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Key: (1) language to be deleted (2) new language

                            CHAPTER 231-H.F.No. 642 
                  An act relating to workers' compensation; modifying 
                  provisions relating to insurance, procedures and 
                  benefits; providing penalties; appropriating money; 
                  amending Minnesota Statutes 1994, sections 13.69, 
                  subdivision 1; 13.82, subdivision 1; 79.074, 
                  subdivision 2; 79.085; 79.211, subdivision 1; 79.251, 
                  subdivision 2, and by adding a subdivision; 79.253, by 
                  adding a subdivision; 79.34, subdivision 2; 79.35; 
                  79.50; 79.51, subdivisions 1 and 3; 79.52, by adding 
                  subdivisions; 79.53, subdivision 1; 79.55, 
                  subdivisions 2, 5, and by adding subdivisions; 79.56, 
                  subdivisions 1 and 3; 79.60, subdivision 1; 79A.01, 
                  subdivisions 1, 4, and by adding a subdivision; 
                  79A.02, subdivisions 1, 2, and 4; 79A.03, by adding a 
                  subdivision; 79A.04, subdivisions 2 and 9; 79A.09, 
                  subdivision 4; 79A.15; 168.012, subdivision 1; 175.16; 
                  176.011, subdivisions 16 and 25; 176.021, subdivisions 
                  3 and 3a; 176.061, subdivision 10; 176.081, 
                  subdivisions 1, 7, 7a, 9, and by adding a subdivision; 
                  176.101, subdivisions 1, 2, 4, 5, 6, 8, and by adding 
                  a subdivision; 176.102, subdivisions 3a and 11; 
                  176.103, subdivisions 2 and 3; 176.104, subdivision 1; 
                  176.105, subdivision 4; 176.106; 176.129, subdivisions 
                  9 and 10; 176.130, subdivision 9; 176.135, subdivision 
                  1; 176.1351, subdivisions 1 and 5; 176.136, 
                  subdivisions 1a, 1b, and 2; 176.138; 176.139, 
                  subdivision 2; 176.178; 176.179; 176.181, subdivisions 
                  7 and 8; 176.182; 176.183, subdivisions 1 and 2; 
                  176.185, subdivision 5a; 176.191, subdivisions 1, 5, 
                  8, and by adding a subdivision; 176.194, subdivision 
                  4; 176.215, by adding a subdivision; 176.221, 
                  subdivisions 1, 3, 3a, 6a, and 7; 176.225, 
                  subdivisions 1 and 5; 176.231, subdivision 10; 
                  176.238, subdivisions 6 and 10; 176.261; 176.2615, 
                  subdivision 7; 176.275, subdivision 1; 176.281; 
                  176.285; 176.291; 176.305, subdivision 1a; 176.645; 
                  176.66, subdivision 11; 176.82; 176.83, subdivision 5; 
                  176.84, subdivision 2; and 268.08, subdivision 3; Laws 
                  1994, chapter 625, article 5, section 7; proposing 
                  coding for new law in Minnesota Statutes, chapters 79; 
                  79A; 176; and 182; repealing Minnesota Statutes 1994, 
                  sections 79.53, subdivision 2; 79.54; 79.56, 
                  subdivision 2; 79.57; 79.58; 176.011, subdivision 26; 
                  176.081, subdivisions 2, 5, and 8; 176.101, 
                  subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 3i, 3j, 
                  3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u; 
                  176.103, subdivision 2a; 176.132; 176.133; 176.191, 
                  subdivision 2; 176.232; and 176.86; Laws 1990, chapter 
                  521, section 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
           Section 1.  Minnesota Statutes 1994, section 79.50, is 
        amended to read: 
           79.50 [PURPOSES.] 
           The purposes of chapter 79 are to:  
           (a) Promote public welfare by regulating insurance rates so 
        that premiums are not excessive, inadequate, or unfairly 
        discriminatory; 
           (b) Promote quality and integrity in the databases used in 
        workers' compensation insurance ratemaking; 
           (c) Prohibit price fixing agreements and anticompetitive 
        behavior by insurers; 
           (d) Promote price competition and provide rates that are 
        responsive to competitive market conditions; 
           (e) Provide a means of establishment of proper rates if 
        competition is not effective; 
           (f) Define the function and scope of activities of data 
        service organizations; 
           (g) Provide for an orderly transition from regulated rates 
        to competitive market conditions; and 
           (h) (e) Encourage insurers to provide alternative 
        innovative methods whereby employers can meet the requirements 
        imposed by section 176.181.  
           Sec. 2.  Minnesota Statutes 1994, section 79.51, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ADOPTION; WHEN.] The commissioner shall 
        adopt rules to implement provisions of this chapter.  The rules 
        shall be finally adopted after May 1, 1982.  By January 15, 
        1982, the commissioner shall provide the legislature a 
        description and explanation of the intent and anticipated effect 
        of the rules on the various factors of the rating system.  
           Sec. 3.  Minnesota Statutes 1994, section 79.51, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RULES; SUBJECT MATTER.] (a) The commissioner in 
        issuing rules shall consider:  
           (1) data reporting requirements, including types of data 
        reported, such as loss and expense data; 
           (2) experience rating plans; 
           (3) retrospective rating plans; 
           (4) general expenses and related expense provisions; 
           (5) minimum premiums; 
           (6) classification systems and assignment of risks to 
        classifications; 
           (7) loss development and trend factors; 
           (8) the workers' compensation reinsurance association; 
           (9) requiring substantial compliance with the rules 
        mandated by this section as a condition of workers' compensation 
        carrier licensure; 
           (10) imposing limitations on the functions of workers' 
        compensation data service organizations consistent with the 
        introduction of competition; 
           (11) the rules contained in the workers' compensation 
        rating manual adopted by the workers' compensation insurers 
        rating association or other licensed data service organizations; 
        and 
           (12) the supporting data and information required in 
        filings under section 79.56, including but not limited to, the 
        experience of the filing insurer and the extent to which the 
        filing insurer relies upon data service organization loss 
        information, descriptions of the actuarial and statistical 
        methods employed in setting rates, and the filing insurers 
        interpretation of any statistical data relied upon; and 
           (13) any other factors that the commissioner deems relevant 
        to achieve the purposes of this chapter.  
           (b) The rules shall provide for the following:  
           (1) competition in workers' compensation insurance rates in 
        such a way that the advantages of competition are introduced 
        with a minimum of employer hardship; 
           (2) adequate safeguards against excessive or discriminatory 
        rates in workers' compensation; 
           (3) (2) encouragement of workers' compensation insurance 
        rates which are as low as reasonably necessary, but shall make 
        provision against inadequate rates, insolvencies and unpaid 
        benefits; 
           (4) (3) assurances that employers are not unfairly 
        relegated to the assigned risk pool; 
           (5) (4) requiring all appropriate data and other 
        information from insurers for the purpose of issuing rules, 
        making legislative recommendations pursuant to this section and 
        monitoring the effectiveness of competition; and 
           (6) (5) preserving a framework for risk classification, 
        data collection, and other appropriate joint insurer 
        services where these will not impede the introduction of 
        competition in premium rates.  
           Sec. 4.  Minnesota Statutes 1994, section 79.53, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [METHOD OF CALCULATION.] Each insurer shall 
        establish premiums to be paid by an employer according to its 
        filed rates and rating plan as follows: 
           Rates shall be applied to an exposure base to yield a base 
        premium which may be further modified increased or decreased up 
        to 25 percent by merit rating, premium discounts, and other 
        appropriate factors contained in the rating plan of an insurer 
        to produce premium if the increase or decrease is not unfairly 
        discriminatory.  Nothing in this chapter shall be deemed to 
        prohibit the use of any premium, provided the premium is not 
        excessive, inadequate or unfairly discriminatory. 
           Sec. 5.  Minnesota Statutes 1994, section 79.55, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXCESSIVENESS.] No premium is excessive in a 
        competitive market.  In the absence of a competitive market, 
        premiums Rates and rating plans are excessive if the expected 
        underwriting profit, together with expected income from invested 
        reserves for the market in question, that would accrue to an 
        insurer under the rates and rating plans would be unreasonably 
        high in relation to the risk undertaken by the insurer in 
        transacting the business.  The burden is on the insurer to 
        establish that profit is not unreasonably high.  
           Sec. 6.  Minnesota Statutes 1994, section 79.55, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DISCOUNTS PERMITTED.] An insurer may offer a 
        discount from scheduled credit or debit to a manual premium of 
        up to 25 percent if the premium otherwise complies with this 
        section.  The commissioner shall not by rule, or otherwise, 
        prohibit a credit or discount from a manual premium solely 
        because it is greater than a certain fixed percentage of the 
        premium. 
           Sec. 7.  Minnesota Statutes 1994, section 79.55, is amended 
        by adding a subdivision to read: 
           Subd. 6.  [RATING FACTORS.] In determining whether a rate 
        filing complies with this section, separate consideration shall 
        be given to:  (i) past and prospective loss experience within 
        this state and outside this state to the extent necessary to 
        develop credible rates; (ii) dividends, savings, or unabsorbed 
        premium deposits allowed or returned by insurers to their 
        policyholders, members, or subscribers; and (iii) a reasonable 
        allowance for expense and profit.  An allowance for expense 
        shall be presumed reasonable if it reflects expenses that are 
        22.5 percent greater or less than the average expense for all 
        insurers writing workers' compensation insurance in this state.  
        An allowance for after-tax profit shall consider anticipated 
        investment income from premium receipts net of disbursements and 
        from allocated surplus, based on the current five-year United 
        States Treasury note yield and an assumed premium to surplus 
        ratio of 2.25 to one.  The allowance for after-tax profit shall 
        be presumed reasonable if the corresponding return on equity 
        target is equal to or less than the sum of:  (i) the current 
        yield on five-year United States Treasury securities; and (ii) 
        an appropriate equity risk premium that reflects the risks of 
        writing workers' compensation insurance.  The risk premium shall 
        not be less than the average, since 1926, of the differences in 
        return between:  (i) the annual return, including dividend 
        income, for the Standards and Poors 500 common stock index or 
        predecessor index for each year; and (ii) the five-year United 
        States Treasury note yield as of the start of the corresponding 
        year.  Profit and expense allowances not presumed reasonable 
        under this subdivision, are reasonable if the circumstances of 
        an insurer, the market, or other factors justify them. 
           Sec. 8.  Minnesota Statutes 1994, section 79.55, is amended 
        by adding a subdivision to read: 
           Subd. 7.  [EXTERNAL FACTORS.] That portion of a rate or 
        rating plan related to assessments from the assigned risk plan, 
        reinsurance association, guarantee fund, special compensation 
        fund, agent commission, premium tax and any other state-mandated 
        surcharges shall not cause the rate or rating plan to be 
        considered excessive, inadequate, or unfairly discriminatory. 
           Sec. 9.  Minnesota Statutes 1994, section 79.56, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AFTER EFFECTIVE DATE PREFILING OF RATES.] 
        Each insurer shall file with the commissioner a complete copy of 
        its rates and rating plan, and all changes and amendments 
        thereto, within 15 days after their and such supporting data and 
        information that the commissioner may by rule require, at least 
        60 days prior to its effective dates date.  An insurer need not 
        file a rating plan if it uses a rating plan filed by a data 
        service organization.  If an insurer uses a rating plan of a 
        data service organization but deviates from it, then all 
        deviations must be filed by the insurer.  The commissioner shall 
        advise an insurer within 30 days of the filing if its submission 
        is not accompanied with such supporting data and information 
        that the commissioner by rule may require.  The commissioner may 
        extend the filing review period and effective date for an 
        additional 30 days if an insurer, after having been advised of 
        what supporting data and information is necessary to complete 
        its filing, does not provide such information within 15 days of 
        having been so notified.  If any rate or rating plan filing or 
        amendment thereto is not disapproved by the commissioner within 
        the filing review period, the insurer may implement it.  For the 
        period August 1, 1995 to December 31, 1995, the filing shall be 
        made at least 90 days prior to the effective date and the 
        department shall advise an insurer within 60 days of such filing 
        if the filing is insufficient under this section. 
           Sec. 10.  Minnesota Statutes 1994, section 79.56, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PENALTIES.] Any insurer using a rate or a rating 
        plan which has not been filed shall be subject to a fine of up 
        to $100 for each day the failure to file continues.  The 
        commissioner may, after a hearing on the record, find that the 
        failure is willful.  A willful failure to meet filing 
        requirements shall be punishable by a fine of up to $500 for 
        each day during which a willful failure continues.  These 
        penalties shall be in addition to any other penalties provided 
        by law.  Notwithstanding this subdivision, an employer that 
        generates $500,000 in annual written workers' compensation 
        premium under the rates and rating plan of an insurer before the 
        application of any large deductible rating plans, may be written 
        by that insurer using rates or rating plans that are not subject 
        to disapproval but which have been filed.  The $500,000 
        threshold shall be increased on January 1, 1996, and on each 
        January 1 thereafter by the percentage increase in the statewide 
        average weekly wage, to the nearest $1,000.  The commissioner 
        shall advise insurers licensed to write workers' compensation 
        insurance in this state of the annual threshold adjustment. 
           Sec. 11.  [79.561] [DISAPPROVAL OF RATES OR RATING PLANS.] 
           Subdivision 1.  [DISAPPROVAL; TIME PERIOD.] The 
        commissioner may disapprove a rate and rating plan or amendment 
        thereto prior to its effective date, as provided under section 
        79.56, subdivision 1, if the commissioner determines that it is 
        excessive, inadequate, or unfairly discriminatory.  If the 
        commissioner disapproves any rate or rating plan filing or 
        amendment thereto, the commissioner shall advise the filing 
        insurer what rate and rating plan the commissioner has reason to 
        believe would be in compliance with section 79.55, and the 
        reasons for that determination.  An insurer may not implement a 
        rate and rating plan or amendment thereto which has been 
        disapproved under this subdivision.  If the commissioner 
        disapproves any rate and rating plan filing or amendment 
        thereto, an insurer may use its current rate and rating plan for 
        writing any workers' compensation insurance in this state.  
        Following any disapproval, the commissioner and insurer may 
        reach agreement on a rate or rating plan filing or amendment 
        thereto.  Notwithstanding any law to the contrary, in such 
        cases, the rate or rating plan filing or amendment thereto may 
        be implemented by the insurer immediately. 
           Subd. 2.  [HEARING.] If an insurer's rate or rating plan 
        filing or amendment thereto is disapproved under subdivision 1, 
        the insurer may request a contested case hearing under chapter 
        14.  The insurer shall have the burden of proof to justify that 
        its rate and rating plan or amendment thereto is in compliance 
        with section 79.55.  The hearing must be scheduled promptly and 
        in no case later than three months from the date of disapproval 
        or else the rate and rating plan or amendment thereto shall be 
        considered effective and may be implemented by the insurer.  A 
        determination pursuant to chapter 14 must be made within 90 days 
        following the closing of the hearing record. 
           Subd. 3.  [CONSULTANTS AND COSTS.] The commissioner may 
        retain consultants, including a consulting actuary or other 
        experts, that the commissioner determines necessary for purposes 
        of this chapter.  The salary limit set by section 43A.17 does 
        not apply to a consulting actuary retained under this 
        subdivision.  A consulting actuary shall be a fellow in the 
        casualty actuarial society and shall have demonstrated 
        experience in workers' compensation insurance ratemaking.  Any 
        individual not so qualified shall not render an opinion or 
        testify on actuarial aspects of a filing, including but not 
        limited to, data quality, loss development, and trending.  The 
        costs incurred in retaining any consulting actuaries and experts 
        shall be reimbursed by the special compensation fund. 
           Sec. 12.  Minnesota Statutes 1994, section 175.16, is 
        amended to read: 
           175.16 [DIVISIONS.] 
           Subdivision 1.  [ESTABLISHED.] The department of labor and 
        industry shall consist of the following divisions:  division of 
        workers' compensation, division of boiler inspection, division 
        of occupational safety and health, division of statistics, 
        division of steamfitting standards, division of voluntary 
        apprenticeship, division of labor standards, and such other 
        divisions as the commissioner of the department of labor and 
        industry may deem necessary and establish.  Each division of the 
        department and persons in charge thereof shall be subject to the 
        supervision of the commissioner of the department of labor and 
        industry and, in addition to such duties as are or may be 
        imposed on them by statute, shall perform such other duties as 
        may be assigned to them by said commissioner. 
           Subd. 2.  [FRAUD INVESTIGATION UNIT.] The department of 
        labor and industry shall contain a fraud investigation unit for 
        the purposes of investigating fraudulent or other illegal 
        practices of health care providers, employers, insurers, 
        attorneys, employees, and others related to workers' 
        compensation and to investigate other matters under the 
        jurisdiction of the department. 
           An investigator of the fraud investigation unit of the 
        department of labor and industry has the inspection authority of 
        the commissioner provided under section 182.659 and may apply 
        this authority to subjects of investigations under this 
        subdivision. 
           Sec. 13.  Minnesota Statutes 1994, section 176.011, 
        subdivision 25, is amended to read: 
           Subd. 25.  [MAXIMUM MEDICAL IMPROVEMENT.] "Maximum medical 
        improvement" means the date after which no further significant 
        recovery from or significant lasting improvement to a personal 
        injury can reasonably be anticipated, based upon reasonable 
        medical probability., irrespective and regardless of subjective 
        complaints of pain.  Except where an employee is medically 
        unable to continue working under section 176.101, subdivision 1, 
        paragraph (e), clause (2), once the date of maximum medical 
        improvement has been determined, no further determinations of 
        other dates of maximum medical improvement for that personal 
        injury is permitted.  The determination that an employee has 
        reached maximum medical improvement shall not be rendered 
        ineffective by the worsening of the employee's medical condition 
        and recovery therefrom. 
           Sec. 14.  Minnesota Statutes 1994, section 176.021, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COMPENSATION, COMMENCEMENT OF PAYMENT.] All 
        employers shall commence payment of compensation at the time and 
        in the manner prescribed by this chapter without the necessity 
        of any agreement or any order of the division.  Except for 
        medical, burial, and other nonperiodic benefits, payments shall 
        be made as nearly as possible at the intervals when the wage was 
        payable, provided, however, that payments for permanent partial 
        disability shall be governed by section 176.101.  If doubt 
        exists as to the eventual permanent partial disability, payment 
        for the economic recovery compensation or impairment 
        compensation, whichever is due, pursuant to section 176.101, 
        shall be then made when due for the minimum permanent partial 
        disability ascertainable, and further payment shall be made upon 
        any later ascertainment of greater permanent partial 
        disability.  Prior to or at the time of commencement of the 
        payment of economic recovery compensation or lump sum or 
        periodic payment of impairment permanent partial compensation, 
        the employee and employer shall be furnished with a copy of the 
        medical report upon which the payment is based and all other 
        medical reports which the insurer has that indicate a permanent 
        partial disability rating, together with a statement by the 
        insurer as to whether the tendered payment is for minimum 
        permanent partial disability or final and eventual disability.  
        After receipt of all reports available to the insurer that 
        indicate a permanent partial disability rating, the employee 
        shall make available or permit the insurer to obtain any medical 
        report that the employee has or has knowledge of that contains a 
        permanent partial disability rating which the insurer does not 
        already have.  Economic recovery compensation or impairment 
        Permanent partial compensation pursuant to section 176.101 is 
        payable in addition to but not concurrently with compensation 
        for temporary total disability but is payable pursuant to 
        section 176.101.  Impairment compensation is payable 
        concurrently and in addition to compensation for permanent total 
        disability pursuant to section 176.101.  Economic recovery 
        compensation or impairment compensation Permanent partial 
        compensation pursuant to section 176.101 shall be withheld 
        pending completion of payment for temporary total disability, 
        and no credit shall be taken for payment of economic recovery 
        compensation or impairment permanent partial compensation 
        against liability for temporary total or future permanent total 
        disability.  Liability on the part of an employer or the insurer 
        for disability of a temporary total, temporary partial, and 
        permanent total nature shall be considered as a continuing 
        product and part of the employee's inability to earn or 
        reduction in earning capacity due to injury or occupational 
        disease and compensation is payable accordingly, subject to 
        section 176.101.  Economic recovery compensation or 
        impairment Permanent partial compensation is payable for 
        functional loss of use or impairment of function, permanent in 
        nature, and payment therefore shall be separate, distinct, and 
        in addition to payment for any other compensation, subject to 
        section 176.101.  The right to receive temporary total, 
        temporary partial, or permanent total disability payments vests 
        in the injured employee or the employee's dependents under this 
        chapter or, if none, in the employee's legal heirs at the time 
        the disability can be ascertained and the right is not abrogated 
        by the employee's death prior to the making of the payment. 
           The right to receive economic recovery permanent partial 
        compensation or impairment compensation vests in an injured 
        employee at the time the disability can be ascertained provided 
        that the employee lives for at least 30 days beyond the date of 
        the injury.  Upon the death of an employee who is receiving 
        economic recovery compensation or impairment compensation, 
        further compensation is payable pursuant to section 176.101.  
        Impairment compensation is payable under this paragraph if 
        vesting has occurred, the employee dies prior to reaching 
        maximum medical improvement, and the requirements and conditions 
        under section 176.101, subdivision 3e, are not met.  
           Disability ratings for permanent partial disability shall 
        be based on objective medical evidence.  
           Sec. 15.  Minnesota Statutes 1994, section 176.021, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments 
        for permanent partial disability as provided in section 176.101, 
        subdivision 3 2a, shall be made in the following manner:  
           (a) If the employee returns to work, payment shall be made 
        by lump sum at the same intervals as temporary total payments 
        were made; 
           (b) If temporary total payments have ceased, but the 
        employee has not returned to work, payment shall be made at the 
        same intervals as temporary total payments were made; 
           (c) If temporary total disability payments cease because 
        the employee is receiving payments for permanent total 
        disability or because the employee is retiring or has retired 
        from the work force, then payment shall be made by lump sum at 
        the same intervals as temporary total payments were made; 
           (d) If the employee completes a rehabilitation plan 
        pursuant to section 176.102, but the employer does not furnish 
        the employee with work the employee can do in a permanently 
        partially disabled condition, and the employee is unable to 
        procure such work with another employer, then payment shall be 
        made by lump sum at the same intervals as temporary total 
        payments were made. 
           Sec. 16.  Minnesota Statutes 1994, section 176.061, 
        subdivision 10, is amended to read: 
           Subd. 10.  [INDEMNITY.] Notwithstanding the provisions of 
        chapter 65B or any other law to the contrary, an employer has a 
        right of indemnity for any compensation paid or payable pursuant 
        to this chapter, including temporary total compensation, 
        temporary partial compensation, permanent partial disability, 
        economic recovery compensation, impairment compensation, medical 
        compensation, rehabilitation, death, and permanent total 
        compensation.  
           Sec. 17.  Minnesota Statutes 1994, section 176.101, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TEMPORARY TOTAL DISABILITY.] (a) For 
        injury producing temporary total disability, the compensation is 
        66-2/3 percent of the weekly wage at the time of injury. 
           (b)  During the year (1) Commencing on October 1, 1992 
        1995, and each year thereafter, the maximum weekly compensation 
        payable is 105 percent of the statewide average weekly wage for 
        the period ending December 31 of the preceding year $615 per 
        week. 
           (2) The workers' compensation advisory council may consider 
        adjustment increases and make recommendations to the legislature.
           (c) The minimum weekly compensation payable is 20 percent 
        of the statewide average weekly wage for the period ending 
        December 31 of the preceding year $104 per week or the injured 
        employee's actual weekly wage, whichever is less.  
           (d) Subject to subdivisions 3a to 3u this Temporary total 
        compensation shall be paid during the period of disability, 
        payment to be made at the intervals when the wage was payable, 
        as nearly as may be subject to the cessation and recommencement 
        conditions in paragraphs (e) to (l). 
           (e) Temporary total disability compensation shall cease 
        when the employee returns to work.  Except as otherwise provided 
        in section 176.102, subdivision 11, temporary total disability 
        compensation may only be recommenced following cessation under 
        this paragraph, paragraph (h), or paragraph (j) prior to payment 
        of 104 weeks of temporary total disability compensation and only 
        as follows: 
           (1) if temporary total disability compensation ceased 
        because the employee returned to work, it may be recommenced if 
        the employee is laid off or terminated for reasons other than 
        misconduct within one year after returning to work if the layoff 
        or termination occurs prior to 90 days after the employee has 
        reached maximum medical improvement.  Recommenced temporary 
        total disability compensation under this clause ceases when any 
        of the cessation events in paragraphs (e) to (l) occurs; or 
           (2) if temporary total disability compensation ceased 
        because the employee returned to work or ceased under paragraph 
        (h) or (j), it may be recommenced if the employee is medically 
        unable to continue at a job due to the injury.  Where the 
        employee is medically unable to continue working due to the 
        injury, temporary total disability compensation may continue 
        until any of the cessation events in paragraphs (e) to (l) 
        occurs following recommencement.  If an employee who has not yet 
        received temporary total disability compensation becomes 
        medically unable to continue working due to the injury after 
        reaching maximum medical improvement, temporary total disability 
        compensation shall commence and shall continue until any of the 
        events in paragraphs (e) to (l) occurs following commencement.  
        For purposes of commencement or recommencement under this clause 
        only, a new period of maximum medical improvement under 
        paragraph (j) begins when the employee becomes medically unable 
        to continue working due to the injury.  Temporary total 
        disability compensation may not be recommenced under this clause 
        and a new period of maximum medical improvement does not begin 
        if the employee is not actively employed when the employee 
        becomes medically unable to work.  All periods of initial and 
        recommenced temporary total disability compensation are included 
        in the 104-week limitation specified in paragraph (k).  
           (f) Temporary total disability compensation shall cease if 
        the employee withdraws from the labor market.  Temporary total 
        disability compensation may be recommenced following cessation 
        under this paragraph only if the employee reenters the labor 
        market prior to 90 days after the employee reached maximum 
        medical improvement and prior to payment of 104 weeks of 
        temporary total disability compensation.  Once recommenced, 
        temporary total disability ceases when any of the cessation 
        events in paragraphs (e) to (l) occurs. 
           (g) Temporary total disability compensation shall cease if 
        the total disability ends and the employee fails to diligently 
        search for appropriate work within the employee's physical 
        restrictions.  Temporary total disability compensation may be 
        recommenced following cessation under this paragraph only if the 
        employee begins diligently searching for appropriate work within 
        the employee's physical restrictions prior to 90 days after 
        maximum medical improvement and prior to payment of 104 weeks of 
        temporary total disability compensation.  Once recommenced, 
        temporary total disability compensation ceases when any of the 
        cessation events in paragraphs (e) to (l) occurs. 
           (h) Temporary total disability compensation shall cease if 
        the employee has been released to work without any physical 
        restrictions caused by the work injury. 
           (i) Temporary total disability compensation shall cease if 
        the employee refuses an offer of work that is consistent with a 
        plan of rehabilitation filed with the commissioner which meets 
        the requirements of section 176.102, subdivision 4, or, if no 
        plan has been filed, the employee refuses an offer of gainful 
        employment that the employee can do in the employee's physical 
        condition.  Once temporary total disability compensation has 
        ceased under this paragraph, it may not be recommenced. 
           (j) Temporary total disability compensation shall cease 90 
        days after the employee has reached maximum medical improvement, 
        except as provided in section 176.102, subdivision 11, paragraph 
        (b).  For purposes of this subdivision, the 90-day period after 
        maximum medical improvement commences on the earlier of:  (1) 
        the date that the employee receives a written medical report 
        indicating that the employee has reached maximum medical 
        improvement; or (2) the date that the employer or insurer serves 
        the report on the employee and the employee's attorney, if any.  
        Once temporary total disability compensation has ceased under 
        this paragraph, it may not be recommenced except if the employee 
        returns to work and is subsequently medically unable to continue 
        working as provided in paragraph (e), clause (2). 
           (k) Temporary total disability compensation shall cease 
        entirely when 104 weeks of temporary total disability 
        compensation have been paid, except as provided in section 
        176.102, subdivision 11, paragraph (b).  Notwithstanding 
        anything in this section to the contrary, initial and 
        recommenced temporary total disability compensation combined 
        shall not be paid for more than 104 weeks, regardless of the 
        number of weeks that have elapsed since the injury, except that 
        if the employee is in a retraining plan approved under section 
        176.102, subdivision 11, the 104 week limitation shall not apply 
        during the retraining, but is subject to the limitation before 
        the plan begins and after the plan ends. 
           (l) Paragraphs (e) to (k) do not limit other grounds under 
        law to suspend or discontinue temporary total disability 
        compensation provided under chapter 176. 
           Sec. 18.  Minnesota Statutes 1994, section 176.101, 
        subdivision 2, is amended to read: 
           Subd. 2.  [TEMPORARY PARTIAL DISABILITY.] (a) In all cases 
        of temporary partial disability the compensation shall be 66-2/3 
        percent of the difference between the weekly wage of the 
        employee at the time of injury and the wage the employee is able 
        to earn in the employee's partially disabled condition.  This 
        compensation shall be paid during the period of disability 
        except as provided in this section, payment to be made at the 
        intervals when the wage was payable, as nearly as may be, and 
        subject to the maximum rate for temporary total compensation.  
           (b) Except as provided under subdivision 3k, Temporary 
        partial compensation may be paid only while the employee is 
        employed, earning less than the employee's weekly wage at the 
        time of the injury, and the reduced wage the employee is able to 
        earn in the employee's partially disabled condition is due to 
        the injury.  Except as provided in section 176.102, subdivision 
        11, paragraph paragraphs (b) and (c), temporary partial 
        compensation may not be paid for more than 225 weeks, or after 
        450 weeks after the date of injury, whichever occurs first.  
           (c) Temporary partial compensation must be reduced to the 
        extent that the wage the employee is able to earn in the 
        employee's partially disabled condition plus the temporary 
        partial disability payment otherwise payable under this 
        subdivision exceeds 500 percent of the statewide average weekly 
        wage. 
           Sec. 19.  Minnesota Statutes 1994, section 176.101, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [PERMANENT PARTIAL DISABILITY.] (a) Compensation 
        for permanent partial disability is as provided in this 
        subdivision.  Permanent partial disability must be rated as a 
        percentage of the whole body in accordance with rules adopted by 
        the commissioner under section 176.105.  The percentage 
        determined pursuant to the rules must be multiplied by the 
        corresponding amount in the following table: 
              Impairment rating                 Amount
                  (percent)
                    0-25                        $ 75,000
                   26-30                          80,000
                   31-35                          85,000
                   36-40                          90,000
                   41-45                          95,000
                   46-50                         100,000
                   51-55                         120,000
                   56-60                         140,000
                   61-65                         160,000
                   66-70                         180,000
                   71-75                         200,000
                   76-80                         240,000
                   81-85                         280,000
                   86-90                         320,000
                   91-95                         360,000
                   96-100                        400,000
        An employee may not receive compensation for more than a 100 
        percent disability of the whole body, even if the employee 
        sustains disability to two or more body parts. 
           (b) Permanent partial disability is payable upon cessation 
        of temporary total disability under subdivision 1.  The 
        compensation is payable in installments at the same intervals 
        and in the same amount as the employee's temporary total 
        disability rate on the date of injury.  Permanent partial 
        disability is not payable while temporary total compensation is 
        being paid. 
           Sec. 20.  Minnesota Statutes 1994, section 176.101, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PERMANENT TOTAL DISABILITY.] For permanent total 
        disability, as defined in subdivision 5, the compensation shall 
        be 66-2/3 percent of the daily wage at the time of the injury, 
        subject to a maximum weekly compensation equal to the maximum 
        weekly compensation for a temporary total disability and a 
        minimum weekly compensation equal to the minimum weekly 
        compensation for a temporary total disability 65 percent of the 
        statewide average weekly wage.  This compensation shall be paid 
        during the permanent total disability of the injured employee 
        but after a total of $25,000 of weekly compensation has been 
        paid, the amount of the weekly compensation benefits being paid 
        by the employer shall be reduced by the amount of any disability 
        benefits being paid by any government disability benefit program 
        if the disability benefits are occasioned by the same injury or 
        injuries which give rise to payments under this subdivision.  
        This reduction shall also apply to any old age and survivor 
        insurance benefits.  Payments shall be made at the intervals 
        when the wage was payable, as nearly as may be.  In case an 
        employee who is permanently and totally disabled becomes an 
        inmate of a public institution, no compensation shall be payable 
        during the period of confinement in the institution, unless 
        there is wholly dependent on the employee for support some 
        person named in section 176.111, subdivision 1, 2 or 3, in which 
        case the compensation provided for in section 176.111, during 
        the period of confinement, shall be paid for the benefit of the 
        dependent person during dependency.  The dependency of this 
        person shall be determined as though the employee were deceased. 
        Permanent total disability shall cease at age 67 because the 
        employee is presumed retired from the labor market.  This 
        presumption is rebuttable by the employee.  The subjective 
        statement the employee is not retired is not sufficient in 
        itself to rebut the presumptive evidence of retirement but may 
        be considered along with other evidence. 
           Sec. 21.  Minnesota Statutes 1994, section 176.101, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DEFINITION.] (a) For purposes of subdivision 4, 
        permanent total disability means only:  
           (1) the total and permanent loss of the sight of both eyes, 
        the loss of both arms at the shoulder, the loss of both legs so 
        close to the hips that no effective artificial members can be 
        used, complete and permanent paralysis, total and permanent loss 
        of mental faculties; or 
           (2) any other injury which totally and permanently 
        incapacitates the employee from working at an occupation which 
        brings the employee an income., provided that the employee must 
        also meet the criteria of one of the following clauses: 
           (a) the employee has at least a 17 percent permanent 
        partial disability rating of the whole body; 
           (b) the employee has a permanent partial disability rating 
        of the whole body of at least 15 percent and the employee is at 
        least 50 years old at the time of injury; or 
           (c) the employee has a permanent partial disability rating 
        of the whole body of at least 13 percent and the employee is at 
        least 55 years old at the time of the injury, and has not 
        completed grade 12 or obtained a GED certificate. 
           For purposes of this clause, "totally and permanently 
        incapacitated" means that the employee's physical disability in 
        combination with any one of clauses (a), (b), or (c) causes the 
        employee to be unable to secure anything more than sporadic 
        employment resulting in an insubstantial income.  Other factors 
        not specified in clause (a), (b), or (c), including the 
        employee's age, education, training and experience, may only be 
        considered in determining whether an employee is totally and 
        permanently incapacitated after the employee meets the threshold 
        criteria of clause (a), (b), or (c).  The employee's age, level 
        of physical disability, or education may not be considered to 
        the extent the factor is inconsistent with the disability, age, 
        and education factors specified in clause (a), (b), or (c). 
           (b) For purposes of paragraph (a), clause (2), "totally and 
        permanently incapacitated" means that the employee's physical 
        disability, in combination with the employee's age, education, 
        training, and experience, causes the employee to be unable to 
        secure anything more than sporadic employment resulting in an 
        insubstantial income.  
           Sec. 22.  Minnesota Statutes 1994, section 176.101, 
        subdivision 6, is amended to read: 
           Subd. 6.  [MINORS; APPRENTICES.] (a) If any employee 
        entitled to the benefits of this chapter is an apprentice of any 
        age and sustains a personal injury arising out of and in the 
        course of employment resulting in permanent total or a 
        compensable permanent partial disability, for the purpose of 
        computing the compensation to which the employee is entitled for 
        the injury, the compensation rate for temporary total, temporary 
        partial, a or permanent total disability or economic recovery 
        compensation shall be the maximum rate for temporary total 
        disability under subdivision 1. 
           (b) If any employee entitled to the benefits of this 
        chapter is a minor and sustains a personal injury arising out of 
        and in the course of employment resulting in permanent total 
        disability, for the purpose of computing the compensation to 
        which the employee is entitled for the injury, the compensation 
        rate for a permanent total disability shall be the maximum rate 
        for temporary total disability under subdivision 1. 
           Sec. 23.  Minnesota Statutes 1994, section 176.101, 
        subdivision 8, is amended to read: 
           Subd. 8.  [RETIREMENT CESSATION OF BENEFITS.] Temporary 
        total disability payments shall cease at retirement.  
        "Retirement" means that a preponderance of the evidence supports 
        a conclusion that an employee has retired.  The subjective 
        statement of an employee that the employee is not retired is not 
        sufficient in itself to rebut objective evidence of retirement 
        but may be considered along with other evidence.  
           For injuries occurring after January 1, 1984, an employee 
        who receives social security old age and survivors insurance 
        retirement benefits under the Social Security Act, Public Law 
        Number 98-21, as amended, is presumed retired from the labor 
        market.  This presumption is rebuttable by a preponderance of 
        the evidence. 
           Sec. 24.  Minnesota Statutes 1994, section 176.105, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LEGISLATIVE INTENT; RULES; LOSS OF MORE THAN ONE 
        BODY PART.] (a) For the purpose of establishing a disability 
        schedule pursuant to clause (b), the legislature declares its 
        intent that the commissioner establish a disability schedule 
        which, assuming the same number and distribution of severity of 
        injuries, the aggregate total of impairment compensation and 
        economic recovery compensation benefits under section 176.101, 
        subdivisions 3a to 3u be approximately equal to the total 
        aggregate amount payable for permanent partial disabilities 
        under section 176.101, subdivision 3, provided, however, that 
        awards for specific injuries under the proposed schedule need 
        not be the same as they were for the same injuries under the 
        schedule pursuant to section 176.101, subdivision 3.  The 
        schedule shall be determined by sound actuarial evaluation and 
        shall be based on the benefit level which exists on January 1, 
        1983.  
           (b) The commissioner shall by rulemaking adopt procedures 
        setting forth rules for the evaluation and rating of functional 
        disability and the schedule for permanent partial disability and 
        to determine the percentage of loss of function of a part of the 
        body based on the body as a whole, including internal organs, 
        described in section 176.101, subdivision 3, and any other body 
        part not listed in section 176.101, subdivision 3, which the 
        commissioner deems appropriate.  
           The rules shall promote objectivity and consistency in the 
        evaluation of permanent functional impairment due to personal 
        injury and in the assignment of a numerical rating to the 
        functional impairment.  
           Prior to adoption of rules the commissioner shall conduct 
        an analysis of the current permanent partial disability schedule 
        for the purpose of determining the number and distribution of 
        permanent partial disabilities and the average compensation for 
        various permanent partial disabilities.  The commissioner shall 
        consider setting the compensation under the proposed schedule 
        for the most serious conditions higher in comparison to the 
        current schedule and shall consider decreasing awards for minor 
        conditions in comparison to the current schedule.  
           The commissioner may consider, among other factors, and 
        shall not be limited to the following factors in developing 
        rules for the evaluation and rating of functional disability and 
        the schedule for permanent partial disability benefits:  
           (1) the workability and simplicity of the procedures with 
        respect to the evaluation of functional disability; 
           (2) the consistency of the procedures with accepted medical 
        standards; 
           (3) rules, guidelines, and schedules that exist in other 
        states that are related to the evaluation of permanent partial 
        disability or to a schedule of benefits for functional 
        disability provided that the commissioner is not bound by the 
        degree of disability in these sources but shall adjust the 
        relative degree of disability to conform to the expressed intent 
        of clause (a) this section; 
           (4) rules, guidelines, and schedules that have been 
        developed by associations of health care providers or 
        organizations provided that the commissioner is not bound by the 
        degree of disability in these sources but shall adjust the 
        relative degree of disability to conform to the expressed intent 
        of clause (a) this section; 
           (5) the effect the rules may have on reducing litigation; 
           (6) the treatment of preexisting disabilities with respect 
        to the evaluation of permanent functional disability provided 
        that any preexisting disabilities must be objectively determined 
        by medical evidence; and 
           (7) symptomatology and loss of function and use of the 
        injured member.  
           The factors in paragraphs (1) to (7) shall not be used in 
        any individual or specific workers' compensation claim under 
        this chapter but shall be used only in the adoption of rules 
        pursuant to this section.  
           Nothing listed in paragraphs (1) to (7) shall be used to 
        dispute or challenge a disability rating given to a part of the 
        body so long as the whole schedule conforms with the expressed 
        intent of clause (a) this section. 
           (c) If an employee suffers a permanent functional 
        disability of more than one body part due to a personal injury 
        incurred in a single occurrence, the percent of the whole body 
        which is permanently partially disabled shall be determined by 
        the following formula so as to ensure that the percentage for 
        all functional disability combined does not exceed the total for 
        the whole body:  
                                 A + B (1 - A) 
           where:  A is the greater percentage whole body loss of the 
        first body part; and B is the lesser percentage whole body loss 
        otherwise payable for the second body part.  A + B (1-A) is 
        equivalent to A + B - AB.  
           For permanent partial disabilities to three body parts due 
        to a single occurrence or as the result of an occupational 
        disease, the above formula shall be applied, providing that A 
        equals the result obtained from application of the formula to 
        the first two body parts and B equals the percentage for the 
        third body part.  For permanent partial disability to four or 
        more body parts incurred as described above, A equals the result 
        obtained from the prior application of the formula, and B equals 
        the percentage for the fourth body part or more in arithmetic 
        progressions. 
           Sec. 25.  Minnesota Statutes 1994, section 176.178, is 
        amended to read: 
           176.178 [FRAUD.] 
           Subdivision 1.  [INTENT.] Any person who, with intent to 
        defraud, receives workers' compensation benefits to which the 
        person is not entitled by knowingly misrepresenting, misstating, 
        or failing to disclose any material fact is guilty of theft and 
        shall be sentenced pursuant to section 609.52, subdivision 3. 
           Subd. 2.  [FORMS.] The text of subdivision 1 shall be 
        placed on all forms prescribed by the commissioner for claims or 
        responses to claims for workers' compensation benefits under 
        this chapter.  The absence of the text does not constitute a 
        defense against prosecution under subdivision 1.  
           Sec. 26.  Minnesota Statutes 1994, section 176.179, is 
        amended to read: 
           176.179 [RECOVERY OF OVERPAYMENTS.] 
           Notwithstanding section 176.521, subdivision 3, or any 
        other provision of this chapter to the contrary, except as 
        provided in this section, no lump sum or weekly payment, or 
        settlement, which is voluntarily paid to an injured employee or 
        the survivors of a deceased employee in apparent or seeming 
        accordance with the provisions of this chapter by an employer or 
        insurer, or is paid pursuant to an order of the workers' 
        compensation division, a compensation judge, or court of appeals 
        relative to a claim by an injured employee or the employee's 
        survivors, and received in good faith by the employee or the 
        employee's survivors shall be refunded to the paying employer or 
        insurer in the event that it is subsequently determined that the 
        payment was made under a mistake in fact or law by the employer 
        or insurer.  When the payments have been made to a person who is 
        entitled to receive further payments of compensation for the 
        same injury, the mistaken compensation may be taken as a full 
        credit against future lump sum benefit entitlement and as a 
        partial credit against future weekly periodic benefits.  The 
        credit applied against further payments of temporary total 
        disability, temporary partial disability, permanent partial 
        disability, permanent total disability, retraining benefits, 
        death benefits, or weekly payments of economic recovery or 
        impairment compensation shall not exceed 20 percent of the 
        amount that would otherwise be payable. 
           A credit may not be applied against medical expenses due or 
        payable.  
           Where the commissioner or compensation judge determines 
        that the mistaken compensation was not received in good faith, 
        the commissioner or compensation judge may order reimbursement 
        of the compensation.  For purposes of this section, a payment is 
        not received in good faith if it is obtained through fraud, or 
        if the employee knew that the compensation was paid under 
        mistake of fact or law, and the employee has not refunded the 
        mistaken compensation. 
           Sec. 27.  Minnesota Statutes 1994, section 176.221, 
        subdivision 6a, is amended to read: 
           Subd. 6a.  [MEDICAL, REHABILITATION, ECONOMIC RECOVERY, AND 
        IMPAIRMENT AND PERMANENT PARTIAL COMPENSATION.] The penalties 
        provided by this section apply in cases where payment for 
        treatment under section 176.135, rehabilitation expenses under 
        section 176.102, subdivisions 9 and 11, economic recovery 
        compensation or impairment compensation or permanent partial 
        compensation are not made in a timely manner as required by law 
        or by rule adopted by the commissioner.  
           Sec. 28.  Minnesota Statutes 1994, section 176.645, is 
        amended to read: 
           176.645 [ADJUSTMENT OF BENEFITS.] 
           Subdivision 1.  [AMOUNT.] For injuries occurring after 
        October 1, 1975 for which benefits are payable under section 
        176.101, subdivisions 1, 2 and 4, and section 176.111, 
        subdivision 5, the total benefits due the employee or any 
        dependents shall be adjusted in accordance with this section.  
        On October 1, 1981, and thereafter on the anniversary of the 
        date of the employee's injury the total benefits due shall be 
        adjusted by multiplying the total benefits due prior to each 
        adjustment by a fraction, the denominator of which is the 
        statewide average weekly wage for December 31, of the year two 
        years previous to the adjustment and the numerator of which is 
        the statewide average weekly wage for December 31, of the year 
        previous to the adjustment.  For injuries occurring after 
        October 1, 1975, all adjustments provided for in this section 
        shall be included in computing any benefit due under this 
        section.  Any limitations of amounts due for daily or weekly 
        compensation under this chapter shall not apply to adjustments 
        made under this section.  No adjustment increase made on or 
        after October 1, 1977, but prior to October 1, 1992, under this 
        section shall exceed six percent a year; in those instances 
        where the adjustment under the formula of this section would 
        exceed this maximum, the increase shall be deemed to be six 
        percent.  No adjustment increase made on or after October 1, 
        1992, under this section shall exceed four percent a year; in 
        those instances where the adjustment under the formula of this 
        section would exceed this maximum, the increase shall be deemed 
        to be four percent.  For injuries occurring on and after October 
        1, 1995, no adjustment increase made on or after October 1, 
        1995, shall exceed two percent a year; in those instances where 
        the adjustment under the formula of this section would exceed 
        this maximum, the increase shall be deemed to be two percent.  
        The workers' compensation advisory council may consider 
        adjustment or other further increases and make recommendations 
        to the legislature. 
           Subd. 2.  [TIME OF FIRST ADJUSTMENT.] For injuries 
        occurring on or after October 1, 1981, the initial adjustment 
        made pursuant to subdivision 1 is deferred until the first 
        anniversary of the date of the injury.  For injuries occurring 
        on or after October 1, 1992, the initial adjustment under 
        subdivision 1 is deferred until the second anniversary of the 
        date of the injury.  The adjustment made at that time shall be 
        that of the last year only.  For injuries occurring on or after 
        October 1, 1995, the initial adjustment under subdivision 1 is 
        deferred until the fourth anniversary of the date of injury.  
        The adjustment at that time shall be that of the last year only. 
           Sec. 29.  Minnesota Statutes 1994, section 176.66, 
        subdivision 11, is amended to read: 
           Subd. 11.  [AMOUNT OF COMPENSATION.] The compensation for 
        an occupational disease is 66-2/3 percent of the employee's 
        weekly wage on the date of injury subject to a maximum 
        compensation equal to the maximum compensation in effect on the 
        date of last exposure.  The employee shall be eligible for 
        supplementary benefits notwithstanding the provisions of section 
        176.132, after four years have elapsed since the date of last 
        significant exposure to the hazard of the occupational disease 
        if that employee's weekly compensation rate is less than the 
        current supplementary benefit rate.  
           Sec. 30.  Minnesota Statutes 1994, section 176.82, is 
        amended to read: 
           176.82 [ACTION FOR CIVIL DAMAGES FOR OBSTRUCTING EMPLOYEE 
        SEEKING BENEFITS.] 
           Subdivision 1.  [RETALIATORY DISCHARGE.] Any person 
        discharging or threatening to discharge an employee for seeking 
        workers' compensation benefits or in any manner intentionally 
        obstructing an employee seeking workers' compensation benefits 
        is liable in a civil action for damages incurred by the employee 
        including any diminution in workers' compensation benefits 
        caused by a violation of this section including costs and 
        reasonable attorney fees, and for punitive damages not to exceed 
        three times the amount of any compensation benefit to which the 
        employee is entitled.  Damages awarded under this section shall 
        not be offset by any workers' compensation benefits to which the 
        employee is entitled. 
           Subd. 2.  [REFUSAL TO OFFER CONTINUED EMPLOYMENT.] An 
        employer who, without reasonable cause, refuses to offer 
        continued employment to its employee when employment is 
        available within the employee's physical limitations shall be 
        liable in a civil action for one year's wages.  The wages are 
        payable from the date of the refusal to offer continued 
        employment, and at the same time and at the same rate as the 
        employee's preinjury wage, to continue during the period of the 
        refusal up to a maximum of $15,000.  These payments shall be in 
        addition to any other payments provided by this chapter.  In 
        determining the availability of employment, the continuance in 
        business of the employer shall be considered and written rules 
        promulgated by the employer with respect to seniority or the 
        provisions or any collective bargaining agreement shall govern.  
        These payments shall not be covered by a contract of insurance.  
        The employer shall be served directly and be a party to the 
        claim.  This subdivision shall not apply to employers who employ 
        15 or fewer full-time equivalent employees. 
           Sec. 31.  [176.861] [DISCLOSURE OF INFORMATION.] 
           Subdivision 1.  [INSURANCE INFORMATION.] The commissioner 
        may, in writing, require an insurance company to release to the 
        commissioner any or all relevant information or evidence the 
        commissioner deems important which the company may have in its 
        possession relating to a workers' compensation claim including 
        material relating to the investigation of the claim; statements 
        of any person, and any other evidence relevant to the 
        investigation.  The writing from the commissioner requiring 
        release of the information shall contain a statement that the 
        commissioner has reason to believe a crime or civil fraud has 
        been committed with respect to an insurance claim, payment, or 
        application. 
           Subd. 2.  [INFORMATION RELEASED TO AUTHORIZED PERSONS.] If 
        an insurance company has evidence that a claim may be 
        fraudulent, the company shall, in writing, notify the 
        commissioner and provide the commissioner with all relevant 
        material related to the company's inquiry into the claim. 
           Subd. 3.  [GOOD FAITH IMMUNITY.] An insurance company or 
        its agent acting in its behalf and in good faith who releases 
        oral or written information under subdivisions 1 and 2 is immune 
        from civil or criminal liability that might otherwise be 
        incurred or imposed. 
           Subd. 4.  [SELF-INSURER; ASSIGNED RISK PLAN.] For the 
        purposes of this section "insurance company" includes a 
        self-insurer and the assigned risk plan and their agents. 
           Sec. 32.  Minnesota Statutes 1994, section 268.08, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOT ELIGIBLE.] An individual shall not be 
        eligible to receive benefits for any week with respect to which 
        the individual is receiving, has received, or has filed a claim 
        for remuneration in an amount equal to or in excess of the 
        individual's weekly benefit amount in the form of: 
           (1) termination, severance, or dismissal payment or wages 
        in lieu of notice whether legally required or not; provided that 
        if a termination, severance, or dismissal payment is made in a 
        lump sum, such lump sum payment shall be allocated over a period 
        equal to the lump sum divided by the employee's regular pay 
        while employed by such employer; provided such payment shall be 
        applied for a period immediately following the last day of 
        employment but not to exceed 28 calendar days provided that 50 
        percent of the total of any such payments in excess of eight 
        weeks shall be similarly allocated to the period immediately 
        following the 28 days; or 
           (2) vacation allowance paid directly by the employer for a 
        period of requested vacation, including vacation periods 
        assigned by the employer under the provisions of a collective 
        bargaining agreement, or uniform vacation shutdown; or 
           (3) compensation for loss of wages under the workers' 
        compensation law of this state or any other state or under a 
        similar law of the United States, or under other insurance or 
        fund established and paid for by the employer except that this 
        does not apply to an individual who is receiving temporary 
        partial compensation pursuant to section 176.101, subdivision 
        3k; or 
           (4) 50 percent of the pension payments from any fund, 
        annuity or insurance maintained or contributed to by a base 
        period employer including the armed forces of the United States 
        if the employee contributed to the fund, annuity or insurance 
        and all of the pension payments if the employee did not 
        contribute to the fund, annuity or insurance; or 
           (5) 50 percent of a primary insurance benefit under title 
        II of the Social Security Act, as amended, or similar old age 
        benefits under any act of Congress or this state or any other 
        state. 
           Provided, that if such remuneration is less than the 
        benefits which would otherwise be due under sections 268.03 to 
        268.231, the individual shall be entitled to receive for such 
        week, if otherwise eligible, benefits reduced by the amount of 
        such remuneration; provided, further, that if the appropriate 
        agency of such other state or the federal government finally 
        determines that the individual is not entitled to such benefits, 
        this provision shall not apply.  If the computation of reduced 
        benefits, required by this subdivision, is not a whole dollar 
        amount, it shall be rounded down to the next lower dollar amount.
           Sec. 33.  [APPROPRIATION.] 
           $900,000 is appropriated from the special compensation fund 
        for the biennium ending June 30, 1997, to the department of 
        commerce for the purposes of rate regulation.  The complement of 
        the department of commerce is increased by 13 positions for the 
        purposes of rate regulation. 
           Sec. 34.  [APPROPRIATION.] 
           $110,000 is appropriated from the special compensation fund 
        to the department of labor and industry for the biennium ending 
        June 30, 1997, for the purposes of this act.  
           Sec. 35.  [REPEALER.] 
           Minnesota Statutes 1994, section 176.132, is repealed. 
           Sec. 36.  [REPEALER.] 
           (a) Minnesota Statutes 1994, sections 79.53, subdivision 2; 
        79.54; 79.56, subdivision 2; 79.57; and 79.58, are repealed. 
           (b) Minnesota Statutes 1994, sections 176.011, subdivision 
        26; and 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 
        3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u, are 
        repealed. 
           (c) Minnesota Statutes 1994, section 176.86, is repealed.  
           (d) Laws 1990, chapter 521, section 4, is repealed. 
           Sec. 37.  [EFFECTIVE DATE.] 
           Sections 1 to 11 and 36, paragraph (a), are effective 
        January 1, 1996.  Rates and rating plans in use as of January 1, 
        1996, may continue to be used until such time as an amendment 
        thereto or a new rate or rating plan is filed, at which time the 
        filing is subject to sections 1 to 11. 
           Sections 23, 24, 26, 27, and 36, paragraph (b), are 
        effective October 1, 1995. 
           Sections 13 to 22, 28, 29, 30, and 32 are effective October 
        1, 1995, and apply to personal injuries occurring on and after 
        that date. 
                                   ARTICLE 2
           Section 1.  Minnesota Statutes 1994, section 13.69, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CLASSIFICATIONS.] (a) The following 
        government data of the department of public safety are private 
        data:  
           (1) medical data on driving instructors, licensed drivers, 
        and applicants for parking certificates and special license 
        plates issued to physically handicapped persons; and 
           (2) social security numbers in driver's license and motor 
        vehicle registration records, except that social security 
        numbers must be provided to the department of revenue for 
        purposes of tax administration and the department of labor and 
        industry for purposes of workers' compensation administration 
        and enforcement.  
           (b) The following government data of the department of 
        public safety are confidential data:  data concerning an 
        individual's driving ability when that data is received from a 
        member of the individual's family. 
           Sec. 2.  Minnesota Statutes 1994, section 13.82, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] This section shall apply to 
        agencies which carry on a law enforcement function, including 
        but not limited to municipal police departments, county sheriff 
        departments, fire departments, the bureau of criminal 
        apprehension, the Minnesota state patrol, the board of peace 
        officer standards and training, and the department of commerce, 
        and the department of labor and industry fraud investigation 
        unit.  
           Sec. 3.  Minnesota Statutes 1994, section 79.074, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DIVIDENDS.] Dividend plans are not unfairly 
        discriminatory where different premiums result for different 
        policyholders with similar loss exposures but different expense 
        factors, or where different premiums result for different 
        policyholders with similar expense factors but different loss 
        exposures, so long as the respective premiums reflect the 
        differences with reasonable accuracy.  Every insurer referred to 
        in section 79.20 who issues participating policies shall file 
        with the commissioner a true copy or summary as the commissioner 
        shall direct of its participating dividend rates as to 
        policyholders.  The commissioner may study the participating 
        dividend rates and make recommendations to the legislature 
        concerning possible bases for unfair discrimination.  
           Sec. 4.  Minnesota Statutes 1994, section 79.085, is 
        amended to read: 
           79.085 [SAFETY PROGRAMS.] 
           All insurers writing workers' compensation insurance in 
        this state shall provide safety and occupational health loss 
        control consultation services to each of their policyholders 
        requesting the services in writing.  Insurers must annually 
        notify their policyholders of their right under this section to 
        safety and occupational health loss consultation services.  The 
        services must include the conduct of workplace surveys to 
        identify health and safety problems, review of employer injury 
        records with appropriate personnel, and development of plans to 
        improve employer occupational health and safety loss records.  
        Insurers shall notify each policyholder of the availability of 
        those services and the telephone number and address where such 
        services can be requested.  The notification may be delivered 
        with the policy of workers' compensation insurance. 
           Sec. 5.  Minnesota Statutes 1994, section 79.211, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CERTAIN WAGES EXCLUDED INCLUDED FOR 
        RATEMAKING.] The rating association or an insurer shall not 
        include wages paid for a vacation, holiday, or sick leave in the 
        determination of a workers' compensation insurance premium. 
           An insurer, including the assigned risk plan, shall not 
        include wages paid for work performed in an adjacent state in 
        the determination of a workers' compensation premium if the 
        employer paid a workers' compensation insurance premium to the 
        exclusive state fund of the adjacent state on the wages earned 
        in the adjacent state. 
           Within 30 days of the effective date of this section, a 
        licensed data service organization on behalf of its members 
        shall file an amendment to its charged class premium rates to 
        reflect the inclusion of vacation, holiday, and sick leave wages 
        in the determination of premium.  Within 30 days of the filing 
        of those pure premium rates each insurer shall amend its filed 
        schedule of rates to reflect the inclusion of vacation, holiday, 
        and sick leave wages in the determination of premium.  
           Sec. 6.  Minnesota Statutes 1994, section 79.251, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPROPRIATE MERIT RATING PLAN.] The commissioner 
        shall develop an appropriate merit rating plan which shall be 
        applicable to all insureds holding policies or contracts of 
        coverage issued pursuant to subdivision 4 and to the insurers or 
        self-insurance administrators issuing those policies or 
        contracts.  The plan shall provide a maximum merit adjustment 
        equal to ten percent of earned premium.  The actual adjustment 
        may vary with insured's loss experience.  To assist small 
        businesses with good safety records, the commissioner shall 
        develop a merit rating plan applicable to all employers holding 
        policies issued pursuant to subdivision 4.  The plan shall 
        provide that nonexperience rated employers, with no lost time 
        claims for the last three policy years, shall receive 33 percent 
        credit.  The credit must be applied directly to the premium 
        charged for the policy.  Nonexperience rated employers with two 
        or more lost time claims for the last three policy years may 
        receive a debit.  Experience rated employers shall receive a 
        maximum credit or debit of ten percent of premium.  The merit 
        rating plan shall be subject to adjustment by the commissioner 
        as necessary to fulfill the commissioner's assigned risk plan 
        responsibilities. 
           Sec. 7.  Minnesota Statutes 1994, section 79.251, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [DISSOLUTION.] Upon the dissolution of the 
        assigned risk plan, the commissioner shall proceed to wind up 
        the affairs of the plan, settle its accounts, and dispose of its 
        assets.  The assets and property of the assigned risk plan must 
        be applied and distributed in the following order of priority: 
           (1) to the establishment of reserves for claims under 
        policies and contracts of coverage issued by the assigned risk 
        plan before termination; 
           (2) to the payment of all debts and liabilities of the 
        assigned risk plan, including the repayment of loans and 
        assessments; 
           (3) to the establishment of reserves considered necessary 
        by the commissioner for contingent liabilities or obligations of 
        the assigned risk plan other than claims arising under policies 
        and contracts of coverage; and 
           (4) to the state of Minnesota. 
           If the commissioner determines that the assets of the 
        assigned risk plan are insufficient to meet its obligations 
        under clauses (1) to (3), excluding the repayment of 
        assessments, the commissioner shall assess all insurers licensed 
        pursuant to section 60A.06, subdivision 1, clause (5), paragraph 
        (b), an amount sufficient to fully fund these obligations. 
           Sec. 8.  Minnesota Statutes 1994, section 79.253, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [ELIGIBLE APPLICANTS.] An employer is eligible 
        to apply for a grant or loan under this section if the employer 
        meets the following requirements: 
           (1) the employer's workers' compensation insurance is 
        provided by the assigned risk plan, is provided by an insurer 
        subject to penalties under chapter 176, or the employer is 
        self-insured; 
           (2) the employer has had an on-site safety survey conducted 
        by a Minnesota occupational safety and health investigator, a 
        Minnesota department of labor and industry workplace safety and 
        health consultant, an in-house employee safety and health 
        committee, a workers' compensation underwriter, a private safety 
        consultant, or a person under contract with the assigned risk 
        plan; and 
           (3) the on-site safety survey recommends specific safety 
        practices or equipment designed to reduce the risk of illness or 
        injury to employees. 
           Sec. 9.  Minnesota Statutes 1994, section 79.34, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LOSSES; RETENTION LIMITS.] The reinsurance 
        association shall provide and each member shall accept 
        indemnification for 100 percent of the amount of ultimate loss 
        sustained in each loss occurrence relating to one or more claims 
        arising out of a single compensable event, including aggregate 
        losses related to a single event or occurrence which constitutes 
        a single loss occurrence, under chapter 176 on and after October 
        1, 1979, in excess of $300,000 or $100,000 a low, a high, or a 
        super retention limit, at the option of the member.  In case of 
        occupational disease causing disablement on and after October 1, 
        1979, each person suffering disablement due to occupational 
        disease is considered to be involved in a separate loss 
        occurrence.  The lower retention limit shall be increased to the 
        nearest $10,000, on January 1, 1982 and on each January 1 
        thereafter by the percentage increase in the statewide average 
        weekly wage, as determined in accordance with section 176.011, 
        subdivision 20.  On January 1, 1982 and on each January 1 
        thereafter, the higher retention limit shall be increased by the 
        amount necessary to retain a $200,000 difference between the two 
        retention limits.  On January 1, 1995, the lower retention limit 
        is $250,000, which shall also be known as the 1995 base 
        retention limit.  On each January 1 thereafter, the cumulative 
        annual percentage changes in the statewide average weekly wage 
        after October 1, 1994, as determined in accordance with section 
        176.011, subdivision 20, shall first be multiplied by the 1995 
        base retention limit, the result of which shall then be added to 
        the 1995 base retention limit.  The resulting figure shall be 
        rounded to the nearest $10,000, yielding the low retention limit 
        for that year, provided that the low retention limit shall not 
        be reduced in any year.  The high retention limit shall be two 
        times the low retention limit and shall be adjusted when the low 
        retention limit is adjusted.  The super retention limit shall be 
        four times the low retention limit and shall be adjusted when 
        the low retention limit is adjusted.  Ultimate loss as used in 
        this section means the actual loss amount which a member is 
        obligated to pay and which is paid by the member for workers' 
        compensation benefits payable under chapter 176 and shall not 
        include claim expenses, assessments, damages or penalties.  For 
        losses incurred on or after January 1, 1979, any amounts paid by 
        a member pursuant to sections 176.183, 176.221, 176.225, and 
        176.82 shall not be included in ultimate loss and shall not be 
        indemnified by the reinsurance association.  A loss is incurred 
        by the reinsurance association on the date on which the accident 
        or other compensable event giving rise to the loss occurs, and a 
        member is liable for a loss up to its retention limit in effect 
        at the time that the loss was incurred, except that members 
        which are determined by the reinsurance association to be 
        controlled by or under common control with another member, and 
        which are liable for claims from one or more employees entitled 
        to compensation for a single compensable event, including 
        aggregate losses relating to a single loss occurrence, may 
        aggregate their losses and obtain indemnification from the 
        reinsurance association for the aggregate losses in excess of 
        the higher highest retention limit selected by any of the 
        members in effect at the time the loss was incurred.  Each 
        member is liable for payment of its ultimate loss and shall be 
        entitled to indemnification from the reinsurance association for 
        the ultimate loss in excess of the member's retention limit in 
        effect at the time of the loss occurrence. 
           A member that chooses the higher high or super retention 
        limit shall retain the liability for all losses below the higher 
        chosen retention limit itself and shall not transfer the 
        liability to any other entity or reinsure or otherwise contract 
        for reimbursement or indemnification for losses below its 
        retention limit, except in the following cases:  (a) when the 
        reinsurance or contract is with another member which, directly 
        or indirectly, through one or more intermediaries, control or 
        are controlled by or are under common control with the member; 
        (b) when the reinsurance or contract provides for reimbursement 
        or indemnification of a member if and only if the total of all 
        claims which the member pays or incurs, but which are not 
        reimbursable or subject to indemnification by the reinsurance 
        association for a given period of time, exceeds a dollar value 
        or percentage of premium written or earned and stated in the 
        reinsurance agreement or contract; (c) when the reinsurance or 
        contract is a pooling arrangement with other insurers where 
        liability of the member to pay claims pursuant to chapter 176 is 
        incidental to participation in the pool and not as a result of 
        providing workers' compensation insurance to employers on a 
        direct basis under chapter 176; (d) when the reinsurance or 
        contract is limited to all the claims of a specific insured of a 
        member which are reimbursed or indemnified by a reinsurer which, 
        directly or indirectly, through one or more intermediaries, 
        controls or is controlled by or is under common control with the 
        insured of the member so long as any subsequent contract or 
        reinsurance of the reinsurer relating to the claims of the 
        insured of a member is not inconsistent with the bases of 
        exception provided under clauses (a), (b) and (c); or (e) when 
        the reinsurance or contract is limited to all claims of a 
        specific self-insurer member which are reimbursed or indemnified 
        by a reinsurer which, directly or indirectly, through one or 
        more intermediaries, controls or is controlled by or is under 
        common control with the self-insurer member so long as any 
        subsequent contract or reinsurance of the reinsurer relating to 
        the claims of the self-insurer member are not inconsistent with 
        the bases for exception provided under clauses (a), (b) and (c). 
           Whenever it appears to the commissioner of labor and 
        industry that any member that chooses the higher high or super 
        retention limit has participated in the transfer of liability to 
        any other entity or reinsured or otherwise contracted for 
        reimbursement or indemnification of losses below its retention 
        limit in a manner inconsistent with the bases for exception 
        provided under clauses (a), (b), (c), (d), and (e), the 
        commissioner may, after giving notice and an opportunity to be 
        heard, order the member to pay to the state of Minnesota an 
        amount not to exceed twice the difference between the 
        reinsurance premium for the higher and lower high or super 
        retention limit, as appropriate, and the low retention limit 
        applicable to the member for each year in which the prohibited 
        reinsurance or contract was in effect.  Any member subject to 
        this penalty provision shall continue to be bound by its 
        selection of the higher high or super retention limit for 
        purposes of membership in the reinsurance association.  
           Sec. 10.  Minnesota Statutes 1994, section 79.35, is 
        amended to read: 
           79.35 [DUTIES; RESPONSIBILITIES; POWERS.] 
           The reinsurance association shall do the following on 
        behalf of its members: 
           (a) Assume 100 percent of the liability as provided in 
        section 79.34; 
           (b) Establish procedures by which members shall promptly 
        report to the reinsurance association each claim which, on the 
        basis of the injury sustained, may reasonably be anticipated to 
        involve liability to the reinsurance association if the member 
        is held liable under chapter 176.  Solely for the purpose of 
        reporting claims, the member shall in all instances consider 
        itself legally liable for the injury.  The member shall advise 
        the reinsurance association of subsequent developments likely to 
        materially affect the interest of the reinsurance association in 
        the claim; 
           (c) Maintain relevant loss and expense data relative to all 
        liabilities of the reinsurance association and require each 
        member to furnish statistics in connection with liabilities of 
        the reinsurance association at the times and in the form and 
        detail as may be required by the plan of operation; 
           (d) Calculate and charge to members a total premium 
        sufficient to cover the expected liability which the reinsurance 
        association will incur in excess of the higher retention limit 
        but less than the prefunded limit, together with incurred or 
        estimated to be incurred operating and administrative expenses 
        for the period to which this premium applies and actual claim 
        payments to be made by members, during the period to which this 
        premium applies, for claims in excess of the prefunded limit in 
        effect at the time the loss was incurred.  Each member shall be 
        charged a premium established by the board as sufficient to 
        cover the reinsurance association's incurred liabilities and 
        expenses between the member's selected retention limit and the 
        prefunded limit.  The prefunded limit shall be $2,500,000 on and 
        after October 1, 1979, provided that the prefunded limit shall 
        be increased on January 1, 1983 and on each January 1 thereafter 
        by the percentage increase in the statewide average weekly wage, 
        to the nearest $100,000, as determined in accordance with 
        section 176.011, subdivision 20 times the lower retention limit 
        established in section 79.34, subdivision 2.  Each member shall 
        be charged a proportion of the total premium calculated for its 
        selected retention limit in an amount equal to its proportion of 
        the exposure base of all members during the period to which the 
        reinsurance association premium will apply.  The exposure base 
        shall be determined by the board and is subject to the approval 
        of the commissioner of labor and industry.  In determining the 
        exposure base, the board shall consider, among other things, 
        equity, administrative convenience, records maintained by 
        members, amenability to audit, and degree of risk 
        refinement.  Each member exercising the lower retention option 
        shall also be charged a premium established by the board as 
        sufficient to cover incurred or estimated to be incurred claims 
        for the liability the reinsurance association is likely to incur 
        between the lower and higher retention limits for the period to 
        which the premium applies.  Each member shall also be charged a 
        premium determined by the board to equitably distribute excess 
        or deficient premiums from previous periods including any excess 
        or deficient premiums resulting from a retroactive change in the 
        prefunded limit.  The premiums charged to members shall not be 
        unfairly discriminatory as defined in section 79.074.  All 
        premiums shall be approved by the commissioner of labor and 
        industry; 
           (e) Require and accept the payment of premiums from members 
        of the reinsurance association; 
           (f) Receive and distribute all sums required by the 
        operation of the reinsurance association; 
           (g) Establish procedures for reviewing claims procedures 
        and practices of members of the reinsurance association.  If the 
        claims procedures or practices of a member are considered 
        inadequate to properly service the liabilities of the 
        reinsurance association, the reinsurance association may 
        undertake, or may contract with another person, including 
        another member, to adjust or assist in the adjustment of claims 
        which create a potential liability to the association.  The 
        reinsurance association may charge the cost of the adjustment 
        under this paragraph to the member, except that any penalties or 
        interest incurred under sections 176.183, 176.221, 176.225, and 
        176.82 as a result of actions by the reinsurance association 
        after it has undertaken adjustment of the claim shall not be 
        charged to the member but shall be included in the ultimate loss 
        and listed as a separate item; and 
           (h) Provide each member of the reinsurance association with 
        an annual report of the operations of the reinsurance 
        association in a form the board of directors may specify. 
           Sec. 11.  Minnesota Statutes 1994, section 79.52, is 
        amended by adding a subdivision to read: 
           Subd. 17.  [ASSOCIATION OR RATING ASSOCIATION.] 
        "Association" or "rating association" means the Minnesota 
        Workers' Compensation Insurers Association, Inc. 
           Sec. 12.  Minnesota Statutes 1994, section 79.52, is 
        amended by adding a subdivision to read: 
           Subd. 18.  [RATE OVERSIGHT COMMISSION.] "Rate oversight 
        commission" means the workers' compensation advisory council 
        established in chapter 175.  
           Sec. 13.  Minnesota Statutes 1994, section 79.55, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [ANNUAL FILINGS.] Not later than October 1 of 
        each year, the rating association shall file with the 
        commissioner and the rate oversight commission the following 
        information used and related to the calculation and cost of 
        workers' compensation insurance premiums: 
           (1) all statistical plans, including classification 
        definitions used to assign each compensation risk written by its 
        members to its approved classification for reporting purposes; 
           (2) all development factors and alternative derivations; 
           (3) a description and summary of each data reporting and 
        monitoring method used to collect and monitor the database for 
        workers' compensation insurance; 
           (4) trend factors and alternative derivations and 
        applications; 
           (5) pure premium relativities for the approved 
        classification system for which data are reported; 
           (6) an evaluation of the effects of changes in law on loss 
        data; 
           (7) an explicit discussion and explanation of all 
        methodology, alternatives examined, assumptions adopted, and 
        areas of judgment and reasoning supporting judgments entered 
        into, and the effect of various combinations of these elements 
        on indications for modification of an overall pure premium rate 
        level change; and 
           (8) all merit rating plans and the calculation of any 
        variable factors necessary for utilization of the plan. 
           Sec. 14.  Minnesota Statutes 1994, section 79.55, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [ANALYSIS BY RATE OVERSIGHT COMMISSION.] Not 
        later than November 1 of each year, the rate oversight 
        commission may submit to the commissioner a report concerning 
        the completeness of the filing and compliance of the filing with 
        the standards for excessiveness, inadequacy, and unfair 
        discrimination set forth in this chapter. 
           Sec. 15.  Minnesota Statutes 1994, section 79.55, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [DUTIES OF COMMISSIONER.] The commissioner shall 
        issue a report by January 1 of each year, comparing the average 
        rates charged by workers' compensation insurers in the state to 
        the pure premium base rates filed by the association, as 
        reviewed by the rate oversight commission.  The rate oversight 
        commission shall review the commissioner's report and if the 
        experience indicates that rates have not reasonably reflected 
        changes in pure premiums, the rate oversight commission shall 
        recommend to the legislature appropriate legislative changes to 
        this chapter. 
           Sec. 16.  Minnesota Statutes 1994, section 79.60, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIRED ACTIVITY.] Each insurer shall 
        perform the following activities:  
           (a) Maintain membership in and report loss experience data 
        to a licensed data service organization in accordance with the 
        statistical plan and rules of the organization as approved by 
        the commissioner; 
           (b) Establish a plan for merit rating which shall be 
        consistently applied to all insureds, provided that members of a 
        data service organization may use merit rating plans developed 
        by that data service organization; 
           (c) Provide an annual report to the commissioner containing 
        the information and prepared in the form required by the 
        commissioner; and 
           (d) Keep a record of the premiums and losses paid under 
        each workers' compensation policy written in Minnesota in the 
        form required by the commissioner; 
           (e) Provide to the association, upon request, information 
        about its insurance premiums, losses, and operations which the 
        association shall request in order to prepare and file with the 
        commissioner and the rate oversight commission the filings 
        required by this chapter; and 
           (f) Pay to the association its equitable share of the costs 
        of preparing the filing with the commissioner and the rate 
        oversight commission required by this chapter. 
           Sec. 17.  Minnesota Statutes 1994, section 79A.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SCOPE.] For the purposes of sections 
        79A.01 to 79A.17 this chapter, the terms defined in this section 
        have the meaning given them. 
           Sec. 18.  Minnesota Statutes 1994, section 79A.01, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INSOLVENT SELF-INSURER.] "Insolvent 
        self-insurer" means either:  (1) a member private self-insurer 
        who has failed to pay compensation as a result of a declaration 
        of bankruptcy or insolvency by a court of competent jurisdiction 
        and whose security deposit has been called by the commissioner 
        pursuant to chapter 176, or; (2) a member self-insurer who has 
        failed to pay compensation and who has been issued a certificate 
        of default by the commissioner and whose security deposit has 
        been called by the commissioner pursuant to chapter 176; or (3) 
        a member or former member private self-insurer who has failed to 
        pay an assessment required by section 79A.12, subdivision 2, and 
        who has been issued a certificate of default by the commissioner 
        and whose security deposit has been called by the commissioner. 
           Sec. 19.  Minnesota Statutes 1994, section 79A.01, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund" means 
        the cash, cash equivalents, or investment accounts maintained by 
        the mutual self-insurance group to pay its workers' compensation 
        liabilities. 
           Sec. 20.  Minnesota Statutes 1994, section 79A.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
        the commissioner, there is established a workers' compensation 
        self-insurers' advisory committee of five members that are 
        employers authorized to self-insure in Minnesota.  Three of the 
        members and three alternates shall be elected by the members of 
        the self-insurers' security fund board of trustees and two 
        alternates shall be appointed by the commissioner.  
           Sec. 21.  Minnesota Statutes 1994, section 79A.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ADVICE TO COMMISSIONER.] At the request of the 
        commissioner, the committee shall meet and shall advise the 
        commissioner with respect to whether or not an applicant to 
        become a private self-insurer in the state of Minnesota has met 
        the statutory requirements to self-insure.  The department of 
        commerce may furnish the committee with any financial data which 
        it has, but a member of the advisory committee who may have a 
        conflict of interest in reviewing the financial data shall not 
        have access to the data nor participate in the discussions 
        concerning the applicant.  Financial data received from the 
        commissioner is nonpublic data.  The committee shall advise the 
        commissioner if it has any information that any private 
        self-insurer may become insolvent.  
           Sec. 22.  Minnesota Statutes 1994, section 79A.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
        REVOCATION.] After each fifth anniversary from the date each 
        individual and group self-insurer becomes certified to 
        self-insure, the committee shall review all relevant financial 
        data filed with the department of commerce that is otherwise 
        available to the public and make a recommendation to the 
        commissioner about whether each self-insurer's certificate 
        should be revoked.  For group self-insurers who have been in 
        existence for five years or more and have been granted renewal 
        authority, 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.04, subdivision 2. 
           Sec. 23.  Minnesota Statutes 1994, section 79A.03, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [EXCEPTIONS.] Notwithstanding the requirements 
        of subdivisions 3 and 4, the commissioner, pursuant to a review 
        of an existing self-insurer's financial data, may continue a 
        self-insurer's authority to self-insure for one year if, in the 
        commissioner's judgment based on all factors relevant to the 
        self-insurer's financial status, the self-insurer will be able 
        to meet its obligations under this chapter for the following 
        year.  The relevant factors to be considered must include, but 
        must not be limited to, the liquidity ratios, leverage ratios, 
        and profitability ratios of the self-insurer.  Where a 
        self-insurer's authority to self-insure is continued under this 
        subdivision, the self-insurer may be required to post security 
        in the amount equal to two times the amount of security required 
        under section 79A.04, subdivision 2. 
           Sec. 24.  Minnesota Statutes 1994, section 79A.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 110 
        percent of the private self-insurer's estimated future liability.
        Up to ten percent of that deposit may be used to secure payment 
        of all administrative and legal costs, and unpaid assessments 
        required by section 79A.12, subdivision 2, relating to or 
        arising from the employer's self-insuring.  As used in this 
        section, "private self-insurer" includes both current and former 
        members of the self-insurers' security fund; and "private 
        self-insurers' estimated future liability" means the private 
        self-insurers' total of estimated future liability as determined 
        by an Associate or Fellow of the Casualty Actuarial Society 
        every year for group member private self-insurers and, for a 
        nongroup member private self-insurer's authority to self-insure, 
        every year for the first five years.  After the first five 
        years, the nongroup member's total shall be as determined by an 
        Associate or Fellow of the Casualty Actuarial Society at least 
        every two years, and each such actuarial study shall include a 
        projection of future losses during the two-year period until the 
        next scheduled actuarial study, less payments anticipated to be 
        made during that time.  
           All data and information furnished by a private 
        self-insurer to an Associate or Fellow of the Casualty Actuarial 
        Society for purposes of determining private self-insurers' 
        estimated future liability must be certified by an officer of 
        the private self-insurer to be true and correct with respect to 
        payroll and paid losses, and must be certified, upon information 
        and belief, to be true and correct with respect to reserves.  
        The certification must be made by sworn affidavit.  In addition 
        to any other remedies provided by law, the certification of 
        false data or information pursuant to this subdivision may 
        result in a fine imposed by the commissioner of commerce on the 
        private self-insurer up to the amount of $5,000, and termination 
        of the private self-insurers' authority to self-insure.  The 
        determination of private self-insurers' estimated future 
        liability by an Associate or Fellow of the Casualty Actuarial 
        Society shall be conducted in accordance with standards and 
        principles for establishing loss and loss adjustment expense 
        reserves by the Actuarial Standards Board, an affiliate of the 
        American Academy of Actuaries.  The commissioner may reject an 
        actuarial report that does not meet the standards and principles 
        of the Actuarial Standards Board, and may further disqualify the 
        actuary who prepared the report from submitting any future 
        actuarial reports pursuant to this chapter.  Within 30 days 
        after the actuary has been served by the commissioner with a 
        notice of disqualification, an actuary who is aggrieved by the 
        disqualification may request a hearing to be conducted in 
        accordance with chapter 14.  Based on a review of the actuarial 
        report, the commissioner of commerce may require an increase in 
        the minimum security deposit in an amount the commissioner 
        considers sufficient. 
           Estimated future liability is determined by first taking 
        the total amount of the self-insured's future liability of 
        workers' compensation claims and then deducting the total amount 
        which is estimated to be returned to the self-insurer from any 
        specific excess insurance coverage, aggregate excess insurance 
        coverage, and any supplementary benefits or second injury 
        benefits which are estimated to be reimbursed by the special 
        compensation fund. Supplementary benefits or second injury 
        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 reports required thereunder 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 last retention limit selected by the self-insurer with 
        the workers' compensation reinsurance association.  The posting 
        or depositing of security pursuant to 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. 
           As a condition for the granting or renewing of a 
        certificate to self-insure, the commissioner may require a 
        private self-insurer to furnish any additional security the 
        commissioner considers sufficient to insure payment of all 
        claims under chapter 176. 
           Sec. 25.  Minnesota Statutes 1994, section 79A.04, 
        subdivision 9, is amended to read: 
           Subd. 9.  [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 
        OF SECURITY DEPOSIT.] The commissioner of labor and industry 
        shall notify the commissioner and the security fund if the 
        commissioner of labor and industry has knowledge that any 
        private self-insurer has failed to pay workers' compensation 
        benefits as required by chapter 176.  If the commissioner 
        determines that a court of competent jurisdiction has declared 
        the private self-insurer to be bankrupt or insolvent, and the 
        private self-insurer has failed to pay workers' compensation as 
        required by chapter 176 or, if the commissioner issues a 
        certificate of default against a private self-insurer for 
        failure to pay workers' compensation as required by chapter 176, 
        or failure to pay an assessment to the self-insurers' security 
        fund when due, then the security deposit shall be utilized to 
        administer and pay the private self-insurers' workers' 
        compensation or assessment obligations. 
           Sec. 26.  Minnesota Statutes 1994, section 79A.09, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CONFIDENTIAL INFORMATION.] The security fund may 
        receive private data concerning the financial condition of 
        private self-insurers whose liabilities to pay compensation have 
        become its responsibility and shall adopt bylaws to prevent 
        dissemination of that information.  The data shall become public 
        data upon its receipt by the security fund.  
           Sec. 27.  Minnesota Statutes 1994, section 79A.15, is 
        amended to read: 
           79A.15 [SURETY BOND FORM.] 
           The form for the surety bond under this chapter shall be: 
                               STATE OF MINNESOTA 
                             DEPARTMENT OF COMMERCE 
              SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION 
         
        IN THE MATTER OF THE CERTIFICATE OF      )
                                                 )
                                                 )    SURETY BOND 
                                                 )    NO. .............
                                                 )    PREMIUM: ........
                                                 )
        Employer, Certificate No: .............. )
        KNOW ALL PERSONS BY THESE PRESENTS:
             That ..................................................... 
                                  (Employer)
        whose address is ..............................................
        as Principal, and .............................................
                                  (Surety) 
        a corporation organized under the laws of ..................... 
        and authorized to transact a general surety business in the 
        State of Minnesota, as Surety, are held and firmly bound to the 
        State of Minnesota in the penal sum of 
        ...........................dollars ($..........) for which 
        payment we bind ourselves, our heirs, executors, administrators, 
        successors, and assigns, jointly and severally, firmly by these 
        presents. 
           WHEREAS in accordance with Minnesota Statutes, chapter 176, 
        the principal elected to self-insure, and made application for, 
        or received from the commissioner of commerce of the state of 
        Minnesota, a certificate to self-insure, upon furnishing of 
        proof satisfactory to the commissioner of commerce of ability to 
        self-insure and to compensate any or all employees of said 
        principal for injury or disability, and their dependents for 
        death incurred or sustained by said employees pursuant to the 
        terms, provisions, and limitations of said statute; 
           NOW THEREFORE, the conditions of this bond or obligation 
        are such that if principal shall pay and furnish compensation, 
        pursuant to the terms, provisions, and limitations of said 
        statute to its employees for injury or disability, and to the 
        dependents of its employees, then this bond or obligation shall 
        be null and void; otherwise to remain in full force and effect.  
           FURTHERMORE, it is understood and agreed that: 
           1.  This bond may be amended, by agreement between the 
        parties hereto and the commissioner of commerce as to the 
        identity of the principal herein named; and, by agreement of the 
        parties hereto, as to the premium or rate of premium.  Such 
        amendment must be by endorsement upon, or rider to, this bond, 
        executed by the surety and delivered to or filed with the 
        commissioner. 
           2.  The surety does, by these presents, undertake and agree 
        that the obligation of this bond shall cover and extend to all 
        past, present, existing, and potential liability of said 
        principal, as a self-insurer, to the extent of the penal sum 
        herein named without regard to specific injuries, date or dates 
        of injuries, happenings or events.  
           3.  The penal sum of this bond may be increased or 
        decreased, by agreement between the parties hereto and the 
        commissioner of commerce, without impairing the obligation 
        incurred under this bond for the overall coverage of the said 
        principal, for all past, present, existing, and potential 
        liability, as a self-insurer, without regard to specific 
        injuries, date or dates of injuries, happenings or events, to 
        the extent, in the aggregate, of the penal sum as increased or 
        decreased.  Such amendment must be by endorsement. 
           4.  The aggregate liability of the surety hereunder on all 
        claims whatsoever shall not exceed the penal sum of this bond in 
        any event. 
           5.  This bond shall be continuous in form and shall remain 
        in full force and effect unless terminated as follows: 
           (a) The obligation of this bond shall terminate upon 
        written notice of cancellation from the surety, given by 
        registered or certified mail to the commissioner of commerce, 
        state of Minnesota, save and except as to all past, present, 
        existing, and potential liability of the principal incurred, 
        including obligations resulting from claims which are incurred 
        but not yet reported, as a self-insurer prior to effective date 
        of termination.  This termination is effective 60 days after 
        receipt of notice of cancellation by the commissioner of 
        commerce, state of Minnesota. 
           (b) This bond shall also terminate upon the revocation of 
        the certificate to self-insure, save and except as to all past, 
        present, existing, and potential liability of the principal 
        incurred, including obligations resulting from claims which are 
        incurred but not yet reported, as a self-insurer prior to 
        effective date of termination.  The principal and the surety, 
        herein named, shall be immediately notified in writing by said 
        commissioner, in the event of such revocation. 
           6.  Where the principal posts with the commissioner of 
        commerce, state of Minnesota, or the state treasurer, state of 
        Minnesota, a replacement security deposit, in the form of a 
        surety bond, irrevocable letter of credit, cash, securities, or 
        any combination thereof, in the full amount as may be required 
        by the commissioner of commerce, state of Minnesota, to secure 
        all incurred liabilities for the payment of compensation of said 
        principal under Minnesota Statutes, chapter 176, the surety is 
        released from obligations under the surety bond upon the date of 
        acceptance by the commissioner of commerce, state of Minnesota, 
        of said replacement security deposit. 
           7.  If the said principal shall suspend payment of workers' 
        compensation benefits or shall become insolvent or a receiver 
        shall be appointed for its business, or the commissioner of 
        commerce, state of Minnesota, issues a certificate of default, 
        the undersigned surety will become liable for the workers' 
        compensation obligations of the principal on the date benefits 
        are suspended.  The surety shall begin payments within 14 days 
        under paragraph 8, or 30 days under paragraph 10, after receipt 
        of written notification by certified mail from the commissioner 
        of commerce, state of Minnesota, to begin payments under the 
        terms of this bond. 
           8.  If the surety exercises its option to administer 
        claims, it shall pay benefits due to the principal's injured 
        workers within 14 days of the receipt of the notification by the 
        commissioner of commerce, state of Minnesota, pursuant to 
        paragraph 7, without a formal award of a compensation judge, the 
        commissioner of labor and industry, any intermediate appellate 
        court, or the Minnesota supreme court and such payment will be a 
        charge against the penal sum of the bond.  Administrative and 
        legal costs and payment of assessments incurred by the surety in 
        discharging its obligations and payment of the principal's 
        obligations for administration and legal expenses and payment of 
        assessments under Minnesota Statutes, chapter chapters 79A and 
        176, and sections 79A.01 to 79A.17 and Laws 1988, chapter 674, 
        section 23, shall also be a charge against the penal sum of the 
        bond; however, the total amount of this surety bond set aside 
        for the payment of said administrative and legal expenses and 
        payment of assessments shall be limited to a maximum ten percent 
        of the total penal sum of the bond unless otherwise authorized 
        by the security fund. 
           9.  If any part or provision of this bond shall be declared 
        unenforceable or held to be invalid by a court of proper 
        jurisdiction, such determination shall not affect the validity 
        or enforceability of the other provisions or parts of this bond. 
           10.  If the surety does not give notice to the 
        (self-insurer's security fund) (commercial self-insurance group 
        security fund) and the commissioner of commerce, state of 
        Minnesota, within two business days of receipt of written 
        notification from the commissioner of commerce, state of 
        Minnesota, pursuant to paragraph 7, to exercise its option to 
        administer claims pursuant to paragraph 8, then 
        the (self-insurer's security fund) (commercial self-insurance 
        security fund) will assume the payments of the workers' 
        compensation obligations of the principal pursuant to Minnesota 
        Statutes, chapter 176.  The surety shall pay, within 30 days of 
        the receipt of the notification by the commissioner of commerce, 
        state of Minnesota, pursuant to paragraph 7, to the 
        self-insurer's security fund) (commercial self-insurance group 
        (security fund) as an initial deposit an amount equal to ten 
        percent of the penal sum of the bond, and shall thereafter, upon 
        notification from the (self-insurer's security fund) (commercial 
        self-insurance group security fund) that the balance of the 
        initial deposit had fallen to one percent of the penal sum of 
        the bond, remit to the (self-insurer's security fund) 
        (commercial self-insurance group security fund) an amount equal 
        to the payments made by the (self-insurer's security fund) 
        (commercial self-insurance group security fund) in the three 
        calendar months immediately preceding said notification.  All 
        such payments will be a charge against the penal sum of the bond.
           11.  Disputes concerning the posting, renewal, termination, 
        exoneration, or return of all or any portion of the principal's 
        security deposit or any liability arising out of the posting or 
        failure to post security, or the adequacy of the security or the 
        reasonableness of administrative costs, including legal costs, 
        arising between or among a surety, the issuer of an agreement of 
        assumption and guarantee of workers' compensation liabilities, 
        the issuer of a letter of credit, any custodian of the security 
        deposit, the principal, or the self-insurers' (self-insurer's 
        security fund) (commercial self-insurance group security fund) 
        shall be resolved by the commissioner of commerce pursuant to 
        Minnesota Statutes, chapter chapters 79A and 176 and sections 
        79A.01 to 79A.17 and Laws 1988, chapter 674, section 23.  
           12.  Written notification to the surety required by this 
        bond shall be sent to: 
                                         .........................
                                         Name of Surety 
                                         .........................
                                         To the attention of Person or
                                           Position
                                         ......................... 
                                         Address 
                                         ......................... 
                                         City, State, Zip 
           Written notification to the principal required by this bond 
        shall be sent to: 
                                         ........................
                                         Name of Principal
                                         ........................
                                         To the attention of Person or
                                           Position
                                         ........................
                                         Address
                                         ........................
                                         City, State, Zip
           13.  This bond is executed by the surety to comply with 
        Minnesota Statutes, chapter 176, and said bond shall be subject 
        to all terms and provisions thereof. 
                                         ........................
                                         Name of Surety
                                         ........................
                                         Address
                                         ........................
                                         City, State, Zip
           THIS bond is executed under an unrevoked appointment or 
        power of attorney.  
           I certify (or declare) under penalty of perjury under the 
        laws of the state of Minnesota that the foregoing is true and 
        correct.  
           
        ..............                   .............................
        Date                             Signature of Attorney-In-Fact 
                                         .............................
                                         Printed or Typed Name of  
                                         Attorney-In-Fact 
           A copy of the transcript or record of the unrevoked 
        appointment, power of attorney, bylaws, or other instrument, 
        duly certified by the proper authority and attested by the seal 
        of the insurer entitling or authorizing the person who executed 
        the bond to do so for and in behalf of the insurer, must be 
        filed in the office of the commissioner of commerce or must be 
        included with this bond for such filing. 
           Sec. 28.  [79A.19] [COMMERCIAL SELF-INSURANCE GROUPS; 
        DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For the purposes of sections 
        79A.19 to 79A.32, the terms defined in this section have the 
        meanings given them.  If there is any inconsistency between this 
        section and section 79A.01, the provisions of this section shall 
        govern.  
           Subd. 2.  [ACCOUNTANT.] "Accountant" means a certified 
        public accountant who is not an employee of any member of the 
        commercial self-insurance group and is not affiliated with any 
        individual or organization providing services other than 
        accounting services to the group. 
           Subd. 3.  [ACTUARY.] "Actuary" means an individual who has 
        attained the status of associate or fellow of the casualty 
        actuarial society who is not an employee of any member of the 
        commercial self-insurance group and is not affiliated with any 
        individual or organization providing services other than 
        actuarial services to the group. 
           Subd. 4.  [COMMON CLAIMS FUND.] "Common claims fund" means 
        the cash, cash equivalents, or investment accounts maintained by 
        the commercial self-insurance group to pay its workers' 
        compensation liabilities. 
           Subd. 5.  [MEMBER.] "Member" means an employer that 
        participates in a commercial self-insurance group. 
           Subd. 6.  [COMMERCIAL SELF-INSURANCE GROUP.] "Commercial 
        self-insurance group" means a group of employers that are 
        self-insured for workers' compensation under chapter 176 and 
        elects to operate under sections 79A.19 to 79A.32 rather than 
        sections 79A.01 to 79A.18. 
           Subd. 7.  [COMMERCIAL SELF-INSURANCE GROUP SECURITY 
        FUND.] "Commercial self-insurance group security fund" means the 
        commercial self-insurance group security fund established 
        pursuant to this chapter. 
           Subd. 8.  [TRUSTEES.] "Trustees" means the board of 
        trustees of the commercial self-insurance group security fund. 
           Sec. 29.  [79A.20] [ELIGIBILITY REQUIREMENTS FOR COMMERCIAL 
        SELF-INSURANCE GROUPS.] 
           Subdivision 1.  [GROUP ELIGIBILITY.] A commercial 
        self-insurance group consists of two or more employers in 
        similar industries.  The commercial self-insurance group shall 
        not incorporate or form a business trust pursuant to chapter 318.
           Subd. 2.  [MEMBERSHIP ELIGIBILITY.] A commercial 
        self-insurance group may only admit employers who meet the 
        eligibility requirements established by the group including 
        financial criteria, underwriting guidelines, risk profile, and 
        any other requirements stated in the commercial self-insurance 
        group's bylaws or plan of operation. 
           Sec. 30.  [79A.21] [COMMERCIAL SELF-INSURANCE GROUP 
        APPLICATION.] 
           Subdivision 1.  [PROCEDURE.] (a) Groups proposing to become 
        licensed as commercial self-insurance groups must complete and 
        submit an application on a form or forms prescribed by the 
        commissioner. 
           (b) The commissioner shall grant or deny the group's 
        application to self-insure within 60 days after a complete 
        application has been filed, provided that the time may be 
        extended for an additional 30 days upon 15 days' prior notice to 
        the applicant. 
           Subd. 2.  [REQUIRED DOCUMENTS.] All applications must be 
        accompanied by the following: 
           (a) A detailed business plan including the risk profile of 
        the proposed membership, underwriting guidelines, marketing 
        plan, minimum financial criteria for each member, and financial 
        projections for the first year of operation.  
           (b) A plan describing the method in which premiums are to 
        be charged to the employer members.  The plan shall be 
        accompanied by copies of the member's workers' compensation 
        insurance policies in force at the time of application.  In 
        developing the premium for the group, the commercial 
        self-insurance group shall base its premium on the Minnesota 
        workers' compensation insurers association's manual of rules, 
        loss costs, and classifications approved for use in Minnesota by 
        the commissioner.  Each member applicant shall, on a form 
        approved by the commissioner, complete estimated payrolls for 
        the first 12-month period that the applicant will be 
        self-insured.  Premium volume discounts per the plan will be 
        permitted if they can be shown to be consistent with actuarial 
        standards.  
           (c) A schedule indicating actual or anticipated operational 
        expenses of the commercial self-insurance group.  No authority 
        to self-insure will be granted unless, over the term of the 
        policy year, at least 65 percent of total revenues from all 
        sources for the year are available for the payment of its claim 
        and assessment obligations.  For purposes of this calculation, 
        claim and assessment obligations include the cost of allocated 
        loss expenses as well as special compensation fund and 
        commercial self-insurance group security fund assessments but 
        exclude the cost of unallocated loss expenses. 
           (d) An indemnity agreement from each member who will 
        participate in the commercial self-insurance group, signed by an 
        officer of each member, providing for joint and several 
        liability for all claims and expenses of all of the members of 
        the commercial self-insurance group arising in any fund year in 
        which the member was a participant on a form approved by the 
        commissioner.  The indemnity agreement shall provide for 
        assessments according to the group's bylaws on an individual and 
        proportionate basis. 
           (e) A copy of the commercial self-insurance group bylaws. 
           (f) Evidence of the security deposit required under section 
        79A.24, accompanied by the actuarial certification study for the 
        minimum security deposit as required under section 79A.24.  
           (g) Each initial member of the commercial self-insurance 
        group shall submit to the commercial self-insurance group 
        accountant its most recent annual financial statement.  
        Financial statements for a period ending more than six months 
        prior to the date of the application must be accompanied by an 
        affidavit, signed by a company officer under oath, stating that 
        there has been no material lessening of the net worth nor other 
        adverse changes in its financial condition since the end of the 
        period.  Individual group members constituting at least 75 
        percent of the group's annual premium shall submit reviewed or 
        audited financial statements.  The remaining members may submit 
        compilation level statements.  Statements for a period ending 
        more than 12 months prior to the date of application cannot be 
        accepted. 
           (h) A compiled combined financial statement of all group 
        members prepared by the commercial self-insurance group's 
        accountant and a list of members included in such statements.  
           (i) A copy of each member's accountant's report letter from 
        the reports used in compiling the combined financial statements. 
           (j) A list of all members and the percentage of premium 
        each represents to the total group's annual premium for the 
        policy year.  
           Subd. 3.  [APPROVAL.] The commissioner shall approve an 
        application for self-insurance upon a determination that all of 
        the following conditions are met: 
           (1) a completed application and all required documents have 
        been submitted to the commissioner; 
           (2) the financial ability of the commercial self-insurance 
        group is sufficient to fulfill all obligations that may arise 
        under this chapter or chapter 176; 
           (3) the annual premium of the commercial self-insurance 
        group to be charged to initial members is at least $500,000; 
           (4) the commercial self-insurance group has contracted with 
        a service company to administer its program; and 
           (5) the required securities or surety bond shall be on 
        deposit prior to the effective date of coverage for the 
        commercial self-insurance group. 
           Sec. 31.  [79A.22] [COMMERCIAL SELF-INSURANCE GROUP 
        OPERATING REQUIREMENTS.] 
           Subdivision 1.  [BOARD OF DIRECTORS.] (a) A commercial 
        self-insurance group shall elect a board of directors who shall 
        have complete authority over and control of the assets of the 
        commercial self-insurance group.  The board of directors will 
        also be responsible for all of the operations of the commercial 
        self-insurance group. 
           (b) The majority of the board of directors shall be owners, 
        officers, directors, partners, or employees of members of the 
        commercial self-insurance group.  No third-party administrator 
        or vendor of risk management services shall serve as a director 
        of the commercial self-insurance group. 
           (c) The directors shall approve applications for membership 
        in the commercial self-insurance group. 
           Subd. 2.  [FINANCIAL STANDARDS.] Commercial self-insurance 
        groups shall have and maintain: 
           (1) combined net worth of all of the members in an amount 
        at least equal to 15 times the group's selected retention level 
        of the workers' compensation reinsurance association; 
           (2) sufficient assets and liquidity in the group's common 
        claims fund to promptly and completely meet all obligations of 
        its members under this chapter and chapter 176. 
           Subd. 3.  [NEW MEMBERSHIP.] The commercial self-insurance 
        group shall file with the commissioner the name of any new 
        employer that has been accepted in the group prior to the 
        initiation date of membership along with the member's signed 
        indemnity agreement and evidence the member has deposited 
        sufficient premiums with the group as required by the commercial 
        self-insurance group's bylaws or plan of operation.  The 
        security deposit of the group will be increased to an amount 
        equal to 50 percent of the new member's premium.  The department 
        of commerce may, at its option, review the financial statement 
        of any applicant whose premium equals 25 percent or more of the 
        group's total premium. 
           Subd. 4.  [COMMERCIAL SELF-INSURANCE GROUP COMMON CLAIMS 
        FUND.] (a) Each commercial self-insurance group shall establish 
        a common claims fund. 
           (b) Each commercial self-insurance group shall, not less 
        than ten days prior to the proposed effective date of the group, 
        collect cash premiums from each member equal to not less than 20 
        percent of the member's annual workers' compensation premium to 
        be paid into a common claims fund, maintained by the group in a 
        designated depository.  The remaining balance of the member's 
        premium shall be paid to the group in a reasonable manner over 
        the remainder of the year.  Payments in subsequent years shall 
        be made according to the business plan. 
           (c) Each commercial self-insurance group shall initiate 
        proceedings against a member when that member becomes more than 
        15 days delinquent in any payment of premium to the fund. 
           (d) There shall be no commingling of any assets of the 
        common claims fund with the assets of any individual member or 
        with any other account of the service company or fiscal agent 
        unrelated to the payment of workers' compensation liabilities 
        incurred by the group. 
           Subd. 5.  [JOINT AND SEVERAL LIABILITY.] Each member of a 
        commercial self-insurance group shall be jointly and severally 
        liable for the obligations incurred by any member of the same 
        group under chapter 176 for any fund year in which the member 
        was a participant of the commercial self-insurance group. 
           Subd. 6.  [ANNUAL AUDIT.] The accounts and records of the 
        common claims fund shall be audited in the manner required under 
        section 79A.03, subdivision 10.  
           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. 
           Subd. 8.  [ADMINISTRATION.] (a) The commercial 
        self-insurance group shall be required to secure administrative 
        services through a service company which maintains an office in 
        the state of Minnesota.  Services provided by the service 
        company or its subcontractor should at a minimum include claim 
        handling, safety and loss control, and submission of all 
        required regulatory reports. 
           (b) The service company must demonstrate it has the 
        capability to provide, through its employees or by contract, 
        services which are necessary to administer the self-insurance 
        group and it must employ or have under contract a claims 
        adjuster with at least three years of Minnesota specific 
        workers' compensation claim handling experience. 
           (c) The service company retained by a commercial 
        self-insurance group to administer workers' compensation claims 
        shall estimate the total accrued liability of the group for the 
        payment of compensation for the commercial self-insurance 
        group's annual report to the commissioner and shall make the 
        estimate both in good faith and with the exercise of a 
        reasonable degree of care. 
           Subd. 9.  [MARKETING AND COMMUNICATIONS.] A commercial 
        self-insurance group's applications, coverage documents, 
        quotations, and all marketing materials must prominently display 
        information indicating that the commercial self-insurance group 
        is a self-insured program, that members are jointly and 
        severally liable for the obligations of the commercial 
        self-insurance group, and that members will be assessed on an 
        individual and proportionate basis for any deficits created by 
        the commercial self-insurance group. 
           Subd. 10.  [REINSURANCE.] (a) A commercial self-insurance 
        group shall be required to purchase specific excess coverage 
        with the workers' compensation reinsurance association at the 
        lower retention level for its first three years of operation.  
        After that time it may select the higher or super retention 
        level with prior notice given to and approval of the 
        commissioner. 
           (b) The commissioner may require a commercial 
        self-insurance group to purchase aggregate excess coverage.  Any 
        reinsurance or excess coverage purchased other than that of the 
        workers' compensation reinsurance association must be secured 
        with an insurance company or reinsurer licensed to underwrite 
        such coverage in Minnesota and maintains at least an "A" rating 
        with the A.M. Best rating organization. 
           Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 
        percent of any surplus money for a fund year in excess of 125 
        percent of the amount necessary to fulfill all obligations under 
        the workers' compensation act, chapter 176, for that fund year 
        may be declared refundable to a member at any time.  The date 
        shall be no earlier than 18 months following the end of such 
        fund year.  The first disbursement of fund surplus may not be 
        made prior to the completion of an operational audit by the 
        commissioner.  There can be no more than one refund made in any 
        12-month period.  When all the claims of any one fund year have 
        been fully paid, as certified by an actuary, all surplus money 
        from that fund year may be declared refundable. 
           (b) The commercial self-insurance group shall give notice 
        to the commissioner of any refund.  Said notice shall be 
        accompanied by a statement from the commercial self-insurer 
        group's certified public accountant certifying that the proposed 
        refund is in compliance with paragraph (a). 
           Subd. 12.  [SATISFACTION OF FUND DEFICIT.] In the event of 
        a deficit in any fund year, such deficit shall be paid up 
        immediately, either from surplus from a fund year other than the 
        current fund year, or by assessment of the membership.  The 
        commissioner shall be notified within ten days of any transfer 
        of surplus funds.  The commissioner, upon finding that a deficit 
        in a fund year has not been satisfied by a transfer of surplus 
        from another fund year, shall order an assessment to be levied 
        on a proportionate basis against the members of the commercial 
        self-insurance group during that fund year sufficient to make up 
        any deficit. 
           Sec. 32.  [79A.23] [COMMERCIAL SELF-INSURANCE GROUP 
        REPORTING REQUIREMENTS.] 
           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 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 statement must be reviewed or 
        audited and must be submitted to the commissioner 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.  
           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 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. 
           Subd. 3.  [OPERATIONAL AUDIT.] (a) The commissioner, prior 
        to authorizing surplus distribution of a commercial 
        self-insurance group's first fund year or no later than after 
        the third anniversary of the group's authority to self-insure, 
        shall conduct an operational audit of the commercial 
        self-insurance group's claim handling and reserve practices as 
        well as its underwriting procedures to determine if they adhere 
        to the group's business plan.  The commissioner may select 
        outside consultants to assist in conducting the audit.  After 
        completion of the audit, the commissioner shall either renew or 
        revoke the commercial self-insurance group's authority to 
        self-insure.  The commissioner may also order any changes deemed 
        necessary in the claims handling, reserving practices, or 
        underwriting procedures of the group. 
           (b) The cost of the operational audit shall be borne by the 
        commercial self-insurance group. 
           Subd. 4.  [UNIT STATISTICAL REPORT.] Each commercial 
        self-insurance group will annually file a unit statistical 
        report to the Minnesota workers' compensation insurers 
        association. 
           Sec. 33.  [79A.24] [COMMERCIAL SELF-INSURANCE GROUP 
        SECURITY DEPOSIT.] 
           Subdivision 1.  [ANNUAL SECURING OF LIABILITY.] Each year 
        every commercial self-insurance group shall secure future 
        incurred liabilities 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. 
           Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 150 
        percent of the commercial self-insurance group's future incurred 
        liabilities 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 future incurred 
        liabilities 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. 
           Subd. 3.  [TYPE OF ACCEPTABLE SECURITY.] The commissioner 
        may only accept as security, and the commercial self-insurance 
        group shall deposit as security, cash, approved government 
        securities as set forth in section 176.181, subdivision 2b, 
        surety bonds or irrevocable letters of credit in any combination 
        in accordance with the requirements under section 79A.04, 
        subdivision 3.  
           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. 34.  [79A.25] [DEFAULT OF A COMMERCIAL SELF-INSURANCE 
        GROUP.] 
           Subdivision 1.  [NOTICE OF INSOLVENCY, BANKRUPTCY, OR 
        DEFAULT.] The commissioner of labor and industry shall notify 
        the commissioner and the commercial self-insurance group 
        security fund if the commissioner of labor and industry has 
        knowledge that any commercial self-insurance group has failed to 
        pay workers' compensation benefits as required by chapter 176.  
        If the commissioner determines that a court of competent 
        jurisdiction has declared the commercial self-insurance group to 
        be bankrupt or insolvent and the commercial self-insurance group 
        has failed to pay workers' compensation as required by chapter 
        176 or if the commissioner issues a certificate of default 
        against a commercial self-insurance group for failure to pay 
        workers' compensation as required by chapter 176, then the 
        security deposit posted by the commercial self-insurance group 
        shall be utilized to administer and pay the commercial 
        self-insurance group's workers' compensation obligation. 
           Subd. 2.  [REVOCATION OF CERTIFICATE TO SELF-INSURE.] (a) 
        The commissioner shall revoke the commercial self-insurance 
        group's certificate to self-insure once notified of the 
        commercial self-insurance group's bankruptcy, insolvency, or 
        upon issuance of a certificate of default.  The revocation shall 
        be completed as soon as practicable, but no later than 30 days 
        after the commercial self-insurance group's security has been 
        called. 
           (b) The commissioner shall also revoke a commercial 
        self-insurance group's authority to self-insure on the following 
        grounds: 
           (1) failure to comply with any lawful order of the 
        commissioner; 
           (2) failure to comply with any provision of chapter 176; 
           (3) a deterioration of the commercial self-insurance 
        group's financial condition affecting its ability to pay 
        obligations in chapter 176; 
           (4) committing an unfair or deceptive act or practice as 
        defined in section 72A.20; or 
           (5) failure to abide by the plan of operation of the 
        workers' compensation reinsurance association. 
           Subd. 3.  [NOTICE BY THE COMMISSIONER.] In the event of 
        bankruptcy, insolvency, or certificate of default, the 
        commissioner shall immediately notify by certified mail the 
        state treasurer, the surety, the issuer of an irrevocable letter 
        of credit, and any custodian of the security.  At the time of 
        notification, the commissioner shall also call the security and 
        transfer and assign it to the commercial self-insurance group 
        security fund.  The commissioner shall also notify by certified 
        mail the commercial self-insurance group's security fund and 
        order the commercial security fund to assume the insolvent 
        commercial self-insurance group's obligations for which it is 
        liable under chapter 176. 
           Sec. 35.  [79A.26] [COMMERCIAL SELF-INSURANCE GROUP 
        SECURITY FUND.] 
           Subdivision 1.  [CREATION.] The commercial self-insurance 
        group security fund is established as a nonprofit corporation 
        pursuant to the Minnesota nonprofit corporation act, sections 
        317A.001 to 317A.909.  If any provision of the Minnesota 
        nonprofit corporation act conflicts with any provision of this 
        chapter, the provisions of this chapter apply.  Each commercial 
        self-insurance group that elects to be subject to the terms of 
        sections 79A.19 to 79A.32 rather than sections 79A.01 to 79A.18 
        shall participate in the commercial self-insurance group 
        security fund.  This participation shall be a condition of 
        maintaining its certificate to self-insure. 
           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.  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. 
           Subd. 3.  [BYLAWS.] The commercial security fund shall 
        establish bylaws and a plan of operation, subject to the prior 
        approval of the commissioner, necessary to the purposes of this 
        chapter and to carry out the responsibilities of the commercial 
        security fund.  The commercial security fund may carry out its 
        responsibilities directly or by contract, and may purchase 
        services and insurance and borrow funds it deems necessary for 
        the protection of the commercial self-insurance group 
        participants and their employees. 
           Subd. 4.  [CONFIDENTIAL INFORMATION.] The commercial 
        security fund may receive private data concerning the financial 
        condition of commercial self-insurance groups whose liabilities 
        to pay compensation have become its responsibility and shall 
        adopt bylaws to prevent dissemination of that information. 
           Subd. 5.  [EMPLOYEES.] Commercial security fund employees 
        are not state employees and are not subject to any state civil 
        service regulations. 
           Subd. 6.  [ASSUMPTION OF OBLIGATIONS.] Upon order of the 
        commissioner under section 79A.25, subdivision 3, the commercial 
        security fund shall assume the workers' compensation obligations 
        of an insolvent commercial self-insurance group.  The 
        commissioner shall further order the commercial self-insurance 
        group security fund to commence payment of these obligations 
        within 14 days of the receipt of this notification and order. 
           Subd. 7.  [ACT OR OMISSIONS; PENALTIES.] Notwithstanding 
        subdivision 6, the commercial security fund shall not be liable 
        for the payment of any penalties assessed for any act or 
        omission on the part of any person other than the commercial 
        security fund or its appointed administrator, including, but not 
        limited to, the penalties provided in chapter 176 unless the 
        commercial security fund or its appointed administrator would be 
        subject to penalties under chapter 176 as the result of the 
        actions of the commercial security fund or its administrator. 
           Subd. 8.  [PARTY IN INTEREST.] The commercial security fund 
        shall be a party in interest in all proceedings involving 
        compensation claims against an insolvent commercial 
        self-insurance group whose compensation obligations have been 
        paid or assumed by the commercial security fund.  The commercial 
        security fund shall have the same rights and defenses as the 
        insolvent commercial self-insurance group, including, but not 
        limited to, all of the following: 
           (1) to appear, defend, and appeal claims; 
           (2) to receive notice of, investigate, adjust, compromise, 
        settle, and pay claims; and 
           (3) to investigate, handle, and deny claims. 
           Subd. 9.  [PAYMENTS TO COMMERCIAL SECURITY FUND.] 
        Notwithstanding sections 79A.19 to 79A.32 or chapter 176 to the 
        contrary, in the event that the commercial self-insurance group 
        security fund assumes the obligations of any bankrupt or 
        insolvent commercial self-insurance group pursuant to this 
        section, then the proceeds of any surety bond, workers' 
        compensation reinsurance association, specific excess insurance 
        or aggregate excess insurance policy, and any special 
        compensation fund payment or supplementary benefit 
        reimbursements shall be paid to the commercial self-insurance 
        group security fund instead of the bankrupt or insolvent 
        commercial self-insurance group or its successor in interest.  
        No special compensation fund reimbursements shall be made to the 
        commercial security fund unless the special compensation fund 
        assessments under section 176.129 are paid and the required 
        reports are made to the special compensation fund. 
           Subd. 10.  [INSOLVENT COMMERCIAL SELF-INSURANCE GROUP.] The 
        commercial security fund shall have the right and obligation to 
        obtain reimbursement from an insolvent commercial self-insurance 
        group up to the amount of the commercial self-insurance group's 
        workers' compensation obligations paid and assumed by the 
        commercial security fund, including reasonable administrative 
        and legal costs.  This right includes, but is not limited to, a 
        right to claim for wages and other necessities of life advanced 
        to claimants as subrogee of the claimants in any action to 
        collect against the commercial self-insurance group as debtor. 
           Subd. 11.  [SECURITY DEPOSITS.] The commercial security 
        fund shall have the right and obligation to obtain from the 
        security deposit of an insolvent commercial self-insurance group 
        the amount of the commercial self-insurance group's compensation 
        obligations, including reasonable administrative and legal 
        costs, paid or assumed by the commercial security fund.  
        Reimbursement of administrative costs, including legal costs, 
        shall be subject to approval by a majority of the commercial 
        security fund's voting trustees.  The commercial security fund 
        shall be a party in interest in any action to obtain the 
        security deposit for the payment of compensation obligations of 
        an insolvent commercial self-insurance group. 
           Subd. 12.  [LEGAL ACTIONS.] The commercial security fund 
        shall have the right to bring an action against any person or 
        entity to recover compensation paid and liability assumed by the 
        commercial security fund, including, but not limited to, any 
        excess insurance carrier of the insolvent commercial 
        self-insurance group and any person or entity whose negligence 
        or breach of an obligation contributed to any underestimation of 
        the commercial self-insurance group's accrued liability as 
        reported to the commissioner. 
           Subd. 13.  [PARTY IN INTEREST.] The commercial security 
        fund may be a party in interest in any action brought by any 
        other person seeking damages resulting from the failure of an 
        insolvent commercial self-insurance group to pay workers' 
        compensation required under this subdivision. 
           Subd. 14.  [ASSETS MAINTAINED.] The commercial security 
        fund shall maintain cash, readily marketable securities, or 
        other assets, or a line of credit, approved by the commissioner, 
        sufficient to immediately continue the payment of the 
        compensation obligations of an insolvent commercial 
        self-insurance group pending receipt of the security deposit, 
        surety bond proceeds, irrevocable letter of credit, or, if 
        necessary, assessment of the participants.  The commissioner may 
        establish the minimum amount to be maintained by, or immediately 
        available to, the commercial security fund for this purpose. 
           Subd. 15.  [ASSESSMENT.] The commercial security fund may 
        assess each of its participants a pro rata share of the funding 
        necessary to carry out its obligation and the purposes of 
        sections 79A.19 to 79A.32.  Total annual assessments in any 
        calendar year shall be a percentage of the workers' compensation 
        benefits paid under sections 176.101 and 176.111 during the 
        previous calendar year.  The annual assessment calculation shall 
        not include supplementary benefits paid which will be reimbursed 
        by the special compensation fund.  Funds obtained by assessments 
        under this subdivision may only be used for the purposes of 
        sections 79A.19 to 79A.32.  The trustees shall certify to the 
        commissioner the collection and receipt of all money from 
        assessments, noting any delinquencies.  The trustees shall take 
        any action deemed appropriate to collect any delinquent 
        assessments. 
           Subd. 16.  [AUDIT OF FUND.] The trustees shall annually 
        contract for an independent certified audit of the financial 
        activities of the fund.  An annual report on the financial 
        status of the commercial self-insurance group security fund 
        shall be submitted to the commissioner and to each commercial 
        group participant. 
           Sec. 36.  [79A.27] [INDEMNITY AGREEMENT FORM.] 
               INDIVIDUAL AND PROPORTIONATE INDEMNITY AGREEMENT
           WHEREAS, (name of company) has agreed to be and has been 
        accepted as a member of (name of commercial self-insurance 
        group). 
           WHEREAS, (name of company) has agreed to be bound by all of 
        the provisions of the Minnesota workers' compensation act and 
        all rules promulgated thereunder. 
           WHEREAS, that (name of company) has agreed to be bound by 
        bylaws or plan of operation and all amendments thereto of (name 
        of commercial self-insurance group); 
           NOW THEREFORE, IT IS AGREED that:  
           1.  (Name of company) shall be jointly and severally liable 
        for all claims and expenses of all the members of (name of 
        commercial self-insurance group) arising in any fund year in 
        which (name of company) is a member of the commercial 
        self-insurance group.  
           2.  (Name of commercial self-insurance group) shall assess 
        (name of company) on an individual and proportionate basis for 
        its share of the total liability of the commercial 
        self-insurance group.  
           3.  In the event that (name of company) is not a member for 
        the full year, it shall be only liable for a pro rata share of 
        that liability. 
           IN WITNESS WHEREOF, the (name of company) and (name of 
        commercial self-insurance group) have caused this indemnity 
        agreement to be executed by its authorized officers: 
        Commercial Self-Insurance Group Name      Company Name
        By: ............................          By: ...................
        date: ..........................          date: .................
           Sec. 37.  [79A.28] [OPEN MEETING; ADMINISTRATIVE PROCEDURE 
        ACT.] 
           The commercial self-insurance group security fund and its 
        board of trustees shall not be subject to: 
           (1) the open meeting law; 
           (2) the open appointments law; 
           (3) the data privacy law; and 
           (4) except where specifically set forth, the administrative 
        procedure act. 
           Sec. 38.  [79A.29] [RULES.] 
           The commissioner may adopt, amend, and repeal rules 
        reasonably necessary to carry out the purposes of this chapter.  
        Minnesota Rules, chapter 2780, shall apply to commercial 
        self-insurance groups unless otherwise specified by rule. 
           Sec. 39.  [79A.30] [GOVERNING LAW.] 
           If there is any inconsistency between sections 79A.19 to 
        79A.32 and any other statute or rule, the provisions of sections 
        79A.19 to 79A.32 shall govern with respect to commercial 
        self-insurance groups. 
           Sec. 40.  [79A.31] [COMMERCIAL SELF-INSURANCE GROUP 
        SECURITY FUND MEMBERSHIP; WITHDRAWAL FROM SELF-INSURERS' 
        SECURITY FUND.] 
           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.34 
        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. 
           Subd. 2.  [TRANSFER; NOTICE TO COMMISSIONER.] A group 
        self-insurer shall provide to the commissioner written notice of 
        its intent to transfer membership to the commercial 
        self-insurance group security fund.  The notice shall be sent at 
        least 30 days prior to the date the group self-insurer requests 
        membership in the commercial self-insurance group security fund. 
           Subd. 3.  [TRANSFER OF POTENTIAL AND CONTINGENT 
        LIABILITIES.] Upon transfer pursuant to subdivision 1, the 
        commercial self-insurance group security fund shall assume all 
        of the past, present, and future potential and contingent 
        workers' compensation liabilities of the transferring group in 
        the event of any bankruptcy or insolvency of that group or its 
        failure to meet its obligations under this chapter and chapter 
        176.  
           Subd. 4.  [ELECTION.] A group self-insurer established 
        after August 1, 1995, may elect to become a member of either the 
        self-insurers' security fund or the commercial self-insurance 
        group security fund.  However, once the election is made, a 
        group may not transfer to the other security fund.  
           Sec. 41.  [79A.32] [REPORTING TO MINNESOTA WORKERS' 
        COMPENSATION INSURERS' ASSOCIATION.] 
           Subdivision 1.  [REQUIRED ACTIVITY.] Each self-insurer 
        shall perform the following activities: 
           (1) maintain membership in and report loss experience data 
        to the Minnesota workers' compensation insurers association, or 
        a licensed data service organization, in accordance with the 
        statistical plan and rules of the organization as approved by 
        the commissioner; 
           (2) establish a plan for merit rating which shall be 
        consistently applied to all insureds, provided that members of a 
        data service organization may use merit rating plans developed 
        by that data service organization; 
           (3) provide an annual report to the commissioner containing 
        the information and prepared in the form required by the 
        commissioner; and 
           (4) keep a record of the losses paid by the self-insurers 
        and premiums for the group self-insurers. 
           Subd. 2.  [PERMITTED ACTIVITY.] In addition to any other 
        activities not prohibited by this chapter, self-insurers may: 
           (1) through licensed data service organizations, 
        individually, or with self-insurers commonly owned, managed, or 
        controlled, conduct research and collect statistics to 
        investigate, identify, and classify information relating to 
        causes or prevention of losses; 
           (2) develop and use classification plans and rates based 
        upon any reasonable factors; and 
           (3) develop rules for the assignment of risks to 
        classifications. 
           Subd. 3.  [DELAYED REPORTING.] Private self-insurers 
        established under sections 79A.01 to 79A.18 prior to August 1, 
        1995, need not begin filing the reports required under 
        subdivision 1 until January 1, 1998.  
           Sec. 42.  Minnesota Statutes 1994, section 168.012, 
        subdivision 1, is amended to read: 
           Subdivision 1.  (a) The following vehicles are exempt from 
        the provisions of this chapter requiring payment of tax and 
        registration fees, except as provided in subdivision 1c:  
           (1) vehicles owned and used solely in the transaction of 
        official business by representatives of foreign powers, by the 
        federal government, the state, or any political subdivision; 
           (2) vehicles owned and used exclusively by educational 
        institutions and used solely in the transportation of pupils to 
        and from such institutions; 
           (3) vehicles used solely in driver education programs at 
        nonpublic high schools; 
           (4) vehicles owned by nonprofit charities and used 
        exclusively to transport disabled persons for educational 
        purposes; 
           (5) vehicles owned and used by honorary consul or consul 
        general of foreign governments; and 
           (6) ambulances owned by ambulance services licensed under 
        section 144.802, the general appearance of which is unmistakable.
           (b) Vehicles owned by the federal government, municipal 
        fire apparatus, police patrols and ambulances, the general 
        appearance of which is unmistakable, shall not be required to 
        register or display number plates.  
           (c) Unmarked vehicles used in general police work, liquor 
        investigations, arson investigations, and passenger automobiles, 
        pickup trucks, and buses owned or operated by the department of 
        corrections shall be registered and shall display appropriate 
        license number plates which shall be furnished by the registrar 
        at cost.  Original and renewal applications for these license 
        plates authorized for use in general police work and for use by 
        the department of corrections must be accompanied by a 
        certification signed by the appropriate chief of police if 
        issued to a police vehicle, the appropriate sheriff if issued to 
        a sheriff's vehicle, the commissioner of corrections if issued 
        to a department of corrections vehicle, or the appropriate 
        officer in charge if issued to a vehicle of any other law 
        enforcement agency.  The certification must be on a form 
        prescribed by the commissioner and state that the vehicle will 
        be used exclusively for a purpose authorized by this section.  
           (d) Unmarked vehicles used by the department departments of 
        revenue and labor and industry, fraud unit, in conducting 
        seizures or criminal investigations must be registered and must 
        display passenger vehicle classification license number plates 
        which shall be furnished at cost by the registrar.  Original and 
        renewal applications for these passenger vehicle license plates 
        must be accompanied by a certification signed by the 
        commissioner of revenue or the commissioner of labor and 
        industry.  The certification must be on a form prescribed by the 
        commissioner and state that the vehicles will be used 
        exclusively for the purposes authorized by this section. 
           (e) All other motor vehicles shall be registered and 
        display tax-exempt number plates which shall be furnished by the 
        registrar at cost, except as provided in subdivision 1c.  All 
        vehicles required to display tax-exempt number plates shall have 
        the name of the state department or political subdivision, or 
        the nonpublic high school operating a driver education program, 
        on the vehicle plainly displayed on both sides thereof in 
        letters not less than 2-1/2 inches high and one-half inch wide; 
        except that each state hospital and institution for the mentally 
        ill and mentally retarded may have one vehicle without the 
        required identification on the sides of the vehicle, and county 
        social service agencies may have vehicles used for child and 
        vulnerable adult protective services without the required 
        identification on the sides of the vehicle.  Such identification 
        shall be in a color giving contrast with that of the part of the 
        vehicle on which it is placed and shall endure throughout the 
        term of the registration.  The identification must not be on a 
        removable plate or placard and shall be kept clean and visible 
        at all times; except that a removable plate or placard may be 
        utilized on vehicles leased or loaned to a political subdivision 
        or to a nonpublic high school driver education program. 
           Sec. 43.  Minnesota Statutes 1994, section 175.16, is 
        amended to read: 
           175.16 [DIVISIONS.] 
           The department of labor and industry shall consist of the 
        following divisions:  division of workers' compensation, 
        division of boiler inspection, division of occupational safety 
        and health, division of statistics, division of steamfitting 
        standards, division of voluntary apprenticeship, division of 
        labor standards, and such other divisions as the commissioner of 
        the department of labor and industry may deem necessary and 
        establish.  Each division of the department and persons in 
        charge thereof shall be subject to the supervision of the 
        commissioner of the department of labor and industry and, in 
        addition to such duties as are or may be imposed on them by 
        statute, shall perform such other duties as may be assigned to 
        them by said commissioner.  Notwithstanding any other law to the 
        contrary, the commissioner is the administrator and supervisor 
        of all of the department's dispute resolution functions and 
        personnel and may delegate authority to settlement judges and 
        others to make determinations under sections 176.106, 176.238, 
        and 176.239 and to approve settlement of claims under section 
        176.521. 
           Sec. 44.  Minnesota Statutes 1994, section 176.011, 
        subdivision 16, is amended to read: 
           Subd. 16.  [PERSONAL INJURY.] "Personal injury" means 
        injury arising out of and in the course of employment and 
        includes personal injury caused by occupational disease; but 
        does not cover an employee except while engaged in, on, or about 
        the premises where the employee's services require the 
        employee's presence as a part of such that service at the time 
        of the injury and during the hours of such that service.  Where 
        the employer regularly furnished transportation to employees to 
        and from the place of employment such, those employees are 
        subject to this chapter while being so transported, but shall.  
        Personal injury does not include an injury caused by the act of 
        a third person or fellow employee intended to injure the 
        employee because of personal reasons, and not directed against 
        the employee as an employee, or because of the employment. 
           Sec. 45.  Minnesota Statutes 1994, section 176.081, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPROVAL LIMITATION OF FEES.] (a) A fee 
        for legal services of 25 percent of the first $4,000 of 
        compensation awarded to the employee and 20 percent of the next 
        $60,000 of compensation awarded to the employee is the maximum 
        permissible fee and does not require approval by the 
        commissioner, compensation judge, or any other party except as 
        provided in paragraph (d).  All fees, including fees for 
        obtaining medical or rehabilitation benefits, must be calculated 
        according to the formula under this subdivision, or earned in 
        hourly fees for representation at discontinuance conferences 
        under section 176.239, or earned in hourly fees for 
        representation on rehabilitation or medical issues under section 
        176.102, 176.135, or 176.136.  Attorney fees for recovery of 
        medical or rehabilitation benefits or services shall be assessed 
        against the employer or insurer if these fees exceed the 
        contingent fee under this section in connection with benefits 
        currently in dispute.  The amount of the fee that the employer 
        or insurer is liable for is the amount determined under 
        subdivision 5, minus the contingent fee except as otherwise 
        provided in clause (1) or (2).  
           (1) the contingent attorney fee for recovery of monetary 
        benefits according to the formula in this section is presumed to 
        be adequate to cover recovery of medical and rehabilitation 
        benefit or services concurrently in dispute.  Attorney fees for 
        recovery of medical or rehabilitation benefits or services shall 
        be assessed against the employer or insurer only if the attorney 
        establishes that the contingent fee is inadequate to reasonably 
        compensate the attorney for representing the employee in the 
        medical or rehabilitation dispute.  In cases where the 
        contingent fee is inadequate the employer or insurer is liable 
        for attorney fees based on the formula in this subdivision or in 
        clause (2). 
           For the purposes of applying the formula where the employer 
        or insurer is liable for attorney fees, the amount of 
        compensation awarded for obtaining disputed medical and 
        rehabilitation benefits under sections 176.102, 176.135, and 
        176.136 shall be the dollar value of the medical or 
        rehabilitation benefit awarded, where ascertainable.  
           (2) The maximum attorney fee for obtaining a change of 
        doctor or qualified rehabilitation consultant, or any other 
        disputed medical or rehabilitation benefit for which a dollar 
        value is not reasonably ascertainable, is the amount charged in 
        hourly fees for the representation or $500, whichever is less, 
        to be paid by the employer or insurer. 
           (3) The fees for obtaining disputed medical or 
        rehabilitation benefits are included in the $13,000 limit in 
        paragraph (b).  An attorney must concurrently file all 
        outstanding disputed issues.  An attorney is not entitled to 
        attorney fees for representation in any issue which could 
        reasonably have been addressed during the pendency of other 
        issues for the same injury. 
           (b) All fees for legal services related to the same injury 
        are cumulative and may not exceed $13,000, except as provided by 
        subdivision 2.  If multiple injuries are the subject of a 
        dispute, the commissioner, compensation judge, or court of 
        appeals shall specify the attorney fee attributable to each 
        injury.  
           (c) If the employer or the insurer or the defendant is 
        given written notice of claims for legal services or 
        disbursements, the claim shall be a lien against the amount paid 
        or payable as compensation.  Subject to the foregoing maximum 
        amount for attorney fees, up to 25 percent of the first $4,000 
        of periodic compensation awarded to the employee and 20 percent 
        of the next $60,000 of periodic compensation awarded to the 
        employee may be withheld from the periodic payments for attorney 
        fees or disbursements if the payor of the funds clearly 
        indicates on the check or draft issued to the employee for 
        payment the purpose of the withholding, the name of the 
        attorney, the amount withheld, and the gross amount of the 
        compensation payment before withholding.  In no case shall fees 
        be calculated on the basis of any undisputed portion of 
        compensation awards.  Allowable fees under this chapter shall be 
        based solely upon genuinely disputed claims or portions of 
        claims, including disputes related to the payment of 
        rehabilitation benefits or to other aspects of a rehabilitation 
        plan.  Fees for administrative conferences under section 176.239 
        shall be determined on an hourly basis, according to the 
        criteria in subdivision 5.  The existence of a dispute is 
        dependent upon a disagreement after the employer or insurer has 
        had adequate time and information to take a position on 
        liability.  Neither the holding of a hearing nor the filing of 
        an application for a hearing alone may determine the existence 
        of a dispute.  Except where the employee is represented by an 
        attorney in other litigation pending at the department or at the 
        office of administrative hearings, a fee may not be charged 
        after June 1, 1996, for services with respect to a medical or 
        rehabilitation issue arising under section 176.102, 176.135, or 
        176.136 performed before the employee has consulted with the 
        department and the department certifies that there is a dispute 
        and that it has tried to resolve the dispute.  
           (d) An attorney who is claiming legal fees for representing 
        an employee in a workers' compensation matter shall file a 
        statement of attorney fees with the commissioner, compensation 
        judge before whom the matter was heard, or workers' compensation 
        court of appeals on cases before the court.  A copy of the 
        signed retainer agreement shall also be filed.  The employee and 
        insurer shall receive a copy of the statement.  The statement 
        shall be on a form prescribed by the commissioner, and shall 
        report the number of hours spent on the case, and shall clearly 
        and conspicuously state that the employee or insurer has ten 
        calendar days to object to the attorney fees requested.  If no 
        objection is timely made by the employee or insurer, the amount 
        requested shall be conclusively presumed reasonable providing 
        the amount does not exceed the limitation in subdivision 1.  The 
        commissioner, compensation judge, or court of appeals shall 
        issue an order granting the fees and the amount requested shall 
        be awarded to the party requesting the fee.  
           If a timely objection is filed, or the fee is determined on 
        an hourly basis, the commissioner, compensation judge, or court 
        of appeals shall review the matter and make a determination 
        based on the criteria in subdivision 5. 
           If no timely objection is made by an employer or insurer, 
        reimbursement under subdivision 7 shall be made if the statement 
        of fees requested this reimbursement. 
           (e) Employers and insurers may not pay attorney fees or 
        wages for legal services of more than $13,000 per case unless 
        the additional fees or wages are approved under subdivision 2.  
           (f) Each insurer and self-insured employer shall file 
        annual statements with the commissioner detailing the total 
        amount of legal fees and other legal costs incurred by the 
        insurer or employer during the year.  The statement shall 
        include the amount paid for outside and in-house counsel, 
        deposition and other witness fees, and all other costs relating 
        to litigation.  
           Sec. 46.  Minnesota Statutes 1994, section 176.081, 
        subdivision 7, is amended to read: 
           Subd. 7.  [AWARD; ADDITIONAL AMOUNT.] If the employer or 
        insurer files a denial of liability, notice of discontinuance, 
        or fails to make payment of compensation or medical expenses 
        within the statutory period after notice of injury or 
        occupational disease, or otherwise unsuccessfully resists the 
        payment of compensation or medical expenses, or unsuccessfully 
        disputes the payment of rehabilitation benefits or other aspects 
        of a rehabilitation plan, and the injured person has employed an 
        attorney at law, who successfully procures payment on behalf of 
        the employee or who enables the resolution of a dispute with 
        respect to a rehabilitation plan, the compensation judge, 
        commissioner, or the workers' compensation court of appeals upon 
        appeal, upon application, shall award to the employee against 
        the insurer or self-insured employer or uninsured employer, in 
        addition to the compensation benefits paid or awarded to the 
        employee, an amount equal to 25 30 percent of that portion of 
        the attorney's fee which has been awarded pursuant to this 
        section that is in excess of $250.  
           Sec. 47.  Minnesota Statutes 1994, section 176.081, 
        subdivision 7a, is amended to read: 
           Subd. 7a.  [SETTLEMENT OFFER.] At any time prior to one day 
        before a matter is to be heard, a party litigating a claim made 
        pursuant to this chapter may serve upon the adverse party a 
        reasonable offer of settlement of the claim, with provision for 
        costs and disbursements then accrued.  If before the hearing the 
        adverse party serves written notice that the offer is accepted, 
        either party may then file the offer and notice of acceptance, 
        together with the proof of service thereof, and thereupon 
        judgment shall be entered.  
           If an offer by an employer or insurer is not accepted by 
        the employee, it shall be deemed withdrawn and evidence thereof 
        is not admissible, except in a proceeding to determine 
        attorney's fees.  Notwithstanding the provisions of subdivision 
        7, if the judgment finally obtained by the employee is less 
        favorable than the offer, the employer shall not be liable for 
        any part of the attorney's fees awarded pursuant to this section.
           If an offer by an employee is not accepted by the employer 
        or insurer, it shall be deemed withdrawn and evidence thereof is 
        not admissible, except in a proceeding to determine attorney's 
        fees.  Notwithstanding the provisions of subdivision 7, if the 
        judgment finally obtained by the employee is at least as 
        favorable as the offer, the employer shall pay an additional 25 
        percent, over the amount provided in subdivision 7, of that 
        portion of the attorney's fee which has been awarded pursuant to 
        this section that is in excess of $250.  
           The fact that an offer is made but not accepted does not 
        preclude a subsequent offer.  
           Sec. 48.  Minnesota Statutes 1994, section 176.081, 
        subdivision 9, is amended to read: 
           Subd. 9.  [RETAINER AGREEMENT.] An attorney who is hired by 
        an employee to provide legal services with respect to a claim 
        for compensation made pursuant to this chapter shall prepare a 
        retainer agreement in which the provisions of this section are 
        specifically set out and provide a copy of this agreement to the 
        employee.  The retainer agreement shall provide a space for the 
        signature of the employee.  A signed agreement shall raise a 
        conclusive presumption that the employee has read and 
        understands the statutory fee provisions.  No fee shall be 
        awarded pursuant to this section in the absence of a signed 
        retainer agreement.  
           The retainer agreement shall contain a notice to the 
        employee regarding the maximum fee allowed under this section in 
        ten-point type, which shall read: 
                            Notice of Maximum Fee
           The maximum fee allowed by law for legal services is 25 
        percent of the first $4,000 of compensation awarded to the 
        employee and 20 percent of the next $60,000 of compensation 
        awarded to the employee subject to a cumulative maximum fee of 
        $13,000 for fees related to the same injury. 
           The employee shall take notice that the employee is under 
        no legal or moral obligation to pay any fee for legal services 
        in excess of the foregoing maximum fee. 
           Sec. 49.  Minnesota Statutes 1994, section 176.081, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [SANCTIONS; FAILURE TO PREPARE, APPEAR, OR 
        PARTICIPATE.] If a party or party's attorney fails to appear at 
        any conference or hearing scheduled under this chapter, is 
        substantially unprepared to participate in the conference or 
        hearing, or fails to participate in good faith, the commissioner 
        or compensation judge, upon motion or upon its own initiative, 
        shall require the party or the party's attorney or both to pay 
        the reasonable expenses including attorney fees, incurred by the 
        other party due to the failure to appear, prepare, or 
        participate.  Attorney fees or other expenses may not be awarded 
        if the commissioner or compensation judge finds that the 
        noncompliance was substantially justified or that other 
        circumstances would make the sanction unjust.  The department of 
        labor and industry, and the office of administrative hearings 
        may by rule establish additional sanctions for failure of a 
        party or the party's attorney to appear, prepare for, or 
        participate in a conference or hearing. 
           Sec. 50.  Minnesota Statutes 1994, section 176.102, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [DISCIPLINARY ACTIONS.] The panel has authority 
        to discipline qualified rehabilitation consultants and vendors 
        and may impose a penalty of up to $1,000 $3,000 per violation, 
        payable to the special compensation fund, and may suspend or 
        revoke certification.  Complaints against registered qualified 
        rehabilitation consultants and vendors shall be made to the 
        commissioner who shall investigate all complaints.  If the 
        investigation indicates a violation of this chapter or rules 
        adopted under this chapter, the commissioner may initiate a 
        contested case proceeding under the provisions of chapter 14.  
        In these cases, the rehabilitation review panel shall make the 
        final decision following receipt of the report of an 
        administrative law judge.  The decision of the panel is 
        appealable to the workers' compensation court of appeals in the 
        manner provided by section 176.421.  The panel shall 
        continuously study rehabilitation services and delivery, develop 
        and recommend rehabilitation rules to the commissioner, and 
        assist the commissioner in accomplishing public education. 
           The commissioner may appoint alternates for one-year terms 
        to serve as a member when a member is unavailable.  The number 
        of alternates shall not exceed one labor member, one employer or 
        insurer member, and one member representing medicine, 
        chiropractic, or rehabilitation. 
           Sec. 51.  Minnesota Statutes 1994, section 176.102, 
        subdivision 11, is amended to read: 
           Subd. 11.  [RETRAINING; COMPENSATION.] (a) Retraining is 
        limited to 156 weeks.  An employee who has been approved for 
        retraining may petition the commissioner or compensation judge 
        for additional compensation not to exceed 25 percent of the 
        compensation otherwise payable.  If the commissioner or 
        compensation judge determines that this additional compensation 
        is warranted due to unusual or unique circumstances of the 
        employee's retraining plan, the commissioner may award 
        additional compensation in an amount not to exceed the 
        employee's request.  This additional compensation shall cease at 
        any time the commissioner or compensation judge determines the 
        special circumstances are no longer present.  
           (b) If the employee is not employed during a retraining 
        plan that has been specifically approved under this section, 
        temporary total compensation is payable for up to 90 days after 
        the end of the retraining plan; except that, payment during the 
        90-day period is subject to cessation in accordance with section 
        176.101.  If the employee is employed during the retraining plan 
        but earning less than at the time of injury, temporary partial 
        compensation is payable at the rate of 66-2/3 percent of the 
        difference between the employee's weekly wage at the time of 
        injury and the weekly wage the employee is able to earn in the 
        employee's partially disabled condition, subject to the maximum 
        rate for temporary total compensation.  Temporary partial 
        compensation is not subject to the 225-week or 450-week 
        limitations provided by section 176.101, subdivision 2, during 
        the retraining plan, but is subject to those limitations before 
        and after the plan. 
           (c) Any request for retraining shall be filed with the 
        commissioner before 104 weeks of any combination of temporary 
        total or temporary partial compensation have been paid.  
        Retraining shall not be available after 104 weeks of any 
        combination of temporary total or temporary partial compensation 
        benefits have been paid unless the request for the retraining 
        has been filed with the commissioner prior to the time the 104 
        weeks of compensation have been paid. 
           (d) The employer or insurer must notify the employee in 
        writing of the 104 week limitation for filing a request for 
        retraining with the commissioner.  This notice must be given 
        before 80 weeks of temporary total disability or temporary 
        partial disability compensation have been paid, regardless of 
        the number of weeks that have elapsed since the date of injury.  
        If the notice is not given before the 80 weeks, the period of 
        time within which to file a request for retraining is extended 
        by the number of days the notice is late, but in no event may a 
        request be filed later than 225 weeks after any combination of 
        temporary total disability or temporary partial disability 
        compensation have been paid.  The commissioner may assess a 
        penalty of $25 per day that the notice is late, up to a maximum 
        penalty of $2,000, against an employer or insurer for failure to 
        provide the notice.  The penalty is payable to the assigned risk 
        safety account. 
           Sec. 52.  Minnesota Statutes 1994, section 176.103, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SCOPE.] The commissioner shall monitor the 
        medical and surgical treatment provided to injured employees, 
        the services of other health care providers and shall also 
        monitor hospital utilization as it relates to the treatment of 
        injured employees.  This monitoring shall include determinations 
        concerning the appropriateness of the service, whether the 
        treatment is necessary and effective, the proper cost of 
        services, the quality of the treatment, the right of providers 
        to receive payment under this chapter for services rendered or 
        the right to receive payment under this chapter for future 
        services.  Insurers and self-insurers must assist the 
        commissioner in this monitoring by reporting to the commissioner 
        cases of suspected excessive, inappropriate, or unnecessary 
        treatment.  The commissioner shall report specific cases of 
        suspected inappropriate, unnecessary, and excessive treatment to 
        the medical services review board.  The medical services review 
        board shall review those cases and make a determination of 
        whether there is inappropriate, unnecessary, or excessive 
        treatment based on rules adopted by the commissioner in 
        consultation with the medical services review board.  The 
        determination of the board is not subject to the contested case 
        provisions of the administrative procedure act in chapter 14.  
        An affected provider shall be given notice and an opportunity to 
        be heard before the board prior to the board reporting its 
        findings and conclusions.  The board shall report its findings 
        and conclusions to the commissioner.  The findings and 
        conclusions of the board are binding on the commissioner.  The 
        commissioner shall order a sanction if the board has concluded 
        there was inappropriate, unnecessary, or excessive treatment.  
        The commissioner in consultation with the medical services 
        review board shall adopt rules defining standards of treatment 
        including inappropriate, unnecessary, or excessive treatment and 
        the sanctions to be imposed for inappropriate, unnecessary, or 
        excessive treatment.  The sanctions imposed may include, without 
        limitation, a warning, a restriction on providing treatment, 
        requiring preauthorization by the board for a plan of treatment, 
        and suspension from receiving compensation for the provision of 
        treatment under chapter 176.  The commissioner's authority under 
        this section also includes the authority to make determinations 
        regarding any other activity involving the questions of 
        utilization of medical services, and any other determination the 
        commissioner deems necessary for the proper administration of 
        this section, but does not include the authority to make the 
        initial determination of primary liability, except as provided 
        by section 176.305. 
           Sec. 53.  Minnesota Statutes 1994, section 176.103, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MEDICAL SERVICES REVIEW BOARD; SELECTION; 
        POWERS.] (a) There is created a medical services review board 
        composed of the commissioner or the commissioner's designee as 
        an ex officio member, two persons representing chiropractic, one 
        person representing hospital administrators, one physical 
        therapist, and six physicians representing different specialties 
        which the commissioner determines are the most frequently 
        utilized by injured employees.  The board shall also have one 
        person representing employees, one person representing employers 
        or insurers, and one person representing the general public.  
        The members shall be appointed by the commissioner and shall be 
        governed by section 15.0575.  Terms of the board's members may 
        be renewed.  The board may appoint from its members whatever 
        subcommittees it deems appropriate.  
           The commissioner may appoint alternates for one-year terms 
        to serve as a member when a member is unavailable.  The number 
        of alternates shall not exceed one chiropractor, one physical 
        therapist, one hospital administrator, three physicians, one 
        employee representative, one employer or insurer representative, 
        and one representative of the general public. 
           The board shall review clinical results for adequacy and 
        recommend to the commissioner scales for disabilities and 
        apportionment.  
           The board shall review and recommend to the commissioner 
        rates for individual clinical procedures and aggregate costs.  
        The board shall assist the commissioner in accomplishing public 
        education.  
           In evaluating the clinical consequences of the services 
        provided to an employee by a clinical health care provider, the 
        board shall consider the following factors in the priority 
        listed:  
           (1) the clinical effectiveness of the treatment; 
           (2) the clinical cost of the treatment; and 
           (3) the length of time of treatment.  
           The board shall advise the commissioner on the adoption of 
        rules regarding all aspects of medical care and services 
        provided to injured employees.  
           (b) The medical services review board may upon petition 
        from the commissioner and after hearing, issue a warning, a 
        penalty of $200 per violation, a restriction on providing 
        treatment that requires preauthorization by the board, 
        commissioner, or compensation judge for a plan of treatment, 
        disqualify, or suspend a provider from receiving payment for 
        services rendered under this chapter if a provider has violated 
        any part of this chapter or rule adopted under this chapter, or 
        where there has been a pattern of, or an egregious case of, 
        inappropriate, unnecessary, or excessive treatment by a provider.
        The hearings are initiated by the commissioner under the 
        contested case procedures of chapter 14.  The board shall make 
        the final decision following receipt of the recommendation of 
        the administrative law judge.  The board's decision is 
        appealable to the workers' compensation court of appeals in the 
        manner provided by section 176.421. 
           (c) The board may adopt rules of procedure.  The rules may 
        be joint rules with the rehabilitation review panel.  
           Sec. 54.  Minnesota Statutes 1994, section 176.104, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DISPUTE.] If there exists a dispute 
        regarding medical causation or whether an injury arose out of 
        and in the course and scope of employment and an employee has 
        been disabled for the requisite time under section 176.102, 
        subdivision 4, is otherwise eligible for rehabilitation services 
        under section 176.102 prior to determination of liability, the 
        employee shall be referred by the commissioner to the 
        department's vocational rehabilitation unit which shall provide 
        rehabilitation consultation if appropriate.  The services 
        provided by the department's vocational rehabilitation unit and 
        the scope and term of the rehabilitation are governed by section 
        176.102 and rules adopted pursuant to that section.  
        Rehabilitation costs and services under this subdivision shall 
        be monitored by the commissioner. 
           Sec. 55.  Minnesota Statutes 1994, section 176.106, is 
        amended to read: 
           176.106 [ADMINISTRATIVE CONFERENCE.] 
           Subdivision 1.  [SCOPE.] All determinations by the 
        commissioner or the commissioner's designee pursuant to section 
        176.102, 176.103, 176.135, or 176.136 shall be in accordance 
        with the procedures contained in this section.  
           Subd. 2.  [REQUEST FOR CONFERENCE.] Any party may request 
        an administrative conference by filing a request on a form 
        prescribed by the commissioner.  
           Subd. 3.  [CONFERENCE.] The matter shall be scheduled for 
        an administrative conference within 60 days after receipt of the 
        request for a conference.  Notice of the conference shall be 
        served on all parties no later than 14 days prior to the 
        conference, unless the commissioner determines that a conference 
        shall not be held.  The commissioner may order an administrative 
        conference before the commissioner's designee whether or not a 
        request for conference is filed.  
           The commissioner may refuse to hold an administrative 
        conference and refer the matter for a settlement or pretrial 
        conference or may certify the matter to the office of 
        administrative hearings for a full hearing before a compensation 
        judge.  
           Subd. 4.  [APPEARANCES.] All parties shall appear either 
        personally, by telephone, by representative, or by written 
        submission.  The commissioner commissioner's designee shall 
        determine the issues in dispute based upon the information 
        available at the conference. 
           Subd. 5.  [DECISION.] A written decision shall be issued by 
        the commissioner or an authorized representative commissioner's 
        designee determining all issues considered at the conference or 
        if a conference was not held, based on the written submissions.  
        Disputed issues of fact shall be determined by a preponderance 
        of the evidence.  The decision must be issued within 30 days 
        after the close of the conference or if no conference was held, 
        within 60 days after receipt of the request for conference.  The 
        decision must include a statement indicating the right to 
        request a de novo hearing before a compensation judge and how to 
        initiate the request.  
           Subd. 6.  [PENALTY.] At a conference, if the insurer does 
        not provide a specific reason for nonpayment of the items in 
        dispute, the commissioner commissioner's designee may assess a 
        penalty of $300 payable to the assigned risk safety account, 
        unless it is determined that the reason for the lack of 
        specificity was the failure of the insurer, upon timely request, 
        to receive information necessary to remedy the lack of 
        specificity.  This penalty is in addition to any penalty that 
        may be applicable for nonpayment.  
           Subd. 7.  [REQUEST FOR HEARING.] Any party aggrieved by the 
        decision of the commissioner commissioner's designee may request 
        a formal hearing by filing the request with the commissioner and 
        serving the request on all parties no later than 30 days after 
        the decision; provided, however, that the commissioner shall 
        review a decision of the commissioner's designee regarding a 
        claim for a medical benefit of $1500 or less and the 
        commissioner's decision shall be final.  The request Requests on 
        other issues shall be referred to the office of administrative 
        hearings for a de novo hearing before a compensation 
        judge.  Except where the only issues to be determined pursuant 
        to this section involve liability for past treatment or services 
        that will not affect entitlement to ongoing or future proposed 
        treatment or services under section 176.102 or 176.135, the 
        commissioner shall refer a timely request to the office of 
        administrative hearings within five working days after filing of 
        the request and the hearing at the office of administrative 
        hearings must be held on the first date that all parties are 
        available but not later than 60 days after the office of 
        administrative hearings receives the matter. Following the 
        hearing, the compensation judge must issue the decision within 
        30 days.  The decision of the compensation judge is appealable 
        pursuant to section 176.421. 
           Subd. 8.  [DENIAL OF PRIMARY LIABILITY.] The commissioner 
        does not have authority to make determinations relating to 
        medical or rehabilitation benefits when there is a genuine 
        dispute over whether the injury initially arose out of and in 
        the course of employment, except as provided by section 176.305. 
           Subd. 9.  [SUBSEQUENT CAUSATION ISSUES.] If initial 
        liability for an injury has been admitted or established and an 
        issue subsequently arises regarding causation between the 
        employee's condition and the work injury, the commissioner may 
        make the subsequent causation determination subject to de novo 
        hearing by a compensation judge with a right to review by the 
        court of appeals, as provided in this chapter.  
           Sec. 56.  [176.107] [TELECONFERENCES.] 
           The division, department, office, or the court of appeals 
        may, at its discretion, conduct mediation sessions, 
        administrative conferences, settlement conferences, or hearings 
        as provided in this chapter in person, by telephone, or by 
        visual or audio teleconferencing methods. 
           Sec. 57.  [176.108] [LIGHT-DUTY WORK POOLS.] 
           Employers may form light-duty work pools for the purpose of 
        encouraging the return to work of injured employees.  The 
        commissioner may adopt emergency and permanent rules necessary 
        to implement this section. 
           Sec. 58.  Minnesota Statutes 1994, section 176.129, 
        subdivision 9, is amended to read: 
           Subd. 9.  [POWERS OF FUND.] In addition to powers granted 
        to the special compensation fund by this chapter the fund may do 
        the following:  
           (a) sue and be sued in its own name; 
           (b) intervene in or commence an action under this chapter 
        or any other law, including, but not limited to, intervention or 
        action as a subrogee to the division's right in a third-party 
        action, any proceeding under this chapter in which liability of 
        the special compensation fund is an issue, or any proceeding 
        which may result in other liability of the fund or to protect 
        the legal right of the fund; 
           (c) enter into settlements including but not limited to 
        structured, annuity purchase agreements with appropriate parties 
        under this chapter;.  Notwithstanding any other provision of 
        this chapter, any settlement may provide that the fund partially 
        or totally denies liability for payment of benefits, and no 
        determination of employer insurance status and liability under 
        section 176.183, subdivision 2, shall be required for approval 
        of the stipulation for a settlement; 
           (d) contract with another party to administer the special 
        compensation fund; 
           (e) take any other action which an insurer is permitted by 
        law to take in operating within this chapter; and 
           (f) conduct a financial audit of indemnity claim payments 
        and assessments reported to the fund.  This may be contracted by 
        the fund to a private auditing firm. 
           Sec. 59.  Minnesota Statutes 1994, section 176.129, 
        subdivision 10, is amended to read: 
           Subd. 10.  [PENALTY.] Sums paid to the commissioner 
        pursuant to this section shall be in the manner prescribed by 
        the commissioner.  The commissioner may impose a penalty payable 
        to the assigned risk safety account of up to 15 percent of the 
        amount due under this section but not less than $500 $1,000 in 
        the event payment is not made in the manner prescribed.  
           Sec. 60.  Minnesota Statutes 1994, section 176.130, 
        subdivision 9, is amended to read: 
           Subd. 9.  [FALSE REPORTS.] Any person or entity that, for 
        the purpose of evading payment of the assessment or avoiding the 
        reimbursement, or any part of it, makes a false report under 
        this section shall pay to the assigned risk safety account, in 
        addition to the assessment, a penalty of 50 75 percent of the 
        amount of the assessment.  A person who knowingly makes or signs 
        a false report, or who knowingly submits other false 
        information, is guilty of a misdemeanor.  
           Sec. 61.  Minnesota Statutes 1994, section 176.135, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MEDICAL, PSYCHOLOGICAL, CHIROPRACTIC, 
        PODIATRIC, SURGICAL, HOSPITAL.] (a) The employer shall furnish 
        any medical, psychological, chiropractic, podiatric, surgical 
        and hospital treatment, including nursing, medicines, medical, 
        chiropractic, podiatric, and surgical supplies, crutches and 
        apparatus, including artificial members, or, at the option of 
        the employee, if the employer has not filed notice as 
        hereinafter provided, Christian Science treatment in lieu of 
        medical treatment, chiropractic medicine and medical supplies, 
        as may reasonably be required at the time of the injury and any 
        time thereafter to cure and relieve from the effects of the 
        injury.  This treatment shall include treatments necessary to 
        physical rehabilitation. 
           (b) The employer shall pay for the reasonable value of 
        nursing services provided by a member of the employee's family 
        in cases of permanent total disability.  
           (c) Exposure to rabies is an injury and an employer shall 
        furnish preventative treatment to employees exposed to rabies. 
           (d) The employer shall furnish replacement or repair for 
        artificial members, glasses, or spectacles, artificial eyes, 
        podiatric orthotics, dental bridge work, dentures or artificial 
        teeth, hearing aids, canes, crutches, or wheel chairs damaged by 
        reason of an injury arising out of and in the course of the 
        employment.  For the purpose of this paragraph, "injury" 
        includes damage wholly or in part to an artificial member.  In 
        case of the employer's inability or refusal seasonably to 
        provide the items required to be provided under this paragraph, 
        the employer is liable for the reasonable expense incurred by or 
        on behalf of the employee in providing the same, including costs 
        of copies of any medical records or medical reports that are in 
        existence, obtained from health care providers, and that 
        directly relate to the items for which payment is sought under 
        this chapter, limited to the charges allowed by subdivision 7, 
        and attorney fees incurred by the employee.  Attorney's fees 
        shall be determined on an hourly basis according to the criteria 
        in section 176.081, subdivision 5.  
           (e) Both the commissioner and the compensation judges have 
        authority to make determinations under this section in 
        accordance with sections 176.106 and 176.305.  
           (f) An employer may require that the treatment and supplies 
        required to be provided by an employer by this section be 
        received in whole or in part from a managed care plan certified 
        under section 176.1351 except as otherwise provided by that 
        section. 
           Sec. 62.  Minnesota Statutes 1994, section 176.1351, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] Any person or entity, other 
        than a workers' compensation insurer or an employer for its own 
        employees, may make written application to the commissioner to 
        have a plan certified that provides management of quality 
        treatment to injured workers for injuries and diseases 
        compensable under this chapter.  Specifically, and without 
        limitation, an entity licensed under chapter 62C or 62D or a 
        preferred provider organization that is subject to chapter 72A 
        is eligible for certification under this section.  Each 
        application for certification shall be accompanied by a 
        reasonable fee prescribed by the commissioner which shall be 
        deposited in the special compensation fund.  A plan may be 
        certified to provide services in a limited geographic area.  A 
        certificate is valid for the period the commissioner prescribes 
        unless revoked or suspended.  Application for certification 
        shall be made in the form and manner and shall set forth 
        information regarding the proposed plan for providing services 
        as the commissioner may prescribe.  The information shall 
        include, but not be limited to: 
           (1) a list of the names of all health care providers who 
        will provide services under the managed care plan, together with 
        appropriate evidence of compliance with any licensing or 
        certification requirements for those providers to practice in 
        this state; and 
           (2) a description of the places and manner of providing 
        services under the plan. 
           Sec. 63.  Minnesota Statutes 1994, section 176.1351, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REVOCATION, SUSPENSION, AND REFUSAL TO CERTIFY; 
        PENALTIES AND ENFORCEMENT.] (a) The commissioner shall refuse to 
        certify or shall revoke or suspend the certification of a 
        managed care plan if the commissioner finds that the plan for 
        providing medical or health care services fails to meet the 
        requirements of this section, or service under the plan is not 
        being provided in accordance with the terms of a certified plan. 
           (b) In lieu of or in addition to suspension or revocation 
        under paragraph (a), the commissioner may, for any noncompliance 
        with the managed care plan as certified or any violation of a 
        statute or rule applicable to a managed care plan, assess an 
        administrative penalty payable to the special compensation fund 
        in an amount up to $25,000 for each violation or incidence of 
        noncompliance.  The commissioner may adopt emergency or 
        permanent rules necessary to implement this subdivision.  In 
        determining the level of an administrative penalty, the 
        commissioner shall consider the following factors: 
           (1) the number of workers affected or potentially affected 
        by the violation or noncompliance; 
           (2) the effect or potential effect of the violation or 
        noncompliance on workers' health, access to health services, or 
        workers' compensation benefits; 
           (3) the effect or potential effect of the violation or 
        noncompliance on workers' understanding of their rights and 
        obligations under the workers' compensation law and rules; 
           (4) whether the violation or noncompliance is an isolated 
        incident or part of a pattern of violations; and 
           (5) the potential or actual economic benefits derived by 
        the managed care plan or a participating provider by virtue of 
        the violation or noncompliance. 
           The commissioner shall give written notice to the managed 
        care plan of the penalty assessment and the reasons for the 
        penalty.  The managed care plan has 30 days from the date the 
        penalty notice is issued within which to file a written request 
        for an administrative hearing and review of the commissioner's 
        determination pursuant to section 176.85, subdivision 1. 
           (c) If the commissioner, for any reason, has cause to 
        believe that a managed care plan has or may violate a statute or 
        rule or a provision of the managed care plan as certified, the 
        commissioner may, before commencing action under paragraph (a) 
        or (b), call a conference with the managed care plan and other 
        persons who may be involved in the suspected violation or 
        noncompliance for the purpose of ascertaining the facts relating 
        to the suspected violation or noncompliance and arriving at an 
        adequate and effective means of correcting or preventing the 
        violation or noncompliance.  The commissioner may enter into 
        stipulated consent agreements with the managed care plan for 
        corrective or preventive action or the amount of the penalty to 
        be paid.  Proceedings under this paragraph shall not be governed 
        by any formal procedural requirements, and may be conducted in a 
        manner the commissioner deems appropriate under the 
        circumstances. 
           (d) The commissioner may issue an order directing a managed 
        care plan or a representative of a managed care plan to cease 
        and desist from engaging in any act or practice that is not in 
        compliance with the managed care plan as certified, or that it 
        is in violation of an applicable statute or rule.  Within 30 
        days of service of the order, the managed care plan may request 
        review of the cease and desist order by an administrative law 
        judge pursuant to chapter 14.  The decision of the 
        administrative law judge shall include findings of fact, 
        conclusions of law and appropriate orders, which shall be the 
        final decision of the commissioner.  In the event of 
        noncompliance with a cease and desist order, the commissioner 
        may institute a proceeding in district court to obtain 
        injunctive or other appropriate relief. 
           (e) A managed care plan, participating health care 
        provider, or an employer or insurer that receives services from 
        the managed care plan, shall cooperate fully with an 
        investigation by the commissioner.  For purposes of this 
        section, cooperation includes, but is not limited to, attending 
        a conference called by the commissioner under paragraph (c), 
        responding fully and promptly to any questions relating to the 
        subject of the investigation, and providing copies of records, 
        reports, logs, data, and other information requested by the 
        commissioner to assist in the investigation.  
           (f) Any person acting on behalf of a managed care plan who 
        knowingly submits false information in any report required to be 
        filed by a managed care plan is guilty of a misdemeanor. 
           Sec. 64.  Minnesota Statutes 1994, section 176.136, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [RELATIVE VALUE FEE SCHEDULE.] The liability of 
        an employer for services included in the medical fee schedule is 
        limited to the maximum fee allowed by the schedule in effect on 
        the date of the medical service, or the provider's actual fee, 
        whichever is lower.  The medical fee schedule effective on 
        October 1, 1991, shall remain in effect until the commissioner 
        adopts a new schedule by permanent rule.  The commissioner shall 
        adopt permanent rules regulating fees allowable for medical, 
        chiropractic, podiatric, surgical, and other health care 
        provider treatment or service, including those provided to 
        hospital outpatients, by implementing a relative value fee 
        schedule to be effective on October 1, 1993.  The commissioner 
        may adopt by reference the relative value fee schedule adopted 
        for the federal Medicare program or a relative value fee 
        schedule adopted by other federal or state agencies.  The 
        relative value fee schedule shall contain reasonable 
        classifications including, but not limited to, classifications 
        that differentiate among health care provider disciplines.  The 
        conversion factors for the original relative value fee schedule 
        must reasonably reflect a 15 percent overall reduction from the 
        medical fee schedule most recently in effect.  The reduction 
        need not be applied equally to all treatment or services, but 
        must represent a gross 15 percent reduction. 
           After permanent rules have been adopted to implement this 
        section, the conversion factors must be adjusted annually on 
        October 1 by no more than the percentage change computed under 
        section 176.645, but without the annual cap provided by that 
        section.  The commissioner shall annually give notice in the 
        State Register of the adjusted conversion factors and may also 
        give annual notice of any additions, deletions, or changes to 
        the relative value units or service codes adopted by the federal 
        Medicare program.  The relative value units may be statistically 
        adjusted in the same manner as for the original workers' 
        compensation relative value fee schedule.  This notice The 
        notices of the adjusted conversion factors and additions, 
        deletions, or changes to the relative value units and service 
        codes shall be in lieu of the requirements of chapter 14. 
           Sec. 65.  Minnesota Statutes 1994, section 176.136, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [LIMITATION OF LIABILITY.] (a) The liability of 
        the employer for treatment, articles, and supplies provided to 
        an employee while an inpatient or outpatient at a small hospital 
        shall be the hospital's usual and customary charge, unless the 
        charge is determined by the commissioner or a compensation judge 
        to be unreasonably excessive.  A "small hospital," for purposes 
        of this paragraph, is a hospital which has 100 or fewer licensed 
        beds. 
           (b) The liability of the employer for the treatment, 
        articles, and supplies that are not limited by subdivision 1a or 
        1c or paragraph (a) shall be limited to 85 percent of the 
        provider's usual and customary charge, or 85 percent of the 
        prevailing charges for similar treatment, articles, and supplies 
        furnished to an injured person when paid for by the injured 
        person, whichever is lower.  On this basis, the commissioner or 
        compensation judge may determine the reasonable value of all 
        treatment, services, and supplies, and the liability of the 
        employer is limited to that amount.  The commissioner may by 
        rule establish the reasonable value of a service, article, or 
        supply in lieu of the 85 percent limitation in this paragraph. 
           (c) The limitation of liability for charges provided by 
        paragraph (b) does not apply to a nursing home that participates 
        in the medical assistance program and whose rates are 
        established by the commissioner of human services. 
           Sec. 66.  Minnesota Statutes 1994, section 176.136, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EXCESSIVE FEES.] If the employer or insurer 
        determines that the charge for a health service or medical 
        service is excessive, no payment in excess of the reasonable 
        charge for that service shall be made under this chapter nor may 
        the provider collect or attempt to collect from the injured 
        employee or any other insurer or government amounts in excess of 
        the amount payable under this chapter unless the commissioner, 
        compensation judge, or court of appeals determines otherwise.  
        In such a case, the health care provider may initiate an action 
        under this chapter for recovery of the amounts deemed excessive 
        by the employer or insurer, but the employer or insurer shall 
        have the burden of proving excessiveness.  
           A charge for a health service or medical service is 
        excessive if it: 
           (1) exceeds the maximum permissible charge pursuant to 
        subdivision 1, 1a, 1b, or 1c; 
           (2) is for a service provided at a level, duration, or 
        frequency that is excessive, based upon accepted medical 
        standards for quality health care and accepted rehabilitation 
        standards; 
           (3) is for a service that is outside the scope of practice 
        of the particular provider or is not generally recognized within 
        the particular profession of the provider as of therapeutic 
        value for the specific injury or condition treated; or 
           (4) is otherwise deemed excessive or inappropriate pursuant 
        to rules adopted pursuant to this chapter.  
           Sec. 67.  Minnesota Statutes 1994, section 176.138, is 
        amended to read: 
           176.138 [MEDICAL DATA; ACCESS.] 
           (a) Notwithstanding any other state laws related to the 
        privacy of medical data or any private agreements to the 
        contrary, the release in writing, by telephone discussion, or 
        otherwise of medical data related to a current claim for 
        compensation under this chapter to the employee, employer, or 
        insurer who are parties to the claim, or to the department of 
        labor and industry, shall not require prior approval of any 
        party to the claim.  This section does not preclude the release 
        of medical data under section 175.10 or 176.231, subdivision 9.  
        Requests for pertinent data shall be made, and the date of 
        discussions with medical providers about medical data shall be 
        confirmed, in writing to the person or organization that 
        collected or currently possesses the data.  Written medical data 
        that exists at the time the request is made shall be provided by 
        the collector or possessor within seven working days of 
        receiving the request.  Nonwritten medical data may be provided, 
        but is not required to be provided, by the collector or 
        possessor.  In all cases of a request for the data or discussion 
        with a medical provider about the data, except when it is the 
        employee who is making the request, the employee shall be sent 
        written notification of the request by the party requesting the 
        data at the same time the request is made or a written 
        confirmation of the discussion.  This data shall be treated as 
        private data by the party who requests or receives the data and 
        the party receiving the data shall provide the employee or the 
        employee's attorney with a copy of all data requested by the 
        requester.  
           (b) Medical data which is not directly related to a current 
        injury or disability shall not be released without prior 
        authorization of the employee. 
           (c) The commissioner may impose a penalty of up 
        to $200 $600 payable to the assigned risk safety account against 
        a party who does not timely release data as required in this 
        section.  A party who does not treat this data as private 
        pursuant to this section is guilty of a misdemeanor.  This 
        paragraph applies only to written medical data which exists at 
        the time the request is made.  
           (d) Workers' compensation insurers and self-insured 
        employers may, for the sole purpose of identifying duplicate 
        billings submitted to more than one insurer, disclose to health 
        insurers, including all insurers writing insurance described in 
        section 60A.06, subdivision 1, clause (5)(a), nonprofit health 
        service plan corporations subject to chapter 62C, health 
        maintenance organizations subject to chapter 62D, and joint 
        self-insurance employee health plans subject to chapter 62H, 
        computerized information about dates, coded items, and charges 
        for medical treatment of employees and other medical billing 
        information submitted to them by an employee, employer, health 
        care provider, or other insurer in connection with a current 
        claim for compensation under this chapter, without prior 
        approval of any party to the claim.  The data may not be used by 
        the health insurer for any other purpose whatsoever and must be 
        destroyed after verification that there has been no duplicative 
        billing.  Any person who is the subject of the data which is 
        used in a manner not allowed by this section paragraph has a 
        cause of action for actual damages and punitive damages for a 
        minimum of $5,000. 
           Sec. 68.  Minnesota Statutes 1994, section 176.139, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FAILURE TO POST; PENALTY.] The commissioner may 
        assess a penalty of $300 $500 against the employer payable to 
        the assigned risk safety account if, after notice from the 
        commissioner, the employer violates the posting requirement of 
        this section.  
           Sec. 69.  Minnesota Statutes 1994, section 176.181, 
        subdivision 7, is amended to read: 
           Subd. 7.  [PENALTY.] Any entity that is self-insured 
        pursuant to subdivision 2, and that knowingly violates any 
        provision of subdivision 2 or any rule adopted pursuant thereto 
        is subject to a civil penalty of not more than $5,000 $10,000 
        for each offense. 
           Sec. 70.  Minnesota Statutes 1994, section 176.181, 
        subdivision 8, is amended to read: 
           Subd. 8.  [DATA SHARING.] (a) The departments of labor and 
        industry, economic security, human services, agriculture, 
        transportation, and revenue are authorized to share information 
        regarding the employment status of individuals, including but 
        not limited to payroll and withholding and income tax 
        information, and may use that information for purposes 
        consistent with this section and regarding the employment or 
        employer status of individuals, partnerships, limited liability 
        companies, corporations, or employers, including, but not 
        limited to, general contractors, intermediate contractors, and 
        subcontractors.  The commissioner shall request data in writing 
        and the responding department shall respond to the request by 
        producing the requested data within 30 days. 
           (b) The commissioner is authorized to inspect and to order 
        the production of all payroll and other business records and 
        documents of any alleged employer in order to determine the 
        employment status of persons and compliance with this section.  
        If any person or employer refuses to comply with such an order, 
        the commissioner may apply to the district court of the county 
        where the person or employer is located for an order compelling 
        production of the documents. 
           Sec. 71.  [176.1812] [COLLECTIVE BARGAINING AGREEMENTS.] 
           Subdivision 1.  [REQUIREMENTS.] Upon appropriate filing, 
        the commissioner, compensation judge, workers' compensation 
        court of appeals, and courts shall recognize as valid and 
        binding a provision in a collective bargaining agreement between 
        a qualified employer or qualified groups of employers engaged in 
        construction, construction maintenance, and related activities 
        and the certified and exclusive representative of its employees 
        to establish certain obligations and procedures relating to 
        workers' compensation.  For purposes of this section, "qualified 
        employer" means any self-insured employer, any employer, through 
        itself or any affiliate as defined in section 60D.15, 
        subdivision 2, who is responsible for the first $100,000 or more 
        of any claim, or a private employer developing or projecting an 
        annual workers' compensation premium, in Minnesota, of $250,000 
        or more.  For purposes of this section, a "qualified group of 
        employers" means a group of private employers engaged in 
        workers' compensation group self-insurance complying with 
        section 79A.03, subdivision 6, which develops or projects annual 
        workers' compensation insurance premiums of $2,000,000 or more.  
        This agreement must be limited to, but need not include, all of 
        the following: 
           (a) an alternative dispute resolution system to supplement, 
        modify, or replace the procedural or dispute resolution 
        provisions of this chapter.  The system may include mediation, 
        arbitration, or other dispute resolution proceedings, the 
        results of which may be final and binding upon the parties.  A 
        system of arbitration shall provide that the decision of the 
        arbiter is subject to review either by the workers' compensation 
        court of appeals in the same manner as an award or order of a 
        compensation judge or, in lieu of review by the workers' 
        compensation court of appeals, by the office of administrative 
        hearings, by the district court, by the Minnesota court of 
        appeals, or by the supreme court in the same manner as the 
        workers' compensation court of appeals and may provide that any 
        arbiter's award disapproved by a court be referred back to the 
        arbiter for reconsideration and possible modification; 
           (b) an agreed list of providers of medical treatment that 
        may be the exclusive source of all medical and related treatment 
        provided under this chapter which need not be certified under 
        section 176.1351; 
           (c) the use of a limited list of impartial physicians to 
        conduct independent medical examinations; 
           (d) the creation of a light duty, modified job, or return 
        to work program; 
           (e) the use of a limited list of individuals and companies 
        for the establishment of vocational rehabilitation or retraining 
        programs which list is not subject to the requirements of 
        section 176.102; 
           (f) the establishment of safety committees and safety 
        procedures; or 
           (g) the adoption of a 24-hour health care coverage plan if 
        a 24-hour plan pilot project is authorized by law, according to 
        the terms and conditions authorized by that law. 
           Subd. 2.  [FILING AND REVIEW.] A copy of the agreement and 
        the approximate number of employees who will be covered under it 
        must be filed with the commissioner.  Within 21 days of receipt 
        of an agreement, the commissioner shall review the agreement for 
        compliance with this section and the benefit provisions of this 
        chapter and notify the parties of any additional information 
        required or any recommended modification that would bring the 
        agreement into compliance.  Upon receipt of any requested 
        information or modification, the commissioner must notify the 
        parties within 21 days whether the agreement is in compliance 
        with this section and the benefit provisions of this chapter. 
           In order for any agreement to remain in effect, it must 
        provide for a timely and accurate method of reporting to the 
        commissioner necessary information regarding service cost and 
        utilization to enable the commissioner to annually report to the 
        legislature.  The information provided to the commissioner must 
        include aggregate data on the: 
           (i) person hours and payroll covered by agreements filed; 
           (ii) number of claims filed; 
           (iii) average cost per claim; 
           (iv) number of litigated claims, including the number of 
        claims submitted to arbitration, the workers' compensation court 
        of appeals, the office of administrative hearings, the district 
        court, the Minnesota court of appeals or the supreme court; 
           (v) number of contested claims resolved prior to 
        arbitration; 
           (vi) projected incurred costs and actual costs of claims; 
           (vii) employer's safety history; 
           (viii) number of workers participating in vocational 
        rehabilitation; and 
           (ix) number of workers participating in light-duty programs.
           Subd. 3.  [REFUSAL TO RECOGNIZE.] A person aggrieved by the 
        commissioner's decision concerning an agreement may request in 
        writing, within 30 days of the date the notice is issued, the 
        initiation of a contested case proceeding under chapter 14.  The 
        request to initiate a contested case must be received by the 
        department by the 30th day after the commissioner's decision.  
        An appeal from the commissioner's final decision and order may 
        be taken to the workers' compensation court of appeals pursuant 
        to sections 176.421 and 176.442. 
           Subd. 4.  [VOID AGREEMENTS.] Nothing in this section shall 
        allow any agreement that diminishes an employee's entitlement to 
        benefits as otherwise set forth in this chapter.  For the 
        purposes of this section, the procedural rights and dispute 
        resolution agreements under subdivision 1, clauses (a) to (g), 
        are not agreements which diminish an employee's entitlement to 
        benefits.  Any agreement that diminishes an employee's 
        entitlement to benefits as set forth in this chapter is null and 
        void. 
           Subd. 5.  [NOTICE TO INSURANCE CARRIER.] If the employer is 
        insured under this chapter, the collective bargaining agreement 
        provision shall not be recognized by the commissioner, 
        compensation judge, workers' compensation court of appeals, and 
        other courts unless the employer has given notice to the 
        employer's insurance carrier, in the manner provided in the 
        insurance contract, of intent to enter into an agreement with 
        its employees as provided in this section. 
           Subd. 6.  [PILOT PROGRAM.] The commissioner shall establish 
        a pilot program ending December 31, 2001, in which up to ten 
        private and up to ten public employers shall be authorized to 
        enter into valid agreements under this section with their 
        employees.  The agreements shall be recognized and enforced as 
        provided by this section.  Employers shall participate in the 
        pilot program through collectively bargained agreements with the 
        certified and exclusive representatives of their employees and 
        without regard to the dollar insurance premium limitations in 
        subdivision 1. 
           Subd. 7.  [RULES.] The commissioner may adopt emergency or 
        permanent rules necessary to implement this section. 
           Sec. 72.  Minnesota Statutes 1994, section 176.182, is 
        amended to read: 
           176.182 [BUSINESS LICENSES OR PERMITS; COVERAGE REQUIRED.] 
           Every state or local licensing agency shall withhold the 
        issuance or renewal of a license or permit to operate a business 
        in Minnesota until the applicant presents acceptable evidence of 
        compliance with the workers' compensation insurance coverage 
        requirement of section 176.181, subdivision 2, by providing the 
        name of the insurance company, the policy number, and dates of 
        coverage or the permit to self-insure.  The commissioner shall 
        assess a penalty to the employer of $1,000 $2,000 payable to the 
        assigned risk safety account, if the information is not reported 
        or is falsely reported.  
           Neither the state nor any governmental subdivision of the 
        state shall enter into any contract for the doing of any public 
        work before receiving from all other contracting parties 
        acceptable evidence of compliance with the workers' compensation 
        insurance coverage requirement of section 176.181, subdivision 2.
           This section shall not be construed to create any liability 
        on the part of the state or any governmental subdivision to pay 
        workers' compensation benefits or to indemnify the special 
        compensation fund, an employer, or insurer who pays workers' 
        compensation benefits.  
           Sec. 73.  Minnesota Statutes 1994, section 176.183, 
        subdivision 1, is amended to read: 
           Subdivision 1.  When any employee sustains an injury 
        arising out of and in the course of employment while in the 
        employ of an employer, other than the state or its political 
        subdivisions, not insured or self-insured as provided for in 
        this chapter, the employee or the employee's dependents shall 
        nevertheless receive benefits as provided for in this chapter 
        from the special compensation fund.  As used in subdivision 1 or 
        2, "employer" includes any owners or officers of a corporation 
        who direct and control the activities of employees.  In any 
        petition for benefits under this chapter, the naming of an 
        employer corporation not insured or self-insured as provided for 
        in this chapter, as a defendant, shall constitute without more 
        the naming of the owners or officers as defendants, and service 
        of notice of proceeding under this chapter on the corporation 
        shall constitute service upon the owners or officers.  An action 
        to recover benefits paid shall be instituted unless the 
        commissioner determines that no recovery is possible.  There 
        shall be no payment from the special compensation fund if there 
        is liability for the injury under the provisions of section 
        176.215, by an insurer or self-insurer. 
           Sec. 74.  Minnesota Statutes 1994, section 176.183, 
        subdivision 2, is amended to read: 
           Subd. 2.  After a hearing on a petition for benefits and 
        prior to issuing an order against the special compensation fund 
        to pay compensation benefits to an employee, a compensation 
        judge shall first make findings regarding the insurance status 
        of the employer and its liability.  The special compensation 
        fund shall not be found liable in the absence of a finding of 
        liability against the employer.  Where the liable employer is 
        found after the hearing to be not insured or self-insured as 
        provided for in this chapter, the compensation judge shall 
        assess and order the employer to pay all compensation benefits 
        to which the employee is entitled, the amount for actual and 
        necessary disbursements expended by the special compensation 
        fund, and a penalty in the amount of 60 65 percent of all 
        compensation benefits ordered to be paid.  An The award issued 
        against an employer after the hearing shall constitute a lien 
        for government services pursuant to section 514.67 on all 
        property of the employer and shall be subject to the provisions 
        of the revenue recapture act in chapter 270A.  The special 
        compensation fund may enforce the terms of that award in the 
        same manner as a district court judgment.  The commissioner of 
        labor and industry, in accordance with the terms of the order 
        awarding compensation, shall pay compensation to the employee or 
        the employee's dependent from the special compensation fund.  
        The commissioner of labor and industry shall certify to the 
        commissioner of finance and to the legislature annually the 
        total amount of compensation paid from the special compensation 
        fund under subdivision 1.  The commissioner of finance shall 
        upon proper certification reimburse the special compensation 
        fund from the general fund appropriation provided for this 
        purpose.  The amount reimbursed shall be limited to the 
        certified amount paid under this section or the appropriation 
        made for this purpose, whichever is the lesser amount.  
        Compensation paid under this section which is not reimbursed by 
        the general fund shall remain a liability of the special 
        compensation fund and shall be financed by the percentage 
        assessed under section 176.129. 
           Sec. 75.  Minnesota Statutes 1994, section 176.185, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  [PENALTY FOR IMPROPER WITHHOLDING.] An employer 
        who violates subdivision 5 after notice from the commissioner is 
        subject to a penalty of 200 400 percent of the amount withheld 
        from or charged the employee.  The penalty shall be imposed by 
        the commissioner.  Fifty Forty percent of this penalty is 
        payable to the assigned risk safety account and 50 60 percent is 
        payable to the employee. 
           Sec. 76.  Minnesota Statutes 1994, section 176.191, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORDER; EMPLOYER, INSURER, OR SPECIAL 
        COMPENSATION FUND PAYMENT.] Where compensation benefits are 
        payable under this chapter, and a dispute exists between two or 
        more employers or two or more insurers or the special 
        compensation fund as to which is liable for payment, the 
        commissioner, compensation judge, or court of appeals upon 
        appeal shall direct, unless action is taken under subdivision 2, 
        that one or more of the employers or insurers or the special 
        compensation fund make payment of the benefits pending a 
        determination of which has liability.  The special compensation 
        fund may be ordered to make payment only if it has been made a 
        party to the claim because the petitioner has alleged that one 
        or more of the employers is uninsured for workers' compensation 
        under section 176.183.  A temporary order may be issued under 
        this subdivision whether or not the employers or, insurers, or 
        special compensation fund agree to pay under the order.  
           When liability has been determined, the party held liable 
        for the benefits shall be ordered to reimburse any other party 
        for payments which the latter has made, including interest at 
        the rate of 12 percent a year.  The claimant shall also be 
        awarded a reasonable attorney fee, to be paid by the party held 
        liable for the benefits. 
           An order directing payment of benefits pending a 
        determination of liability may not be used as evidence before a 
        compensation judge, the workers' compensation court of appeals, 
        or court in which the dispute is pending. 
           Sec. 77.  Minnesota Statutes 1994, section 176.191, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [EQUITABLE APPORTIONMENT.] Equitable 
        apportionment of liability for an injury under this chapter is 
        not allowed except that apportionment among employers and 
        insurers is allowed in a settlement agreement filed pursuant to 
        section 176.521, and an employer or insurer may request 
        equitable apportionment of liability for workers' compensation 
        benefits among employer and insurers by arbitration pursuant to 
        subdivision 5.  For purposes of this subdivision, the term 
        "equitable apportionment of liability" shall include all 
        attempts to obtain contribution and/or reimbursement from other 
        employers or insurers.  To the same extent limited by this 
        subdivision, contribution and reimbursement actions based on 
        equitable apportionment are not allowed under this chapter.  If 
        the insurers choose to arbitrate apportionment, contribution, or 
        reimbursement issues pursuant to subdivision 5, the arbitration 
        proceeding is for the limited purpose of apportioning liability 
        for workers' compensation benefits payable among employers and 
        insurers.  This subdivision applies without regard to whether 
        one or more of the injuries results from cumulative trauma or a 
        specific injury, but does not apply to an occupational disease.  
        In the case of an occupational disease, section 176.66 applies.  
        In the arbitration of equitable apportionment under subdivision 
        5, the parties and the arbitrator must be guided by general 
        rules of arbitrator selection and presumptive apportionment 
        among employers and insurers that are developed and approved by 
        the commissioner of the department of labor and industry.  
        Apportionment against preexisting disability is allowed only for 
        permanent partial disability as provided in section 176.101, 
        subdivision 4a.  Nothing in this subdivision shall be 
        interpreted to repeal or in any way affect the law with respect 
        to special compensation fund statutory liability or benefits.  
           Sec. 78.  Minnesota Statutes 1994, section 176.191, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ARBITRATION.] Where a dispute exists between an 
        employer, insurer, the special compensation fund, the reopened 
        case fund, or the workers' compensation reinsurance association, 
        regarding apportionment of liability for benefits payable under 
        this chapter, the dispute and the requesting party has expended 
        over $10,000 in medical or 52 weeks worth of indemnity benefits 
        and made the request within one year thereafter, a party may be 
        submitted with consent of all interested parties require 
        submission of the dispute as to apportionment of liability among 
        employers and insurers to binding arbitration.  The decision of 
        the arbitrator shall be conclusive with respect to all issues 
        presented except as provided in subdivisions 6 and 7 on the 
        issue of apportionment among employers and insurers.  Consent of 
        the employee is not required for submission of a dispute to 
        arbitration pursuant to this section and the employee is not 
        bound by the results of the arbitration.  An arbitration award 
        shall not be admissible in any other proceeding under this 
        chapter.  Notice of the proceeding shall be given to the 
        employee.  
           The employee, or any person with material information to 
        the facts to be arbitrated, shall attend the arbitration 
        proceeding if any party to the proceeding deems it necessary. 
        Nothing said by an employee in connection with any arbitration 
        proceeding may be used against the employee in any other 
        proceeding under this chapter.  Reasonable expenses of meals, 
        lost wages, and travel of the employee or witnesses in attending 
        shall be reimbursed on a pro rata basis.  Arbitration costs 
        shall be paid by the parties, except the employee, on a pro rata 
        basis. 
           Sec. 79.  Minnesota Statutes 1994, section 176.191, 
        subdivision 8, is amended to read: 
           Subd. 8.  [ATTORNEY FEES.] No attorney's fees shall be 
        awarded under either section 176.081, subdivision 8, or 176.191 
        against any employer or insurer in connection with any 
        arbitration proceeding unless the employee chooses to retain an 
        attorney to represent the employee's interests during 
        arbitration.  
           Sec. 80.  Minnesota Statutes 1994, section 176.194, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PENALTIES.] The penalties for violations of 
        subdivision 3, clauses (1) through (6), are as follows: 
            1st through 5th violation
            of each paragraph                   written warning 
            6th through 10th violation          $2,500 $3,000 per 
            of each paragraph                   violation 
                                                in excess of five 
            11th through 30th violation         $5,000 per violation 
            11 or more violations               $6,000 per violation 
            of each paragraph                   in excess of ten 
        For violations of subdivision 3, clauses (7) and (8), the 
        penalties are: 
            1st through 5th violation
            of each paragraph                   $2,500 $3,000 per 
                                                violation 
            6th through 30th violation          $5,000 per violation 
            6 or more violations                $6,000 per violation 
            of each paragraph                   in excess of five 
           The penalties under this section may be imposed in addition 
        to other penalties under this chapter that might apply for the 
        same violation.  The penalties under this section are assessed 
        by the commissioner and are payable to the assigned risk safety 
        account.  A party may object to the penalty and request a formal 
        hearing under section 176.85.  If an entity has more than 30 
        violations within any 12-month period, in addition to the 
        monetary penalties provided, the commissioner may refer the 
        matter to the commissioner of commerce with recommendation for 
        suspension or revocation of the entity's (a) license to write 
        workers' compensation insurance; (b) license to administer 
        claims on behalf of a self-insured, the assigned risk plan, or 
        the Minnesota insurance guaranty association; (c) authority to 
        self-insure; or (d) license to adjust claims.  The commissioner 
        of commerce shall follow the procedures specified in section 
        176.195. 
           Sec. 81.  Minnesota Statutes 1994, section 176.215, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [ENFORCEMENT OF ORDER.] If the compensation 
        judge orders the general contractor, intermediate contractor, or 
        subcontractor to pay compensation benefits, the award issued 
        against the general contractor, intermediate contractor, or 
        subcontractor constitutes a lien for government services under 
        section 514.67 on all property of the general contractor, 
        intermediate contractor, or subcontractor and is subject to the 
        provisions of the revenue recapture act under chapter 270A.  The 
        special compensation fund may enforce the terms of the award in 
        the same manner as a district court judgment. 
           Sec. 82.  Minnesota Statutes 1994, section 176.221, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COMMENCEMENT OF PAYMENT.] Within 14 days 
        of notice to or knowledge by the employer of an injury 
        compensable under this chapter the payment of temporary total 
        compensation shall commence.  Within 14 days of notice to or 
        knowledge by an employer of a new period of temporary total 
        disability which is caused by an old injury compensable under 
        this chapter, the payment of temporary total compensation shall 
        commence; provided that the employer or insurer may file for an 
        extension with the commissioner within this 14-day period, in 
        which case the compensation need not commence within the 14-day 
        period but shall commence no later than 30 days from the date of 
        the notice to or knowledge by the employer of the new period of 
        disability.  Commencement of payment by an employer or insurer 
        does not waive any rights to any defense the employer has on any 
        claim or incident either with respect to the compensability of 
        the claim under this chapter or the amount of the compensation 
        due.  Where there are multiple employers, the first employer 
        shall pay, unless it is shown that the injury has arisen out of 
        employment with the second or subsequent employer.  Liability 
        for compensation under this chapter may be denied by the 
        employer or insurer by giving the employee written notice of the 
        denial of liability.  If liability is denied for an injury which 
        is required to be reported to the commissioner under section 
        176.231, subdivision 1, the denial of liability must be filed 
        with the commissioner within 14 days after notice to or 
        knowledge by the employer of an injury which is alleged to be 
        compensable under this chapter.  If the employer or insurer has 
        commenced payment of compensation under this subdivision but 
        determines within 30 60 days of notice to or knowledge by the 
        employer of the injury that the disability is not a result of a 
        personal injury, payment of compensation may be terminated upon 
        the filing of a notice of denial of liability within 30 60 days 
        of notice or knowledge.  After the 30-day 60-day period, payment 
        may be terminated only by the filing of a notice as provided 
        under section 176.239.  Upon the termination, payments made may 
        be recovered by the employer if the commissioner or compensation 
        judge finds that the employee's claim of work related disability 
        was not made in good faith.  A notice of denial of liability 
        must state in detail the facts forming the basis for the denial 
        and specific reasons explaining why the claimed injury or 
        occupational disease was determined not to be within the scope 
        and course of employment and shall include the name and 
        telephone number of the person making this determination.  
           Sec. 83.  Minnesota Statutes 1994, section 176.221, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PENALTY.] If the employer or insurer does not 
        begin payment of compensation within the time limit prescribed 
        under subdivision 1 or 8, the commissioner may assess a penalty, 
        payable to the assigned risk safety account, which shall be a 
        percentage of the amount of compensation to which the employee 
        is entitled to receive up to the date compensation payment is 
        made.  
           The amount of penalty shall be determined as follows: 
                  Numbers of days late           Penalty  
                        1 - 15               25 30 percent of 
                                               compensation due,  
                                               not to exceed $375 
                                               $500, 
                       16 - 30               50 55 percent of 
                                               compensation due, 
                                               not to exceed $1,140 
                                               $1,500, 
                       31 - 60               75 80 percent of 
                                               compensation due, 
                                               not to exceed $2,878 
                                               $3,500, 
                       61 or more           100 105 percent of 
                                               compensation due, 
                                               not to exceed $3,838 
                                               $5,000. 
           The penalty under this section is in addition to any 
        penalty otherwise provided by statute.  
           Sec. 84.  Minnesota Statutes 1994, section 176.221, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [PENALTY.] In lieu of any other penalty under 
        this section, the commissioner may assess a penalty of up 
        to $1,000 $2,000 payable to the assigned risk safety account for 
        each instance in which an employer or insurer does not pay 
        benefits or file a notice of denial of liability within the time 
        limits prescribed under this section.  
           Sec. 85.  Minnesota Statutes 1994, section 176.221, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INTEREST.] Any payment of compensation, charges 
        for treatment under section 176.135, rehabilitation expenses 
        under section 176.102, subdivision 9, or penalties assessed 
        under this chapter not made when due shall bear interest at the 
        rate of eight percent a year from the due date to the date the 
        payment is made or at the rate set by section 549.09, 
        subdivision 1, whichever is greater.  
           For the purposes of this subdivision, permanent partial 
        disability payment is due 14 days after receipt of the first 
        medical report which contains a disability rating if such 
        payment is otherwise due under this chapter, and charges for 
        treatment under section 176.135 are due 30 calendar days after 
        receiving the bill and necessary medical data.  
           If the claim of the employee or dependent for compensation 
        is contested in a proceeding before a compensation judge or the 
        commissioner, the decision of the judge or commissioner shall 
        provide for the payment of unpaid interest on all compensation 
        awarded, including interest accruing both before and after the 
        filing of the decision. 
           Sec. 86.  [176.223] [PROMPT PAYMENT REPORT.] 
           The department shall publish an annual report providing 
        data on the promptness of all insurers and self-insurers in 
        making first payments on a claim for injury.  The report shall 
        identify all insurers and self-insurers and state the percentage 
        of first payments made within 14 days from the last date worked 
        for each of the insurers and self-insurers.  The report shall 
        also list the total number of claims and the number of claims 
        paid within the 14-day standard.  Each report shall contain the 
        required information for each of the last four years the report 
        has been compiled so that a total of five years is included.  
        The department shall make the report available to employers and 
        shall provide a copy to each insurer and self-insurer listed in 
        the report for the current year. 
           Sec. 87.  Minnesota Statutes 1994, section 176.225, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GROUNDS.] Upon reasonable notice and 
        hearing or opportunity to be heard, the commissioner, a 
        compensation judge, or upon appeal, the court of appeals or the 
        supreme court may shall award compensation, in addition to the 
        total amount of compensation award, of up to 25 30 percent of 
        that total amount where an employer or insurer has: 
           (a) instituted a proceeding or interposed a defense which 
        does not present a real controversy but which is frivolous or 
        for the purpose of delay; or, 
           (b) unreasonably or vexatiously delayed payment; or, 
           (c) neglected or refused to pay compensation; or, 
           (d) intentionally underpaid compensation; or 
           (e) frivolously denied a claim; or 
           (f) unreasonably or vexatiously discontinued compensation 
        in violation of sections 176.238 and 176.239. 
           For the purpose of this section, "frivolously" means 
        without a good faith investigation of the facts or on a basis 
        that is clearly contrary to fact or law. 
           Sec. 88.  Minnesota Statutes 1994, section 176.225, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PENALTY.] Where the employer is guilty of 
        inexcusable delay in making payments, the payments which are 
        found to be delayed shall be increased by ten 25 percent.  
        Withholding amounts unquestionably due because the injured 
        employee refuses to execute a release of the employee's right to 
        claim further benefits will be regarded as inexcusable delay in 
        the making of compensation payments.  If any sum ordered by the 
        department to be paid is not paid when due, and no appeal of the 
        order is made, the sum shall bear interest at the rate of 12 
        percent per annum.  Any penalties paid pursuant to this section 
        shall not be considered as a loss or expense item for purposes 
        of a petition for a rate increase made pursuant to chapter 79.  
           Sec. 89.  Minnesota Statutes 1994, section 176.231, 
        subdivision 10, is amended to read: 
           Subd. 10.  [FAILURE TO FILE REQUIRED REPORT, PENALTY.] If 
        an employer, insurer, physician, chiropractor, or other health 
        provider fails to file with the commissioner any report required 
        by this section in the manner and within the time limitations 
        prescribed, or otherwise fails to provide a report required by 
        this section in the manner provided by this section, the 
        commissioner may impose a penalty of up to $200 $500 for each 
        failure. 
           The imposition of a penalty may be appealed to a 
        compensation judge within 30 days of notice of the penalty. 
           Penalties collected by the state under this subdivision 
        shall be paid into the assigned risk safety account. 
           Sec. 90.  Minnesota Statutes 1994, section 176.238, 
        subdivision 6, is amended to read: 
           Subd. 6.  [EXPEDITED HEARING BEFORE A COMPENSATION JUDGE.] 
        A hearing before a compensation judge shall be held within 30 60 
        calendar days after the office receives the file from the 
        commissioner if:  
           (a) an objection to discontinuance has been filed under 
        subdivision 4 within 60 calendar days after the notice of 
        discontinuance was filed and where no administrative conference 
        has been held; 
           (b) an objection to discontinuance has been filed under 
        subdivision 4 within 60 calendar days after the commissioner's 
        decision under this section has been issued; 
           (c) a petition to discontinue has been filed by the insurer 
        in lieu of filing a notice of discontinuance; or 
           (d) a petition to discontinue has been filed within 60 
        calendar days after the commissioner's decision under this 
        section has been issued.  
           If the petition or objection is filed later than the 
        deadlines listed above, the expedited procedures in this section 
        apply only where the employee is unemployed at the time of 
        filing the objection and shows, to the satisfaction of the chief 
        administrative judge, by sworn affidavit, that the failure to 
        file the objection within the deadlines was due to some 
        infirmity or incapacity of the employee or to circumstances 
        beyond the employee's control.  The hearing shall be limited to 
        the issues raised by the notice or petition unless all parties 
        agree to expanding the issues.  If the issues are expanded, the 
        time limits for hearing and issuance of a decision by the 
        compensation judge under this subdivision shall not apply.  
           Once a hearing date has been set, a continuance of the 
        hearing date will be granted only under the following 
        circumstances:  
           (a) the employer has agreed, in writing, to a continuation 
        of the payment of benefits pending the outcome of the hearing; 
        or 
           (b) the employee has agreed, in a document signed by the 
        employee, that benefits may be discontinued pending the outcome 
        of the hearing.  
           Absent a clear showing of surprise at the hearing or the 
        unexpected unavailability of a crucial witness, all evidence 
        must be introduced at the hearing.  If it is necessary to accept 
        additional evidence or testimony after the scheduled hearing 
        date, it must be submitted no later than 14 days following the 
        hearing, unless the compensation judge, for good cause, 
        determines otherwise.  
           The compensation judge shall issue a decision pursuant to 
        this subdivision within 30 days following the close of the 
        hearing record.  
           Sec. 91.  Minnesota Statutes 1994, section 176.238, 
        subdivision 10, is amended to read: 
           Subd. 10.  [FINES; VIOLATION.] An employer who violates 
        requirements set forth in this section or section 176.239 is 
        subject to a fine of up to $500 $1,000 for each violation 
        payable to the special compensation fund.  
           Sec. 92.  Minnesota Statutes 1994, section 176.261, is 
        amended to read: 
           176.261 [EMPLOYEE OF COMMISSIONER OF THE DEPARTMENT OF 
        LABOR AND INDUSTRY MAY ACT FOR AND ADVISE A PARTY TO A 
        PROCEEDING.] 
           When requested by an employer or an employee or an 
        employee's dependent, the commissioner of the department of 
        labor and industry may designate one or more of the division 
        employees to advise that party of rights under this chapter, and 
        as far as possible to assist in adjusting differences between 
        the parties.  The person so designated may appear in person in 
        any proceedings under this chapter as the representative or 
        adviser of the party.  In such case, the party need not be 
        represented by an attorney at law.  
           Prior to advising an employee or employer to seek 
        assistance outside of the department, the department must refer 
        employers and employees seeking advice or requesting assistance 
        in resolving a dispute to an attorney or rehabilitation and 
        medical specialist employed by the department, whichever is 
        appropriate. 
           The department must make efforts to settle problems of 
        employees and employers by contacting third parties, including 
        attorneys, insurers, and health care providers, on behalf of 
        employers and employees and using the department's persuasion to 
        settle issues quickly and cooperatively.  The obligation to make 
        efforts to settle problems exists whether or not a formal claim 
        has been filed with the department. 
           Sec. 93.  Minnesota Statutes 1994, section 176.2615, 
        subdivision 7, is amended to read: 
           Subd. 7.  [DETERMINATION.] If the parties do not agree to a 
        settlement, the settlement judge shall summarily hear and 
        determine the issues and issue an order in accordance with 
        section 176.305, subdivision 1a., except that there is no appeal 
        or request for a formal de novo hearing from the order.  Any 
        determination by a settlement judge may not be considered as 
        evidence in any other proceeding and the issues decided are not 
        res judicata in any other proceeding shall be res judicata in 
        subsequent proceeding concerning issues determined under this 
        section. 
           Sec. 94.  Minnesota Statutes 1994, section 176.275, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [FILING.] If a document is required to be 
        filed by this chapter or any rules adopted pursuant to authority 
        granted by this chapter, the filing shall be completed by the 
        receipt of the document at the division, department, office, or 
        the court of appeals.  The division, department, office, and the 
        court of appeals shall accept any document which has been 
        delivered to it for legal filing immediately upon its receipt, 
        but may refuse to accept any form or document that lacks the 
        name of the injured employee, employer, or insurer, the date of 
        injury, or the injured employee's social security number.  If 
        the injured employee has fewer than three days of lost time from 
        work, the party submitting the required document must attach to 
        it, at the time of filing, a copy of the first report of injury. 
           A notice or other document required to be served or filed 
        at either the department, the office, or the court of appeals 
        which is inadvertently served or filed at the wrong one of these 
        agencies shall be deemed to have been served or filed with the 
        proper agency.  The receiving agency shall note the date of 
        receipt of a document and shall forward the documents to the 
        proper agency no later than two working days following receipt.  
           Sec. 95.  Minnesota Statutes 1994, section 176.281, is 
        amended to read: 
           176.281 [ORDERS, DECISIONS, AND AWARDS; FILING; SERVICE.] 
           When the commissioner or compensation judge or office of 
        administrative hearings or the workers' compensation court of 
        appeals has rendered a final order, decision, or award, or 
        amendment to an order, decision, or award, it shall be filed 
        immediately with the commissioner.  If the commissioner, 
        compensation judge, office of administrative hearings, or 
        workers' compensation court of appeals has rendered a final 
        order, decision, or award, or amendment thereto, the 
        commissioner or the office of administrative hearings or the 
        workers' compensation court of appeals shall immediately serve a 
        copy upon every party in interest, together with a notification 
        of the date the order was filed. 
           On all orders, decisions, awards, and other documents, the 
        commissioner or compensation judge or office of administrative 
        hearings or the workers' compensation court of appeals may 
        digitize the signatures of all officials, including judges, for 
        the use of electronic data interchange and clerical automation.  
        These signatures shall have the same legal authority of an 
        original signature, provided that proper security is used to 
        safeguard the use of the digitized signatures and each digitized 
        signature has been certified by the division, department, 
        office, or court of appeals before its use, in accordance with 
        rules adopted by that agency or court.  
           Sec. 96.  Minnesota Statutes 1994, section 176.285, is 
        amended to read: 
           176.285 [SERVICE OF PAPERS AND NOTICES.] 
           Service of papers and notices shall be by mail or otherwise 
        as the commissioner or the chief administrative law judge may by 
        rule direct.  Where service is by mail, service is effected at 
        the time mailed if properly addressed and stamped.  If it is so 
        mailed, it is presumed the paper or notice reached the party to 
        be served.  However, a party may show by competent evidence that 
        that party did not receive it or that it had been delayed in 
        transit for an unusual or unreasonable period of time.  In case 
        of nonreceipt or delay, an allowance shall be made for the 
        party's failure to assert a right within the prescribed time.  
           Where service to the division, department, office, or court 
        of appeals is by electronic filing, digitized signatures may be 
        used provided that the signature has been certified by the 
        department no later than five business days after filing.  The 
        department or court may adopt rules for the certification of 
        signatures. 
           When the electronic filing of a legal document with the 
        department marks the beginning of a prescribed time for another 
        party to assert a right, the prescribed time for another party 
        to assert a right shall be lengthened by two calendar days when 
        it can be shown that service to the other party was by mail.  
           The commissioner and the chief administrative law judge 
        shall ensure that proof of service of all papers and notices 
        served by their respective agencies is placed in the official 
        file of the case.  
           Sec. 97.  Minnesota Statutes 1994, section 176.291, is 
        amended to read: 
           176.291 [DISPUTES; PETITIONS; PROCEDURE.] 
           Where there is a dispute as to a question of law or fact in 
        connection with a claim for compensation, a party may serve on 
        all other parties and file a notarized petition with the 
        commissioner stating the matter in dispute.  The petition shall 
        be on a form prescribed by the commissioner and shall be signed 
        by the petitioner. 
           The petition shall also state and include, where applicable:
           (1) names and residence or business address of parties; 
           (2) facts relating to the employment at the time of injury, 
        including amount of wages received; 
           (3) extent and character of injury; 
           (4) notice to or knowledge by employer of injury; 
           (5) copies of written medical reports or other information 
        in support of the claim; 
           (6) names and addresses of all known witnesses intended to 
        be called in support of the claim; 
           (7) the desired location of any hearing and estimated time 
        needed to present evidence at the hearing; 
           (8) any requests for a prehearing or settlement conference; 
           (9) a list of all known third parties, including the 
        departments of human services and economic security, who may 
        have paid any medical bills or other benefits to the employee 
        for the injuries or disease alleged in the petition or for the 
        time the employee was unable to work due to the injuries or 
        disease, together with a listing of the amounts paid by each; 
           (10) the nature and extent of the claim; and 
           (11) a request for an expedited hearing which must include 
        an attached affidavit of significant financial hardship which 
        complies with the requirements of section 176.341, subdivision 6.
           Incomplete petitions may be stricken from the calendar as 
        provided by section 176.305, subdivision 4.  Within 30 days of a 
        request by a party, an employee who has filed a claim petition 
        pursuant to section 176.271 or this section shall furnish a list 
        of physicians and health care providers from whom the employee 
        has received treatment for the same or a similar condition as 
        well as authorizations to release relevant information, data, 
        and records to the requester.  The petition may be stricken from 
        the calendar upon motion of a party for failure to timely 
        provide the required list of health care providers or 
        authorizations.  
           Sec. 98.  Minnesota Statutes 1994, section 176.305, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [SETTLEMENT AND PRETRIAL CONFERENCES; SUMMARY 
        DECISION.] The commissioner shall schedule a settlement 
        conference, if appropriate, within 60 days after receiving the 
        petition.  All parties must appear at the conference, either 
        personally or by representative, must be prepared to discuss 
        settlement of all issues, and must be prepared to discuss or 
        present the information required by the joint rules of the 
        division and the office.  If a representative appears on behalf 
        of a party, the representative must have authority to fully 
        settle the matter.  
           If settlement is not reached, the presiding officer may 
        require the parties to present copies of all documentary 
        evidence not previously filed and a summary of the evidence they 
        will present at a formal hearing.  If appropriate, a written 
        summary decision shall be issued within ten days after the 
        conference stating the issues and a determination of each 
        issue.  If a party fails to appear at the conference, all issues 
        may be determined contrary to the absent party's interest, 
        provided the party in attendance presents a prima facie case.  
           The summary decision is final unless a written request for 
        a formal hearing is served on all parties and filed with the 
        commissioner within 30 days after the date of service and filing 
        of the summary decision.  Within ten days after receipt of the 
        request, the commissioner shall certify the matter to the office 
        for a de novo hearing.  In proceedings under section 176.2615, 
        the summary decision is final and not subject to appeal or de 
        novo proceedings. 
           Sec. 99.  Minnesota Statutes 1994, section 176.83, 
        subdivision 5, is amended to read: 
           Subd. 5.  [TREATMENT STANDARDS FOR MEDICAL SERVICES.] In 
        consultation with the medical services review board or the 
        rehabilitation review panel, the commissioner shall adopt 
        emergency and permanent rules establishing standards and 
        procedures for health care provider treatment.  The rules shall 
        apply uniformly to all providers including those providing 
        managed care under section 176.1351.  The rules shall be used to 
        determine whether a provider of health care services and 
        rehabilitation services, including a provider of medical, 
        chiropractic, podiatric, surgical, hospital, or other services, 
        is performing procedures or providing services at a level or 
        with a frequency that is excessive, unnecessary, or 
        inappropriate under section 176.135, subdivision 1, based upon 
        accepted medical standards for quality health care and accepted 
        rehabilitation standards.  
           The rules shall include, but are not limited to, the 
        following: 
           (1) criteria for diagnosis and treatment of the most common 
        work-related injuries including, but not limited to, low back 
        injuries and upper extremity repetitive trauma injuries; 
           (2) criteria for surgical procedures including, but not 
        limited to, diagnosis, prior conservative treatment, supporting 
        diagnostic imaging and testing, and anticipated outcome 
        criteria; 
           (3) criteria for use of appliances, adoptive adaptive 
        equipment, and use of health clubs or other exercise facilities; 
           (4) criteria for diagnostic imaging procedures; 
           (5) criteria for inpatient hospitalization; and 
           (6) criteria for treatment of chronic pain. 
           If it is determined by the payer that the level, frequency 
        or cost of a procedure or service of a provider is excessive, 
        unnecessary, or inappropriate according to the standards 
        established by the rules, the provider shall not be paid for the 
        procedure, service, or cost by an insurer, self-insurer, or 
        group self-insurer, and the provider shall not be reimbursed or 
        attempt to collect reimbursement for the procedure, service, or 
        cost from any other source, including the employee, another 
        insurer, the special compensation fund, or any government 
        program unless the commissioner or compensation judge determines 
        at a hearing or administrative conference that the level, 
        frequency, or cost was not excessive under the rules in which 
        case the insurer, self-insurer, or group self-insurer shall make 
        the payment deemed reasonable.  
           A rehabilitation provider who is determined by the 
        rehabilitation review panel board, after hearing, to be 
        consistently performing procedures or providing services at an 
        excessive level or cost may be prohibited from receiving any 
        further reimbursement for procedures or services provided under 
        this chapter.  A prohibition imposed on a provider under this 
        subdivision may be grounds for revocation or suspension of the 
        provider's license or certificate of registration to provide 
        health care or rehabilitation service in Minnesota by the 
        appropriate licensing or certifying body.  The commissioner and 
        medical services review board shall review excessive, 
        inappropriate, or unnecessary health care provider treatment 
        under section 176.103, subdivision 2. 
           Sec. 100.  Minnesota Statutes 1994, section 176.84, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTY.] The commissioner or compensation judge 
        may impose a penalty of $300 $500 for each violation of 
        subdivision 1. 
           Sec. 101.  [182.676] [SAFETY COMMITTEES.] 
           Every public or private employer of more than 25 employees 
        shall establish and administer a joint labor-management safety 
        committee.  
           Every public or private employer of 25 or fewer employees 
        shall establish and administer a safety committee if: 
           (1) the employer has a lost workday cases incidence rate in 
        the top ten percent of all rates for employers in the same 
        industry; or 
           (2) the workers' compensation premium classification 
        assigned to the greatest portion of the payroll for the employer 
        has a pure premium rate as reported by the workers' compensation 
        rating association in the top 25 percent of premium rates for 
        all classes. 
           A safety committee must hold regularly scheduled meetings 
        unless otherwise provided in a collective bargaining agreement. 
           Employee safety committee members must be selected by 
        employees.  An employer that fails to establish or administer a 
        safety committee as required by this section may be cited by the 
        commissioner.  A citation is punishable as a serious violation 
        under section 182.666. 
           The commissioner may adopt emergency or permanent rules 
        necessary to implement this section.  
           Sec. 102.  Laws 1994, chapter 625, article 5, section 7, is 
        amended to read: 
           Sec. 7.  [24-HOUR COVERAGE.] 
           As part of the implementation report submitted on January 
        1, 1996, as required under Minnesota Statutes, section 62Q.41, 
        The commissioners of commerce, health, and labor and industry 
        shall develop a 24-hour coverage plan incorporating and on a 
        pilot project basis, coordinating the health component medical 
        benefits of workers' compensation with health care coverage 
        benefits to be offered by an integrated service network, health 
        maintenance organization, or an insurer or self-insured employer 
        under Minnesota Statutes, chapters 62A, 62C, 62D, 62H, 62N, 79, 
        and 79A, and Minnesota Statutes, section 176.181.  The 
        commissioners shall also make provide the plan and 
        recommendations of any legislative changes that may be needed to 
        implement this plan, to the legislature by January 1, 1996. 
           Sec. 103.  [SMALL BUSINESS WORKERS' COMPENSATION SAFETY 
        PILOT PROJECT.] 
           The commissioner of commerce shall by January 1, 1996, 
        contract with the division of environmental and occupational 
        health of the school of public health of the University of 
        Minnesota for a pilot injury prevention project.  The contract 
        shall require the department of environmental and occupational 
        health to consult and provide assistance about ergonomic 
        problems to small employers insured by the state assigned risk 
        plan.  The consultative and assistance services shall focus on 
        employers having employees that can most benefit from the 
        consultation and assistance.  The contract shall be for the 
        period January 1, 1996 to December 31, 1997.  For the purpose of 
        this section, small employer means an employer with less than 
        500 employees. 
           Sec. 104.  [SMALL BUSINESS INJURY AND ILLNESS PREVENTION 
        SURVEY.] 
           The division of environmental and occupational health of 
        the school of public health of the University of Minnesota shall 
        evaluate injury and illness prevention activities of small 
        business by surveying small businesses to assess the following: 
           (1) current use of occupational safety and health services 
        by small businesses; 
           (2) specific areas in which small business needs 
        assistance; 
           (3) in what form is desired assistance most helpful; 
           (4) what services are sponsored by public and public sector 
        programs; 
           (5) what measures exist to assess the effectiveness of 
        these programs; and 
           (6) how can these programs be best adapted by Minnesota. 
           The division shall provide technical assistance and advice 
        to small businesses as part of the survey process. 
           For the purpose of this section, small employer means a 
        employer with less than 500 employees. 
           The survey shall be completed by January 1, 1996.  The 
        division shall report the survey results and any recommendations 
        to the legislature and the commissioner of labor and industry by 
        February 1, 1996. 
           Sec. 105.  [LEGISLATIVE AUDITOR; ASSIGNED RISK EVALUATION.] 
           The legislative audit commission is requested to direct the 
        legislative auditor to conduct an evaluation of the assigned 
        risk plan created by Minnesota Statutes, sections 79.251 to 
        79.252.  The evaluation shall include: 
           (1) whether the assigned risk plan should be organized and 
        operated in a different manner; 
           (2) the development of strategies that permits small safe 
        employers to receive the benefit of their safe workplace through 
        reduced premiums; 
           (3) safety practices of unsafe employers placed in the 
        assigned risk plan due to their own poor safety record or the 
        poor safety record of their industry; 
           (4) an analysis of the claims adjusting and reserving 
        practices of the plan; and 
           (5) a plan for the state fund mutual insurance company to 
        be the sole service company or insurer servicing policies or 
        contracts of coverage under the assigned risk plan. 
           The evaluation shall specifically focus on developing 
        alternative insurance techniques for small employers in the 
        assigned risk plan such as grouping or self-insurance that can 
        be utilized to reduce insurance premiums. 
           The legislative auditor shall report findings of the 
        evaluation to the legislature by January 15, 1996. 
           Sec. 106.  [APPROPRIATION; SURVEY.] 
           $150,000 is appropriated from the assigned risk safety 
        account in the special compensation fund to the commissioner of 
        commerce for the biennium ending June 30, 1997, for the purpose 
        of the small business injury and illness prevention survey. 
           Sec. 107.  [APPROPRIATION; SURVEY.] 
           $200,000 is appropriated for the biennium ending June 30, 
        1997, from the assigned risk safety account in the special 
        compensation fund to the board of regents of the University of 
        Minnesota for the purpose of the small business workers' 
        compensation safety pilot project. 
           Sec. 108.  [APPROPRIATION.] 
           $960,000 is appropriated from the special compensation fund 
        to the department of labor and industry for the biennium ending 
        June 30, 1997, for the purposes of this act. 
           Sec. 109.  [INCONSISTENT LAWS SUPERSEDED.] 
           Notwithstanding the order of final enactment, the 
        amendments to Minnesota Statutes, section 175.16, by this act, 
        supersede any conflicting provision of law enacted by the 1995 
        regular legislative session. 
           Sec. 110.  [REPEALER.] 
           Minnesota Statutes 1994, sections 79.53, subdivision 2; 
        79.54; 79.56, subdivision 2; 79.57; 79.58; 176.011, subdivision 
        26; 176.081, subdivisions 2, 5, and 8; 176.103, subdivision 2a; 
        176.132; 176.133; 176.191, subdivision 2; and 176.232, are 
        repealed. 
           Sec. 111.  [EFFECTIVE DATE; TRANSITION.] 
           Sections 11 to 16 (79.52 to 79.60) are effective on January 
        1, 1996.  Rates and rating plans in use as of January 1, 1996, 
        may continue to be used until such time as an amendment thereto 
        or a new rate or rating plan is filed, at which time such 
        submission shall be subject to this article.  
           Sec. 112.  [EFFECTIVE DATE.] 
           Sections 43 (175.16), 58 (176.129, subd. 9), 63 (176.1351, 
        subd. 5), and 109 are effective the day following final 
        enactment.  Sections 4 (79.085), 5 (79.211, subd. 1), 44 to 47 
        (176.011, subd. 16 to 176.081, subd. 7a), 57 (176.108), 79 
        (176.191, subd. 8), 82 to 92 (176.221, subd. 1 to 176.261), and 
        94 (176.275, subd. 1) are effective October 1, 1995.  Sections 9 
        and 10 (79.34 and 79.35) are effective January 1, 1996.  Section 
        51 (176.102, subd. 11) applies to a personal injury, as defined 
        under Minnesota Statutes, section 176.011, subdivision 16, 
        occurring on or after October 1, 1995.  Sections 28 to 41 
        (79A.19 to 79A.32) are effective August 1, 1995.  Sections 78 
        (176.191, subd. 1a) and 79 (176.191, subd. 5) are effective for 
        apportionment proceedings instituted after July 1, 1995. 
           Presented to the governor May 23, 1995 
           Signed by the governor May 25, 1995, 3:42 p.m.

Official Publication of the State of Minnesota
Revisor of Statutes