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

  

                         Laws of Minnesota 1992 

                        CHAPTER 510-S.F.No. 2107 
           An act relating to workers' compensation; providing 
          for comprehensive reform; regulating benefits; 
          providing for medical cost control; requiring improved 
          safety measures; regulating attorneys; providing for 
          more efficient administrative procedures; eliminating 
          the second injury fund; regulating insurance; 
          reforming the assigned risk plan; regulating fraud; 
          imposing penalties; amending Minnesota Statutes 1990, 
          sections 79.251, by adding subdivisions; 79.252, 
          subdivisions 1 and 3; 79.58, by adding a subdivision; 
          79A.02, by adding subdivisions; 79A.03, subdivisions 
          3, 4, 7, and 9; 79A.04, subdivision 2; 79A.06, 
          subdivision 5; 175.007; 176.011, subdivisions 9 and 
          11a; 176.081, subdivisions 1, 2, and 3; 176.101, 
          subdivisions 1, 2, 5, 6, and 8; 176.102, subdivisions 
          1, 2, 4, 6, 9, and 11; 176.103, subdivisions 2, 3, and 
          by adding a subdivision; 176.105, subdivision 1; 
          176.106, subdivision 6; 176.111, subdivision 18; 
          176.129, subdivision 10; 176.130, subdivisions 8 and 
          9; 176.132, subdivision 1; 176.135, subdivisions 1, 5, 
          6, and 7; 176.136, subdivisions 1, 2, and by adding 
          subdivisions; 176.137, subdivision 5; 176.138; 
          176.139, subdivision 2; 176.155, subdivision 1; 
          176.179; 176.181, subdivision 3, and by adding a 
          subdivision; 176.182; 176.183; 176.185, subdivision 
          5a; 176.194, subdivisions 4 and 5; 176.221, 
          subdivisions 3 and 3a; 176.231, subdivision 10; 
          176.261; 176.421, subdivision 1; 176.461; 176.645, 
          subdivisions 1 and 2; 176.83, subdivision 5, and by 
          adding a subdivision; 176A.03, by adding a 
          subdivision; 480B.01, subdivisions 1 and 10; 609.52, 
          subdivision 2; proposing coding for new law in 
          Minnesota Statutes, chapter 79; 79A; and 176; 
          repealing Minnesota Statutes 1990, sections 176.131; 
          176.135, subdivision 3; and 176.136, subdivision 5. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                                BENEFITS
    Section 1.  Minnesota Statutes 1990, section 176.011, 
subdivision 9, is amended to read: 
    Subd. 9.  [EMPLOYEE.] "Employee" means any person who 
performs services for another for hire including the following: 
    (1) an alien; 
    (2) a minor; 
    (3) a sheriff, deputy sheriff, constable, marshal, police 
officer, firefighter, county highway engineer, and peace officer 
while engaged in the enforcement of peace or in the pursuit or 
capture of a person charged with or suspected of crime; 
    (4) a person requested or commanded to aid an officer in 
arresting or retaking a person who has escaped from lawful 
custody, or in executing legal process, in which cases, for 
purposes of calculating compensation under this chapter, the 
daily wage of the person shall be the prevailing wage for 
similar services performed by paid employees; 
    (5) a county assessor; 
    (6) an elected or appointed official of the state, or of a 
county, city, town, school district, or governmental subdivision 
in the state.  An officer of a political subdivision elected or 
appointed for a regular term of office, or to complete the 
unexpired portion of a regular term, shall be included only 
after the governing body of the political subdivision has 
adopted an ordinance or resolution to that effect; 
      (7) an executive officer of a corporation, except those 
executive officers excluded by section 176.041; 
      (8) a voluntary uncompensated worker, other than an inmate, 
rendering services in state institutions under the commissioners 
of human services and corrections similar to those of officers 
and employees of the institutions, and whose services have been 
accepted or contracted for by the commissioner of human services 
or corrections as authorized by law.  In the event of injury or 
death of the worker, the daily wage of the worker, for the 
purpose of calculating compensation under this chapter, shall be 
the usual wage paid at the time of the injury or death for 
similar services in institutions where the services are 
performed by paid employees; 
      (9) a voluntary uncompensated worker engaged in peace time 
in the civil defense program when ordered to training or other 
duty by the state or any political subdivision of it.  The daily 
wage of the worker, for the purpose of calculating compensation 
under this chapter, shall be the usual wage paid at the time of 
the injury or death for similar services performed by paid 
employees; 
    (10) a voluntary uncompensated worker participating in a 
program established by a county welfare board.  In the event of 
injury or death of the worker, the wage of the worker, for the 
purpose of calculating compensation under this chapter, shall be 
the usual wage paid in the county at the time of the injury or 
death for similar services performed by paid employees working a 
normal day and week; 
    (11) a voluntary uncompensated worker accepted by the 
commissioner of natural resources who is rendering services as a 
volunteer pursuant to section 84.089.  The daily wage of the 
worker for the purpose of calculating compensation under this 
chapter, shall be the usual wage paid at the time of injury or 
death for similar services performed by paid employees; 
    (12) a voluntary uncompensated worker in the building and 
construction industry who renders services for joint 
labor-management nonprofit community service projects.  The 
daily wage of the worker for the purpose of calculating 
compensation under this chapter shall be the usual wage paid at 
the time of injury or death for similar services performed by 
paid employees; 
    (12) (13) a member of the military forces, as defined in 
section 190.05, while in state active service, as defined in 
section 190.05, subdivision 5a.  The daily wage of the member 
for the purpose of calculating compensation under this chapter 
shall be based on the member's usual earnings in civil life.  If 
there is no evidence of previous occupation or earning, the 
trier of fact shall consider the member's earnings as a member 
of the military forces; 
    (13) (14) a voluntary uncompensated worker, accepted by the 
director of the Minnesota historical society, rendering services 
as a volunteer, pursuant to chapter 138.  The daily wage of the 
worker, for the purposes of calculating compensation under this 
chapter, shall be the usual wage paid at the time of injury or 
death for similar services performed by paid employees; 
    (14) (15) a voluntary uncompensated worker, other than a 
student, who renders services at the Minnesota state academy for 
the deaf or the Minnesota state academy for the blind, and whose 
services have been accepted or contracted for by the state board 
of education, as authorized by law.  In the event of injury or 
death of the worker, the daily wage of the worker, for the 
purpose of calculating compensation under this chapter, shall be 
the usual wage paid at the time of the injury or death for 
similar services performed in institutions by paid employees; 
    (15) (16) a voluntary uncompensated worker, other than a 
resident of the veterans home, who renders services at a 
Minnesota veterans home, and whose services have been accepted 
or contracted for by the commissioner of veterans affairs, as 
authorized by law.  In the event of injury or death of the 
worker, the daily wage of the worker, for the purpose of 
calculating compensation under this chapter, shall be the usual 
wage paid at the time of the injury or death for similar 
services performed in institutions by paid employees; 
    (16) (17) a worker who renders in-home attendant care 
services to a physically handicapped person, and who is paid 
directly by the commissioner of human services for these 
services, shall be an employee of the state within the meaning 
of this subdivision, but for no other purpose; 
    (17) (18) students enrolled in and regularly attending the 
medical school of the University of Minnesota in the graduate 
school program or the postgraduate program.  The students shall 
not be considered employees for any other purpose.  In the event 
of the student's injury or death, the weekly wage of the student 
for the purpose of calculating compensation under this chapter, 
shall be the annualized educational stipend awarded to the 
student, divided by 52 weeks.  The institution in which the 
student is enrolled shall be considered the "employer" for the 
limited purpose of determining responsibility for paying 
benefits under this chapter; 
    (18) (19) a faculty member of the University of Minnesota 
employed for an academic year is also an employee for the period 
between that academic year and the succeeding academic year if: 
    (a) the member has a contract or reasonable assurance of a 
contract from the University of Minnesota for the succeeding 
academic year; and 
    (b) the personal injury for which compensation is sought 
arises out of and in the course of activities related to the 
faculty member's employment by the University of Minnesota; 
    (19) (20) a worker who performs volunteer ambulance driver 
or attendant services is an employee of the political 
subdivision, nonprofit hospital, nonprofit corporation, or other 
entity for which the worker performs the services.  The daily 
wage of the worker for the purpose of calculating compensation 
under this chapter shall be the usual wage paid at the time of 
injury or death for similar services performed by paid 
employees; 
    (20) (21) a voluntary uncompensated worker, accepted by the 
commissioner of administration, rendering services as a 
volunteer at the department of administration.  In the event of 
injury or death of the worker, the daily wage of the worker, for 
the purpose of calculating compensation under this chapter, 
shall be the usual wage paid at the time of the injury or death 
for similar services performed in institutions by paid 
employees; 
    (21) (22) a voluntary uncompensated worker rendering 
service directly to the pollution control agency.  The daily 
wage of the worker for the purpose of calculating compensation 
payable under this chapter is the usual going wage paid at the 
time of injury or death for similar services if the services are 
performed by paid employees; and 
    (22) (23) a voluntary uncompensated worker while 
volunteering services as a first responder or as a member of a 
law enforcement assistance organization while acting under the 
supervision and authority of a political subdivision.  The daily 
wage of the worker for the purpose of calculating compensation 
payable under this chapter is the usual going wage paid at the 
time of injury or death for similar services if the services are 
performed by paid employees. 
    If it is difficult to determine the daily wage as provided 
in this subdivision, the trier of fact may determine the wage 
upon which the compensation is payable. 
    Sec. 2.  Minnesota Statutes 1990, section 176.011, 
subdivision 11a, is amended to read: 
    Subd. 11a.  [FAMILY FARM.] (a) "Family farm" means any farm 
operation which pays or is obligated to pay less than $8,000 in 
cash wages, exclusive of machine hire, to farm laborers for 
services rendered during the preceding calendar year in an 
amount: 
    (1) less than $8,000; or 
    (2) less than the statewide average annual wage as 
described in subdivision 20 when the farm operation has total 
liability and medical payment coverage equal to $300,000 and 
$5,000, respectively, under a farm liability insurance policy, 
and the policy covers injuries to farm laborers.  
    (b) For purposes of this subdivision, farm laborer does not 
include any spouse, parent or child, regardless of age, of a 
farmer employed by the farmer, or any executive officer of a 
family farm corporation as defined in section 500.24, 
subdivision 2, or any spouse, parent or child, regardless of 
age, of such an officer employed by that family farm 
corporation, or other farmers in the same community or members 
of their families exchanging work with the employer.  
Notwithstanding any law to the contrary, a farm laborer shall 
not be considered as an independent contractor for the purposes 
of this chapter; provided that a commercial baler or commercial 
thresher shall be considered an independent contractor. 
    Sec. 3.  Minnesota Statutes 1990, 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. 
    (1) provided that (b) During the year commencing on October 
1, 1979 1992, and each year thereafter, commencing on October 1, 
the maximum weekly compensation payable is 105 percent of the 
statewide average weekly wage for the period ending December 31, 
of the preceding year. 
    (2) (c) The minimum weekly compensation benefits for 
temporary total disability shall be not less than 50 payable is 
20 percent of the statewide average weekly wage for the period 
ending December 31 of the preceding year or the injured 
employee's actual weekly wage, whichever is less.  In no case 
shall a weekly benefit be less than 20 percent of the statewide 
average weekly wage.  
    (d) Subject to subdivisions 3a to 3u this 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. 
    Sec. 4.  Minnesota Statutes 1990, 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 a the maximum compensation equal to the statewide 
average weekly wage 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 (b), 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. 5.  Minnesota Statutes 1990, section 176.101, 
subdivision 5, is amended to read: 
    Subd. 5.  [TOTAL DISABILITY 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 constitutes total disability.  
    (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. 6.  Minnesota Statutes 1990, 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 a minor or 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 permanent total disability or economic 
recovery compensation shall be the statewide average weekly wage 
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. 7.  Minnesota Statutes 1990, section 176.101, 
subdivision 8, is amended to read: 
    Subd. 8.  [RETIREMENT PRESUMPTION.] 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 the effective date of this 
subdivision an employee who receives social security old age and 
survivors insurance retirement benefits is presumed retired from 
the labor market. This presumption is rebuttable by a 
preponderance of the evidence.  
    Sec. 8.  Minnesota Statutes 1990, 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 the commissioner determines 
is appropriate, 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. 
    Sec. 9.  Minnesota Statutes 1990, section 176.111, 
subdivision 18, is amended to read: 
    Subd. 18.  [BURIAL EXPENSE.] In all cases where death 
results to an employee from a personal injury arising out of and 
in the course of employment, the employer shall pay the expense 
of burial, not exceeding in amount $2,500 $7,500.  In case any 
dispute arises as to the reasonable value of the services 
rendered in connection with the burial, its reasonable value 
shall be determined and approved by the commissioner, a 
compensation judge, or workers' compensation court of appeals, 
in cases upon appeal, before payment, after reasonable notice to 
interested parties as is required by the commissioner.  If the 
deceased leaves no dependents, no compensation is payable, 
except as provided by this chapter. 
    Sec. 10.  Minnesota Statutes 1990, section 176.132, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ELIGIBLE RECIPIENTS.] (a) An employee who 
has suffered personal injury prior to October 1, 1983 for which 
benefits are payable under section 176.101 and who has been 
totally disabled for more than 104 weeks shall be eligible for 
supplementary benefits as prescribed in this section after 104 
weeks have elapsed and for the remainder of the total 
disablement.  Regardless of the number of weeks of total 
disability, no totally disabled person who has suffered personal 
injury prior to October 1, 1983, is ineligible for supplementary 
benefits after four years have elapsed since the first date of 
the total disability, except as provided by clause (b), provided 
that all periods of disability are caused by the same injury. 
    (b) An employee who has suffered personal injury after 
October 1, 1983, and before October 1, 1992, is eligible to 
receive supplementary benefits after the employee has been 
receiving temporary total or permanent total benefits for 208 
weeks.  Regardless of the number of weeks of total disability, 
no person who has suffered personal injury on or after October 
1, 1983, and before October 1, 1992, who is receiving temporary 
total compensation shall be ineligible for supplementary 
benefits after four years have elapsed since the first date of 
the total disability, provided that all periods of disability 
are caused by the same injury.  
    (c) An employee who has suffered a personal injury on or 
after October 1, 1992, and is permanently totally disabled as 
defined in section 176.101, subdivisions 4 and 5, is eligible to 
receive supplementary benefits after the employee has been 
receiving temporary total or permanent total benefits for 208 
weeks.  Regardless of the number of weeks of total disability, 
no person who is receiving permanent total compensation shall be 
ineligible for supplementary benefits after four years have 
elapsed since the first date of the total disability, provided 
that all periods of disability are caused by the same injury. 
    Sec. 11.  Minnesota Statutes 1990, section 176.179, is 
amended to read: 
    176.179 [PAYMENTS OF COMPENSATION RECEIVED IN GOOD FAITH 
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 benefits.  The credit 
applied against further payments of temporary total disability, 
temporary 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. 12.  Minnesota Statutes 1990, section 176.645, 
subdivision 1, is amended to read: 
    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 or thereafter, 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. 
    Sec. 13.  Minnesota Statutes 1990, section 176.645, 
subdivision 2, is amended to read: 
    Subd. 2.  [TIME OF FIRST ADJUSTMENT.] For injuries 
occurring on or after October 1, 1981, the initial adjustment 
made pursuant to subdivision 1 shall be 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.  
    Sec. 14.  [EFFECTIVE DATE.] 
    Section 2 is effective January 1, 1993.  The rest of the 
article is effective October 1, 1992. 

                                ARTICLE 2

                           LEGAL AND JUDICIAL
    Section 1.  Minnesota Statutes 1990, section 176.081, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPROVAL.] (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 $27,500 $60,000 of 
compensation awarded to the employee is permissible and does not 
require approval by the commissioner, compensation judge, or any 
other party except as provided in clause (b). paragraph (d).  
All fees 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. 
    (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.  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.  
    (b) (d) An attorney who is claiming legal fees under this 
section for representing an employee in a workers' compensation 
matter shall file a statement of attorney's 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, 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. 2.  Minnesota Statutes 1990, section 176.081, 
subdivision 2, is amended to read: 
    Subd. 2.  An application for attorney fees in excess of the 
amount authorized in subdivision 1 shall be made to the 
commissioner, compensation judge, or district judge, before whom 
the matter was heard.  An appeal of a decision by the 
commissioner, a compensation judge, or district court judge on 
additional fees may be made to the workers' compensation court 
of appeals.  The application shall set forth the fee requested 
and, the number of hours spent on the case, the basis for the 
request, and whether or not a hearing is requested.  The 
application, with affidavit of service upon the employee, shall 
be filed by the attorney requesting the fee.  If a hearing is 
requested by an interested party, a hearing shall be set with 
notice of the hearing served upon known interested parties.  In 
all cases the employee shall be served with notice of hearing.  
    Sec. 3.  Minnesota Statutes 1990, section 176.081, 
subdivision 3, is amended to read: 
    Subd. 3.  [REVIEW.] An employee who A party that is 
dissatisfied with its attorney fees, may file an application for 
review by the workers' compensation court of appeals.  Such The 
application shall state the basis for the need of review and 
whether or not a hearing is requested.  A copy of such the 
application shall be served upon the party's attorney for the 
employee by the court administrator and if a hearing is 
requested by either party, the matter shall be set for hearing.  
The notice of hearing shall be served upon known interested 
parties.  The attorney for the employee shall be served with a 
notice of the hearing.  The workers' compensation court of 
appeals shall have the authority to raise the question of the 
issue of the attorney fees at any time upon its own motion and 
shall have continuing jurisdiction over attorney fees. 
    Sec. 4.  Minnesota Statutes 1990, section 176.105, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCHEDULE; RULES.] (a) The commissioner of 
labor and industry shall by rule establish a schedule of degrees 
of disability resulting from different kinds of 
injuries.  Disability ratings under the schedule for permanent 
partial disability must be based on objective medical evidence.  
The commissioner, in consultation with the medical services 
review board, shall periodically review the rules adopted under 
this paragraph to determine whether any injuries omitted from 
the schedule should be included and amend the rules accordingly. 
    (b) No permanent partial disability compensation shall be 
payable except in accordance with the disability ratings 
established under this subdivision, except as provided in 
paragraph (c).  The schedule may provide that minor impairments 
receive a zero rating.  
    (c) If an injury for which there is objective medical 
evidence is not rated by the permanent partial disability 
schedule, the unrated injury must be assigned and compensated 
for at the rating for the most similar condition that is rated. 
     Sec. 5.  [176.1311] [SECOND INJURY FUND DATA.] 
    No person shall, directly or indirectly, provide the names 
of persons who have registered a preexisting physical impairment 
under section 176.131 to an employer with the intent of 
assisting the employer to discriminate against those persons who 
have so registered with respect to hiring or other terms and 
conditions of employment. 
    A violation of this section is a gross misdemeanor. 
    Sec. 6.  [176.178] [FRAUD.] 
    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. 
    Sec. 7.  [176.2615] [SMALL CLAIMS COURT.] 
    Subdivision 1.  [PURPOSE.] There is established in the 
department of labor and industry a small claims court, to be 
presided over by settlement judges for the purpose of settling 
small claims. 
    Subd. 2.  [ELIGIBILITY.] The claim is eligible for 
determination in the small claims court if all parties agree to 
submit to its jurisdiction; and 
    (1) the claim is for rehabilitation benefits only under 
section 176.102 or medical benefits only under section 176.135; 
or 
    (2) the claim in its total amount does not equal more than 
$5,000; or 
    (3) where the claim is for apportionment or for 
contribution or reimbursement, no counterclaim in excess of 
$5,000 is asserted. 
    Subd. 3.  [TESTIMONY; EXHIBITS.] At the hearing a 
settlement judge shall hear the testimony of the parties and 
consider any exhibits offered by them and may also hear any 
witnesses introduced by either party. 
    Subd. 4.  [APPEARANCE OF PARTIES.] A party may appear on 
the party's own behalf without an attorney, or may retain and be 
represented by a duly admitted attorney who may participate in 
the hearing to the extent and in the manner that the settlement 
judge considers helpful.  Attorney fees awarded under this 
subdivision are included in the overall limit allowed under 
section 176.081, subdivision 1. 
    Subd. 5.  [EVIDENCE ADMISSIBLE.] At the hearing the 
settlement judge shall receive evidence admissible under the 
rules of evidence.  In addition, in the interest of justice and 
summary determination of issues before the court, the settlement 
judge may receive, in the judge's discretion, evidence not 
otherwise admissible.  The settlement judge, on the judge's own 
motion, may receive into evidence any documents which have been 
filed with the department. 
    Subd. 6.  [SETTLEMENT.] A settlement judge may attempt to 
conciliate the parties.  If the parties agree on a settlement, 
the judge shall issue an order in accordance with that 
settlement. 
    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.  There is no appeal 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. 
    Subd. 8.  [COSTS.] The prevailing party is entitled to 
costs and disbursements as in any other workers' compensation 
case. 
    Sec. 8.  [176.307] [COMPENSATION JUDGES; BLOCK SYSTEM.] 
    The chief administrative law judge must assign workers' 
compensation cases to compensation judges using a block system 
type of assignment that, among other things, ensures that a case 
will remain with the same judge from commencement to conclusion 
unless the judge is removed from the case by exercise of a legal 
right of a party or by incapacity.  The block system must be the 
principal means of assigning cases, but it may be supplemented 
by other systems of case assignment to ensure that cases are 
timely decided. 
    Sec. 9.  [176.325] [CERTIFIED QUESTION.] 
    Subdivision 1.  [WHEN CERTIFIED.] The chief administrative 
law judge or commissioner may certify a question of workers' 
compensation law to the supreme court as important and doubtful 
under the following circumstances: 
    (1) all parties to the case have stipulated in writing to 
the facts; and 
    (2) the issue to be resolved is a question of workers' 
compensation law that has not been resolved by the Minnesota 
supreme court. 
    Subd. 2.  [EXPEDITED DECISION.] It is the legislature's 
intent that the Minnesota supreme court resolve the certified 
question as expeditiously as possible, after compliance by the 
parties with any requirements of the Minnesota supreme court 
regarding submission of legal memoranda, oral argument, or other 
matters, and after the participation of amicus curiae, should 
the workers' compensation court of appeals or Minnesota supreme 
court consider such participation advisable. 
    Subd. 3.  [NOTICE.] The commissioner or chief 
administrative law judge shall notify all persons who request to 
be notified of a certification under this section. 
    Sec. 10.  Minnesota Statutes 1990, section 176.421, 
subdivision 1, is amended to read: 
    Subdivision 1.  [TIME FOR TAKING; GROUNDS.] When a petition 
has been heard before a compensation judge, within 30 days after 
a party in interest has been served with notice of an award or 
disallowance of compensation, or other order affecting the 
merits of the case, the party may appeal to the workers' 
compensation court of appeals on any of the following grounds: 
    (1) the order does not conform with this chapter; or 
    (2) the compensation judge committed an error of law; or 
    (3) the findings of fact and order were clearly erroneous 
and unsupported by substantial evidence in view of the entire 
record as submitted; or 
    (4) the findings of fact and order were procured by fraud, 
or coercion, or other improper conduct of a party in interest. 
    Sec. 11.  Minnesota Statutes 1990, section 176.461, is 
amended to read: 
     176.461 [SETTING ASIDE AWARD.] 
     Except when a writ of certiorari has been issued by the 
supreme court and the matter is still pending in that court or 
if as a matter of law the determination of the supreme court 
cannot be subsequently modified, the workers' compensation court 
of appeals, for cause, at any time after an award, upon 
application of either party and not less than five working days 
after written notice to all interested parties, may set the 
award aside and grant a new hearing and refer the matter for a 
determination on its merits to the chief administrative law 
judge for assignment to a compensation judge, who shall make 
findings of fact, conclusions of law, and an order of award or 
disallowance of compensation or other order based on the 
pleadings and the evidence produced and as required by the 
provisions of this chapter or rules adopted under it. 
    As used in this section, the phrase "for cause" is limited 
to the following: 
    (1) a mutual mistake of fact; 
    (2) newly discovered evidence; 
    (3) fraud; or 
    (4) a substantial change in medical condition since the 
time of the award that was clearly not anticipated and could not 
reasonably have been anticipated at the time of the award. 
    Sec. 12.  Minnesota Statutes 1990, section 480B.01, 
subdivision 1, is amended to read: 
    Subdivision 1.  [JUDICIAL VACANCIES.] If a judge of the 
district court or workers' compensation court of appeals dies, 
resigns, retires, or is removed during the judge's term of 
office, or if a new district or workers' compensation court of 
appeals judgeship is created, the resulting vacancy must be 
filled by the governor as provided in this section. 
    Sec. 13.  Minnesota Statutes 1990, section 480B.01, 
subdivision 10, is amended to read: 
    Subd. 10.  [NOTICE TO THE PUBLIC.] Upon receiving notice 
from the governor that a judicial vacancy has occurred or will 
occur on a specified date, the chair shall provide notice of the 
following information: 
    (1) the office that is or will be vacant; 
    (2) that applications from qualified persons or on behalf 
of qualified persons are being accepted by the commission; 
    (3) that application forms may be obtained from the 
governor or the commission at a named address; and 
    (4) that application forms must be returned to the 
commission by a named date.  
    For a district court vacancy, the notice must be made 
available to attorney associations in the judicial district 
where the vacancy has occurred or will occur and to at least one 
newspaper of general circulation in each county in the 
district.  For a workers' compensation court of appeals vacancy, 
the notice must be given to state attorney associations and all 
forms of the public media.  
    Sec. 14.  Minnesota Statutes 1990, section 609.52, 
subdivision 2, is amended to read: 
    Subd. 2.  [ACTS CONSTITUTING THEFT.] Whoever does any of 
the following commits theft and may be sentenced as provided in 
subdivision 3: 
     (1) intentionally and without claim of right takes, uses, 
transfers, conceals or retains possession of movable property of 
another without the other's consent and with intent to deprive 
the owner permanently of possession of the property; or 
     (2) having a legal interest in movable property, 
intentionally and without consent, takes the property out of the 
possession of a pledgee or other person having a superior right 
of possession, with intent thereby to deprive the pledgee or 
other person permanently of the possession of the property; or 
     (3) obtains for the actor or another the possession, 
custody, or title to property of or performance of services by a 
third person by intentionally deceiving the third person with a 
false representation which is known to be false, made with 
intent to defraud, and which does defraud the person to whom it 
is made.  "False representation" includes without limitation: 
     (a) the issuance of a check, draft, or order for the 
payment of money, except a forged check as defined in section 
609.631, or the delivery of property knowing that the actor is 
not entitled to draw upon the drawee therefor or to order the 
payment or delivery thereof; or 
    (b) a promise made with intent not to perform.  Failure to 
perform is not evidence of intent not to perform unless 
corroborated by other substantial evidence; or 
    (c) the preparation or filing of a claim for reimbursement, 
a rate application, or a cost report used to establish a rate or 
claim for payment for medical care provided to a recipient of 
medical assistance under chapter 256B, which intentionally and 
falsely states the costs of or actual services provided by a 
vendor of medical care; or 
    (d) the preparation or filing of a claim for reimbursement 
for providing treatment or supplies required to be furnished to 
an employee under section 176.135 which intentionally and 
falsely states the costs of or actual treatment or supplies 
provided; or 
    (e) the preparation or filing of a claim for reimbursement 
for providing treatment or supplies required to be furnished to 
an employee under section 176.135 for treatment or supplies that 
the provider knew were medically unnecessary, inappropriate, or 
excessive; or 
    (4) by swindling, whether by artifice, trick, device, or 
any other means, obtains property or services from another 
person; or 
      (5) intentionally commits any of the acts listed in this 
subdivision but with intent to exercise temporary control only 
and: 
      (a) the control exercised manifests an indifference to the 
rights of the owner or the restoration of the property to the 
owner; or 
      (b) the actor pledges or otherwise attempts to subject the 
property to an adverse claim; or 
      (c) the actor intends to restore the property only on 
condition that the owner pay a reward or buy back or make other 
compensation; or 
      (6) finds lost property and, knowing or having reasonable 
means of ascertaining the true owner, appropriates it to the 
finder's own use or to that of another not entitled thereto 
without first having made reasonable effort to find the owner 
and offer and surrender the property to the owner; or 
      (7) intentionally obtains property or services, offered 
upon the deposit of a sum of money or tokens in a coin or token 
operated machine or other receptacle, without making the 
required deposit or otherwise obtaining the consent of the 
owner; or 
      (8) intentionally and without claim of right converts any 
article representing a trade secret, knowing it to be such, to 
the actor's own use or that of another person or makes a copy of 
an article representing a trade secret, knowing it to be such, 
and intentionally and without claim of right converts the same 
to the actor's own use or that of another person.  It shall be a 
complete defense to any prosecution under this clause for the 
defendant to show that information comprising the trade secret 
was rightfully known or available to the defendant from a source 
other than the owner of the trade secret; or 
      (9) leases or rents personal property under a written 
instrument and who with intent to place the property beyond the 
control of the lessor conceals or aids or abets the concealment 
of the property or any part thereof, or any lessee of the 
property who sells, conveys, or encumbers the property or any 
part thereof without the written consent of the lessor, without 
informing the person to whom the lessee sells, conveys, or 
encumbers that the same is subject to such lease and with intent 
to deprive the lessor of possession thereof.  Evidence that a 
lessee used a false or fictitious name or address in obtaining 
the property or fails or refuses to return the property to 
lessor within five days after written demand for the return has 
been served personally in the manner provided for service of 
process of a civil action or sent by certified mail to the last 
known address of the lessee, whichever shall occur later, shall 
be evidence of intent to violate this clause.  Service by 
certified mail shall be deemed to be complete upon deposit in 
the United States mail of such demand, postpaid and addressed to 
the person at the address for the person set forth in the lease 
or rental agreement, or, in the absence of the address, to the 
person's last known place of residence; or 
      (10) alters, removes, or obliterates numbers or symbols 
placed on movable property for purpose of identification by the 
owner or person who has legal custody or right to possession 
thereof with the intent to prevent identification, if the person 
who alters, removes, or obliterates the numbers or symbols is 
not the owner and does not have the permission of the owner to 
make the alteration, removal, or obliteration; or 
      (11) with the intent to prevent the identification of 
property involved, so as to deprive the rightful owner of 
possession thereof, alters or removes any permanent serial 
number, permanent distinguishing number or manufacturer's 
identification number on personal property or possesses, sells 
or buys any personal property with knowledge that the permanent 
serial number, permanent distinguishing number or manufacturer's 
identification number has been removed or altered; or 
      (12) intentionally deprives another of a lawful charge for 
cable television service by: 
      (i) making or using or attempting to make or use an 
unauthorized external connection outside the individual dwelling 
unit whether physical, electrical, acoustical, inductive, or 
other connection, or by 
      (ii) attaching any unauthorized device to any cable, wire, 
microwave, or other component of a licensed cable communications 
system as defined in chapter 238.  Nothing herein shall be 
construed to prohibit the electronic video rerecording of 
program material transmitted on the cable communications system 
by a subscriber for fair use as defined by Public Law Number 
94-553, section 107; or 
      (13) except as provided in paragraphs (12) and (14), 
obtains the services of another with the intention of receiving 
those services without making the agreed or reasonably expected 
payment of money or other consideration; or 
     (14) intentionally deprives another of a lawful charge for 
telecommunications service by:  
     (i) making, using, or attempting to make or use an 
unauthorized connection whether physical, electrical, by wire, 
microwave, radio, or other means to a component of a local 
telecommunication system as provided in chapter 237; or 
     (ii) attaching an unauthorized device to a cable, wire, 
microwave, radio, or other component of a local 
telecommunication system as provided in chapter 237.  
     The existence of an unauthorized connection is prima facie 
evidence that the occupier of the premises:  
     (i) made or was aware of the connection; and 
     (ii) was aware that the connection was unauthorized; or 
     (15) with intent to defraud, diverts corporate property 
other than in accordance with general business purposes or for 
purposes other than those specified in the corporation's 
articles of incorporation; or 
    (16) with intent to defraud, authorizes or causes a 
corporation to make a distribution in violation of section 
302A.551, or any other state law in conformity with it; or 
    (17) intentionally takes or drives a motor vehicle without 
the consent of the owner or an authorized agent of the owner. 
    Sec. 15.  [HEARINGS AT THE OFFICE OF ADMINISTRATIVE 
HEARINGS; REPORT OF CHIEF ADMINISTRATIVE LAW JUDGE.] 
    The chief administrative law judge shall reduce the 
formality and length of hearings in workers' compensation cases 
at the office of administrative hearings, with a goal of 
completing 50 percent of the hearings in less than two hours, 75 
percent in less than four hours, and nearly all of the hearings 
in less than one day.  Before January 1, 1993, the chief 
administrative law judge shall report to the legislature on the 
success in meeting these goals, including any recommendations 
for legislation needed to achieve these goals.  
    Sec. 16.  [EFFECTIVE DATE.] 
    Section 4 is effective the day following final enactment.  
The rest of the article is effective July 1, 1992. 

                                ARTICLE 3

                    ADMINISTRATIVE, SAFETY, INSURANCE
    Section 1.  [79.081] [MANDATORY DEDUCTIBLES.] 
    Subdivision 1.  [PREMIUM REDUCTION.] Each insurer, 
including the assigned risk plan, issuing a policy of insurance, 
must make available to an employer, upon request, the option to 
agree to pay an amount per claim selected by the employer and 
specified in the policy toward the total of any claim payable 
under chapter 176.  The amount of premium to be paid by an 
employer who selects a policy with a deductible shall be reduced 
based upon a rating schedule or rating plan filed with and 
approved by the commissioner of commerce.  Administration of 
claims shall remain with the insurer as provided in the terms 
and conditions of the policy.  Each insurer shall notify its 
agents authorized to write workers' compensation insurance about 
the availability and terms and conditions of deductibles 
required by this section, using a brochure in a format approved 
by the commissioner. 
    Subd. 2.  [PROCEDURE FOR PAYING DEDUCTIBLE.] If an insured 
employer chooses a deductible, the insured employer is liable 
for the amount of the deductible.  The insurer shall administer 
the claim as provided in the terms and conditions of the 
insurance policy and seek reimbursement from the insured 
employer for the deductible.  The payment or nonpayment of 
deductible amounts by the insured employer to the insurer shall 
be treated under the policy insuring the liability for workers' 
compensation in the same manner as payment or nonpayment of 
premiums. 
    Subd. 3.  [CREDIT RISK; EXCEPTION.] An insurer is not 
required to offer a deductible to an employer if, as a result of 
a credit investigation, the insurer determines that the employer 
is not sufficiently financially stable to be responsible for the 
payment of deductible amounts. 
    Subd. 4.  [REPORTING REQUIREMENT.] The existence of an 
insurance contract with a deductible or the fact of payment as a 
result of a deductible does not affect the requirement of an 
employer to report an injury or death to an insurer or the 
commissioner of labor and industry. 
    Subd. 5.  [NO EMPLOYEE LIABILITY.] Nothing in this section 
alters the obligation of the employer to provide the benefits 
required by this chapter.  An employee is not responsible to pay 
all or a part of the deductible chosen by an employer. 
    Sec. 2.  [79.085] [SAFETY PROGRAMS.] 
    All insurers writing workers' compensation insurance in 
this state shall provide safety consultation services to each of 
their policyholders requesting the services in writing.  
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. 3.  [79.096] [ACCESS TO RATE MAKING DATA.] 
    The rating association must make available for inspection 
on request of any person any data it possesses related to the 
calculation of indicated pure premium rates. 
    Sec. 4.  Minnesota Statutes 1990, section 79.251, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [MEDICAL COST CONTAINMENT.] The assigned risk 
plan must consider utilizing managed care plans certified under 
section 176.1351 with respect to its covered employees.  In 
addition, the assigned risk plan must implement a medical cost 
containment program.  The program must, at a minimum, include: 
    (1) billings review to determine if claims are compensable 
under chapter 176; 
    (2) utilization of cost management specialists familiar 
with billing practice guidelines; 
    (3) review of treatment to determine if it is reasonable 
and necessary and has a reasonable chance to cure and relieve 
the employee's injury; 
    (4) a system to reduce billed charges to the maximum 
permitted by law or rule; 
    (5) review of medical care utilization; and 
    (6) reporting of health care providers suspected of 
providing unnecessary, inappropriate, or excessive services to 
the commissioner of labor and industry. 
    Sec. 5.  Minnesota Statutes 1990, section 79.251, is 
amended by adding a subdivision to read: 
    Subd. 4b.  [GROUPS.] The assigned risk plan must create a 
program that attempts to group employers in the same or similar 
risk classification for purposes of group premium underwriting 
and claims management.  The assigned risk plan must engage in 
extensive safety consultation with group members to reduce the 
extent and severity of injuries of group members.  The 
consultation should include on-site inspections and specific 
recommendations as to safety improvements. 
    Sec. 6.  Minnesota Statutes 1990, section 79.252, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PURPOSE.] The purpose of the assigned risk 
plan is to provide workers' compensation coverage to employers 
rejected by a two nonaffiliated licensed insurance 
company companies, pursuant to subdivision 2.  Each rejection 
must be in writing and must be obtained within 60 days before 
the date of application to the assigned risk plan.  In addition, 
the rejections must also show the name of the insurance company 
and the representative contacted. 
    Sec. 7.  Minnesota Statutes 1990, section 79.252, 
subdivision 3, is amended to read: 
    Subd. 3.  [COVERAGE.] (a) Policies and contracts of 
coverage issued pursuant to section 79.251, subdivision 4, shall 
contain the usual and customary provisions of workers' 
compensation insurance policies, and shall be deemed to meet the 
mandatory workers' compensation insurance requirements of 
section 176.181, subdivision 2.  
    (b) Policies issued by the assigned risk plan pursuant to 
this chapter may also provide workers' compensation coverage 
required under the laws of states other than Minnesota, 
including coverages commonly known as "all states coverage."  
The assigned risk plan review board may apply for and obtain any 
licensure required in any other state to issue that coverage. 
    Sec. 8.  [79.253] [ASSIGNED RISK SAFETY ACCOUNT.] 
    Subdivision 1.  [CREATION OF ACCOUNT.] There is created the 
assigned risk safety account as a separate account in the 
special compensation fund in the state treasury.  Income earned 
by funds in the account must be credited to the account.  
Principal and income of the account are annually appropriated to 
the commissioner of labor and industry and must be used for 
grants and loans under this section. 
    Subd. 2.  [USE OF FUNDS; SAFETY ASSESSMENTS.] The assigned 
risk plan shall, through persons under contract with the plan, 
perform on-site surveys of employers insured by the assigned 
risk plan and recommend practices and equipment to employers 
designed to reduce the risk of injury to employees.  The 
recommendations may include that the employer form a joint 
labor-management safety committee.  The plan shall generally 
survey employers in the following priority:  
    (1) employers with poor safety records for their industry 
based on their premium modification factor or other factors; 
    (2) employers whose workers' compensation premium 
classification assigned to the greatest portion of the payroll 
for the employer has a premium rate in the top 25 percent of 
premium rates for all classes; and 
    (3) all other employers.  
    Subd. 3.  [INCENTIVES AND PENALTIES.] The assigned risk 
plan shall develop a premium rating system subject to approval 
by the commissioner of commerce that provides a reduction in 
premium rates for employers that follow safety recommendations 
made under this section and an increase in rates for employers 
that do not.  The system must be sensitive to the economic 
ability of an employer to implement particular recommendations. 
    Subd. 4.  [GRANTS AND LOANS.] The commissioner of labor and 
industry may make grants or loans to employers for the cost of 
implementing safety recommendations made under this section.  
    Subd. 5.  [RULES.] The commissioner of labor and industry 
may adopt rules necessary to implement this section. 
     Sec. 9.  [79.255] [WORKERS' COMPENSATION INSURANCE; LESSORS 
OF EMPLOYEES.] 
    Subdivision 1.  [REGISTRATION REQUIRED.] A corporation, 
partnership, sole proprietorship, or other business entity which 
provides staff, personnel, or employees to be employed in this 
state to other businesses pursuant to a lease arrangement or 
agreement shall, before becoming eligible to be issued a policy 
of workers' compensation insurance or becoming eligible to 
secure coverage on a multiple coordinated policies basis, 
register with the commissioner of commerce.  The registration 
shall: 
    (1) identify the name of the lessor; 
    (2) identify the address of the principal place of business 
of the lessor and the address of each office it maintains within 
this state; 
    (3) include the lessor's taxpayer or employer 
identification number; 
    (4) include a list by jurisdiction of each and every name 
that the lessor has operated under in the preceding five years 
including any alternative names and names of predecessors and, 
if known, successor business entities; 
    (5) include a list of each person or entity who owns a five 
percent or greater interest in the employee leasing business at 
the time of application and a list of each person who formerly 
owned a five percent or greater interest in the employee leasing 
company or its predecessors, successors, or alter egos in the 
preceding five years; and 
    (6) include a list of each and every cancellation or 
nonrenewal of workers' compensation insurance which has been 
issued to the lessor or any predecessor in the preceding five 
years.  The list shall include the policy or certificate number, 
name of insurer or other provider of coverage, date of 
cancellation, and reason for cancellation.  If coverage has not 
been canceled or nonrenewed, the registration shall include a 
sworn affidavit signed by the chief executive officer of the 
lessor attesting to that fact. 
    Subd. 2.  [INELIGIBILITY TO REGISTER.] Any lessor of 
employees whose workers' compensation insurance has been 
terminated within the past five years in any jurisdiction due to 
a determination that an employee leasing arrangement was being 
utilized to avoid premium otherwise payable by lessees shall be 
ineligible to register with the commissioner or to remain 
registered, if previously registered. 
    Subd. 3.  [NOTICE OF CHANGE.] Persons filing registration 
statements pursuant to this section shall notify the 
commissioner as to any changes in any information required to be 
provided under this section. 
    Subd. 4.  [LIST MAINTAINED.] The commissioner shall 
maintain a list of those lessors of employees who are registered 
with the commissioner. 
    Subd. 5.  [FORMS OF REGISTRATION.] The commissioner may 
prescribe forms necessary to promote the efficient 
administration of this section. 
    Subd. 6.  [ADVERTISING PROHIBITION.] No organization 
registered under this section shall directly or indirectly 
reference that registration in any advertisements, marketing 
material, or publications. 
    Subd. 7.  [CRIMINAL PENALTIES.] Any corporation, 
partnership, sole proprietorship, or other form of business 
entity and any officer, director, general partner, agent, 
representative, or employee of theirs who knowingly utilizes or 
participates in any employee leasing agreement, arrangement, or 
mechanism for the purpose of depriving one or more insurers of 
premium otherwise properly payable is guilty of a misdemeanor. 
    Subd. 8.  [APPLICATION OF SECTION.] Any lessor of employees 
that was doing business in this state prior to enactment of this 
section shall register with the commissioner within 30 days of 
the effective date of this section. 
    Sec. 10.  Minnesota Statutes 1990, section 175.007, is 
amended to read: 
    175.007 [ADVISORY COUNCIL ON WORKERS' COMPENSATION; 
CREATION.] 
    Subdivision 1.  [CREATION; COMPOSITION.] The commissioner 
shall appoint an advisory council on workers' compensation, 
which consists of five representatives of employers and five 
representatives of employees; five nonvoting members 
representing the general public; two persons who have received 
or are currently receiving workers' compensation benefits under 
chapter 176 and the chairs of the rehabilitation review panel 
and the medical services review board.  The council may consult 
with any party it desires.  (a) There is created a permanent 
council on workers' compensation consisting of 12 voting members 
as follows:  the presidents of the largest statewide Minnesota 
business and organized labor organizations as measured by the 
number of employees of its business members and in its 
affiliated labor organizations in Minnesota on July 1, 1992, and 
every five years thereafter; five additional members 
representing business, and five additional members representing 
organized labor.  The commissioner of labor and industry shall 
serve as chair of the council and shall be a nonvoting member. 
    (b) The governor, the majority leader of the senate, the 
speaker of the house of representatives, the minority leader of 
the senate, and the minority leader of the house of 
representatives shall each select a business and a labor 
representative.  At least four of the labor representatives 
shall be chosen from the affiliated membership of the Minnesota 
AFL-CIO.  At least two of the business representatives shall be 
representatives of small employers as defined in section 177.24, 
subdivision 1, paragraph (a), clause (2).  None of the council 
members shall represent attorneys, health care providers, 
qualified rehabilitation consultants, or insurance companies.  
If the appointing officials cannot agree on a method of 
appointing the required number of Minnesota AFL-CIO and small 
business representatives by the second Monday in June of the 
year in which appointments are made, they shall notify the 
secretary of state.  The distribution of appointments shall then 
be determined publicly by lot by the secretary of state or a 
designee in the presence of the appointing officials or their 
designees on the third Monday in June.  
    (c) Each council member shall appoint an alternate.  
Alternates shall serve in the absence of the member they replace.
    (d) The ten appointed voting members shall serve for terms 
of five years and may be reappointed. 
    (e) The council shall designate liaisons to the council 
representing workers' compensation insurers; medical, hospital, 
and rehabilitation providers; and the legal profession.  The 
speaker and minority leader of the house of representatives 
shall each appoint a caucus member as a liaison to the council.  
The majority and minority leaders of the senate shall each 
appoint a caucus member to serve as a liaison to the council. 
    (f) The terms compensation and removal of members shall be 
as provided in section 15.059.  The council expires as provided 
in section 15.059, subdivision 5. 
    Subd. 2.  The advisory council shall study and present to 
the legislature and the governor, on or before November 15 of 
each even numbered year, its findings relative to the costs, 
methods of financing, and the formula to be used to provide 
supplementary compensation to workers who have been determined 
permanently and totally disabled prior to July 1, 1969, and its 
findings relative to alterations in the scheduled benefits for 
permanent partially disabled, and other aspects of the workers' 
compensation act.  The council shall also study and present to 
the legislature and the governor on or before November 15 of 
1981 and by November 15 of each even-numbered year thereafter a 
report on the financial, administrative and personnel needs of 
the workers' compensation division. advise the department in 
carrying out the purposes of chapter 176.  The council shall 
submit its recommendations with respect to amendments to chapter 
176 by February 1 of each year to each regular session of the 
legislature and shall report its views upon any pending bill 
relating to chapter 176 to the proper legislative committee.  A 
recommendation may not be made by the council unless it is 
supported by a majority of the employer members and a majority 
of the labor members.  At the request of the chairs of the 
senate and house of representatives committees that hear 
workers' compensation matters, the department shall schedule a 
meeting of the council with the members of the committees to 
discuss matters of legislative concern arising under chapter 176.
    Subd. 3.  [MEETINGS; VOTING.] (a) The council shall meet as 
frequently as necessary to carry out its duties and 
responsibilities.  The council may also conduct public hearings 
throughout the state as may be necessary to give interested 
persons an opportunity to comment and make suggestions on the 
operation of the state's workers' compensation law. 
    (b) The meetings of the council are subject to the state's 
open meeting law, section 471.705; except that the six employer 
voting members and the six labor voting members may meet in 
separate closed caucuses for the purpose of deliberating on 
matters before the council.  All votes of the council must be 
public and recorded.  
    Subd. 4.  [EXECUTIVE DIRECTOR.] (a) The assistant 
commissioner for workers' compensation at the department of 
labor and industry shall serve as executive director of the 
council.  
    (b) The executive director shall provide administrative 
support and information to the council in order to allow it to 
monitor all elements of Minnesota's workers' compensation 
system.  Specific duties of the executive director shall include:
    (1) examining the activities of the various entities 
involved in Minnesota's workers' compensation system and 
identifying problem areas for the council's consideration; 
    (2) identifying trends and developments in the workers' 
compensation law of other states, and reporting to the council 
on issues that are developing and solutions that are being 
proposed or attempted; 
    (3) monitoring the decisions of Minnesota courts, including 
the workers' compensation court of appeals and the supreme 
court, to determine the impact of court decisions on the 
workers' compensation system; 
    (4) monitoring workers' compensation research activities 
and bringing important research findings and recommendations to 
the attention of the council; and 
    (5) conducting other activities and duties as may be 
requested by the council. 
    Subd. 5.  [ADMINISTRATIVE SUPPORT.] The commissioner of 
labor and industry shall supply necessary office space, 
supplies, and staff support to assist the council and its 
executive director in their duties. 
    Sec. 11.  Minnesota Statutes 1990, section 176.106, 
subdivision 6, is amended to read: 
    Subd. 6.  [PENALTY.] At a conference, if the insurer does 
not provide a specific reason for nonpayment of the items in 
dispute, the commissioner may assess a penalty of $300 payable 
to the special compensation fund 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.  
    Sec. 12.  Minnesota Statutes 1990, 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 in the 
event payment is not made in the manner prescribed.  
    Sec. 13.  Minnesota Statutes 1990, section 176.130, 
subdivision 8, is amended to read: 
    Subd. 8.  [PENALTIES; WOOD MILLS.] If the assessment 
provided for in this chapter is not paid on or before February 
15 of the year when due and payable, the commissioner may impose 
penalties as provided in section 176.129, subdivision 10, 
payable to the assigned risk safety account.  
    Sec. 14.  Minnesota Statutes 1990, 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 special compensation fund assigned 
risk safety account, in addition to the assessment, a penalty of 
50 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. 15.  Minnesota Statutes 1990, 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 
payable to the special compensation fund 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 has a cause of 
action for actual damages and punitive damages for a minimum of 
$5,000. 
    Sec. 16.  Minnesota Statutes 1990, section 176.139, 
subdivision 2, is amended to read: 
    Subd. 2.  [FAILURE TO POST; PENALTY.] The commissioner may 
assess a penalty of $300 against the employer payable to the 
special compensation fund assigned risk safety account if, after 
notice from the commissioner, the employer violates the posting 
requirement of this section.  
    Sec. 17.  Minnesota Statutes 1990, section 176.181, 
subdivision 3, is amended to read: 
    Subd. 3.  [FAILURE TO INSURE, PENALTY.] Any employer who 
fails to comply with the provisions of subdivision 2 to secure 
payment of compensation is liable to the state of Minnesota for 
a penalty of $750, if the number of uninsured employees is less 
than five and for a penalty of $1,500 if the number of such 
uninsured employees is five or more.  If the commissioner 
determines that the failure to comply with the provisions of 
subdivision 2 was willful and deliberate, the employer shall be 
liable to the state of Minnesota for a penalty of $2,500, if the 
number of uninsured employees is less than five, and for a 
penalty of $5,000 if the number of uninsured employees is five 
or more.  If the employer continues noncompliance, the employer 
is liable for five times the lawful premium for compensation 
insurance for such employer for the period the employer fails to 
comply with such provisions, commencing ten days after notice 
has been served upon the employer by the commissioner of the 
department of labor and industry by certified mail.  These 
penalties may be recovered jointly or separately in a civil 
action brought in the name of the state by the attorney general 
in any court having jurisdiction.  Whenever any such failure 
occurs the commissioner of the department of labor and industry 
shall immediately certify that fact to the attorney general.  
Upon receipt of such certification the attorney general shall 
forthwith commence and prosecute the action.  All penalties 
recovered by the state in any such action shall be paid into the 
state treasury and credited to the special compensation fund.  
If an employer fails to comply with the provisions of 
subdivision 2, to secure payment of compensation after having 
been notified of the employer's duty, the attorney general, upon 
request of the commissioner, may proceed against the employer in 
any court having jurisdiction for an order restraining the 
employer from having any person in employment at any time when 
the employer is not complying with the provisions of subdivision 
2 or for an order compelling the employer to comply with 
subdivision 2. (a) If the commissioner has reason to believe 
that an employer is in violation of subdivision 2, he may issue 
an order directing the employer to comply with subdivision 2, to 
refrain from employing any person at any time without complying 
with subdivision 2, and to pay a penalty of up to $1,000 per 
employee per week during which the employer was not in 
compliance. 
    (b) An employer shall have ten working days to contest such 
an order by filing a written objection with the commissioner, 
stating in detail its reasons for objecting.  If the 
commissioner does not receive an objection within ten working 
days, the commissioner's order shall constitute a final order 
not subject to further review, and violation of that order shall 
be enforceable by way of civil contempt proceedings in district 
court.  If the commissioner does receive a timely objection, the 
commissioner shall refer the matter to the office of 
administrative hearings for an expedited hearing before a 
compensation judge.  The compensation judge shall issue a 
decision either affirming, reversing, or modifying the 
commissioner's order within ten days of the close of the 
hearing.  If the compensation judge affirms the commissioner's 
order, the compensation judge may order the employer to pay an 
additional penalty if the employer continued to employ persons 
without complying with subdivision 2 while the proceedings were 
pending. 
    (c) All penalties assessed under this subdivision shall be 
paid into the state treasury and credited to the assigned risk 
safety account.  Penalties assessed under this section shall 
constitute a lien for government services pursuant to section 
514.67, on all the employer's property and shall be subject to 
the revenue recapture act in chapter 270A. 
    (d) For purposes of this subdivision, the term "employer" 
includes any owners or officers of a corporation who direct and 
control the activities of employees. 
    Sec. 18.  Minnesota Statutes 1990, section 176.181, is 
amended by adding a subdivision to read: 
    Subd. 8.  [DATA SHARING.] (a) The departments of labor and 
industry, jobs and training, 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. 
    (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. 19.  Minnesota Statutes 1990, 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 payable to the 
special compensation fund 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. 20.  Minnesota Statutes 1990, section 176.183, is 
amended to read: 
    176.183 [UNINSURED AND SELF-INSURED EMPLOYERS; BENEFITS TO 
EMPLOYEES AND DEPENDENTS; LIABILITY OF EMPLOYER.] 
    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, and the commissioner has a 
cause of action against the employer for reimbursement for all 
moneys paid out or to be paid out, and, in the discretion of the 
court, as punitive damages an additional amount not exceeding 50 
percent of all moneys paid out or to be paid out.  As used in 
this subdivision subdivision 1 or 2, "employer" includes any 
owners or officers of corporations a corporation who have legal 
direct and control, either individually or jointly with another 
or others, of the payment of wages the activities of employees.  
An action to recover the moneys benefits paid shall be 
instituted unless the commissioner determines that no recovery 
is possible.  All moneys recovered shall be deposited in the 
general fund.  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. 
    Subd. 2.  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 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 and a penalty in the amount of 60 percent 
of all compensation benefits ordered to be paid.  An award 
issued against an employer 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. 
    Subd. 3.  (a) Notwithstanding subdivision 2, the 
commissioner may direct payment from the special compensation 
fund for compensation payable pursuant to subdivision 1, 
including benefits payable under sections 176.102 and 176.135, 
prior to issuance of an order of a compensation judge or the 
workers' compensation court of appeals directing payment or 
awarding compensation.  Where payment is issued pursuant to a 
petition for a temporary order, the terms of any resulting order 
shall have the same status and be governed by the same 
provisions as an award issued pursuant to subdivision 2. 
    (b) The commissioner may suspend or terminate an order 
under clause (a) for good cause as determined by the 
commissioner. 
    Subd. 4.  If the commissioner authorizes the special fund 
to commence payment under this section without the issuance of a 
temporary order, the commissioner shall serve by certified mail 
notice upon the employer and other interested parties of the 
intention to commence payment.  This notice shall be served at 
least ten calendar days before commencing payment and shall be 
mailed to the last known address of the parties.  The notice 
shall include a statement that failure of the employer to 
respond within ten calendar days of the date of service will be 
deemed acceptance by the employer of the proposed action by the 
commissioner and will be deemed a waiver of defenses the 
employer has to a subrogation or indemnity action by the 
commissioner.  At any time prior to final determination of 
liability, the employer may appear as a party and present 
defenses the employer has, whether or not an appearance by the 
employer has previously been made in the matter.  The 
commissioner has a cause of action against the employer to 
recover compensation paid by the special fund under this section.
    Sec. 21.  Minnesota Statutes 1990, 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 percent of the amount withheld from 
or charged the employee.  The penalty shall be imposed by the 
commissioner.  Fifty percent of this penalty is payable to 
the special compensation fund assigned risk safety account and 
50 percent is payable to the employee. 
    Sec. 22.  Minnesota Statutes 1990, section 176.194, 
subdivision 4, is amended to read: 
    Subd. 4.  [PENALTIES.] The penalties for violations of 
clauses (1) through (6) are as follows: 
    1st through 5th violation
    of each paragraph                   written warning 
    6th through 10th violation          $2,500 per violation 
    of each paragraph                   in excess of five 
    11th through 30th violation         $5,000 per violation 
    of each paragraph                   in excess of ten 
For violations of clauses (7) and (8), the penalties are: 
    1st through 5th violation
    of each paragraph                   $2,500 per violation 
    6th through 30th violation          $5,000 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 special compensation 
fund 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. 23.  Minnesota Statutes 1990, section 176.194, 
subdivision 5, is amended to read: 
    Subd. 5.  [RULES.] The commissioner may, by rules adopted 
in accordance with chapter 14, specify additional illegal, 
misleading, deceptive, or fraudulent practices or conduct which 
are subject to the penalties under this section. 
    Sec. 24.  Minnesota Statutes 1990, 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 special compensation fund 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 percent of 
                                       compensation due,  
                                       not to exceed $375, 
               16 - 30               50 percent of 
                                       compensation due, 
                                       not to exceed $1,140, 
               31 - 60               75 percent of 
                                       compensation due, 
                                       not to exceed $2,878, 
               61 or more           100 percent of 
                                       compensation due, 
                                       not to exceed $3,838. 
    The penalty under this section is in addition to any 
penalty otherwise provided by statute.  
    Sec. 25.  Minnesota Statutes 1990, 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 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. 26.  [176.222] [REPORT ON COLLECTION AND ASSESSMENT OF 
FINES AND PENALTIES.] 
    The commissioner shall annually, by January 30, submit a 
report to the legislature detailing the assessment and 
collection of fines and penalties under this chapter on a fiscal 
year basis for the immediately preceding fiscal year and for as 
many prior years as the data is available. 
    Sec. 27.  Minnesota Statutes 1990, 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 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 special compensation fund assigned risk 
safety account. 
    Sec. 28.  [176.232] [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. 
    The commissioner may adopt rules regarding the training of 
safety committee members and the operation of safety committees. 
    Sec. 29.  Minnesota Statutes 1990, 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. 
    Sec. 30.  [176.86] [FRAUD UNIT.] 
    The department shall establish a workers' compensation 
fraud unit to investigate fraudulent and other illegal practices 
of health care providers, employers, insurers, attorneys, 
employees, and others related to workers' compensation.  The 
unit shall review files of the department and may conduct field 
investigations.  If the department determines there is illegal 
activity, the commissioner must refer the case to the attorney 
general or other appropriate prosecuting authority.  The 
attorney general and other prosecuting authorities must give 
high priority to reviewing and prosecuting cases referred to 
them by the commissioner under this section. 
    The attorney general shall train personnel of the 
department of labor and industry in effective investigative 
practices and in the requisites for successful prosecution of 
illegal activity under chapter 176. 
    Sec. 31.  Minnesota Statutes 1990, section 176A.03, is 
amended by adding a subdivision to read: 
    Subd. 3.  [COVERAGE OUTSIDE STATE.] Policies issued by the 
fund pursuant to this chapter may also provide workers' 
compensation coverage required under the laws of states other 
than Minnesota, including coverages commonly known as "all 
states coverage."  The fund may apply for and obtain any 
licensure required in any other state in order to issue the 
coverage. 
    Sec. 32.  [DEPARTMENT STUDY; DATA SHARING ON UNINSURED 
EMPLOYERS.] 
    The commissioner of labor and industry shall study the 
issue of whether there is data in the possession of other state 
or private entities that would assist the department in 
identifying employers that are not complying with the insurance 
requirements of Minnesota Statutes, chapter 176.  The department 
shall report the results of its studies to the legislature by 
January 30, 1993, together with proposed legislation that would 
enable the department to obtain that information. 
    Sec. 33.  [REPETITIVE MOTION STUDY; DEPARTMENT OF EMPLOYEE 
RELATIONS.] 
    The department of employee relations shall assess the 
number and severity of work-related repetitive motion injuries 
incurred by state employees.  The assessment shall include 
carpal tunnel and related injuries.  The department shall report 
the results of the assessment to the legislature by January 30, 
1993.  
    In addition, the department shall develop a plan for a 
pilot project to reduce repetitive motion injuries for which it 
shall seek funding from the 1993 legislature. 
    Sec. 34.  [INDEPENDENT CONTRACTORS; LEASED EMPLOYEES.] 
    The commissioner of labor and industry shall study the 
practice of employee leasing and declaration of independent 
contract status as devices to evade or reduce premiums for 
workers' compensation insurance. 
    The commissioner shall submit a report to the legislature 
by January 15, 1993, with the results of the study and proposals 
for legislative action. 
    Sec. 35.  [MANDATED REDUCTIONS.] 
    (a) As a result of the workers' compensation law changes in 
this act and the resulting savings to the costs of Minnesota's 
workers' compensation system, an insurer's approved schedule of 
workers' compensation rates in effect on October 1, 1992, must 
be reduced by 16 percent and applied by the insurer to all 
policies with an effective date between October 1, 1992, and 
March 31, 1993.  For purposes of this section, "insurer" 
includes the assigned risk plan, and "rates" include the rates 
approved by the commissioner of commerce for the assigned risk 
plan.  The reduction mandated by this section must also be 
applied on a prorated basis to the unexpired portion of all 
workers' compensation policies on October 1, 1992.  An insurer 
shall provide a written notice by November 1, 1992, to all 
workers' compensation policyholders having an unexpired policy 
with the insurer as of October 1, 1992, that reads as follows:  
"As a result of the changes in the workers' compensation system 
enacted by the 1992 legislature, you are entitled to a prorated 
reduction of 16 percent on your current policy premium." 
    (b) No rate increases may be filed between April 1, 1992, 
and April 1, 1993.  
    (c) The commissioner of labor and industry shall survey 
Minnesota employers to determine if the mandated workers' 
compensation insurance rate reductions required under this 
section have been implemented by insurers, both as to amount and 
in a manner that is uniform and nondiscriminatory between 
employers having similar risks with respect to a particular 
occupational classification.  The commissioner shall present a 
report detailing the findings and conclusions to the legislature 
by March 1, 1993. 
    Sec. 36.  [REPEALER.] 
    Minnesota Statutes 1990, section 176.131, is repealed.  The 
special compensation fund shall not reimburse an employer under 
Minnesota Statutes, section 176.131, for a subsequent injury 
occurring after June 30, 1992.  The special compensation fund 
shall continue to reimburse employers for subsequent injuries 
occurring prior to July 1, 1992, and the commissioner of labor 
and industry shall continue to assess for those reimbursements 
under Minnesota Statutes, section 176.129.  
    Sec. 37.  [EFFECTIVE DATE.] 
    Section 35 is effective the day following final enactment 
retroactive to April 1, 1992.  Section 1 is effective for 
policies insuring liability for workers' compensation that are 
effective on or after October 1, 1992.  The rest of this article 
is effective July 1, 1992. 

                                ARTICLE 4

                       MEDICAL AND REHABILITATION
    Section 1.  Minnesota Statutes 1990, section 176.102, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCOPE.] (a) This section applies only to 
vocational rehabilitation of injured employees and their spouses 
as provided under subdivision 1a.  Physical rehabilitation of 
injured employees is considered treatment subject to section 
176.135. 
    (b) Rehabilitation is intended to restore the injured 
employee, through physical and vocational rehabilitation, so the 
employee may return to a job related to the employee's former 
employment or to a job in another work area which produces an 
economic status as close as possible to that the employee would 
have enjoyed without disability.  Rehabilitation to a job with a 
higher economic status than would have occurred without 
disability is permitted if it can be demonstrated that this 
rehabilitation is necessary to increase the likelihood of 
reemployment.  Economic status is to be measured not only by 
opportunity for immediate income but also by opportunity for 
future income.  
    Sec. 2.  Minnesota Statutes 1990, section 176.102, 
subdivision 2, is amended to read: 
    Subd. 2.  [ADMINISTRATORS.] The commissioner shall hire a 
director of rehabilitation services in the classified service. 
The commissioner shall monitor and supervise rehabilitation 
services, including, but not limited to, making determinations 
regarding the selection and delivery of rehabilitation services 
and the criteria used to approve qualified rehabilitation 
consultants and rehabilitation vendors.  The commissioner may 
also make determinations regarding fees for rehabilitation 
services and shall by rule establish a fee schedule or otherwise 
limit fees charged by qualified rehabilitation consultants and 
vendors.  The commissioner shall annually review the fees and 
give notice of any adjustment in the State Register.  An annual 
adjustment is not subject to chapter 14.  By March 1, 1993, the 
commissioner shall report to the legislature on the status of 
the commission's monitoring of rehabilitation services.  The 
commissioner may hire qualified personnel to assist in the 
commissioner's duties under this section and may delegate the 
duties and performance.  
    Sec. 3.  Minnesota Statutes 1990, section 176.102, 
subdivision 4, is amended to read: 
    Subd. 4.  [REHABILITATION PLAN; DEVELOPMENT.] (a) An 
employer or insurer shall provide rehabilitation consultation by 
a qualified rehabilitation consultant or by another person 
permitted by rule to provide consultation to an injured employee 
within five days after the employee has 60 days of lost work 
time due to the personal injury, except as otherwise provided in 
this subdivision.  Where an employee has incurred an injury to 
the back, the consultation shall be made within five days after 
the employee has 30 days of lost work time due to the injury.  
The lost work time in either case may be intermittent lost work 
time.  If an employer or insurer has medical information at any 
time prior to the time specified in this subdivision that the 
employee will be unable to return to the job the employee held 
at the time of the injury rehabilitation consultation shall be 
provided immediately after receipt of this information.  
    For purposes of this section "lost work time" means only 
those days during which the employee would actually be working 
but for the injury.  In the case of the construction industry, 
mining industry, or other industry where the hours and days of 
work are affected by seasonal conditions, "lost work time" shall 
be computed by using the normal schedule worked when employees 
are working full time. A rehabilitation consultation must be 
provided by the employer to an injured employee upon request of 
the employee, the employer, or the commissioner.  When the 
commissioner has received notice or information that an employee 
has sustained an injury that may be compensable under this 
chapter, the commissioner must notify the injured employee of 
the right to request a rehabilitation consultation to assist in 
return to work.  The notice may be included in other information 
the commissioner gives to the employee under section 176.235, 
and must be highlighted in a way to draw the employee's 
attention to it.  If a rehabilitation consultation is requested, 
the employer shall provide a qualified rehabilitation 
consultant.  If the injured employee objects to the employer's 
selection, the employee may select a qualified rehabilitation 
consultant of the employee's own choosing within 60 days 
following the filing of a copy of the employee's rehabilitation 
plan with the commissioner.  If the consultation indicates that 
rehabilitation services are appropriate under subdivision 1, the 
employer shall provide the services.  If the consultation 
indicates that rehabilitation services are not appropriate under 
subdivision 1, the employer shall notify the employee of this 
determination within 14 days after the consultation. 
    (b) In order to assist the commissioner in determining 
whether or not to request rehabilitation consultation for an 
injured employee, an employer shall notify the commissioner 
whenever the employee's temporary total disability will likely 
exceed 13 weeks.  The notification must be made within 90 days 
from the date of the injury or when the likelihood of at least a 
13-week disability can be determined, whichever is earlier, and 
must include a current physician's report. 
    (c) The qualified rehabilitation consultant appointed by 
the employer or insurer shall disclose in writing at the first 
meeting or written communication with the employee any ownership 
interest or affiliation between the firm which employs the 
qualified rehabilitation consultant and the employer, insurer, 
adjusting or servicing company, including the nature and extent 
of the affiliation or interest.  
    The consultant shall also disclose to all parties any 
affiliation, business referral or other arrangement between the 
consultant or the firm employing the consultant and any other 
party to, attorney, or health care provider involved in the case 
, including any attorneys, doctors, or chiropractors. 
    If the employee objects to the employer's selection of a 
qualified rehabilitation consultant, the employee shall notify 
the employer and the commissioner in writing of the objection.  
The notification shall include the name, address, and telephone 
number of the qualified rehabilitation consultant chosen by the 
employee to provide rehabilitation consultation.  
    (d) After the initial provision or selection of a qualified 
rehabilitation consultant as provided under paragraph (a), the 
employee may choose request a different qualified rehabilitation 
consultant as follows:  
    (1) once during the first 60 days following the first 
in-person contact between the employee and the original 
consultant; 
    (2) once after the 60-day period referred to in clause (1); 
and 
    (3) subsequent requests which shall be determined granted 
or denied by the commissioner or compensation judge according to 
the best interests of the parties. 
    (e) The employee and employer shall enter into a program if 
one is prescribed in a rehabilitation plan within 30 days of the 
rehabilitation consultation if the qualified rehabilitation 
consultant determines that rehabilitation is appropriate.  A 
copy of the plan, including a target date for return to work, 
shall be submitted to the commissioner within 15 days after the 
plan has been developed.  
    (b) (f) If the employer does not provide rehabilitation 
consultation as required by this section requested under 
paragraph (a), the commissioner or compensation judge shall 
notify the employer that if the employer fails to appoint 
provide a qualified rehabilitation consultant or other persons 
as permitted by clause (a) within 15 days to conduct a 
rehabilitation consultation, the commissioner or compensation 
judge shall appoint a qualified rehabilitation consultant to 
provide the consultation at the expense of the employer unless 
the commissioner or compensation judge determines the 
consultation is not required.  
    (c) (g) In developing a rehabilitation plan consideration 
shall be given to the employee's qualifications, including but 
not limited to age, education, previous work history, interest, 
transferable skills, and present and future labor market 
conditions.  
    (d) (h) The commissioner or compensation judge may waive 
rehabilitation services under this section if the commissioner 
or compensation judge is satisfied that the employee will return 
to work in the near future or that rehabilitation services will 
not be useful in returning an employee to work.  
    Sec. 4.  Minnesota Statutes 1990, section 176.102, 
subdivision 6, is amended to read: 
    Subd. 6.  [PLAN, ELIGIBILITY FOR REHABILITATION, APPROVAL 
AND APPEAL.] (a) The commissioner or a compensation judge shall 
determine eligibility for rehabilitation services and shall 
review, approve, modify, or reject rehabilitation plans 
developed under subdivision 4.  The commissioner or a 
compensation judge shall also make determinations regarding 
rehabilitation issues not necessarily part of a plan including, 
but not limited to, determinations regarding whether an employee 
is eligible for further rehabilitation and the benefits under 
subdivisions 9 and 11 to which an employee is entitled.  
    (b) A rehabilitation consultant must file a progress report 
on the plan with the commissioner six months after the plan is 
filed.  The progress report must include a current estimate of 
the total cost and the expected duration of the plan.  The 
commissioner may require additional progress reports.  Based on 
the progress reports and available information, the commissioner 
may take actions including, but not limited to, redirecting, 
amending, suspending, or terminating the plan. 
    Sec. 5.  Minnesota Statutes 1990, section 176.102, 
subdivision 9, is amended to read: 
    Subd. 9.  [PLAN, COSTS.] (a) An employer is liable for the 
following rehabilitation expenses under this section:  
    (a) (1) Cost of rehabilitation evaluation and preparation 
of a plan; 
    (b) (2) Cost of all rehabilitation services and supplies 
necessary for implementation of the plan; 
    (c) (3) Reasonable cost of tuition, books, travel, and 
custodial day care; and, in addition, reasonable costs of board 
and lodging when rehabilitation requires residence away from the 
employee's customary residence; 
    (d) (4) Reasonable costs of travel and custodial day care 
during the job interview process; 
    (e) (5) Reasonable cost for moving expenses of the employee 
and family if a job is found in a geographic area beyond 
reasonable commuting distance after a diligent search within the 
present community.  Relocation shall not be paid more than once 
during any rehabilitation program, and relocation shall not be 
required if the new job is located within the same standard 
metropolitan statistical area as the employee's job at the time 
of injury.  An employee shall not be required to relocate and a 
refusal to relocate shall not result in a suspension or 
termination of compensation under this chapter; and 
    (f) (6) Any other expense agreed to be paid.  
    (b) Charges for services provided by a rehabilitation 
consultant or vendor must be submitted on a billing form 
prescribed by the commissioner.  No payment for the services 
shall be made until the charges are submitted on the prescribed 
form. 
    (c) Except as provided in this paragraph, an employer is 
not liable for charges for services provided by a rehabilitation 
consultant or vendor unless the employer or its insurer receives 
a bill for those services within 45 days of the provision of the 
services.  The commissioner or a compensation judge may order 
payment for charges not timely billed under this paragraph if 
the rehabilitation consultant or vendor can prove that the 
failure to submit the bill as required by this paragraph was due 
to circumstances beyond the control of the rehabilitation 
consultant or vendor.  A rehabilitation consultant or vendor may 
not collect payment from any other person, including the 
employee, for bills that an employer is relieved from liability 
for paying under this paragraph. 
    Sec. 6.  Minnesota Statutes 1990, section 176.103, 
subdivision 2, is amended to read: 
    Subd. 2.  [SCOPE.] (a) 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 the results of the 
monitoring specific cases of suspected inappropriate, 
unnecessary, and excessive treatment to the medical services 
review board.  The commissioner may, either as a result of the 
monitoring or as a result of an investigation following receipt 
of a complaint, if the commissioner believes that any provider 
of health care services has violated any provision of this 
chapter or rules adopted under this chapter, initiate a 
contested case proceeding under chapter 14.  In these cases, The 
medical services review board shall make the final decision 
following receipt of the report of an administrative law 
judge 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. 7.  Minnesota Statutes 1990, section 176.103, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [APPEALS, EFFECT OF DECISION.] An order imposing 
sanctions on a health care provider under subdivision 2 may be 
appealed and has the effect provided by this subdivision. 
    A sanction becomes effective at the time the commissioner 
notifies the provider of the order of sanction.  The notice 
shall advise the provider of the right to obtain review as 
provided in this subdivision.  If mailed, the notice of order of 
sanction is deemed received three days after mailing to the last 
known address of the provider. 
    Within 30 days of receipt of a notice of order of sanction, 
a provider may request in writing a review by the commissioner 
of the order.  Upon receiving a request the commissioner or the 
commissioner's designee shall review the order, the evidence 
upon which the order was based, and any other material 
information brought to the attention of the commissioner, and 
determine whether sufficient cause exists to sustain the order.  
Within 15 days of receiving the request the commissioner shall 
report in writing the results of the review.  The review 
provided in this subdivision is not subject to the contested 
case provisions of the administrative procedure act in chapter 
14.  
    Within 30 days following receipt of the commissioner's 
decision on review, a provider may petition the workers' 
compensation court of appeals for review.  The petition shall be 
filed with the court, together with proof of service of a copy 
on the commissioner, and accompanied by the standard filing fee 
for appeals from decisions of compensation judges.  No 
responsive pleading shall be required of the commissioner, and 
no fees shall be charged for the appearance of the commissioner 
in the matter. 
    The petition shall be captioned in the full name of the 
provider making the petition as petitioner and the commissioner 
as respondent.  The petition shall state with specificity the 
grounds upon which the petitioner seeks rescission of the order 
of sanction.  
    The filing of the petition shall not stay the sanction.  
The court may order a stay of the balance of the sanction if the 
hearing has not been conducted within 60 days after filing of 
the petition upon terms the court deems proper.  To the extent 
applicable, review shall be conducted according to the rules of 
the court for review of decisions of compensation judges. 
     The scope of the hearing shall be limited to the issues of 
whether the medical services review board's findings were 
supported by substantial evidence in view of the record before 
the board and whether the sanction imposed by the commissioner 
was authorized by law or rule. 
    The workers' compensation court of appeals may adopt rules 
necessary to implement this subdivision. 
    Sec. 8.  Minnesota Statutes 1990, 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 penalty of $200 
per violation, 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.  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. 9.  Minnesota Statutes 1990, 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 do so 
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.  No action to 
recover the cost of copies may be brought until the commissioner 
adopts a schedule of reasonable charges under subdivision 7.  
Attorney's fees shall be determined on an hourly basis according 
to the criteria in section 176.081, subdivision 5.  The employer 
shall pay for the reasonable value of nursing services by a 
member of the employee's family in cases of permanent total 
disability. 
    (b) (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. 10.  Minnesota Statutes 1990, section 176.135, 
subdivision 5, is amended to read: 
    Subd. 5.  [OCCUPATIONAL DISEASE MEDICAL ELIGIBILITY.] 
Notwithstanding section 176.66, an employee who has contracted 
an occupational disease is eligible to receive compensation 
under this section even if the employee is not disabled from 
earning full wages at the work at which the employee was last 
employed.  
    Payment of compensation under this section shall be made by 
the employer and insurer on the date of the employee's last 
exposure to the hazard of the occupational disease.  
Reimbursement for medical benefits paid under this subdivision 
or subdivision 1a is allowed from the employer and insurer 
liable under section 176.66, subdivision 10, only in the case of 
disablement.  
    Sec. 11.  Minnesota Statutes 1990, section 176.135, 
subdivision 6, is amended to read: 
    Subd. 6.  [COMMENCEMENT OF PAYMENT.] As soon as reasonably 
possible, and no later than 30 calendar days after receiving the 
bill, the employer or insurer shall pay the charge or any 
portion of the charge which is not denied, or deny all or a part 
of the charge on the basis of excessiveness or 
noncompensability, or specify the additional data needed, with 
written notification to the employee and the provider explaining 
the basis for denial.  All or part of a charge must be denied if 
any of the following conditions exists:  
    (1) the injury or condition is not compensable under this 
chapter; 
    (2) the charge or service is excessive under this section 
or section 176.136; 
    (3) the charges are not submitted on the prescribed billing 
form; or 
    (4) additional medical records or reports are required 
under subdivision 7 to substantiate the nature of the charge and 
its relationship to the work injury.  
    If payment is denied under clause (3) or (4), the employer 
or insurer shall reconsider the charges in accordance with this 
subdivision within 30 calendar days after receiving additional 
medical data, a prescribed billing form, or documentation of 
enrollment or certification as a provider.  
    Sec. 12.  Minnesota Statutes 1990, section 176.135, 
subdivision 7, is amended to read: 
    Subd. 7.  [MEDICAL BILLS AND RECORDS.] Health care 
providers shall submit to the insurer an itemized statement of 
charges on a billing form prescribed by the commissioner.  
Health care providers other than hospitals shall also submit 
copies of medical records or reports that substantiate the 
nature of the charge and its relationship to the work injury, 
provided, however, that hospitals must submit any copies of 
records or reports requested under subdivision 6.  Health care 
providers may charge for copies of any records or reports that 
are in existence and directly relate to the items for which 
payment is sought under this chapter.  Charges for copies 
provided under this subdivision shall be reasonable.  The 
commissioner shall adopt a schedule of reasonable charges by 
emergency rules rule. 
    A health care provider shall not collect, attempt to 
collect, refer a bill for collection, or commence an action for 
collection against the employee, employer, or any other party 
until the information required by this section has been 
furnished.  
    A United States government facility rendering health care 
services to veterans is not subject to the uniform billing form 
requirements of this subdivision. 
    Sec. 13.  [176.1351] [MANAGED CARE.] 
    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.  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. 
    Subd. 2.  [CERTIFICATION.] The commissioner shall certify a 
managed care plan if the commissioner finds that the plan: 
    (1) proposes to provide quality services that meet uniform 
treatment standards prescribed by the commissioner and all 
medical and health care services that may be required by this 
chapter in a manner that is timely, effective, and convenient 
for the worker; 
    (2) is reasonably geographically convenient to employees it 
serves; 
    (3) provides appropriate financial incentives to reduce 
service costs and utilization without sacrificing the quality of 
service; 
    (4) provides adequate methods of peer review, utilization 
review, and dispute resolution to prevent inappropriate, 
excessive, or not medically necessary treatment, and excludes 
participation in the plan by those individuals who violate these 
treatment standards; 
    (5) provides a procedure for the resolution of medical 
disputes; 
    (6) provides aggressive case management for injured workers 
and provides a program for early return to work and cooperative 
efforts by the workers, the employer, and the managed care plan 
to promote workplace health and safety consultative and other 
services; 
    (7) provides a timely and accurate method of reporting to 
the commissioner necessary information regarding medical and 
health care service cost and utilization to enable the 
commissioner to determine the effectiveness of the plan; 
    (8) authorizes workers to receive compensable treatment 
from a health care provider who is not a member of the managed 
care plan, if that provider maintains the employee's medical 
records and has a documented history of treatment with the 
employee and agrees to refer the employee to the managed care 
plan for any other treatment that the employee may require and 
if the health care provider agrees to comply with all the rules, 
terms, and conditions of the managed care plan; 
    (9) authorizes necessary emergency medical treatment for an 
injury provided by a health care provider not a part of the 
managed care plan; 
    (10) does not discriminate against or exclude from 
participation in the plan any category of health care provider 
and includes an adequate number of each category of health care 
providers to give workers convenient geographic accessibility to 
all categories of providers and adequate flexibility to choose 
health care providers from among those who provide services 
under the plan; 
    (11) provides an employee the right to change health care 
providers under the plan at least once; and 
    (12) complies with any other requirement the commissioner 
determines is necessary to provide quality medical services and 
health care to injured workers.  
    The commissioner may accept findings, licenses, or 
certifications of other state agencies as satisfactory evidence 
of compliance with a particular requirement of this subdivision. 
    Subd. 3.  [DISPUTE RESOLUTION.] An employee must exhaust 
the dispute resolution procedure of the certified managed care 
plan prior to filing a petition or otherwise seeking relief from 
the commissioner or a compensation judge on an issue related to 
managed care.  If an employee has exhausted the dispute 
resolution procedure of the managed care plan on the issue of a 
rating for a disability, the employee may seek a disability 
rating from a health care provider outside of the managed care 
organization.  The employer is liable for the reasonable fees of 
the outside provider as limited by the medical fee schedule 
adopted under this chapter.  
    Subd. 4.  [ACCESS TO ALL HEALTH CARE DISCIPLINES.] The 
commissioner may refuse to certify or may revoke or suspend the 
certification of a managed care plan that unfairly restricts 
direct access within the managed care plan to any health care 
provider profession.  Direct access within the managed care plan 
is unfairly restricted if direct access is denied and the 
treatment or service sought is within the scope of practice of 
the profession to which direct access is sought and is 
appropriate under the standards of treatment adopted by the 
managed care plan or, in instances where the commissioner has 
adopted standards of treatment, the standards adopted by the 
commissioner. 
    Subd. 5.  [REVOCATION, SUSPENSION, AND REFUSAL TO CERTIFY.] 
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. 
    Subd. 6.  [RULES.] The commissioner may adopt emergency or 
permanent rules necessary to implement this section. 
    Sec. 14.  Minnesota Statutes 1990, section 176.136, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCHEDULE.] (a) The commissioner shall by 
rule establish procedures for determining whether or not the 
charge for a health service is excessive.  In order to 
accomplish this purpose, the commissioner shall consult with 
insurers, associations and organizations representing the 
medical and other providers of treatment services and other 
appropriate groups.  
    (b) The procedures established by the commissioner shall 
must limit, in accordance with subdivisions 1a, 1b, and 1c, the 
charges allowable for medical, chiropractic, podiatric, 
surgical, hospital and other health care provider treatment or 
services, as defined and compensable under section 176.135, 
based upon billings for each class of health care provider 
during all of the calendar year preceding the year in which the 
determination is made of the amount to be paid the health care 
provider for the billing.  The procedures established by the 
commissioner for determining whether or not the charge for a 
health service is excessive shall must be structured to 
encourage providers to develop and deliver services for 
rehabilitation of injured workers.  The procedures shall must 
incorporate the provisions of sections 144.701, 144.702, and 
144.703 to the extent that the commissioner finds that these 
provisions effectively accomplish the intent of this section or 
are otherwise necessary to insure that quality hospital care is 
available to injured employees. 
    Sec. 15.  Minnesota Statutes 1990, section 176.136, is 
amended by adding a subdivision 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.  This notice 
shall be in lieu of the requirements of chapter 14. 
    Sec. 16.  Minnesota Statutes 1990, section 176.136, is 
amended by adding a subdivision 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. 
    Sec. 17.  Minnesota Statutes 1990, section 176.136, is 
amended by adding a subdivision to read: 
    Subd. 1c.  [CHARGES FOR INDEPENDENT MEDICAL 
EXAMINATIONS.] The commissioner shall adopt rules that 
reasonably limit amounts which may be charged for, or in 
connection with, independent or adverse medical examinations 
requested by any party, including the amount that may be charged 
for depositions, witness fees, or other expenses.  No party may 
pay fees above the amount in the schedule.  
    Sec. 18.  Minnesota Statutes 1990, 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. 19.  Minnesota Statutes 1990, section 176.137, 
subdivision 5, is amended to read: 
    Subd. 5.  An employee is limited to $30,000 $60,000 under 
this section for each personal injury. 
    Sec. 20.  Minnesota Statutes 1990, section 176.155, 
subdivision 1, is amended to read: 
    Subdivision 1.  [EMPLOYER'S PHYSICIAN.] The injured 
employee must submit to examination by the employer's physician, 
if requested by the employer, and at reasonable times thereafter 
upon the employer's request.  The examination must be scheduled 
at a location within 150 miles of the employee's residence 
unless the employer can show cause to the department to order an 
examination at a location further from the employee's 
residence.  The employee is entitled upon request to have a 
personal physician present at any such examination.  Each party 
shall defray the cost of that party's physician.  Any report or 
written statement made by the employer's physician as a result 
of an examination of the employee, regardless of whether the 
examination preceded the injury or was made subsequent to the 
injury, shall be made available, upon request and without 
charge, to the injured employee or representative of the 
employee.  The employer shall pay reasonable travel expenses 
incurred by the employee in attending the examination including 
mileage, parking, and, if necessary, lodging and meals.  The 
employer shall also pay the employee for any lost wages 
resulting from attendance at the examination.  A self-insured 
employer or insurer who is served with a claim petition pursuant 
to section 176.271, subdivision 1, or 176.291, shall schedule 
any necessary examinations of the employee, if an examination by 
the employer's physician or health care provider is necessary to 
evaluate benefits claimed.  The examination shall be completed 
and the report of the examination shall be served on the 
employee and filed with the commissioner within 120 days of 
service of the claim petition.  
    No evidence relating to the examination or report shall be 
received or considered by the commissioner, a compensation 
judge, or the court of appeals in determining any issues unless 
the report has been served and filed as required by this 
section, unless a written extension has been granted by the 
commissioner or compensation judge.  The commissioner or a 
compensation judge shall extend the time for completing the 
adverse examination and filing the report upon good cause 
shown.  The extension must not be for the purpose of delay and 
the insurer must make a good faith effort to comply with this 
subdivision.  Good cause shall include but is not limited to:  
    (1) that the extension is necessary because of the limited 
number of physicians or health care providers available with 
expertise in the particular injury or disease, or that the 
extension is necessary due to the complexity of the medical 
issues, or 
    (2) that the extension is necessary to gather additional 
information which was not included on the petition as required 
by section 176.291.  
    Sec. 21.  Minnesota Statutes 1990, section 176.83, 
subdivision 5, is amended to read: 
    Subd. 5.  [EXCESSIVE 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 determining 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 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 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 
excessive 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 excessive 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 in which case the insurer, self-insurer, or group 
self-insurer shall make the payment deemed reasonable.  
    A health or rehabilitation provider who is determined by 
the rehabilitation review panel or medical services review 
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 medical services review board shall 
review excessive, inappropriate, or unnecessary health care 
provider treatment under section 176.103, subdivision 2. 
    The rules adopted under this subdivision shall require 
insurers, self-insurers, and group self-insurers to report 
medical and other data necessary to implement the procedures 
required by this clause.  
    Sec. 22.  Minnesota Statutes 1990, section 176.83, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [REPORTING.] Rules requiring insurers, 
self-insurers, and group self-insurers to report medical and 
other data necessary to implement the procedures required by 
this chapter. 
    Sec. 23.  [UTILIZATION OF HIGH TECHNOLOGY MEDICAL 
PROCEDURES.] 
    The commissioner of labor and industry shall appoint a 
committee to study the utilization of high technology medical 
procedures for treatment of injuries under Minnesota Statutes, 
chapter 176.  The committee must include physicians, hospital 
representatives, medical device manufacturers, purchasers, 
consumers, and ethicists.  The study must specifically examine 
excessive use of technology.  The commissioner shall report the 
results of the study together with any proposals for legislation 
to the legislature by January 30, 1993. 
    Sec. 24.  [MEDICAL COVERAGE STUDY.] 
    The commissioners of commerce and labor and industry shall 
study the feasibility of providing medical coverage currently 
furnished through the workers' compensation system through other 
health insurance mechanisms including group health and universal 
health coverage plans.  The study shall particularly focus on 
the concept known as 24-hour coverage.  The commissioners shall 
report the results of their study with specific recommendations 
to the legislature by February 1, 1993. 
    Sec. 25.  [MANAGED CARE; LEGISLATIVE INTENT.] 
    It is the intent of the legislature that the commissioner 
of labor and industry proceed with certifying managed care 
organizations as expeditiously as possible.  Any rules or 
procedures the commissioner adopts must be designed to assist in 
the formation of managed care organizations while ensuring 
quality managed care to injured employees. 
    Sec. 26.  [REPEALER.] 
    Minnesota Statutes 1990, sections 176.135, subdivision 3; 
and 176.136, subdivision 5, are repealed. 
    Sec. 27.  [EFFECTIVE DATE.] 
   Section 13 is effective the day following final enactment.  
The authority to adopt emergency rules granted under section 21 
is effective the day following final enactment and expires 
January 1, 1994.  The rest of this article is effective October 
1, 1992. 

                                ARTICLE 5

                             SELF-INSURANCE
    Section 1.  Minnesota Statutes 1990, section 79A.02, is 
amended by adding a subdivision to read: 
    Subd. 3.  [AUDIT OF SELF-INSURANCE APPLICATION.] (a) The 
self-insurer's security fund shall retain a certified public 
accountant who shall perform services for, and report directly 
to, the commissioner of commerce.  The certified public 
accountant shall review each application to self-insure, 
including the applicant's financial data.  The certified public 
accountant shall provide a report to the commissioner of 
commerce indicating whether the applicant has met the 
requirements of section 79A.03, subdivisions 2 and 3.  
Additionally, the certified public accountant shall provide 
advice and counsel to the commissioner about relevant facts 
regarding the applicant's financial condition. 
    (b) If the report of the certified public accountant is 
used by the commissioner as the basis for the commissioner's 
determination regarding the applicant's self-insurance status, 
the certified public accountant shall be made available to the 
commissioner for any hearings or other proceedings arising from 
that determination. 
    (c) The commissioner shall provide the advisory committee 
with the summary report by the certified public accountant and 
any financial data in possession of the department of commerce 
that is otherwise available to the public.  
    The cost of the review shall be the obligation of the 
self-insurer's security fund. 
    Sec. 2.  Minnesota Statutes 1990, section 79A.02, is 
amended by adding a subdivision 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. 
    Sec. 3.  Minnesota Statutes 1990, section 79A.03, 
subdivision 3, is amended to read: 
    Subd. 3.  [NET WORTH.] Each individual self-insurer shall 
have and maintain a net worth at least equal to the greater of 
ten times the retention limit selected with the workers' 
compensation reinsurance association or one-third the amount of 
the self-insurer's current annual modified premium.  The 
requirements of this subdivision shall be modified if the 
self-insurer can demonstrate through a reinsurance program, 
other than coverage provided by the workers' compensation 
reinsurance association, that it can pay expected losses without 
endangering the financial stability of the company.  Each 
individual self-insurer's net worth, as presented on its audited 
balance sheet filed with the department of commerce, shall equal 
at least ten percent of the entity's total assets and shall 
equal at least ten times the retention level selected with the 
workers' compensation reinsurance association. 
    Sec. 4.  Minnesota Statutes 1990, section 79A.03, 
subdivision 4, is amended to read: 
    Subd. 4.  [ASSETS, NET WORTH, AND LIQUIDITY.] (a) Each 
individual self-insurer shall have and maintain sufficient 
assets, net worth, and liquidity to promptly and completely meet 
all of its obligations that may arise under chapter 176 or this 
chapter.  In determining whether a self-insurer meets this 
requirement, the commissioner shall consider the self-insurer's 
current ratio; its long-term and short-term debt to equity 
ratios; its net worth; financial characteristics of the 
particular industry in which the self-insurer is involved; any 
recent changes in the management and ownership of the company 
self-insurer; any excess insurance purchased by the self-insurer 
from a licensed company or an authorized surplus line carrier, 
other than excess insurance from the workers' compensation 
reinsurance association; any other financial data submitted to 
the commissioner by the company self-insurer; and the company's 
self-insurer's workers' compensation experience for the last 
four years.  Notwithstanding any other provision of this 
chapter, the commissioner may deny an application for 
self-insurance authority or terminate existing self-insurance 
authority if the applicant or self-insurer does not have 
sufficient assets, net worth, and liquidity to promptly and 
completely meet all of its self-insurance obligations.  
    (b) An individual self-insurer must have had positive net 
income as shown on audited income statements filed with the 
department of commerce during three of the last five years and 
cumulatively over the five-year period.  If the self-insurer has 
been in existence less than five years, it must have had 
cumulative net income during the period of existence and in the 
most recent year.  
    (c) An individual self-insurer must have had cash generated 
from operations as shown on the audited statements of cash flows 
filed with the department of commerce during three of the last 
five years and cumulatively over the five-year period.  If the 
self-insurer has been in existence less than five years, it 
shall have had cumulative cash generated from operations during 
the period of existence and in the most recent year.  
    (d) No entity shall be admitted as an individual 
self-insurer, or be allowed to continue its self-insurance 
authority, if the audit report for the most recent year includes 
an explanatory paragraph stating that the auditor has concluded 
that there is substantial doubt about the entity's ability to 
continue as a going concern. 
    Sec. 5.  Minnesota Statutes 1990, section 79A.03, 
subdivision 7, is amended to read: 
    Subd. 7.  [FINANCIAL STANDARDS.] A group proposing to 
self-insure shall have and maintain: 
    (a) A combined net worth of all of the members of an amount 
at least equal to the greater of ten times the retention 
selected with the workers' compensation reinsurance association 
or one-third of the current annual modified premium of the 
members.  The requirements of this paragraph shall be modified 
if the self-insurer can demonstrate that through excess 
insurance, other than coverage provided by the workers' 
compensation reinsurance association, it can pay expected losses.
    (b) Sufficient assets, net worth, and liquidity to promptly 
and completely meet all obligations of its members under chapter 
176 or this chapter.  In determining whether a group is in sound 
financial condition, consideration shall be given to the 
combined net worth of the member companies; the consolidated 
long-term and short-term debt to equity ratios of the member 
companies; any excess insurance other than reinsurance with the 
workers' compensation reinsurance association, purchased by the 
group from an insurer licensed in Minnesota or from an 
authorized surplus line carrier; other financial data requested 
by the commissioner or submitted by the group; and the combined 
workers' compensation experience of the group for the last four 
years. 
    Sec. 6.  Minnesota Statutes 1990, section 79A.03, 
subdivision 9, is amended to read: 
     Subd. 9.  [FILING REPORTS.] (a) Incurred losses, paid and 
unpaid, specifying indemnity and medical losses by 
classification, payroll by classification, and current estimated 
outstanding liability for workers' compensation shall be 
reported to the commissioner by each self-insurer on a calendar 
year basis, in a manner and on forms available from the 
commissioner.  Payroll information must be filed by April 1 of 
the following year, and loss information and total workers' 
compensation liability must be filed by August 1 of the 
following year.  
     (b) Each self-insurer shall, under oath, attest to the 
accuracy of each report submitted pursuant to paragraph (a).  
Upon sufficient cause, the commissioner shall require the 
self-insurer 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:  where the losses reported appear 
significantly different from similar types of businesses; where 
major changes in the reports exist from year to year, which are 
not solely attributable to economic factors; or where the 
commissioner has reason to believe that the losses and payroll 
in the report do not accurately reflect the losses and payroll 
of that employer.  If any discrepancy is found, the commissioner 
shall require changes in the self-insurer's or workers' 
compensation service company record keeping practices. 
    (c) With the annual loss report due August 1, each 
self-insurer shall report to the commissioner any workers' 
compensation claim from the previous year where the full, 
undiscounted value is estimated to exceed $50,000, in a manner 
and on forms prescribed by the commissioner.  
    (d) Each individual self-insurer shall, within four months 
after the end of its fiscal year, annually file with the 
commissioner its latest 10K report required by the Securities 
and Exchange Commission.  If an individual self-insurer does not 
prepare a 10K report, it shall file an annual certified 
financial statement, together with such other financial 
information as the commissioner may require to substantiate data 
in the financial statement.  
    (e) Each group self-insurer shall, within four months after 
the end of the fiscal year for that group, annually file a 
statement showing the combined net worth of its members based 
upon an accounting review performed by a certified public 
accountant, together with such other financial information the 
commissioner may require to substantiate data in the group's 
summary statement. Each member of the group shall, within four 
months after the end of each fiscal year for that group, file 
the most recent annual financial statement, reviewed by a 
certified public accountant in accordance with the Statements on 
Standards for Accounting and Review Services, Volume 2, the 
American Institute of Certified Public Accountants Professional 
Standards, or audited in accordance with generally accepted 
auditing standards, together with such other financial 
information the commissioner may require.  In addition, the 
group shall file, within four months after the end of each 
fiscal year for that group, combining financial statements of 
the group members, compiled by a certified public accountant in 
accordance with the Statements on Standards for Accounting and 
Review Services, Volume 2, the American Institute of Certified 
Public Accountants Professional Standards.  The combining 
financial statements shall include, but not be limited to, a 
balance sheet, income statement, statement of changes in net 
worth, and statement of cash flow.  Each combining financial 
statement shall include a column for each individual group 
member along with a total column.  
    Where a group has 50 or more members, the group shall file, 
in lieu of the combining financial statements, a combined 
financial statement showing only the total column for the entire 
group's balance sheet, income statement, statement of changes in 
net worth, and statement of cash flow.  Additionally, the group 
shall disclose, for each member, the total assets, net worth, 
revenue, and income for the most recent fiscal year.  The 
combining and combined financial statements may omit all 
footnote disclosures. 
    (f) In addition to the financial statements required by 
paragraphs (d) and (e), interim financial statements or 10Q 
reports required by the Securities and Exchange Commission may 
be required by the commissioner upon an indication that there 
has been deterioration in the self-insurer's financial 
condition, including a worsening of current ratio, lessening of 
net worth, net loss of income, the downgrading of the company's 
bond rating, or any other significant change that may adversely 
affect the self-insurer's ability to pay expected losses.  Any 
self-insurer that files an 8K report with the Securities and 
Exchange Commission shall also file a copy of the report with 
the commissioner within 30 days of the filing with the 
Securities and Exchange Commission. 
    Sec. 7.  Minnesota Statutes 1990, 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 relating to or arising 
from the employer's self-insuring.  As used in this section, 
"private self-insurers' estimated future liability" means the 
private self-insurers' total of estimated future liability as 
determined by a member of the casualty actuarial society every 
two years for nongroup member private self-insurers, and 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 a member of 
the casualty actuarial society 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.  
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. 
    Sec. 8.  Minnesota Statutes 1990, section 79A.06, 
subdivision 5, is amended to read: 
     Subd. 5.  [PRIVATE EMPLOYERS WHO HAVE CEASED TO BE 
SELF-INSURED.] Private employers who have ceased to be private 
self-insurers shall discharge their continuing obligations to 
secure the payment of compensation which is accrued during the 
period of self-insurance, for purposes of Laws 1988, chapter 
674, sections 1 to 21, by compliance with all of the following 
obligations of current certificate holders: 
     (1) Filing reports with the commissioner to carry out the 
requirements of this chapter; 
     (2) Depositing and maintaining a security deposit for 
accrued liability for the payment of any compensation which may 
become due, pursuant to chapter 176.  However, if a private 
employer who has ceased to be a private self-insurer purchases 
an insurance policy from an insurer authorized to transact 
workers' compensation insurance in this state which provides 
coverage of all claims for compensation arising out of injuries 
occurring during the period the employer was self-insured, 
whether or not reported during that period, the policy will 
discharge the obligation of the employer to maintain a security 
deposit for the payment of the claims covered under the policy.  
The policy may not be issued by an insurer unless it has 
previously been approved as to form and substance by the 
commissioner; and 
      (3) Paying within 30 days all assessments of which notice 
is sent by the security fund, for a period of seven years from 
the last day its certificate of self-insurance was in effect.  
Thereafter, the private employer who has ceased to be a private 
self-insurer may either:  (a) continue to pay within 30 days all 
assessments of which notice is sent by the security fund until 
it has no incurred liabilities for the payment of compensation 
arising out of injuries during the period of self-insurance; or 
(b) pay the security fund a cash payment equal to four percent 
of the net present value of all remaining incurred liabilities 
for the payment of compensation under sections 176.101 and 
176.111 as certified by a member of the casualty actuarial 
society.  Assessments shall be based on the benefits paid by the 
employer during the last full calendar year of self-insurance on 
claims incurred during that year immediately preceding the 
calendar year in which the employer's right to self-insure is 
terminated or withdrawn. 
    In addition to proceedings to establish liabilities and 
penalties otherwise provided, a failure to comply may be the 
subject of a proceeding before the commissioner.  An appeal from 
the commissioner's determination may be taken pursuant to the 
contested case procedures of chapter 14 within 30 days of the 
commissioner's written determination. 
    Any current or past member of the self-insurers' security 
fund is subject to service of process on any claim arising out 
of chapter 176 or this chapter in the manner provided by section 
303.13, subdivision 1, clause (3), or as otherwise provided by 
law.  The issuance of a certificate to self-insure to the 
private self-insured employer shall be deemed to be the 
agreement that any process which is served in accordance with 
this section shall be of the same legal force and effect as if 
served personally within this state. 
    Sec. 9.  [79A.071] [CUSTODIAL ACCOUNTS.] 
    Subdivision 1.  [DEPOSIT.] All securities shall be 
deposited with the state treasurer or in a custodial account 
with a depository institution acceptable to the state 
treasurer.  Surety bonds shall be filed with the commissioner.  
The commissioner and the state treasurer may sell or collect, in 
the case of default of the employer or fund, the amount that 
yields sufficient funds to pay compensation due under the 
workers' compensation act.  
    Subd. 2.  [ASSIGNMENT.] Securities in physical form 
deposited with the state treasurer must bear the following 
assignment, which shall be signed by an officer, partner, or 
owner:  "Assigned to the state of Minnesota for the benefit of 
injured employees of the self-insured employer under the 
Minnesota workers' compensation act."  Any securities held in a 
custodial account, whether in physical form, book entry, or 
other form, need not bear the assignment language.  The 
instrument or contract creating and governing any custodial 
account must contain the following assignment language:  "This 
account is assigned to the state treasurer by the Company to pay 
compensation and perform the obligations of employers imposed 
under Minnesota Statutes, chapter 176.  A depositor or other 
party has no right, title, or interest in the security deposited 
in the account until released by the state."  
    Subd. 3.  [CUSTODY.] All securities in physical form on 
deposit with the state treasurer and surety bonds on deposit 
shall remain in the custody of the state treasurer or the 
commissioner for a period of time dictated by the applicable 
statute of limitations provided in the workers' compensation act.
All original instruments and contracts creating and governing 
custodial accounts shall remain with the state treasurer or the 
commissioner for a period of time dictated by the applicable 
statute of limitations provided in the workers' compensation act.
    Subd. 4.  [RELEASE.] No securities in physical form on 
deposit with the state treasurer or custodial accounts assigned 
to the state shall be released without an order from the 
commissioner.  
    Subd. 5.  [EXCHANGING OR REPLACING.] Any securities 
deposited with the state treasurer or with a custodial account 
assigned to the state treasurer or surety bonds held by the 
commissioner may be exchanged or replaced by the depositor with 
other acceptable securities or surety bonds of like amount so 
long as the market value of the securities or amount of the 
surety bond equals or exceeds the amount of deposit required.  
If securities are replaced by a surety bond, the self-insurer 
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, subject to the limitations on maximum security 
deposits established in Minnesota Rules. 
    Sec. 10.  [REPEALER.] 
    Minnesota Rules, part 2780.0400, subparts 2, 3, 6, 7, and 
8, are repealed. 
    Sec. 11.  [EFFECTIVE DATE.] 
    Sections 1 to 10 are effective August 1, 1992.  For 
self-insurers that have Minnesota self-insurance authority on 
August 1, 1992, section 4, paragraphs (b), (c), and (d), are 
effective August 1, 1995. 

                                ARTICLE 6

                          INSURANCE REGULATION
    Section 1.  Minnesota Statutes 1990, section 79.58, is 
amended by adding a subdivision to read: 
    Subd. 3.  [FLEX RATING.] (a) Whenever an insurer files a 
change in its existing rate level that is greater than eight 
percent in a 12-month period, the commissioner may hold a 
hearing to determine if the rate is excessive.  The hearing must 
be conducted as provided under chapter 14.  The commissioner 
shall give notice of intent to hold a hearing within 60 days of 
the filing of the change.  The commissioner of labor and 
industry may appear as an interested party at the hearing.  At 
the hearing, the insurer has the responsibility of showing the 
rate is not excessive.  The rate is effective unless it is 
determined as a result of the hearing that the rate is 
excessive.  The disapproval of a rate under this subdivision 
must be done in the same manner as provided under section 70A.11.
    (b) This subdivision applies only to changes resulting from 
an insurer's utilization of either (1) the pure premium base 
rate level filed by any data service organization plus the 
insurer's loading for expenses and profit, or (2) the insurer's 
own filed rate levels.  This subdivision does not apply to any 
changes resulting from assessments for the assigned risk plan, 
reinsurance association, guarantee fund, special compensation 
fund, benefit level changes, or other rates or rating plans 
utilized by an insurer. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 28, 1992, 8:40 a.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569