1.1                          A bill for an act
  1.2             relating to insurance; transferring regulatory 
  1.3             authority for health maintenance organizations to the 
  1.4             commissioner of commerce; requiring the commissioner 
  1.5             of health to advise and assist; amending Minnesota 
  1.6             Statutes 1996, sections 60B.02; 60B.03, subdivision 2; 
  1.7             60B.15; 60B.20; 60G.01, subdivisions 2 and 4; 62D.01, 
  1.8             subdivision 2; 62D.02, subdivision 3; 62D.03, 
  1.9             subdivisions 1, 3, and 4; 62D.04, subdivisions 1, 2, 
  1.10            3, and by adding a subdivision; 62D.05, subdivision 6; 
  1.11            62D.06, subdivision 2; 62D.07, subdivisions 2, 3, and 
  1.12            10; 62D.08, subdivisions 1, 2, 3, 4, 5, and 6; 62D.09, 
  1.13            subdivisions 1 and 8; 62D.10, subdivision 4; 62D.11, 
  1.14            subdivisions 1b, 2, and 3; 62D.12, subdivisions 1, 2, 
  1.15            and 9; 62D.121, subdivisions 3a and 7; 62D.14, 
  1.16            subdivisions 1, 3, 4, 5, and 6; 62D.15, subdivisions 1 
  1.17            and 4; 62D.16, subdivisions 1 and 2; 62D.17, 
  1.18            subdivisions 1, 3, 4, and 5; 62D.18, subdivisions 1 
  1.19            and 7; 62D.19; 62D.20, subdivision 1; 62D.21; 62D.211; 
  1.20            62D.22, subdivisions 4 and 10; 62D.24; 62D.30, 
  1.21            subdivisions 1 and 3; repealing Minnesota Statutes 
  1.22            1996, sections 62D.03, subdivision 2; and 62D.18. 
  1.23  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.24     Section 1.  Minnesota Statutes 1996, section 60B.02, is 
  1.25  amended to read: 
  1.26     60B.02 [PERSONS COVERED.] 
  1.27     The proceedings authorized by sections 60B.01 to 60B.61 may 
  1.28  be applied to: 
  1.29     (1) All insurers who are doing, or have done, an insurance 
  1.30  business in this state, and against whom claims arising from 
  1.31  that business may exist now or in the future; 
  1.32     (2) All insurers who purport to do an insurance business in 
  1.33  this state; 
  1.34     (3) All insurers who have insureds resident in this state; 
  2.1      (4) All other persons organized or in the process of 
  2.2   organizing with the intent to do an insurance business in this 
  2.3   state; and 
  2.4      (5) All nonprofit service plan corporations incorporated or 
  2.5   operating under the nonprofit health service plan corporation 
  2.6   act, health maintenance organizations operating under chapter 
  2.7   62D, any health plan incorporated under chapter 317A, all 
  2.8   fraternal benefit societies operating under chapter 64B, except 
  2.9   those associations enumerated in section 64B.38, all township 
  2.10  mutual or other companies operating under chapter 67A, all 
  2.11  reciprocals or interinsurance exchanges operating under chapter 
  2.12  71A, and all integrated service networks operating under chapter 
  2.13  62N. 
  2.14     Sec. 2.  Minnesota Statutes 1996, section 60B.03, 
  2.15  subdivision 2, is amended to read: 
  2.16     Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
  2.17  commissioner of commerce of the state of Minnesota and, in that 
  2.18  commissioner's absence or disability, a deputy or other person 
  2.19  duly designated to act in that commissioner's place.  In the 
  2.20  context of rehabilitation or liquidation of ~~a health maintenance~~ 
  2.21  ~~organization or~~ an integrated service network, "commissioner" 
  2.22  means the commissioner of health of the state of Minnesota and, 
  2.23  in that commissioner's absence or disability, a deputy or other 
  2.24  person duly designated to act in that commissioner's place. 
  2.25     Sec. 3.  Minnesota Statutes 1996, section 60B.15, is 
  2.26  amended to read: 
  2.27     60B.15 [GROUNDS FOR REHABILITATION.] 
  2.28     The commissioner may apply by verified petition to the 
  2.29  district court for Ramsey county or for the county in which the 
  2.30  principal office of the insurer is located for an order 
  2.31  directing the commissioner to rehabilitate a domestic insurer or 
  2.32  an alien insurer domiciled in this state on any one or more of 
  2.33  the following grounds: 
  2.34     (1) Any ground on which the commissioner may apply for an 
  2.35  order of liquidation under section 60B.20, whenever the 
  2.36  commissioner believes that the insurer may be successfully 
  3.1   rehabilitated without substantial increase in the risk of loss 
  3.2   to creditors of the insurer, its policyholders or to the public; 
  3.3      (2) That the commissioner has reasonable cause to believe 
  3.4   that there has been theft from the insurer, wrongful 
  3.5   sequestration or diversion of the insurer's assets, forgery or 
  3.6   fraud affecting the insurer or other illegal conduct in, by or 
  3.7   with respect to the insurer, which endanger assets in an amount 
  3.8   threatening insolvency of the insurer; 
  3.9      (3) That substantial and unexplained discrepancies exist 
  3.10  between the insurer's records and the most recent annual report 
  3.11  or other official company reports; 
  3.12     (4) That the insurer, after written demand by the 
  3.13  commissioner, has failed to remove any person who in fact has 
  3.14  executive authority in the insurer, whether an officer, manager, 
  3.15  general agent, employee, or other person, if the person has been 
  3.16  found by the commissioner after notice and hearing to be 
  3.17  dishonest or untrustworthy in a way affecting the insurer's 
  3.18  business such as is the basis for action under section 60A.052; 
  3.19     (5) That control of the insurer, whether by stock ownership 
  3.20  or otherwise, and whether direct or indirect, is in one or more 
  3.21  persons found by the commissioner after notice and hearing to be 
  3.22  dishonest or untrustworthy such as is the basis for action under 
  3.23  section 60A.052; 
  3.24     (6) That the insurer, after written demand by the 
  3.25  commissioner, has failed within a reasonable period of time to 
  3.26  terminate the employment and status and all influences on 
  3.27  management of any person who in fact has executive authority in 
  3.28  the insurer, whether an officer, manager, general agent, 
  3.29  employee or other person if the person has refused to submit to 
  3.30  lawful examination under oath by the commissioner concerning the 
  3.31  affairs of the insurer, whether in this state or elsewhere; 
  3.32     (7) That after lawful written demand by the commissioner 
  3.33  the insurer has failed to submit promptly any of its own 
  3.34  property, books, accounts, documents, or other records, or those 
  3.35  of any subsidiary or related company within the control of the 
  3.36  insurer, or those of any person having executive authority in 
  4.1   the insurer so far as they pertain to the insurer, to reasonable 
  4.2   inspection or examination by the commissioner or an authorized 
  4.3   representative.  If the insurer is unable to submit the 
  4.4   property, books, accounts, documents, or other records of a 
  4.5   person having executive authority in the insurer, it shall be 
  4.6   excused from doing so if it promptly and effectively terminates 
  4.7   the relationship of the person to the insurer; 
  4.8      (8) That without first obtaining the written consent of the 
  4.9   commissioner, or if required by law, the written consent of the 
  4.10  attorney general, the insurer has transferred, or attempted to 
  4.11  transfer, substantially its entire property or business, or has 
  4.12  entered into any transaction the effect of which is to merge, 
  4.13  consolidate, or reinsure substantially its entire property or 
  4.14  business of any other person; 
  4.15     (9) That the insurer or its property has been or is the 
  4.16  subject of an application for the appointment of a receiver, 
  4.17  trustee, custodian, conservator or sequestrator or similar 
  4.18  fiduciary of the insurer or its property otherwise than as 
  4.19  authorized under sections 60B.01 to 60B.61, and that such 
  4.20  appointment has been made or is imminent, and that such 
  4.21  appointment might divest the courts of this state of 
  4.22  jurisdiction or prejudice orderly delinquency proceedings under 
  4.23  sections 60B.01 to 60B.61; 
  4.24     (10) That within the previous year the insurer has 
  4.25  willfully violated its charter or articles of incorporation or 
  4.26  its bylaws or any applicable insurance law or regulation of any 
  4.27  state, or of the federal government, or any valid order of the 
  4.28  commissioner under section 60B.11 in any manner or as to any 
  4.29  matter which threatens substantial injury to the insurer, its 
  4.30  creditors, it policyholders or the public, or having become 
  4.31  aware within the previous year of an unintentional or willful 
  4.32  violation has failed to take all reasonable steps to remedy the 
  4.33  situation resulting from the violation and to prevent the same 
  4.34  violations in the future; 
  4.35     (11) That the directors of the insurer are deadlocked in 
  4.36  the management of the insurer's affairs and that the members or 
  5.1   shareholders are unable to break the deadlock and that 
  5.2   irreparable injury to the insurer, its creditors, its 
  5.3   policyholders, or the public is threatened by reason thereof; 
  5.4      (12) That the insurer has failed to pay for 60 days after 
  5.5   due date any obligation to this state or any political 
  5.6   subdivision thereof or any judgment entered in this state, 
  5.7   except that such nonpayment shall not be a ground until 60 days 
  5.8   after any good faith effort by the insurer to contest the 
  5.9   obligation or judgment has been terminated, whether it is before 
  5.10  the commissioner or in the courts; 
  5.11     (13) That the insurer has failed to file its annual report 
  5.12  or other report within the time allowed by law, and after 
  5.13  written demand by the commissioner has failed to give an 
  5.14  adequate explanation immediately; 
  5.15     (14) That two-thirds of the board of directors, or the 
  5.16  holders of a majority of the shares entitled to vote, or a 
  5.17  majority of members or policyholders of an insurer subject to 
  5.18  control by its members or policyholders, consent to 
  5.19  rehabilitation under sections 60B.01 to 60B.61; 
  5.20     (15) That the insurer is engaging in a systematic practice 
  5.21  of reaching settlements with and obtaining releases from 
  5.22  policyholders or third party claimants and then unreasonably 
  5.23  delaying payment of or failing to pay the agreed upon 
  5.24  settlements; 
  5.25     (16) That the insurer is in such condition that the further 
  5.26  transaction of business would be hazardous, financially or 
  5.27  otherwise, to its policyholders, its creditors, or the public; 
  5.28     (17) That within the previous 12 months the insurer has 
  5.29  systematically attempted to compromise with its creditors on the 
  5.30  ground that it is financially unable to pay its claims in full; 
  5.31     (18) In the context of a health maintenance organization, 
  5.32  "insurer" when used in clauses (1) to (17) means "health 
  5.33  maintenance organization."  In addition to the grounds in 
  5.34  clauses (1) to (17), any one of the following constitutes 
  5.35  grounds for rehabilitation of a health maintenance organization: 
  5.36     (a) the health maintenance organization is unable or is 
  6.1   expected to be unable to meet its debts as they become due; 
  6.2      (b) grounds exist under section 62D.042, subdivision 7; 
  6.3      (c) the health maintenance organization's liabilities 
  6.4   exceed the current value of its assets, exclusive of intangibles 
  6.5   and, where the guaranteeing organization's financial condition 
  6.6   no longer meets the requirements of sections 62D.041 and 
  6.7   62D.042, exclusive of any deposits, letters of credit, or 
  6.8   guarantees provided by any guaranteeing organization under 
  6.9   chapter 62D; 
  6.10     (d) in addition to grounds under clause (16), within the 
  6.11  last year the health maintenance organization has failed, and 
  6.12  the commissioner ~~of health~~ expects such failure to continue in 
  6.13  the future, to make comprehensive medical care adequately 
  6.14  available and accessible to its enrollees and the health 
  6.15  maintenance organization has not successfully implemented a plan 
  6.16  of corrective action pursuant to section 62D.121, subdivision 7; 
  6.17  and 
  6.18     (e) in addition to grounds under clause (16), within the 
  6.19  last year the directors or officers of the health maintenance 
  6.20  organization willfully violated the requirements of section 
  6.21  317A.251, or having become aware within the previous year of an 
  6.22  unintentional or willful violation of section 317A.251, have 
  6.23  failed to take all reasonable steps to remedy the situation 
  6.24  resulting from the violation and to prevent the same violation 
  6.25  in the future; 
  6.26     (19) An affiliate of the insurer has been placed in 
  6.27  conservatorship, rehabilitation, liquidation, or other court 
  6.28  supervision such that the insurer's financial condition may be 
  6.29  jeopardized.  
  6.30     Sec. 4.  Minnesota Statutes 1996, section 60B.20, is 
  6.31  amended to read: 
  6.32     60B.20 [GROUNDS FOR LIQUIDATION.] 
  6.33     The commissioner may apply by verified petition to the 
  6.34  district court for Ramsey county or for the county in which the 
  6.35  principal office of the insurer is located for an order to 
  6.36  liquidate a domestic insurer or an alien insurer domiciled in 
  7.1   this state on any one or more of the following grounds: 
  7.2      (1) Any ground on which the commissioner may apply for an 
  7.3   order of rehabilitation under section 60B.15, whenever the 
  7.4   commissioner believes that attempts to rehabilitate the insurer 
  7.5   would substantially increase the risk of loss to its creditors, 
  7.6   its policyholders, or the public, or would be futile, or that 
  7.7   rehabilitation would serve no useful purpose; 
  7.8      (2) That the insurer is or is about to become insolvent; 
  7.9      (3) That the insurer has not transacted the business for 
  7.10  which it was organized or incorporated during the previous 12 
  7.11  months or has transacted only a token such business during that 
  7.12  period, although authorized to do so throughout that period, or 
  7.13  that more than 12 months after incorporation it has failed to 
  7.14  become authorized to do the business for which it was organized 
  7.15  or incorporated; 
  7.16     (4) That the insurer has commenced, or within the previous 
  7.17  year has attempted to commence, voluntary dissolution or 
  7.18  liquidation otherwise than as provided in section 60B.04, 
  7.19  subdivision 3 in the case of a solvent insurer; 
  7.20     (5) That the insurer has concealed records or assets from 
  7.21  the commissioner or improperly removed them from the 
  7.22  jurisdiction, or the commissioner believes that the insurer is 
  7.23  about to do so; 
  7.24     (6) That the insurer does not satisfy the requirements that 
  7.25  would be applicable if it were seeking initial authorization in 
  7.26  this state to do the business for which it was organized or 
  7.27  incorporated, except for: 
  7.28     (i) Requirements that are intended to apply only at the 
  7.29  time the initial authorization to do business is obtained, and 
  7.30  not thereafter; and 
  7.31     (ii) Requirements that are expressly made inapplicable by 
  7.32  the laws establishing the requirements; 
  7.33     (7) That the holders of two-thirds of the shares entitled 
  7.34  to vote, or two-thirds of the members or policyholders entitled 
  7.35  to vote in an insurer controlled by its members or 
  7.36  policyholders, have consented to a petition; 
  8.1      (8) In the context of a health maintenance organization, 
  8.2   "insurer" when used in clauses (1) to (7) means "health 
  8.3   maintenance organization."  In addition to the grounds in 
  8.4   clauses (1) to (7), any one of the following constitutes grounds 
  8.5   for liquidation of a health maintenance organization: 
  8.6      (i) the health maintenance organization is unable or is 
  8.7   expected to be unable to meet its debts as they become due; 
  8.8      (ii) grounds exist under section 62D.042, subdivision 7; 
  8.9      (iii) the health maintenance organization's liabilities 
  8.10  exceed the current value of its assets, exclusive of intangibles 
  8.11  and, where the guaranteeing organization's financial condition 
  8.12  no longer meets the requirements of sections 62D.041 and 
  8.13  62D.042, exclusive of any deposits, letters of credit, or 
  8.14  guarantees provided by any guaranteeing organization under 
  8.15  chapter 62D; 
  8.16     (iv) within the last year the health maintenance 
  8.17  organization has failed, and the commissioner ~~of health~~ expects 
  8.18  failure to continue in the future, to make comprehensive medical 
  8.19  care adequately available and accessible to its enrollees and 
  8.20  the health maintenance organization has not successfully 
  8.21  implemented a plan of corrective action pursuant to section 
  8.22  62D.121, subdivision 7; and 
  8.23     (v) within the last year the directors or officers of the 
  8.24  health maintenance organization willfully violated the 
  8.25  requirements of section 317A.251, or having become aware within 
  8.26  the previous year of an unintentional or willful violation of 
  8.27  section 317A.251, have failed to take all reasonable steps to 
  8.28  remedy the situation resulting from the violation and to prevent 
  8.29  the same violation in the future. 
  8.30     Sec. 5.  Minnesota Statutes 1996, section 60G.01, 
  8.31  subdivision 2, is amended to read: 
  8.32     Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
  8.33  commissioner of commerce, except that "commissioner" means the 
  8.34  commissioner of health for ~~administrative supervision of health~~ 
  8.35  ~~maintenance organizations and~~ integrated service networks. 
  8.36     Sec. 6.  Minnesota Statutes 1996, section 60G.01, 
  9.1   subdivision 4, is amended to read: 
  9.2      Subd. 4.  [DEPARTMENT.] "Department" means the department 
  9.3   of commerce, except that "department" means the department of 
  9.4   health for ~~administrative supervision of health maintenance~~ 
  9.5   ~~organizations and~~ integrated service networks. 
  9.6      Sec. 7.  Minnesota Statutes 1996, section 62D.01, 
  9.7   subdivision 2, is amended to read: 
  9.8      Subd. 2.  (a) Faced with the continuation of mounting costs 
  9.9   of health care coupled with its inaccessibility to large 
  9.10  segments of the population, the legislature has determined that 
  9.11  there is a need to explore alternative methods for the delivery 
  9.12  of health care services, with a view toward achieving greater 
  9.13  efficiency and economy in providing these services. 
  9.14     (b) It is, therefore, the policy of the state to eliminate 
  9.15  the barriers to the organization, promotion, and expansion of 
  9.16  health maintenance organizations; to provide for their 
  9.17  regulation by the state commissioner of ~~health~~ commerce; and to 
  9.18  exempt them from the operation of the insurance and nonprofit 
  9.19  health service plan corporation laws of the state except as 
  9.20  hereinafter provided. 
  9.21     (c) It is further the intention of the legislature to 
  9.22  closely monitor the development of health maintenance 
  9.23  organizations in order to assess their impact on the costs of 
  9.24  health care to consumers, the accessibility of health care to 
  9.25  consumers, and the quality of health care provided to consumers. 
  9.26     Sec. 8.  Minnesota Statutes 1996, section 62D.02, 
  9.27  subdivision 3, is amended to read: 
  9.28     Subd. 3.  "Commissioner of ~~health~~ commerce" or 
  9.29  "commissioner" means the state commissioner of ~~health~~ commerce 
  9.30  or a designee. 
  9.31     Sec. 9.  Minnesota Statutes 1996, section 62D.03, 
  9.32  subdivision 1, is amended to read: 
  9.33     Subdivision 1.  Notwithstanding any law of this state to 
  9.34  the contrary, any nonprofit corporation organized to do so or a 
  9.35  local governmental unit may apply to the commissioner ~~of health~~ 
  9.36  for a certificate of authority to establish and operate a health 
 10.1   maintenance organization in compliance with sections 62D.01 to 
 10.2   62D.30.  A copy of the application must be submitted to the 
 10.3   commissioner of health at the same time it is submitted to the 
 10.4   commissioner.  No person shall establish or operate a health 
 10.5   maintenance organization in this state, nor sell or offer to 
 10.6   sell, or solicit offers to purchase or receive advance or 
 10.7   periodic consideration in conjunction with a health maintenance 
 10.8   organization or health maintenance contract unless the 
 10.9   organization has a certificate of authority under sections 
 10.10  62D.01 to 62D.30. 
 10.11     Sec. 10.  Minnesota Statutes 1996, section 62D.03, 
 10.12  subdivision 3, is amended to read: 
 10.13     Subd. 3.  The commissioner ~~of health may~~ shall require any 
 10.14  person providing physician and hospital services with payments 
 10.15  made in the manner set forth in section 62D.02, subdivision 4, 
 10.16  to apply for a certificate of authority under sections 62D.01 to 
 10.17  62D.30.  ~~Any person directed to apply for a certificate of~~ 
 10.18  ~~authority shall be subject to the provisions of subdivision 2.~~ 
 10.19     Sec. 11.  Minnesota Statutes 1996, section 62D.03, 
 10.20  subdivision 4, is amended to read: 
 10.21     Subd. 4.  Each application for a certificate of authority 
 10.22  shall be verified by an officer or authorized representative of 
 10.23  the applicant, and shall be in a form prescribed by the 
 10.24  commissioner ~~of health~~.  Each application shall include the 
 10.25  following: 
 10.26     (a) a copy of the basic organizational document, if any, of 
 10.27  the applicant and of each major participating entity; such as 
 10.28  the articles of incorporation, or other applicable documents, 
 10.29  and all amendments thereto; 
 10.30     (b) a copy of the bylaws, rules and regulations, or similar 
 10.31  document, if any, and all amendments thereto which regulate the 
 10.32  conduct of the affairs of the applicant and of each major 
 10.33  participating entity; 
 10.34     (c) a list of the names, addresses, and official positions 
 10.35  of the following: 
 10.36     (1) all members of the board of directors, or governing 
 11.1   body of the local government unit, and the principal officers 
 11.2   and shareholders of the applicant organization; and 
 11.3      (2) all members of the board of directors, or governing 
 11.4   body of the local government unit, and the principal officers of 
 11.5   the major participating entity and each shareholder beneficially 
 11.6   owning more than ten percent of any voting stock of the major 
 11.7   participating entity; 
 11.8      The commissioner may by rule identify persons included in 
 11.9   the term "principal officers"; 
 11.10     (d) a full disclosure of the extent and nature of any 
 11.11  contract or financial arrangements between the following:  
 11.12     (1) the health maintenance organization and the persons 
 11.13  listed in clause (c)(1); 
 11.14     (2) the health maintenance organization and the persons 
 11.15  listed in clause (c)(2); 
 11.16     (3) each major participating entity and the persons listed 
 11.17  in clause (c)(1) concerning any financial relationship with the 
 11.18  health maintenance organization; and 
 11.19     (4) each major participating entity and the persons listed 
 11.20  in clause (c)(2) concerning any financial relationship with the 
 11.21  health maintenance organization; 
 11.22     (e) the name and address of each participating entity and 
 11.23  the agreed upon duration of each contract or agreement; 
 11.24     (f) a copy of the form of each contract binding the 
 11.25  participating entities and the health maintenance organization.  
 11.26  Contractual provisions shall be consistent with the purposes of 
 11.27  sections 62D.01 to 62D.30, in regard to the services to be 
 11.28  performed under the contract, the manner in which payment for 
 11.29  services is determined, the nature and extent of 
 11.30  responsibilities to be retained by the health maintenance 
 11.31  organization, the nature and extent of risk sharing permissible, 
 11.32  and contractual termination provisions; 
 11.33     (g) a copy of each contract binding major participating 
 11.34  entities and the health maintenance organization.  Contract 
 11.35  information filed with the commissioner shall be confidential 
 11.36  and subject to the provisions of section 13.37, subdivision 1, 
 12.1   clause (b), upon the request of the health maintenance 
 12.2   organization.  
 12.3      Upon initial filing of each contract, the health 
 12.4   maintenance organization shall file a separate document 
 12.5   detailing the projected annual expenses to the major 
 12.6   participating entity in performing the contract and the 
 12.7   projected annual revenues received by the entity from the health 
 12.8   maintenance organization for such performance.  The commissioner 
 12.9   shall disapprove any contract with a major participating entity 
 12.10  if the contract will result in an unreasonable expense under 
 12.11  section 62D.19.  The commissioner shall approve or disapprove a 
 12.12  contract within 30 days of filing.  
 12.13     Within 120 days of the anniversary of the implementation of 
 12.14  each contract, the health maintenance organization shall file a 
 12.15  document detailing the actual expenses incurred and reported by 
 12.16  the major participating entity in performing the contract in the 
 12.17  preceding year and the actual revenues received from the health 
 12.18  maintenance organization by the entity in payment for the 
 12.19  performance~~.~~; 
 12.20     ~~Contracts implemented prior to April 25, 1984, shall be~~ 
 12.21  ~~filed within 90 days of April 25, 1984.  These contracts are~~ 
 12.22  ~~subject to the provisions of section 62D.19, but are not subject~~ 
 12.23  ~~to the prospective review prescribed by this clause, unless or~~ 
 12.24  ~~until the terms of the contract are modified.  Commencing with~~ 
 12.25  ~~the next anniversary of the implementation of each of these~~ 
 12.26  ~~contracts immediately following filing, the health maintenance~~ 
 12.27  ~~organization shall, as otherwise required by this subdivision,~~ 
 12.28  ~~file annual actual expenses and revenues;~~ 
 12.29     (h) a statement generally describing the health maintenance 
 12.30  organization, its health maintenance contracts and separate 
 12.31  health service contracts, facilities, and personnel, including a 
 12.32  statement describing the manner in which the applicant proposes 
 12.33  to provide enrollees with comprehensive health maintenance 
 12.34  services and separate health services; 
 12.35     (i) a copy of the form of each evidence of coverage to be 
 12.36  issued to the enrollees; 
 13.1      (j) a copy of the form of each individual or group health 
 13.2   maintenance contract and each separate health service contract 
 13.3   which is to be issued to enrollees or their representatives; 
 13.4      (k) financial statements showing the applicant's assets, 
 13.5   liabilities, and sources of financial support.  If the 
 13.6   applicant's financial affairs are audited by independent 
 13.7   certified public accountants, a copy of the applicant's most 
 13.8   recent certified financial statement may be deemed to satisfy 
 13.9   this requirement; 
 13.10     (l) a description of the proposed method of marketing the 
 13.11  plan, a schedule of proposed charges, and a financial plan which 
 13.12  includes a three-year projection of the expenses and income and 
 13.13  other sources of future capital; 
 13.14     (m) a statement reasonably describing the geographic area 
 13.15  or areas to be served and the type or types of enrollees to be 
 13.16  served; 
 13.17     (n) a description of the complaint procedures to be 
 13.18  utilized as required under section 62D.11; 
 13.19     (o) a description of the procedures and programs to be 
 13.20  implemented to meet the requirements of section 62D.04, 
 13.21  subdivision 1, clauses (b) and (c) and to monitor the quality of 
 13.22  health care provided to enrollees; 
 13.23     (p) a description of the mechanism by which enrollees will 
 13.24  be afforded an opportunity to participate in matters of policy 
 13.25  and operation under section 62D.06; 
 13.26     (q) a copy of any agreement between the health maintenance 
 13.27  organization and an insurer or nonprofit health service 
 13.28  corporation regarding reinsurance, stop-loss coverage, 
 13.29  insolvency coverage, or any other type of coverage for potential 
 13.30  costs of health services, as authorized in sections 62D.04, 
 13.31  subdivision 1, clause (f), 62D.05, subdivision 3, and 62D.13; 
 13.32     (r) a copy of the conflict of interest policy which applies 
 13.33  to all members of the board of directors and the principal 
 13.34  officers of the health maintenance organization, as described in 
 13.35  section 62D.04, subdivision 1, paragraph (g)~~.  All currently~~ 
 13.36  ~~licensed health maintenance organizations shall also file a~~ 
 14.1   ~~conflict of interest policy with the commissioner within 60 days~~ 
 14.2   ~~after August 1, 1990, or at a later date if approved by the~~ 
 14.3   ~~commissioner~~; 
 14.4      (s) a copy of the statement that describes the health 
 14.5   maintenance organization's prior authorization administrative 
 14.6   procedures; 
 14.7      (t) a copy of the agreement between the guaranteeing 
 14.8   organization and the health maintenance organization, as 
 14.9   described in section 62D.043, subdivision 6; and 
 14.10     (u) other information as the commissioner ~~of health~~ may 
 14.11  reasonably require to be provided. 
 14.12     Sec. 12.  Minnesota Statutes 1996, section 62D.04, 
 14.13  subdivision 1, is amended to read: 
 14.14     Subdivision 1.  Upon receipt of an application for a 
 14.15  certificate of authority, the commissioner ~~of health~~ shall 
 14.16  determine whether the applicant for a certificate of authority 
 14.17  has: 
 14.18     (a) ~~demonstrated the willingness and potential ability to~~ 
 14.19  ~~assure that health care services will be provided in such a~~ 
 14.20  ~~manner as to enhance and assure both the availability and~~ 
 14.21  ~~accessibility of adequate personnel and facilities;~~ 
 14.22     ~~(b) arrangements for an ongoing evaluation of the quality~~ 
 14.23  ~~of health care;~~ 
 14.24     ~~(c) a procedure to develop, compile, evaluate, and report~~ 
 14.25  ~~statistics relating to the cost of its operations, the pattern~~ 
 14.26  ~~of utilization of its services, the quality, availability and~~ 
 14.27  ~~accessibility of its services, and such other matters as may be~~ 
 14.28  ~~reasonably required by regulation of the commissioner of health;~~ 
 14.29     ~~(d) reasonable provisions for emergency and out of area~~ 
 14.30  ~~health care services;~~ 
 14.31     ~~(e)~~ demonstrated that it is financially responsible and may 
 14.32  reasonably be expected to meet its obligations to enrollees and 
 14.33  prospective enrollees.  In making this determination, the 
 14.34  commissioner ~~of health~~ shall require the amounts of net worth 
 14.35  and working capital required in section 62D.042, the deposit 
 14.36  required in section 62D.041, and in addition shall consider: 
 15.1      (1) the financial soundness of its arrangements for health 
 15.2   care services and the proposed schedule of charges used in 
 15.3   connection therewith; 
 15.4      (2) arrangements which will guarantee for a reasonable 
 15.5   period of time the continued availability or payment of the cost 
 15.6   of health care services in the event of discontinuance of the 
 15.7   health maintenance organization; and 
 15.8      (3) agreements with providers for the provision of health 
 15.9   care services; 
 15.10     ~~(f)~~ (b) demonstrated that it will assume full financial 
 15.11  risk on a prospective basis for the provision of comprehensive 
 15.12  health maintenance services, including hospital care; provided, 
 15.13  however, that the requirement in this paragraph shall not 
 15.14  prohibit the following: 
 15.15     (1) a health maintenance organization from obtaining 
 15.16  insurance or making other arrangements (i) for the cost of 
 15.17  providing to any enrollee comprehensive health maintenance 
 15.18  services, the aggregate value of which exceeds $5,000 in any 
 15.19  year, (ii) for the cost of providing comprehensive health care 
 15.20  services to its members on a nonelective emergency basis, or 
 15.21  while they are outside the area served by the organization, or 
 15.22  (iii) for not more than 95 percent of the amount by which the 
 15.23  health maintenance organization's costs for any of its fiscal 
 15.24  years exceed 105 percent of its income for such fiscal years; 
 15.25  and 
 15.26     (2) a health maintenance organization from having a 
 15.27  provision in a group health maintenance contract allowing an 
 15.28  adjustment of premiums paid based upon the actual health 
 15.29  services utilization of the enrollees covered under the 
 15.30  contract, except that at no time during the life of the contract 
 15.31  shall the contract holder fully self-insure the financial risk 
 15.32  of health care services delivered under the contract.  Risk 
 15.33  sharing arrangements shall be subject to the requirements of 
 15.34  sections 62D.01 to 62D.30; 
 15.35     ~~(g)~~ (c) demonstrated that it has made provisions for and 
 15.36  adopted a conflict of interest policy applicable to all members 
 16.1   of the board of directors and the principal officers of the 
 16.2   health maintenance organization.  The conflict of interest 
 16.3   policy shall include the procedures described in section 
 16.4   317A.255, subdivisions 1 and 2.  However, the commissioner is 
 16.5   not precluded from finding that a particular transaction is an 
 16.6   unreasonable expense as described in section 62D.19 even if the 
 16.7   directors follow the required procedures; and 
 16.8      ~~(h)~~ (d) otherwise met the requirements of sections 62D.01 
 16.9   to 62D.30. 
 16.10     Sec. 13.  Minnesota Statutes 1996, section 62D.04, is 
 16.11  amended by adding a subdivision to read: 
 16.12     Subd. 1a.  Upon receipt of an application for a certificate 
 16.13  of authority, the commissioner of health shall determine whether 
 16.14  the applicant has: 
 16.15     (a) demonstrated the willingness and potential ability to 
 16.16  assure that health care services will be provided in such a 
 16.17  manner so as to enhance and assure both the availability and 
 16.18  accessibility of adequate personnel and facilities; 
 16.19     (b) arrangements for an ongoing evaluation of the quality 
 16.20  of health care; 
 16.21     (c) a procedure to develop, compile, evaluate, and report 
 16.22  statistics relating to the cost of its operations, the pattern 
 16.23  of utilization of its services, the quality, availability and 
 16.24  accessibility of its services, and such other matters as may be 
 16.25  reasonably required by rule of the commissioner; and 
 16.26     (d) reasonable provisions for emergency and out of area 
 16.27  health care services. 
 16.28     The commissioner of health shall report this determination 
 16.29  to the commissioner within the time period specified in 
 16.30  subdivision 2. 
 16.31     Sec. 14.  Minnesota Statutes 1996, section 62D.04, 
 16.32  subdivision 2, is amended to read: 
 16.33     Subd. 2.  Within 90 days after the receipt of the 
 16.34  application for a certificate of authority, the commissioner ~~of~~ 
 16.35  ~~health~~ shall determine whether or not the applicant meets the 
 16.36  requirements of this section.  If the commissioner ~~of health~~ 
 17.1   determines that the applicant meets the requirements of sections 
 17.2   62D.01 to 62D.30, the commissioner shall issue a certificate of 
 17.3   authority to the applicant.  If the commissioner ~~of health~~ 
 17.4   determines that the applicant is not qualified, the commissioner 
 17.5   shall so notify the applicant and shall specify the reason or 
 17.6   reasons for such disqualification. 
 17.7      Sec. 15.  Minnesota Statutes 1996, section 62D.04, 
 17.8   subdivision 3, is amended to read: 
 17.9      Subd. 3.  ~~Except as provided in section 62D.03, subdivision~~ 
 17.10  ~~2,~~ No person who has not been issued a certificate of authority 
 17.11  shall use the words "health maintenance organization" or the 
 17.12  initials "HMO" in its name, contracts or literature.  Provided, 
 17.13  however, that persons who are operating under a contract with, 
 17.14  operating in association with, enrolling enrollees for, or 
 17.15  otherwise authorized by a health maintenance organization 
 17.16  licensed under sections 62D.01 to 62D.30 to act on its behalf 
 17.17  may use the terms "health maintenance organization" or "HMO" for 
 17.18  the limited purpose of denoting or explaining their association 
 17.19  or relationship with the authorized health maintenance 
 17.20  organization.  No health maintenance organization which has a 
 17.21  minority of consumers as members of its board of directors shall 
 17.22  use the words "consumer controlled" in its name or in any way 
 17.23  represent to the public that it is controlled by consumers. 
 17.24     Sec. 16.  Minnesota Statutes 1996, section 62D.05, 
 17.25  subdivision 6, is amended to read: 
 17.26     Subd. 6.  [SUPPLEMENTAL BENEFITS.] (a) A health maintenance 
 17.27  organization may, as a supplemental benefit, provide coverage to 
 17.28  its enrollees for health care services and supplies received 
 17.29  from providers who are not employed by, under contract with, or 
 17.30  otherwise affiliated with the health maintenance organization.  
 17.31  Supplemental benefits may be provided if the following 
 17.32  conditions are met:  
 17.33     (1) a health maintenance organization desiring to offer 
 17.34  supplemental benefits must at all times comply with the 
 17.35  requirements of sections 62D.041 and 62D.042; 
 17.36     (2) a health maintenance organization offering supplemental 
 18.1   benefits must maintain an additional surplus in the first year 
 18.2   supplemental benefits are offered equal to the lesser of 
 18.3   $500,000 or 33 percent of the supplemental benefit expenses.  At 
 18.4   the end of the second year supplemental benefits are offered, 
 18.5   the health maintenance organization must maintain an additional 
 18.6   surplus equal to the lesser of $1,000,000 or 33 percent of the 
 18.7   supplemental benefit expenses.  At the end of the third year 
 18.8   benefits are offered and every year after that, the health 
 18.9   maintenance organization must maintain an additional surplus 
 18.10  equal to the greater of $1,000,000 or 33 percent of the 
 18.11  supplemental benefit expenses.  When in the judgment of the 
 18.12  commissioner the health maintenance organization's surplus is 
 18.13  inadequate, the commissioner may require the health maintenance 
 18.14  organization to maintain additional surplus; 
 18.15     (3) claims relating to supplemental benefits must be 
 18.16  processed in accordance with the requirements of section 
 18.17  72A.201; and 
 18.18     (4) in marketing supplemental benefits, the health 
 18.19  maintenance organization shall fully disclose and describe to 
 18.20  enrollees and potential enrollees the nature and extent of the 
 18.21  supplemental coverage, and any claims filing and other 
 18.22  administrative responsibilities in regard to supplemental 
 18.23  benefits.  
 18.24     (b) The commissioner may, pursuant to chapter 14, adopt, 
 18.25  enforce, and administer rules relating to this subdivision, 
 18.26  including:  rules insuring that these benefits are supplementary 
 18.27  and not substitutes for comprehensive health maintenance 
 18.28  services by addressing percentage of out-of-plan coverage; rules 
 18.29  relating to the establishment of necessary financial reserves; 
 18.30  rules relating to marketing practices; and other rules necessary 
 18.31  for the effective and efficient administration of this 
 18.32  subdivision.  The commissioner, in adopting rules, shall give 
 18.33  consideration to existing laws and rules administered and 
 18.34  enforced by the ~~department of commerce~~ commissioner relating to 
 18.35  health insurance plans.  
 18.36     Sec. 17.  Minnesota Statutes 1996, section 62D.06, 
 19.1   subdivision 2, is amended to read: 
 19.2      Subd. 2.  The governing body shall establish a mechanism to 
 19.3   afford the enrollees an opportunity to express their opinions in 
 19.4   matters of policy and operation through the establishment of 
 19.5   advisory panels, by the use of advisory referenda on major 
 19.6   policy decisions, or through the use of other mechanisms as may 
 19.7   be prescribed or permitted by the commissioner ~~of health~~. 
 19.8      Sec. 18.  Minnesota Statutes 1996, section 62D.07, 
 19.9   subdivision 2, is amended to read: 
 19.10     Subd. 2.  No evidence of coverage or contract, or amendment 
 19.11  thereto shall be issued or delivered to any person in this state 
 19.12  until a copy of the form of the evidence of coverage or contract 
 19.13  or amendment thereto has been filed with the commissioner ~~of~~ 
 19.14  ~~health~~ pursuant to section 62D.03 or 62D.08. 
 19.15     Sec. 19.  Minnesota Statutes 1996, section 62D.07, 
 19.16  subdivision 3, is amended to read: 
 19.17     Subd. 3.  Contracts and evidences of coverage shall contain:
 19.18     (a) No provisions or statements which are unjust, unfair, 
 19.19  inequitable, misleading, deceptive, or which are untrue, 
 19.20  misleading, or deceptive as defined in section 62D.12, 
 19.21  subdivision 1; and 
 19.22     (b) A clear, concise and complete statement of: 
 19.23     (1) the health care services and the insurance or other 
 19.24  benefits, if any, to which the enrollee is entitled under the 
 19.25  health maintenance contract; 
 19.26     (2) any exclusions or limitations on the services, kind of 
 19.27  services, benefits, or kind of benefits, to be provided, 
 19.28  including any deductible or copayment feature and requirements 
 19.29  for referrals, prior authorizations, and second opinions; 
 19.30     (3) where and in what manner information is available as to 
 19.31  how services, including emergency and out of area services, may 
 19.32  be obtained; 
 19.33     (4) the total amount of payment and copayment, if any, for 
 19.34  health care services and the indemnity or service benefits, if 
 19.35  any, which the enrollee is obligated to pay with respect to 
 19.36  individual contracts, or an indication whether the plan is 
 20.1   contributory or noncontributory with respect to group 
 20.2   certificates; and 
 20.3      (5) a description of the health maintenance organization's 
 20.4   method for resolving enrollee complaints and a statement 
 20.5   identifying the commissioner as an external source with whom 
 20.6   grievances may be registered.  
 20.7      (c) On the cover page of the evidence of coverage and 
 20.8   contract, a clear and complete statement of enrollees' rights as 
 20.9   consumers.  The statement must be in bold print and captioned 
 20.10  "Important Consumer Information and Enrollee Bill of Rights" and 
 20.11  must include but not be limited to the following provisions in 
 20.12  the following language or in substantially similar language 
 20.13  approved in advance by the commissioner:  
 20.14                        CONSUMER INFORMATION 
 20.15     (1) COVERED SERVICES:  Services provided by (name of health 
 20.16  maintenance organization) will be covered only if services are 
 20.17  provided by participating (name of health maintenance 
 20.18  organization) providers or authorized by (name of health 
 20.19  maintenance organization).  Your contract fully defines what 
 20.20  services are covered and describes procedures you must follow to 
 20.21  obtain coverage. 
 20.22     (2) PROVIDERS:  Enrolling in (name of health maintenance 
 20.23  organization) does not guarantee services by a particular 
 20.24  provider on the list of providers.  When a provider is no longer 
 20.25  part of (name of health maintenance organization), you must 
 20.26  choose among remaining (name of the health maintenance 
 20.27  organization) providers. 
 20.28     (3) REFERRALS:  Certain services are covered only upon 
 20.29  referral.  See section (section number) of your contract for 
 20.30  referral requirements.  All referrals to non-(name of health 
 20.31  maintenance organization) providers and certain types of health 
 20.32  care providers must be authorized by (name of health maintenance 
 20.33  organization). 
 20.34     (4) EMERGENCY SERVICES:  Emergency services from providers 
 20.35  who are not affiliated with (name of health maintenance 
 20.36  organization) will be covered only if proper procedures are 
 21.1   followed.  Your contract explains the procedures and benefits 
 21.2   associated with emergency care from (name of health maintenance 
 21.3   organization) and non-(name of health maintenance organization) 
 21.4   providers. 
 21.5      (5) EXCLUSIONS:  Certain services or medical supplies are 
 21.6   not covered.  You should read the contract for a detailed 
 21.7   explanation of all exclusions. 
 21.8      (6) CONTINUATION:  You may convert to an individual health 
 21.9   maintenance organization contract or continue coverage under 
 21.10  certain circumstances.  These continuation and conversion rights 
 21.11  are explained fully in your contract. 
 21.12     (7) CANCELLATION:  Your coverage may be canceled by you or 
 21.13  (name of health maintenance organization) only under certain 
 21.14  conditions.  Your contract describes all reasons for 
 21.15  cancellation of coverage. 
 21.16                      ENROLLEE BILL OF RIGHTS 
 21.17     (1) Enrollees have the right to available and accessible 
 21.18  services including emergency services, as defined in your 
 21.19  contract, 24 hours a day and seven days a week; 
 21.20     (2) Enrollees have the right to be informed of health 
 21.21  problems, and to receive information regarding treatment 
 21.22  alternatives and risks which is sufficient to assure informed 
 21.23  choice; 
 21.24     (3) Enrollees have the right to refuse treatment, and the 
 21.25  right to privacy of medical and financial records maintained by 
 21.26  the health maintenance organization and its health care 
 21.27  providers, in accordance with existing law; 
 21.28     (4) Enrollees have the right to file a grievance with the 
 21.29  health maintenance organization and the commissioner of ~~health~~ 
 21.30  commerce and the right to initiate a legal proceeding when 
 21.31  experiencing a problem with the health maintenance organization 
 21.32  or its health care providers; 
 21.33     (5) Enrollees have the right to a grace period of 31 days 
 21.34  for the payment of each premium for an individual health 
 21.35  maintenance contract falling due after the first premium during 
 21.36  which period the contract shall continue in force; 
 22.1      (6) Medicare enrollees have the right to voluntarily 
 22.2   disenroll from the health maintenance organization and the right 
 22.3   not to be requested or encouraged to disenroll except in 
 22.4   circumstances specified in federal law; and 
 22.5      (7) Medicare enrollees have the right to a clear 
 22.6   description of nursing home and home care benefits covered by 
 22.7   the health maintenance organization. 
 22.8      Sec. 20.  Minnesota Statutes 1996, section 62D.07, 
 22.9   subdivision 10, is amended to read: 
 22.10     Subd. 10.  An individual health maintenance organization 
 22.11  contract and an evidence of coverage must contain a department 
 22.12  of ~~health~~ commerce telephone number that the enrollee can call 
 22.13  to register a complaint about a health maintenance organization. 
 22.14     Sec. 21.  Minnesota Statutes 1996, section 62D.08, 
 22.15  subdivision 1, is amended to read: 
 22.16     Subdivision 1.  A health maintenance organization shall, 
 22.17  unless otherwise provided for by rules adopted by the 
 22.18  commissioner ~~of health~~, file notice with the commissioner ~~of~~ 
 22.19  ~~health~~ prior to any modification of the operations or documents 
 22.20  described in the information submitted under clauses (a), (b), 
 22.21  (e), (f), (g), (i), (j), (l), (m), (n), (o), (p), (q), (r), (s), 
 22.22  and (t) of section 62D.03, subdivision 4.  If the modification 
 22.23  involves the operations or documents described in the 
 22.24  information submitted under section 62D.03, subdivision 4, 
 22.25  clause (o), the notice of modification must be filed with the 
 22.26  commissioner of health at the same time it is filed with the 
 22.27  commissioner.  The commissioner of health shall provide the 
 22.28  commissioner with a recommendation on the approval or 
 22.29  disapproval of the modifications within 60 days of the filing.  
 22.30  If the commissioner ~~of health~~ does not disapprove of the filing 
 22.31  within 60 days, it shall be deemed approved and may be 
 22.32  implemented by the health maintenance organization. 
 22.33     Sec. 22.  Minnesota Statutes 1996, section 62D.08, 
 22.34  subdivision 2, is amended to read: 
 22.35     Subd. 2.  Every health maintenance organization shall 
 22.36  annually, on or before April 1, file a verified report with the 
 23.1   commissioner and commissioner of health covering the preceding 
 23.2   calendar year.  However, utilization data required under 
 23.3   subdivision 3, clause (c), shall be filed on or before July 1. 
 23.4      Sec. 23.  Minnesota Statutes 1996, section 62D.08, 
 23.5   subdivision 3, is amended to read: 
 23.6      Subd. 3.  Such report shall be on forms prescribed by the 
 23.7   commissioner ~~of health~~, and shall include: 
 23.8      (a) A financial statement of the organization, including 
 23.9   its balance sheet and receipts and disbursements for the 
 23.10  preceding year certified by an independent certified public 
 23.11  accountant, reflecting at least (1) all prepayment and other 
 23.12  payments received for health care services rendered, (2) 
 23.13  expenditures to all providers, by classes or groups of 
 23.14  providers, and insurance companies or nonprofit health service 
 23.15  plan corporations engaged to fulfill obligations arising out of 
 23.16  the health maintenance contract, (3) expenditures for capital 
 23.17  improvements, or additions thereto, including but not limited to 
 23.18  construction, renovation or purchase of facilities and capital 
 23.19  equipment, and (4) a supplementary statement of assets, 
 23.20  liabilities, premium revenue, and expenditures for risk sharing 
 23.21  business under section 62D.04, subdivision 1, on forms 
 23.22  prescribed by the commissioner; 
 23.23     (b) The number of new enrollees enrolled during the year, 
 23.24  the number of group enrollees and the number of individual 
 23.25  enrollees as of the end of the year and the number of enrollees 
 23.26  terminated during the year; 
 23.27     (c) A summary of information compiled pursuant to section 
 23.28  62D.04, subdivision 1, clause (c), in such form as may be 
 23.29  required by the commissioner ~~of health~~; 
 23.30     (d) A report of the names and addresses of all persons set 
 23.31  forth in section 62D.03, subdivision 4, clause (c), who were 
 23.32  associated with the health maintenance organization or the major 
 23.33  participating entity during the preceding year, and the amount 
 23.34  of wages, expense reimbursements, or other payments to such 
 23.35  individuals for services to the health maintenance organization 
 23.36  or the major participating entity, as those services relate to 
 24.1   the health maintenance organization, including a full disclosure 
 24.2   of all financial arrangements during the preceding year required 
 24.3   to be disclosed pursuant to section 62D.03, subdivision 4, 
 24.4   clause (d); 
 24.5      (e) A separate report addressing health maintenance 
 24.6   contracts sold to individuals covered by Medicare, title XVIII 
 24.7   of the Social Security Act, as amended, including the 
 24.8   information required under section 62D.30, subdivision 6; and 
 24.9      (f) Such other information relating to the performance of 
 24.10  the health maintenance organization as is reasonably necessary 
 24.11  to enable the commissioner ~~of health~~ to carry out the duties 
 24.12  under sections 62D.01 to 62D.30. 
 24.13     Sec. 24.  Minnesota Statutes 1996, section 62D.08, 
 24.14  subdivision 4, is amended to read: 
 24.15     Subd. 4.  Any health maintenance organization which fails 
 24.16  to file a verified report with the commissioner on or before 
 24.17  April 1 of the year due shall be subject to the levy of a fine 
 24.18  up to $500 for each day the report is past due.  This failure 
 24.19  will serve as a basis for other disciplinary action against the 
 24.20  organization, including suspension or revocation, in accordance 
 24.21  with sections 62D.15 to 62D.17 and chapter 45.  The commissioner 
 24.22  may grant an extension of the reporting deadline upon good cause 
 24.23  shown by the health maintenance organization.  Any fine levied 
 24.24  or disciplinary action taken against the organization under this 
 24.25  subdivision is subject to the contested case and judicial review 
 24.26  provisions of sections 14.57 to 14.69.  
 24.27     Sec. 25.  Minnesota Statutes 1996, section 62D.08, 
 24.28  subdivision 5, is amended to read: 
 24.29     Subd. 5.  Every health maintenance organization shall 
 24.30  inform the commissioner of any change in the information 
 24.31  described in section 62D.03, subdivision 4, clause (e), 
 24.32  including any change in address, any modification of the 
 24.33  duration of any contract or agreement, and any addition to the 
 24.34  list of participating entities, within ten working days of the 
 24.35  notification of the change.  Any cancellation or discontinuance 
 24.36  of any contract or agreement listed in section 62D.03, 
 25.1   subdivision 4, clause (e), or listed subsequently in accordance 
 25.2   with this subdivision, shall be reported to the commissioner 120 
 25.3   days before the effective date.  When the health maintenance 
 25.4   organization terminates a provider for cause, death, disability, 
 25.5   or loss of license, the health maintenance organization must 
 25.6   notify the commissioner within three working days of the date 
 25.7   the health maintenance organization sends out or receives the 
 25.8   notice of cancellation, discontinuance, or termination.  Any 
 25.9   health maintenance organization which fails to notify the 
 25.10  commissioner within the time periods prescribed in this 
 25.11  subdivision shall be subject to the levy of a fine up to $200 
 25.12  per contract for each day the notice is past due, accruing up to 
 25.13  the date the organization notifies the commissioner of the 
 25.14  cancellation or discontinuance.  Any fine levied under this 
 25.15  subdivision is subject to the contested case and judicial review 
 25.16  provisions of chapter 14.  The levy of a fine does not preclude 
 25.17  the commissioner from using other penalties described in 
 25.18  sections 62D.15 to 62D.17 and chapter 45. 
 25.19     Sec. 26.  Minnesota Statutes 1996, section 62D.08, 
 25.20  subdivision 6, is amended to read: 
 25.21     Subd. 6.  A health maintenance organization shall submit to 
 25.22  the commissioner unaudited financial statements of the 
 25.23  organization for the first three quarters of the year on forms 
 25.24  prescribed by the commissioner.  The statements are due 30 days 
 25.25  after the end of the quarter and shall be maintained as 
 25.26  ~~nonpublic~~ public data~~, as defined by section 13.02, subdivision~~ 
 25.27  ~~9~~ under chapter 13.  Unaudited financial statements for the 
 25.28  fourth quarter shall be submitted at the request of the 
 25.29  commissioner. 
 25.30     Sec. 27.  Minnesota Statutes 1996, section 62D.09, 
 25.31  subdivision 1, is amended to read: 
 25.32     Subdivision 1.  (a) Any written marketing materials which 
 25.33  may be directed toward potential enrollees and which include a 
 25.34  detailed description of benefits provided by the health 
 25.35  maintenance organization shall include a statement of consumer 
 25.36  information and rights as described in section 62D.07, 
 26.1   subdivision 3, paragraphs (b) and (c).  Prior to any oral 
 26.2   marketing presentation, the agent marketing the plan must inform 
 26.3   the potential enrollees that any complaints concerning the 
 26.4   material presented should be directed to the health maintenance 
 26.5   organization, the commissioner ~~of health~~, or, if applicable, the 
 26.6   employer. 
 26.7      (b) Detailed marketing materials must affirmatively 
 26.8   disclose all exclusions and limitations in the organization's 
 26.9   services or kinds of services offered to the contracting party, 
 26.10  including but not limited to the following types of exclusions 
 26.11  and limitations: 
 26.12     (1) health care services not provided; 
 26.13     (2) health care services requiring copayments or 
 26.14  deductibles paid by enrollees; 
 26.15     (3) the fact that access to health care services does not 
 26.16  guarantee access to a particular provider type; and 
 26.17     (4) health care services that are or may be provided only 
 26.18  by referral of a physician. 
 26.19     (c) No marketing materials may lead consumers to believe 
 26.20  that all health care needs will be covered.  All marketing 
 26.21  materials must alert consumers to possible uncovered expenses 
 26.22  with the following language in bold print:  "THIS HEALTH CARE 
 26.23  PLAN MAY NOT COVER ALL YOUR HEALTH CARE EXPENSES; READ YOUR 
 26.24  CONTRACT CAREFULLY TO DETERMINE WHICH EXPENSES ARE COVERED."  
 26.25  Immediately following the disclosure required under paragraph 
 26.26  (b), clause (3), consumers must be given a telephone number to 
 26.27  use to contact the health maintenance organization for specific 
 26.28  information about access to provider types. 
 26.29     (d) The disclosures required in paragraphs (b) and (c) are 
 26.30  not required on billboards or image, and name identification 
 26.31  advertisement. 
 26.32     Sec. 28.  Minnesota Statutes 1996, section 62D.09, 
 26.33  subdivision 8, is amended to read: 
 26.34     Subd. 8.  Each health maintenance organization shall issue 
 26.35  a membership card to its enrollees.  The membership card must: 
 26.36     (1) identify the health maintenance organization; 
 27.1      (2) include the name, address, and telephone number to call 
 27.2   if the enroller has a complaint; 
 27.3      (3) include the telephone number to call or the instruction 
 27.4   on how to receive authorization for emergency care; and 
 27.5      (4) include the telephone number to call to appeal to the 
 27.6   commissioner ~~of health~~. 
 27.7      Sec. 29.  Minnesota Statutes 1996, section 62D.10, 
 27.8   subdivision 4, is amended to read: 
 27.9      Subd. 4.  A health plan may apply to the commissioner ~~of~~ 
 27.10  ~~health~~ for a waiver of the requirements of this section or for 
 27.11  authorization to impose such underwriting restrictions upon open 
 27.12  enrollment as are necessary (a) to preserve its financial 
 27.13  stability, (b) to prevent excessive adverse selection by 
 27.14  prospective enrollees, or (c) to avoid unreasonably high or 
 27.15  unmarketable charges for enrollee coverage for health care 
 27.16  services.  The commissioner ~~of health~~ upon a showing of good 
 27.17  cause, shall approve or upon failure to show good cause shall 
 27.18  deny such application within 30 days of the receipt thereof from 
 27.19  the health plan.  The commissioner ~~of health~~ may, in accordance 
 27.20  with chapter 14, promulgate rules to implement this section. 
 27.21     Sec. 30.  Minnesota Statutes 1996, section 62D.11, 
 27.22  subdivision 1b, is amended to read: 
 27.23     Subd. 1b.  [EXPEDITED RESOLUTION OF COMPLAINTS ABOUT 
 27.24  URGENTLY NEEDED SERVICE.] In addition to any remedy contained in 
 27.25  subdivision 1a, when a complaint involves a dispute about a 
 27.26  health maintenance organization's coverage of an immediately and 
 27.27  urgently needed service, the commissioner or the commissioner of 
 27.28  health may also order the health maintenance organization to use 
 27.29  an expedited system to process the complaint.  
 27.30     Sec. 31.  Minnesota Statutes 1996, section 62D.11, 
 27.31  subdivision 2, is amended to read: 
 27.32     Subd. 2.  The health maintenance organization shall 
 27.33  maintain a record of each written complaint filed with it for 
 27.34  five years and the commissioner ~~of health~~ shall have access to 
 27.35  the records. 
 27.36     Sec. 32.  Minnesota Statutes 1996, section 62D.11, 
 28.1   subdivision 3, is amended to read: 
 28.2      Subd. 3.  [DENIAL OF SERVICE.] Within a reasonable time 
 28.3   after receiving an enrollee's written or oral communication to 
 28.4   the health maintenance organization concerning a refusal of 
 28.5   service or inadequacy of services, the health maintenance 
 28.6   organization shall provide the enrollee with a written statement 
 28.7   of the reason for the refusal of service, and a statement 
 28.8   approved by the commissioner ~~of health~~ which explains the health 
 28.9   maintenance organization complaint procedures, and in the case 
 28.10  of Medicare enrollees, which also explains Medicare appeal 
 28.11  procedures. 
 28.12     Sec. 33.  Minnesota Statutes 1996, section 62D.12, 
 28.13  subdivision 1, is amended to read: 
 28.14     Subdivision 1.  No health maintenance organization or 
 28.15  representative thereof may cause or knowingly permit the use of 
 28.16  advertising or solicitation which is untrue or misleading, or 
 28.17  any form of evidence of coverage which is deceptive.  Each 
 28.18  health maintenance organization shall be subject to sections 
 28.19  72A.17 to 72A.32, relating to the regulation of trade practices, 
 28.20  except ~~(a)~~ to the extent that the nature of a health maintenance 
 28.21  organization renders such sections clearly inappropriate ~~and (b)~~ 
 28.22  ~~that enforcement shall be by the commissioner of health and not~~ 
 28.23  ~~by the commissioner of commerce~~.  Every health maintenance 
 28.24  organization shall be subject to sections 8.31 and 325F.69. 
 28.25     Sec. 34.  Minnesota Statutes 1996, section 62D.12, 
 28.26  subdivision 2, is amended to read: 
 28.27     Subd. 2.  No health maintenance organization may cancel or 
 28.28  fail to renew the coverage of an enrollee except for (a) failure 
 28.29  to pay the charge for health care coverage; (b) termination of 
 28.30  the health care plan; (c) termination of the group plan; (d) 
 28.31  enrollee moving out of the area served, subject to section 
 28.32  62A.17, subdivisions 1 and 6, and section 62D.104; (e) enrollee 
 28.33  moving out of an eligible group, subject to section 62A.17, 
 28.34  subdivisions 1 and 6, and section 62D.104; (f) failure to make 
 28.35  copayments required by the health care plan; or (g) other 
 28.36  reasons established in rules promulgated by the commissioner ~~of~~ 
 29.1   ~~health~~. 
 29.2      Sec. 35.  Minnesota Statutes 1996, section 62D.12, 
 29.3   subdivision 9, is amended to read: 
 29.4      Subd. 9.  All net earnings of the health maintenance 
 29.5   organization shall be devoted to the nonprofit purposes of the 
 29.6   health maintenance organization in providing comprehensive 
 29.7   health care.  No health maintenance organization shall provide 
 29.8   for the payment, whether directly or indirectly, of any part of 
 29.9   its net earnings, to any person as a dividend or rebate; 
 29.10  provided, however, that health maintenance organizations may 
 29.11  make payments to providers or other persons based upon the 
 29.12  efficient provision of services or as incentives to provide 
 29.13  quality care.  The commissioner ~~of health~~ shall, pursuant to 
 29.14  sections 62D.01 to 62D.30, revoke the certificate of authority 
 29.15  of any health maintenance organization in violation of this 
 29.16  subdivision. 
 29.17     Sec. 36.  Minnesota Statutes 1996, section 62D.121, 
 29.18  subdivision 3a, is amended to read: 
 29.19     Subd. 3a.  If the replacement coverage is health 
 29.20  maintenance organization coverage, as explained in subdivisions 
 29.21  2 and 2a, the fee shall not exceed 125 percent of the cost of 
 29.22  the average fee charged by health maintenance organizations for 
 29.23  a similar health plan.  The commissioner ~~of health will~~ shall 
 29.24  determine the average cost of the plan on the basis of 
 29.25  information provided annually by the health maintenance 
 29.26  organizations concerning the rates charged by the health 
 29.27  maintenance organizations for the plans offered.  Fees or 
 29.28  premiums charged under this section must be actuarially 
 29.29  justified. 
 29.30     Sec. 37.  Minnesota Statutes 1996, section 62D.121, 
 29.31  subdivision 7, is amended to read: 
 29.32     Subd. 7.  [GEOGRAPHIC ACCESSIBILITY.] If the commissioner 
 29.33  of health determines that there are not enough providers to 
 29.34  assure that enrollees have accessible health services available 
 29.35  in a geographic service area, the commissioner of health shall 
 29.36  institute a plan of corrective action that shall be followed by 
 30.1   the health maintenance organization.  Such a plan may include 
 30.2   but not be limited to requiring the health maintenance 
 30.3   organization to make payments to nonparticipating providers for 
 30.4   health services for enrollees, requiring the health maintenance 
 30.5   organization to discontinue accepting new enrollees in that 
 30.6   service area, and requiring the health maintenance organization 
 30.7   to reduce its geographic service area.  If a nonparticipating 
 30.8   provider has been a participating provider with the health 
 30.9   maintenance organization within the last year, any payments made 
 30.10  under this section must not exceed the payment level of the 
 30.11  previous contract unless the commissioner of health determines 
 30.12  that without adjusting payments the health maintenance 
 30.13  organization will be unable to meet the health care needs of 
 30.14  enrollees in the area. 
 30.15     Sec. 38.  Minnesota Statutes 1996, section 62D.14, 
 30.16  subdivision 1, is amended to read: 
 30.17     Subdivision 1.  The commissioner ~~of health~~ may make an 
 30.18  examination of the affairs of any health maintenance 
 30.19  organization and its contracts, agreements, or other 
 30.20  arrangements with any participating entity as often as the 
 30.21  commissioner ~~of health~~ deems necessary for the protection of the 
 30.22  interests of the people of this state, but not less frequently 
 30.23  than once every three years.  Examinations of participating 
 30.24  entities pursuant to this subdivision shall be limited to their 
 30.25  dealings with the health maintenance organization and its 
 30.26  enrollees, except that examinations of major participating 
 30.27  entities may include inspection of the entity's financial 
 30.28  statements kept in the ordinary course of business.  The 
 30.29  commissioner may require major participating entities to submit 
 30.30  the financial statements directly to the commissioner.  
 30.31  Financial statements of major participating entities are subject 
 30.32  to the provisions of section 13.37, subdivision 1, clause (b), 
 30.33  upon request of the major participating entity or the health 
 30.34  maintenance organization with which it contracts. 
 30.35     Sec. 39.  Minnesota Statutes 1996, section 62D.14, 
 30.36  subdivision 3, is amended to read: 
 31.1      Subd. 3.  In order to accomplish the duties under this 
 31.2   section with respect to the dealings of the participating 
 31.3   entities with the health maintenance organization, the 
 31.4   commissioner ~~of health shall have~~ has the right to: 
 31.5      (a) inspect or otherwise evaluate the quality, 
 31.6   appropriateness, and timeliness of services performed or direct 
 31.7   the commissioner of health to perform these duties; 
 31.8      (b) audit and inspect any books and records of a health 
 31.9   maintenance organization and a participating entity which 
 31.10  pertain to services performed and determinations of amounts 
 31.11  payable under such contract; 
 31.12     (c) require persons or organizations under examination to 
 31.13  be deposed and to answer interrogatories, regardless of whether 
 31.14  an administrative hearing or other civil proceeding has been or 
 31.15  will be initiated; and 
 31.16     (d) employ site visits, public hearings, or any other 
 31.17  procedures considered appropriate to obtain the information 
 31.18  necessary to determine the issues.  
 31.19     Sec. 40.  Minnesota Statutes 1996, section 62D.14, 
 31.20  subdivision 4, is amended to read: 
 31.21     Subd. 4.  Any data or information pertaining to the 
 31.22  diagnosis, treatment, or health of any enrollee, or any 
 31.23  application obtained from any person, shall be private as 
 31.24  defined in chapter 13 and shall not be disclosed to any person 
 31.25  except (a) to the extent necessary to carry out the purposes of 
 31.26  sections 62D.01 to 62D.30, the commissioner and the commissioner 
 31.27  of health and a designee shall have access to the above data or 
 31.28  information but the data removed from the health maintenance 
 31.29  organization or participating entity shall not identify any 
 31.30  particular patient or client by name or contain any other unique 
 31.31  personal identifier; (b) upon the express consent of the 
 31.32  enrollee or applicant; (c) pursuant to statute or court order 
 31.33  for the production of evidence or the discovery thereof; or (d) 
 31.34  in the event of claim or litigation between such person and the 
 31.35  provider or health maintenance organization wherein such data or 
 31.36  information is pertinent.  In any case involving a suspected 
 32.1   violation of a law applicable to health maintenance 
 32.2   organizations in which access to health data maintained by the 
 32.3   health maintenance organization or participating entity is 
 32.4   necessary, the commissioner and the commissioner of health and 
 32.5   agents, while maintaining the privacy rights of individuals and 
 32.6   families, shall be permitted to obtain data that identifies any 
 32.7   particular patient or client by name.  A health maintenance 
 32.8   organization shall be entitled to claim any statutory privileges 
 32.9   against such disclosure which the provider who furnished such 
 32.10  information to the health maintenance organization is entitled 
 32.11  to claim. 
 32.12     Sec. 41.  Minnesota Statutes 1996, section 62D.14, 
 32.13  subdivision 5, is amended to read: 
 32.14     Subd. 5.  The commissioner and the commissioner of health 
 32.15  shall have the power to administer oaths to and examine 
 32.16  witnesses, and to issue subpoenas. 
 32.17     Sec. 42.  Minnesota Statutes 1996, section 62D.14, 
 32.18  subdivision 6, is amended to read: 
 32.19     Subd. 6.  Reasonable expenses of examinations under this 
 32.20  section shall be assessed by the commissioner ~~of health~~ against 
 32.21  the organization being examined, and shall be remitted to the 
 32.22  commissioner ~~of health~~ for deposit in the general fund of the 
 32.23  state treasury. 
 32.24     Sec. 43.  Minnesota Statutes 1996, section 62D.15, 
 32.25  subdivision 1, is amended to read: 
 32.26     Subdivision 1.  The commissioner ~~of health~~ may suspend or 
 32.27  revoke any certificate of authority issued to a health 
 32.28  maintenance organization under sections 62D.01 to 62D.30 ~~if the~~ 
 32.29  ~~commissioner finds~~ upon a finding by the commissioner or the 
 32.30  commissioner of health that: 
 32.31     (a) The health maintenance organization is operating 
 32.32  significantly in contravention of its basic organizational 
 32.33  document, its health maintenance contract, or in a manner 
 32.34  contrary to that described in and reasonably inferred from any 
 32.35  other information submitted under section 62D.03, unless 
 32.36  amendments to such submissions have been filed with and approved 
 33.1   by the commissioner ~~of health~~; 
 33.2      (b) The health maintenance organization issues evidences of 
 33.3   coverage which do not comply with the requirements of section 
 33.4   62D.07; 
 33.5      (c) The health maintenance organization is unable to 
 33.6   fulfill its obligations to furnish comprehensive health 
 33.7   maintenance services as required under its health maintenance 
 33.8   contract; 
 33.9      (d) The health maintenance organization is no longer 
 33.10  financially responsible and may reasonably be expected to be 
 33.11  unable to meet its obligations to enrollees or prospective 
 33.12  enrollees; 
 33.13     (e) The health maintenance organization has failed to 
 33.14  implement a mechanism affording the enrollees an opportunity to 
 33.15  participate in matters of policy and operation under section 
 33.16  62D.06; 
 33.17     (f) The health maintenance organization has failed to 
 33.18  implement the complaint system required by section 62D.11 in a 
 33.19  manner designed to reasonably resolve valid complaints; 
 33.20     (g) The health maintenance organization, or any person 
 33.21  acting with its sanction, has advertised or merchandised its 
 33.22  services in an untrue, misrepresentative, misleading, deceptive, 
 33.23  or unfair manner; 
 33.24     (h) The continued operation of the health maintenance 
 33.25  organization would be hazardous to its enrollees; or 
 33.26     (i) The health maintenance organization has otherwise 
 33.27  failed to substantially comply with sections 62D.01 to 62D.30 or 
 33.28  with any other statute or administrative rule applicable to 
 33.29  health maintenance organizations, or has submitted false 
 33.30  information in any report required hereunder. 
 33.31     Sec. 44.  Minnesota Statutes 1996, section 62D.15, 
 33.32  subdivision 4, is amended to read: 
 33.33     Subd. 4.  When the certificate of authority of a health 
 33.34  maintenance organization is revoked, the organization shall 
 33.35  proceed, immediately following the effective date of the order 
 33.36  of revocation, to wind up its affairs, and shall conduct no 
 34.1   further business except as may be essential to the orderly 
 34.2   conclusion of the affairs of the organization. It shall engage 
 34.3   in no further advertising or solicitation whatsoever.  The 
 34.4   commissioner ~~of health~~ may, by written order, permit further 
 34.5   operation of the organization as the commissioner may find to be 
 34.6   in the best interest of enrollees, to the end that enrollees 
 34.7   will be afforded the greatest practical opportunity to obtain 
 34.8   continuing health care coverage. 
 34.9      Sec. 45.  Minnesota Statutes 1996, section 62D.16, 
 34.10  subdivision 1, is amended to read: 
 34.11     Subdivision 1.  When the commissioner ~~of health~~ has cause 
 34.12  to believe that grounds for the denial, suspension or revocation 
 34.13  of a certificate of authority exists, the commissioner shall 
 34.14  notify the health maintenance organization in writing 
 34.15  specifically stating the grounds for denial, suspension or 
 34.16  revocation and fixing a time of at least 20 days thereafter for 
 34.17  a hearing on the matter, except in summary proceedings as 
 34.18  provided in section 62D.18. 
 34.19     Sec. 46.  Minnesota Statutes 1996, section 62D.16, 
 34.20  subdivision 2, is amended to read: 
 34.21     Subd. 2.  After such hearing, or upon the failure of the 
 34.22  health maintenance organization to appear at the hearing, the 
 34.23  commissioner ~~of health~~ shall take action as is deemed advisable 
 34.24  and shall issue written findings which shall be mailed to the 
 34.25  health maintenance organization.  The action of the commissioner 
 34.26  ~~of health~~ shall be subject to judicial review pursuant to 
 34.27  chapter 14. 
 34.28     Sec. 47.  Minnesota Statutes 1996, section 62D.17, 
 34.29  subdivision 1, is amended to read: 
 34.30     Subdivision 1.  The commissioner ~~of health~~ may, for any 
 34.31  violation of statute or rule applicable to a health maintenance 
 34.32  organization, or in lieu of suspension or revocation of a 
 34.33  certificate of authority under section 62D.15, levy an 
 34.34  administrative penalty in an amount up to $25,000 for each 
 34.35  violation.  In the case of contracts or agreements made pursuant 
 34.36  to section 62D.05, subdivisions 2 to 4, each contract or 
 35.1   agreement entered into or implemented in a manner which violates 
 35.2   sections 62D.01 to 62D.30 shall be considered a separate 
 35.3   violation.  In determining the level of an administrative 
 35.4   penalty, the commissioner shall consider the following factors: 
 35.5      (1) the number of enrollees affected by the violation; 
 35.6      (2) the effect of the violation on enrollees' health and 
 35.7   access to health services; 
 35.8      (3) if only one enrollee is affected, the effect of the 
 35.9   violation on that enrollee's health; 
 35.10     (4) whether the violation is an isolated incident or part 
 35.11  of a pattern of violations; and 
 35.12     (5) the economic benefits derived by the health maintenance 
 35.13  organization or a participating provider by virtue of the 
 35.14  violation. 
 35.15     Reasonable notice in writing to the health maintenance 
 35.16  organization shall be given of the intent to levy the penalty 
 35.17  and the reasons therefor, and the health maintenance 
 35.18  organization may have 15 days within which to file a written 
 35.19  request for an administrative hearing and review of the 
 35.20  ~~commissioner of health's~~ commissioner's determination.  Such 
 35.21  administrative hearing shall be subject to judicial review 
 35.22  pursuant to chapter 14. 
 35.23     Sec. 48.  Minnesota Statutes 1996, section 62D.17, 
 35.24  subdivision 3, is amended to read: 
 35.25     Subd. 3.  (a) If the commissioner ~~of health~~ shall, for any 
 35.26  reason, have cause to believe that any violation of sections 
 35.27  62D.01 to 62D.30 has occurred or is threatened, the commissioner 
 35.28  ~~of health~~ may, before commencing action under sections 62D.15 
 35.29  and 62D.16, and subdivision 1, give notice to the health 
 35.30  maintenance organization and to the representatives, or other 
 35.31  persons who appear to be involved in such suspected violation, 
 35.32  to arrange a voluntary conference with the alleged violators or 
 35.33  their authorized representatives for the purpose of attempting 
 35.34  to ascertain the facts relating to such suspected violation and, 
 35.35  in the event it appears that any violation has occurred or is 
 35.36  threatened, to arrive at an adequate and effective means of 
 36.1   correcting or preventing such violation. 
 36.2      (b) Proceedings under this subdivision shall not be 
 36.3   governed by any formal procedural requirements, and may be 
 36.4   conducted in such manner as the commissioner ~~of health~~ may deem 
 36.5   appropriate under the circumstances. 
 36.6      Sec. 49.  Minnesota Statutes 1996, section 62D.17, 
 36.7   subdivision 4, is amended to read: 
 36.8      Subd. 4.  (a) The commissioner ~~of health~~ may issue an order 
 36.9   directing a health maintenance organization or a representative 
 36.10  of a health maintenance organization to cease and desist from 
 36.11  engaging in any act or practice in violation of the provisions 
 36.12  of sections 62D.01 to 62D.30. 
 36.13     (1) The cease and desist order may direct a health 
 36.14  maintenance organization to pay for or provide a service when 
 36.15  that service is required by statute or rule to be provided. 
 36.16     (2) The ~~commissioner may issue a~~ cease and desist order 
 36.17  ~~directing~~ may direct a health maintenance organization to pay 
 36.18  for a service that is required by statute or rule to be 
 36.19  provided, only if there is a demonstrable and irreparable harm 
 36.20  to the public or an enrollee.  
 36.21     (3) If the cease and desist order involves a dispute over 
 36.22  the medical necessity of a procedure based on its experimental 
 36.23  nature, the commissioner may issue a cease and desist order only 
 36.24  if the following conditions are met:  
 36.25     (i) the commissioner has consulted with appropriate and 
 36.26  identified experts; 
 36.27     (ii) the commissioner has reviewed relevant scientific and 
 36.28  medical literature; and 
 36.29     (iii) the commissioner has considered all other relevant 
 36.30  factors including whether final approval of the technology or 
 36.31  procedure has been granted by the appropriate government agency; 
 36.32  the availability of scientific evidence concerning the effect of 
 36.33  the technology or procedure on health outcomes; the availability 
 36.34  of scientific evidence that the technology or procedure is as 
 36.35  beneficial as established alternatives; and the availability of 
 36.36  evidence of benefit or improvement without the technology or 
 37.1   procedure. 
 37.2      (b) Within 20 days after service of the order to cease and 
 37.3   desist, the respondent may request a hearing on the question of 
 37.4   whether acts or practices in violation of sections 62D.01 to 
 37.5   62D.30 have occurred.  Such hearings shall be subject to 
 37.6   judicial review as provided by chapter 14. 
 37.7      If the acts or practices involve violation of the reporting 
 37.8   requirements of section 62D.08, or if the commissioner has 
 37.9   ordered the rehabilitation, liquidation, or conservation of the 
 37.10  health maintenance organization in accordance with section 
 37.11  62D.18, the health maintenance organization may request an 
 37.12  expedited hearing on the matter.  The hearing shall be held 
 37.13  within 15 days of the request.  Within ten days thereafter, an 
 37.14  administrative law judge shall issue a recommendation on the 
 37.15  matter.  The commissioner shall make a final determination on 
 37.16  the matter within ten days of receipt of the administrative law 
 37.17  judge's recommendation.  
 37.18     ~~When a request for a stay accompanies the hearing request,~~ 
 37.19  ~~the matter shall be referred to the office of administrative~~ 
 37.20  ~~hearings within three working days of receipt of the request.~~ 
 37.21  ~~Within ten days thereafter, an administrative law judge shall~~ 
 37.22  ~~issue a recommendation to grant or deny the stay.  The~~ 
 37.23  ~~commissioner shall grant or deny the stay within five days of~~ 
 37.24  ~~receipt of the administrative law judge's recommendation.~~ 
 37.25     ~~To the extent the acts or practices alleged do not involve~~ 
 37.26  ~~(1) violations of section 62D.08; (2) violations which may~~ 
 37.27  ~~result in the financial insolvency of the health maintenance~~ 
 37.28  ~~organization; (3) violations which threaten the life and health~~ 
 37.29  ~~of enrollees; (4) violations which affect whole classes of~~ 
 37.30  ~~enrollees; or (5) violations of benefits or service requirements~~ 
 37.31  ~~mandated by law; if a timely request for a hearing is made, the~~ 
 37.32  ~~cease and desist order shall be stayed for a period of 90 days~~ 
 37.33  ~~from the date the hearing is requested or until a final~~ 
 37.34  ~~determination is made on the order, whichever is earlier.~~  
 37.35  ~~During this stay, the respondent may show cause why the order~~ 
 37.36  ~~should not become effective upon the expiration of the stay.~~  
 38.1   ~~Arguments on this issue shall be made through briefs filed with~~ 
 38.2   ~~the administrative law judge no later than ten days prior to the~~ 
 38.3   ~~expiration of the stay.~~  
 38.4      Sec. 50.  Minnesota Statutes 1996, section 62D.17, 
 38.5   subdivision 5, is amended to read: 
 38.6      Subd. 5.  In the event of noncompliance with a cease and 
 38.7   desist order issued pursuant to subdivision 4, the commissioner 
 38.8   ~~of health~~ may institute a proceeding to obtain injunctive relief 
 38.9   or other appropriate relief in Ramsey county district court. 
 38.10     Sec. 51.  Minnesota Statutes 1996, section 62D.18, 
 38.11  subdivision 1, is amended to read: 
 38.12     Subdivision 1.  [~~COMMISSIONER OF HEALTH;~~ COURT ORDER.] The 
 38.13  commissioner ~~of health~~ may apply by verified petition to the 
 38.14  district court of Ramsey county or the county in which the 
 38.15  principal office of the health maintenance organization is 
 38.16  located for an order directing the commissioner ~~of health~~ to 
 38.17  rehabilitate or liquidate a health maintenance organization.  
 38.18  The rehabilitation or liquidation of a health maintenance 
 38.19  organization shall be conducted under the supervision of the 
 38.20  commissioner ~~of health~~ under the procedures, and with the powers 
 38.21  granted to a rehabilitator or liquidator, in chapter 60B, except 
 38.22  to the extent that the nature of health maintenance 
 38.23  organizations renders the procedures or powers clearly 
 38.24  inappropriate and as provided in this subdivision or in chapter 
 38.25  60B.  A health maintenance organization shall be considered an 
 38.26  insurance company for the purposes of rehabilitation or 
 38.27  liquidation as provided in subdivisions 4, 6, and 7. 
 38.28     Sec. 52.  Minnesota Statutes 1996, section 62D.18, 
 38.29  subdivision 7, is amended to read: 
 38.30     Subd. 7.  [EXAMINATION ACCOUNT.] The commissioner ~~of health~~ 
 38.31  shall assess against a health maintenance organization not yet 
 38.32  in rehabilitation or liquidation a fee sufficient to cover the 
 38.33  costs of a special examination.  The fee must be deposited in an 
 38.34  examination account.  Money in the account is appropriated to 
 38.35  the commissioner ~~of health~~ to pay for the examinations.  If the 
 38.36  money in the account is insufficient to pay the initial costs of 
 39.1   examinations, the commissioner may use other money appropriated 
 39.2   to the commissioner, provided the other appropriation is 
 39.3   reimbursed from the examination account when it contains 
 39.4   sufficient money.  Money from the examination account must be 
 39.5   used to pay per diem salaries and expenses of special examiners, 
 39.6   including meals, lodging, laundry, transportation, and mileage.  
 39.7   The salary of regular employees of the ~~health~~ commerce 
 39.8   department must not be paid out of the account. 
 39.9      Sec. 53.  Minnesota Statutes 1996, section 62D.19, is 
 39.10  amended to read: 
 39.11     62D.19 [UNREASONABLE EXPENSES.] 
 39.12     No health maintenance organization shall incur or pay for 
 39.13  any expense of any nature which is unreasonably high in relation 
 39.14  to the value of the service or goods provided.  The commissioner 
 39.15  ~~of health~~ shall implement and enforce this section by rules 
 39.16  adopted under this section. 
 39.17     In an effort to achieve the stated purposes of sections 
 39.18  62D.01 to 62D.30; in order to safeguard the underlying nonprofit 
 39.19  status of health maintenance organizations; and to ensure that 
 39.20  the payment of health maintenance organization money to major 
 39.21  participating entities results in a corresponding benefit to the 
 39.22  health maintenance organization and its enrollees, when 
 39.23  determining whether an organization has incurred an unreasonable 
 39.24  expense in relation to a major participating entity, due 
 39.25  consideration shall be given to, in addition to any other 
 39.26  appropriate factors, whether the officers and trustees of the 
 39.27  health maintenance organization have acted with good faith and 
 39.28  in the best interests of the health maintenance organization in 
 39.29  entering into, and performing under, a contract under which the 
 39.30  health maintenance organization has incurred an expense.  The 
 39.31  commissioner has standing to sue, on behalf of a health 
 39.32  maintenance organization, officers or trustees of the health 
 39.33  maintenance organization who have breached their fiduciary duty 
 39.34  in entering into and performing such contracts. 
 39.35     Sec. 54.  Minnesota Statutes 1996, section 62D.20, 
 39.36  subdivision 1, is amended to read: 
 40.1      Subdivision 1.  [RULEMAKING.] The commissioner ~~of health~~ 
 40.2   may, pursuant to chapter 14, promulgate such reasonable rules as 
 40.3   are necessary or proper to carry out the provisions of sections 
 40.4   62D.01 to 62D.30.  Included among such rules shall be those 
 40.5   which provide minimum requirements for the provision of 
 40.6   comprehensive health maintenance services, as defined in section 
 40.7   62D.02, subdivision 7, and reasonable exclusions therefrom.  
 40.8   Nothing in such rules shall force or require a health 
 40.9   maintenance organization to provide elective, induced abortions, 
 40.10  except as medically necessary to prevent the death of the 
 40.11  mother, whether performed in a hospital, other abortion 
 40.12  facility, or the office of a physician; the rules shall provide 
 40.13  every health maintenance organization the option of excluding or 
 40.14  including elective, induced abortions, except as medically 
 40.15  necessary to prevent the death of the mother, as part of its 
 40.16  comprehensive health maintenance services.  
 40.17     Sec. 55.  Minnesota Statutes 1996, section 62D.21, is 
 40.18  amended to read: 
 40.19     62D.21 [FEES.] 
 40.20     Every health maintenance organization subject to sections 
 40.21  62D.01 to 62D.30 shall pay to the commissioner ~~of health~~ fees as 
 40.22  prescribed by the commissioner ~~of health pursuant to section~~ 
 40.23  ~~144.122~~ for the following: 
 40.24     (a) Filing an application for a certificate of authority, 
 40.25     (b) Filing an amendment to a certificate of authority, 
 40.26     (c) Filing each annual report, and 
 40.27     (d) Other filings, as specified by rule. 
 40.28     Sec. 56.  Minnesota Statutes 1996, section 62D.211, is 
 40.29  amended to read: 
 40.30     62D.211 [RENEWAL FEE.] 
 40.31     Each health maintenance organization subject to sections 
 40.32  62D.01 to 62D.30 shall submit to the commissioner ~~of health~~ each 
 40.33  year before June 15 a certificate of authority renewal fee in 
 40.34  the amount of $10,000 each plus 20 cents per person enrolled in 
 40.35  the health maintenance organization on December 31 of the 
 40.36  preceding year.  The commissioner may adjust the renewal fee in 
 41.1   rule under the provisions of chapter 14. 
 41.2      Sec. 57.  Minnesota Statutes 1996, section 62D.22, 
 41.3   subdivision 4, is amended to read: 
 41.4      Subd. 4.  To the extent that it furthers the purposes of 
 41.5   sections 62D.01 to 62D.30, the commissioner ~~of health~~ shall 
 41.6   attempt to coordinate the operations of sections 62D.01 to 
 41.7   62D.30 relating to the quality of health care services with the 
 41.8   operations of United States Code, title 42, sections 1320c to 
 41.9   1320c-20.  The commissioner of health shall make recommendations 
 41.10  to the commissioner regarding the coordination of these 
 41.11  operations. 
 41.12     Sec. 58.  Minnesota Statutes 1996, section 62D.22, 
 41.13  subdivision 10, is amended to read: 
 41.14     Subd. 10.  Any person or committee conducting a review of a 
 41.15  health maintenance organization or a participating entity, 
 41.16  pursuant to sections 62D.01 to 62D.30, shall have access to any 
 41.17  data or information necessary to conduct the review.  All data 
 41.18  or information is subject to admission into evidence in any 
 41.19  civil action initiated by the commissioner ~~of health~~ against the 
 41.20  health maintenance organization.  The data and information are 
 41.21  subject to chapter 13.  
 41.22     Sec. 59.  Minnesota Statutes 1996, section 62D.24, is 
 41.23  amended to read: 
 41.24     62D.24 [~~STATE COMMISSIONER OF HEALTH'S AUTHORITY TO~~ 
 41.25  ~~CONTRACT~~ ENFORCEMENT SUPPORT.] 
 41.26     Subdivision 1.  [CONTRACTING AUTHORITY.] The commissioner 
 41.27  ~~of health~~, in carrying out the obligations under sections 62D.01 
 41.28  to 62D.30, may contract with the commissioner of ~~commerce~~ health 
 41.29  or other qualified persons to make recommendations concerning 
 41.30  the determinations required to be made.  Such recommendations 
 41.31  may be accepted in full or in part by the commissioner ~~of health~~.
 41.32     Subd. 2.  [COMMISSIONER OF HEALTH.] The commissioner of 
 41.33  health shall provide any assistance the commissioner requires to 
 41.34  carry out the obligations under this chapter. 
 41.35     Sec. 60.  Minnesota Statutes 1996, section 62D.30, 
 41.36  subdivision 1, is amended to read: 
 42.1      Subdivision 1.  The commissioner ~~of health~~ may establish 
 42.2   demonstration projects to allow health maintenance organizations 
 42.3   to extend coverage to:  
 42.4      (a) Individuals enrolled in Part A or Part B, or both, of 
 42.5   the Medicare program, Title XVIII of the Social Security Act, 
 42.6   United States Code, title 42, section 1395 et seq.; 
 42.7      (b) Groups of fewer than 50 employees where each group is 
 42.8   covered by a single group health policy; 
 42.9      (c) Individuals who are not eligible for enrollment in any 
 42.10  group health maintenance contracts; and 
 42.11     (d) Low income population groups.  
 42.12     For purposes of this section, the commissioner ~~of health~~ 
 42.13  may waive compliance with minimum benefits pursuant to sections 
 42.14  62A.151 and 62D.02, subdivision 7, full financial risk pursuant 
 42.15  to section 62D.04, subdivision 1, clause (f), open enrollment 
 42.16  pursuant to section 62D.10, and to applicable rules if there is 
 42.17  reasonable evidence that the rules prohibit the operation of the 
 42.18  demonstration project.  The commissioner shall provide for 
 42.19  public comment before any statute or rule is waived.  
 42.20     Sec. 61.  Minnesota Statutes 1996, section 62D.30, 
 42.21  subdivision 3, is amended to read: 
 42.22     Subd. 3.  A health maintenance organization electing to 
 42.23  participate in a demonstration project shall apply to the 
 42.24  commissioner for approval on a form developed by the 
 42.25  commissioner.  The application shall include at least the 
 42.26  following:  
 42.27     (a) A statement identifying the population that the project 
 42.28  is designed to serve; 
 42.29     (b) A description of the proposed project including a 
 42.30  statement projecting a schedule of costs and benefits for the 
 42.31  enrollee; 
 42.32     (c) Reference to the sections of Minnesota Statutes and 
 42.33  department of ~~health~~ commerce rules for which waiver is 
 42.34  requested; 
 42.35     (d) Evidence that application of the requirements of 
 42.36  applicable Minnesota Statutes and department of ~~health~~ commerce 
 43.1   rules would, unless waived, prohibit the operation of the 
 43.2   demonstration project; 
 43.3      (e) Evidence that another arrangement is available for 
 43.4   assumption of full financial risk if full financial risk is 
 43.5   waived under subdivision 1; 
 43.6      (f) An estimate of the number of years needed to adequately 
 43.7   demonstrate the project's effects; and 
 43.8      (g) Other information the commissioner may reasonably 
 43.9   require. 
 43.10     Sec. 62.  [RULES TRANSFER.] 
 43.11     The rules adopted by the commissioner of health relating to 
 43.12  the regulations of health maintenance organizations shall be 
 43.13  enforced by the commissioner of commerce and may be further 
 43.14  amended or repealed by the commissioner of commerce. 
 43.15     Sec. 63.  [REPEALER.] 
 43.16     Minnesota Statutes 1996, sections 62D.03, subdivision 2; 
 43.17  and 62D.18, are repealed. 
 43.18     Sec. 64.  [EFFECTIVE DATE.] 
 43.19     Sections 1 to 63 are effective January 1, 1998.