2005 Minnesota Statutes

CHAPTER 79. Workers' compensation insurance

MISCELLANEOUS PROVISIONS

     79.01 Definitions. 

    Subdivision 1.    Terms.  Unless the language or 
 context clearly indicates that a different meaning is intended, 
 the following terms, for the purposes of sections 79.01 to 
 79.211, shall have the meanings ascribed to them. 

    Subd. 2.    Insurer.  The word "insurer" means any 
 insurance carrier authorized by license issued by the 
 commissioner of commerce to transact the business of workers' 
 compensation insurance in this state and includes a political 
 subdivision providing self insurance or establishing a pool 
 under section 471.981, subdivision 3.  

    Subd. 3.    Insurance.  The word "insurance" means 
 workers' compensation insurance and insurance covering any part 
 of the liability of an employer exempted from insuring liability 
 for compensation, as provided in section 176.181 and includes a 
 program of self insurance, self insurance revolving fund or pool 
 established under section 471.981. 

    Subd. 4.  Repealed, 1969 c 9 s 10 

    Subd. 5.    Commissioner.  The word "commissioner" 
 means the commissioner of commerce. 

    Subd. 6.    Association or rating association.  
 "Association" or "rating association" means the Workers' 
 Compensation Insurers Rating Association of Minnesota.  

    Subd. 7.    Interested party.  "Interested party" means 
 any person or association acting on behalf of its members who is 
 directly affected by a change in the schedule of rates and 
 includes the staff of the Department of Commerce.  

    Subd. 8.    Schedule of rates.  "Schedule of rates" 
 means the rate level applicable to the various industry 
 groupings or classes, including the risk classifications 
 thereunder upon which the determination of workers' compensation 
 premiums are based, including but not limited to all systems for 
 merit or experience rating, retrospective rating, and premium 
 discounts.  

    HIST: (3612) 1921 c 85 s 1; 1931 c 353 s 1; 1957 c 508 s 1; 
 1969 c 9 s 8; 1973 c 577 s 1,2; 1975 c 359 s 23; Ex1979 c 3 s 1; 
 1980 c 529 s 3,4; 1981 c 346 s 9,10; 1983 c 289 s 114 subd 1; 
 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 384 art 2 s 1 

  79.02 Repealed, 1969 c 9 s 10 

  79.021 Repealed, 1969 c 9 s 10 

  79.03 Repealed, 1969 c 9 s 10 

  79.04 Repealed, 1969 c 9 s 10 

  79.05 Repealed, Ex1979 c 3 s 70 

  79.06 Repealed, Ex1979 c 3 s 70 

  79.07 Repealed, Ex1979 c 3 s 70 

  79.071 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.072 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.073 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

     79.074 Discrimination. 

    Subdivision 1. Repealed, 1981 c 346 s 145; 1983 c 290 s 
 15 

    Subd. 2.    Dividends.  Dividend plans are not unfairly 
 discriminatory where different premiums result for different 
 policyholders with similar loss exposures but different expense 
 factors, or where different premiums result for different 
 policyholders with similar expense factors but different loss 
 exposures, so long as the respective premiums reflect the 
 differences with reasonable accuracy.  Every insurer who issues 
 participating policies shall file with the commissioner a true 
 copy or summary as the commissioner shall direct of its 
 participating dividend rates as to policyholders.  The 
 commissioner may study the participating dividend rates and make 
 recommendations to the legislature concerning possible bases for 
 unfair discrimination.  

    HIST: Ex1979 c 3 s 5; 1995 c 231 art 2 s 3 

  79.075 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.076 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.08 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

     79.081 Mandatory deductibles. 

    Subdivision 1.    Premium reduction.  Each insurer, 
 including the assigned risk plan, issuing a policy of insurance, 
 must make available to an employer, upon request, the option to 
 agree to pay an amount per claim selected by the employer and 
 specified in the policy toward the total of any claim payable 
 under chapter 176.  The amount of premium to be paid by an 
 employer who selects a policy with a deductible shall be reduced 
 based upon a rating schedule or rating plan filed with and 
 approved by the commissioner of commerce.  Administration of 
 claims shall remain with the insurer as provided in the terms 
 and conditions of the policy.  Each insurer shall notify its 
 agents authorized to write workers' compensation insurance about 
 the availability and terms and conditions of deductibles 
 required by this section, using a brochure in a format approved 
 by the commissioner. 

    Subd. 2.    Procedure for paying deductible.  If an 
 insured employer chooses a deductible, the insured employer is 
 liable for the amount of the deductible.  The insurer shall 
 administer the claim as provided in the terms and conditions of 
 the insurance policy and seek reimbursement from the insured 
 employer for the deductible.  The payment or nonpayment of 
 deductible amounts by the insured employer to the insurer shall 
 be treated under the policy insuring the liability for workers' 
 compensation in the same manner as payment or nonpayment of 
 premiums. 

    Subd. 3.    Credit risk; exception.  An insurer is not 
 required to offer a deductible to an employer if, as a result of 
 a credit investigation, the insurer determines that the employer 
 is not sufficiently financially stable to be responsible for the 
 payment of deductible amounts. 

    Subd. 4.    Reporting requirement.  The existence of an 
 insurance contract with a deductible or the fact of payment as a 
 result of a deductible does not affect the requirement of an 
 employer to report an injury or death to an insurer or the 
 commissioner of labor and industry. 

    Subd. 5.    No employee liability.  Nothing in this 
 section alters the obligation of the employer to provide the 
 benefits required by this chapter.  An employee is not 
 responsible to pay all or a part of the deductible chosen by an 
 employer. 

    HIST: 1992 c 510 art 3 s 1 

     79.085 Safety programs. 

    All insurers writing workers' compensation insurance in 
 this state shall provide safety and occupational health loss 
 control consultation services to each of their policyholders 
 requesting the services in writing.  Insurers must annually 
 notify their policyholders of their right under this section to 
 safety and occupational health loss consultation services.  The 
 services must include the conduct of workplace surveys to 
 identify health and safety problems, review of employer injury 
 records with appropriate personnel, and development of plans to 
 improve employer occupational health and safety loss records.  
 Insurers shall notify each policyholder of the availability of 
 those services and the telephone number and address where such 
 services can be requested.  The notification may be delivered 
 with the policy of workers' compensation insurance. 

    HIST: 1992 c 510 art 3 s 2; 1995 c 231 art 2 s 4 

  79.09 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

     79.095 Appointment of actuary. 

    The commissioner shall employ the services of a casualty 
 actuary experienced in worker's compensation whose duties shall 
 include but not be limited to investigation of complaints by 
 insured parties relative to rates, rate classifications, or 
 discriminatory practices of an insurer.  The salary of the 
 actuary employed pursuant to this section is not subject to the 
 provisions of section 43A.17, subdivision 1. 

    HIST: 1977 c 342 s 24; Ex1979 c 3 s 8; 1981 c 210 s 54 

     79.096 Access to rate making data. 

    The rating association must make available for inspection 
 on request of any person any data it possesses related to the 
 calculation of indicated pure premium rates. 

    HIST: 1992 c 510 art 3 s 3 

     79.10 Review of acts of insurers. 

    The Department of Commerce staff may investigate on the 
 request of any person or on its own initiative the acts of the 
 rating association, an insurer, or an agent that are subject to 
 provisions of chapter 79 and may make findings and 
 recommendations that the commissioner issue an order requiring 
 compliance with the provisions thereof.  The proposed findings 
 and recommended order shall be served on all affected parties at 
 the same time that the staff transmits its findings and 
 recommendations to the commissioner.  Any party adversely 
 affected by the proposed findings and recommended order may 
 request that a hearing be held concerning the issues raised 
 therein within 15 days after service of the findings and 
 recommended order.  This hearing shall be conducted as a 
 contested case pursuant to sections 14.001 to 14.69.  If a 
 hearing is not requested within the time specified in this 
 section, the proposed findings and recommended order may be 
 adopted by the commissioner as a final order.  

    HIST: (3621) 1921 c 85 s 10; 1953 c 615 s 3; 1969 c 9 s 9; 
 1973 c 577 s 2; Ex1979 c 3 s 9; 1982 c 424 s 130; 1983 c 289 s 
 114 subd 1; 1984 c 592 s 77; 1984 c 655 art 1 s 92; 1987 c 384 
 art 2 s 1; 1990 c 422 s 10 

  79.11 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.12 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.13 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.14 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.15 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.16 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.17 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.171 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.18 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.19 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.20 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.21 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

     79.211 Certain premium determination practices. 

    Subdivision 1.    Certain wages included for ratemaking. 
  The rating association or an insurer shall include wages paid 
 for a vacation, holiday, or sick leave in the determination of a 
 workers' compensation insurance premium. 

    An insurer, including the assigned risk plan, shall not 
 include wages paid for work performed in an adjacent state in 
 the determination of a workers' compensation premium if the 
 employer paid a workers' compensation insurance premium to the 
 exclusive state fund of the adjacent state on the wages earned 
 in the adjacent state. 

    Within 30 days of October 1, 1995, a licensed data service 
 organization on behalf of its members shall file an amendment to 
 its charged class premium rates to reflect the inclusion of 
 vacation, holiday, and sick leave wages in the determination of 
 premium.  Within 30 days of the filing of those pure premium 
 rates each insurer shall amend its filed schedule of rates to 
 reflect the inclusion of vacation, holiday, and sick leave wages 
 in the determination of premium.  

    Subd. 2.    Division of payroll.  An insurer shall 
 permit an employer to divide a payroll among the rating 
 classifications most closely fitting the work actually performed 
 by each employee in a four-hour block or more for purposes of 
 premium calculation when the employer's records provide adequate 
 support for a division. 

    Subd. 3.    Payroll computations for certain public 
 employees.  The commissioner of commerce in setting the 
 assigned risk plan rates or an insurer shall compute a premium 
 for an elected or appointed official of a town based on the 
 actual annual wage received from the town. 

    Subd. 4.    Experience modification factor revision for 
 certain closed claims.  An insurer or an employer insured 
 under a workers' compensation policy subject to an experience 
 rating plan may request in writing of the data service 
 organization computing the policy's experience modification 
 factor that the most recent factor be revised if each of the 
 following criteria is met: 

    (1) a workers' compensation claim under that policy is 
 closed between the normal valuation date for that claim and the 
 next time that valuation is used in computing the experience 
 modification factor on the policy; 

    (2) the data service organization receives a revised unit 
 statistical report containing data on the closed claim in a form 
 consistent with its filed unit statistical plan; and 

    (3) inclusion of the closed claim in the experience 
 modification factor calculation would impact that factor by five 
 percentage points or more. 

    HIST: Ex1979 c 3 s 12; 1980 c 556 s 6; 1981 c 346 s 139; 1983 
 c 290 s 4; 1986 c 444; 1987 c 301 s 1; 1993 c 194 s 1; 1995 c 
 231 art 2 s 5; 2005 c 132 s 24 

    79.22 Subdivision 1. Repealed, 1981 c 346 s 145; 
 1983 c 290 s 15 

    Subd. 2. Repealed, 1984 c 432 art 2 s 55 

  79.221 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.23 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.24 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.25 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

ASSIGNED RISK PLAN

     79.251 Administration of assigned risk plan. 

    Subdivision 1.    General duties of commissioner.  (a)(1)
 The commissioner shall have all the usual powers and authorities 
 necessary for the discharge of the commissioner's duties under 
 this section and may contract with individuals in discharge of 
 those duties.  The commissioner shall audit the reserves 
 established (a) for individual cases arising under policies and 
 contracts of coverage issued under subdivision 4 and (b) for the 
 total book of business issued under subdivision 4.  If the 
 commissioner determines on the basis of an audit that there is 
 an excess surplus in the assigned risk plan, the commissioner 
 must notify the commissioner of finance who shall transfer 
 assets of the plan equal to the excess surplus to the budget 
 reserve account in the general fund. 

    (2) The commissioner shall monitor the operations of 
 section 79.252 and this section and shall periodically make 
 recommendations to the governor and legislature when 
 appropriate, for improvement in the operation of those sections. 

    (3) All insurers and self-insurance administrators issuing 
 policies or contracts under subdivision 4 shall pay to the 
 commissioner a .25 percent assessment on premiums for policies 
 and contracts of coverage issued under subdivision 4 for the 
 purpose of defraying the costs of performing the duties under 
 clauses (1) and (2).  Proceeds of the assessment shall be 
 deposited in the state treasury and credited to the general fund.

    (4) The assigned risk plan shall not be deemed a state 
 agency.  

    (b) As used in this subdivision, "excess surplus" means the 
 amount of assigned risk plan assets in excess of the amount 
 needed to pay all current liabilities of the plan, including, 
 but not limited to: 

    (1) administrative expenses; 

    (2) benefit claims; and 

    (3) if the assigned risk plan is dissolved under 
 subdivision 8, the amounts that would be due insurers who have 
 paid assessments to the plan. 

    Subd. 2.    Merit rating plan.  To assist small 
 businesses with good safety records, the commissioner shall 
 develop a merit rating plan applicable to all employers holding 
 policies issued pursuant to subdivision 4.  The plan shall 
 provide that nonexperience rated employers, with no lost time 
 claims for the last three policy years, shall receive 33 percent 
 credit.  The credit must be applied directly to the premium 
 charged for the policy.  Nonexperience rated employers with two 
 or more lost time claims for the last three policy years may 
 receive a debit.  Experience rated employers shall receive a 
 maximum credit or debit of ten percent of premium.  The merit 
 rating plan shall be subject to adjustment by the commissioner 
 as necessary to fulfill the commissioner's assigned risk plan 
 responsibilities. 

    Subd. 3.    Rates.  Insureds served by the assigned risk 
 plan shall be charged premiums based upon a rating plan, 
 including a merit rating plan adopted by the commissioner by 
 rule.  The commissioner shall annually, not later than January 1 
 of each year, establish the schedule of rates applicable to 
 assigned risk plan business.  Assigned risk premiums shall not 
 be lower than rates generally charged by insurers for the 
 business.  The commissioner shall fix the compensation received 
 by the agent of record.  The establishment of the assigned risk 
 plan rates and agent fees are not subject to chapter 14.  

    Subd. 4.    Administration.  The commissioner shall 
 enter into service contracts as necessary or beneficial for 
 accomplishing the purposes of the assigned risk plan.  Services 
 related to the administration of policies or contracts of 
 coverage shall be performed by one or more qualified insurance 
 companies licensed pursuant to section 60A.06, subdivision 1, 
 clause (5), paragraph (b), or self-insurance administrators 
 licensed pursuant to section 176.181, subdivision 2, clause (2), 
 paragraph (a).  A qualified insurer or self-insurance 
 administrator shall possess sufficient financial, professional, 
 administrative, and personnel resources to provide the services 
 contemplated in the contract.  Services related to assignments, 
 data management, assessment collection, and other services shall 
 be performed by a licensed data service organization.  The cost 
 of those services is an obligation of the assigned risk plan.  

    Subd. 4a.    Medical cost containment.  The assigned 
 risk plan must consider utilizing managed care plans certified 
 under section 176.1351 with respect to its covered employees.  
 In addition, the assigned risk plan must implement a medical 
 cost containment program.  The program must, at a minimum, 
 include: 

    (1) billings review to determine if claims are compensable 
 under chapter 176; 

    (2) utilization of cost management specialists familiar 
 with billing practice guidelines; 

    (3) review of treatment to determine if it is reasonable 
 and necessary and has a reasonable chance to cure and relieve 
 the employee's injury; 

    (4) a system to reduce billed charges to the maximum 
 permitted by law or rule; 

    (5) review of medical care utilization; and 

    (6) reporting of health care providers suspected of 
 providing unnecessary, inappropriate, or excessive services to 
 the commissioner of labor and industry. 

    Subd. 4b.    Groups.  The assigned risk plan must create 
 a program that attempts to group employers in the same or 
 similar risk classification for purposes of group premium 
 underwriting and claims management.  The assigned risk plan must 
 engage in extensive safety consultation with group members to 
 reduce the extent and severity of injuries of group members.  
 The consultation should include on-site inspections and specific 
 recommendations as to safety improvements. 

    Subd. 5.    Assessments.  The commissioner shall assess 
 all insurers licensed pursuant to section 60A.06, subdivision 1, 
 clause (5), paragraph (b) an amount sufficient to fully fund the 
 obligations of the assigned risk plan, if the commissioner 
 determines that the assets of the assigned risk plan are 
 insufficient to meet its obligations.  The assessment of each 
 insurer shall be in a proportion equal to the proportion which 
 the amount of compensation insurance written in this state 
 during the preceding calendar year by that insurer bears to the 
 total compensation insurance written in this state during the 
 preceding calendar year by all licensed insurers.  

    Amounts assessed under this subdivision are considered a 
 liability of the assigned risk plan, to be repaid upon 
 dissolution of the plan. 

    Subd. 6.    Agents.  A person licensed under chapter 60K 
 may submit an application for coverage to the assigned risk plan 
 and receive a fee from the assigned risk plan for submitting the 
 application.  However, the licensee is not an agent of the 
 assigned risk plan for purposes of state law.  All checks or 
 similar instruments submitted in payment of assigned risk plan 
 premiums must be made payable to the assigned risk plan and not 
 the agent. 

    Subd. 7.    Investment of assets.  The commissioner 
 shall certify and transfer to the state Board of Investment all 
 assigned risk plan assets which in the commissioner's judgment 
 are not required for immediate use.  The state Board of 
 Investment shall invest the certified assets, and may invest the 
 assets consistent with the provisions of section 11A.14.  All 
 investment income and losses attributable to the investment of 
 assigned risk plan assets must be credited to the assigned risk 
 plan.  When the commissioner certifies to the state board that 
 invested assets are required for immediate use, the state board 
 shall sell assets to provide the amount of assets the 
 commissioner certifies.  The board shall transfer the sale 
 proceeds to the commissioner. 

    Subd. 8.    Dissolution.  Upon the dissolution of the 
 assigned risk plan, the commissioner shall proceed to wind up 
 the affairs of the plan, settle its accounts, and dispose of its 
 assets.  The assets and property of the assigned risk plan must 
 be applied and distributed in the following order of priority: 

    (1) to the establishment of reserves for claims under 
 policies and contracts of coverage issued by the assigned risk 
 plan before termination; 

    (2) to the payment of all debts and liabilities of the 
 assigned risk plan, including the repayment of loans and 
 assessments; 

    (3) to the establishment of reserves considered necessary 
 by the commissioner for contingent liabilities or obligations of 
 the assigned risk plan other than claims arising under policies 
 and contracts of coverage; and 

    (4) to the state of Minnesota. 

    If the commissioner determines that the assets of the 
 assigned risk plan are insufficient to meet its obligations 
 under clauses (1), (2), and (3), excluding the repayment of 
 assessments, the commissioner shall assess all insurers licensed 
 pursuant to section 60A.06, subdivision 1, clause (5), paragraph 
 (b), an amount sufficient to fully fund these obligations. 

    HIST: 1981 c 346 s 14; 1983 c 289 s 114 subd 1; 1983 c 290 s 
 5; 1983 c 293 s 63; 1984 c 655 art 1 s 92; 1989 c 260 s 24; 1990 
 c 450 s 1; 1992 c 510 art 3 s 4,5; 1993 c 13 art 2 s 4; 1995 c 
 231 art 2 s 6,7; 1995 c 258 s 55,56; 2002 c 374 art 8 s 2; 2002 
 c 387 s 5; 2003 c 2 art 1 s 11,45 subd 9 

     79.252 Assigned risk plan. 

    Subdivision 1.    Purpose.  The purpose of the assigned 
 risk plan is to provide workers' compensation coverage to 
 employers rejected by a licensed insurance company pursuant to 
 subdivision 2.  

    Subd. 2.    Rejected risks.  An insurer that refuses to 
 write insurance for an employer shall furnish the employer a 
 written notice of refusal.  The employer shall file a copy of 
 the notice of refusal with the data service organization under 
 contract with the commissioner pursuant to section 79.251, 
 subdivision 4.  

    Subd. 3.    Coverage.  (a) Policies and contracts of 
 coverage issued pursuant to section 79.251, subdivision 4, shall 
 contain the usual and customary provisions of workers' 
 compensation insurance policies, and shall be deemed to meet the 
 mandatory workers' compensation insurance requirements of 
 section 176.181, subdivision 2.  

    (b) Policies issued by the assigned risk plan pursuant to 
 this chapter may also provide workers' compensation coverage 
 required under the laws of states other than Minnesota, 
 including coverages commonly known as "all states coverage."  
 The commissioner may apply for and obtain any licensure required 
 in any other state to issue that coverage.  

    Subd. 4.    Responsibilities.  Assigned risk policies 
 and contracts of coverage are subject to taxation under chapter 
 297I, and special compensation fund assessments under Minnesota 
 Statutes 1990, section 176.131, subdivision 10.  The assigned 
 risk plan shall be a member of the reinsurance association for 
 the purposes of sections 79.34 to 79.40 and may select either 
 retention limit provided in section 79.34, subdivision 2.  

    Subd. 5.    Rules.  The commissioner may adopt rules as 
 may be necessary to implement section 79.251 and this section.  

    HIST: 1983 c 290 s 6; 1984 c 640 s 32; 1Sp1985 c 10 s 72; 1992 
 c 510 art 3 s 6,7; 1993 c 13 art 2 s 1; 1993 c 299 s 31; 1995 c 
 233 art 2 s 56; 2000 c 394 art 2 s 20; 2002 c 387 s 6 

     79.253 Assigned risk safety account. 

    Subdivision 1.    Creation of account.  There is created 
 the assigned risk safety account as a separate account in the 
 special compensation fund in the state treasury.  Income earned 
 by funds in the account must be credited to the account.  
 Principal and income of the account are annually appropriated to 
 the commissioner of labor and industry to establish and promote 
 workplace safety and health programs. 

    Subd. 2.    Use of funds; safety assessments.  The 
 assigned risk plan shall, through persons under contract with 
 the plan, perform on-site surveys of employers insured by the 
 assigned risk plan and recommend practices and equipment to 
 employers designed to reduce the risk of injury to employees.  
 The recommendations may include that the employer form a joint 
 labor-management safety committee.  The plan shall generally 
 survey employers in the following priority:  

    (1) employers with poor safety records for their industry 
 based on their premium modification factor or other factors; 

    (2) employers whose workers' compensation premium 
 classification assigned to the greatest portion of the payroll 
 for the employer has a premium rate in the top 25 percent of 
 premium rates for all classes; and 

    (3) all other employers.  

    Subd. 2a.    Eligible applicants.  An employer is 
 eligible to apply for a grant or loan under this section if the 
 employer meets the following requirements: 

    (1) the employer's workers' compensation insurance is 
 provided by the assigned risk plan, is provided by an insurer 
 subject to penalties under chapter 176, or the employer is 
 self-insured; 

    (2) the employer has had an on-site safety survey conducted 
 by a Minnesota occupational safety and health investigator, a 
 Minnesota Department of Labor and Industry workplace safety and 
 health consultant, an in-house employee safety and health 
 committee, a workers' compensation underwriter, a private safety 
 consultant, or a person under contract with the assigned risk 
 plan; and 

    (3) the on-site safety survey recommends specific safety 
 practices or equipment designed to reduce the risk of illness or 
 injury to employees. 

    Subd. 3.    Incentives and penalties.  The assigned risk 
 plan shall develop a premium rating system subject to approval 
 by the commissioner of commerce that provides a reduction in 
 premium rates for employers that follow safety recommendations 
 made under this section and an increase in rates for employers 
 that do not.  The system must be sensitive to the economic 
 ability of an employer to implement particular recommendations. 

    Subd. 4.    Grants and loans.  The commissioner of labor 
 and industry may make grants or loans to employers for the cost 
 of implementing safety recommendations made under this section.  

    Subd. 5.    Rules.  The commissioner of labor and 
 industry may adopt rules necessary to implement this section. 

    HIST: 1992 c 510 art 3 s 8; 1995 c 231 art 2 s 8; 1997 c 200 
 art 1 s 46 

EMPLOYEE LEASING

     79.255 Workers' compensation insurance; lessors of 
  employees. 

    Subdivision 1.    Registration required.  A corporation, 
 partnership, sole proprietorship, or other business entity which 
 provides staff, personnel, or employees to be employed in this 
 state to other businesses pursuant to a lease arrangement or 
 agreement shall, before becoming eligible to be issued a policy 
 of workers' compensation insurance or becoming eligible to 
 secure coverage on a multiple coordinated policies basis, 
 register with the commissioner of commerce.  The registration 
 shall: 

    (1) identify the name of the lessor; 

    (2) identify the address of the principal place of business 
 of the lessor and the address of each office it maintains within 
 this state; 

    (3) include the lessor's taxpayer or employer 
 identification number; 

    (4) include a list by jurisdiction of each and every name 
 that the lessor has operated under in the preceding five years 
 including any alternative names and names of predecessors and, 
 if known, successor business entities; 

    (5) include a list of each person or entity who owns a five 
 percent or greater interest in the employee leasing business at 
 the time of application and a list of each person who formerly 
 owned a five percent or greater interest in the employee leasing 
 company or its predecessors, successors, or alter egos in the 
 preceding five years; and 

    (6) include a list of each and every cancellation or 
 nonrenewal of workers' compensation insurance which has been 
 issued to the lessor or any predecessor in the preceding five 
 years.  The list shall include the policy or certificate number, 
 name of insurer or other provider of coverage, date of 
 cancellation, and reason for cancellation.  If coverage has not 
 been canceled or nonrenewed, the registration shall include a 
 sworn affidavit signed by the chief executive officer of the 
 lessor attesting to that fact. 

    Subd. 2.    Ineligibility to register.  Any lessor of 
 employees whose workers' compensation insurance has been 
 terminated within the past five years in any jurisdiction due to 
 a determination that an employee leasing arrangement was being 
 utilized to avoid premium otherwise payable by lessees shall be 
 ineligible to register with the commissioner or to remain 
 registered, if previously registered. 

    Subd. 3.    Notice of change.  Persons filing 
 registration statements pursuant to this section shall notify 
 the commissioner as to any changes in any information required 
 to be provided under this section. 

    Subd. 4.    List maintained.  The commissioner shall 
 maintain a list of those lessors of employees who are registered 
 with the commissioner. 

    Subd. 5.    Forms of registration.  The commissioner may 
 prescribe forms necessary to promote the efficient 
 administration of this section. 

    Subd. 6.    Advertising prohibition.  No organization 
 registered under this section shall directly or indirectly 
 reference that registration in any advertisements, marketing 
 material, or publications. 

    Subd. 7.    Criminal penalties.  Any corporation, 
 partnership, sole proprietorship, or other form of business 
 entity and any officer, director, general partner, agent, 
 representative, or employee of theirs who knowingly utilizes or 
 participates in any employee leasing agreement, arrangement, or 
 mechanism for the purpose of depriving one or more insurers of 
 premium otherwise properly payable is guilty of a misdemeanor. 

    Subd. 8.    Application of section.  Any lessor of 
 employees that was doing business in this state prior to April 
 28, 1992, shall register with the commissioner within 30 days of 
 July 1, 1992. 

    Subd. 9.    Exemption.  A corporation, partnership, sole 
 proprietorship, or other business entity that provides personnel 
 supply arrangements or agreements for the purpose of temporarily 
 supporting or supplementing a client's work force in work 
 situations, such as employee absences, temporary skill 
 shortages, seasonal workloads, and specific functions and 
 projects, may be exempt from the registration requirements of 
 this section, provided that the arrangements or agreements do 
 not involve the lease-back of the client's employees.  

    To qualify for an exemption, an applicant must obtain a 
 certificate of exemption from registration from the 
 commissioner.  A certificate of exemption shall be issued upon 
 the applicant's filing of a letter with the commissioner stating 
 that the applicant meets all of the requirements for obtaining 
 an exemption.  If a corporation, partnership, sole 
 proprietorship, or other business entity operating under the 
 exemption subsequently fails to meet the requirements for the 
 exemption, the corporation, partnership, sole proprietorship, or 
 other business entity must immediately surrender the exemption 
 certificate and register with the commissioner. 

    Subd. 10.    Fee.  A registration or exemption 
 certificate fee of $100 shall be paid. 

    HIST: 1992 c 510 art 3 s 9; 1993 c 194 s 2; 1997 c 200 art 1 s 
 47; 1999 c 223 art 2 s 11 

  79.26 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.27 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.28 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.29 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.30 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.31 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.32 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

  79.33 Repealed, 1981 c 346 s 145; 1983 c 290 s 15 

REINSURANCE ASSOCIATION

     79.34 Creation of reinsurance association. 

    Subdivision 1.    Conditions requiring membership.  The 
 nonprofit association known as the Workers' Compensation 
 Reinsurance Association may be incorporated under chapter 317A 
 with all the powers of a corporation formed under that chapter, 
 except that if the provisions of that chapter are inconsistent 
 with sections 79.34 to 79.40, sections 79.34 to 79.40 govern.  
 Each insurer as defined by section 79.01, subdivision 2, shall, 
 as a condition of its authority to transact workers' 
 compensation insurance in this state, be a member of the 
 reinsurance association and is bound by the plan of operation of 
 the reinsurance association; provided, that all affiliated 
 insurers within a holding company system as defined in chapter 
 60D are considered a single entity for purposes of the exercise 
 of all rights and duties of membership in the reinsurance 
 association.  Each self-insurer approved under section 176.181 
 and each political subdivision that self-insures shall, as a 
 condition of its authority to self-insure workers' compensation 
 liability in this state, be a member of the reinsurance 
 association and is bound by its plan of operation; provided that:

    (1) all affiliated companies within a holding company 
 system, as determined by the commissioner of labor and industry 
 in a manner consistent with the standards and definitions in 
 chapter 60D, are considered a single entity for purposes of the 
 exercise of all rights and duties of membership in the 
 reinsurance association; and 

    (2) all group self-insurers granted authority to 
 self-insure pursuant to section 176.181 are considered single 
 entities for purposes of the exercise of all the rights and 
 duties of membership in the reinsurance association.  As a 
 condition of its authority to self-insure workers' compensation 
 liability, and for losses incurred after December 31, 1983, the 
 state is a member of the reinsurance association and is bound by 
 its plan of operation.  The commissioner of employee relations 
 represents the state in the exercise of all the rights and 
 duties of membership in the reinsurance association.  The 
 amounts necessary to pay the state's premiums required for 
 coverage by the Workers' Compensation Reinsurance Association 
 are appropriated from the general fund to the commissioner of 
 employee relations.  The University of Minnesota shall pay its 
 portion of workers' compensation reinsurance premiums directly 
 to the Workers' Compensation Reinsurance Association.  For the 
 purposes of this section, "state" means the administrative 
 branch of state government, the legislative branch, the judicial 
 branch, the University of Minnesota, and any other entity whose 
 workers' compensation liability is paid from the state revolving 
 fund.  The commissioner of finance may calculate, prorate, and 
 charge a department or agency the portion of premiums paid to 
 the reinsurance association for employees who are paid wholly or 
 in part by federal funds, dedicated funds, or special revenue 
 funds.  The reinsurance association is not a state agency.  
 Actions of the reinsurance association and its board of 
 directors and actions of the commissioner of labor and industry 
 with respect to the reinsurance association are not subject to 
 chapters 13 and 15.  All property owned by the association is 
 exempt from taxation.  The reinsurance association is not 
 obligated to make any payments or pay any assessments to any 
 funds or pools established pursuant to this chapter or chapter 
 176 or any other law. 

    Subd. 1a.    Gross premiums tax.  The direct funded 
 premiums received by the reinsurance association from 
 self-insurers approved under section 176.181 and political 
 subdivisions that self-insure are subject to taxation under 
 chapter 297I.  

    Subd. 2.    Losses; retention limits.  The reinsurance 
 association shall provide and each member shall accept 
 indemnification for 100 percent of the amount of ultimate loss 
 sustained in each loss occurrence relating to one or more claims 
 arising out of a single compensable event, including aggregate 
 losses related to a single event or occurrence which constitutes 
 a single loss occurrence, under chapter 176 on and after October 
 1, 1979, in excess of a low, a high, or a super retention limit, 
 at the option of the member.  In case of occupational disease 
 causing disablement on and after October 1, 1979, each person 
 suffering disablement due to occupational disease is considered 
 to be involved in a separate loss occurrence.  On January 1, 
 1995, the lower retention limit is $250,000, which shall also be 
 known as the 1995 base retention limit.  On each January 1 
 thereafter, the cumulative annual percentage changes in the 
 statewide average weekly wage after October 1, 1994, as 
 determined in accordance with section 176.011, subdivision 20, 
 shall first be multiplied by the 1995 base retention limit, the 
 result of which shall then be added to the 1995 base retention 
 limit.  The resulting figure shall be rounded to the nearest 
 $10,000, yielding the low retention limit for that year, 
 provided that the low retention limit shall not be reduced in 
 any year.  The high retention limit shall be two times the low 
 retention limit and shall be adjusted when the low retention 
 limit is adjusted.  The super retention limit shall be four 
 times the low retention limit and shall be adjusted when the low 
 retention limit is adjusted.  Ultimate loss as used in this 
 section means the actual loss amount which a member is obligated 
 to pay and which is paid by the member for workers' compensation 
 benefits payable under chapter 176 and shall not include claim 
 expenses, assessments, damages or penalties.  For losses 
 incurred on or after January 1, 1979, any amounts paid by a 
 member pursuant to sections 176.183, 176.221, 176.225, and 
 176.82 shall not be included in ultimate loss and shall not be 
 indemnified by the reinsurance association.  A loss is incurred 
 by the reinsurance association on the date on which the accident 
 or other compensable event giving rise to the loss occurs, and a 
 member is liable for a loss up to its retention limit in effect 
 at the time that the loss was incurred, except that members 
 which are determined by the reinsurance association to be 
 controlled by or under common control with another member, and 
 which are liable for claims from one or more employees entitled 
 to compensation for a single compensable event, including 
 aggregate losses relating to a single loss occurrence, may 
 aggregate their losses and obtain indemnification from the 
 reinsurance association for the aggregate losses in excess of 
 the highest retention limit selected by any of the members in 
 effect at the time the loss was incurred.  Each member is liable 
 for payment of its ultimate loss and shall be entitled to 
 indemnification from the reinsurance association for the 
 ultimate loss in excess of the member's retention limit in 
 effect at the time of the loss occurrence. 

    A member that chooses the high or super retention limit 
 shall retain the liability for all losses below the chosen 
 retention limit itself and shall not transfer the liability to 
 any other entity or reinsure or otherwise contract for 
 reimbursement or indemnification for losses below its retention 
 limit, except in the following cases:  (a) when the reinsurance 
 or contract is with another member which, directly or 
 indirectly, through one or more intermediaries, control or are 
 controlled by or are under common control with the member; (b) 
 when the reinsurance or contract provides for reimbursement or 
 indemnification of a member if and only if the total of all 
 claims which the member pays or incurs, but which are not 
 reimbursable or subject to indemnification by the reinsurance 
 association for a given period of time, exceeds a dollar value 
 or percentage of premium written or earned and stated in the 
 reinsurance agreement or contract; (c) when the reinsurance or 
 contract is a pooling arrangement with other insurers where 
 liability of the member to pay claims pursuant to chapter 176 is 
 incidental to participation in the pool and not as a result of 
 providing workers' compensation insurance to employers on a 
 direct basis under chapter 176; (d) when the reinsurance or 
 contract is limited to all the claims of a specific insured of a 
 member which are reimbursed or indemnified by a reinsurer which, 
 directly or indirectly, through one or more intermediaries, 
 controls or is controlled by or is under common control with the 
 insured of the member so long as any subsequent contract or 
 reinsurance of the reinsurer relating to the claims of the 
 insured of a member is not inconsistent with the bases of 
 exception provided under clauses (a), (b) and (c); or (e) when 
 the reinsurance or contract is limited to all claims of a 
 specific self-insurer member which are reimbursed or indemnified 
 by a reinsurer which, directly or indirectly, through one or 
 more intermediaries, controls or is controlled by or is under 
 common control with the self-insurer member so long as any 
 subsequent contract or reinsurance of the reinsurer relating to 
 the claims of the self-insurer member are not inconsistent with 
 the bases for exception provided under clauses (a), (b) and (c). 

    Whenever it appears to the commissioner of labor and 
 industry that any member that chooses the high or super 
 retention limit has participated in the transfer of liability to 
 any other entity or reinsured or otherwise contracted for 
 reimbursement or indemnification of losses below its retention 
 limit in a manner inconsistent with the bases for exception 
 provided under clauses (a), (b), (c), (d), and (e), the 
 commissioner may, after giving notice and an opportunity to be 
 heard, order the member to pay to the state of Minnesota an 
 amount not to exceed twice the difference between the 
 reinsurance premium for the high or super retention limit, as 
 appropriate, and the low retention limit applicable to the 
 member for each year in which the prohibited reinsurance or 
 contract was in effect.  Any member subject to this penalty 
 provision shall continue to be bound by its selection of the 
 high or super retention limit for purposes of membership in the 
 reinsurance association.  

    Subd. 2a.    Deficiency.  If the board determines that a 
 distribution of excess surplus resulted in inadequate funds 
 being available to pay claims that arose during the period upon 
 which that distribution was calculated, the board shall 
 determine the amount of the deficiency.  The deficiency shall be 
 made up by imposing an assessment rate against self-insured 
 members and policyholders of insurer members.  The board shall 
 notify the commissioner of commerce of the amount of the 
 deficiency and recommend an assessment rate.  The commissioner 
 shall order an assessment at a rate and for the time period 
 necessary to eliminate the deficiency.  The assessment rate 
 shall be applied to the exposure base of self-insured employers 
 and insured employers.  The assessment may not be retroactive 
 and applies only prospectively.  The assessment may be spread 
 over a period of time that will cause the least financial 
 hardship to employers.  All assessments under this subdivision 
 are payable to the association.  The commissioner may issue 
 orders necessary to administer this section.  

    Subd. 3.    Withdrawal from association.  An insurer may 
 withdraw from the reinsurance association only upon ceasing to 
 be authorized by license issued by the commissioner of commerce 
 to transact workers' compensation insurance in this state and 
 when all workers' compensation insurance policies issued by such 
 insurer have expired; a self-insurer may withdraw from the 
 reinsurance association only upon ceasing to be approved to 
 self-insure workers' compensation liability in this state 
 pursuant to section 176.181. 

    An insurer or self-insurer which withdraws or whose 
 membership in the reinsurance association is terminated shall 
 continue to be bound by the plan of operation.  Upon withdrawal 
 or termination, all unpaid premiums which have been charged to 
 the withdrawing or terminated member shall be payable as of the 
 effective date of the withdrawal or termination. 

    Subd. 4.    Liabilities of insolvent members.  An 
 unsatisfied net liability to the reinsurance association of an 
 insolvent member shall be assumed by and apportioned among the 
 remaining members of the reinsurance association as provided in 
 the plan of operation.  The reinsurance association shall have 
 all rights allowed by law on behalf of the remaining members 
 against the estate or funds of the insolvent member for sums due 
 the reinsurance association. 

    Subd. 5.    Merger or consolidation.  When a member has 
 been merged or consolidated into another insurer or 
 self-insurer, or another insurer, which provides insurance 
 required by chapter 176, has reinsured a member's entire 
 business, the member and successors in interest of the member 
 shall remain liable for the member's obligations. 

    Subd. 6.    Identifying losses in report.  The 
 commissioner of labor and industry shall require each member to 
 identify the portion of all losses which exceed its retention 
 limit selected under this section in any report filed with the 
 Workers' Compensation Insurers Rating Association of Minnesota 
 or filed with the Department of Labor and Industry for use in 
 reviewing the workers' compensation schedule of rates.  

    Subd. 7.    Losses 1984 and after.  For losses incurred 
 on or after January 1, 1984, the reinsurance association shall 
 indemnify the member for the ultimate loss, in excess of the 
 retention limit in effect at the time of the loss occurrence, 
 sustained in each loss occurrence relating to one or more claims 
 arising out of a single compensable event in another state 
 provided that:  

    (a) the injured worker is eligible for benefits under 
 section 176.041, subdivision 2 or 3, but elects to receive 
 benefits under the workers' compensation statute of another 
 state in lieu of benefits under chapter 176; and 

    (b) the ultimate loss indemnified by the reinsurance 
 association shall be determined as provided in this chapter, 
 except that the benefits shall be equal to those required to be 
 paid under the workers' compensation statute of the state 
 elected.  

    HIST: Ex1979 c 3 s 17; 1980 c 556 s 7; 1981 c 346 s 17,18,139; 
 1Sp1981 c 4 art 1 s 62; 1982 c 424 s 130; 1983 c 289 s 114 subd 
 1; 1983 c 290 s 7-9; 1984 c 432 art 1 s 2; 1984 c 655 art 1 s 
 92; 1985 c 234 s 21; 1987 c 268 art 2 s 26,27; 1988 c 667 s 22; 
 1989 c 304 s 137; 1991 c 325 art 14 s 17; 1991 c 345 art 1 s 70; 
 1993 c 361 s 5; 1995 c 231 art 2 s 9; 1995 c 258 s 57; 1997 c 
 187 art 3 s 19,20; 2000 c 394 art 2 s 21; 1Sp2001 c 10 art 2 s 
 52 

     79.35 Duties; responsibilities; powers. 

    The reinsurance association shall do the following on 
 behalf of its members: 

    (a) Assume 100 percent of the liability as provided in 
 section 79.34; 

    (b) Establish procedures by which members shall promptly 
 report to the reinsurance association each claim which, on the 
 basis of the injury sustained, may reasonably be anticipated to 
 involve liability to the reinsurance association if the member 
 is held liable under chapter 176.  Solely for the purpose of 
 reporting claims, the member shall in all instances consider 
 itself legally liable for the injury.  The member shall advise 
 the reinsurance association of subsequent developments likely to 
 materially affect the interest of the reinsurance association in 
 the claim; 

    (c) Maintain relevant loss and expense data relative to all 
 liabilities of the reinsurance association and require each 
 member to furnish statistics in connection with liabilities of 
 the reinsurance association at the times and in the form and 
 detail as may be required by the plan of operation; 

    (d) Calculate and charge to members a total premium 
 sufficient to cover the expected liability which the reinsurance 
 association will incur, together with incurred or estimated to 
 be incurred operating and administrative expenses for the period 
 to which this premium applies and actual claim payments to be 
 made by members, during the period to which this premium 
 applies, for claims in excess of the prefunded limit in effect 
 at the time the loss was incurred.  Each member shall be charged 
 a premium established by the board as sufficient to cover the 
 reinsurance association's incurred liabilities and expenses 
 between the member's selected retention limit and the prefunded 
 limit.  The prefunded limit shall be 20 times the lower 
 retention limit established in section 79.34, subdivision 2.  
 Each member shall be charged a proportion of the total premium 
 calculated for its selected retention limit in an amount equal 
 to its proportion of the exposure base of all members during the 
 period to which the reinsurance association premium will apply.  
 The exposure base shall be determined by the board and is 
 subject to the approval of the commissioner of labor and 
 industry.  In determining the exposure base, the board shall 
 consider, among other things, equity, administrative 
 convenience, records maintained by members, amenability to 
 audit, and degree of risk refinement.  Each member shall also be 
 charged a premium determined by the board to equitably 
 distribute excess or deficient premiums from previous periods 
 including any excess or deficient premiums resulting from a 
 retroactive change in the prefunded limit.  The premiums charged 
 to members shall not be unfairly discriminatory as defined in 
 section 79.074.  All premiums shall be approved by the 
 commissioner of labor and industry; 

    (e) Require and accept the payment of premiums from members 
 of the reinsurance association; 

    (f) Receive and distribute all sums required by the 
 operation of the reinsurance association; 

    (g) Establish procedures for reviewing claims procedures 
 and practices of members of the reinsurance association.  If the 
 claims procedures or practices of a member are considered 
 inadequate to properly service the liabilities of the 
 reinsurance association, the reinsurance association may 
 undertake, or may contract with another person, including 
 another member, to adjust or assist in the adjustment of claims 
 which create a potential liability to the association.  The 
 reinsurance association may charge the cost of the adjustment 
 under this paragraph to the member, except that any penalties or 
 interest incurred under sections 176.183, 176.221, 176.225, and 
 176.82 as a result of actions by the reinsurance association 
 after it has undertaken adjustment of the claim shall not be 
 charged to the member but shall be included in the ultimate loss 
 and listed as a separate item; and 

    (h) Provide each member of the reinsurance association with 
 an annual report of the operations of the reinsurance 
 association in a form the board of directors may specify. 

    HIST: Ex1979 c 3 s 18; 1980 c 556 s 8; 1981 c 346 s 19,139; 
 1983 c 290 s 10; 1985 c 234 s 21; 1995 c 231 art 2 s 10; 1995 c 
 258 s 58 

     79.36 Additional powers. 

    In addition to the powers granted in section 79.35, the 
 reinsurance association may do the following: 

    (a) Sue and be sued.  A judgment against the reinsurance 
 association shall not create any direct liability against the 
 individual members of the reinsurance association.  The 
 reinsurance association shall provide in the plan of operation 
 for the indemnification, to the extent provided in the plan of 
 operation, of the members, members of the board of directors of 
 the reinsurance association, and officers, employees and other 
 persons lawfully acting on behalf of the reinsurance 
 association; 

    (b) Reinsure all or any portion of its potential liability, 
 including potential liability in excess of the prefunded limit, 
 with reinsurers licensed to transact insurance in this state or 
 otherwise approved by the commissioner of labor and industry; 

    (c) Provide for appropriate housing, equipment, and 
 personnel as may be necessary to assure the efficient operation 
 of the reinsurance association; 

    (d) Contract for goods and services, including but not 
 limited to independent claims management, actuarial, investment, 
 and legal services from others within or without this state to 
 assure the efficient operation of the reinsurance association; 

    (e) Adopt operating rules, consistent with the plan of 
 operation, for the administration of the reinsurance 
 association, enforce those operating rules, and delegate 
 authority as necessary to assure the proper administration and 
 operation of the reinsurance association; 

    (f) Intervene in or prosecute at any time, including but 
 not limited to intervention or prosecution as subrogee to the 
 member's rights in a third party action, any proceeding under 
 this chapter or chapter 176 in which liability of the 
 reinsurance association may, in the opinion of the board of 
 directors of the reinsurance association or its designee, be 
 established, or the reinsurance association affected in any 
 other way; 

    (g) The net proceeds derived from intervention or 
 prosecution of any subrogation interest, or other recovery, 
 shall first be used to reimburse the reinsurance association for 
 amounts paid or payable pursuant to this chapter, together with 
 any expenses of recovery, including attorney's fees, and any 
 excess shall be paid to the member or other person entitled 
 thereto, as determined by the board of directors of the 
 reinsurance association, unless otherwise ordered by a court; 

    (h) Hear and determine complaints of a company or other 
 interested party concerning the operation of the reinsurance 
 association; and 

    (i) Perform other acts not specifically enumerated in this 
 section which are necessary or proper to accomplish the purposes 
 of the reinsurance association and which are not inconsistent 
 with sections 79.34 to 79.40 or the plan of operation. 

    HIST: Ex1979 c 3 s 19; 1980 c 556 s 9; 1981 c 346 s 20,139; 
 1985 c 234 s 21; 1987 c 384 art 2 s 1 

     79.361 Post-1992 distribution of Workers' Compensation 
  Reinsurance Association surplus. 

    Subdivision 1.    Scope.  This section governs the 
 distribution of excess surplus of the Workers' Compensation 
 Reinsurance Association declared after January 1, 1993.  A 
 distribution of excess surplus is declared on the date the board 
 votes to make a distribution.  No distribution of excess surplus 
 other than that provided by this section may be made.  

    Subd. 2.    Self-insured.  A self-insurer shall receive 
 a distribution of excess surplus in an amount equal to the 
 self-insurer's share of the premiums paid to the Workers' 
 Compensation Reinsurance Association for the period and for each 
 retention layer for which the distribution is made. 

    Subd. 3.    Insured employers.  A policyholder, other 
 than a policyholder insured by the assigned risk plan or the 
 State Fund Mutual Insurance Company, shall receive a refund of a 
 share of the distribution equal to the policyholder's share of 
 the annual total earned Minnesota workers' compensation 
 insurance premium, as reported to the commissioner of commerce 
 in the most recent annual statements of insurers, including the 
 assigned risk plan and the State Fund Mutual Insurance Company. 

    Subd. 4.    Assigned risk plan.  A policyholder of the 
 assigned risk plan shall receive a refund of a share of the 
 distribution equal to the policyholder's share of the annual 
 total earned Minnesota workers' compensation insurance premium, 
 as reported to the commissioner of commerce in the most recent 
 annual statements of insurers, including the assigned risk plan 
 and the State Fund Mutual Insurance Company. 

    Subd. 5.    State Fund Mutual Insurance Company.  A 
 policyholder of the State Fund Mutual Insurance Company shall 
 receive a refund of a share of the distribution equal to the 
 policyholder's share of the annual total earned Minnesota 
 workers' compensation insurance premium, as reported to the 
 commissioner of commerce in the most recent annual statements of 
 insurers, including the assigned risk plan and the state fund 
 mutual insurance company. 

    Subd. 6.    Distribution defined.  For the purpose of 
 subdivisions 3 to 5, "distribution" means a distribution 
 described in subdivision 1 minus a distribution to self-insurers 
 under subdivision 2. 

    Subd. 7.    Policyholder.  For the purpose of this 
 section "policyholder" means a workers' compensation insurance 
 policyholder in the calendar year preceding a declaration of 
 excess surplus by the board of the reinsurance association. 

    Subd. 8.    Information required.  Insurers and the 
 Workers' Compensation Insurers Rating Association of Minnesota 
 must provide the Workers' Compensation Reinsurance Association 
 with information necessary to administer and calculate the 
 refunds to policyholders governed by this section within 60 days 
 of a request by the association.  For the purpose of this 
 subdivision, "insurer" includes the assigned risk plan. 

    Subd. 9.    Refund due date.  Policyholders must receive 
 the refund within 60 days of the day the reinsurance association 
 receives the information required to be provided by subdivision 
 8. 

    Subd. 10.    Unclaimed refund.  Any part of the refund 
 not distributed within one year after the due date of a refund 
 under this section due to the inability to identify or locate 
 policyholders remains with the Workers' Compensation Reinsurance 
 Association.  

    Subd. 11.    Costs of distribution.  The reinsurance 
 association may pay the actual and reasonable costs of the 
 refunds made under this section from earnings on a declared 
 excess surplus prior to its distribution. 

    HIST: 1993 c 361 s 4 

     79.362 Workers' Compensation Reinsurance Association 
  excess surplus distribution. 

    An order of the commissioner of the Department of Labor and 
 Industry relating to the distribution of excess surplus of the 
 Workers' Compensation Reinsurance Association shall be reviewed 
 by the commissioner of commerce.  The commissioner of commerce 
 may amend, approve, or reject an order or issue further orders 
 to accomplish the purposes of section 79.361 and Laws 1993, 
 chapter 361, section 2.  The commissioner may not change the 
 amount of the distribution ordered by the commissioner of labor 
 and industry without agreement of the commissioner of labor and 
 industry.  

    HIST: 1993 c 361 s 6; 1997 c 187 art 3 s 21 

     79.363 Distribution of excess surplus. 

    The distribution of excess surplus of the Workers' 
 Compensation Reinsurance Association is not a distribution of 
 excess premiums to members.  Any excess surplus not refunded 
 according to Laws 1993, chapter 361, section 2, must be returned 
 to the association and must not be distributed to its members.  
 Any excess surplus not distributed or refunded according to 
 section 79.361 must be retained by the association and must not 
 be distributed to members. 

    HIST: 1993 c 361 s 8 

     79.37 Board of directors. 

    A board of directors of the reinsurance association is 
 created and is responsible for the operation of the reinsurance 
 association consistent with the plan of operation and sections 
 79.34 to 79.40.  The board consists of 13 directors.  Four 
 directors shall represent insurers, two directors shall 
 represent employers, two shall represent self-insurers; two 
 directors shall represent employees; the commissioner of finance 
 and the executive director of the state Board of Investment or 
 their designees shall serve as directors; and one director shall 
 represent the public.  Insurer members of the reinsurance 
 association shall elect the directors who represent insurers; 
 self-insurer members of the reinsurance association shall elect 
 the directors who represent self-insurers; and the commissioner 
 of labor and industry shall appoint the remaining directors for 
 the terms authorized in the plan of operation.  Each director is 
 entitled to one vote.  Terms of the directors shall be staggered 
 so that the terms of all the directors do not expire at the same 
 time and so that a director does not serve a term of more than 
 four years.  The board shall select a chair and other officers 
 it deems appropriate. 

    A majority of the directors currently holding office 
 constitutes a quorum.  Action may be taken by a majority vote of 
 the directors present. 

    The board shall take reasonable and prudent action 
 regarding the management of the reinsurance association 
 including but not limited to determining the entity who shall 
 manage the daily affairs of the reinsurance association.  The 
 board shall report to the governor of its actions regarding the 
 entity selected to manage the reinsurance association and the 
 reasons for the selection. 

    HIST: Ex1979 c 3 s 20; 1980 c 556 s 10; 1981 c 346 s 139; 1983 
 c 290 s 11; 1984 c 592 s 78; 1985 c 234 s 2; 1986 c 444; 1987 c 
 384 art 2 s 1 

  79.371 Repealed, 1993 c 228 s 4; 2001 c 63 s 2 

     79.38 Plan of operation. 

    Subdivision 1.    Provisions.  The plan of operation 
 shall provide for all of the following: 

    (a) the establishment of necessary facilities; 

    (b) the management and operation of the reinsurance 
 association; 

    (c) a preliminary premium, payable by each member in 
 proportion to its total premium in the year preceding the 
 inauguration of the reinsurance association, for initial 
 expenses necessary to commence operation of the reinsurance 
 association; 

    (d) procedures to be utilized in charging premiums, 
 including adjustments from excess or deficient premiums from 
 prior periods; 

    (e) procedures governing the actual payment of premiums to 
 the reinsurance association; 

    (f) reimbursement of each member of the board by the 
 reinsurance association for actual and necessary expenses 
 incurred on reinsurance association business; 

    (g) the composition, terms, compensation and other 
 necessary rules consistent with section 79.37 for boards of 
 directors of the reinsurance association; 

    (h) the investment policy of the reinsurance association; 
 and 

    (i) any other matters required by or necessary to 
 effectively implement sections 79.34 to 79.40. 

    Subd. 2.    Validity.  If the reinsurance association is 
 incorporated pursuant to chapter 317A, the plan of operation 
 shall be filed with and accepted by the secretary of state as 
 the corporation's articles of incorporation and bylaws.  The 
 plan of operation shall be valid as articles of incorporation 
 and bylaws under chapter 317A, notwithstanding that one or more 
 of the required provisions for articles and bylaws under chapter 
 317A is not included or requirements of form are not followed.  

    Subd. 3.    Amendments.  (a)   Procedure with members' 
 ratification.  The plan of operation may be amended, in whole 
 or in part, as follows:  proposal of an amendment by a member of 
 the board and adoption by a majority vote of the board at a 
 meeting duly called for that purpose, ratification by a majority 
 vote of the members at any annual meeting or special meeting 
 duly called for that purpose, and approval of the commissioner 
 of labor and industry, provided that an amendment shall be 
 deemed approved 30 days after the day following the date of 
 ratification by the members if not sooner disapproved by written 
 order of the commissioner.  

    (b)   Emergency board power to amend with delayed 
 members' ratification.  The board shall have emergency powers 
 to amend the plan at a meeting duly called for that purpose, 
 without ratification by the members; provided that a meeting of 
 members shall be scheduled to consider ratification of the 
 amendment within 90 days.  

    (c)   Commissioner's power to amend.  If the board 
 proposes an amendment which the members decline to ratify, the 
 commissioner of labor and industry is authorized, upon request 
 of the board, to amend the plan as proposed by the board when 
 the commissioner determines that failure to adopt the proposed 
 amendment may seriously impair the ability of the reinsurance 
 association to meet its financial obligations.  

    (d)   Delegation of authority to ratify.  By a majority 
 vote, the members, voting in person, or by proxy if authorized 
 by the board, at a meeting duly called for that purpose, may 
 authorize the board to exercise the power of amendment of the 
 plan without ratification by the members.  When the members have 
 authorized the board to amend the plan without ratification by 
 the members, the board may, by a majority vote of the directors, 
 amend the plan, provided that notice of the meeting and of the 
 proposed amendment shall be given to each director and officer, 
 including the commissioner of labor and industry.  By a majority 
 vote, the members, voting in person, or by proxy if authorized 
 by the board, at a meeting duly called for that purpose, may 
 prospectively revoke the authority of the board to amend the 
 plan without ratification by the members.  

    HIST: Ex1979 c 3 s 21; 1980 c 556 s 11; 1981 c 346 s 139; 1985 
 c 234 s 21; 1986 c 444; 1987 c 384 art 2 s 1,16; 1989 c 304 s 
 137 

     79.39 Applicability of chapter 79. 

    Subdivision 1.    Examination by commissioner.  The 
 reinsurance association is subject to all the provisions of this 
 chapter.  The commissioner of labor and industry or an 
 authorized representative of the commissioner may visit the 
 reinsurance association at any time and examine, audit, or 
 evaluate the reinsurance association's operations, records and 
 practices.  For purposes of this section, "authorized 
 representative of the commissioner" includes employees of the 
 Department of Labor and Industry or other parties retained by 
 the commissioner.  

    Subd. 2.    Costs and expenses.  The commissioner of 
 labor and industry may order and the reinsurance association 
 shall pay the costs and expenses of any examination, audit, or 
 evaluation conducted pursuant to subdivision 1.  

    HIST: Ex1979 c 3 s 22; 1984 c 592 s 79; 1985 c 234 s 21 

     79.40 Premium inclusion in ratemaking. 

    Premiums charged members by the reinsurance association 
 shall be recognized in the ratemaking procedures for insurance 
 rates.  

    HIST: Ex1979 c 3 s 23; 2005 c 132 s 25 

  79.41 Repealed, 1980 c 556 s 13; 1981 c 346 s 139 

  79.42 Repealed, 1980 c 556 s 13; 1981 c 346 s 139 

PREMIUMS; DATA SERVICE ORGANIZATIONS

     79.50 Purposes. 

    The purposes of this chapter are to:  

    (a) promote public welfare by regulating insurance rates so 
 that premiums are not excessive, inadequate, or unfairly 
 discriminatory; 

    (b) promote quality and integrity in the databases used in 
 workers' compensation insurance ratemaking; 

    (c) prohibit price fixing agreements and anticompetitive 
 behavior by insurers; 

    (d) define the function and scope of activities of data 
 service organizations; and 

    (e) encourage insurers to provide alternative innovative 
 methods whereby employers can meet the requirements imposed by 
 section 176.181.  

    HIST: 1981 c 346 s 21; 1995 c 231 art 1 s 1 

     79.51 Rules. 

    Subdivision 1.    Adoption; when.  The commissioner 
 shall adopt rules to implement provisions of this chapter.  

    Subd. 2. Repealed, 1983 c 290 s 173 

    Subd. 3.    Rules; subject matter.  (a) The commissioner 
 in issuing rules shall consider:  

    (1) data reporting requirements, including types of data 
 reported, such as loss and expense data; 

    (2) experience rating plans; 

    (3) retrospective rating plans; 

    (4) general expenses and related expense provisions; 

    (5) minimum premiums; 

    (6) classification systems and assignment of risks to 
 classifications; 

    (7) loss development and trend factors; 

    (8) the Workers' Compensation Reinsurance Association; 

    (9) requiring substantial compliance with the rules 
 mandated by this section as a condition of workers' compensation 
 carrier licensure; 

    (10) imposing limitations on the functions of workers' 
 compensation data service organizations consistent with the 
 introduction of competition; 

    (11) the rules contained in the workers' compensation 
 rating manual adopted by the workers' compensation insurers 
 rating association or other licensed data service organizations; 

    (12) the supporting data and information required in 
 filings under section 79.56, including but not limited to, the 
 experience of the filing insurer and the extent to which the 
 filing insurer relies upon data service organization loss 
 information, descriptions of the actuarial and statistical 
 methods employed in setting rates, and the filing insurers 
 interpretation of any statistical data relied upon; and 

    (13) any other factors that the commissioner deems relevant 
 to achieve the purposes of this chapter.  

    (b) The rules shall provide for the following:  

    (1) adequate safeguards against excessive or discriminatory 
 rates in workers' compensation; 

    (2) encouragement of workers' compensation insurance rates 
 which are as low as reasonably necessary, but shall make 
 provision against inadequate rates, insolvencies and unpaid 
 benefits; 

    (3) assurances that employers are not unfairly relegated to 
 the assigned risk pool; 

    (4) requiring all appropriate data and other information 
 from insurers for the purpose of issuing rules, making 
 legislative recommendations pursuant to this section; and 

    (5) preserving a framework for risk classification, data 
 collection, and other appropriate joint insurer services.  

    Subd. 4. Repealed, 1999 c 86 art 2 s 6 

    HIST: 1981 c 346 s 22; 1983 c 290 s 12; 1988 c 629 s 14; 1993 
 c 132 s 1; 1995 c 231 art 1 s 2,3 

     79.52 Definitions. 

    Subdivision 1.    Generally.  The following words or 
 phrases shall have the meanings ascribed to them for the 
 purposes of this chapter, unless the context clearly indicates 
 that a different meaning is intended.  

    Subd. 2.    Market.  "Market" means any reasonable 
 grouping or classification of employers.  

    Subd. 3.    Data service organization.  "Data service 
 organization"  means any entity which has ten or more members or 
 is controlled directly or indirectly by ten or more insurers and 
 is engaged in collecting data for use in insurance ratemaking or 
 other activities permitted by this chapter.  Affiliated members 
 or insurers shall be counted as a single unit for the purpose of 
 this definition.  The Workers' Compensation Insurers Rating 
 Association of Minnesota shall be considered a data service 
 organization.  

    Subd. 4.    Classification plan; classification.  
 "Classification plan" or "classification" means the plan, 
 system, or arrangement for rating insurance policyholders.  

    Subd. 5.    Rates.  "Rates" means the cost of insurance 
 per exposure base unit.  

    Subd. 6.    Base premium.  "Base premium" means the 
 amount of premium which an employer would pay for insurance 
 derived by applying rates to an exposure base prior to the 
 application of any merit rating or discount factors.  

    Subd. 7.    Premium.  "Premium" means the price charged 
 to an insured for insurance for a specified period of time, 
 regardless of the timing of actual payments.  

    Subd. 8.    Discount factor.  "Discount factor" means 
 any factor which is applied to the base premium and which is 
 based upon insurer expenses or other factors not related to the 
 risk of loss.  

    Subd. 9.    Merit rating.  "Merit rating" means a system 
 or form of rating by which base premium is modified on the basis 
 of loss experience or other factors which are reasonably related 
 to loss or risk of loss and which may be reasonably affected by 
 the action or activities of the insured.  The sensitivity of a 
 merit rating system to loss experience may vary by the size of 
 risk.  Merit rating shall include both prospective and 
 retrospective methods for modifying base premium.  

    Subd. 10.    Loss development factors.  "Loss 
 development factors"  means factors applied to recorded incurred 
 losses to estimate the amount of ultimate loss payments that 
 will have been made for losses during the applicable period when 
 all claims are paid.  

    Subd. 11.    Trend or trending.  "Trend" or "trending" 
 means any procedure employing data for the purpose of projecting 
 or forecasting the future value of that data or other data, or 
 the factors resulting from such a procedure.  

    Subd. 12.    Interested party.  "Interested party" means 
 any person, or association acting on behalf of its members, 
 directly affected by a change in the schedule of rates and 
 includes the staff of the Department of Commerce.  

    Subd. 13.    Insurer.  "Insurer" means any insurer 
 licensed to transact the business of workers' compensation 
 insurance in this state.  

    Subd. 14.    Insurance.  "Insurance" means workers' 
 compensation insurance.  

    Subd. 15.    Rating plan.  "Rating plan" means every 
 manual, and every other rule including discount factors and 
 merit rating necessary for the calculation of an insured's 
 premium from an insurer's rates.  An insurer may choose to adopt 
 for use the rating plan of the data service organization in 
 which it maintains membership.  

    Subd. 16.    Attorney fees.  No loss adjustment expense 
 used to pay attorney fees or other costs in defense of a 
 workers' compensation claim shall be charged to an insured in a 
 merit rating plan or to a plan under section 79.251, subdivision 
 2.  

    Subd. 17.    Association or rating association.  
 "Association" or "rating association" means the Minnesota 
 Workers' Compensation Insurers Association, Inc. 

    Subd. 18.    Rate Oversight Commission.  "Rate Oversight 
 Commission" means the Workers' Compensation Advisory Council 
 established in chapter 175.  

    HIST: 1981 c 346 s 23; 1983 c 289 s 114 subd 1; 1983 c 290 s 
 13; 1984 c 655 art 1 s 92; 1995 c 231 art 2 s 11,12 

     79.53 Premium calculation. 

    Subdivision 1.    Method of calculation.  Each insurer 
 shall establish premiums to be paid by an employer according to 
 its filed rates and rating plan as follows: 

    Rates shall be applied to an exposure base to yield a base 
 premium which may be further modified by merit rating, premium 
 discounts, and other appropriate factors contained in the rating 
 plan of an insurer to produce premium if the increase or 
 decrease is not unfairly discriminatory.  Nothing in this 
 chapter shall be deemed to prohibit the use of any premium, 
 provided the premium is not excessive, inadequate or unfairly 
 discriminatory. 

    Subd. 2. Repealed, 1995 c 231 art 1 s 36; art 2 s 110 

    HIST: 1981 c 346 s 24; 1983 c 289 s 114 subd 1; 1983 c 290 s 
 14; 1984 c 655 art 1 s 92; 1995 c 231 art 1 s 4; 1996 c 374 s 1 

     79.531 Negligently paid claims. 

    An insurer who has negligently paid benefits under chapter 
 176 may not charge the payment to the employer's experience 
 rating. 

    HIST: 1986 c 461 s 1 

  79.54 Repealed, 1995 c 231 art 1 s 36; art 2 s 110 

     79.55 Standards for rates. 

    Subdivision 1.    General standards.  Premiums shall not 
 be excessive, inadequate, or unfairly discriminatory.  

    Subd. 2.    Excessiveness.  Rates and rating plans are 
 excessive if the expected underwriting profit, together with 
 expected income from invested reserves, that would accrue to an 
 insurer under the rates and rating plans would be unreasonably 
 high in relation to the risk undertaken by the insurer in 
 transacting the business.  The burden is on the insurer to 
 establish that profit is not unreasonably high.  

    Subd. 3.    Inadequacy.  Premiums are inadequate if, 
 together with the investment income associated with an insurer's 
 Minnesota workers' compensation insurance business, they are 
 clearly insufficient to sustain projected losses and expenses of 
 the insurer and (a) if their continued use could lead to an 
 insolvent situation for the insurer; or (b) if their use 
 destroys or lessens competition or is likely to destroy or 
 lessen competition.  

    Subd. 4.    Unfair discrimination.  Premiums are 
 unfairly discriminatory if differentials for insureds fail to 
 reasonably reflect the differences in expected losses and 
 expenses to the insurer attributable to the insureds.  Rates are 
 not unfairly discriminatory solely because different premiums 
 result for insureds with like loss exposures but different 
 expense factors, or like expense factors but different loss 
 exposures, provided that rates reflect the differences with 
 reasonable accuracy.  

    Subd. 5.    Discounts permitted.  An insurer may offer a 
 discount from a manual premium if the premium otherwise complies 
 with this section.  The commissioner shall not by rule, or 
 otherwise, prohibit a credit or discount from a manual premium 
 solely because it is greater than a certain fixed percentage of 
 the premium.  

    Subd. 6.    Rating factors.  In determining whether a 
 rate filing complies with this section, separate consideration 
 shall be given to:  (i) past and prospective loss experience 
 within this state and outside this state to the extent necessary 
 to develop credible rates; (ii) dividends, savings, or 
 unabsorbed premium deposits allowed or returned by insurers to 
 their policyholders, members, or subscribers; and (iii) a 
 reasonable allowance for expense and profit.  An allowance for 
 expense shall be presumed reasonable if it reflects expenses 
 that are 22.5 percent greater or less than the average expense 
 for all insurers writing workers' compensation insurance in this 
 state.  An allowance for after-tax profit shall consider 
 anticipated investment income from premium receipts net of 
 disbursements and from allocated surplus, based on the current 
 five-year United States Treasury note yield and an assumed 
 premium to surplus ratio of 2.25 to one.  The allowance for 
 after-tax profit shall be presumed reasonable if the 
 corresponding return on equity target is equal to or less than 
 the sum of:  (i) the current yield on five-year United States 
 Treasury securities; and (ii) an appropriate equity risk premium 
 that reflects the risks of writing workers' compensation 
 insurance.  The risk premium shall not be less than the average, 
 since 1926, of the differences in return between:  (i) the 
 annual return, including dividend income, for the Standards and 
 Poors 500 common stock index or predecessor index for each year; 
 and (ii) the five-year United States Treasury note yield as of 
 the start of the corresponding year.  Profit and expense 
 allowances not presumed reasonable under this subdivision, are 
 reasonable if the circumstances of an insurer, the market, or 
 other factors justify them. 

    Subd. 7.    External factors.  That portion of a rate or 
 rating plan related to assessments from the assigned risk plan, 
 reinsurance association, guarantee fund, special compensation 
 fund, agent commission, premium tax and any other state-mandated 
 surcharges shall not cause the rate or rating plan to be 
 considered excessive, inadequate, or unfairly discriminatory. 

    Subd. 8.    Annual filings.  Not later than October 1 of 
 each year, the rating association shall file with the 
 commissioner and the Rate Oversight Commission the following 
 information used and related to the calculation and cost of 
 workers' compensation insurance premiums: 

    (1) all statistical plans, including classification 
 definitions used to assign each compensation risk written by its 
 members to its approved classification for reporting purposes; 

    (2) all development factors and alternative derivations; 

    (3) a description and summary of each data reporting and 
 monitoring method used to collect and monitor the database for 
 workers' compensation insurance; 

    (4) trend factors and alternative derivations and 
 applications; 

    (5) pure premium relativities for the approved 
 classification system for which data are reported; 

    (6) an evaluation of the effects of changes in law on loss 
 data; 

    (7) an explicit discussion and explanation of all 
 methodology, alternatives examined, assumptions adopted, and 
 areas of judgment and reasoning supporting judgments entered 
 into, and the effect of various combinations of these elements 
 on indications for modification of an overall pure premium rate 
 level change; and 

    (8) all merit rating plans and the calculation of any 
 variable factors necessary for utilization of the plan. 

    Subd. 9.    Analysis by Rate Oversight Commission.  Not 
 later than December 1 of each year, the Rate Oversight 
 Commission may submit to the commissioner a report concerning 
 the completeness of the filing and compliance of the filing with 
 the standards for excessiveness, inadequacy, and unfair 
 discrimination set forth in this chapter. 

    Subd. 10.    Duties of commissioner.  The commissioner 
 shall issue a report by March 1 of each year, comparing the 
 average rates charged by workers' compensation insurers in the 
 state to the pure premium base rates filed by the association, 
 as reviewed by the Rate Oversight Commission.  The Rate 
 Oversight Commission shall review the commissioner's report and 
 if the experience indicates that rates have not reasonably 
 reflected changes in pure premiums, the rate oversight 
 commission shall recommend to the legislature appropriate 
 legislative changes to this chapter. 

    HIST: 1981 c 346 s 26; 1985 c 219 s 1; 1995 c 231 art 1 s 5-8; 
 art 2 s 13-15; 1996 c 374 s 2; 1997 c 128 s 1,2 

     79.56 Filing rates and rating information. 

    Subdivision 1.    Prefiling of rates.  (a) Each insurer 
 shall file with the commissioner a complete copy of its rates 
 and rating plan, and all changes and amendments thereto, and 
 such supporting data and information that the commissioner may 
 by rule require, at least 60 days prior to its effective date.  
 The commissioner shall advise an insurer within 30 days of the 
 filing if its submission is not accompanied with such supporting 
 data and information that the commissioner by rule may require.  
 The commissioner may extend the filing review period and 
 effective date for an additional 30 days if an insurer, after 
 having been advised of what supporting data and information is 
 necessary to complete its filing, does not provide such 
 information within 15 days of having been so notified.  If any 
 rate or rating plan filing or amendment thereto is not 
 disapproved by the commissioner within the filing review period, 
 the insurer may implement it.  For the period August 1, 1995, to 
 December 31, 1995, the filing shall be made at least 90 days 
 prior to the effective date and the department shall advise an 
 insurer within 60 days of such filing if the filing is 
 insufficient under this section. 

    (b) A rating plan or rates are not subject to the 
 requirements of paragraph (a), where the insurer files a 
 certification verifying that it will use the mutually agreed 
 upon rating plan or rates only to write a specific employer that 
 generates $250,000 in annual written workers' compensation 
 premiums before the application of any large deductible rating 
 plan.  The certification must be refiled upon each renewal of 
 the employer's policy.  The $250,000 threshold includes premiums 
 generated in any state.  The designation and certification must 
 be submitted in substantially the following form: 

 Name and address of insurer:................................. 

 Name and address of insured employer:........................ 

 Policy period:............................................... 

 I certify that the employer named above generates $250,000 or 
 more in annual countrywide written workers' compensation 
 premiums, and that the calculation of this threshold is based on 
 the rates and rating plans that have been approved by the 
 appropriate state regulatory authority.  The filing of this 
 certification authorizes the use of this rate or rating plan 
 only for the named employer. 

 Name of responsible officer:................................. 

 Title:....................................................... 

 Signature:................................................... 

    Subd. 2. Repealed, 1995 c 231 art 1 s 36; art 2 s 110 

    Subd. 3.    Penalties.  Any insurer using a rate or a 
 rating plan which has not been filed or certified under 
 subdivision 1 shall be subject to a fine of up to $100 for each 
 day the failure to file continues.  The commissioner may, after 
 a hearing on the record, find that the failure is willful.  A 
 willful failure to meet filing requirements shall be punishable 
 by a fine of up to $500 for each day during which a willful 
 failure continues.  These penalties shall be in addition to any 
 other penalties provided by law.  

    Subd. 4.    Public inspection.  All filings shall be 
 open to public inspection during normal business hours at the 
 offices of the Department of Commerce.  

    HIST: 1981 c 346 s 27; 1983 c 289 s 114 subd 1; 1984 c 655 art 
 1 s 92; 1995 c 231 art 1 s 9,10; 2001 c 131 s 16; 2002 c 336 s 4; 2005 c 
 132 s 26,27 

     79.561 Disapproval of rates or rating plans. 

    Subdivision 1.    Disapproval; time period.  The 
 commissioner may disapprove a rate and rating plan or amendment 
 thereto prior to its effective date, as provided under section 
 79.56, subdivision 1, if the commissioner determines that it is 
 excessive, inadequate, or unfairly discriminatory.  If the 
 commissioner disapproves any rate or rating plan filing or 
 amendment thereto, the commissioner shall advise the filing 
 insurer what rate and rating plan the commissioner has reason to 
 believe would be in compliance with section 79.55, and the 
 reasons for that determination.  An insurer may not implement a 
 rate and rating plan or amendment thereto which has been 
 disapproved under this subdivision.  If the commissioner 
 disapproves any rate and rating plan filing or amendment 
 thereto, an insurer may use its current rate and rating plan for 
 writing any workers' compensation insurance in this state.  
 Following any disapproval, the commissioner and insurer may 
 reach agreement on a rate or rating plan filing or amendment 
 thereto.  Notwithstanding any law to the contrary, in such 
 cases, the rate or rating plan filing or amendment thereto may 
 be implemented by the insurer immediately. 

    Subd. 2.    Hearing.  If an insurer's rate or rating 
 plan filing or amendment thereto is disapproved under 
 subdivision 1, the insurer may request a contested case hearing 
 under chapter 14.  The insurer shall have the burden of proof to 
 justify that its rate and rating plan or amendment thereto is in 
 compliance with section 79.55.  The hearing must be scheduled 
 promptly and in no case later than three months from the date of 
 disapproval or else the rate and rating plan or amendment 
 thereto shall be considered effective and may be implemented by 
 the insurer.  A determination pursuant to chapter 14 must be 
 made within 90 days following the closing of the hearing record. 

    Subd. 3.    Consultants and costs.  The commissioner may 
 retain consultants, including a consulting actuary or other 
 experts, that the commissioner determines necessary for purposes 
 of this chapter.  The salary limit set by section 43A.17 does 
 not apply to a consulting actuary retained under this 
 subdivision.  A consulting actuary shall be a fellow in the 
 casualty actuarial society and shall have demonstrated 
 experience in workers' compensation insurance ratemaking.  Any 
 individual not so qualified shall not render an opinion or 
 testify on actuarial aspects of a filing, including but not 
 limited to, data quality, loss development, and trending.  The 
 commissioner may determine the costs necessary for implementing 
 and conducting a contested case hearing under subdivision 2, 
 including, but not limited to, retaining any consulting 
 actuaries and experts, and those costs shall be reimbursed by 
 the special compensation fund. 

    HIST: 1995 c 231 art 1 s 11; 1996 c 452 s 28 

  79.57 Repealed, 1995 c 231 art 1 s 36; art 2 s 110 

  79.58 Repealed, 1995 c 231 art 1 s 36; art 2 s 110 

     79.59 Insurers and data service organizations; 
  prohibited activities. 

    Subdivision 1.    Monopolization.  No insurer or data 
 service organization shall attempt to monopolize or combine or 
 conspire with any other person to monopolize the business of 
 insurance.  

    Subd. 2.    Agreement prohibited.  No insurer shall 
 agree with any other insurer or with a data service organization 
 to adhere to or to use any rate, rating plan, rating schedule, 
 rating rule, or underwriting rule except as specifically 
 authorized by this chapter or for the purpose of creating 
 experience modifications for employers with employees in more 
 than one state.  

    Subd. 3.    Trade restraint.  No insurer or data service 
 organization shall make an agreement with any other insurer, 
 data service organization, or other person which has the purpose 
 or the effect of restraining trade or of substantially lessening 
 competition.  

    Subd. 4.    Exceptions.  The fact that insurers writing 
 not more than 25 percent of the workers' compensation premiums 
 in Minnesota use the same rates, rating plans, rating schedules, 
 rating rules, underwriting rules, or similar materials shall not 
 alone constitute a violation of subdivision 1 or 2.  

    Two or more insurers under common ownership or operating 
 under common management or control may act in concert between or 
 among themselves with respect to matters authorized under this 
 chapter as if they constituted a single insurer, provided that 
 the rating plan of such insurers shall be considered to be a 
 single plan for the purposes of determining unfair 
 discrimination.  

    Subd. 5.    Additional prohibition.  In addition to 
 other prohibitions contained in this chapter, no data service 
 organization shall:  

    (a) refuse to supply any service for which it is licensed 
 or any data, except for data identifiable to an individual 
 insurer, to any insurer authorized to do business in this state 
 which offers to pay the usual compensation for the service or 
 data; 

    (b) require the purchase of any specific service as a 
 condition to obtaining any other services sought; 

    (c) participate in the development or distribution of 
 rates, rating plans, or rating rules except as specifically 
 authorized by this chapter or by rules adopted pursuant to this 
 chapter; or 

    (d) refuse membership to any licensed insurer.  

    HIST: 1981 c 346 s 30 

     79.60 Insurers; required and permitted activity. 

    Subdivision 1.    Required activity.  Each insurer shall 
 perform the following activities:  

    (a) maintain membership in and report loss experience data 
 to a licensed data service organization in accordance with the 
 statistical plan and rules of the organization as approved by 
 the commissioner; 

    (b) establish a plan for merit rating which shall be 
 consistently applied to all insureds, provided that members of a 
 data service organization may use merit rating plans developed 
 by that data service organization; 

    (c) provide an annual report to the commissioner containing 
 the information and prepared in the form required by the 
 commissioner; 

    (d) keep a record of the premiums and losses paid under 
 each workers' compensation policy written in Minnesota in the 
 form required by the commissioner; 

    (e) provide to the association, upon request, information 
 about its insurance premiums, losses, and operations which the 
 association shall request in order to prepare and file with the 
 commissioner and the Rate Oversight Commission the filings 
 required by this chapter; and 

    (f) pay to the association its equitable share of the costs 
 of preparing the filing with the commissioner and the Rate 
 Oversight Commission required by this chapter. 

    Subd. 2.    Permitted activity.  In addition to any 
 other activities not prohibited by this chapter, insurers may:  

    (a) through licensed data service organizations, 
 individually, or with insurers commonly owned, managed, or 
 controlled, conduct research and collect statistics to 
 investigate, identify, and classify information relating to 
 causes or prevention of losses; 

    (b) develop and use classification plans and rates based 
 upon any reasonable factors; and 

    (c) develop rules for the assignment of risks to 
 classifications.  

    HIST: 1981 c 346 s 31; 1995 c 231 art 2 s 16 

     79.61 Data service organizations; required and permitted 
  activity. 

    Subdivision 1.    Required activity.  Any data service 
 organization shall perform the following activities:  

    (a) file statistical plans, including classification 
 definitions, amendments to the plans, and definitions, with the 
 commissioner for approval, and assign each compensation risk 
 written by its members to its approved classification for 
 reporting purposes; 

    (b) establish requirements for data reporting and 
 monitoring methods to maintain a high quality database; 

    (c) prepare and distribute a periodic report, in a form 
 prescribed by the commissioner, on ratemaking including, but not 
 limited to the following elements:  

    (i) development factors and alternative derivations; 

    (ii) trend factors and alternative derivations and 
 applications; 

    (iii) pure premium relativities for the approved 
 classification system for which data are reported, provided that 
 the relativities for insureds engaged in similar occupations and 
 presenting substantially similar risks shall, if different, 
 differ by at least ten percent; and 

    (iv) an evaluation of the effects of changes in law on loss 
 data.  

    The report shall also include explicit discussion and 
 explanation of methodology, alternatives examined, assumptions 
 adopted, and areas of judgment and reasoning supporting 
 judgments entered into, and the effect of various combinations 
 of these elements on indications for modification of an overall 
 pure premium rate level change.  The pure premium relativities 
 and rate level indications shall not include a loading for 
 expenses or profit and no expense or profit data or 
 recommendations relating to expense or profit shall be included 
 in the report or collected by a data service organization; 

    (d) collect, compile, summarize, and distribute data from 
 members or other sources pursuant to a statistical plan approved 
 by the commissioner; 

    (e) prepare merit rating plan and calculate any variable 
 factors necessary for utilization of the plan.  Such a plan may 
 be used by any of its members, at the option of the member 
 provided that the application of a plan shall not result in 
 rates that are unfairly discriminatory; 

    (f) provide loss data specific to an insured to the insured 
 at a reasonable cost; 

    (g) distribute information to an insured or interested 
 party that is filed with the commissioner and is open to public 
 inspection; and 

    (h) assess its members for operating expenses on a fair and 
 equitable basis.  

    Subd. 2.    Permitted activity.  In addition to any 
 other activities not prohibited by chapter 79, any data service 
 organization may:  

    (a) collect and analyze data in order to investigate, 
 identify, and classify information relating to causes or 
 prevention of losses; 

    (b) make inspections for the sole purpose of reporting and 
 maintaining data quality; 

    (c) contract with another data service organization to 
 fulfill any of the above requirements; and 

    (d) prepare and file with the commissioner a rating plan 
 for use by any of its members, provided that no member may be 
 required to use any part of the plan.  

    HIST: 1981 c 346 s 32 

     79.62 Data service organizations; licensing, examination.

    Subdivision 1.    License required.  No data service 
 organization shall provide any service and no insurer shall use 
 the services of a data service organization unless the 
 organization is licensed by the commissioner.  

    Subd. 2.    Procedure; application.  A data service 
 organization shall apply for a license in a form and manner 
 prescribed by the commissioner.  The application of a data 
 service organization shall include:  

    (a) a copy of its constitution, articles of incorporation, 
 bylaws, and other rules pertaining to the conduct of its 
 business; 

    (b) a plan and narrative describing how it will perform the 
 activities required by section 79.61; 

    (c) a statement showing its technical qualifications; and 

    (d) any other information that the commissioner may 
 reasonably require.  

    Subd. 2a.    Employer representation.  The commissioner 
 may appoint two representatives of employers to serve on the 
 board of directors of each licensed data service organization.  
 These directors serve for a term of two years and are entitled 
 to vote on all matters under consideration. 

    Subd. 3.    Issuance.  The commissioner, upon finding 
 that the applicant organization is qualified to provide the 
 services required and proposed, or has contracted with a 
 licensed data service organization to purchase these services 
 which are required by this chapter but are not provided directly 
 by the applicant, and that all requirements of law are met, 
 shall issue a license.  Each license is subject to annual 
 renewal effective June 30.  Each new or renewal license 
 application must be accompanied by a fee of $1,000.  

    Subd. 4.    Suspension; revocation.  The commissioner 
 may, after a hearing on the record, revoke or suspend the 
 license of a data service organization if the commissioner finds 
 that the organization is not in compliance with the requirements 
 of this chapter or rules issued thereunder.  

    Subd. 5.    Licensee examination.  The commissioner may 
 examine any licensed data service organization or applicant for 
 this license to determine whether its activities and practices 
 comply with law.  The cost of the examination shall be paid by 
 the examined organization pursuant to section 60A.03.  

    HIST: 1981 c 346 s 33; 1Sp1985 c 10 s 73; 1986 c 444; 2005 c 
 132 s 28 

  79.63 Repealed, 1983 c 290 s 173