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Minnesota Legislature

Office of the Revisor of Statutes

176.129 CREATION OF SPECIAL COMPENSATION FUND.
    Subdivision 1. Deposit of funds. The special compensation fund is created for the purposes
provided for in this chapter and chapter 182. The commissioner of finance is the custodian of
the special compensation fund. Sums paid to the commissioner pursuant to this section shall be
deposited with the commissioner of finance for the benefit of the fund and used to pay the benefits
under this chapter and administrative costs pursuant to subdivision 11. Any interest or profit
accruing from investment of these sums shall be credited to the special compensation fund.
Subject to the provisions of this section, all the powers, duties, functions, obligations, and rights
vested in the special compensation fund immediately prior to January 1, 1984 are transferred to
and vested in the special compensation fund recreated by this section. All rights and obligations
of employers with regard to the special compensation fund which existed immediately prior to
January 1, 1984, continue, subject to the provisions of this section.
    Subd. 1a. Interest. Interest earned on revenue collected by the special compensation fund
shall be deposited into the special compensation fund.
    Subd. 1b. Definitions. (a) For purposes of this section, the terms defined in this subdivision
have the meanings given them.
(b) "Paid indemnity losses" means gross benefits paid for temporary total disability,
economic recovery compensation, permanent partial disability, temporary partial disability,
impairment compensation, permanent total disability, retraining compensation paid to the
employee as provided by section 176.102, subdivision 11, or dependency benefits, exclusive of
medical and supplementary benefits. In the case of policy deductibles, paid indemnity losses
includes all benefits paid, including the amount below deductible limits.
(c) "Standard workers' compensation premium" means the data service organization's
designated statistical reporting pure premium after excluding retrospective rating plan
adjustments, other individual risk rating plan adjustments such as schedule rating, premium credits
for small and large deductible coverage, and other deviations from the data service organization's
designated statistical reporting pure premiums and experience rating plan modification factors
but prior to the application of premium discounts, policyholder dividends, other premium
adjustments, and expense constants.
    Subd. 2.[Repealed, 2000 c 447 s 28]
    Subd. 2a. Payments to fund. (a) On or before April 1 of each year, all self-insured employers
shall report paid indemnity losses and insurers shall report paid indemnity losses and standard
workers' compensation premium in the form and manner prescribed by the commissioner. On June
1 of each year, the commissioner shall determine the total amount needed to pay all estimated
liabilities, including administrative expenses, of the special compensation fund for the following
fiscal year. The commissioner shall assess this amount against self-insured employers and insurers.
The total amount of the assessment must be allocated between self-insured employers and insured
employers based on paid indemnity losses for the preceding calendar year, as provided by
paragraph (b). The method of assessing self-insured employers must be based on paid indemnity
losses, as provided by paragraph (c). The method of assessing insured employers is based on
standard workers' compensation premium, as provided by paragraph (c). Each insurer shall collect
the assessment through a policyholder surcharge as provided by paragraph (d). On or before June
30 of each year, the commissioner shall provide notification to each self-insured employer and
insurer of amounts due. Each self-insured employer and each insurer shall pay at least one-half
of the amount due to the commissioner for deposit into the special compensation fund on or
before August 1 of the same calendar year. The remaining balance is due on February 1 of the
following calendar year. Each insurer must pay the full amount due as stated in the commissioner's
notification, regardless of the amount the insurer actually collects from the premium surcharge.
(b) The portion of the total assessment that is allocated to self-insured employers is the
proportion that paid indemnity losses made by all self-insured employers bore to the total paid
indemnity losses made by all self-insured employers and insured employers during the preceding
calendar year. The portion of the total assessment that is allocated to insured employers is the
proportion that paid indemnity losses made on behalf of all insured employers bore to the total
paid indemnity losses made by all self-insured employers and insured employers during the
preceding calendar year.
(c) The portion of the total assessment allocated to self-insured employers that shall be
paid by each self-insured employer must be based upon paid indemnity losses made by that
self-insured employer during the preceding calendar year. The portion of the total assessment
allocated to insured employers that is paid by each insurer must be based on standard workers'
compensation premium earned in the state by that insurer during the preceding calendar year. An
employer who has ceased to be self-insured shall continue to be liable for assessments based on
paid indemnity losses arising out of injuries occurring during periods when the employer was
self-insured, unless the self-insured employer has purchased a replacement policy covering those
losses. An insurer who assumes a self-insured employer's obligation under a replacement policy
shall separately report and pay assessments based on indemnity losses paid by the insurer under
the replacement policy. The replacement policy may provide for reimbursement of the assessment
to the insurer by the self-insured employer.
(d) Insurers shall collect the assessments from their insured employers through a surcharge
based on standard workers' compensation premium for each employer. Assessments when
collected do not constitute an element of loss for the purpose of establishing rates for workers'
compensation insurance but for the purpose of collection are treated as separate costs imposed
on insured employers. The premium surcharge is included in the definition of gross premium as
defined in section 297I.01. An insurer may cancel a policy for nonpayment of the premium
surcharge. The premium surcharge is excluded from the definition of premium except as otherwise
provided in this paragraph.
(e) For purposes of this section, the workers' compensation assigned risk plan established
under section 79.252, shall report and pay assessments on standard workers' compensation
premium in the same manner as an insurer.
    Subd. 3.[Repealed, 2002 c 262 s 23]
    Subd. 4.[Repealed, 2002 c 262 s 23]
    Subd. 4a.[Repealed, 2002 c 262 s 23]
    Subd. 5.[Repealed, 1984 c 432 art 2 s 55]
    Subd. 6. Payments out of fund. The Workers' Compensation Division, a compensation
judge, the Workers' Compensation Court of Appeals, or a district court in cases before them shall
direct the distribution of benefits provided by this chapter. These benefits are payable in the same
manner as other payments of compensation.
    Subd. 7. Refunds. In case deposit is or has been made pursuant to subdivision 2a by mistake
or inadvertence, or under circumstances that justice requires a refund, the commissioner of finance
is authorized to refund the deposit under order of the commissioner, a compensation judge, the
Workers' Compensation Court of Appeals, or a district court. Claims for refunds must be submitted
to the commissioner within three years of the assessment due date. There is appropriated to the
commissioner from the fund an amount sufficient to make the refund and payment.
    Subd. 8. Commissioner as administrator. The commissioner is the administrator of the
special compensation fund. The special fund shall be designated a party in an action regarding any
right, obligation, and liability of the special fund. The commissioner of finance, as custodian, does
not have standing in an action determining any right, obligation, or liability of the special fund.
As requested by the commissioner, the attorney general shall represent the special fund in all legal
matters in which the special fund has an interest. The commissioner may designate one or more
division employees to appear on behalf of the special fund in proceedings under this chapter. The
division employees so designated need not be attorneys-at-law.
    Subd. 9. Powers of fund. In addition to powers granted to the special compensation fund by
this chapter the fund may do the following:
(a) sue and be sued in its own name;
(b) intervene in or commence an action under this chapter or any other law, including, but not
limited to, intervention or action as a subrogee to the division's right in a third-party action, any
proceeding under this chapter in which liability of the special compensation fund is an issue, or any
proceeding which may result in other liability of the fund or to protect the legal right of the fund;
(c) enter into settlements including but not limited to structured, annuity purchase agreements
with appropriate parties under this chapter. Notwithstanding any other provision of this chapter,
any settlement may provide that the fund partially or totally denies liability for payment of
benefits, and no determination of employer insurance status and liability under section 176.183,
subdivision 2
, shall be required for approval of the stipulation for a settlement;
(d) contract with another party to administer the special compensation fund;
(e) take any other action which an insurer is permitted by law to take in operating within
this chapter; and
(f) conduct a financial audit of indemnity claim payments, premium, and assessments
reported to the fund. This may be contracted by the fund to a private auditing firm.
    Subd. 10. Penalty. Sums paid to the commissioner pursuant to this section shall be in the
manner prescribed by the commissioner. The commissioner may impose a penalty payable to the
commissioner for deposit in the assigned risk safety account of up to 15 percent of the amount
due under this section but not less than $1,000 in the event payment is not made or reports are not
submitted in the manner prescribed.
    Subd. 11. Administrative provisions. The accounting, investigation, and legal costs
necessary for the administration of the programs financed by the special compensation fund shall
be paid from the fund during each biennium commencing July 1, 1981. Staffing and expenditures
related to the administration of the special compensation fund shall be approved through the
regular budget and appropriations process. All sums recovered by the special compensation
fund as a result of action under section 176.061, or recoveries of payments made by the special
compensation fund under section 176.183 or 176.191, or sums recovered under chapter 182, shall
be credited to the special compensation fund.
    Subd. 12. Report of commissioner. The commissioner shall report biennially to the
governor and to the legislature as to the financial status of the special compensation fund. The
report shall include a statement of the receipts and the disbursements for the period covered.
    Subd. 13. Employer reports. All employers and insurers shall make reports to the
commissioner as required for the proper administration of this section and Minnesota Statutes
1990, section 176.131, and Minnesota Statutes 1994, section 176.132. Employers and insurers
may not be reimbursed from the special compensation fund for any periods unless the employer
or insurer is up to date with all past due and currently due assessments, penalties, and reports to
the special compensation fund under this section. The commissioner may allow an offset of the
reimbursements due an employer or insurer pursuant to Minnesota Statutes 1990, section 176.131,
and Minnesota Statutes 1994, section 176.132, against the assessment due under the section.
History: 1983 c 290 s 93; 1984 c 432 art 2 s 20-22; 1986 c 461 s 17; 1987 c 268 art 2 s
28; 1987 c 332 s 27-29; 1992 c 510 art 3 s 12; 1992 c 513 art 3 s 37,38; 1995 c 231 art 2 s
58,59; 1996 c 305 art 1 s 45,46; 2000 c 447 s 19,20; 2001 c 123 s 6-8; 2002 c 262 s 6-11,24;
2003 c 112 art 2 s 50; 2005 c 90 s 7-9