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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 72A

Section 72A.20

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72A.20 METHODS, ACTS, AND PRACTICES WHICH ARE DEFINED AS UNFAIR
OR DECEPTIVE.
    Subdivision 1. Misrepresentations and false advertising of policy contracts. Making,
issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration,
circular, or statement misrepresenting the terms of any policy issued or to be issued or the benefits
or advantages promised thereby or the dividends or share of the surplus to be received thereon,
or making any false or misleading statement as to the dividends or share of surplus previously
paid on similar policies, or making any misleading representation or any misrepresentation as
to the financial condition of any insurer, or as to the legal reserve system upon which any life
insurer operates, or using any name or title of any policy or class of policies misrepresenting the
true nature thereof, or making any misrepresentation to any policyholder insured in any company
for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender
insurance, shall constitute an unfair method of competition and an unfair and deceptive act or
practice in the business of insurance.
    Subd. 2. False information and advertising generally. Making, publishing, disseminating,
circulating, or placing before the public, or causing, directly or indirectly, to be made, published,
disseminated, circulated, or placed before the public, in a newspaper, magazine, or other
publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station,
or in any other way, an advertisement, announcement, or statement, containing any assertion,
representation, or statement with respect to the business of insurance, or with respect to any person
in the conduct of the person's insurance business, which is untrue, deceptive, or misleading, shall
constitute an unfair method of competition and an unfair and deceptive act or practice.
    Subd. 3. Defamation. Making, publishing, disseminating, or circulating, directly or
indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating
of any oral or written statement or any pamphlet, circular, article, or literature which is false,
or maliciously critical of or derogatory to the financial condition of an insurer, and which is
calculated to injure any person engaged in the business of insurance, shall constitute an unfair
method of competition and an unfair and deceptive act or practice.
    Subd. 4. Boycott, coercion, and intimidation. Entering into any agreement to commit, or
by any concerted action committing, any act of boycott, coercion, or intimidation, resulting in or
tending to result in unreasonable restraint of, or monopoly in, the business of insurance, shall
constitute an unfair method of competition and an unfair and deceptive act or practice.
    Subd. 4a.[Renumbered 72A.201, subd 4a]
    Subd. 5. False financial statements. Filing with any supervisory or other public official,
or making, publishing, disseminating, circulating, or delivering to any person, or placing before
the public, or causing, directly or indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public, any false statement of financial condition of
an insurer with intent to deceive, shall constitute an unfair method of competition and an unfair
and deceptive act or practice in the insurance business.
    Subd. 6. False entries. Making any false entry in any book, report, or statement of any
insurer with intent to deceive any agent or examiner lawfully appointed to examine into its
condition or into any of its affairs, or any public official to whom such insurer is required by law
to report, or who has authority by law to examine into its condition or into any of its affairs, or,
with like intent, willfully omitting to make a true entry of any material fact pertaining to the
business of such insurer in any book, report, or statement of such insurer, shall constitute an unfair
method of competition and an unfair and deceptive act or practice.
    Subd. 7. Stock operations and advisory board contracts. Issuing or delivering, or
permitting agents, officers, or employees to issue or deliver, agency company stock or other
capital stock, or benefit certificates or shares in any common-law corporation, or securities or
any special or advisory board contracts or other contracts of any kind promising returns and
profits as an inducement to insurance, shall constitute an unfair method of competition and an
unfair and deceptive act or practice.
    Subd. 8. Discrimination. (a) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the rates charged for any contract of
life insurance or of annuity or in the dividends or other benefits payable thereon, or in any other of
the terms and conditions of such contract or in making or permitting the rejection of an individual's
application for life insurance coverage, as well as the determination of the rate class for such
individual, on the basis of a disability, shall constitute an unfair method of competition and an
unfair and deceptive act or practice, unless the claims experience and actuarial projections and
other data establish significant and substantial differences in class rates because of the disability.
(b) Refusing to insure or refusing to continue to insure the life of a member of a reserve
component of the armed forces of the United States, or the National Guard due to that person's
status as a member, or duty assignment while a member of any of these military organizations,
constitutes an unfair method of competition and an unfair and deceptive act or practice unless the
individual has received an order for active duty.
(c) Refusing to reinstate coverage for the insured or any covered dependents under
an individual or group life or health insurance policy or contract of a member of a reserve
component of the armed forces of the United States or the National Guard whose coverage or
dependent coverage was terminated, canceled, or nonrenewed while that person was on active
duty constitutes an unfair method of competition and an unfair and deceptive act or practice. For
purposes of paragraphs (a) to (c), "health insurance policy or contract" means any policy, contract,
or certificate providing benefits regulated under chapter 62A, 62C, 62D, or 64B.
For purposes of reinstatement of an individual policy, the person shall apply for reinstatement
within 90 days after removal from active duty.
The reinstated coverage must not contain any new preexisting condition or other exclusion
or limitation, except a condition determined by the Veterans Administration to be a disability
incurred or aggravated in the line of duty. The remainder of a preexisting condition limitation that
was not satisfied before the coverage was terminated may be applied once the person returns and
coverage is reinstated. Reinstatement is effective upon the payment of any required premiums.
(d) Refusing to offer, sell, or renew coverage; limiting coverage; or charging a rate different
from that normally charged for the same coverage under a life insurance policy or health plan
because the applicant who is also the proposed insured has been or is a victim of domestic abuse
is an unfair method of competition and an unfair and deceptive act or practice.
Nothing in this paragraph prevents an insurer from underwriting a risk on the basis of the
physical or mental history of an individual if the insurer does not take into consideration whether
the individual's condition was caused by an act of domestic abuse.
For purposes of this paragraph, "domestic abuse" has the meaning given in section 518B.01,
subdivision 2
; and "health plan" has the meaning given in section 62Q.01, subdivision 3, and
includes the coverages referred to in section 62A.011, subdivision 3, clauses (1), (7), (9), and (10).
    Subd. 9. Discrimination between individuals of the same class. Making or permitting any
unfair discrimination between individuals of the same class and of essentially the same hazard
in the amount of premium, policy fees, or rates charged for any policy or contract of accident
or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of
such contract, or in any other manner whatever, or in making or permitting the rejection of an
individual's application for accident or health insurance coverage, as well as the determination of
the rate class for such individual, on the basis of a disability, shall constitute an unfair method
of competition and an unfair and deceptive act or practice, unless the claims experience and
actuarial projections and other data establish significant and substantial differences in class rates
because of the disability.
    Subd. 10. Rebates. Except as otherwise expressly provided by law, knowingly permitting
or offering to make or making any contract of life insurance, annuity, or accident and health
insurance, or agreement as to such contract, other than as plainly expressed in the contract issued
thereon, or paying or allowing or giving, or offering to pay, allow, or give, directly or indirectly,
as inducement to such insurance or annuity, any rebate of premiums payable on the contract,
or any special favor or advantage in the dividends or other benefits thereon, or any valuable
consideration or inducement whatever not specified in the contract; or giving or selling or
purchasing, or offering to give, sell, or purchase, as inducement to such insurance or annuity, or in
connection therewith, any stocks, bonds, or other securities of any insurance company or other
corporation, association, or partnership, or any dividends or profits accrued thereon, or anything
of value whatsoever not specified in the contract, shall constitute an unfair method of competition
and an unfair and deceptive act or practice.
    Subd. 11. Application to certain sections. Violating any provision of the following sections
of this chapter not set forth in this section shall constitute an unfair method of competition and
an unfair and deceptive act or practice: sections 72A.12, subdivisions 2, 3, and 4, 72A.16,
subdivision 2
, 72A.03 and 72A.04, 72A.08, subdivision 1, as modified by sections 72A.08,
subdivision 4
, 72A.201, sections 72A.49 to 72A.505, and 65B.13.
    Subd. 12. Unfair service. Causing or permitting with such frequency to indicate a general
business practice any unfair, deceptive, or fraudulent act concerning any claim or complaint of an
insured or claimant including, but not limited to, the following practices:
    (1) misrepresenting pertinent facts or insurance policy provisions relating to coverages at
issue;
    (2) failing to acknowledge and act reasonably promptly upon communications with respect
to claims arising under insurance policies;
    (3) failing to adopt and implement reasonable standards for the prompt investigation of
claims arising under insurance policies;
    (4) refusing to pay claims without conducting a reasonable investigation based upon all
available information;
    (5) failing to affirm or deny coverage of claims within a reasonable time after proof of
loss statements have been completed;
    (6) not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims
in which liability has become reasonably clear;
    (7) compelling insureds to institute litigation to recover amounts due under an insurance
policy by offering substantially less than the amounts ultimately recovered in actions brought
by the insureds;
    (8) attempting to settle a claim for less than the amount to which reasonable persons
would have believed they were entitled by reference to written or printed advertising material
accompanying or made part of an application;
    (9) attempting to settle claims on the basis of an application which was altered without notice
to, or knowledge or consent of, the insured;
    (10) making claims payments to insureds or beneficiaries not accompanied by a statement
setting forth the coverage under which the payments are being made;
    (11) making known to insureds or claimants a policy of appealing from arbitration awards
in favor of insureds or claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration;
    (12) delaying the investigation or payment of claims by requiring an insured, claimant, or
the physician of either to submit a preliminary claim report and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions contain substantially the
same information;
    (13) failing to promptly settle claims, where liability has become reasonably clear, under one
portion of the insurance policy coverage in order to influence settlements under other portions
of the insurance policy coverage;
    (14) failing to promptly provide a reasonable explanation of the basis in the insurance policy
in relation to the facts or applicable law for denial of a claim or for the offer of a compromise
settlement;
    (15) requiring an insured to provide information or documentation that is or would be
dated more than five years prior to or five years after the date of a fire loss, except for proof of
ownership of the damaged property;
    (16) stating or implying to an insured that filing a claim related to the I-35W bridge collapse
for no-fault motor vehicle insurance benefits would or may result in cancellation or nonrenewal of
the insured's policy or in a surcharge or other future increase in premium rates, when any such
consequence of filing the claim would be prohibited by law;
    (17) failing to promptly inform an insured who files a claim related to the I-35W bridge
collapse and described in section 65B.133, subdivision 5a, of the provisions of that law, both
orally and in writing.
    Subd. 12a.[Renumbered 72A.201]
    Subd. 13. Refusal to renew. Refusing to renew, declining to offer or write, or charging
differential rates for an equivalent amount of homeowner's insurance coverage, as defined by
section 65A.27, for property located in a town or statutory or home rule charter city, in which the
insurer offers to sell or writes homeowner's insurance, solely because:
(a) of the geographic area in which the property is located;
(b) of the age of the primary structure sought to be insured;
(c) the insured or prospective insured was denied coverage of the property by another insurer,
whether by cancellation, nonrenewal or declination to offer coverage, for a reason other than those
specified in section 65A.01, subdivision 3a, clauses (a) to (e);
(d) the property of the insured or prospective insured has been insured under the Minnesota
FAIR Plan Act, shall constitute an unfair method of competition and an unfair and deceptive act
or practice; or
(e) the insured has inquired about coverage for a hypothetical claim or has made an inquiry
to the insured's agent regarding a potential claim.
This subdivision prohibits an insurer from filing or charging different rates for different zip
code areas within the same town or statutory or home rule charter city.
This subdivision shall not prohibit the insurer from applying underwriting or rating standards
which the insurer applies generally in all other locations in the state and which are not specifically
prohibited by clauses (a) to (e). Such underwriting or rating standards shall specifically include but
not be limited to standards based upon the proximity of the insured property to an extraordinary
hazard or based upon the quality or availability of fire protection services or based upon the
density or concentration of the insurer's risks. Clause (b) shall not prohibit the use of rating
standards based upon the age of the insured structure's plumbing, electrical, heating or cooling
system or other part of the structure, the age of which affects the risk of loss. Any insurer's
failure to comply with section 65A.29, subdivisions 2 to 4, either (1) by failing to give an insured
or applicant the required notice or statement or (2) by failing to state specifically a bona fide
underwriting or other reason for the refusal to write shall create a presumption that the insurer has
violated this subdivision.
    Subd. 14. Application form refusal. An insurance agent refusing to supply a requested
application form for homeowner's insurance with any insurer whom the agent represents or
refusing to transmit forthwith any completed application form to the insurer, shall constitute an
unfair method of competition and an unfair and deceptive act or practice.
    Subd. 15. Practices not held to be discrimination or rebates. Nothing in subdivision 8,
9, or 10, or in section 72A.12, subdivisions 3 and 4, shall be construed as including within the
definition of discrimination or rebates any of the following practices:
(1) in the case of any contract of life insurance or annuity, paying bonuses to policyholders
or otherwise abating their premiums in whole or in part out of surplus accumulated from
nonparticipating insurance, provided that any bonuses or abatement of premiums shall be fair and
equitable to policyholders and for the best interests of the company and its policyholders;
(2) in the case of life insurance policies issued on the industrial debit plan, making allowance,
to policyholders who have continuously for a specified period made premium payments directly
to an office of the insurer, in an amount which fairly represents the saving in collection expense;
(3) readjustment of the rate of premium for a group insurance policy based on the loss or
expense experienced thereunder, at the end of the first or any subsequent policy year of insurance
thereunder, which may be made retroactive only for such policy year;
(4) in the case of an individual or group health insurance policy, the payment of differing
amounts of reimbursement to insureds who elect to receive health care goods or services from
providers designated by the insurer, provided that each insurer shall on or before August 1 of
each year file with the commissioner summary data regarding the financial reimbursement offered
to providers so designated.
Any insurer which proposes to offer an arrangement authorized under this clause shall
disclose prior to its initial offering and on or before August 1 of each year thereafter as a
supplement to its annual statement submitted to the commissioner pursuant to section 60A.13,
subdivision 1
, the following information:
(a) the name which the arrangement intends to use and its business address;
(b) the name, address, and nature of any separate organization which administers the
arrangement on the behalf of the insurers; and
(c) the names and addresses of all providers designated by the insurer under this clause and
the terms of the agreements with designated health care providers.
The commissioner shall maintain a record of arrangements proposed under this clause,
including a record of any complaints submitted relative to the arrangements.
If the commissioner requests copies of contracts with a provider under this clause and the
provider requests a determination, all information contained in the contracts that the commissioner
determines may place the provider or health care plan at a competitive disadvantage is nonpublic
data.
    Subd. 16. Discrimination based on sex or marital status. Refusing to insure, refusing to
continue to insure, refusing to offer or submit an application for coverage, or limiting the amount
of coverage available to an individual because of the sex or marital status of the individual;
however, nothing in this subsection prohibits an insurer from taking marital status into account for
the purpose of defining persons eligible for dependents' benefits.
    Subd. 17. Return of premiums. (a) Refusing, upon surrender of an individual policy of life
insurance in the case of the insured's death, or in the case of a surrender prior to death, of an
individual insurance policy not covered by the standard nonforfeiture laws under section 61A.24,
to refund to the owner all unearned premiums paid on the policy covering the insured as of the
time of the insured's death or surrender if the unearned premium is for a period of more than one
month. The return of unearned premium must be delivered to the insured within 30 days following
receipt by the insurer of the insured's request for cancellation.
(b) Refusing, upon termination or cancellation of a policy of automobile insurance under
section 65B.14, subdivision 2, or a policy of homeowner's insurance under section 65A.27,
subdivision 4
, or a policy of accident and sickness insurance under section 62A.01, or a policy
of comprehensive health insurance under chapter 62E, to refund to the insured all unearned
premiums paid on the policy covering the insured as of the time of the termination or cancellation
if the unearned premium is for a period of more than one month. The return of unearned premium
must be delivered to the insured within 30 days following receipt by the insurer of the insured's
request for cancellation.
(c) This subdivision does not apply to policies of insurance providing coverage only for
motorcycles or other seasonally rated or limited use vehicles where the rate is reduced to reflect
seasonal or limited use.
(d) For purposes of this section, a premium is unearned during the period of time the insurer
has not been exposed to any risk of loss. Except for premiums for motorcycle coverage or other
seasonally rated or limited use vehicles where the rate is reduced to reflect seasonal or limited use,
the unearned premium is determined by multiplying the premium by the fraction that results from
dividing the period of time from the date of termination to the date the next scheduled premium
is due by the period of time for which the premium was paid.
(e) The owner may cancel a policy referred to in this section at any time during the policy
period. This provision supersedes any inconsistent provision of law or any inconsistent policy
provision.
    Subd. 18. Improper business practices. (a) Improperly withholding, misappropriating, or
converting any money belonging to a policyholder, beneficiary, or other person when received in
the course of the insurance business; or (b) engaging in fraudulent, coercive, or dishonest practices
in connection with the insurance business, shall constitute an unfair method of competition
and an unfair and deceptive act or practice.
    Subd. 19. Support for underwriting standards. No life or health insurance company doing
business in this state shall engage in any selection or underwriting process unless the insurance
company establishes beforehand substantial data, actuarial projections, or claims experience
which support the underwriting standards used by the insurance company. The data, projections,
or claims experience used to support the selection or underwriting process is not limited to only
that of the company. The experience, projections, or data of other companies or a rate service
organization may be used as well.
    Subd. 20. Contact with government. An insurance company may not terminate or otherwise
penalize an insurance agent solely because the agent contacted any government department
or agency regarding a problem that the agent or an insured may be having with an insurance
company. For purposes of this section, "government department or agency" includes the executive,
legislative, and judicial branches of government as stated in article III of the Constitution.
    Subd. 21. Prohibited selection or underwriting practice. No insurance company doing
business in this state shall engage in any selection or underwriting practice that is arbitrary,
capricious, or unfairly discriminatory.
    Subd. 22. Limitations on health care providers. (a) No insurer providing benefits under
the Minnesota No-Fault Automobile Insurance Act or a plan authorized by sections 471.617 or
471.98 to 471.982 may limit the type of licensed health care provider who may provide treatment
for covered conditions under a policy so long as the services provided are within the scope of
licensure for the provider. The insurer may not exclude a specific method of treatment for a
covered condition if that exclusion has the effect of excluding a specific type of licensed health
care provider from treating a covered condition.
(b) This subdivision does not limit the right of an insurer to contract with individual members
of any type of licensed health care provider to the exclusion of other members of the group, nor
shall it limit the right to the insurer to exclude coverage for a type of treatment if the insurer can
show the treatment is not medically necessary or is not medically appropriate.
    Subd. 23. Discrimination in automobile insurance policies. (a) No insurer that offers an
automobile insurance policy in this state shall:
(1) use the employment status of the applicant as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason.
(b) No insurer that offers an automobile insurance policy in this state shall:
(1) use the applicant's status as a residential tenant, as the term is defined in section
504B.001, subdivision 12, as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason; or
(3) make any discrimination in offering or establishing rates, premiums, dividends, or
benefits of any kind, or by way of rebate, for the same reason.
(c) No insurer that offers an automobile insurance policy in this state shall:
(1) use the failure of the applicant to have an automobile policy in force during any period of
time before the application is made as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason.
Paragraph (c) does not apply if the applicant was required by law to maintain automobile
insurance coverage and failed to do so.
An insurer may require reasonable proof that the applicant did not fail to maintain this
coverage. The insurer is not required to accept the mere lack of a conviction or citation for failure
to maintain this coverage as proof of failure to maintain coverage. The insurer must provide the
applicant with information identifying the documentation that is required to establish reasonable
proof that the applicant did not fail to maintain the coverage.
(d) No insurer that offers an automobile insurance policy in this state shall use an applicant's
prior claims for benefits paid under section 65B.44 as an underwriting standard or guideline if the
applicant was 50 percent or less negligent in the accident or accidents causing the claims.
(e) No insurer shall refuse to issue any standard or preferred policy of motor vehicle
insurance or make any discrimination in the acceptance of risks, in rates, premiums, dividends,
or benefits of any kind, or by way of rebate:
(1) between persons of the same class, or
(2) on account of race, or
(3) on account of physical disability if the disability is compensated for by special training,
equipment, prosthetic device, corrective lenses, or medication and if the physically disabled
person:
(i) is licensed by the Department of Public Safety to operate a motor vehicle in this state, and
(ii) operates only vehicles that are equipped with auxiliary devices and equipment necessary
for safe and effective operation by the disabled person, or
(4) on account of marital dissolution.
    Subd. 24. Cancellations and nonrenewals. No insurer shall cancel or fail to renew an
individual life or individual health policy or an individual nonprofit health service plan subscriber
contract for nonpayment of premium unless it mails or delivers to the named insured, at the
address shown on the policy or subscriber contract at least 30 days before lapse, final notice of the
cancellation or nonrenewal and the effective date of the cancellation or nonrenewal.
If the named insured is not the policy or subscriber contract owner, the notice required
by this subdivision must be sent to the insured's last known address, if any, and to the owner's
last known address.
Proof of mailing of the notice of lapse for failure to pay the premium before the expiration of
the grace period is sufficient proof that notice required in this subdivision has been given.
This subdivision does not apply to a life or health insurance policy or contract upon which
premiums are paid at a monthly interval or less and that contains any grace period required by
statute for the payment of premiums during which time the insurance continues in force.
    Subd. 25. Use of statements of a minor. No statement of a minor or information obtained by
an insurer or a representative of an insurer from a minor may be used in any manner in regard to
a claim unless the parent or guardian of the minor has granted permission for the minor to be
interviewed or the minor's statement to be taken.
    Subd. 26. Loss experience. An insurer shall without cost to the insured provide an insured
with the loss or claims experience of that insured for the current policy period and for the two
policy periods preceding the current one for which the insurer has provided coverage, within
30 days of a request for the information by the policyholder. Claims experience data must
be provided to the insured in accordance with state and federal requirements regarding the
confidentiality of medical data. The insurer shall not be responsible for providing information
without cost more often than once in a 12-month period. The insurer is not required to provide the
information if the policy covers the employee of more than one employer and the information is
not maintained separately for each employer and not all employers request the data.
An insurer, health maintenance organization, or a third-party administrator may not request
more than three years of loss or claims experience as a condition of submitting an application or
providing coverage.
This subdivision only applies to group life policies and group health policies.
    Subd. 27. Solicitations and sales of insurance products to borrowers. (a) A loan officer, a
loan representative, or other person involved in taking or processing a loan may not solicit an
insurance product, except for credit life, credit disability, credit involuntary unemployment,
mortgage life, mortgage accidental death, or mortgage disability, and except for life insurance
when offered in lieu of credit life insurance, from the completion of the initial loan application,
as defined in the federal Equal Credit Opportunity Act, United States Code, title 15, sections
1691 to 1691f, and any regulations adopted under those sections, until after the closing of the
loan transaction.
(b) This subdivision applies only to loan transactions covered by the federal Truth-in-Lending
Act, United States Code, title 15, sections 1601 to 1666j, and any regulations adopted under
those sections.
(c) This subdivision does not apply to sales of title insurance, homeowner's insurance, a
package homeowner's-automobile insurance product, automobile insurance, or a similar insurance
product, required to perfect title to, or protect, property for which a security interest will be taken
if the product is required as a condition of the loan.
(d) Nothing in this subdivision prohibits the solicitation or sale of any insurance product
by means of mass communication.
    Subd. 28. Conversion fees prohibited. An issuer providing health coverage through
conversion policies, plans, or contracts shall not impose a fee or charge, other than the premium,
for issuing these policies, plans, or contracts.
    Subd. 29. HIV tests; crime victims and emergency medical service personnel. No insurer
regulated under chapter 61A, 62B, or 62S, or providing health, medical, hospitalization, long-term
care insurance, or accident and sickness insurance regulated under chapter 62A, or nonprofit
health service plan corporation regulated under chapter 62C, health maintenance organization
regulated under chapter 62D, or fraternal benefit society regulated under chapter 64B, may:
(1) use the results of a test to determine the presence of the human immunodeficiency virus
(HIV) antibody performed on an offender under section 611A.19 or performed on a crime victim
who was exposed to or had contact with an offender's bodily fluids during commission of a crime
that was reported to law enforcement officials, in order to make an underwriting decision, cancel,
fail to renew, or take any other action with respect to a policy, plan, certificate, or contract;
(2) use the results of a test to determine the presence of a bloodborne pathogen performed
on an individual according to sections 144.7401 to 144.7415, 241.33 to 241.342, or 246.71 to
246.722 in order to make an underwriting decision, cancel, fail to renew, or take any other action
with respect to a policy, plan, certificate, or contract; or
(3) ask an applicant for coverage or a person already covered whether the person has: (i) had
a test performed for the reason set forth in clause (1) or (2); or (ii) been the victim of an assault or
any other crime which involves bodily contact with the offender.
This subdivision does not affect tests conducted for purposes other than those described in
clause (1) or (2), including any test to determine the presence of a bloodborne pathogen if such test
was performed at the insurer's direction as part of the insurer's normal underwriting requirements.
    Subd. 29a. HIV tests; vaccine research. (a) No insurer regulated under chapter 61A or
62B, or providing health, medical, hospitalization, or accident and sickness insurance regulated
under chapter 62A, or nonprofit health services corporation regulated under chapter 62C, health
maintenance organization regulated under chapter 62D, or fraternal benefit society regulated
under chapter 64B, may make an underwriting decision, cancel, fail to renew, or take any other
action with respect to a policy, plan, certificate, or contract based solely on the fact of a person's
participation in a human immunodeficiency virus (HIV) vaccine clinical trial.
(b) If a test to determine the presence of the HIV antibody is performed at the insurer's
direction, as part of the insurer's normal underwriting requirements or on any other basis, and an
applicant or covered person is a participant or former participant in a vaccine clinical trial and
tests positive for the HIV antibody in the insurer-directed test, the person shall disclose the
person's status as a participant or former participant in a vaccine clinical trial and provide the
insurance company with certification from the trial sponsor of the person's participation or former
participation in the vaccine trial. Upon that notification, an insurer shall stay any adverse decision
or refrain from making an underwriting decision to cancel, fail to renew, or take any other action
based solely on the positive test result until the insurer obtains a confidential certificate from the
sponsor of the trial verifying the person's HIV status. If the confidential certificate indicates that
the person's HIV antibodies are a result of exposure to the vaccine, that the person does not have
the HIV virus, and that the person did not test positive for the HIV virus in any test administered
by the trial sponsor prior to entering the vaccine clinical trial, the insurer shall ignore the presence
of the HIV antibody in the insurer-directed test.
(c) This subdivision does not affect any tests to determine the presence of the HIV antibody,
except as provided under paragraph (b).
(d) This subdivision does not apply to persons who are confirmed as having the HIV virus.
(e) For purposes of this subdivision, "vaccine clinical trial" means a clinical trial conducted
by a sponsor under an investigational new drug application as provided by Code of Federal
Regulations, title 21, section 312. "Sponsor" means the hospital, clinic, or health care professional
that is conducting the vaccine clinical trial.
    Subd. 30. Records retention. An insurer shall retain copies of all underwriting documents,
policy forms, and applications for three years from the effective date of the policy. An insurer
shall retain all claim files and documentation related to a claim for three years from the date the
claim was paid or denied. This subdivision does not relieve the insurer of its obligation to produce
these documents to the department after the retention period has expired in connection with an
enforcement action or administrative proceeding against the insurer from whom the documents
are requested, if the insurer has retained the documents. Records required to be retained by
this section may be retained in paper, photograph, microprocess, magnetic, mechanical, or
electronic media, or by any process which accurately reproduces or forms a durable medium for
the reproduction of a record.
    Subd. 31. Reasonable, adequate, and not predatory premiums. Premiums charged by
a health plan company, as defined in section 62Q.01, shall be reasonable, adequate, and not
predatory in relation to the benefits, considering actuarial projection of the cost of providing or
paying for the covered health services, considering the costs of administration, and in relation
to the reserves and surplus required by law.
    Subd. 32. Unfair health risk avoidance. No insurer or health plan company may design a
network of providers, policies on access to providers, or marketing strategy in such a way as to
discourage enrollment by individuals or groups whose health care needs are perceived as likely
to be more expensive than the average. This subdivision does not prohibit underwriting and
rating practices that comply with Minnesota law.
    Subd. 33. Prohibition of inappropriate incentives. No insurer or health plan company may
give any financial incentive to a health care provider based solely on the number of services
denied or referrals not authorized by the provider. This subdivision does not prohibit capitation
or other compensation methods that serve to hold health care providers financially accountable
for the cost of caring for a patient population.
    Subd. 34. Suitability of insurance for customer. In recommending or issuing life,
endowment, individual accident and sickness, long-term care, annuity, life-endowment, or
Medicare supplement insurance to a customer, an insurer, either directly or through its agent, must
have reasonable grounds for believing that the recommendation is suitable for the customer.
In the case of group insurance marketed on a direct response basis without the use of direct
agent contact, this subdivision is satisfied if the insurer has reasonable grounds to believe that the
insurance offered is generally suitable for the group to whom the offer is made.
    Subd. 35. Determination of health plan policy limits. Any health plan that includes
a specific policy limit within its insurance policy, certificate, or subscriber agreement shall
calculate the policy limit by using the amount actually paid on behalf of the insured, subscriber, or
dependents for services covered under the policy, subscriber agreement, or certificate unless the
amount paid is greater than the billed charge.
    Subd. 36. Limitations on the use of credit information. (a) No insurer or group of affiliated
insurers may reject, cancel, or nonrenew a policy of private passenger motor vehicle insurance
as defined under section 65B.01 or a policy of homeowner's insurance as defined under section
65A.27, for any person in whole or in part on the basis of credit information, including a credit
reporting product known as a "credit score" or "insurance score," without consideration and
inclusion of any other applicable underwriting factor.
(b) If credit information, credit scoring, or insurance scoring is to be used in underwriting,
the insurer must disclose to the consumer that credit information will be obtained and used as
part of the insurance underwriting process.
(c) Insurance inquiries and non-consumer-initiated inquiries must not be used as part of the
credit scoring or insurance scoring process.
(d) If a credit score, insurance score, or other credit information relating to a consumer, with
respect to the types of insurance referred to in paragraph (a), is adversely impacted or cannot be
generated because of the absence of a credit history, the insurer must exclude the use of credit as a
factor in the decision to reject, cancel, or nonrenew.
(e) Insurers must upon the request of a policyholder reevaluate the policyholder's score. Any
change in premium resulting from the reevaluation must be effective upon the renewal of the
policy. An insurer is not required to reevaluate a policyholder's score pursuant to this paragraph
more than twice in any given calendar year.
(f) Insurers must upon request of the applicant or policyholder provide reasonable
underwriting exceptions based upon prior credit histories for persons whose credit information
is unduly influenced by expenses related to a catastrophic injury or illness, temporary loss of
employment, or the death of an immediate family member. The insurer may require reasonable
documentation of these events prior to granting an exception.
(g) A credit scoring or insurance scoring methodology must not be used by an insurer if the
credit scoring or insurance scoring methodology incorporates the gender, race, nationality, or
religion of an insured or applicant.
(h) Insurers that employ a credit scoring or insurance scoring system in underwriting of
coverage described in paragraph (a) must have on file with the commissioner:
(1) the insurer's credit scoring or insurance scoring methodology; and
(2) information that supports the insurer's use of a credit score or insurance score as an
underwriting criterion.
(i) Insurers described in paragraph (g) shall file the required information with the
commissioner within 120 days of August 1, 2002, or prior to implementation of a credit scoring
or insurance scoring system by the insurer, if that date is later.
(j) Information provided by, or on behalf of, an insurer to the commissioner under this
subdivision is trade secret information under section 13.37.
    Subd. 37. Electronic transmission of required information. A health carrier, as defined in
section 62A.011, subdivision 2, is not in violation of this chapter for electronically transmitting or
electronically making available information otherwise required to be delivered in writing under
chapters 62A to 62Q and 72A to an enrollee as defined in section 62Q.01, subdivision 2a, and
with the requirements of those chapters if the following conditions are met:
(1) the health carrier informs the enrollee that electronic transmission or access is available
and, at the discretion of the health carrier, the enrollee is given one of the following options:
(i) electronic transmission or access will occur only if the enrollee affirmatively requests to
the health carrier that the required information be electronically transmitted or available and a
record of that request is retained by the health carrier; or
(ii) electronic transmission or access will automatically occur if the enrollee has not
opted out of that manner of transmission by request to the health carrier and requested that the
information be provided in writing. If the enrollee opts out of electronic transmission, a record of
that request must be retained by the health carrier;
(2) the enrollee is allowed to withdraw the request at any time;
(3) if the information transmitted electronically contains individually identifiable data, it must
be transmitted to a secured mailbox. If the information made available electronically contains
individually identifiable data, it must be made available at a password-protected secured Web site;
(4) the enrollee is provided a customer service number on the enrollee's member card that
may be called to request a written copy of the document; and
(5) the electronic transmission or electronic availability meets all other requirements of
this chapter including, but not limited to, size of the typeface and any required time frames
for distribution.
    Subd. 38. Unfair claims service; service contracts. No person shall, in connection with a
service contract regulated under chapter 59B:
(1) attempt to settle claims on the basis of an application or any other material document
which was altered without notice to, or knowledge or consent of, the service contract holder;
(2) make a material misrepresentation to the service contract holder for the purpose and
with the intent of effecting settlement of the claims, loss, or damage under the contract on less
favorable terms than those provided in, and contemplated by, the contract; or
(3) commit or perform with such frequency as to indicate a general business practice any
of the following practices:
(i) failure to properly investigate claims;
(ii) misrepresentation of pertinent facts or contract provisions relating to coverages at issue;
(iii) failure to acknowledge and act upon communications within a reasonable time with
respect to claims;
(iv) denial of claims without conducting reasonable investigations based upon available
information;
(v) failure to affirm or deny coverage of claims upon written request of the service contract
holder within a reasonable time after proof-of-loss statements have been completed; or
(vi) failure to timely provide a reasonable explanation to the service contract holder of the
basis in the contract in relation to the facts or applicable law for denial of a claim or for the
offer of a compromise settlement.
    Subd. 39. Discounted payments by health care providers; effect on use of usual and
customary payments. An insurer, including, but not limited to, a health plan company as defined
in section 62Q.01, subdivision 4; a reparation obligor as defined in section 65B.43, subdivision 9;
and a workers' compensation insurer shall not consider in determining a health care provider's
usual and customary payment, standard payment, or allowable payment used as a basis for
determining the provider's payment by the insurer, the following discounted payment situations:
(1) care provided to relatives of the provider;
(2) care for which a discount or free care is given in hardship situations; and
(3) care for which a discount is given in exchange for cash payment.
For purposes of this subdivision, "health care provider" and "provider" have the meaning
given in section 62J.03, subdivision 8.
History: 1967 c 395 art 12 s 20; 1973 c 474 s 1; 1975 c 139 s 1; 1979 c 207 s 6; 1Sp1981 c 4
art 2 s 7; 1983 c 285 s 1; 1984 c 555 s 1-3; 1984 c 592 s 73; 1Sp1985 c 10 s 71; 1986 c 444; 1987
c 113 s 1; 1987 c 337 s 116-119; 1989 c 170 s 3; 1989 c 260 s 17-20; 1989 c 316 s 1; 1989 c 330 s
27-32; 1990 c 467 s 1; 1991 c 188 s 1; 1992 c 524 s 1; 1992 c 564 art 1 s 46,54; art 4 s 14; 1992
c 569 s 6; 1993 c 343 s 26; 1994 c 475 s 1; 1994 c 485 s 54,55,65; 1994 c 625 art 3 s 20; 1995 c
186 s 17; 1995 c 234 art 8 s 21,22; 1995 c 258 s 52,53; 1996 c 278 s 1; 1996 c 433 s 1; 1996 c
446 art 1 s 61-65; 1997 c 77 s 3; 1999 c 121 s 1; 1999 c 177 s 70; 1999 c 199 art 2 s 1; 2000 c
422 s 3; 2000 c 483 s 21,22; 2001 c 28 s 1; 2002 c 357 s 1; 2004 c 268 s 11; 2004 c 288 art 7 s 4;
2005 c 56 s 1; 2005 c 132 s 22,23; 1Sp2005 c 1 art 5 s 12; 2006 c 255 s 59; 1Sp2007 c 2 art 2 s 3