2007 Minnesota Statutes

79A.26 COMMERCIAL SELF-INSURANCE GROUP SECURITY FUND.
    Subdivision 1. Creation. The commercial self-insurance group security fund is established as
a nonprofit corporation pursuant to the Minnesota Nonprofit Corporation Act, sections 317A.001
to 317A.909. If any provision of the Minnesota Nonprofit Corporation Act conflicts with any
provision of this chapter, the provisions of this chapter apply. Each commercial self-insurance
group that elects to be subject to the terms of sections 79A.19 to 79A.32 rather than sections
79A.01 to 79A.18 shall participate in the commercial self-insurance group security fund. This
participation shall be a condition of maintaining its certificate to self-insure.
    Subd. 2. Board of trustees. The commercial security fund shall be governed by a
board consisting of a minimum of three and maximum of five trustees. The trustees shall be
representatives of commercial self-insurance groups who shall be elected by the participants of
the commercial security fund, each group having one vote. The trustees initially elected by the
participants shall serve staggered terms of either two or three years. Thereafter, trustees shall be
elected to three-year terms and shall serve until their successors are elected and assume office
pursuant to the bylaws of the commercial security fund. Two additional trustees shall be appointed
by the commissioner. Initially, one of these trustees shall serve a two-year term. Thereafter, the
trustees shall be appointed to four-year terms, and shall serve until their successors are appointed
and assume office according to the bylaws of the commercial security fund. In addition to the
trustees elected by the participants or appointed by the commissioner, the commissioner of labor
and industry or the commissioner's designee shall be an ex officio, nonvoting member of the
board of trustees. A member of the board of trustees may designate another person to act in the
member's place as though the member were acting and the designee's actions shall be deemed
those of the member.
    Subd. 3. Bylaws. The commercial security fund shall establish bylaws and a plan of
operation, subject to the prior approval of the commissioner, necessary to the purposes of this
chapter and to carry out the responsibilities of the commercial security fund. The commercial
security fund may carry out its responsibilities directly or by contract, and may purchase
services and insurance and borrow funds it deems necessary for the protection of the commercial
self-insurance group participants and their employees.
    Subd. 4. Confidential information. The commercial security fund may receive private data
concerning the financial condition of commercial self-insurance groups whose liabilities to pay
compensation have become its responsibility and shall adopt bylaws to prevent dissemination
of that information.
    Subd. 5. Employees. Commercial security fund employees are not state employees and are
not subject to any state civil service regulations.
    Subd. 6. Assumption of obligations. Upon order of the commissioner under section 79A.25,
subdivision 3 , the commercial security fund shall assume the workers' compensation obligations
of an insolvent commercial self-insurance group. The commissioner shall further order the
commercial self-insurance group security fund to commence payment of these obligations within
14 days of the receipt of this notification and order.
    Subd. 7. Act or omissions; penalties. Notwithstanding subdivision 6, the commercial
security fund shall not be liable for the payment of any penalties assessed for any act or omission
on the part of any person other than the commercial security fund or its appointed administrator,
including, but not limited to, the penalties provided in chapter 176 unless the commercial security
fund or its appointed administrator would be subject to penalties under chapter 176 as the result of
the actions of the commercial security fund or its administrator.
    Subd. 8. Party in interest. The commercial security fund shall be a party in interest in all
proceedings involving compensation claims against an insolvent commercial self-insurance group
whose compensation obligations have been paid or assumed by the commercial security fund. The
commercial security fund shall have the same rights and defenses as the insolvent commercial
self-insurance group, including, but not limited to, all of the following:
(1) to appear, defend, and appeal claims;
(2) to receive notice of, investigate, adjust, compromise, settle, and pay claims; and
(3) to investigate, handle, and deny claims.
    Subd. 9. Payments to commercial security fund. Notwithstanding sections 79A.19 to
79A.32 or chapter 176 to the contrary, in the event that the commercial self-insurance group
security fund assumes the obligations of any bankrupt or insolvent commercial self-insurance
group pursuant to this section, then the proceeds of any surety bond, Workers' Compensation
Reinsurance Association, specific excess insurance or aggregate excess insurance policy, and any
special compensation fund payment or supplementary benefit reimbursements shall be paid to the
commercial self-insurance group security fund instead of the bankrupt or insolvent commercial
self-insurance group or its successor in interest. No special compensation fund reimbursements
shall be made to the commercial security fund unless the special compensation fund assessments
under section 176.129 are paid and the required reports are made to the special compensation fund.
    Subd. 10. Insolvent commercial self-insurance group. The commercial security fund
shall have the right and obligation to obtain reimbursement from an insolvent commercial
self-insurance group up to the amount of the commercial self-insurance group's workers'
compensation obligations paid and assumed by the commercial security fund, including
reasonable administrative and legal costs. This right includes, but is not limited to, a right to claim
for wages and other necessities of life advanced to claimants as subrogee of the claimants in any
action to collect against the commercial self-insurance group as debtor.
    Subd. 11. Security deposits. The commercial security fund shall have the right and
obligation to obtain from the security deposit of an insolvent commercial self-insurance group the
amount of the commercial self-insurance group's compensation obligations, including reasonable
administrative and legal costs, paid or assumed by the commercial security fund. Reimbursement
of administrative costs, including legal costs, shall be subject to approval by a majority of the
commercial security fund's voting trustees. The commercial security fund shall be a party in
interest in any action to obtain the security deposit for the payment of compensation obligations
of an insolvent commercial self-insurance group.
    Subd. 12. Legal actions. The commercial security fund shall have the right to bring an
action against any person or entity to recover compensation paid and liability assumed by the
commercial security fund, including, but not limited to, any excess insurance carrier of the
insolvent commercial self-insurance group and any person or entity whose negligence or breach
of an obligation contributed to any underestimation of the commercial self-insurance group's
accrued liability as reported to the commissioner.
    Subd. 13. Party in interest. The commercial security fund may be a party in interest in any
action brought by any other person seeking damages resulting from the failure of an insolvent
commercial self-insurance group to pay workers' compensation required under this subdivision.
    Subd. 14. Assets maintained. The commercial security fund shall maintain cash, readily
marketable securities, or other assets, or a line of credit, approved by the commissioner, sufficient
to immediately continue the payment of the compensation obligations of an insolvent commercial
self-insurance group pending receipt of the security deposit, surety bond proceeds, irrevocable
letter of credit, or, if necessary, assessment of the participants. The commissioner may establish
the minimum amount to be maintained by, or immediately available to, the commercial security
fund for this purpose.
    Subd. 15. Assessment. The commercial security fund may assess each of its participants a
pro rata share of the funding necessary to carry out its obligation and the purposes of sections
79A.19 to 79A.32. Total annual assessments in any calendar year shall be a percentage of the
workers' compensation benefits paid under sections 176.101 and 176.111 during the previous
calendar year. The annual assessment calculation shall not include supplementary benefits paid
which will be reimbursed by the special compensation fund. Funds obtained by assessments under
this subdivision may only be used for the purposes of sections 79A.19 to 79A.32. The trustees
shall certify to the commissioner the collection and receipt of all money from assessments,
noting any delinquencies. The trustees shall take any action deemed appropriate to collect any
delinquent assessments.
    Subd. 16. Audit of fund. The trustees shall annually contract for an independent certified
audit of the financial activities of the fund. An annual report on the financial status of the
commercial self-insurance group security fund shall be submitted to the commissioner and to
each commercial group participant.
History: 1995 c 231 art 2 s 35; 1998 c 339 s 10