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79A.06 THIRD-PARTY ADMINISTRATOR.
    Subdivision 1. Certificate to self-insure. No person, firm, or corporation, other than an
insurer admitted to transact workers' compensation insurance in this state, shall contract to
administer claims of self-insured employers as a third-party administrator unless qualified to do
so pursuant to section 60A.23, subdivision 8.
    Subd. 2. Local office. A third-party administrator who contracts to administer claims of a
self-insured employer shall maintain an office in the state of Minnesota and shall be subject
to regulation under this chapter and chapters 60A and 72A with respect to the adjustment,
administration, and management of workers' compensation claims for any self-insured employer.
    Subd. 3. Annual estimate of liability. A third-party administrator retained by a self-insured
employer to administer the employer's workers' compensation claims shall estimate the total
accrued liability of the employer for the payment of compensation for the employer's annual
report to the commissioner and shall make the estimate both in good faith and with the exercise of
a reasonable degree of care. The use of a third-party administrator does not discharge or alter the
employer's responsibilities with respect to the report.
    Subd. 4. Failure to submit reports or information; penalty. Failure to submit reports to
the commissioner as required by this chapter may result in the assessment of a penalty which
shall not exceed $3,000 for each month or fraction thereof the report is past due. Failure to
submit reports required by statute within 60 days from the due date without written consent of
the commissioner shall result in the revocation of the certificate to self-insure. Penalties shall be
deposited in the self-insurers' security fund.
    Subd. 5. Private employers who have ceased to be self-insured. (a) Private employers who
have ceased to be private self-insurers shall discharge their continuing obligations to secure the
payment of compensation which is accrued during the period of self-insurance, for purposes of
Laws 1988, chapter 674, sections 1 to 21, by compliance with all of the following obligations of
current certificate holders:
(1) Filing reports with the commissioner to carry out the requirements of this chapter;
(2) Depositing and maintaining a security deposit for accrued liability for the payment of any
compensation which may become due, pursuant to chapter 176. However, if a private employer
who has ceased to be a private self-insurer purchases an insurance policy from an insurer
authorized to transact workers' compensation insurance in this state which provides coverage of
all claims for compensation arising out of injuries occurring during the entire period the employer
was self-insured, whether or not reported during that period, the policy will:
(i) discharge the obligation of the employer to maintain a security deposit for the payment of
the claims covered under the policy;
(ii) discharge any obligation which the self-insurers' security fund has or may have for
payment of all claims for compensation arising out of injuries occurring during the period the
employer was self-insured, whether or not reported during that period; and
(iii) discharge the obligations of the employer to pay any future assessments to the
self-insurers' security fund.
A private employer who has ceased to be a private self-insurer may instead buy an insurance
policy described above, except that it covers only a portion of the period of time during which the
private employer was self-insured; purchase of such a policy discharges any obligation that the
self-insurers' security fund has or may have for payment of all claims for compensation arising
out of injuries occurring during the period for which the policy provides coverage, whether
or not reported during that period.
A policy described in this clause may not be issued by an insurer unless it has previously
been approved as to form and substance by the commissioner; and
(3) Paying within 30 days all assessments of which notice is sent by the security fund, for a
period of seven years from the last day its certificate of self-insurance was in effect. Thereafter,
the private employer who has ceased to be a private self-insurer may either: (i) continue to
pay within 30 days all assessments of which notice is sent by the security fund until it has no
incurred liabilities for the payment of compensation arising out of injuries during the period of
self-insurance; or (ii) pay the security fund a cash payment equal to four percent of the net present
value of all remaining incurred liabilities for the payment of compensation under sections 176.101
and 176.111 as certified by a member of the casualty actuarial society. Assessments shall be based
on the benefits paid by the employer during the calendar year immediately preceding the calendar
year in which the employer's right to self-insure is terminated or withdrawn.
(b) With respect to a self-insurer who terminates its self-insurance authority after April
1, 1998, that member shall obtain and file with the commissioner an actuarial opinion of its
outstanding liabilities as determined by an associate or fellow of the Casualty Actuarial Society
within 120 days of the date of its termination. If the actuarial opinion is not timely filed, the
self-insurers' security fund may, at its discretion, engage the services of an actuary for this
purpose. The expense of this actuarial opinion must be assessed against and be the obligation of
the self-insurer. The commissioner may issue a certificate of default against the self-insurer for
failure to pay this assessment to the self-insurers' security fund as provided by section 79A.04,
subdivision 9
. The opinion must separate liability for indemnity benefits from liability from
medical benefits, and must discount each up to four percent per annum to net present value. Within
30 days after notification of approval of the actuarial opinion by the commissioner, the member
shall pay to the security fund an amount equal to 120 percent of that discounted outstanding
indemnity liability, multiplied by the greater of the average annualized assessment rate since
inception of the security fund or the annual rate at the time of the most recent assessment before
termination. If the payment is not made within 30 days of the notification, interest on it at the
rate prescribed by section 549.09 must be paid by the former member to the security fund until
the principal amount is paid in full.
(c) A former member who terminated its self-insurance authority before April 1, 1998, who
has paid assessments to the self-insurers' security fund for seven years, and whose annualized
assessment is $500 or less, may buy out of its outstanding liabilities to the self-insurers' security
fund by an amount calculated as follows: 1.35 multiplied by the indemnity case reserves at the
time of the calculation, multiplied by the then current self-insurers' security fund annualized
assessment rate.
(d) A former member who terminated its self-insurance authority before April 1, 1998, and
who is paying assessments within the first seven years after ceasing to be self-insured under
paragraph (a), clause (3), may elect to buy out its outstanding liabilities to the self-insurers'
security fund by obtaining and filing with the commissioner an actuarial opinion of its outstanding
liabilities as determined by an associate or fellow of the Casualty Actuarial Society. The opinion
must separate liability for indemnity benefits from liability for medical benefits, and must discount
each up to four percent per annum to net present value. Within 30 days after notification of
approval of the actuarial opinion by the commissioner, the member shall pay to the security fund
an amount equal to 120 percent of that discounted outstanding indemnity liability, multiplied by
the greater of the average annualized assessment rate since inception of the security fund or the
annual rate at the time of the most recent assessment.
(e) A former member who has paid the security fund according to paragraphs (b) to (d) and
subsequently receives authority from the commissioner to again self-insure shall be assessed
under section 79A.12, subdivision 2, only on indemnity benefits paid on injuries that occurred
after the former member received authority to self-insure again; provided that the member
furnishes verified data regarding those benefits to the security fund.
(f) In addition to proceedings to establish liabilities and penalties otherwise provided, a
failure to comply may be the subject of a proceeding before the commissioner. An appeal from the
commissioner's determination may be taken pursuant to the contested case procedures of chapter
14 within 30 days of the commissioner's written determination.
Any current or past member of the self-insurers' security fund is subject to service of process
on any claim arising out of chapter 176 or this chapter in the manner provided by section 5.25, or
as otherwise provided by law. The issuance of a certificate to self-insure to the private self-insured
employer shall be deemed to be the agreement that any process which is served in accordance
with this section shall be of the same legal force and effect as if served personally within this state.
    Subd. 6. Private employers who are self-insured. Private employers who are currently
self-insurers may also purchase a policy described in subdivision 5, paragraph (a), clause (2), with
the same effect as specified in that clause for the period covered by the policy.
History: 1988 c 674 s 6; 1992 c 510 art 5 s 8; 1995 c 128 art 1 s 3; 1998 c 339 s 2; 1999 c
86 art 1 s 17; 1999 c 177 s 82,83; 2005 c 132 s 32

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Revisor of Statutes