Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                        CHAPTER 330-H.F.No. 1155 
           An act relating to insurance; life and health; 
          regulating policy and contract provisions, coverages, 
          certain cost-containment mechanisms, cancellations and 
          nonrenewals, trade and marketing practices, and 
          remedies in these and other lines; making technical 
          changes; amending Minnesota Statutes 1988, sections 
          45.025, subdivision 8; 45.027, subdivision 7; 45.028, 
          subdivision 1; 61A.011, subdivision 1; 61A.09, by 
          adding a subdivision; 61A.092, subdivision 3; 61B.03, 
          subdivision 6; 62A.01; 62A.041; 62A.08; 62A.09; 
          62A.15, subdivisions 3a and 4; 62A.152, subdivisions 2 
          and 3; 62A.17, subdivision 2; 62A.46, by adding a 
          subdivision; 62A.48, subdivision 1; 62B.01; 62B.04, 
          subdivision 1; 62D.12, by adding a subdivision; 
          62E.06, subdivision 1; 65B.525, subdivision 1; 72A.20, 
          subdivision 15, and by adding subdivisions; and 
          149.11; proposing coding for new law in Minnesota 
          Statutes, chapters 62A; 65A; and 72A; repealing 
          Minnesota Statutes 1988, sections 60A.23, subdivision 
          7; and 72A.13, subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1988, section 45.025, 
subdivision 8, is amended to read:  
    Subd. 8.  [CIVIL REMEDY.] A person violating this section 
is liable to a purchaser of the investment product.  The 
purchaser may sue either in equity for rescission upon tender of 
the investment product or at law for damages if the purchaser no 
longer owns the investment product.  In an action for 
rescission, the purchaser is entitled to recover the 
consideration paid for the investment product, together with 
interest at the legal rate, costs, and reasonable attorney fees, 
less the amount of any income received on the investment 
product.  In an action at law, damages are the consideration 
paid for the investment product together with interest at the 
legal rate to the date of disposition, costs, and reasonable 
attorney fees, less the value of the investment product at the 
date of disposition.  Subject to the exceptions in subdivision 
3, if the advertisement advertises an investment product whose 
interest rate varies according to the earnings or income of the 
issuer and if the advertisement projects the accumulated 
earnings for a period longer than one year, the issuer and agent 
are jointly and severally liable to the purchaser for the 
difference in the principal and interest received by the 
purchaser and the principal and interest as projected in the 
advertisement.  
    Sec. 2.  Minnesota Statutes 1988, section 45.027, 
subdivision 7, is amended to read:  
    Subd. 7.  [ACTIONS AGAINST LICENSEES.] In addition to any 
other actions authorized by this section, the commissioner may, 
by order, deny, suspend, or revoke the authority or license of a 
person subject to chapters 45 to 83, 155A, 309, or 332, or 
censure that person if the commissioner finds that: 
    (1) the order is in the public interest; or and 
    (2) the person has violated chapters 45 to 83, 155A, 309, 
or 332. 
    Sec. 3.  Minnesota Statutes 1988, section 45.028, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENT.] (a) When a person, including 
any nonresident of this state, engages in conduct prohibited or 
made actionable by chapters 45 to 83, 155A, 309, and 332, or any 
rule or order under those chapters, and the person has not filed 
a consent to service of process under chapters 45 to 83, 155A, 
309, and 332, that conduct is equivalent to an appointment of 
the commissioner as the person's attorney to receive service of 
process in any noncriminal suit, action, or proceeding against 
the person which is based on that conduct and is brought under 
chapters 45 to 83, 155A, 309, and 332, or any rule or order 
under those chapters.  
    (b) Subdivision 2 also applies in all other cases under 
chapters 45 to 83, 155A, 309, and 332, or any rule or order 
under those chapters, in which a person, including a nonresident 
of this state, has filed a consent to service of process.  This 
paragraph supersedes any inconsistent provision of law.  
    Sec. 4.  Minnesota Statutes 1988, section 61A.011, 
subdivision 1, is amended to read: 
    Subdivision 1.  Notwithstanding any other provision of law 
when any insurer, including a fraternal benefit society, 
admitted to transact life insurance in this state pays the 
proceeds of or payments under any policy of life insurance, 
individual or group, such insurer shall pay interest at a rate 
not less than the then current rate of interest on death 
proceeds left on deposit with the insurer, computed from the 
insured's death until the date of payment, on any such proceeds 
or payments payable to a beneficiary residing in this state, or 
to a beneficiary under a policy issued in this state or to a 
beneficiary under a policy insuring a person resident in this 
state at the time of death.  If the insurer has no established 
current rate of interest for death proceeds left on deposit with 
the insurer, then the rate of interest to be paid under this 
subdivision shall be the rate of interest charged by the insurer 
to policy holders for loans under the insurer's policies. 
    Sec. 5.  Minnesota Statutes 1988, section 61A.09, is 
amended by adding a subdivision to read:  
    Subd. 3.  Group life insurance policies may be issued to 
cover groups of not less than ten debtors of a creditor written 
under a master policy issued to a creditor to insure its debtors 
in connection with real estate mortgage loans, in an amount not 
to exceed the actual or scheduled amount of their indebtedness.  
Each application for group mortgage insurance offered prior to 
or at the time of loan closing shall contain a clear and 
conspicuous notice that the insurance is optional and is not a 
condition for obtaining the loan.  Each person insured under a 
group insurance policy issued under this subdivision shall be 
furnished a certificate of insurance which conforms to the 
requirements of section 62B.06, subdivision 2, and which 
includes a conversion privilege permitting an insured debtor to 
convert, without evidence of insurability, to an individual 
policy of decreasing term insurance within 30 days of the date 
the insured debtor's group coverage is terminated for any reason 
other than the nonpayment of premiums.  The initial amount of 
coverage under the individual policy shall be an amount equal to 
the amount of coverage terminated under the group policy and 
shall decrease over a term that corresponds with the scheduled 
term of the insured debtor's mortgage loan.  The premium for the 
individual policy shall be the same premium the insured debtor 
was paying under the group policy.  
    Sec. 6.  Minnesota Statutes 1988, section 61A.092, 
subdivision 3, is amended to read:  
    Subd. 3.  [NOTICE OF OPTIONS.] Upon termination of or 
layoff from employment of a covered employee, the employer shall 
inform the employee of: 
    (1) the employee's right to elect to continue the coverage; 
    (2) the amount the employee must pay monthly to the 
employer to retain the coverage; 
    (3) the manner in which and the office of the employer to 
which the payment to the employer must be made; and 
    (4) the time by which the payments to the employer must be 
made to retain coverage. 
    The employee has 60 days within which to elect coverage.  
The 60-day period shall begin to run on the date coverage would 
otherwise terminate or on the date upon which notice of the 
right to coverage is received, whichever is later. 
    Notice must be in writing and sent by first class certified 
mail to the employee's last known address which the employee has 
provided to the employer. 
    A notice in substantially the following form is 
sufficient:  "As a terminated or laid off employee, the law 
authorizes you to maintain your group insurance benefits for a 
period of up to 18 months.  To do so, you must notify your 
former employer within 60 days of your receipt of this notice 
that you intend to retain this coverage and must make a monthly 
payment of $............ at ............. by the ............. 
of each month." 
    Sec. 7.  Minnesota Statutes 1988, section 61B.03, 
subdivision 6, is amended to read: 
    Subd. 6.  [COVERED POLICY.] "Covered policy" means any 
policy or contract owned by a Minnesota resident to which 
sections 61B.01 to 61B.16 apply, as provided in section 61B.02. 
    Sec. 8.  Minnesota Statutes 1988, section 62A.01, is 
amended to read: 
    62A.01 [POLICY OF ACCIDENT AND SICKNESS INSURANCE DEFINED.] 
    Subdivision 1.  [DEFINITION.] The term "policy of accident 
and sickness insurance" as used herein includes any policy 
covering the kind of insurance described in section 60A.06, 
subdivision 1, clause (5)(a).  
    Subd. 2.  [EQUAL PROTECTION.] A certificate of insurance or 
similar evidence of coverage issued to a Minnesota resident 
shall provide coverage for all benefits required to be covered 
in group policies in Minnesota by chapters 62A and 62E. 
    This subdivision supersedes any inconsistent provision of 
chapters 62A and 62E. 
    A policy of accident and sickness insurance that is issued 
or delivered in this state and that covers a person residing in 
another state may provide coverage or contain provisions that 
are less favorable to that person than required by chapters 62A 
and 62E.  Less favorable coverages or provisions must meet the 
requirements that the state in which the person resides would 
have required had the policy been issued or delivered in that 
state. 
    Subd. 3.  [EXCLUSIONS.] Subdivision 2 does not apply to 
certificates issued in regard to a master policy issued outside 
the state of Minnesota if all of the following are true:  
    (1) the policyholder or certificate holder exists primarily 
for purposes other than to obtain insurance; 
    (2) the policyholder or certificate holder is not a 
Minnesota corporation and does not have its principal office in 
Minnesota; 
    (3) the policy or certificate covers fewer than 25 
employees who are residents of Minnesota and the Minnesota 
employees represent less than 25 percent of all covered 
employees; and 
     (4) on request of the commissioner, the issuer files with 
the commissioner a copy of the policy and a copy of each form of 
certificate.  
     This subdivision applies to employers who are not 
corporations if they are policyholders or certificate holders 
providing coverage to employees through the certificate or 
policy.  
    Subd. 4.  [APPLICATION OF OTHER LAWS.] Section 60A.08, 
subdivision 4, shall not be construed as requiring a certificate 
of insurance or similar evidence of insurance that meets the 
conditions of subdivision 3 to comply with chapter 62A or 62E. 
    Sec. 9.  Minnesota Statutes 1988, section 62A.041, is 
amended to read: 
    62A.041 [MATERNITY BENEFITS.] 
    Subdivision 1.  [DISCRIMINATION PROHIBITED AGAINST 
UNMARRIED WOMEN.] Each group policy of accident and health 
insurance and each group health maintenance contract shall 
provide the same coverage for maternity benefits to unmarried 
women and minor female dependents that it provides to married 
women including the wives of employees choosing dependent family 
coverage.  If an unmarried insured or an unmarried enrollee is a 
parent of a dependent child, each group policy and each group 
contract shall provide the same coverage for that child as that 
provided for the child of a married employee choosing dependent 
family coverage if the insured or the enrollee elects dependent 
family coverage. 
    Each individual policy of accident and health insurance and 
each individual health maintenance contract shall provide the 
same coverage for maternity benefits to unmarried women and 
minor female dependents as that provided for married women.  If 
an unmarried insured or an unmarried enrollee is a parent of a 
dependent child, each individual policy and each individual 
contract shall also provide the same coverage for that child as 
that provided for the child of a married insured or a married 
enrollee choosing dependent family coverage if the insured or 
the enrollee elects dependent family coverage. 
    Subd. 2.  [LIMITATION ON COVERAGE PROHIBITED.] Each group 
policy of accident and health insurance, except for policies 
which only provide coverage for specified diseases, or each 
group subscriber contract of accident and health insurance or 
health maintenance contract, issued or renewed after August 1, 
1987, shall include maternity benefits in the same manner as any 
other illness covered under the policy or contract.  
    Subd. 3.  [ABORTION.] For the purposes of this section, the 
term "maternity benefits" shall not include elective, induced 
abortion whether performed in a hospital, other abortion 
facility, or the office of a physician. 
    This section applies to policies and contracts issued, 
delivered, or renewed after August 1, 1985, that cover Minnesota 
residents. 
    Sec. 10.  [62A.049] [LIMITATION ON PREAUTHORIZATIONS.] 
    No policy of accident and sickness insurance or group 
subscriber contract regulated under chapter 62C issued or 
renewed in this state may contain a provision that makes an 
insured person ineligible to receive full benefits because of 
the insured's failure to obtain preauthorization, if that 
failure occurs because of the need for emergency confinement or 
emergency treatment.  The insured or an authorized 
representative of the insured shall notify the insurer as soon 
after the beginning of emergency confinement or emergency 
treatment as reasonably possible.  However, to the extent that 
the insurer suffers actual prejudice caused by the failure to 
obtain preauthorization, the insured may be denied all or part 
of the insured's benefits.  This provision does not apply to 
admissions for treatment of chemical dependency and nervous and 
mental disorders.  
    Sec. 11.  Minnesota Statutes 1988, section 62A.08, is 
amended to read: 
    62A.08 [COVERAGE OF POLICY, CONTINUANCE IN FORCE.] 
    If any such policy contains a provision establishing, as an 
age limit or otherwise, a date after which the coverage provided 
by the policy will not be effective, and if such date falls 
within a period for which premium is accepted by the insurer or 
if the insurer accepts a premium after such date, the coverage 
provided by the policy will continue in force subject to any 
right of cancellation until the end of the period for which 
premium has been accepted.  In the event the age of the insured 
has been misstated and if, according to the correct age of the 
insured, the coverage provided by the policy would not have 
become effective, or would have ceased prior to the acceptance 
of such premium or premiums, then the liability of the insurer 
shall be limited to the refund, upon request, of all premiums 
paid for the period not covered by the policy. the policy would 
not have been issued, the insurer may, within 90 days of 
discovering the misstatement, limit its liability to a refund of 
all premiums paid.  In all other instances the insurer may 
either adjust the premium to reflect the actual age of the 
insured or adjust the benefits to reflect the actual age and the 
premium.  
    Sec. 12.  Minnesota Statutes 1988, section 62A.09, is 
amended to read:  
    62A.09 [LIMITATION.] 
    Nothing in sections 62A.01 to, 62A.02, 62A.03, 62A.04, 
62A.05, 62A.06, 62A.07, and 62A.08 shall apply to or affect: 
    (1) any policy of workers' compensation insurance or any 
policy of casualty or fire and allied lines insurance with or 
without supplementary coverage therein; or 
    (2) any policy or contract of reinsurance; or 
    (3) any blanket or group policy of insurance, except when 
specifically referred to; or 
    (4) life insurance, endowment or annuity contracts, or 
contracts supplemental thereto which contain only such 
provisions relating to accident and sickness insurance as (a) 
provide additional benefits in case of death or dismemberment or 
loss of sight by accident, or as (b) operate to safeguard such 
contracts against lapse or to give a special surrender value or 
special benefit or an annuity in the event that the insured or 
annuitant shall become totally and permanently disabled, as 
defined by the contract or supplemental contract. 
     Sec. 13.  Minnesota Statutes 1988, section 62A.15, 
subdivision 3a, is amended to read: 
    Subd. 3a.  [NURSING SERVICES.] All benefits provided by a 
policy or contract referred to in subdivision 1, relating to 
expenses incurred for medical treatment or services of a duly 
licensed physician must include services provided by a 
registered nurse who is licensed pursuant to section 148.171 and 
who is certified by the profession to engage in advanced nursing 
practice.  "Advanced nursing practice" means the performance of 
health services by professional nurses who have gained 
additional knowledge and skills through an organized program of 
study and clinical experience preparing nurses for advanced 
practice roles as nurse anesthetists, nurse midwives, nurse 
practitioners, or clinical specialists in psychiatric or mental 
health nursing.  The program of study must be beyond the 
education required for registered nurse licensure and must meet 
criteria established by the professional nursing organization 
having authority to certify the registered nurse in advanced 
nursing practice, and appear on a list established and 
maintained by the board of nursing through rulemaking.  For the 
purposes of this subdivision, the board of nursing shall, by 
rule, adopt a list of professional nursing organizations which 
have the authority to certify nurses in advanced nursing 
practice.  
    This subdivision is intended to provide payment of benefits 
for treatment and services by a licensed registered nurse 
certified in advanced nursing practice as defined in this 
subdivision and is not intended to add to the benefits provided 
for in these policies or contracts. 
    Sec. 14.  Minnesota Statutes 1988, section 62A.15, 
subdivision 4, is amended to read: 
    Subd. 4.  [DENIAL OF BENEFITS.] (a) No carrier referred to 
in subdivision 1 may, in the payment of claims to employees in 
this state, deny benefits payable for services covered by the 
policy or contract if the services are lawfully performed by a 
licensed chiropractor, licensed optometrist, or a registered 
nurse meeting the requirements of subdivision 3a. 
    (b) When carriers referred to in subdivision 1 make claim 
determinations concerning the appropriateness, quality, or 
utilization of chiropractic health care for Minnesotans, any of 
these determinations that are made by health care professionals 
must be made by, or under the direction of, or subject to the 
review of licensed doctors of chiropractic licensed under the 
provisions of sections 148.01 to 148.104.  
    Sec. 15.  Minnesota Statutes 1988, section 62A.152, 
subdivision 2, is amended to read: 
    Subd. 2.  [MINIMUM BENEFITS.] (a) All group policies and 
all group subscriber contracts providing benefits for mental or 
nervous disorder treatments in a hospital shall also provide 
coverage on the same basis as coverage for other benefits for at 
least 80 percent of the cost of the usual and customary charges 
of the first ten hours of treatment incurred over a 12-month 
benefit period, for mental or nervous disorder consultation, 
diagnosis and treatment services delivered while the insured 
person is not a bed patient in a hospital, and at least 75 
percent of the cost of the usual and customary charges for any 
additional hours of treatment during the same 12-month benefit 
period for serious or persistent mental or nervous disorders, if 
the services are furnished by (1) a licensed or accredited 
hospital, (2) a community mental health center or mental health 
clinic approved or licensed by the commissioner of human 
services or other authorized state agency, or (3) a licensed 
psychologist licensed under the provisions of sections 148.88 to 
148.98, (4) a licensed consulting psychologist licensed under 
the provisions of sections 148.88 to 148.98, or (5) a 
psychiatrist licensed under chapter 147.  Prior authorization 
from an accident and health insurance company, or a nonprofit 
health service corporation, shall be required for an extension 
of coverage beyond ten hours of treatment.  This prior 
authorization must be based upon the severity of the disorder, 
the patient's risk of deterioration without ongoing treatment 
and maintenance, degree of functional impairment, and a concise 
treatment plan.  Authorization for extended treatment may be 
limited to a maximum of 30 visit hours during any 12-month 
benefit period. 
    (b) For purposes of this section, covered treatment for a 
minor includes treatment for the family if family therapy is 
recommended by a provider listed in paragraph (a), item (1), 
(2), or (3).  For purposes of determining benefits under this 
section, "hours of treatment" means treatment rendered on an 
individual or single-family basis.  If treatment is rendered on 
a group basis, the hours of covered group treatment must be 
provided at a ratio of no less than two group treatment sessions 
to one individual treatment hour.  
    Sec. 16.  Minnesota Statutes 1988, section 62A.152, 
subdivision 3, is amended to read: 
    Subd. 3.  [PROVIDER DISCRIMINATION PROHIBITED.] All group 
policies and group subscriber contracts that provide benefits 
for mental or nervous disorder treatments in a hospital must 
provide direct reimbursement for those services if performed by 
a licensed psychologist or a licensed consulting psychologist to 
the extent that the services and treatment are within the scope 
of licensed psychologist or licensed consulting psychologist 
licensure.  The order of the physician requesting the services 
of the licensed psychologist or licensed consulting psychologist 
may be required to be submitted with the claim for payment.  
    This subdivision is intended to provide payment of benefits 
for mental or nervous disorder treatments performed by a 
licensed psychologist or a licensed consulting psychologist in a 
hospital and is not intended to change or add benefits for those 
services provided in policies or contracts to which this 
subdivision applies.  
    Sec. 17.  Minnesota Statutes 1988, section 62A.17, 
subdivision 2, is amended to read: 
    Subd. 2.  [RESPONSIBILITY OF EMPLOYEE.] Every covered 
employee electing to continue coverage shall pay the former 
employer, on a monthly basis, the cost of the continued 
coverage.  If the policy, contract, or health care plan is 
administered by a trust, every covered employee electing to 
continue coverage shall pay the trust the cost of continued 
coverage according to the eligibility rules established by the 
trust.  In no event shall the amount of premium charged exceed 
102 percent of the cost to the plan for such period of coverage 
for similarly situated employees with respect to whom neither 
termination nor layoff has occurred, without regard to whether 
such cost is paid by the employer or employee.  The employee 
shall be eligible to continue the coverage until the employee 
becomes covered under another group health plan, or for a period 
of 18 months after the termination of or lay off from 
employment, whichever is shorter.  If the employee becomes 
covered under another group policy, contract, or health plan and 
the new group policy, contract, or health plan contains any 
preexisting condition limitations, the employee may, subject to 
the 18-month maximum continuation limit, continue coverage with 
the former employer until the preexisting condition limitations 
have been satisfied.  The new policy, contract, or health plan 
is primary except as to the preexisting condition.  In the case 
of a newborn child who is a dependent of the employee, the new 
policy, contract, or health plan is primary upon the date of 
birth of the child, regardless of which policy, contract, or 
health plan coverage is deemed primary for the mother of the 
child.  
    Sec. 18.  Minnesota Statutes 1988, section 62A.46, is 
amended by adding a subdivision to read: 
    Subd. 12.  [HOMEBOUND OR HOUSE CONFINED.] "Homebound or 
house confined" means that a person is physically unable to 
leave the home without another person's aid because the person 
has lost the capacity of independent transportation or is 
disoriented. 
    Sec. 19.  Minnesota Statutes 1988, section 62A.48, 
subdivision 1, is amended to read: 
    Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
group policy, certificate, subscriber contract, or other 
evidence of coverage of nursing home care or other long-term 
care services shall be offered, issued, delivered, or renewed in 
this state, whether or not the policy is issued in this state, 
unless the policy is offered, issued, delivered, or renewed by a 
qualified insurer and the policy satisfies the requirements of 
sections 62A.46 to 62A.56.  A long-term care policy must cover 
medically prescribed long-term care in nursing facilities and at 
least the medically prescribed long-term home care services in 
section 62A.46, subdivision 4, clauses (1) to (5), provided by a 
home health agency.  Coverage under a long-term care policy AA 
must include:  a maximum lifetime benefit limit of at least 
$100,000 for services, and nursing facility and home care 
coverages must not be subject to separate lifetime maximums, and 
a requirement of prior hospitalization for up to one day may be 
imposed only for long-term care in a nursing facility.  Coverage 
under a long-term care policy A must include:  a maximum 
lifetime benefit limit of at least $50,000 for services, and 
nursing facility and home care coverages must not be subject to 
separate lifetime maximums, and a requirement of prior 
hospitalization for up to three days may be imposed for 
long-term care in a nursing facility or home care services.  If 
long-term care policies require the policyholder to be admitted 
to a nursing facility or begin home care services within a 
specified period after discharge from a hospital, that period 
may be no less than 30 days.  Prior hospitalization may not be 
required under a long-term care policy. 
    Coverage under either policy designation must cover 
preexisting conditions during the first six months of coverage 
if the insured was not diagnosed or treated for the particular 
condition during the 90 days immediately preceding the effective 
date of coverage.  Coverage under either policy designation may 
include a waiting period of up to 90 days before benefits are 
paid, but there must be no more than one waiting period per 
benefit period.  No policy may exclude coverage for mental or 
nervous disorders which have a demonstrable organic cause, such 
as Alzheimer's and related dementias.  No policy may require the 
insured to meet a prior hospitalization test more than once 
during a single benefit period be homebound or house confined to 
receive home care services.  The policy must include a provision 
that the plan will not be canceled or renewal refused except on 
the grounds of nonpayment of the premium, provided that the 
insurer may change the premium rate on a class basis on any 
policy anniversary date.  A provision that the policyholder may 
elect to have the premium paid in full at age 65 by payment of a 
higher premium up to age 65 may be offered.  A provision that 
the premium would be waived during any period in which benefits 
are being paid to the insured during confinement in a nursing 
facility must be included.  A nongroup policyholder may return a 
policy within 30 days of its delivery and have the premium 
refunded in full, less any benefits paid under the policy, if 
the policyholder is not satisfied for any reason. 
    Sec. 20.  [62A.60] [RETROACTIVE DENIAL OF EXPENSES.] 
    In cases where the subscriber or insured is liable for 
costs beyond applicable copayments or deductibles, no insurer 
may retroactively deny payment to a person who is covered when 
the services are provided for health care services that are 
otherwise covered, if the insurer or its representative failed 
to provide prior or concurrent review or authorization for the 
expenses when required to do so under the policy, plan, or 
certificate.  If prior or concurrent review or authorization was 
provided by the insurer or its representative, the insurer may 
not deny payment for the authorized service or time period 
except in cases where fraud or substantive misrepresentation 
occurred. 
    Sec. 21.  Minnesota Statutes 1988, section 62B.01, is 
amended to read: 
    62B.01 [SCOPE.] 
    All life insurance and accident and health insurance in 
connection with loan or other credit transactions shall be 
subject to the provisions of sections 62B.01 to 62B.14, except 
insurance in connection with a loan or other credit transaction 
of more than five years duration mortgage life, mortgage 
accidental death, and mortgage disability insurance.  Insurance 
shall not be subject to the provisions of sections 62B.01 to 
62B.14 where its issuance is an isolated transaction on the part 
of the insurer not related to an agreement or a plan for 
insuring debtors of the creditor.  Credit life and accident and 
health insurance provided at no additional cost to the borrower 
shall not be subject to the provisions of sections 62B.01 to 
62B.14.  
     Sec. 22.  Minnesota Statutes 1988, section 62B.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREDIT LIFE INSURANCE.] (1) The initial 
amount of credit life insurance shall not exceed the total 
amount of principal repayable under the contract of indebtedness.
Thereafter, if the indebtedness is repayable in substantially 
equal installments according to a predetermined schedule, the 
amount of insurance shall not exceed the scheduled or actual 
amount of indebtedness, whichever is greater. 
    (2) Notwithstanding clause (1), the amount of credit life 
insurance written in connection with credit transactions 
repayable over a specified term exceeding 63 months shall not 
exceed:  (i) the actual amount of unpaid indebtedness as it 
exists from time to time; or (ii) where an indebtedness is 
repayable in substantially equal installments according to a 
predetermined schedule, the scheduled amount of unpaid 
indebtedness, less any unearned interest or finance charges, 
plus an amount equal to two monthly payments. 
    (3) Notwithstanding clause clauses (1) and (2), insurance 
on educational, agricultural and horticultural credit 
transaction commitments may be written on a nondecreasing or 
level term plan for the amount of the loan commitment. 
    Sec. 23.  Minnesota Statutes 1988, section 62D.12, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [SWING-OUT PRODUCTS.] Notwithstanding 
subdivision 1, nothing in sections 10, 20, and 27 applies to a 
commercial health policy issued under this chapter as a 
companion to a health maintenance contract. 
    Sec. 24.  Minnesota Statutes 1988, section 62E.06, 
subdivision 1, is amended to read: 
    Subdivision 1.  [NUMBER THREE PLAN.] A plan of health 
coverage shall be certified as a number three qualified plan if 
it otherwise meets the requirements established by chapters 62A 
and 62C, and the other laws of this state, whether or not the 
policy is issued in Minnesota, and meets or exceeds the 
following minimum standards: 
    (a) The minimum benefits for a covered individual shall, 
subject to the other provisions of this subdivision, be equal to 
at least 80 percent of the cost of covered services in excess of 
an annual deductible which does not exceed $150 per person.  The 
coverage shall include a limitation of $3,000 per person on 
total annual out-of-pocket expenses for services covered under 
this subdivision.  The coverage shall be subject to a maximum 
lifetime benefit of not less than $500,000. 
    The $3,000 limitation on total annual out-of-pocket 
expenses and the $500,000 maximum lifetime benefit shall not be 
subject to change or substitution by use of an actuarially 
equivalent benefit. 
     (b) Covered expenses shall be the usual and customary 
charges for the following services and articles when prescribed 
by a physician: 
     (1) hospital services; 
     (2) professional services for the diagnosis or treatment of 
injuries, illnesses, or conditions, other than dental, which are 
rendered by a physician or at the physician's direction; 
     (3) drugs requiring a physician's prescription; 
     (4) services of a nursing home for not more than 120 days 
in a year if the services would qualify as reimbursable services 
under Medicare; 
     (5) services of a home health agency if the services would 
qualify as reimbursable services under Medicare; 
     (6) use of radium or other radioactive materials; 
     (7) oxygen; 
     (8) anesthetics; 
     (9) prostheses other than dental but including scalp hair 
prostheses worn for hair loss suffered as a result of alopecia 
areata; 
     (10) rental or purchase, as appropriate, of durable medical 
equipment other than eyeglasses and hearing aids; 
     (11) diagnostic X-rays and laboratory tests; 
     (12) oral surgery for partially or completely unerupted 
impacted teeth, a tooth root without the extraction of the 
entire tooth, or the gums and tissues of the mouth when not 
performed in connection with the extraction or repair of teeth; 
     (13) services of a physical therapist; 
     (14) transportation provided by licensed ambulance service 
to the nearest facility qualified to treat the condition; or a 
reasonable mileage rate for transportation to a kidney dialysis 
center for treatment; and 
     (15) services of an occupational therapist. 
    (c) Covered expenses for the services and articles 
specified in this subdivision do not include the following: 
    (1) any charge for care for injury or disease either (i) 
arising out of an injury in the course of employment and subject 
to a workers' compensation or similar law, (ii) for which 
benefits are payable without regard to fault under coverage 
statutorily required to be contained in any motor vehicle, or 
other liability insurance policy or equivalent self-insurance, 
or (iii) for which benefits are payable under another policy of 
accident and health insurance, Medicare or any other 
governmental program except as otherwise provided by law section 
62A.04, subdivision 3, clause (4); 
    (2) any charge for treatment for cosmetic purposes other 
than for reconstructive surgery when such service is incidental 
to or follows surgery resulting from injury, sickness, or other 
diseases of the involved part or when such service is performed 
on a covered dependent child because of congenital disease or 
anomaly which has resulted in a functional defect as determined 
by the attending physician; 
    (3) care which is primarily for custodial or domiciliary 
purposes which would not qualify as eligible services under 
Medicare; 
    (4) any charge for confinement in a private room to the 
extent it is in excess of the institution's charge for its most 
common semiprivate room, unless a private room is prescribed as 
medically necessary by a physician, provided, however, that if 
the institution does not have semiprivate rooms, its most common 
semiprivate room charge shall be considered to be 90 percent of 
its lowest private room charge; 
     (5) that part of any charge for services or articles 
rendered or prescribed by a physician, dentist, or other health 
care personnel which exceeds the prevailing charge in the 
locality where the service is provided; and 
     (6) any charge for services or articles the provision of 
which is not within the scope of authorized practice of the 
institution or individual rendering the services or articles. 
     (d) The minimum benefits for a qualified plan shall 
include, in addition to those benefits specified in clauses (a) 
and (e), benefits for well baby care, effective July 1, 1980, 
subject to applicable deductibles, coinsurance provisions, and 
maximum lifetime benefit limitations. 
     (e) Effective July 1, 1979, the minimum benefits of a 
qualified plan shall include, in addition to those benefits 
specified in clause (a), a second opinion from a physician on 
all surgical procedures expected to cost a total of $500 or more 
in physician, laboratory, and hospital fees, provided that the 
coverage need not include the repetition of any diagnostic tests.
    (f) Effective August 1, 1985, the minimum benefits of a 
qualified plan must include, in addition to the benefits 
specified in clauses (a), (d), and (e), coverage for special 
dietary treatment for phenylketonuria when recommended by a 
physician. 
    (g) Outpatient mental health coverage is subject to section 
62A.152, subdivision 2. 
    Sec. 25.  [65A.061] [CREDITORS LIMITED TO EXISTING 
INSURANCE.] 
    When a creditor requires a debtor to provide insurance on 
real or personal property security against reasonable risks of 
loss, damage, or destruction, no insurance shall be sold or 
placed by or through the creditor if the debtor provides the 
creditor with a loss payable through existing policies of 
insurance that the debtor owns or controls.  This section does 
not apply if the existing insurance is in an amount less than 
the amount of indebtedness to be secured on the real or personal 
property. 
    This section does not prevent the disapproval of the 
insurer or a policy of insurance where there are reasonable 
grounds for believing that the insurer is insolvent or that the 
insurance is unsatisfactory as to placement with an unauthorized 
insurer, adequacy of the coverage, adequacy of the insurer to 
assume the risk to be insured, the assessment features to which 
the policy is subject, or other grounds that are based on the 
nature of the coverage and that are not arbitrary, unreasonable 
or discriminatory.  This section does not prevent a mortgage 
lender or mortgage servicer from requiring that a policy of 
insurance or renewal of the policy be in conformance with 
standards of the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation, nor does this section 
forbid the securing of a policy of insurance or a renewal of the 
policy at the request of the borrower or because of the 
borrower's failure to furnish the necessary insurance or renewal.
    This section supersedes any inconsistent provision of law 
to the contrary. 
    Sec. 26.  Minnesota Statutes 1988, section 65B.525, 
subdivision 1, is amended to read: 
    Subdivision 1.  Except as otherwise provided in section 
72A.327, the supreme court and the several courts of general 
trial jurisdiction of this state shall by rules of court or 
other constitutionally allowable device, provide for the 
mandatory submission to arbitration of all cases at issue where 
the claim at the commencement of arbitration is in an amount of 
$5,000 or less against any insured's reparation obligor for 
no-fault benefits or comprehensive or collision damage coverage. 
    Sec. 27.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [STANDARDS FOR PREAUTHORIZATION APPROVAL.] If a 
policy of accident and sickness insurance or a subscriber 
contract requires preauthorization approval for any nonemergency 
services or benefits, the decision to approve or disapprove the 
requested services or benefits must be communicated to the 
insured or the insured's health care provider within ten 
business days of the preauthorization request provided that all 
information reasonably necessary to make a decision on the 
request has been made available to the insurer. 
    Sec. 28.  Minnesota Statutes 1988, section 72A.20, 
subdivision 15, is amended to read: 
    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.  
    Sec. 29.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    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. 
    Sec. 30.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    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. 
    Sec. 31.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    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.  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 does not apply to individual life and 
health insurance policies or personal automobile or homeowner's 
insurance policies. 
    Sec. 32.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read:  
    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 and 
disability or 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. 
    Sec. 33.  [72A.205] [PROHIBITED PROVISIONS AND COVERAGES.] 
    No policy of insurance paying a death benefit that returns 
premiums or premiums plus interest, or multiples of less than 
four times the premiums or premiums plus interest, in lieu of 
benefits may be issued in this state.  This section does not 
prohibit the return of premiums or premiums plus interest in 
connection with a voluntary or judicially ordered rescission of 
the policy, nor in accordance with the terms of exclusions from 
coverage for suicides, aviation, or war risk.  
    Sec. 34.  [72A.327] [HEALTH CLAIMS; RIGHTS OF APPEAL.] 
    (a) An insured whose claim for medical benefits under 
chapter 65B is denied because the treatment or services for 
which the claim is made is claimed to be experimental, 
investigative, not medically necessary, or otherwise not 
generally accepted by licensed health care providers and for 
which the insured has financial responsibility in excess of 
applicable copayments and deductibles may appeal the denial to 
the commissioner. 
    (b) This section does not apply to claims for health 
benefits which have been arbitrated under section 65B.525, 
subdivision 1. 
    (c) A three-member panel shall review the denial of the 
claim and report to the commissioner.  The commissioner shall 
establish a list of qualified individuals who are eligible to 
serve on the panel.  In establishing the list, the commissioner 
shall consult with representatives of the contributing members 
as defined in section 65B.01, subdivision 2, and professional 
societies.  Each panel must include:  one person with medical 
expertise as identified by the contributing members; one person 
with medical expertise as identified by the professional 
societies; and one public member.  The commissioner, upon 
initiation of an arbitration, shall select from each list three 
potential arbitrators and shall notify the issuer and the 
claimant of the selection.  Each party shall strike one of the 
potential arbitrators and an arbitrator shall be selected by the 
commissioner from the remaining names of potential arbitrators 
if more than one potential arbitrator is left.  In the event of 
multiparty arbitration, the commissioner may increase the number 
of potential arbitrators and divide the strikes so as to afford 
an equal number of strikes to each adverse interest.  If the 
selected arbitrator is unable or unwilling to serve for any 
reason, the commissioner may appoint an arbitrator, which will 
be subject to challenge only for cause.  The party that denied 
the coverage has the burden of proving that the services or 
treatment are experimental, investigative, not medically 
necessary, or not generally accepted by licensed health care 
professionals.  In determining whether the burden has been met, 
the panel may consider expert testimony, medical literature, and 
any other relevant sources.  If the party fails to sustain its 
burden, the commissioner may order the immediate payment of the 
claim.  All proceedings of the panel and any documents received 
or developed by the review process are nonpublic. 
    (d) A person aggrieved by an order under this section may 
appeal the order.  The appeal shall be pursuant to section 
65B.525 where appropriate, or to the district court for a trial 
de novo, in all other cases.  In nonemergency situations, if the 
insurer has an internal grievance or appeal process, the insured 
must exhaust that process before the external appeal.  In no 
event shall the internal grievance process exceed the time 
limits described in section 72A.201, subdivision 4a. 
    (e) If prior authorization is required before services or 
treatment can be rendered, an appeal of the denial of prior 
authorization may be made as provided in this section. 
    (f) The commissioner shall adopt procedural rules for the 
conduct of appeals. 
    (g) The permanent rulemaking authority granted in this 
section is effective the day following final enactment of the 
section regardless of the actual effective date of the section. 
    Sec. 35.  Minnesota Statutes 1988, section 149.11, is 
amended to read: 
    149.11 [PREARRANGED FUNERAL PLANS; CONTRACTS; TRUST FUNDS.] 
    (a) When prior to the death of any person, that person or 
another enters into any transaction, makes a contract, or any 
series or combination of transactions or contracts with another 
person, partnership, association or corporation, other than an 
insurance company licensed to do business in the state of 
Minnesota, by the terms of which, certain personal property 
related to the funeral services or the burial, cremation, or 
other disposition of human remains will be used upon the death 
of the person for whom the property is to be used, or when the 
professional services of a funeral director or embalmer will 
then be furnished, or both, then the total of all money paid by 
the terms of the transaction, contract or series or combination 
of transactions or contracts shall be held in trust for the 
purpose for which it has been paid until the death of the person 
for whose benefit the money was paid, or refunded to the person 
who made the payment or payments, upon demand.  A prearranged 
funeral or burial contract buyer may, at the buyer's option, 
declare the funeral or burial trust to be irrevocable up to an 
amount equivalent to the current allowable supplemental security 
income asset exclusion used for determining eligibility for 
public assistance.  The contract buyer may, at the buyer's 
option, also declare the interest to be irrevocable to the 
extent permitted by federal laws and rules governing public 
assistance.  The buyer of either a revocable or an irrevocable 
prearranged funeral or burial contract retains the right to 
designate as trustee a different funeral establishment at any 
time before the death of the person for whose benefit the money 
was paid.  Upon the death of that person, the next of kin or 
other legal representative of that person's estate retains the 
right to designate as trustee a different funeral 
establishment.  Accruals of interest or dividends declared upon 
the sum of money held in trust are subject to the same trust.  
The person, partnership, association or corporation holding the 
money in trust shall inform the person on whose behalf the money 
is held that all money paid plus all accrued earnings will be 
held in trust until the death of that person or until a request 
for a refund is made if made prior to death, except for a 
prearranged funeral or burial trust declared irrevocable by the 
buyer under this section.  The location of the trust account 
including the name and address of the institution in which the 
money is being held and any identifying account numbers, and any 
subsequent changes in that information must be disclosed in 
writing to the person on whose behalf the money is being held, 
at the time the funds are deposited into the trust account and 
at the time of any subsequent changes in the information.  The 
personal property shall include but not be limited to a casket, 
burial vault not interred in a grave, combination casket-vault 
or other receptacle not described in paragraph (b) for the 
internment, entombment, cremation, or other disposition of human 
remains.  
    (b) Nothing in this section shall prevent the sale and 
delivery of cemetery lots, graves, burial vaults preinterred in 
a grave, cremation urns, crypt spaces, niches, or grave or lot 
markers or monuments before their use is required.  Nothing in 
this section prevents the preconstruction sale of crypt spaces 
to be permanently installed except that any seller of mausoleum 
space or columbarium space, selling burial space in a mausoleum 
or columbarium that is not completely constructed and usable, 
must comply with section 306.90.  
     (c) It is the intent of the legislature that the provisions 
of this section shall be construed as a limitation upon the 
manner in which a person or legal entity is permitted to accept 
funds in prepayment of funeral services to be performed in the 
future or in prepayment of funeral or burial goods to be used in 
connection with the funeral or final disposition of human 
remains.  It is further intended to allow members of the public 
to arrange and pay for funerals, final dispositions, funeral 
services, and funeral and burial goods for themselves and their 
families in advance of need while at the same time providing all 
possible safeguards so that the prepaid funds cannot be 
dissipated, whether intentionally or not, so as to be available 
for the payment of the services and goods selected. 
    Sec. 36.  [REVISOR'S INSTRUCTION.] 
    The revisor of statutes shall, as part of the regular 
process of statutory revision, prepare a bill for introduction 
that amends Minnesota Statutes to reflect the intent of the 
legislature as expressed in section 3 to make uniform the 
service of process provisions in Minnesota Statutes, chapters 45 
to 83, 155A, 309, and 332. 
    Sec. 37.  [REPEALER.] 
    Minnesota Statutes 1988, sections 60A.23, subdivision 7; 
and 72A.13, subdivision 2, are repealed. 
    Sec. 38.  [EFFECTIVE DATE.] 
    Sections 1 to 3, 5, 6, 8, 9, 11 to 14, 18, 23 to 25, 28, 
30, 32, 33, 36, and 37 are effective the day following final 
enactment.  Sections 4, 7, 10, 17, 20, 27, 29, 31, and 35 are 
effective August 1, 1989.  Sections 15, 16, 19, 21, and 22 are 
effective for policies, plans, or contracts issued or renewed on 
or after August 1, 1989. 
    Sections 26 and 34 are effective January 1, 1990. 
    Presented to the governor May 30, 1989 
    Signed by the governor June 1, 1989, 11:52 p.m.