Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2001, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 215-S.F.No. 1054
An act relating to insurance; regulating insurers,
agents, coverages and benefits, costs, claims,
investments, and notifications and disclosures;
prescribing powers and duties of the commissioner;
eliminating the regulation of nonprofit legal services
plans; amending Minnesota Statutes 2000, sections
60A.06, subdivision 3; 60A.08, subdivision 13; 60A.11,
subdivision 10; 60A.129, subdivision 2; 60A.14,
subdivision 1; 60A.16, subdivision 1; 60A.23,
subdivision 8; 61A.072, by adding a subdivision;
62A.17, subdivision 1; 62A.20, subdivision 1; 62A.21,
subdivision 2a; 62A.302; 62A.31, subdivisions 1a, 1i,
3; 62A.65, subdivision 8; 62E.04, subdivision 4;
62E.06, subdivision 1; 62I.07, subdivision 1; 62L.05,
subdivisions 1, 2; 62M.03, subdivision 2; 62M.05,
subdivision 5; 62Q.01, subdivision 6; 62Q.73,
subdivision 3; 65A.29, subdivision 7; 65B.04,
subdivision 3; 65B.06, subdivisions 1, 4; 65B.16;
65B.19, subdivision 2; 67A.20, by adding a
subdivision; 70A.07; 79A.02, subdivision 1; 79A.03,
subdivision 7; 79A.04, subdivision 16; 79A.15;
471.617, subdivision 1; proposing coding for new law
in Minnesota Statutes, chapters 62A; 62L; repealing
Minnesota Statutes 2000, sections 13.7191, subdivision
11; 60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05;
62G.06; 62G.07; 62G.08; 62G.09; 62G.10; 62G.11;
62G.12; 62G.13; 62G.14; 62G.15; 62G.16; 62G.17;
62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23;
62G.24; 62G.25.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 2000, section 60A.06,
subdivision 3, is amended to read:
Subd. 3. [LIMITATION ON COMBINATION POLICIES.] (a) Unless
specifically authorized by subdivision 1, clause (4), it is
unlawful to combine in one policy coverage permitted by
subdivision 1, clauses (4) and (5)(a). This subdivision does
not prohibit the simultaneous sale of these products, but the
sale must involve two separate and distinct policies.
(b) This subdivision does not apply to group policies.
(c) This subdivision does not apply to policies permitted
by subdivision 1, clause (4), that contain benefits providing
acceleration of life, endowment, or annuity benefits in advance
of the time they would otherwise be payable, or to long-term
care policies as defined in section 62A.46, subdivision 2, or
chapter 62S.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 2. Minnesota Statutes 2000, section 60A.08,
subdivision 13, is amended to read:
Subd. 13. [REDUCTION OF LIMITS BY COSTS OF DEFENSE
PROHIBITED.] (a) No insurer shall issue or renew a policy of
liability insurance in this state that reduces the limits of
liability stated in the policy by the costs of legal defense.
(b) This subdivision does not apply to:
(1) professional liability insurance with annual aggregate
limits of liability greater than of at least $100,000, including
directors' and officers' and errors and omissions liability
insurance;
(2) environmental impairment liability insurance;
(3) insurance policies issued to large commercial risks; or
(4) coverages that the commissioner determines to be
appropriate which will be published in the manner prescribed for
surplus lines insurance in section 60A.201, subdivision 4.
(c) For purposes of this subdivision, "large commercial
risks" means an insured whose gross annual revenues in the
fiscal year preceding issuance of the policy were at least
$10,000,000.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 3. Minnesota Statutes 2000, section 60A.11,
subdivision 10, is amended to read:
Subd. 10. [DEFINITIONS.] The following terms have the
meaning assigned in this subdivision for purposes of this
section and section 60A.111:
(a) "Adequate evidence" means a written confirmation,
advice, or other verification issued by a depository, issuer, or
custodian bank which shows that the investment is held for the
company;
(b) "Adequate security" means a letter of credit qualifying
under subdivision 11, paragraph (f), cash, or the pledge of an
investment authorized by any subdivision of this section;
(c) "Admitted assets," for purposes of computing percentage
limitations on particular types of investments, means the assets
as shown by the company's annual statement, required by section
60A.13, as of the December 31 immediately preceding the date the
company acquires the investment;
(d) "Clearing corporation" means The Depository Trust
Company or any other clearing agency registered with the
securities and exchange commission pursuant to the Securities
Exchange Act of 1934, section 17A, Euro-clear Clearance System
Limited and CEDEL S.A., and, with the approval of the
commissioner, any other clearing corporation as defined in
section 336.8-102;
(e) "Control" has the meaning assigned to that term in, and
must be determined in accordance with, section 60D.15,
subdivision 4;
(f) "Custodian bank" means a bank or trust company or a
branch of a bank or trust company that is acting as custodian
and is supervised and examined by state or federal authority
having supervision over the bank or trust company or with
respect to a company's foreign investments only by the
regulatory authority having supervision over banks or trust
companies in the jurisdiction in which the bank, trust company,
or branch is located, and any banking institutions qualifying as
an "Eligible Foreign Custodian" under the Code of Federal
Regulations, section 270.17f-5, adopted under section 17(f) of
the Investment Company Act of 1940, and specifically including
Euro-clear Clearance System Limited and CEDEL S.A., acting as
custodians;
(g) "Evergreen clause" means a provision that automatically
renews a letter of credit for a time certain if the issuer of
the letter of credit fails to affirmatively signify its
intention to nonrenew upon expiration;
(h) "Government obligations" means direct obligations for
the payment of money, or obligations for the payment of money to
the extent guaranteed as to the payment of principal and
interest by any governmental issuer where the obligations are
payable from ad valorem taxes or guaranteed by the full faith,
credit, and taxing power of the issuer and are not secured
solely by special assessments for local improvements;
(i) "Noninvestment grade obligations" means obligations
which, at the time of acquisition, were rated below Baa/BBB or
the equivalent by a securities rating agency or which, at the
time of acquisition, were not in one of the two highest
categories established by the securities valuation office of the
National Association of Insurance Commissioners;
(j) "Issuer" means the corporation, business trust,
governmental unit, partnership, association, individual, or
other entity which issues or on behalf of which is issued any
form of obligation;
(k) "Licensed real estate appraiser" means a person who
develops and communicates real estate appraisals and who holds a
current, valid license under chapter 82B or a substantially
similar licensing requirement in another jurisdiction;
(l) "Member bank" means a national bank, state bank or
trust company which is a member of the Federal Reserve System;
(m) "National securities exchange" means an exchange
registered under section 6 of the Securities Exchange Act of
1934 or an exchange regulated under the laws of the Dominion of
Canada;
(n) "NASDAQ" means the reporting system for securities
meeting the definition of National Market System security as
provided under Part I to Schedule D of the National Association
of Securities Dealers Incorporated bylaws;
(o) "Obligations" include bonds, notes, debentures,
transportation equipment certificates, repurchase agreements,
bank certificates of deposit, time deposits, bankers'
acceptances, and other obligations for the payment of money not
in default as to payments of principal and interest on the date
of investment, whether constituting general obligations of the
issuer or payable only out of certain revenues or certain funds
pledged or otherwise dedicated for payment. Leases are
considered obligations if the lease is assigned for the benefit
of the company and is nonterminable by the lessee or lessees
thereunder upon foreclosure of any lien upon the leased
property, and rental payments are sufficient to amortize the
investment over the primary lease term;
(p) "Qualified assets" means the sum of (1) all investments
qualified in accordance with this section other than investments
in affiliates and subsidiaries, (2) investments in obligations
of affiliates as defined in section 60D.15, subdivision 2,
secured by real or personal property sufficient to qualify the
investment under subdivision 19 or 23, (3) qualified investments
in subsidiaries, as defined in section 60D.15, subdivision 9, on
a consolidated basis with the insurance company without
allowance for goodwill or other intangible value, and (4) cash
on hand and on deposit, agent's balances or uncollected premiums
not due more than 90 days, assets held pursuant to section
60A.12, subdivision 2, investment income due and accrued, funds
due or on deposit or recoverable on loss payments under
contracts of reinsurance entered into pursuant to section
60A.09, premium bills and notes receivable, federal income taxes
recoverable, and equities and deposits in pools and
associations;
(q) "Qualified net earnings" means that the net earnings of
the issuer after elimination of extraordinary nonrecurring items
of income and expense and before income taxes and fixed charges
over the five immediately preceding completed fiscal years, or
its period of existence if less than five years, has averaged
not less than 1-1/4 times its average annual fixed charges
applicable to the period;
(r) "Required liabilities" means the sum of (1) total
liabilities as required to be reported in the company's most
recent annual report to the commissioner of commerce of this
state, (2) for companies operating under the stock plan, the
minimum paid-up capital and surplus required to be maintained
pursuant to section 60A.07, subdivision 5a, (3) for companies
operating under the mutual or reciprocal plan, the minimum
amount of surplus required to be maintained pursuant to section
60A.07, subdivision 5b, and (4) the amount, if any, by which the
company's loss and loss adjustment expense reserves exceed 350
percent of its surplus as it pertains to policyholders as of the
same date. The commissioner may waive the requirement in clause
(4) unless the company's written premiums exceed 300 percent of
its surplus as it pertains to policyholders as of the same
date. In addition to the required amounts pursuant to clauses
(1) to (4), the commissioner may require that the amount of any
apparent reserve deficiency that may be revealed by one to five
year loss and loss adjustment expense development analysis for
the five years reported in the company's most recent annual
statement to the commissioner be added to required liabilities;
(s) "Revenue obligations" means obligations for the payment
of money by a governmental issuer where the obligations are
payable from revenues, earnings, or special assessments on
properties benefited by local improvements of the issuer which
are specifically pledged therefor;
(t) "Security" has the meaning given in section 5 of the
Security Act of 1933 and specifically includes, but is not
limited to, stocks, stock equivalents, warrants, rights,
options, obligations, American Depository Receipts (ADR's),
repurchase agreements, and reverse repurchase agreements; and
(u) "Unrestricted surplus" means the amount by which
qualified assets exceed 110 percent of required liabilities.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 4. Minnesota Statutes 2000, section 60A.129,
subdivision 2, is amended to read:
Subd. 2. [LOSS RESERVE CERTIFICATION.] (a) Each domestic
company engaged in providing the types of coverage described in
section 60A.06, subdivision 1, clause (1), (2), (3), (5)(b),
(6), (8), (9), (10), (11), (12), (13), or (14), must have its
loss reserves certified by a qualified actuary. The company
must file the certification with the commissioner within 30 days
of completion of the certification, but not later than June 1.
The actuary providing the certification must not may be an
employee of the company but the commissioner may still require
an independent actuarial certification as described in
subdivision 1. This subdivision does not apply to township
mutual companies, or to other domestic insurers having less than
$1,000,000 of premiums written in any year and fewer than 1,000
policyholders. The commissioner may allow an exception to the
stand alone certification where it can be demonstrated that a
company in a group has a pooling or 100 percent reinsurance
agreement used in a group which substantially affects the
solvency and integrity of the reserves of the company, or where
it is only the parent company of a group which is licensed to do
business in Minnesota. If these circumstances exist, the
company may file a written request with the commissioner for an
exception. Companies writing reinsurance alone are not exempt
from this requirement. The certification must contain the
following statement: "The loss reserves and loss expense
reserves have been examined and found to be calculated in
accordance with generally accepted actuarial principles and
practices In my opinion, the reserves described in this
certification are consistent with reserves computed in
accordance with standards and principles established by the
Actuarial Standards Board and are fairly stated."
(b) Each foreign company engaged in providing the types of
coverage described in section 60A.06, subdivision 1, clause (1),
(2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or
(14), required by this section to file an annual audited
financial report, whose total net earned premium for Schedule P,
Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H
plus Part 1R, Column 4, current year premiums earned, from the
company's most currently filed annual statement) is equal to
one-third or more of the company's total net earned premium
(Underwriting and Investment Exhibit, Part 2, Column 4, total
line, of the annual statement) must have a reserve certification
by a qualified actuary at least every three years. In the year
that the certification is due, the company must file the
certification with the commissioner within 30 days of completion
of the certification, but not later than June 1. The actuary
providing the certification must not be an employee of the
company. Companies writing reinsurance alone are not exempt
from this requirement. The certification must contain the
following statement: "The loss reserves and loss expense
reserves have been examined and found to be calculated in
accordance with generally accepted actuarial principles and
practices and are fairly stated."
(c) Each company providing life and/or health insurance
coverages described in section 60A.06, subdivision 1, clause (4)
or (5)(a), required by this section to file an audited annual
financial report, whose premiums and annuity considerations (net
of reinsurance) from accident and health equal one-third or more
of the company's total premiums and annuity considerations (net
of reinsurance), as reported in the summary of operations, must
have its aggregate reserve for accident and health policies and
liability for policy and contract claims for accident and health
certified by a qualified actuary at least once every three
years. The actuary providing the certification must not be an
employee of the company. Companies writing reinsurance alone
are not exempt from this requirement. The certification must
contain the following statement: "The policy and contract
claims reserves for accident and health have been examined and
found to be calculated in accordance with generally accepted
actuarial principles and practices and are fairly stated."
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 5. Minnesota Statutes 2000, section 60A.14,
subdivision 1, is amended to read:
Subdivision 1. [FEES OTHER THAN EXAMINATION FEES.] In
addition to the fees and charges provided for examinations, the
following fees must be paid to the commissioner for deposit in
the general fund:
(a) by township mutual fire insurance companies:
(1) for filing certificate of incorporation $25 and
amendments thereto, $10;
(2) for filing annual statements, $15;
(3) for each annual certificate of authority, $15;
(4) for filing bylaws $25 and amendments thereto, $10.
(b) by other domestic and foreign companies including
fraternals and reciprocal exchanges:
(1) for filing certified copy of certificate of articles of
incorporation, $100;
(2) for filing annual statement, $225;
(3) for filing certified copy of amendment to certificate
or articles of incorporation, $100;
(4) for filing bylaws, $75 or amendments thereto, $75;
(5) for each company's certificate of authority, $575,
annually.
(c) the following general fees apply:
(1) for each certificate, including certified copy of
certificate of authority, renewal, valuation of life policies,
corporate condition or qualification, $25;
(2) for each copy of paper on file in the commissioner's
office 50 cents per page, and $2.50 for certifying the same;
(3) for license to procure insurance in unadmitted foreign
companies, $575;
(4) for valuing the policies of life insurance companies,
one cent per $1,000 of insurance so valued, provided that the
fee shall not exceed $13,000 per year for any company. The
commissioner may, in lieu of a valuation of the policies of any
foreign life insurance company admitted, or applying for
admission, to do business in this state, accept a certificate of
valuation from the company's own actuary or from the
commissioner of insurance of the state or territory in which the
company is domiciled;
(5) for receiving and filing certificates of policies by
the company's actuary, or by the commissioner of insurance of
any other state or territory, $50;
(6) for each appointment of an agent filed with the
commissioner, a domestic insurer shall remit $5 and all other
insurers shall remit $3;
(7) for filing forms and rates, $75 per filing, to be paid
on a quarterly basis in response to an invoice. Billing and
payment may be made electronically;
(8) for annual renewal of surplus lines insurer license,
$300.
The commissioner shall adopt rules to define filings that
are subject to a fee.
[EFFECTIVE DATE.] This section is effective July 1, 2001.
Sec. 6. Minnesota Statutes 2000, section 60A.16,
subdivision 1, is amended to read:
Subdivision 1. [SCOPE.] (1) [DOMESTIC INSURANCE
CORPORATIONS.] Any two or more domestic insurance corporations,
formed for any of the purposes for which stock, mutual, or stock
and mutual insurance corporations, or reciprocal or
interinsurance contract exchanges might be formed under the laws
of this state, may be
(a) merged into one of such domestic insurance
corporations, or
(b) consolidated into a new insurance corporation to be
formed under the laws of this state.
(2) [DOMESTIC AND FOREIGN INSURANCE CORPORATIONS.] Any such
domestic insurance corporations and any foreign insurance
corporations formed to carry on any insurance business for the
conduct of which an insurance corporation might be organized
under the laws of this state, may be
(a) merged into one of such domestic insurance
corporations, or
(b) merged into one of such foreign insurance corporations,
or
(c) consolidated into a new insurance corporation to be
formed under the laws of this state, or
(d) consolidated into a new insurance corporation to be
formed under the laws of the government under which one of such
foreign insurance corporations was formed, provided that each of
such foreign insurance corporations is authorized by the laws of
the government under which it was formed to effect such merger
or consolidation.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 7. Minnesota Statutes 2000, section 60A.23,
subdivision 8, is amended to read:
Subd. 8. [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS
WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1) [SCOPE.] This
subdivision applies to any vendor of risk management services
and to any entity which administers, for compensation, a
self-insurance or insurance plan. This subdivision does not
apply (a) to an insurance company authorized to transact
insurance in this state, as defined by section 60A.06,
subdivision 1, clauses (4) and (5); (b) to a service plan
corporation, as defined by section 62C.02, subdivision 6; (c) to
a health maintenance organization, as defined by section 62D.02,
subdivision 4; (d) to an employer directly operating a
self-insurance plan for its employees' benefits; (e) to an
entity which administers a program of health benefits
established pursuant to a collective bargaining agreement
between an employer, or group or association of employers, and a
union or unions; or (f) to an entity which administers a
self-insurance or insurance plan if a licensed Minnesota insurer
is providing insurance to the plan and if the licensed insurer
has appointed the entity administering the plan as one of its
licensed agents within this state.
(2) [DEFINITIONS.] For purposes of this subdivision the
following terms have the meanings given them.
(a) "Administering a self-insurance or insurance plan"
means (i) processing, reviewing or paying claims, (ii)
establishing or operating funds and accounts, or (iii) otherwise
providing necessary administrative services in connection with
the operation of a self-insurance or insurance plan.
(b) "Employer" means an employer, as defined by section
62E.02, subdivision 2.
(c) "Entity" means any association, corporation,
partnership, sole proprietorship, trust, or other business
entity engaged in or transacting business in this state.
(d) "Self-insurance or insurance plan" means a plan
providing life, medical or hospital care, accident, sickness or
disability insurance for the benefit of employees or members of
an association, or a plan providing liability coverage for any
other risk or hazard, which is or is not directly insured or
provided by a licensed insurer, service plan corporation, or
health maintenance organization.
(e) "Vendor of risk management services" means an entity
providing for compensation actuarial, financial management,
accounting, legal or other services for the purpose of designing
and establishing a self-insurance or insurance plan for an
employer.
(3) [LICENSE.] No vendor of risk management services or
entity administering a self-insurance or insurance plan may
transact this business in this state unless it is licensed to do
so by the commissioner. An applicant for a license shall state
in writing the type of activities it seeks authorization to
engage in and the type of services it seeks authorization to
provide. The license may be granted only when the commissioner
is satisfied that the entity possesses the necessary
organization, background, expertise, and financial integrity to
supply the services sought to be offered. The commissioner may
issue a license subject to restrictions or limitations upon the
authorization, including the type of services which may be
supplied or the activities which may be engaged in. The license
fee is $1,000 for the initial application and $1,000 for each
two-year renewal. All licenses are for a period of two years.
(4) [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.]
To assure that self-insurance or insurance plans are financially
solvent, are administered in a fair and equitable fashion, and
are processing claims and paying benefits in a prompt, fair, and
honest manner, vendors of risk management services and entities
administering insurance or self-insurance plans are subject to
the supervision and examination by the commissioner. Vendors of
risk management services, entities administering insurance or
self-insurance plans, and insurance or self-insurance plans
established or operated by them are subject to the trade
practice requirements of sections 72A.19 to 72A.30. In lieu of
an unlimited guarantee from a parent corporation for a vendor of
risk management services or an entity administering insurance or
self-insurance plans, the commissioner may accept a surety bond
in a form satisfactory to the commissioner in an amount equal to
120 percent of the total amount of claims handled by the
applicant in the prior year. If at any time the total amount of
claims handled during a year exceeds the amount upon which the
bond was calculated, the administrator shall immediately notify
the commissioner. The commissioner may require that the bond be
increased accordingly.
No contract entered into after July 1, 2001, between a
licensed vendor of risk management services and a group
authorized to self-insure for workers' compensation liabilities
under section 79A.03, subdivision 6, may take effect until it
has been filed with the commissioner, and either (1) the
commissioner has approved it or (2) 60 days have elapsed and the
commissioner has not disapproved it as misleading or violative
of public policy.
(5) [RULEMAKING AUTHORITY.] To carry out the purposes of
this subdivision, the commissioner may adopt rules pursuant to
sections 14.001 to 14.69. These rules may:
(a) establish reporting requirements for administrators of
insurance or self-insurance plans;
(b) establish standards and guidelines to assure the
adequacy of financing, reinsuring, and administration of
insurance or self-insurance plans;
(c) establish bonding requirements or other provisions
assuring the financial integrity of entities administering
insurance or self-insurance plans; or
(d) establish other reasonable requirements to further the
purposes of this subdivision.
[EFFECTIVE DATE.] This section is effective July 1, 2001.
Sec. 8. Minnesota Statutes 2000, section 61A.072, is
amended by adding a subdivision to read:
Subd. 6. [ACCELERATED BENEFITS.] (a) "Accelerated benefits"
covered under this section are benefits payable under the life
insurance contract:
(1) to a policyholder or certificate holder, during the
lifetime of the insured, in anticipation of death upon the
occurrence of a specified life-threatening or catastrophic
condition as defined by the policy or rider;
(2) that reduce the death benefit otherwise payable under
the life insurance contract; and
(3) that are payable upon the occurrence of a single
qualifying event that results in the payment of a benefit amount
fixed at the time of acceleration.
(b) "Qualifying event" means one or more of the following:
(1) a medical condition that would result in a drastically
limited life span as specified in the contract;
(2) a medical condition that has required or requires
extraordinary medical intervention, such as, but not limited to,
major organ transplant or continuous artificial life support
without which the insured would die; or
(3) a condition that requires continuous confinement in an
eligible institution as defined in the contract if the insured
is expected to remain there for the rest of the insured's life.
[EFFECTIVE DATE.] This section is effective July 1, 2001.
Sec. 9. Minnesota Statutes 2000, section 62A.17,
subdivision 1, is amended to read:
Subdivision 1. [CONTINUATION OF COVERAGE.] Every group
insurance policy, group subscriber contract, and health care
plan included within the provisions of section 62A.16, except
policies, contracts, or health care plans covering employees of
an agency of the federal government, shall contain a provision
which permits every covered employee who is voluntarily or
involuntarily terminated or laid off from employment, if the
policy, contract, or health care plan remains in force for
active employees of the employer, to elect to continue the
coverage for the employee and dependents.
An employee shall be considered to be laid off from
employment if there is a reduction in hours to the point where
the employee is no longer eligible under the policy, contract,
or health care plan. Termination shall not include discharge
for gross misconduct.
Upon request by the terminated or laid off employee, a
health carrier must provide the instructions necessary to enable
the employee to elect continuation of coverage.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 10. Minnesota Statutes 2000, section 62A.20,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENT.] Every policy of accident and
health insurance providing coverage of hospital or medical
expense on either an expense-incurred basis or other than an
expense-incurred basis, which in addition to covering the
insured also provides coverage to the spouse and dependent
children of the insured shall contain:
(1) a provision which permits allows the spouse and
dependent children to elect to continue coverage when the
insured becomes enrolled for benefits under Title XVIII of the
Social Security Act (Medicare); and
(2) a provision which permits allows the dependent children
to continue coverage when they cease to be dependent children
under the generally applicable requirement of the plan.
Upon request by the insured or the insured's spouse or
dependent child, a health carrier must provide the instructions
necessary to enable the spouse or child to elect continuation of
coverage.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 11. Minnesota Statutes 2000, section 62A.21,
subdivision 2a, is amended to read:
Subd. 2a. [CONTINUATION PRIVILEGE.] Every policy described
in subdivision 1 shall contain a provision which permits
continuation of coverage under the policy for the insured's
former spouse and dependent children upon entry of a valid
decree of dissolution of marriage. The coverage shall be
continued until the earlier of the following dates:
(a) the date the insured's former spouse becomes covered
under any other group health plan; or
(b) the date coverage would otherwise terminate under the
policy.
If the coverage is provided under a group policy, any
required premium contributions for the coverage shall be paid by
the insured on a monthly basis to the group policyholder for
remittance to the insurer. The policy must require the group
policyholder to, upon request, provide the insured with written
verification from the insurer of the cost of this coverage
promptly at the time of eligibility for this coverage and at any
time during the continuation period. In no event shall the
amount of premium charged exceed 102 percent of the cost to the
plan for such period of coverage for other similarly situated
spouses and dependent children with respect to whom the marital
relationship has not dissolved, without regard to whether such
cost is paid by the employer or employee.
Upon request by the insured's former spouse or dependent
child, a health carrier must provide the instructions necessary
to enable the child or former spouse to elect continuation of
coverage.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 12. Minnesota Statutes 2000, section 62A.302, is
amended to read:
62A.302 [COVERAGE OF DEPENDENTS.]
Subdivision 1. [SCOPE OF COVERAGE.] This section applies
to all health plans as defined in section 62A.011:
(1) a health plan as defined in section 62A.011;
(2) coverage described in section 62A.011, subdivision 3,
clauses (4), (6), (7), (8), (9), and (10); and
(3) a policy, contract, or certificate issued by a
community integrated service network licensed under chapter 62N.
Subd. 2. [REQUIRED COVERAGE.] Every health plan included
in subdivision 1 that provides dependent coverage must define
"dependent" no more restrictively than the definition provided
in section 62L.02.
Sec. 13. Minnesota Statutes 2000, section 62A.31,
subdivision 1a, is amended to read:
Subd. 1a. [MINIMUM COVERAGE.] The policy must provide a
minimum of the coverage set out in subdivision 2 and for an
extended basic plan, the additional requirements of section
62E.07.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 14. Minnesota Statutes 2000, section 62A.31,
subdivision 1i, is amended to read:
Subd. 1i. [REPLACEMENT COVERAGE.] If a Medicare supplement
policy or certificate replaces another Medicare supplement
policy or certificate, the issuer of the replacing policy or
certificate shall waive any time periods applicable to
preexisting conditions, waiting periods, elimination periods,
and probationary periods in the new Medicare supplement policy
or certificate for benefits to the extent the time was spent
under the original policy or certificate. For purposes of this
subdivision, "Medicare supplement policy or certificate" means
all coverage described in section 62A.011, subdivision 4 3,
clause (10).
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 15. Minnesota Statutes 2000, section 62A.31,
subdivision 3, is amended to read:
Subd. 3. [DEFINITIONS.] (a) The definitions provided in
this subdivision apply to sections 62A.31 to 62A.44.
(b) "Accident," "accidental injury," or "accidental means"
means to employ "result" language and does not include words
that establish an accidental means test or use words such as
"external," "violent," "visible wounds," or similar words of
description or characterization.
(1) The definition shall not be more restrictive than the
following: "Injury or injuries for which benefits are provided
means accidental bodily injury sustained by the insured person
which is the direct result of an accident, independent of
disease or bodily infirmity or any other cause, and occurs while
insurance coverage is in force."
(2) The definition may provide that injuries shall not
include injuries for which benefits are provided or available
under a workers' compensation, employer's liability or similar
law, or motor vehicle no-fault plan, unless prohibited by law.
(c) "Applicant" means:
(1) in the case of an individual Medicare supplement policy
or certificate, the person who seeks to contract for insurance
benefits; and
(2) in the case of a group Medicare supplement policy or
certificate, the proposed certificate holder.
(d) "Bankruptcy" means a situation in which a
Medicare+Choice organization that is not an issuer has filed, or
has had filed against it, a petition for declaration of
bankruptcy and has ceased doing business in the state.
(e) "Benefit period" or "Medicare benefit period" shall not
be defined more restrictively than as defined in the Medicare
program.
(f) "Certificate" means a certificate delivered or issued
for delivery in this state or offered to a resident of this
state under a group Medicare supplement policy or certificate.
(g) "Certificate form" means the form on which the
certificate is delivered or issued for delivery by the issuer.
(h) "Convalescent nursing home," "extended care facility,"
or "skilled nursing facility" shall not be defined more
restrictively than as defined in the Medicare program.
(i) "Employee welfare benefit plan" means a plan, fund, or
program of employee benefits as defined in United States Code,
title 29, section 1002 (Employee Retirement Income Security Act).
(j) "Health care expenses" means expenses of health
maintenance organizations associated with the delivery of health
care services which are analogous to incurred losses of
insurers. The expenses shall not include:
(1) home office and overhead costs;
(2) advertising costs;
(3) commissions and other acquisition costs;
(4) taxes;
(5) capital costs;
(6) administrative costs; and
(7) claims processing costs.
(k) "Hospital" may be defined in relation to its status,
facilities, and available services or to reflect its
accreditation by the joint commission on accreditation of
hospitals, but not more restrictively than as defined in the
Medicare program.
(l) "Insolvency" means a situation in which an issuer,
licensed to transact the business of insurance in this state,
including the right to transact business as any type of issuer,
has had a final order of liquidation entered against it with a
finding of insolvency by a court of competent jurisdiction in
the issuer's state of domicile.
(m) "Issuer" includes insurance companies, fraternal
benefit societies, health service plan corporations, health
maintenance organizations, and any other entity delivering or
issuing for delivery Medicare supplement policies or
certificates in this state or offering these policies or
certificates to residents of this state.
(n) "Medicare" shall be defined in the policy and
certificate. Medicare may be defined as the Health Insurance
for the Aged Act, title XVIII of the Social Security Amendments
of 1965, as amended, or title I, part I, of Public Law Number
89-97, as enacted by the 89th Congress of the United States of
America and popularly known as the Health Insurance for the Aged
Act, as amended.
(o) "Medicare eligible expenses" means health care expenses
covered by Medicare, to the extent recognized as reasonable and
medically necessary by Medicare.
(p) "Medicare+Choice plan" means a plan of coverage for
health benefits under Medicare part C as defined in section 1859
of the federal Social Security Act, United States Code, title
42, section 1395w-28, and includes:
(1) coordinated care plans which provide health care
services, including, but not limited to, health maintenance
organization plans, with or without a point-of-service option,
plans offered by provider-sponsored organizations, and preferred
provider organization plans;
(2) medical savings account plans coupled with a
contribution into a Medicare+Choice medical savings account; and
(3) Medicare+Choice private fee-for-service plans.
(q) "Medicare-related coverage" means a policy, contract,
or certificate issued as a supplement to Medicare, regulated
under sections 62A.31 to 62A.44, including Medicare select
coverage; policies, contracts, or certificates that supplement
Medicare issued by health maintenance organizations; or
policies, contracts, or certificates governed by section 1833
(known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA"
or "risk" contracts) of the federal Social Security Act, United
States Code, title 42, section 1395, et seq., as amended.; or
Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law
105-33), Sections 1851 to 1859 of the Social Security Act
establishing Part C of the Medicare program, known as the
"Medicare+Choice program."
(r) "Medicare supplement policy or certificate" means a
group or individual policy of accident and sickness insurance or
a subscriber contract of hospital and medical service
associations or health maintenance organizations, or those
policies or certificates covered by section 1833 of the federal
Social Security Act, United States Code, title 42, section 1395,
et seq., or an issued policy under a demonstration project
specified under amendments to the federal Social Security Act,
which is advertised, marketed, or designed primarily as a
supplement to reimbursements under Medicare for the hospital,
medical, or surgical expenses of persons eligible for Medicare.
(s) "Physician" shall not be defined more restrictively
than as defined in the Medicare program or section 62A.04,
subdivision 1, or 62A.15, subdivision 3a.
(t) "Policy form" means the form on which the policy is
delivered or issued for delivery by the issuer.
(u) "Secretary" means the Secretary of the United States
Department of Health and Human Services.
(v) "Sickness" shall not be defined more restrictively than
the following:
"Sickness means illness or disease of an insured person
which first manifests itself after the effective date of
insurance and while the insurance is in force."
The definition may be further modified to exclude
sicknesses or diseases for which benefits are provided under a
workers' compensation, occupational disease, employer's
liability, or similar law.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 16. [62A.421] [DEMONSTRATION PROJECTS.]
Subdivision 1. [ESTABLISHMENT.] The commissioner may
establish demonstration projects to allow an issuer of Medicare
supplement policies to extend coverage to individuals enrolled
in part A or part B, or both, of the Medicare program, Title
XVIII of the Social Security Act, United States Code, title 42,
section 1395, et seq. For purposes of this section, the
commissioner may waive compliance with the benefits described in
sections 62A.315 and 62A.316 and other applicable statutes and
rules if there is reasonable evidence that the statutes or rules
prohibit the operation of the demonstration project, but may not
waive the six-month guaranteed issue provision. The
commissioner shall provide for public comment before any statute
or rule is waived.
Subd. 2. [BENEFITS.] A demonstration project must provide
health benefits equal to or exceeding the level of benefits
provided in Title XVIII of the Social Security Act and an
out-of-hospital prescription drug benefit. The out-of-hospital
prescription drug benefit may be waived by the commissioner if
the issuer presents evidence satisfactory to the commissioner
that the inclusion of the benefit would restrict the operation
of the demonstration project.
Subd. 3. [APPLICATION.] An issuer electing to participate
in a demonstration project shall apply to the commissioner for
approval on a form developed by the commissioner. The
application shall include at least the following:
(1) a statement identifying the population that the project
is designed to serve;
(2) a description of the proposed project including a
statement projecting a schedule of costs and benefits for the
policyholder;
(3) reference to the sections of Minnesota Statutes and
department of commerce rules for which waiver is requested;
(4) evidence that application of the requirements of
applicable Minnesota Statutes and department of commerce rules
would, unless waived, prohibit the operation of the
demonstration project;
(5) an estimate of the number of years needed to adequately
demonstrate the project's effects; and
(6) other information the commissioner may reasonably
require.
Subd. 4. [TIMELINE.] The commissioner shall approve, deny,
or refer back to the issuer for modification, the application
for a demonstration project within 60 days of the receipt of a
complete application.
Subd. 5. [PERIOD SPECIFIED.] The commissioner may approve
an application for a demonstration project for a period of six
years, with an option to renew.
Subd. 6. [ANNUAL REPORT.] Each issuer for which a
demonstration project is approved shall annually file a report
with the commissioner summarizing the project's experience at
the same time it files its annual report. The report shall be
on a form developed by the commissioner and shall be separate
from the annual report.
Subd. 7. [RESCISSION OF APPROVAL.] The commissioner may
rescind approval of a demonstration project if the commissioner
makes any of the findings listed in section 60A.052 or 62D.15,
subdivision 1, with respect to the project for which it has not
been granted a specific exemption, or if the commissioner finds
that the project's operation is contrary to the information
contained in the approved application.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 17. Minnesota Statutes 2000, section 62A.65,
subdivision 8, is amended to read:
Subd. 8. [CESSATION OF INDIVIDUAL BUSINESS.]
Notwithstanding the provisions of subdivisions 1 to 7, a health
carrier may elect to cease doing business in the individual
health plan market in this state if it complies with the
requirements of this subdivision. For purposes of this section,
"cease doing business" means to discontinue issuing new
individual health plans and to refuse to renew all of the health
carrier's existing individual health plans issued in this state
whose terms permit refusal to renew under the circumstances
specified in this subdivision. This subdivision does not permit
cancellation of an individual health plan, unless the terms of
the health plan permit cancellation under the circumstances
specified in this subdivision. A health carrier electing to
cease doing business in the individual health plan market in
this state shall notify the commissioner 180 days prior to the
effective date of the cessation. Within 30 days after the
termination, the health carrier shall submit to the commissioner
a complete list of policyholders that have been terminated. The
cessation of business does not include the failure of a health
carrier to offer or issue new business in the individual health
plan market or continue an existing product line in that market,
provided that a health carrier does not terminate, cancel, or
fail to renew its current individual health plan business. A
health carrier electing to cease doing business in the
individual health plan market shall provide 120 days' written
notice to each policyholder covered by an individual health plan
issued by the health carrier. This notice must also inform each
policyholder of the existence of the Minnesota Comprehensive
Health Association, the requirements for being accepted, the
procedures for applying for coverage, and the telephone numbers
at the department of health and the department of commerce for
information about private individual or family health coverage.
A health carrier that ceases to write new business in the
individual health plan market shall continue to be governed by
this section with respect to continuing individual health plan
business conducted by the health carrier. A health carrier that
ceases to do business in the individual health plan market after
July 1, 1994, is prohibited from writing new business in the
individual health plan market in this state for a period of five
years from the date of notice to the commissioner. This
subdivision applies to any health maintenance organization that
ceases to do business in the individual health plan market in
one service area with respect to that service area only.
Nothing in this subdivision prohibits an affiliated health
maintenance organization from continuing to do business in the
individual health plan market in that same service area. The
right to refuse to renew an individual health plan under this
subdivision does not apply to individual health plans issued on
a guaranteed renewable basis that does not permit refusal to
renew under the circumstances specified in this subdivision.
Sec. 18. Minnesota Statutes 2000, section 62E.04,
subdivision 4, is amended to read:
Subd. 4. [MAJOR MEDICAL COVERAGE.] Each insurer and
fraternal shall affirmatively offer coverage of major medical
expenses to every applicant who applies to the insurer or
fraternal for a new unqualified policy, which has a lifetime
benefit limit of less than $1,000,000, at the time of
application and annually to every holder of such an unqualified
policy of accident and health insurance renewed by the insurer
or fraternal. The coverage shall provide that when a covered
individual incurs out-of-pocket expenses of $5,000 or more
within a calendar year for services covered in section 62E.06,
subdivision 1, benefits shall be payable, subject to any
copayment authorized by the commissioner, up to a maximum
lifetime limit of $500,000 not less than $1,000,000. The offer
of coverage of major medical expenses may consist of the offer
of a rider on an existing unqualified policy or a new policy
which is a qualified plan.
Sec. 19. Minnesota Statutes 2000, 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 62Q, 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 $1,000,000.
The $3,000 limitation on total annual out-of-pocket
expenses and the $500,000 $1,000,000 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 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. 20. Minnesota Statutes 2000, section 62I.07,
subdivision 1, is amended to read:
Subdivision 1. [GENERAL ASSESSMENT.] Each member of the
association that is authorized to write property and casualty
insurance in the state shall participate in its losses and
expenses in the proportion that the direct written premiums of
the member on the kinds of insurance in that account bears to
the total aggregate direct written premiums written in this
state by all members on the kinds of insurance in that account.
The members' participation in the association shall be
determined annually on the direct written premiums written
during the preceding calendar year as reported on the annual
statements and other reports filed by the member with the
commissioner. Direct written premiums mean that amount at page
14 15, column (2), lines 5.1 5.2, 8, 9, 17, 21.2, 22, 23, 24,
25, 26, and 27 of the annual statement filed annually with the
department of commerce under section 60A.13.
Sec. 21. Minnesota Statutes 2000, section 62L.05,
subdivision 1, is amended to read:
Subdivision 1. [TWO SMALL EMPLOYER PLANS.] Each health
carrier in the small employer market must make available, on a
guaranteed issue basis, to any small employer that satisfies the
contribution and participation requirements of section 62L.03,
subdivision 3, both of the small employer plans described in
subdivisions 2 and 3. Under subdivisions 2 and 3, coinsurance
and deductibles do not apply to child health supervision
services and prenatal services, as defined by section 62A.047.
The maximum out-of-pocket costs for covered services must be
$3,000 per individual and $6,000 per family per year. The
maximum lifetime benefit must be $500,000 not less than
$1,000,000.
Sec. 22. Minnesota Statutes 2000, section 62L.05,
subdivision 2, is amended to read:
Subd. 2. [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The
benefits of the deductible-type small employer plan offered by a
health carrier must be equal to 80 percent of the charges, as
specified in subdivision 10, for health care services, supplies,
or other articles covered under the small employer plan, in
excess of an annual deductible which must be $500 $2,250 per
individual and $1,000 $4,500 per family.
Sec. 23. [62L.23] [SUSPENSION OF REINSURANCE OPERATIONS;
REACTIVATION.]
Subdivision 1. [SUSPENSION.] The commissioner may, by
order, suspend the operation of sections 62L.13 to 62L.22, upon
receipt of a recommendation for suspension from the association
board of directors. The order is effective 30 days after
publication in the State Register.
Subd. 2. [SUSPENSION OF REINSURANCE OPERATIONS.] Upon the
issuance of an order issued pursuant to subdivision 1, the
association shall suspend its operations in an orderly manner
supervised by the commissioner and shall provide for the proper
storage of the association's records. Notwithstanding the
provisions of subdivision 1, the association may continue to
levy assessments under section 62L.22 for the purpose of
satisfying the association's presuspension expenses and the
expenses associated with the association's suspension activities
pursuant to this subdivision. The assessments must be approved
by the commissioner.
Subd. 3. [NO CANCELLATION PERMITTED.] Effective upon the
effective date of an order issued pursuant to subdivision 1,
reinsurance must be terminated for any person reinsured by the
association pursuant to section 62L.18. No health carrier may
cancel or fail to renew a health benefit plan for any person
whose reinsurance with the association has been terminated
subsequently to the issuance of an order pursuant to subdivision
1 solely because of the termination of reinsurance.
Subd. 4. [REACTIVATION OF REINSURANCE OPERATIONS.] The
commissioner may, by order, reactivate the operation of sections
62L.13 to 62L.22, on a finding that the private market for
reinsurance of health benefit plans has failed and that
commercial reinsurance is unavailable to health carriers
operating in the small employer market in Minnesota. The
commissioner may not make findings or issue an order pursuant to
this subdivision until a hearing is held pursuant to chapter 14.
Subd. 5. [TRANSITION.] After issuance of any order
pursuant to subdivision 4, the commissioner shall immediately
appoint an interim board of directors of the association. The
terms of members of this interim board must be for a period not
to exceed 18 months. The board shall cause the reinsurance
operations of the association to be resumed within 180 days of
an order issued pursuant to subdivision 4.
Subd. 6. [MODIFICATION OF FIVE-YEAR RULE.] If the
commissioner issues an order pursuant to subdivision 4, any
health carrier may elect to participate in the reinsurance
association, notwithstanding any departicipation by the health
carrier within the preceding five years that, pursuant to
section 62L.17, would have otherwise prohibited the health
carrier's participation.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 24. Minnesota Statutes 2000, section 62M.03,
subdivision 2, is amended to read:
Subd. 2. [NONLICENSED UTILIZATION REVIEW ORGANIZATION.] An
organization that meets the definition of a utilization review
organization under section 62M.02, subdivision 21, that is not
licensed in this state that performs utilization review services
for Minnesota residents must register with the commissioner of
commerce and must certify compliance with sections 62M.01 to
62M.16.
Initial registration must occur no later than January 1,
1993. The registration is effective for two years and may be
renewed for another two years by written request. Each
utilization review organization registered under this chapter
shall notify the commissioner of commerce within 30 days of any
change in the name, address, or ownership of the
organization. The organization shall pay to the commissioner of
commerce a fee of $1,000 for the initial registration
application and $1,000 for each two-year renewal.
Sec. 25. Minnesota Statutes 2000, section 62M.05,
subdivision 5, is amended to read:
Subd. 5. [NOTIFICATION TO CLAIMS ADMINISTRATOR.] If the
utilization review organization and the claims administrator are
separate entities, the utilization review organization must
forward, electronically or in writing, a notification of
certification or determination not to certify to the appropriate
claims administrator for the health benefit plan. If it is
determined by the claims administrator that the certified health
care service is not covered by the health benefit plan, the
claims administrator must promptly notify the claimant and
provider of this information.
Sec. 26. Minnesota Statutes 2000, section 62Q.01,
subdivision 6, is amended to read:
Subd. 6. [MEDICARE-RELATED COVERAGE.] "Medicare-related
coverage" means a policy, contract, or certificate issued as a
supplement to Medicare, regulated under sections 62A.31 to
62A.44, including Medicare select coverage; policies, contracts,
or certificates that supplement Medicare issued by health
maintenance organizations; or policies, contracts, or
certificates governed by section 1833 (known as "cost" or "HCPP"
contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the
federal Social Security Act, United States Code, title 42,
section 1395, et seq., as amended.; or Section 4001 of the
Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections
1851 to 1859 of the Social Security Act establishing Part C of
the Medicare program, known as the "Medicare+Choice program."
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 27. Minnesota Statutes 2000, section 62Q.73,
subdivision 3, is amended to read:
Subd. 3. [RIGHT TO EXTERNAL REVIEW.] (a) Any enrollee or
anyone acting on behalf of an enrollee who has received an
adverse determination may submit a written request for an
external review of the adverse determination, if applicable
under section 62Q.68, subdivision 1, or 62M.06, to the
commissioner of health if the request involves a health plan
company regulated by that commissioner or to the commissioner of
commerce if the request involves a health plan company regulated
by that commissioner. Notification of the enrollee's right to
external review must accompany the denial issued by the insurer.
The written request must be accompanied by a filing fee of $25.
The fee may be waived by the commissioner of health or commerce
in cases of financial hardship.
(b) Nothing in this section requires the commissioner of
health or commerce to independently investigate an adverse
determination referred for independent external review.
(c) If an enrollee requests an external review, the health
plan company must participate in the external review. The cost
of the external review in excess of the filing fee described in
paragraph (a) shall be borne by the health plan company.
Sec. 28. Minnesota Statutes 2000, section 65A.29,
subdivision 7, is amended to read:
Subd. 7. [RENEWAL; NOTICE REQUIREMENT.] No insurer shall
refuse to renew, or reduce limits of coverage, or eliminate any
coverage in a homeowner's insurance policy unless it mails or
delivers to the insured, at the address shown in the policy, at
least 60 days' advance notice of its intention. The notice must
contain the specific underwriting or other reason or reasons for
the indicated action and must state the name of the insurer and
the date the notice is issued.
Proof of mailing this notice to the insured at the address
shown in the policy is sufficient proof that the notice required
by this section has been given.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 29. Minnesota Statutes 2000, section 65B.04,
subdivision 3, is amended to read:
Subd. 3. [AMENDMENTS.] The plan of operation may be
amended by a majority vote of the governing committee, and the
approval of the commissioner and ratification by a majority of
the members. An order by the commissioner disapproving an
amendment to the plan of operation must be issued within 30 days
of receipt by the commissioner of the proposed amendment,
certified by the governing committee as having been adopted by
that committee by a majority vote, or the amendment shall be
deemed approved by the commissioner. An order of disapproval
may be appealed as provided in chapter 14.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 30. Minnesota Statutes 2000, section 65B.06,
subdivision 1, is amended to read:
Subdivision 1. With respect to private passenger, nonfleet
automobiles, the facility shall provide for the equitable
distribution of qualified applicants to members in accordance
with the participation ratio or among these insurance companies
as selected under the provisions of the plan of operation.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 31. Minnesota Statutes 2000, section 65B.06,
subdivision 4, is amended to read:
Subd. 4. Coverage made available under this section shall
be the standard automobile policy and endorsement forms, as
approved by the commissioner, with such changes, additions and
amendments as are adopted by the governing committee and
approved by the commissioner.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 32. Minnesota Statutes 2000, section 65B.16, is
amended to read:
65B.16 [STATEMENT OF REASONS FOR CANCELLATION OR
REDUCTION.]
No notice of cancellation or reduction in the limits of
liability of coverage of an automobile insurance policy under
section 65B.15 shall be effective unless the specific
underwriting or other reason or reasons for such cancellation or
reduction in the limits of liability of coverage are stated in
such notice and the notice is mailed or delivered by the insurer
so as to provide the named insured with at least 30 days days'
notice prior to the effective date of cancellation; provided,
however, that when nonpayment of premium is the reason for
cancellation or when the company is exercising its right to
cancel insurance which has been in effect for less than 60 days
at least ten days' notice of cancellation, and the reasons for
the cancellation, shall be given. Information regarding moving
traffic violations or motor vehicle accidents must be
specifically requested on the application in order for a company
to use those incidents to exercise its right to cancel within
the first 59 days of coverage. When nonpayment of premiums is
the reason for cancellation, the reason must be given to the
insured with the notice of cancellation; and if the company is
exercising its right to cancel within the first 59 days of
coverage and notice is given with less than ten days remaining
in the 59-day period, the coverage must be extended, to expire
ten days after notice was mailed.
Sec. 33. Minnesota Statutes 2000, section 65B.19,
subdivision 2, is amended to read:
Subd. 2. [NOTICE OF RIGHT TO COMPLAIN.] When the insurer
notifies the policyholder of nonrenewal, cancellation or
reduction in the limits of liability of coverage under section
65B.16 or 65B.17, the insurer shall also notify the named
insured of the right to complain within 30 days of receipt by
the named insured of notice of nonrenewal, cancellation or
reduction in the limits of liability to the commissioner of such
action and of the nature of and possible eligibility for
insurance through the Minnesota automobile insurance plan. Such
notice shall be included in the notice of nonrenewal,
cancellation or reduction in the limits of liability of
coverage, and shall state that such notice of the insured's
right of complaint to the commissioner and of the availability
of insurance through the Minnesota automobile insurance plan is
given pursuant to sections 65B.14 to 65B.21. The notice must
state the name of the insurer and the date the notice is issued.
Sec. 34. Minnesota Statutes 2000, section 67A.20, is
amended by adding a subdivision to read:
Subd. 3. [WITH LICENSED INSURERS.] Township mutual fire
insurance companies may enter into reinsurance agreements with
any Minnesota licensed insurer authorized to write the same
lines of business.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 35. Minnesota Statutes 2000, section 70A.07, is
amended to read:
70A.07 [RATES AND FORMS OPEN TO INSPECTION.]
All rates and, supplementary rate information, and forms,
furnished to the commissioner under this chapter shall, as soon
as the rates are reviewed by the commissioner as the
commissioner's review has been completed, be open to public
inspection at any reasonable time.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 36. Minnesota Statutes 2000, section 79A.02,
subdivision 1, is amended to read:
Subdivision 1. [MEMBERSHIP.] For the purposes of assisting
the commissioner, there is established a workers' compensation
self-insurers' advisory committee of five members that are
employers authorized to self-insure in Minnesota. Three of the
members and three alternates shall be elected by the
self-insurers' security fund board of trustees and two members
and two alternates shall be appointed by the
commissioner. Notwithstanding section 15.059, subdivision 5a,
the advisory committee does not expire June 30, 2001.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 37. Minnesota Statutes 2000, section 79A.03,
subdivision 7, is amended to read:
Subd. 7. [FINANCIAL STANDARDS.] A self-insurer group shall
have and maintain:
(a) A combined net worth of all of the members of an amount
at least equal to the greater of ten times the retention
selected with the workers' compensation reinsurance association
or one-third of the current annual modified premium of the
members.
(b) Sufficient assets, net worth, and liquidity to promptly
and completely meet all obligations of its members under chapter
176 or this chapter. In determining whether a group is in sound
financial condition, consideration shall be given to the
combined net worth of the member companies; the consolidated
long-term and short-term debt to equity ratios of the member
companies; any excess insurance other than reinsurance with the
workers' compensation reinsurance association, purchased by the
group from an insurer licensed in Minnesota or from an
authorized surplus line carrier; other financial data requested
by the commissioner or submitted by the group; and the combined
workers' compensation experience of the group for the last four
years.
No authority to self-insure will be granted unless, over
the term of the policy year, at least 65 percent of total
revenues from all sources for the year are available for the
payment of its claim and assessment obligations, and insurance
premiums for stop loss coverage. For purposes of this
calculation, claim and assessment obligations include the cost
of allocated loss expenses as well as special compensation fund
and self-insurers' security fund assessments but exclude the
cost of unallocated loss expenses.
[EFFECTIVE DATE.] This section is effective July 1, 2001.
Sec. 38. Minnesota Statutes 2000, section 79A.04,
subdivision 16, is amended to read:
Subd. 16. [CERTIFICATE TO SELF-INSURE; REVOCATION.] If,
following a private self-insurer's bankruptcy, insolvency, or
certificate of default, the commissioner calls its security and
proceeds in accordance with this section, the commissioner shall
revoke the certificate to self-insure of the private
self-insurer as soon as practicable but no later than 30 days
after its security has been called. No insolvent self-insurer,
as defined in section 79A.01, subdivision 4, shall be eligible
to receive another grant of authority to self-insure unless
either: (1) the insolvent self-insurer's posted security was
sufficient to pay all direct and indirect administrative and
professional expenses of the security fund related to the
insolvent self-insurer, and all losses, including estimated
future liability, allocated loss expense, and unallocated loss
expense of the insolvent self-insurer; or (2) the insolvent
self-insurer pays the security fund an amount equal to all such
losses and expenses the security fund has paid or will be
required to pay related to this insolvent self-insurer.
Sec. 39. Minnesota Statutes 2000, section 79A.15, is
amended to read:
79A.15 [SURETY BOND FORM.]
The form for the surety bond under this chapter shall be:
STATE OF MINNESOTA
DEPARTMENT OF COMMERCE
SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION
IN THE MATTER OF THE CERTIFICATE OF )
)
) SURETY BOND
) NO. .............
) PREMIUM: ........
)
Employer, Certificate No: .............. )
KNOW ALL PERSONS BY THESE PRESENTS:
That .....................................................
(Employer)
whose address is ..............................................
as Principal, and .............................................
(Surety)
a corporation organized under the laws of .....................
and authorized to transact a general surety business in the
State of Minnesota, as Surety, are held and firmly bound to the
State of Minnesota in the penal sum of
...........................dollars ($..........) for which
payment we bind ourselves, our heirs, executors, administrators,
successors, and assigns, jointly and severally, firmly by these
presents.
WHEREAS in accordance with Minnesota Statutes, chapter 176,
the principal elected to self-insure, and made application for,
or received from the commissioner of commerce of the state of
Minnesota, a certificate to self-insure, upon furnishing of
proof satisfactory to the commissioner of commerce of ability to
self-insure and to compensate any or all employees of said
principal for injury or disability, and their dependents for
death incurred or sustained by said employees pursuant to the
terms, provisions, and limitations of said statute;
NOW THEREFORE, the conditions of this bond or obligation
are such that if principal shall pay and furnish compensation,
pursuant to the terms, provisions, and limitations of said
statute to its employees for injury or disability, and to the
dependents of its employees, then this bond or obligation shall
be null and void; otherwise to remain in full force and effect.
FURTHERMORE, it is understood and agreed that:
1. This bond may be amended, by agreement between the
parties hereto and the commissioner of commerce as to the
identity of the principal herein named; and, by agreement of the
parties hereto, as to the premium or rate of premium. Such
amendment must be by endorsement upon, or rider to, this bond,
executed by the surety and delivered to or filed with the
commissioner.
2. The surety does, by these presents, undertake and agree
that the obligation of this bond shall cover and extend to all
past, present, existing, and potential liability of said
principal, as a self-insurer, to the extent of the penal sum
herein named without regard to specific injuries, date or dates
of injuries, happenings or events.
3. The penal sum of this bond may be increased or
decreased, by agreement between the parties hereto and the
commissioner of commerce, without impairing the obligation
incurred under this bond for the overall coverage of the said
principal, for all past, present, existing, and potential
liability, as a self-insurer, without regard to specific
injuries, date or dates of injuries, happenings or events, to
the extent, in the aggregate, of the penal sum as increased or
decreased. Such amendment must be by endorsement.
4. The aggregate liability of the surety hereunder on all
claims whatsoever shall not exceed the penal sum of this bond in
any event.
5. This bond shall be continuous in form and shall remain
in full force and effect unless terminated as follows:
(a) The obligation of this bond shall terminate upon
written notice of cancellation from the surety, given by
registered or certified mail to the commissioner of commerce,
state of Minnesota, save and except as to all past, present,
existing, and potential liability of the principal incurred,
including obligations resulting from claims which are incurred
but not yet reported, as a self-insurer prior to effective date
of termination. This termination is effective 60 days after
receipt of notice of cancellation by the commissioner of
commerce, state of Minnesota.
(b) This bond shall also terminate upon the revocation of
the certificate to self-insure, save and except as to all past,
present, existing, and potential liability of the principal
incurred, including obligations resulting from claims which are
incurred but not yet reported, as a self-insurer prior to
effective date of termination. The principal and the surety,
herein named, shall be immediately notified in writing by said
commissioner, in the event of such revocation.
6. Where the principal posts with the commissioner of
commerce, state of Minnesota, or the state treasurer, state of
Minnesota, a replacement security deposit, in the form of a
surety bond, irrevocable letter of credit, cash, securities, or
any combination thereof, in the full amount as may be required
by the commissioner of commerce, state of Minnesota, to secure
all incurred liabilities for the payment of compensation of said
principal under Minnesota Statutes, chapter 176, the surety is
released from obligations under the surety bond upon the date of
acceptance by the commissioner of commerce, state of Minnesota,
of said replacement security deposit.
7. If the said principal shall suspend payment of workers'
compensation benefits or shall become insolvent or a receiver
shall be appointed for its business, or the commissioner of
commerce, state of Minnesota, issues a certificate of default,
the undersigned surety will become liable for the workers'
compensation obligations of the principal on the date benefits
are suspended. The surety shall begin payments within 14 days
under paragraph 8, or 30 days under paragraph 10, after receipt
of written notification by certified mail from the commissioner
of commerce, state of Minnesota, to begin payments under the
terms of this bond.
8. If the surety exercises its option to administer
claims, it shall pay benefits due to the principal's injured
workers within 14 days of the receipt of the notification by the
commissioner of commerce, state of Minnesota, pursuant to
paragraph 7, without a formal award of a compensation judge, the
commissioner of labor and industry, any intermediate appellate
court, or the Minnesota supreme court and such payment will be a
charge against the penal sum of the bond. Administrative and
legal costs and payment of assessments incurred by the surety in
discharging its obligations and payment of the principal's
obligations for administration and legal expenses and payment of
assessments under Minnesota Statutes, chapters 79A and 176,
shall also be a charge against the penal sum of the bond;
however, the total amount of this surety bond set aside for the
payment of said administrative and legal expenses and payment of
assessments shall be limited to a maximum ten percent of the
total penal sum of the bond unless otherwise authorized by the
security fund.
9. If any part or provision of this bond shall be declared
unenforceable or held to be invalid by a court of proper
jurisdiction, such determination shall not affect the validity
or enforceability of the other provisions or parts of this bond.
10. If the surety does not give notice to the
(self-insurer's security fund) (commercial self-insurance group
security fund) and the commissioner of commerce, state of
Minnesota, within two five business days of receipt of written
notification from the commissioner of commerce, state of
Minnesota, pursuant to paragraph 7, to exercise its option to
administer claims pursuant to paragraph 8, then the
(self-insurer's security fund) (commercial self-insurance
security fund) will assume the payments of the workers'
compensation obligations of the principal pursuant to Minnesota
Statutes, chapter 176. Administrative, legal, actuarial, and
other direct costs attributed to the principal shall also be a
charge against the penal sum of the bond. The surety shall pay,
within 30 days of the receipt of the notification by the
commissioner of commerce, state of Minnesota, pursuant to
paragraph 7, to the (self-insurer's security fund) (commercial
self-insurance group security fund) as an initial deposit an
amount equal to ten 50 percent of the penal sum of the bond, and
shall thereafter, upon notification from the (self-insurer's
security fund) (commercial self-insurance group security fund)
that the balance of the initial deposit, including interest
earned as provided below with respect to the segregated account,
had fallen to one ten percent of the penal sum of the bond,
remit to the (self-insurer's security fund) (commercial
self-insurance group security fund) an amount equal to the
payments made by the (self-insurer's security fund) (commercial
self-insurance group security fund) in the three calendar months
immediately preceding said notification. an additional ten
percent of the penal sum of the bond. All such payments will be
a charge against the penal sum of the bond. The initial deposit
and all subsequent deposits shall be deposited by the
(self-insurer's security fund) (commercial self-insurance group
security fund) into a segregated, interest-bearing account.
These deposits, together with any interest earned thereon, shall
be used to satisfy all obligations of the surety hereunder.
Upon determination that there are no remaining reserves for any
known claims covered under the bond, the balance of the account,
including any interest earned thereon, shall be paid to the
surety.
Said repayment of the funds to the surety will not
discharge the bond, which shall remain in full force and effect
as to all past, present, existing, and potential liability of
the principal incurred, including obligations resulting from
claims which are incurred but not yet reported, as a
self-insurer prior to the effective date of termination of the
bond.
11. Disputes concerning the posting, renewal, termination,
exoneration, or return of all or any portion of the principal's
security deposit or any liability arising out of the posting or
failure to post security, or the adequacy of the security or the
reasonableness of administrative costs, including legal costs,
arising between or among a surety, the issuer of an agreement of
assumption and guarantee of workers' compensation liabilities,
the issuer of a letter of credit, any custodian of the security
deposit, the principal, or the (self-insurer's security fund)
(commercial self-insurance group security fund) shall be
resolved by the commissioner of commerce pursuant to Minnesota
Statutes, chapters 79A and 176.
12. Written notification to the surety required by this
bond shall be sent to:
.........................
Name of Surety
.........................
To the attention of Person or
Position
.........................
Address
.........................
City, State, Zip
Written notification to the principal required by this bond
shall be sent to:
.........................
Name of Principal
.........................
To the attention of Person or
Position
.........................
Address
.........................
City, State, Zip
13. This bond is executed by the surety to comply with
Minnesota Statutes, chapter 176, and said bond shall be subject
to all terms and provisions thereof.
.........................
Name of Surety
.........................
Address
.........................
City, State, Zip
THIS bond is executed under an unrevoked appointment or
power of attorney.
I certify (or declare) under penalty of perjury under the
laws of the state of Minnesota that the foregoing is true and
correct.
.............. .............................
Date Signature of Attorney-In-Fact
.............................
Printed or Typed Name of
Attorney-In-Fact
A copy of the transcript or record of the unrevoked
appointment, power of attorney, bylaws, or other instrument,
duly certified by the proper authority and attested by the seal
of the insurer entitling or authorizing the person who executed
the bond to do so for and in behalf of the insurer, must be
filed in the office of the commissioner of commerce or must be
included with this bond for such filing.
[EFFECTIVE DATE.] This section is effective for bonds
posted on or after January 1, 2002.
Sec. 40. Minnesota Statutes 2000, section 471.617,
subdivision 1, is amended to read:
Subdivision 1. [IF MORE THAN 100 EMPLOYEES; CONDITIONS.] A
statutory or home rule charter city, county, school district, or
instrumentality thereof which has more than 100 employees, may
by ordinance or resolution self-insure for any employee health
benefits including long-term disability, but not for employee
life benefits. Any self-insurance plan shall provide all
benefits which are required by law to be provided by group
health insurance policies. Self-insurance plans shall must be
certified as provided by section 62E.05 and must be filed and
certified by the department of commerce before they are issued
or delivered to any person in this state.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Sec. 41. [REPEALER.]
Minnesota Statutes 2000, sections 13.7191, subdivision 11;
60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07;
62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 62G.14; 62G.15;
62G.16; 62G.17; 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23;
62G.24; and 62G.25, are repealed.
[EFFECTIVE DATE.] This section is effective the day
following final enactment.
Presented to the governor May 25, 2001
Signed by the governor May 29, 2001, 11:28 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes