59A.01 CITATION. Sections 59A.01 to 59A.15 may be cited as the "Insurance Premium Finance Company Act." History:   1974 c 353 s 1 
59A.02 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 59A.01 to 59A.15, the words, terms and phrases defined in this section have the meanings ascribed to them except where the context clearly indicates a different meaning. Subd. 2. Insurance premium finance agreement. "Insurance premium finance agreement" means an agreement by which an insured or prospective insured promises to pay to a premium finance company or to its assignee the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance policy together with a service charge. Any agreement to finance premiums is a premium finance agreement if an insurance policy, other than a life or disability insurance policy, is made the security or collateral for the repayment of the debt incurred under the agreement. Provided, however, an agreement to finance premiums for insurance which is included in a retail installment transaction or purchased in connection with a real estate transaction, mortgage, deed of trust or other security agreement is not a premium finance agreement. Provided further, that an agreement by an insurance company to finance policies written by itself or by companies other than itself or its parent company, its subsidiaries or companies with which it shares a common parent company is not a premium finance agreement. Subd. 3. Licensee. "Licensee" means a person licensed by the commissioner to engage in the business of insurance premium financing. The term does not include a person in the business of insurance premium financing exclusively financing premiums for business, agricultural, or corporate purposes. Subd. 4. Commissioner. "Commissioner" means the commissioner of commerce. History:  1974 c 353 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1993 c 257 s 43
59A.03 LICENSES; PENALTY. Subdivision 1. Requirement. No person other than a savings association, bank, savings bank, trust company, regulated lender, industrial loan and thrift company, credit union or resident insurance agent who, within 15 days after entering into an insurance premium finance agreement, transfers such agreement to a licensee or to any of the organizations exempt under this subdivision may engage in the business of entering into, acquiring or holding insurance premium finance agreements unless licensed to do so by the commissioner. A violation of this subdivision is a misdemeanor. Subd. 2. Required fees. The applicant at the time of making application, shall pay to the commissioner the sum of $250 as a fee for investigating the application, and the additional sum of $200 as an annual licensee fee for a period terminating on May 31 of each year. In addition to the annual license fee, every licensee shall pay to the commissioner the actual costs of each examination as may be required to be conducted under the terms of sections 59A.01 to 59A.15. Subd. 3. Commissioner's authority. The person to whom the license or the renewal thereof may be issued shall file sworn answers to such interrogatories as the commissioner may require. The commissioner shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers and employees and may refuse to issue or issue a license in the name of any firm, partnership, or corporation if not satisfied that any officer, employee, stockholder or partner thereof, who may materially influence the applicant's conduct, meets the standards of sections 59A.01 to 59A.15. Subd. 4. Records and fees; maintenance and processing. Section 58A.04, subdivisions 2 and 3, apply to this section. History:  1974 c 353 s 3; 1976 c 2 s 34; 1976 c 111 s 1; 1986 c 444; 1994 c 382 s 13; 1995 c 202 art 1 s 25; 1999 c 151 s 37; 2020 c 80 art 1 s 13
59A.04 ACTION BY COMMISSIONER ON APPLICATION. Subdivision 1. Investigation and hearing. Upon the filing of an initial application and the payment of the license fee, the commissioner shall make an investigation of each applicant. If a license has not been issued within 30 days after receipt of the application the commissioner shall, at the request of the applicant, give the applicant a full hearing. Subd. 2. License issued. The commissioner shall issue or renew a license when satisfied that the person to be licensed: (a) is competent and trustworthy and intends to act in good faith in the financing of insurance premiums; (b) has a good business reputation and has had experience, training or education so as to be qualified in financing insurance premiums; and (c) if a corporation, is a corporation incorporated under the laws of this state or a foreign corporation authorized to transact business in this state. History:  1974 c 353 s 4; 1986 c 444
59A.05 REVOCATION AND SUSPENSION OF LICENSES. The commissioner may after a hearing revoke, suspend, or refuse to renew the license of any licensee if it appears to the commissioner that: (a) the license was obtained by fraud; (b) there was any misrepresentation in the application for the license; (c) the holder of the license is untrustworthy or incompetent to finance insurance premiums, or is involved in any fraudulent, dishonest or deceptive practice; or (d) the licensee has violated any of the provisions of sections 59A.01 to 59A.15 or rules adopted pursuant to sections 59A.01 to 59A.15. History:  1974 c 353 s 5; 1986 c 444
59A.06 BOOKS AND RECORDS. Subdivision 1. Licensee duties. Every licensee shall maintain records satisfactory to the commissioner of its premium finance transactions. The records shall be open to examination and investigation by the commissioner at any time during ordinary business hours. The commissioner may, at any time, require any licensee to bring these records to the commissioner's office for examination. Subd. 2. Retention requirements. Every licensee shall preserve its records of premium finance transactions for at least three years after making the final entry in respect to any premium finance agreement. The records may be preserved in photographic form or in a form acceptable to the commissioner under section 46.04, subdivision 3. Subd. 3. Commissioner's examination authority; recovery of costs. The commissioner may at any time make an examination of the affairs, business, office, and records of each licensee. Each licensee shall pay to the commissioner the actual costs of examination as well as amounts required under section 46.131, and the commissioner may maintain an action for the recovery of such costs in any court of competent jurisdiction. Subd. 4. Annual report. Each licensee shall annually before March 15 file a report under oath with the commissioner, in the form prescribed, giving information as required concerning the business and operations of each licensed place of business during the preceding year. The commissioner shall make and publish annually an analysis and recapitulation of the reports. History:  1974 c 353 s 6; 1976 c 26 s 1; 1986 c 444; 1987 c 349 art 2 s 2; 1995 c 202 art 2 s 24
59A.07 POWER TO MAKE RULES. The commissioner shall promulgate any rules which may be necessary to the administration of sections 59A.01 to 59A.15. History:  1974 c 353 s 7; 1985 c 248 s 70
59A.08 PREMIUM FINANCE AGREEMENTS. Subdivision 1. Contents; specific information. A premium finance agreement shall: (a) be dated and signed by or on behalf of the insured, and the printed portion thereof shall be in at least eight point type; (b) contain the name and place of business of the insurance agent or insurance broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified, the name and place of business of the premium finance company to which installments or other payments are to be made, the name of the insurer issuing the related insurance contract, a description of the insurance contracts including the term and type of policy, the premiums for which are advanced or are to be advanced under the agreement and the amount of the premiums therefor; and (c) set forth the following items where applicable: (1) the total amount of the premiums, (2) the amount of the down payment, (3) the balance of premiums due, the amount financed (the difference between items (1) and (2)), (4) the amount of the finance charge, (5) the amount of the flat service fee, (6) the total of payments (sum of items (3), (4) and (5)). Subd. 2. Contents; sequence or order. The items set forth in subdivision 1, clause (c) need not be stated in the sequence or order in which they appear and additional items may be included to explain the computations made in determining the amount to be paid by the insured. Subd. 3. Other premiums. Additional or subsequent premiums may be added to an insurance premium finance agreement from time to time, provided that: (a) The additional or subsequent insurance premium to be added results from additional premiums required under policies presently being financed under the insurance premium finance agreement or from a renewal of a policy or from other policies owned or purchased by the insured. (b) The insurance premium finance company receives written notice or advice from an insurer authorized to do business in this state or from an insurance agent licensed in this state acknowledging that the premium on an existing financed policy has been increased or that a policy has been renewed or that additional policies have or will be issued to the insured. The notice or advice shall contain the amount of the additional premium, the down payment collected by the insurer or agent, if any, and the amount of premium to be added to the insurance premium finance agreement. (c) If the additional premiums to be added to the insurance premium finance agreement result from additional premiums required on policies presently financed under the agreement or from a renewal of a policy or from other policies owned or purchased by the insured, a written notice must be mailed, faxed, or delivered to the insured outlining any changes to the information required by subdivision 1 along with a conspicuous statement to the insured that the insured may tender the premiums in full or affirm the proposed changes by tendering either an additional down payment or tendering the proposed revised installment amount, or disaffirm the financing of the additional premium by continuing the original payment amount as agreed to in the initial agreement. If the proposed revisions in paragraph (c) are affirmed by the insured, the finance company may make an additional finance charge according to section 59A.09 for the additional premium financed and added to the open-end agreement; however, no additional flat service fee may be made or charged for adding additional or subsequent premiums to an open-end insurance premium finance agreement for which a flat service fee was previously made or charged. Subd. 4. Copy. The premium finance company or the insurance agent shall deliver to the insured, or mail to the insured at the address shown in the agreement, a completed copy of that agreement. Within 15 days of receiving the policy number of the policy being financed, the premium finance company shall mail to the insurer a notice of financed premium, which contains the term, amount of premium, and type of policy being financed. Subd. 5. Competitive equality. No insurance agent, insurance broker, or insurer may require a person to use a particular insurance premium finance company or other installment payment plan for which a finance charge or other fee in connection with an installment payment has been or will be imposed or refuse to accept premium payment from a company licensed under sections 59A.01 to 59A.15. History:  1974 c 353 s 8; 1975 c 309 s 1; 1986 c 444; 1992 c 564 art 1 s 9,10; 1997 c 157 s 52,53
59A.09 MAXIMUM FINANCE CHARGE. Subdivision 1. Grant of authority. No person engaged in the business of financing insurance premiums may charge, contract for, receive or collect a finance charge plus flat service fee with respect to an insurance premium finance agreement other than as permitted by this section. Subd. 2. Balance determined. The finance charge shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when final installment of the premium finance agreement is payable. Subd. 3. How computed. The finance charge must not exceed five percent in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank located in the Ninth Federal Reserve District when an insurance premium finance agreement is made or when an additional or subsequent premium is added under an open end agreement. For expenses incurred in servicing the loan including any filing fees, application fee for the examination or investigation of the character of the borrower, comaker or security, and drawing any necessary papers in making the loan, an insurance premium finance company may contract for a flat rate service fee not exceeding the greater of one percent of the amount financed or $20 per premium finance agreement. The flat service fee need not be refunded upon prepayment in full before maturity. Subd. 4. When computed. The finance charge shall be computed in advance on the principal balance of a premium finance agreement according to the actuarial method on terms payable in substantially equal successive monthly installments. Subd. 5. Prepayment. Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such event the insured shall receive a refund credit. The amount of such refund credit shall represent at least as great a proportion of the finance charge as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedule of installments in the agreement. Where the amount of the refund is less than $1, no refund need be made. If, in addition to the finance charge, an additional flat service fee was imposed, the flat service fee need not be refunded nor taken into consideration in computing the refund credit. Subd. 6. Limitation. Subdivision 3 applies only to a premium finance agreement in which the related insurance contract is for personal, family, or household use. The rate charged under an agreement made to finance an insurance policy for business, agricultural, or corporate purposes shall be as agreed to by the parties to the agreement. History:  1974 c 353 s 9; 1979 c 261 s 1; 1983 c 200 s 1-3; 1986 c 444
59A.10 DEFAULT CHARGES. Subdivision 1. Delinquencies. A premium finance agreement may provide for payment by the insured of a delinquency charge. The delinquency charge may not exceed five percent of the delinquent installment. The delinquency charge may be imposed upon any installment which is in default for a period of ten days or more. Subd. 2. Cancellations and collections. If the default results in the cancellation or subsequent reinstatement of any insurance contract listed in the agreement, the agreement may provide for payment by the insured of a cancellation charge of $10. A premium finance agreement may also provide for the payment of statutory attorneys fees and statutory court costs if the agreement is referred for collection to an attorney not a salaried employee of the insurance premium finance company. History:  1974 c 353 s 10; 1991 c 283 s 1
59A.11 CANCELLATION OF INSURANCE CONTRACT UPON DEFAULT. Subdivision 1. Grant of authority. When a premium finance agreement contains a power of attorney or other authority enabling the insurance premium finance company to cancel any insurance contract listed in the agreement, the insurance contract or contracts shall not be canceled by the premium finance company unless such cancellation is effectuated in accordance with this section. Subd. 2. Notice required. Not less than ten days' written notice shall be mailed to the insured setting forth the intent of the insurance premium finance company to cancel the insurance contract unless the default is cured prior to the date stated in the notice. The insurance agent or insurance broker indicated on the premium finance agreement shall also be given ten days' notice of this action in a manner agreed upon between the insurance premium finance company and insurance agent or insurance broker. Subd. 3. Regulation of required notice. (a) Pursuant to the power of attorney or other authority referred to above, the insurance premium finance company may cancel on behalf of the insured by mailing to the insurer written notice stating when thereafter the cancellation shall be effective, and the insurance contract shall be canceled as if such notice of cancellation had been submitted by the insured personally, but without requiring the return of the insurance contract. In the event that the insurer or its agent does not provide the insurance premium finance company with a specific mailing address for the purposes of receipt of the above notice, then mailing by the insurance premium finance company to the insurer at the address which is on file and of record with the commissioner of commerce pursuant to the provisions of chapters 60A and 72A shall be considered sufficient notice under this section. The notice requirements of this paragraph only apply if an insurance premium finance company and an insurer have not agreed on a method of providing notice of cancellation. (b) The insurance premium finance company shall also mail a notice of cancellation to the insured at the insured's last known address. (c) Written notice of the cancellation must also be given to the insurance agent or insurance broker indicated on the premium finance agreement. Written notice to the insurance agent or broker required by this paragraph may be given in a manner agreed upon between the insurance premium finance company, insurer, agent, or broker. Subd. 4. Notice to third party. Where statutory, regulatory or contractual restrictions provide that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or other third party, the insurer shall give the prescribed notice on behalf of itself or the insured to the governmental agency, mortgagee or other third party within ten days after the day it receives the notice of cancellation from the premium finance company. When the above restrictions require the continuation of insurance beyond the effective date of cancellation specified by the premium finance company, the insurance shall be limited to the coverage to which the restrictions relate and to the persons they are designed to protect. History:  1974 c 353 s 11; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1992 c 564 art 1 s 11; 1997 c 157 s 54,55
59A.12 APPLICATION OF UNEARNED PREMIUMS. Subdivision 1. Pro rata return after cancellation. Whenever a financed insurance contract is canceled, within 30 days of the effective date of cancellation, if the premium finance company has notified the insurer that the premiums are financed, the insurer shall return whatever gross unearned premiums, computed pro rata, are due under the insurance contract to the premium finance company for the account of the insured or insureds. This action by the insurer satisfies the insurer's obligations under the insurance contract which relate to the return of the unearned premiums. Subd. 2. Premium audit; determination of final premium amount. In the event that a premium is subject to an audit to determine the final premium amount, the gross unearned premium will be calculated upon the deposit premium and the insurer shall return whatever gross unearned premiums are due based upon the deposit rather than the actual unearned premium to the finance company for the account of the insured or insureds. Subd. 3. Assigned risk policies. Assigned risk policies shall be handled in conformance with section 59A.11 and subdivisions 1 and 2. Subd. 4. Refund to insured. If the crediting of returned premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company must refund the excess to the insured within 30 days after receipt of the returned premium; but no refund is required if it amounts to less than $1. Subd. 5. Return of unearned premium; notice to policyholder. Whenever an insurer, after having been advised that an insurance policy has been financed by a premium finance agreement, returns an unearned premium on such a policy, the insurer shall deliver or mail to the policyholder a notice that includes the following information: the amount of premium paid, the term of the policy, the date coverage began and ceased, the amount of the unearned premium, the name of the party receiving the funds, and a statement of the obligation of the premium finance company to return within 30 days of receipt of the unearned premium any amount of the unearned premium in excess of the amount owed by the policyholder to the premium finance company. History:  1974 c 353 s 12; 1983 c 200 s 4,5; 1992 c 564 art 1 s 12; 1994 c 485 s 3
59A.13 EXEMPTION FROM FILING. No filing of the premium finance agreement or recording of a premium finance transaction shall be necessary to perfect the validity of the agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrances, successors or assigns. History:   1974 c 353 s 13 
59A.15 APPLICABILITY OF CHAPTER 14. The provisions of chapter 14 shall apply to sections 59A.01 to 59A.15. History:  1974 c 353 s 15; 1982 c 424 s 130
59B.01 SCOPE AND PURPOSE. (a) The purpose of this chapter is to create a legal framework within which service contracts may be sold in this state. (b) The following are exempt from this chapter: (1) warranties; (2) maintenance agreements; (3) warranties, service contracts, or maintenance agreements offered by public utilities, as defined in section 216B.02, subdivision 4, or an entity or operating unit owned by or under common control with a public utility; (4) service contracts sold or offered for sale to persons other than consumers; (5) service contracts on tangible property where the tangible property for which the service contract is sold has a purchase price of $250 or less, exclusive of sales tax; (6) service contracts for home security equipment installed by a licensed technology systems contractor; and (7) motor club membership contracts that typically provide roadside assistance services to motorists stranded for reasons that include, but are not limited to, mechanical breakdown or adverse road conditions. (c) The types of agreements referred to in paragraph (b) are not subject to chapters 60A to 79A, except as otherwise specifically provided by law. (d) Service contracts issued by motor vehicle manufacturers covering private passenger automobiles are only subject to sections 59B.03, subdivision 5, 59B.05, and 59B.07. (e) All warranty service contracts are deemed to be made in Minnesota for the purpose of arbitration. History:  1Sp2005 c 1 art 5 s 1; 2008 c 344 s 2; 2009 c 178 art 1 s 4
59B.02 DEFINITIONS. Subdivision 1. Terms. For the purposes of this chapter, the terms defined in this section have the meanings given them. Subd. 2. Administrator. "Administrator" means the person who is responsible for the administration of the service contracts or the service contracts plan or who is responsible for any filings required by this chapter. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 4. Consumer. "Consumer" means a natural person who buys, other than for purposes of resale, any tangible personal property that is distributed in commerce and that is normally used for personal, family, or household purposes and not for business or research purposes. Subd. 5. Maintenance agreement. "Maintenance agreement" means a contract of limited duration that provides for scheduled maintenance only. Subd. 5a. Motor vehicle manufacturer. "Motor vehicle manufacturer" means a person that: (1) manufactures or produces motor vehicles and sells motor vehicles under its own name or label; (2) is a wholly owned subsidiary of the person that manufactures or produces motor vehicles; (3) is a corporation which owns 100 percent of the person that manufactures or produces motor vehicles; (4) does not manufacture or produce motor vehicles, but sells motor vehicles under the trade name or label of another person that manufactures or produces motor vehicles; (5) manufactures or produces motor vehicles and sells the motor vehicles under the trade name or label of another person that manufactures or produces motor vehicles; or (6) does not manufacture or produce motor vehicles but, pursuant to a written contract, licenses the use of its trade name or label to another person that manufactures or produces motor vehicles and that sells motor vehicles under the licensor's trade name or label. Subd. 6. Person. "Person" means an individual, partnership, corporation, incorporated or unincorporated association, joint stock company, reciprocal, syndicate, or any similar entity or combination of entities acting in concert. Subd. 7. Premium. "Premium" means the consideration paid to an insurer for a reimbursement insurance policy. Subd. 8. Provider. "Provider" means a person who is contractually obligated to the service contract holder under the terms of the service contract. Subd. 9. Provider fee. "Provider fee" means the consideration paid for a service contract. Subd. 10. Reimbursement insurance policy. "Reimbursement insurance policy" means a policy of insurance issued to a provider to either provide reimbursement to the provider under the terms of the insured service contracts issued or sold by the provider or, in the event of the provider's nonperformance, to pay on behalf of the provider all covered contractual obligations incurred by the provider under the terms of the insured service contracts issued or sold by the provider. Subd. 10a. Road hazard. "Road hazard" means a danger encountered while driving a motor vehicle including, but not limited to, potholes, rocks, weed debris, metal parts, glass, plastic, curbs, or composite scraps. Subd. 11. Service contract. "Service contract" means a contract or agreement for a separately stated consideration for a specific duration to perform: (1) the repair, replacement, or maintenance of property or indemnification for repair, replacement, or maintenance, for the operational or structural failure due to a defect in materials, workmanship, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances, including without limitation, towing, rental, emergency road service, and road hazard protection. Service contracts may provide for the repair, replacement, or maintenance of property for damage resulting from power surges and accidental damage from handling; (2) the repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with a road hazard; (3) the removal of dents on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish or replacing vehicle body panels, sanding, bonding, or painting; (4) the repair of chips or cracks in a motor vehicle windshield or the replacement of a motor vehicle windshield as a result of damage caused by a road hazard; (5) the replacement of a motor vehicle key or key fob in the event that the key or key fob becomes inoperable or is lost or stolen; or (6) other services as approved by the commissioner. Subd. 12. Service contract holder or contract holder. "Service contract holder" or "contract holder" means a person who is the purchaser or holder of a service contract. Subd. 13. Warranty. "Warranty" means a warranty made solely by the manufacturer, importer, or seller of property or services without consideration, that is not negotiated or separated from the sale of the product, and is incidental to the sale of the product, that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor, or other remedial measures, such as repair or replacement of the property or repetition of services. History:  1Sp2005 c 1 art 5 s 2; 2008 c 344 s 3,4; 2018 c 112 s 1,2
59B.03 REQUIREMENTS FOR TRANSACTING BUSINESS. Subdivision 1. Appointment of administrator. A provider may, but is not required to, appoint an administrator or other designee to be responsible for any or all of the administration of service contracts and compliance with this chapter. Subd. 2. Contract copies and receipts. Service contracts must not be issued, sold, or offered for sale in this state unless the provider has: (1) provided a receipt for, or other written evidence of, the purchase of the service contract to the contract holder; (2) provided a copy of the service contract to the service contract holder within a reasonable period of time from the date of purchase; and (3) complied with this chapter. Subd. 3. Registration. Each provider of service contracts sold in this state shall file a registration with the commissioner on a form prescribed by the commissioner. Each provider shall pay to the commissioner a fee in the amount of $750 annually. Subd. 4. Financial requirements. In order to ensure the faithful performance of a provider's obligations to its contract holders, each provider is responsible for complying with the requirements of one of the following: (1) insure all service contracts under a reimbursement insurance policy issued by an insurer authorized to transact insurance in this state, a risk retention group, as that term is defined in United States Code, title 15, section 3901(A)(4), as long as that risk retention group is registered pursuant to section 60E.03 or 60E.04 as applicable, and is in full compliance with the federal Liability Risk Retention Act of 1986, United States Code, title 15, section 3901, et al., or issued pursuant to sections 60A.195 to 60A.209, and either: (i) the insurer or risk retention group shall, at the time the policy is filed with the commissioner, and continuously thereafter, maintain surplus as to policyholders and paid-in capital of at least $15,000,000, and annually file audited financial statements with the commissioner; or (ii) the commissioner may authorize an insurer or risk retention group that has surplus as to policyholders and paid-in capital of less than $15,000,000 but at least equal to $10,000,000 to issue the insurance required by this section if the insurer or risk retention group demonstrates to the satisfaction of the commissioner that the company maintains a ratio of direct written premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater than 3-to-1; or (2)(i) maintain a funded reserve account for obligations under contracts issued and outstanding in this state. The reserves must not be less than 40 percent of gross consideration received, less claims paid, on the sale of the service contract for all in-force contracts. The reserve account is subject to examination and review by the commissioner; and (ii) place in trust with the commissioner a financial security deposit, having a value of not less than five percent of the gross consideration received, less claims paid, on the sale of the service contract for all service contracts issued and in force, but not less than $25,000, consisting of one of the following: (A) a surety bond issued by an authorized surety; (B) securities of the type eligible for deposit by authorized insurers in this state; (C) cash; (D) a letter of credit issued by a qualified financial institution containing an evergreen clause which prevents the expiration of the letter without due notice from the issuer; or (E) another form of security prescribed by rules of the commissioner; or (3)(i) maintain, or its parent company maintain, a net worth or stockholders' equity of $100,000,000; and (ii) upon request, provide the commissioner with a copy of the provider's or the provider's parent company's most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission (SEC) within the last calendar year, or if the company does not file with the SEC, a copy of the company's audited financial statements, which shows a net worth of the provider or its parent company of at least $100,000,000. If the provider's parent company's Form 10-K, Form 20-F, or audited financial statements are filed to meet the provider's financial stability requirement, then the parent company shall agree to guarantee the obligations of the provider relating to service contracts sold by the provider in this state. Subd. 5. Right of return. Service contracts must require the provider to permit the service contract holder to return the service contract within 20 days of the date the service contract was mailed to the service contract holder or within ten days of delivery if the service contract is delivered to the service contract holder at the time of sale or within a longer time period permitted under the service contract. Upon return of the service contract to the provider within the applicable time period, if no claim has been made under the service contract before its return to the provider, the service contract is void and the provider shall refund to the service contract holder, or credit the account of the service contract holder, with the full purchase price of the service contract. The right to void the service contract provided in this paragraph is not transferable and applies only to the original service contract purchaser, and only if no claim has been made before its return to the provider. A ten percent penalty per month must be added to a refund that is not paid or credited within 45 days after return of the service contract to the provider. Subd. 6. Premium taxes. (a) Provider fees collected on service contracts are not subject to premium taxes. (b) Premiums for reimbursement insurance policies are subject to applicable taxes. Subd. 7. Licensing exemption. Except for the registration requirements in subdivision 3, providers and related service contract sellers, administrators, and other persons marketing, selling, or offering to sell service contracts are exempt from any licensing requirements of this state. Subd. 8. Insurance exemption. The marketing, sale, offering for sale, issuance, making, proposing to make, and administration of service contracts by providers and related service contract sellers, administrators, and other persons are exempt from all other provisions of the insurance laws of this state, except as provided in section 72A.20, subdivision 38. History:   1Sp2005 c 1 art 5 s 3 
59B.04 REQUIRED DISCLOSURES; REIMBURSEMENT INSURANCE POLICY. Subdivision 1. Right to payment or reimbursement. Reimbursement insurance policies insuring service contracts issued, sold, or offered for sale in this state shall state that the insurer that issued the reimbursement insurance policy shall either reimburse or pay on behalf of the provider any covered sums the provider is legally obligated to pay or, in the event of the provider's nonperformance, shall provide the service which the provider is legally obligated to perform according to the provider's contractual obligations under the service contracts issued or sold by the provider. Subd. 2. Right to apply to company. In the event covered service is not provided by the service contract provider within 60 days of proof of loss by the service contract holder, the contract holder is entitled to apply directly to the reimbursement insurance company. History:   1Sp2005 c 1 art 5 s 4 
59B.05 REQUIRED DISCLOSURE; SERVICE CONTRACTS. Subdivision 1. Readability and general disclosure. Service contracts marketed, sold, offered for sale, issued, made, proposed to be made, or administered in this state must be written, printed, or typed in clear, understandable language that is easy to read and must disclose the requirements set forth in this section, as applicable. Subd. 2. Identities of parties. Service contracts must state the name and address of the provider, and must identify any administrator if different from the provider, the service contract seller, and the service contract holder to the extent that the name of the service contract holder has been furnished by the service contract holder. The identities of the parties are not required to be preprinted on the service contract and may be added to the service contract at the time of sale. Subd. 3. Total purchase price and sales terms. Service contracts must state the total purchase price and the terms under which the service contract is sold. The purchase price is not required to be preprinted on the service contract and may be negotiated at the time of sale with the service contract holder. Subd. 4. Deductibles. Service contracts must state the existence of any deductible amount, if applicable. Subd. 5. Coverages, limitations, and exclusions. No particular causes of loss or property are required to be covered, but service contracts must specify the merchandise and services to be provided and, with equal prominence, any limitations, exceptions, or exclusions including, but not limited to, any damage or breakdown not covered by the service contract. Service contracts may cover damage resulting from rust, corrosion, or damage caused by a noncovered part or system. Subd. 6. Restrictions on transferability. Service contracts must state any restrictions governing the transferability of the service contract, if applicable. Subd. 7. Cancellation terms. Service contracts must state the terms, restrictions, or conditions governing cancellation of the service contract prior to the termination or expiration date of the service contract by either the provider or the service contract holder. The provider of the service contract shall mail a written notice to the contract holder at the last known address of the service contract holder contained in the records of the provider at least 15 days before cancellation by the provider. Five days' notice is required if the reason for cancellation is nonpayment of the provider fee, a material misrepresentation by the service contract holder to the provider, or a substantial breach of duties by the service contract holder relating to the covered product or its use. The notice must state the effective date of the cancellation and the reason for the cancellation. Subd. 8. Duties of contract holder. Service contracts must set forth all of the obligations and duties of the service contract holder, such as the duty to protect against any further damage and any requirement to follow the owner's manual. Subd. 9. Exclusions; consequential damages and preexisting conditions. Service contracts may exclude coverage for consequential damages or preexisting conditions. These exclusions, if applicable, must be stated in the contract. History:  1Sp2005 c 1 art 5 s 5; 2008 c 344 s 5
59B.06 ADDITIONAL REQUIRED DISCLOSURE; SERVICE CONTRACTS. Subdivision 1. Insurance disclosure. Service contracts insured under a reimbursement insurance policy pursuant to section 59B.03, subdivision 4, clause (1), must contain a statement in substantially the following form: "Obligations of the provider under this service contract are insured under a service contract reimbursement insurance policy." The service contract must also state the name and address of the insurer. Subd. 2. Disclosure of no insurance. Service contracts not insured under a reimbursement insurance policy pursuant to section 59B.03, subdivision 4, clause (1), must contain a statement in substantially the following form: "Obligations of the provider under this service contract are backed by the full faith and credit of the provider." History:   1Sp2005 c 1 art 5 s 6 
59B.07 PROHIBITED ACTS. Subdivision 1. Deceptive names. A provider shall not use in its name the words insurance, casualty, surety, mutual, or any other words descriptive of the insurance, casualty, or surety business; or a name deceptively similar to the name or description of any insurance or surety corporation, or to the name of any other provider. The word "guaranty" or similar word may be used by a provider. This section does not apply to a company that was using any of the prohibited language in its name before January 1, 2006. However, a company using the prohibited language in its name shall include in its service contracts a statement in substantially the following form: "This agreement is not an insurance contract." Subd. 2. False or misleading statements. A provider or its representative shall not in its service contracts, literature, or otherwise make, permit, or cause to be made any false or misleading statement or omit any material statement that would be considered misleading if omitted. Subd. 3. Required purchase. A person, such as a bank, savings association, lending institution, manufacturer, or seller of any product shall not require the purchase of a service contract as a condition of a loan or a condition for the sale of any property. History:   1Sp2005 c 1 art 5 s 7 
59B.08 RECORD-KEEPING REQUIREMENTS. Subdivision 1. Generally. The provider shall keep accurate accounts, books, and records concerning transactions regulated under this chapter. The provider's accounts, books, and records include the following: (1) copies of each type of service contracts sold; (2) the name and address of each service contract holder to the extent that the name and address have been furnished by the service contract holder; (3) a list of the locations where service contracts are marketed, sold, or offered for sale; and (4) written claims files which shall contain information regarding the services provided or claims payments for contracts that provide for payments or reimbursement, including at least the dates and description of claims related to the service contracts. Subd. 2. Retention. (a) Except as provided in paragraph (b), the provider shall retain all records required to be maintained by this section for at least three years after the specified period of coverage has expired. (b) A provider discontinuing business in this state shall maintain its records until it furnishes the commissioner satisfactory proof that it has discharged all obligations to contract holders in this state. Subd. 3. Medium. The records required by this chapter may be, but are not required to be, maintained on a computer disk or other record-keeping technology. If the records are maintained in other than hard copy, the records must be capable of duplication to legible hard copy at the request of the commissioner. History:   1Sp2005 c 1 art 5 s 8 
59B.09 TERMINATION OF REIMBURSEMENT INSURANCE POLICY. An insurer that issued a reimbursement insurance policy may not terminate the policy unless the insurer mails or delivers written notice of the termination to the commissioner at least 30 days before the effective date of termination. The termination of a reimbursement insurance policy does not reduce the issuer's responsibility for service contracts issued by providers before the date of the termination. History:   1Sp2005 c 1 art 5 s 9 
59B.10 OBLIGATION OF REIMBURSEMENT INSURANCE POLICY INSURERS. Insurers issuing reimbursement insurance to providers are deemed to have received the premiums for the insurance upon the payment of provider fees by consumers for service contracts issued by the insured providers. Nothing in this chapter prevents or limits the right of an insurer that issued a reimbursement insurance policy to seek indemnification or subrogation against a provider if the issuer pays or is obligated to pay the service contract holder sums that the provider was obligated to pay pursuant to the provisions of the service contract. History:   1Sp2005 c 1 art 5 s 10 
59B.11 SEVERABILITY PROVISION. If any provision of this chapter or the application of the provision to any person or circumstances are held invalid, the remainder of this chapter and the application of the provision to person or circumstances other than those as to which it is held invalid, must not be affected. History:   1Sp2005 c 1 art 5 s 11 
59C.01 SHORT TITLE. This chapter may be cited as the "Vehicle Protection Product Act." History:   2007 c 57 art 3 s 21 
59C.02 DEFINITIONS. Subdivision 1. Terms. For purposes of this chapter, the terms defined in subdivisions 2 to 11 have the meanings given them. Subd. 2. Administrator. "Administrator" means a third party other than the warrantor who is designated by the warrantor to be responsible for the administration of vehicle protection product warranties. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 4. Department. "Department" means the Department of Commerce. Subd. 5. Incidental costs. "Incidental costs" means expenses specified in the warranty incurred by the warranty holder related to the failure of the vehicle protection product to perform as provided in the warranty. Incidental costs may include, without limitation, insurance policy deductibles, rental vehicle charges, the difference between the actual value of the stolen vehicle at the time of theft and the cost of a replacement vehicle, sales taxes, registration fees, transaction fees, and mechanical inspection fees. Subd. 6. Service contract. "Service contract" means a contract or agreement as regulated under chapter 59B. Subd. 7. Vehicle protection product. "Vehicle protection product" means a vehicle protection device, system, or service that: (1) is installed on or applied to a vehicle; (2) is designed to prevent loss or damage to a vehicle from a specific cause; and (3) includes a written warranty. For purposes of this section, vehicle protection product includes, without limitation, alarm systems; body part marking products; steering locks; window etch products; pedal and ignition locks; fuel and ignition kill switches; and electronic, radio, and satellite tracking devices. Subd. 8. Vehicle protection product warranty or warranty. "Vehicle protection product warranty" or "warranty" means, for the purposes of this chapter, a written agreement by a warrantor that provides if the vehicle protection product fails to prevent loss or damage to a vehicle from a specific cause, that the warranty holder must be paid specified incidental costs by the warrantor as a result of the failure of the vehicle protection product to perform pursuant to the terms of the warranty. Subd. 9. Vehicle protection product warrantor or warrantor. "Vehicle protection product warrantor" or "warrantor," for the purposes of this chapter, means a person who is contractually obligated to the warranty holder under the terms of the vehicle protection product warranty agreement. Warrantor does not include an authorized insurer providing a warranty reimbursement insurance policy. Subd. 10. Warranty holder. "Warranty holder," for the purposes of this chapter, means the person who purchases a vehicle protection product or who is a permitted transferee. Subd. 11. Warranty reimbursement insurance policy. "Warranty reimbursement insurance policy" means a policy of insurance that is issued to the vehicle protection product warrantor to provide reimbursement to, or to pay on behalf of, the warrantor all covered contractual obligations incurred by the warrantor under the terms and conditions of the insured vehicle protection product warranties sold by the warrantor. History:   2007 c 57 art 3 s 22 
59C.03 SCOPE AND EXEMPTIONS. (a) No vehicle protection product may be sold or offered for sale in this state unless the seller, warrantor, and administrator, if any, comply with the provisions of this chapter. (b) Vehicle protection product warrantors and related vehicle protection product sellers and warranty administrators complying with this chapter are not required to comply with and are not subject to any other provision of chapters 59B to 72A, except that section 72A.20, subdivision 38, shall apply to vehicle protection product warranties in the same manner it applies to service contracts. (c) Service contract providers who do not sell vehicle protection products are not subject to the requirements of this chapter and sales of vehicle protection products are exempt from the requirements of chapter 59B. (d) Warranties, indemnity agreements, and guarantees that are not provided as a part of a vehicle protection product are not subject to the provisions of this chapter. History:   2007 c 57 art 3 s 23 
59C.04 REGISTRATION AND FILING REQUIREMENTS OF WARRANTORS. Subdivision 1. General requirement.  A person may not operate as a warrantor or represent to the public that the person is a warrantor unless the person is registered with the department on a form prescribed by the commissioner. Subd. 2. Registration records. A registrant shall file a warrantor registration record annually and shall update it within 30 days of any change. A registration record must contain the following information: (1) the warrantor's name, any fictitious names under which the warrantor does business in the state, principal office address, and telephone number; (2) the name and address of the warrantor's agent for service of process in the state if other than the warrantor; (3) the names of the warrantor's executive officer or officers directly responsible for the warrantor's vehicle protection product business; (4) the name, address, and telephone number of any administrators designated by the warrantor to be responsible for the administration of vehicle protection product warranties in this state; (5) a copy of the warranty reimbursement insurance policy or policies or other financial information required by section 59C.05; (6) a copy of each warranty the warrantor proposes to use in this state; and (7) a statement indicating under which provision of section 59C.05 the warrantor qualifies to do business in this state as a warrantor. Subd. 3. Registration fee. The commissioner may charge each registrant a reasonable fee to offset the cost of processing the registration and maintaining the records in an amount of $250 annually. The information in subdivision 2, clauses (1) and (2), must be made available to the public. Subd. 4. Renewal. The registrant will have 30 days to complete the renewal of the registration before the commissioner suspends the registration. Subd. 5. Exception.  An administrator or person who sells or solicits a sale of a vehicle protection product but who is not a warrantor shall not be required to register as a warrantor or be licensed under the insurance laws of this state to sell vehicle protection products. History:   2007 c 57 art 3 s 24 
59C.05 FINANCIAL RESPONSIBILITY. Subdivision 1. General requirements. No vehicle protection product may be sold, or offered for sale in this state unless the warrantor meets either the requirements of subdivision 2 or 3 in order to ensure adequate performance under the warranty. No other financial security requirements or financial standards for warrantors is required. Subd. 2. Warranty reimbursement insurance policy. The vehicle protection product warrantor shall be insured under a warranty reimbursement insurance policy issued by an insurer authorized to do business in this state which provides that: (1) the insurer will pay to, or on behalf of the warrantor, 100 percent of all sums that the warrantor is legally obligated to pay according to the warrantor's contractual obligations under the warrantor's vehicle protection product warranty; (2) a true and correct copy of the warranty reimbursement insurance policy has been filed with the commissioner by the warrantor; and (3) the policy contains the provision required in section 59C.06. Subd. 3. Network or stockholder's equity. (1) The vehicle protection product warrantor, or its parent company in accordance with clause (2), shall maintain a net worth or stockholders' equity of $50,000,000; and (2) the warrantor shall provide the commissioner with a copy of the warrantor's or the warrantor's parent company's most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission within the last calendar year or, if the warrantor does not file with the Securities and Exchange Commission, a copy of the warrantor or the warrantor's parent company's audited financial statements that shows a net worth of the warrantor or its parent company of at least $50,000,000. If the warrantor's parent company's Form 10-K, Form 20-F, or audited financial statements are filed to meet the warrantor's financial stability requirement, then the parent company shall agree to guarantee the obligations of the warrantor relating to warranties issued by the warrantor in this state. The financial information provided to the commissioner under this clause is trade secret information for purposes of section 13.37. History:   2007 c 57 art 3 s 25 
59C.06 WARRANTY REIMBURSEMENT POLICY REQUIREMENTS. No warranty reimbursement insurance policy may be issued, sold, or offered for sale in this state unless the policy meets the following conditions: (1) the policy states that the issuer of the policy will reimburse, or pay on behalf of the vehicle protection product warrantor, all covered sums that the warrantor is legally obligated to pay, or will provide all service that the warrantor is legally obligated to perform according to the warrantor's contractual obligations under the provisions of the insured warranties sold by the warrantor; (2) the policy states that in the event payment due under the terms of the warranty is not provided by the warrantor within 60 days after proof of loss has been filed according to the terms of the warranty by the warranty holder, the warranty holder may file directly with the warranty reimbursement insurance company for reimbursement; (3) the policy provides that a warranty reimbursement insurance company that insures a warranty is deemed to have received payment of the premium if the warranty holder paid for the vehicle protection product and the insurer's liability under the policy shall not be reduced or relieved by a failure of the warrantor, for any reason, to report the issuance of a warranty to the insurer; and (4) the policy has the following provisions regarding cancellation of the policy: (i) the issuer of a reimbursement insurance policy shall not cancel the policy until a notice of cancellation in writing has been mailed or delivered to the commissioner and each insured warrantor; (ii) the cancellation of a reimbursement insurance policy shall not reduce the issuer's responsibility for vehicle protection products sold prior to the date of cancellation; and (iii) in the event an insurer cancels a policy that a warrantor has filed with the commissioner, the warrantor shall do either of the following: (A) file a copy of a new policy with the commissioner, before the termination of the prior policy, providing no lapse in coverage following the termination of the prior policy; or (B) discontinue offering warranties as of the termination date of the policy until a new policy becomes effective and is accepted by the commissioner. History:   2007 c 57 art 3 s 26 
59C.07 DISCLOSURE TO WARRANTY HOLDER. A vehicle protection product warranty must not be sold or offered for sale in this state unless the warranty: (1) states, "The obligations of the warrantor to the warranty holder are guaranteed under a warranty reimbursement insurance policy" if the warrantor elects to meet its financial responsibility obligations under section 59C.05, subdivision 2, or states "The obligations of the warrantor under this warranty are backed by the full faith and credit of the warrantor" if the warrantor elects to meet its financial responsibility obligations under section 59C.05, subdivision 3; (2) states that in the event a warranty holder must make a claim against a party other than the warranty reimbursement insurance policy issuer, the warranty holder is entitled to make a direct claim against the insurer upon the failure of the warrantor to pay any claim or meet any obligation under the terms of the warranty within 60 days after proof of loss has been filed with the warrantor, if the warrantor elects to meet its financial responsibility obligations under section 59C.05, subdivision 2; (3) states the name and address of the issuer of the warranty reimbursement insurance policy, and this information need not be preprinted on the warranty form, but may be added to or stamped on the warranty, if the warrantor elects to meet its financial responsibility obligations under section 59C.05, subdivision 2; (4) identifies the warrantor, the seller, and the warranty holder; (5) sets forth the total purchase price and the terms under which it is to be paid, however, the purchase price is not required to be preprinted on the vehicle protection product warranty and may be negotiated with the consumer at the time of sale; (6) sets forth the procedure for making a claim, including a telephone number; (7) specifies the payments or performance to be provided under the warranty including payments for incidental costs expressed as either a fixed amount specified in the warranty or sales agreement or by the use of a formula itemizing specific incidental costs incurred by the warranty holder, the manner of calculation or determination of payments or performance, and any limitations, exceptions, or exclusions; (8) sets forth all of the obligations and duties of the warranty holder such as the duty to protect against any further damage to the vehicle, the obligation to notify the warrantor in advance of any repair, or other similar requirements, if any; (9) sets forth any terms, restrictions, or conditions governing transferability and cancellation of the warranty, if any; and (10) contains a disclosure that reads substantially as follows: "This agreement is a product warranty and is not insurance." History:   2007 c 57 art 3 s 27 
59C.08 PROHIBITED ACTS. (a) Unless licensed as an insurance company, a vehicle protection product warrantor shall not use in its name, contracts, or literature, any of the words "insurance," "casualty," "surety," "mutual," or any other words descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of any insurance or surety corporation, or any other vehicle protection product warrantor. A warrantor may use the term "guaranty" or similar word in the warrantor's name. (b) A vehicle protection product seller or warrantor may not require as a condition of financing that a retail purchaser of a motor vehicle purchase a vehicle protection product. History:   2007 c 57 art 3 s 28 
59C.09 RECORD KEEPING. (a) All vehicle protection product warrantors shall keep accurate accounts, books, and records concerning transactions regulated under this chapter. (b) A vehicle protection product warrantor's accounts, books, and records must include: (1) copies of all vehicle protection product warranties; (2) the name and address of each warranty holder; and (3) the dates, amounts, and descriptions of all receipts, claims, and expenditures. (c) A vehicle protection product warrantor shall retain all required accounts, books, and records pertaining to each warranty holder for at least two years after the specified period of coverage has expired. A warrantor discontinuing business in this state shall maintain its records until it furnishes the commissioner satisfactory proof that it has discharged all obligations to warranty holders in this state. History:   2007 c 57 art 3 s 29 
59C.10 COMMISSIONER'S POWERS AND DUTIES. Subdivision 1. Examination and compliance powers. The commissioner may conduct examinations of warrantors, administrators, or other persons to enforce this chapter and protect warranty holders in this state. Upon request of the commissioner, a warrantor shall make available to the commissioner all accounts, books, and records concerning vehicle protection products sold by the warrantor and transactions regulated under this chapter that are necessary to enable the commissioner to reasonably determine compliance or noncompliance with this chapter. Subd. 2. Enforcement authority. The commissioner has the enforcement authority in chapter 45 available to enforce the provisions of the chapter and the rules adopted pursuant to it. History:  2007 c 57 art 3 s 30; 2014 c 222 art 1 s 10
59C.12 APPLICABILITY. This chapter applies to all vehicle protection products sold or offered for sale on or after January 1, 2008. The failure of any person to comply with this chapter before January 1, 2008, is not admissible in any court proceeding, administrative proceeding, arbitration, or alternative dispute resolution proceeding and may not otherwise be used to prove that the action of any person or the affected vehicle protection product was unlawful or otherwise improper. The adoption of this chapter does not imply that a vehicle protection product warranty was insurance before January 1, 2008. Nothing in this section may be construed to require the application of the penalty provisions where this section is not applicable. History:   2007 c 57 art 3 s 31 
59D.01 APPLICATION. (a) This chapter does not apply to: (1) a policy of insurance offered in compliance with chapters 60A to 79A; (2) a debt cancellation or debt suspension contract, including a guaranteed asset protection waiver, being offered by a banking institution or credit union in compliance with chapter 48 or 52; and (3) a debt cancellation or debt suspension contract being offered in compliance with Code of Federal Regulations, title 12, parts 37, 721, or other federal law. (b) Guaranteed asset protection waivers regulated under this chapter are not insurance and are not subject to chapters 60A to 79A. Persons selling, soliciting, or negotiating guaranteed asset protection waivers to borrowers in compliance with this chapter are exempt from chapter 60K. (c) The commissioner of commerce has the full investigatory authority of chapter 45 to enforce the terms of this chapter. History:   1Sp2015 c 1 art 3 s 3 
59D.02 DEFINITIONS. Subdivision 1. Terms. For purposes of this chapter, the terms defined in subdivisions 2 to 10 have the meanings given them. Subd. 2. Administrator. "Administrator" means a person, other than an insurer or creditor who performs administrative or operational functions pursuant to guaranteed asset protection waiver programs. Subd. 3. Borrower. "Borrower" means a debtor, retail buyer, or lessee under a finance agreement. Subd. 4. Creditor. "Creditor" means: (1) the lender in a loan or credit transaction; (2) the lessor in a lease transaction; (3) a dealer or seller of motor vehicles that provides credit to purchasers of the motor vehicles provided that the entities comply with this section; (4) the seller in commercial retail installment transactions; or (5) the assignees of any of the forgoing to whom the credit obligation is payable. Subd. 5. Finance agreement. "Finance agreement" means a loan, lease, or retail installment sales contract for the purchase or lease of a motor vehicle. Subd. 6. Free-look period. "Free-look period" means the period of time from the effective date of the GAP waiver until the date the borrower may cancel the contract without penalty, fees, or costs to the borrower. This period of time must not be shorter than 30 days. Subd. 7. Guaranteed asset protection waiver. "Guaranteed asset protection waiver" or "GAP waiver" means a contractual agreement wherein a creditor agrees for a separate charge to cancel or waive all or part of amounts due on a borrower's finance agreement in the event of a total physical damage loss or unrecovered theft of the motor vehicle. Subd. 8. Insurer. "Insurer" means an insurance company licensed, registered, or otherwise authorized to do business under Minnesota law. Subd. 9. Motor vehicle. "Motor vehicle" means self-propelled or towed vehicles designed for personal or commercial use, including, but not limited to, automobiles; trucks; motorcycles; recreational vehicles; all-terrain vehicles; snowmobiles; campers; boats; personal watercraft; and motorcycle, boat, camper, and personal watercraft trailers. A creditor is prohibited from selling a GAP waiver in conjunction with the sale or lease of any used motor vehicle that is an automobile or truck that is valued at less than $5,000. Subd. 10. Person. "Person" includes an individual, company, association, organization, partnership, business trust, corporation, and every form of legal entity. History:   1Sp2015 c 1 art 3 s 4 
59D.03 COMMERCIAL TRANSACTIONS EXEMPTED. Sections 59D.04, subdivision 3, and 59D.06 do not apply to a guaranteed asset protection waiver offered in connection with a lease or retail installment sale associated with any transaction not for personal, family, or household purposes. History:   1Sp2015 c 1 art 3 s 5 
59D.04 GUARANTEED ASSET PROTECTION WAIVER REQUIREMENTS. Subdivision 1. Authorization. GAP waivers may be offered, sold, or provided to borrowers in Minnesota in compliance with this chapter. Subd. 2. Payment options. GAP waivers may, at the option of the creditor, be sold for a single payment or may be offered with a monthly or periodic payment option. Subd. 3. Certain costs not considered finance charge or interest. Notwithstanding any other provision of law, any cost to the borrower for a guaranteed asset protection waiver entered into in compliance with United States Code, title 15, sections 1601 to 1667F, and its implementing regulations under Code of Federal Regulations, title 12, part 226, as they may be amended from time to time, must be separately stated and is not to be considered a finance charge or interest. Subd. 4. Insurance. A retail seller must insure its GAP waiver obligations under a contractual liability or other insurance policy issued by an insurer. A creditor, other than a retail seller, may insure its GAP waiver obligations under a contractual liability policy or other such policy issued by an insurer. The insurance policy may be directly obtained by a creditor or retail seller, or may be procured by an administrator to cover a creditor's or retail seller's obligations. Retail sellers that are lessors on motor vehicles are not required to insure obligations related to GAP waivers on leased vehicles. Subd. 5. Financing agreement. The GAP waiver must be part of, or a separate addendum to, the finance agreement and must remain a part of the finance agreement upon the assignment, sale, or transfer of the finance agreement by the creditor. Subd. 6. Purchase restriction. The extension of credit, the terms of the credit, or the terms and conditions of the related motor vehicle sale or lease must not be conditioned upon the purchase of a GAP waiver. Subd. 7. Reporting. A creditor that offers a GAP waiver must report the sale of, and forward funds received on, all such waivers to the designated party, if any, as prescribed in any applicable administrative services agreement, contractual liability policy, other insurance policy, or other specified program documents. Subd. 8. Fiduciary responsibilities. Funds received or held by a creditor or administrator and belonging to an insurer, creditor, or administrator, pursuant to the terms of a written agreement, must be held by the creditor or administrator in a fiduciary capacity. Subd. 9. Defined terms. The terms defined in section 59D.02 are not intended to provide actual terms that are required in guaranteed asset protection waivers. History:   1Sp2015 c 1 art 3 s 6 
59D.05 CONTRACTUAL LIABILITY OR OTHER INSURANCE POLICIES. Subdivision 1. Reimbursement or payment statement. Contractual liability or other insurance policies insuring GAP waivers must state the obligation of the insurer to reimburse or pay to the creditor any sums the creditor is legally obligated to waive under the GAP waivers issued by the creditor and purchased or held by the borrower. Subd. 2. Coverage of assignee. Coverage under a contractual liability or other insurance policy insuring a GAP waiver must also cover a subsequent assignee upon the assignment, sale, or transfer of the finance agreement. Subd. 3. Term. Coverage under a contractual liability or other insurance policy insuring a GAP waiver must remain in effect unless canceled or terminated in compliance with applicable laws. Subd. 4. Effect of cancellation or termination. The cancellation or termination of a contractual liability or other insurance policy must not reduce the insurer's responsibility for GAP waivers issued by the creditor before the date of cancellation or termination and for which a premium has been received by the insurer. History:   1Sp2015 c 1 art 3 s 7 
59D.06 DISCLOSURES. (a) Guaranteed asset protection waivers must disclose, as applicable, in writing and in clear, understandable language that is easy to read, the following: (1) the name and address of the initial creditor and the borrower at the time of sale, and the identity of any administrator if different from the creditor; (2) the purchase price and the terms of the GAP waiver, including without limitation, the requirements for protection, conditions, or exclusions associated with the GAP waiver; (3) that the borrower may cancel the GAP waiver within a free-look period as specified in the waiver, and will be entitled to a full refund of the purchase price, so long as no benefits have been provided; (4) the procedure the borrower must follow, if any, to obtain GAP waiver benefits under the terms and conditions of the waiver, including a telephone number and address where the borrower may apply for waiver benefits; (5) whether or not the GAP waiver is cancelable after the free-look period and the conditions under which it may be canceled or terminated including the procedures for requesting a refund due; (6) that in order to receive a refund due in the event of a borrower's cancellation of the GAP waiver agreement or early termination of the finance agreement after the free-look period of the GAP waiver, the borrower, in accordance with the terms of the waiver, must provide a written cancellation request to the creditor, administrator, or other party. If such a request is being made because of the termination of the finance agreement, notice must be provided to the creditor, administrator, or other party within 90 days of the occurrence of the event terminating the finance agreement; (7) the methodology for calculating a refund of the unearned purchase price of the GAP waiver due in the event of cancellation of the GAP waiver or early termination of the finance agreement; and (8) that the extension of credit, the terms of the credit, or the terms and conditions of the related motor vehicle sale or lease are not conditioned upon the purchase of the GAP waiver. (b) The creditor or any person offering a GAP waiver must provide the following verbatim disclosure in bold, 14-point type, either in a separate writing or as part of the agreement: "THE GAP WAIVER IS OPTIONAL. YOU DO NOT HAVE TO PURCHASE THIS PRODUCT IN ORDER TO BUY [OR LEASE] THIS MOTOR VEHICLE. YOU ALSO HAVE A LIMITED RIGHT TO CANCEL." History:   1Sp2015 c 1 art 3 s 8 
59D.07 CANCELLATION; REFUNDS. Subdivision 1. Refund requirements during free-look period. A GAP waiver must provide that, if a borrower cancels a waiver within the free-look period, the borrower will be entitled to a full refund of the purchase price, so long as no benefits have been provided. Subd. 2. Refund requirements after free-look period. (a) Guaranteed asset protection waivers may be cancelable or noncancelable after the free-look period. (b) In the event of a borrower's cancellation of the GAP waiver or early termination of the finance agreement, after the agreement has been in effect beyond the free-look period, the borrower may be entitled to a refund of any unearned portion of the purchase price of the waiver unless the waiver provides otherwise. In order to receive a refund, the borrower, in accordance with any applicable terms of the waiver, must provide a written request to the creditor, administrator, or other party. If such a request is being made because of the termination of the finance agreement, notice must be provided to the creditor, administrator, or other party within 90 days of the occurrence of the event terminating the finance agreement. (c) If the cancellation of a GAP waiver occurs as a result of a default under the finance agreement or the repossession of the motor vehicle associated with the finance agreement, or any other termination of the finance agreement, any refund due may be paid directly to the creditor or administrator and applied as set forth in subdivision 3. Subd. 3. How applied. A refund under subdivision 1 or 2 may be applied by the creditor as a reduction of the amount owed under the finance agreement, unless the borrower can show that the finance agreement has been paid in full. History:   1Sp2015 c 1 art 3 s 9 
60A.01 SCOPE. This chapter includes the provisions relating to administration in general and the provisions applicable to insurance in general. History:   1967 c 395 art 1 s 1 
60A.02 DEFINITIONS. Subdivision 1. Terms. Unless the language or context clearly indicates that a different meaning is intended, the following terms shall, for the purposes of chapters 60A to 72A, 69, 70A and 299F, have the meanings ascribed to them. Subd. 1a. Association or associations. (a) "Association" or "associations" means an organized body of people who have some interest in common and that has at the onset a minimum of 100 persons; is organized and maintained in good faith for purposes other than that of obtaining insurance; and has a constitution and bylaws which provide that: (1) the association or associations hold regular meetings not less frequently than annually to further purposes of the members; (2) except for credit unions, the association or associations collect dues or solicit contributions from members; (3) the members have voting privileges and representation on the governing board and committees, which provide the members with control of the association including the purchase and administration of insurance products offered to members; and (4) the members are not, within the first 30 days of membership, directly solicited, offered, or sold an insurance policy if the policy is available as an association benefit. (b) An association may apply to the commissioner for a waiver of the 30-day waiting period to that association. The commissioner may grant the waiver upon a finding of at least three of the following: (1) the association is in full compliance with this subdivision; (2) sanctions have not been imposed against the association as a result of significant disciplinary action by the commissioner; (3) at least 80 percent of the association's income comes from dues, contributions, or sources other than income from the sale of insurance; or (4) the association has been organized and maintained for at least ten years. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce of the state of Minnesota and, in the commissioner's absence or disability, a deputy or other person duly designated to act in the commissioner's place. Subd. 2a. Continued. An insurance policy that is issued for a term in excess of one year or that has no specified term or that is designated as being continuous is "continued" each year on the anniversary date of the issuance of the policy. Subd. 2b. Filed. In cases where a law requires documents to be filed with the commissioner, the documents will be considered filed when they are received by the Department of Commerce. Subd. 3. Insurance. (a) "Insurance" is any agreement whereby one party, for a consideration, undertakes to indemnify another to a specified amount against loss or damage from specified causes, or to do some act of value to the assured in case of such loss or damage. A program of self-insurance, self-insurance revolving fund or pool established under section 471.981 is not insurance for purposes of this subdivision. (b) [Expired] Subd. 4. Company or insurance company. "Company" or "insurance company" includes every insurer, corporation, business trust, or association engaged in insurance as principal, but for purposes of this subdivision does not include a political subdivision providing self-insurance or establishing a pool under section 471.981, subdivision 3. Subd. 4a. Mutual property and casualty insurance company. "Mutual property and casualty insurance company" includes a property and casualty insurance company that was converted to a stock company after December 31, 1987, and before January 1, 1994, if the company was controlled on the date of conversion by a mutual life insurance company and so long as the company continues to be controlled by a mutual life insurance company. Subd. 5. Domestic. "Domestic" shall designate those companies incorporated or organized in this state. Subd. 6. Foreign. "Foreign," when used without limitations, shall designate those companies incorporated or organized in any other state or country. Subd. 7. Insurance agent or insurance agency. An "insurance agent" or "insurance agency" is an insurance producer licensed under sections 60K.30 to 60K.56 acting under express authority from, and an appointment by, an insurer and on its behalf to solicit insurance, or to appoint other insurance producers to solicit insurance, or to write and countersign policies of insurance, or to collect premiums therefor within this state, or to exercise any or all these powers when so authorized by the insurer. The term "person" includes a natural person, a partnership, a corporation, or other entity, including an insurance agency. Subd. 8.  [Repealed, 1981 c 307 s 22] Subd. 9. Net assets. "Net assets" means that portion of the excess of the entire assets of an insurance company over its entire liabilities, exclusive of capital, and inclusive of policy liability, available for the payment of its obligations, including capital stock in this state and including as assets deferred premiums on policies written within three months and actually in force; and, in the case of a mutual marine or fire and marine company, its subscription funds and premium notes not more than 30 days past due and uncollected. In the case of a mutual fire insurance company, there shall be included as assets premium notes absolutely payable within six months from date and given for policies actually in force, when such notes are not more than 30 days overdue. Unpaid guaranty fund subscriptions shall not be included as assets, and guaranty fund certificates upon which there is no liability of the company until all of its other obligations and liabilities are paid shall not be included as a liability. Subd. 10. Earned premiums. "Earned premiums" includes gross premiums charged on all policies written, including all determined excess and additional premiums, less return premiums, other than premiums returned to policyholders as dividends, and less reinsurance premiums and premiums on policies canceled, and less unearned premiums on policies in force. Any participating company which has charged in its premiums a loading solely for dividends shall not be required to include such loading in its earned premiums; provided, a statement of the amount of such loading has been filed and approved by the commissioner. Subd. 11. Unearned premiums, insurance reserve, net value policies, and premium reserve. "Unearned premiums," "insurance reserve," "net value policies," and "premium reserve" severally refer to the liability of an insurance company upon its insurance contracts other than accrued claims computed by rules on valuation herein established. Subd. 12. Profits. "Profits" of a mutual insurance company means that portion of its net earnings not required for payment of losses and expenses, nor set apart for any lawful purposes. Subd. 13. Loss payments and loss expense payments. The terms "loss payments" and "loss expense payments" include all payments to claimants, including payments for medical and surgical attendance, legal expense, salaries and expenses of investigators, adjusters, and field representatives, rents, stationery, telegraph and telephone charges, postage, salaries and expenses of office employees, home office expenses, and all other payments made on account of claims, whether such payments shall be allocated to specific claims or unallocated. Subd. 14. Compensation. The term "compensation" relates to all insurance effected by virtue of statutes providing compensation to employees for personal injuries irrespective of fault of the employer. Subd. 15. Liability. The term "liability" relates to all insurance, except compensation insurance, against loss or damage from accident to or injuries suffered by an employee or other person and for which the insured is liable. Subd. 16. Department of Commerce. "Department of Commerce" of the state of Minnesota also means Department of Commerce or commissioner of commerce. Subd. 17. Leasehold estate. The term "leasehold estate" means an estate in land which includes the ground lease covering the land and any improvements thereon. Subd. 18. State. "State" means any state of the United States of America, the District of Columbia, the Commonwealth of Puerto Rico and any other possessions of the United States. Subd. 19. Alien. "Alien" means an insurer domiciled outside of the United States, but conducting business within the United States. Subd. 20. Assume. "Assume" means to accept all or part of a ceding company's insurance or reinsurance on a risk or exposure. Subd. 21. Cede. "Cede" means to pass on to another insurer all or part of the insurance written by an insurer for the purpose of reducing the possible liability of the insurer. Subd. 22. Cession. "Cession" means the unit of insurance passed to a reinsurer by an insurer which issued a policy to the insured. Subd. 23. Facultative reinsurance. "Facultative reinsurance" means the reinsurance of part or all of the insurance provided by a single policy, with separate negotiation for each cession. Subd. 24. Reinsurer. "Reinsurer" means an insurer which assumes the liability of another insurer through reinsurance. Subd. 25. Retrocession. "Retrocession" means a transaction in which a reinsurer cedes to another reinsurer all or part of the reinsurance that the reinsurer had previously assumed. Subd. 26. United States branch. "United States branch" means the business unit through which business is transacted within the United States by an alien insurer. Subd. 27. Admitted assets. "Admitted assets" means the assets as shown by the company's annual statement on December 31 valued according to valuation regulations prescribed by the National Association of Insurance Commissioners and procedures adopted by the National Association of Insurance Commissioners' financial condition Ex 4 subcommittee if not addressed in another section, unless the commissioner requires or finds another method of valuation reasonable under the circumstances. Subd. 28. Group insurance. "Group insurance" means that form of insurance coverage sponsored by: (1) an employer covering not less than two employees and which may include the employees' dependents, consisting of husband, wife, children, and actual dependents residing in the household, written under a master policy issued to any employer, or group of employers who have joined into an arrangement for the purposes of providing the employees insurance for their individual benefit. Employees' dependents, consisting of husband, wife, children, and actual dependents residing in the same household, are not employees for purposes of this definition except for a spouse employed on a regular full-time basis by the same employer. This clause does not apply to chapter 62L; (2) an association to provide insurance to its members; or (3) a creditor to provide life insurance 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. Subd. 29. Multiple employer trust. "Multiple employer trust" means a trust organized for the benefit of two or more employers for the purpose of providing health insurance coverage to employees and dependents. History:  1967 c 395 art 1 s 2; 1969 c 494 s 1,2; 1971 c 24 s 9; 1980 c 529 s 1,2; 1981 c 307 s 1; 1983 c 289 s 114 subd 1; 1983 c 328 s 1; 1984 c 655 art 1 s 92; 1Sp1985 c 10 s 49; 1986 c 444; 1989 c 260 s 1; 1991 c 325 art 1 s 1-9; art 10 s 1; 1992 c 564 art 1 s 13; art 3 s 1; 1994 c 485 s 4; 1994 c 587 art 1 s 1; 1994 c 625 art 8 s 1; 1995 c 234 art 7 s 1; 1999 c 177 s 1,2; 2001 c 117 art 2 s 3
60A.03 COMMISSIONER OF COMMERCE. Subdivision 1. Commissioner; appointment. The commissioner of commerce shall be appointed by the governor under the provisions of section 15.06. All of the commissioner's time shall be devoted to the duties of the office. Subd. 2. Powers of commissioner. The commissioner shall have and exercise the power to enforce all the laws of this state relating to insurance, and shall enforce all the provisions of the laws of this state relating to insurance in the manner provided by the laws defining the powers and duties of the commissioner of commerce, or, in the absence of any law prescribing the procedure, by any reasonable procedure the commissioner prescribes. Subd. 3. Appointment of staff and officials. (1) Official staff. The commissioner may appoint a deputy or assistant commissioner of commerce to assist in the commissioner's duties, an actuary, a chief examiner, a statistician, and such assistants to these employees and such stenographic and clerical help as may be required for the proper conduct of the Department of Commerce. (2) Duties of departmental officials. In the absence or disability of the commissioner, the commissioner's duties shall be performed by the deputy or assistant commissioner of commerce. The actuary of the department shall, under the direction of the commissioner, make such valuation of life insurance policies as shall be necessary, from time to time, to the proper supervision of life insurance companies transacting business in this state, and shall perform such other actuarial duties, including the visitation and examination of insurance companies, as the commissioner may prescribe. The chief and assistant examiners shall, under the direction of the commissioner, devote their principal time to necessary or required examinations of insurance companies, and perform such other duties as the commissioner may prescribe. Other salaried employees of the Department of Commerce shall be under the direction of the commissioner and perform such duties, in connection with the Department of Commerce, as the commissioner may prescribe. (3) Consulting actuary, appointment and compensation. The commissioner may, when the commissioner shall deem it necessary, appoint any experienced and competent professional insurance actuary to personally make or conduct, or assist in making or conducting, an examination of any insurance company admitted, or applying for admission, to do business in this state, on condition that the commissioner shall have previously filed with the secretary of state a written declaration designating such person, by name and address, as a consulting actuary of the Department of Commerce. In this case, the commissioner shall fix a reasonable compensation for the actuary on a per diem basis for the actual time employed in making or conducting, or assisting to make or conduct, the examination, which compensation, together with the amount of the necessary expenses actually incurred by the actuary, including expenses of any necessary appraisal or clerical assistance, shall be charged to the company and paid by it to the actuary. (4) Appraiser, appointment and compensation. The commissioner, when deeming it necessary, may appoint any qualified person to make an appraisal of any or all of the assets of any such company. Such person shall be paid such reasonable fees for the appraisal as may be approved by the commissioner and shall also be paid necessary expenses actually incurred in connection with the services. Such compensation and expenses shall be paid by the company. Subd. 4.  [Repealed, 1969 c 7 s 2] Subd. 5. Examination fees and expenses. When any visitation, examination, or appraisal is made by order of the commissioner, the company being examined, visited, or appraised, including, but not limited to, fraternals, township mutuals, reciprocal exchanges, nonprofit service plan corporations, health maintenance organizations, vendors of risk management services licensed under section 60A.23, or self-insurance plans or pools established under section 176.181 or 471.982, shall pay to the Department of Commerce the necessary expenses of the persons engaged in the examination, visit, appraisal, or desk audits of annual statements and records performed by the department other than on the company premises plus the per diem salary fees of the employees of the Department of Commerce who are conducting or participating in the examination, visitation, appraisal, or desk audit. The per diem salary fees may be based upon the approved examination fee schedules of the National Association of Insurance Commissioners or otherwise determined by the commissioner. All of these fees and expenses must be paid into the Department of Commerce revolving fund. Subd. 6. Examination revolving fund. (1) Revolving fund created. There is hereby created the Department of Commerce examination revolving fund for the purpose of carrying on the examination of foreign and domestic insurance companies. (2) Money in revolving fund. Such fund shall consist of the $7,500 appropriated therefor and the money transferred to it as herein provided, which are reappropriated to the commissioner of commerce for the purpose of this subdivision. (3) Fund to be kept in state treasury. Such fund shall be kept in the state treasury and shall be paid out in the manner prescribed by law for money therein. (4) Purposes for which fund may be expended. Such fund shall be used for the payment of per diem salaries and expenses of special examiners and appraisers, and the expenses of the commissioner of commerce, deputy commissioner of commerce, chief examiner, actuary other than a consulting actuary appointed under subdivision 3, clause (3) hereof, regular salaried examiners and other employees of the Department of Commerce when participating in examinations. Expenses include meals, lodging, laundry, transportation, and mileage. The salary of regular employees of the Division of Insurance shall not be paid out of this fund. (5) Collections to be deposited in fund. All money collected by the Division of Insurance from insurance companies for fees and expenses of examinations, shall be deposited in the insurance division examination revolving fund. (6) Payments from such fund. Upon authorization by the commissioner of commerce, the money due each examiner or employee engaged in an examination shall be paid from the insurance division examination revolving fund in the manner prescribed by law. (7) Excess over $25,000 canceled into general fund. The balance in such fund on June 30 of each year in excess of $25,000 shall be forthwith canceled into the general fund. Subd. 7.  [Repealed, 1969 c 707 s 1; 1969 c 1129 art 4 s 11] Subd. 8. Computation of net value; life insurance. (1) Domestic insurers. The commissioner shall compute, yearly, the net value of all outstanding policies in every company authorized to insure lives in this state, calculated upon the basis stated in section 61A.25. (2) Foreign insurers. The commissioner may accept the valuation made by the insurance commissioner of the state under whose authority a life company was organized, when that valuation has been made on sound and recognized principles and on the legal basis provided in section 61A.25, or its equivalent, when furnished with a certificate of that commissioner setting forth that value on the last day of the preceding year. Every such life company which fails to promptly furnish this certificate shall, on demand, furnish the commissioner detailed lists of all its policies and securities, and shall be liable for all charges and expenses resulting therefrom. Subd. 9. Confidentiality of information. The commissioner may not be required to divulge any information obtained in the course of the supervision of insurance companies, or the examination of insurance companies, including examination related correspondence and work papers, until the examination report is finally accepted and issued by the commissioner, and then only in the form of the final public report of examinations. Nothing contained in this subdivision prevents or shall be construed as prohibiting the commissioner from disclosing the content of this information to the insurance department of another state, the National Association of Insurance Commissioners, the National Association of Securities Dealers, or any national securities association registered under the Securities Exchange Act of 1934, if the recipient of the information agrees in writing to hold it as nonpublic data as defined in section 13.02, in a manner consistent with this subdivision. This subdivision does not apply to the extent the commissioner is required or permitted by law, or ordered by a court of law to testify or produce evidence in a civil or criminal proceeding. For purposes of this subdivision, a subpoena is not an order of a court of law. History:  1967 c 395 art 1 s 3; 1969 c 7 s 3; 1969 c 399 s 1; 1969 c 707 s 1; 1969 c 1129 art 4 s 11; 1976 c 2 s 35; 1977 c 305 s 17; 1978 c 470 s 1; 1983 c 289 s 114 subd 1; 1983 c 328 s 2; 1984 c 655 art 1 s 92; 1985 c 248 s 20; 1986 c 444; 1990 c 573 s 19; 1991 c 325 art 10 s 2; 1992 c 540 art 2 s 1; 1992 c 564 art 1 s 14; 1994 c 485 s 5; 1995 c 214 s 2; 2004 c 285 art 4 s 2; 2004 c 290 s 21
60A.031 EXAMINATIONS. Subdivision 1. Power to examine. (1) Insurers and other licensees. At any time and for any reason related to the enforcement of the insurance laws, or to ensure that companies are being operated in a safe and sound manner and to protect the public interest, the commissioner may examine the affairs and conditions of any foreign or domestic insurance or reinsurance company, including reciprocals and fraternals, licensee or applicant for a license under the insurance laws, or any other person or organization of persons doing or in the process of organizing to do any insurance business in this state, and of any licensed advisory organization serving any of the foregoing in this state. The commissioner shall examine the affairs and conditions of every insurer licensed in this state not less frequently than once every five years. (2) Who may be examined. The commissioner in making any examination of an insurance company as authorized by this section may, if in the commissioner's discretion, there is cause to believe the commissioner is unable to obtain relevant information from such insurance company or that the examination or investigation is, in the discretion of the commissioner, necessary or material to the examination of the company, examine any person, association, or corporation: (a) transacting, having transacted, or being organized to transact the business of insurance in this state; (b) engaged in or proposing to be engaged in the organization, promotion, or solicitation of shares or capital contributions to or aiding in the formation of a domestic insurance company; (c) holding shares of capital stock of an insurance company for the purpose of controlling the management thereof as voting trustee or otherwise; (d) having a contract, written or oral, pertaining to the management or control of an insurance company as general agent, managing agent, attorney-in-fact, or otherwise; (e) which has substantial control directly or indirectly over an insurance company whether by ownership of its stock or otherwise, or owning stock in any domestic insurance company, which stock constitutes a substantial proportion of either the stock of the domestic insurance company or of the assets of the owner thereof; (f) which is a subsidiary or affiliate of an insurance company; (g) which is a licensed agent or solicitor or has made application for the licenses; (h) engaged in the business of adjusting losses or financing premiums. Nothing contained in this clause shall authorize the commissioner to examine any person, association, or corporation which is subject to regular examination by another division of the Commerce Department of this state. The commissioner shall notify the other division when an examination is deemed advisable. Subd. 2.  [Repealed, 1981 c 211 s 42] Subd. 2a. Purpose, scope, and notice of examination. An examination may, but need not, cover comprehensively all aspects of the examinee's affairs, practices, and conditions. The commissioner shall determine the nature and scope of each examination and in doing so shall take into account all available relevant factors concerning the financial and business affairs, practices and conditions of the examinee. For examinations undertaken pursuant to this section, the commissioner shall issue an order stating the scope of the examination and designating the person responsible for conducting the examination. A copy of the order shall be provided to the examinee. In conducting the examination, the examiner shall observe the guidelines and procedures in the examiner's handbook adopted by the National Association of Insurance Commissioners. The commissioner may also employ other guidelines or procedures that the commissioner may consider appropriate. Subd. 3. Access to examinee. (a) The commissioner, or the designated person, shall have timely, convenient, and free access at all reasonable hours to all books, records, securities, accounts, documents, and any or all computer or other records and papers relating to the property, assets, business, and affairs of any company, applicant, association, or person which may be examined pursuant to this section for the purpose of ascertaining, appraising, and evaluating the assets, conditions, affairs, operations, ability to fulfill obligations, and compliance with all the provisions of law of the company or person insofar as any of the above pertain to the business of insurance of a person, organization, or corporation transacting, having transacted, or being organized to transact business in this state. Every company or person being examined, its officers, directors, and agents, shall provide to the commissioner or the designated person timely, convenient, and free access at all reasonable hours at its office to all its books, records, accounts, papers, securities, documents, any or all computer or other records relating to the property, assets, business, and affairs of the company or person. The officers, directors, and agents of the company or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a company, by its officers, directors, employees, or agents, to submit to examination or to comply with a reasonable request of the examiners is grounds for suspension or refusal of, or nonrenewal of, a license or authority held by the company to engage in an insurance or other business subject to the commissioner's jurisdiction. The proceedings for suspension, revocation, or refusal of a license or authority must be conducted as provided in section 45.027. (b) The commissioner or any examiners may issue subpoenas, administer oaths, and examine under oath any person as to any matter pertinent to the examination. If a person fails or refuses to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court. (c) When making an examination or audit under this section, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the cost of which must be paid by the company that is the subject of the examination or audit. (d) This section does not limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions made pursuant to an examination are prima facie evidence in a legal or regulatory action. (e) Nothing contained in this section shall be construed to limit the commissioner's authority to use as evidence a final or preliminary examination report, examiner or company work papers or other documents, or other information discovered or developed during the course of an examination in the furtherance of a legal or administrative action which the commissioner may, in the commissioner's sole discretion, consider appropriate. Subd. 4. Examination report; foreign and domestic companies. (a) The commissioner shall make a full and true report of every examination conducted pursuant to this chapter, which shall include (1) a statement of findings of fact relating to the financial status and other matters ascertained from the books, papers, records, documents, and other evidence obtained by investigation and examination or ascertained from the testimony of officers, agents, or other persons examined under oath concerning the business, affairs, assets, obligations, ability to fulfill obligations, and compliance with all the provisions of the law of the company, applicant, organization, or person subject to this chapter and (2) a summary of important points noted in the report, conclusions, recommendations and suggestions as may reasonably be warranted from the facts so ascertained in the examinations. The report of examination shall be verified by the oath of the examiner in charge thereof, and shall be prima facie evidence in any action or proceedings in the name of the state against the company, applicant, organization, or person upon the facts stated therein. (b) No later than 60 days following completion of the examination, the examiner in charge shall file with the department a verified written report of examination under oath. Upon receipt of the verified report, the department shall transmit the report to the company examined, together with a notice which provides the company examined with a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to matters contained in the examination report. (c) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with the written submissions or rebuttals and the relevant portions of the examiner's work papers and enter an order: (1) adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, rule, or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure the violation; (2) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation, or information, and refiling the report as required under paragraph (b); or (3) calling for an investigatory hearing with no less than 20 days' notice to the company for purposes of obtaining additional documentation, data, information, and testimony. (d)(1) All orders entered under paragraph (c), clause (1), must be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner work papers, and any written submissions or rebuttals. The order is a final administrative decision and may be appealed as provided under chapter 14. The order must be served upon the company by certified mail, together with a copy of the adopted examination report. Within 30 days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders. (2) A hearing conducted under paragraph (c), clause (3), by the commissioner or authorized representative, must be conducted as a nonadversarial confidential investigatory proceeding as necessary for the resolution of inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the commissioner's review of relevant work papers or by the written submission or rebuttal of the company. Within 20 days of the conclusion of the hearing, the commissioner shall enter an order as required under paragraph (c), clause (1). (3) The commissioner shall not appoint an examiner as an authorized representative to conduct the hearing. The hearing must proceed expeditiously. Discovery by the company is limited to the examiner's work papers which tend to substantiate assertions in a written submission or rebuttal. The commissioner or the commissioner's representative may issue subpoenas for the attendance of witnesses or the production of documents considered relevant to the investigation whether under the control of the department, the company, or other persons. The documents produced must be included in the record. Testimony taken by the commissioner or the commissioner's representative must be under oath and preserved for the record. This section does not require the department to disclose information or records which would indicate or show the existence or content of an investigation or activity of a criminal justice agency. (4) The hearing must proceed with the commissioner or the commissioner's representative posing questions to the persons subpoenaed. Thereafter, the company and the department may present testimony relevant to the investigation. Cross-examination may be conducted only by the commissioner or the commissioner's representative. The company and the department shall be permitted to make closing statements and may be represented by counsel of their choice. (e)(1) Upon the adoption of the examination report under paragraph (c), clause (1), the commissioner shall continue to hold the content of the examination report as private and confidential information for a period of 30 days except as otherwise provided in paragraph (b). Thereafter, the commissioner may open the report for public inspection if a court of competent jurisdiction has not stayed its publication. (2) Nothing contained in this subdivision prevents or shall be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating to the reports, to the Commerce Department or the insurance department of another state or country, or to law enforcement officials of this or another state or agency of the federal government at any time, if the agency or office receiving the report or matters relating to the report agrees in writing to hold it confidential and in a manner consistent with this subdivision. (3) If the commissioner determines that regulatory action is appropriate as a result of an examination, the commissioner may initiate proceedings or actions as provided by law. (f) All working papers, scheduling orders, recorded information, documents and copies thereof produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination made under this subdivision, or in the course of market analysis, including documents related to scheduling conferences, must be given confidential treatment and are not subject to subpoena and may not be made public by the commissioner or any other person, except to the extent provided in paragraph (e). Access may also be granted to the National Association of Insurance Commissioners (NAIC), the Financial Industry Regulatory Authority, and any national securities association registered under the Securities Exchange Act of 1934. The parties must agree in writing prior to receiving the information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the company to which it pertains has been obtained. For purposes of this section, "market analysis" means a process whereby market conduct surveillance personnel collect and analyze information from filed schedules, surveys, required reports, such as the NAIC Market Conduct Annual Statement, or other sources in order to develop a baseline profile of an insurer, to review the operation or activity of an insurer, or to identify patterns or practices of insurers licensed to do business in this state that deviate significantly from the norm or that may pose a potential risk to the insurance consumer. (g) Information in the possession or control of, or obtained or disclosed to, the commissioner in the course of, or derived from, market analysis, as defined in paragraph (f), by an insurance company and any scheduling order, supplement to a scheduling order, or document related to a scheduling conference required under section 60A.033 is: (1) subject to confidential treatment as provided under paragraph (f); and (2) not subject to subpoena or other discovery nor admissible in evidence in a private civil action. Neither the commissioner nor any person who received information while acting under the authority of the commissioner is permitted or required to testify in a private civil action concerning the information. Nothing in this paragraph limits the ability of the commissioner to use the information in furtherance of an action brought by the commissioner. (h) Requests for information issued by the commissioner to an insurance company in the course of a market analysis, as defined in paragraph (f), must be issued under the commissioner's authority as provided in this section. (i) Notwithstanding paragraph (h), the commissioner may request information from an insurance company pursuant to the commissioner's authority under section 45.027, subdivision 1a or 2, if: (1) the request for information is in connection with an unresolved consumer complaint; or (2) there is an imminent risk of significant harm to a consumer. (j) Requests for information from the commissioner to an insurance company under paragraph (i) are not subject to section 60A.033. Subd. 5. Order; foreign and domestic companies. Within a reasonable time of receipt of an examination report the commissioner may issue an order to the examinee directing compliance within a time specified in the order or by law with one or more of the following: (a) to restore within the time and extent prescribed by law or the commissioner's order any deficiency, whenever its capital, reserves or surplus have become impaired, (b) to cease and desist from transaction of any business or from any business practice which if transacted or continued might result in the examinee's condition or further transaction of business being hazardous to its policyholders, its creditors, or the public, (c) to cease and desist from any other violation of its charter or any law of the state. Subd. 6. Penalty. (a) Notwithstanding section 72A.05, any person who violates or aids and abets any violation of a written order issued pursuant to this section may be fined not more than $10,000 for each day the violation continues for each violation of the order and the money so recovered shall be paid into the general fund. (b) For conduct prohibited under chapters 60A to 79, multiple violations of an identical or substantially similar law, rule, or order shall be considered a single violation under this section and section 45.027. This paragraph does not apply to willful violations by the insurer. This paragraph does not apply to violations that the insurer has not taken corrective action for and that: (1) cause financial harm to the policyholder; (2) constitute an unfair method of competition; or (3) constitute an unfair or deceptive act or practice. (c) For any applicable penalty imposed by the commissioner under this section, the commissioner must consider whether corrective action for the consumer was taken promptly after a violation was discovered or the violation was not part of a pattern or practice, and shall reduce or eliminate the penalty accordingly. (d) This subdivision does not apply if a different penalty is specified under law. Subd. 7. Alternatives to examinations. In lieu of an examination under this section of a foreign or an alien insurer licensed in this state, the commissioner may accept an examination report on the company as prepared by the insurance department for the company's state of domicile or port of entry state until January 1, 1994. After January 1, 1994, the reports may only be accepted if: (1) the insurance department is accredited under the National Association of Insurance Commissioners Financial Regulation Standards and Accreditation Program at the time of the examination; or (2) the examination is performed under the supervision of an accredited insurance department or with the participation of one or more examiners who are employed by an accredited state insurance department and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department. Subd. 7a. Conflict of interest. The department shall establish reasonable procedures so that no examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in a person subject to examination under this chapter. This section shall not be construed to automatically preclude an examiner from being: (1) a policyholder or claimant under an insurance policy; (2) a grantor of a mortgage or similar instrument on the examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business; (3) an investment owner in shares of regulated diversified investment companies; or (4) a settlor or beneficiary of a "blind trust" into which any otherwise impermissible holdings have been placed. Notwithstanding the requirements of this section, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions, even though the persons may from time to time be similarly employed or retained by persons subject to examination under this chapter. Subd. 8. Power to make rules. The commissioner may promulgate any rules which may be necessary to the administration of subdivisions 1 to 9. Subd. 9. Immunity from liability. (a) No cause of action shall arise nor shall liability be imposed against the commissioner, the commissioner's authorized representatives, or an examiner appointed by the commissioner for statements made or conduct performed in good faith while carrying out the provisions of this section. (b) No cause of action shall arise, nor shall liability be imposed against a person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this section, if the act of communication or delivery is performed in good faith and without fraudulent intent or the intent to deceive. (c) This section does not abrogate or modify a common law or statutory privilege or immunity enjoyed by a person identified in paragraph (a). (d) A person identified in paragraph (a) may be awarded attorney fees and costs if the person is the prevailing party in a civil cause of action for libel, slander, or other relevant tort arising out of activities in carrying out the provisions of this section, and the party bringing the action was not substantially justified in doing so. For purposes of this section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated. Subd. 10. Limitation of enforcement actions or administrative proceedings. An enforcement action or administrative proceeding brought by the commissioner against a licensee who violates any law, rule, or order related to the duties and responsibilities entrusted to the commissioner in chapters 60A to 79, including without limitation the issuance of an order pursuant to chapters 60A to 79, must be commenced within nine years of the date the violation occurs unless the violation arises out of a contract that remains in force, in which case the action or administrative proceeding must be commenced within two years of the date of the discovery of the violation. If the licensee attempts to conceal a violation, an enforcement action or administrative proceeding must be brought by the commissioner within nine years of discovery of the violation by the commissioner. Subd. 11. Multistate examinations. If the commissioner elects to participate in an examination of a licensee that involves multiple states, the commissioner is prohibited from commencing, undertaking, or continuing an examination under this section against the subject examinee related to the same alleged conduct, including without limitation incurring or charging any examination costs, unless and until the multistate examination is complete or Minnesota has formally withdrawn from that examination. With respect to any completed multistate examination that Minnesota elected to participate in, the commissioner is prohibited from taking separate action against a licensee that was subject to the multistate examination unless the commissioner follows the procedures set forth in this section and section 60A.033, as applicable. History:  1967 c 591 s 1; 1969 c 234 s 1,2; 1969 c 399 s 1; 1981 c 211 s 1-7; 1984 c 628 art 3 s 11; 1986 c 444; 1991 c 325 art 10 s 3; 1992 c 540 art 2 s 2; 2004 c 285 art 4 s 3; 2004 c 290 s 22; 2010 c 384 s 4; 2017 c 39 s 1,2; 2020 c 80 art 1 s 14; 2022 c 93 art 2 s 18-20
60A.032 COMMISSIONER'S ORDERS, REPORT. When, upon receipt of an examination report, the commissioner forwards to the company an order based on the report, the commissioner shall immediately report the fact to the governor and the attorney general. Within 20 days after submission of the report the commissioner shall submit to the governor and attorney general a supplementary report if the company has not complied with the order. History:  1969 c 7 s 1; 1986 c 444
60A.033 SCHEDULING CONFERENCE AND ORDER. Subdivision 1. Scope. This section applies to examinations limited to market analysis, as defined in section 60A.031, subdivision 4, paragraph (f). Subd. 2. Scheduling conference required. Within 30 days of issuing an examination order under section 60A.031, the commissioner must hold a scheduling conference with the insurance company. Subd. 3.  [Repealed, 2022 c 93 art 2 s 43] Subd. 4. Scheduling conference. At the scheduling conference, the commissioner must provide the insurance company with the following: (1) the justification for the examination and the regulatory issues the examination will address; (2) the information that must be produced by the insurance company and the timing for its production in accordance with the requirements of subdivision 6; (3) the estimated length of the examination, subject to the requirements of subdivision 9; (4) whether contract examiners will be used; (5) a budget for the exam including: (i) the daily or hourly rates for the examiners that will be involved in the examination; (ii) the estimated travel, lodging, meal, and other expenses of the examiners; and (iii) the estimated administrative and supply costs directly associated with the examination; and (6) an explanation of the invoicing process and the process for resolving billing disputes. Subd. 5. Scheduling order. Within 15 days following the scheduling conference or as otherwise agreed to by the commissioner and the insurance company, the commissioner must issue a scheduling order that includes the information required by subdivision 4, based on the discussion at the scheduling conference. The commissioner and insurance company must follow the terms of the scheduling order. To amend a scheduling order there must be a supplemental scheduling conference that complies with subdivision 4 and a supplemental scheduling order that complies with this subdivision, unless otherwise agreed upon by the commissioner and the insurance company. Subd. 6. Production of information. (a) Any information requested from an insurance company by the commissioner must: (1) be limited to matters relevant to the issues the examination will address; (2) provide the insurance company with a reasonable period of time to respond to the request, but not less than 30 days from the receipt of the request; and (3) be reasonable in relation to the burden or expense of gathering the requested information and the needs of the examination. (b) In making an information request, the commissioner must consider whether the information being requested is obtainable from some other source that is more convenient, less burdensome, or less expensive for the insurance company. (c) An insurance company can extend the time period by which a response to an information request from the commissioner is due by up to 30 days upon giving notice of the extension to the commissioner. The commissioner may extend any time period by which information is due relating to an examination. Subd. 7. Conduct of an examination. (a) Unless required to preserve evidence, the commissioner, department, and examiners: (1) may not appear at an insurance company's place of business unannounced to conduct the examination; or (2) may not be present at an insurance company's place of business outside of normal hours without the insurance company's written consent. (b) If a statement is taken by the commissioner from a person under oath, the person must first be informed of the following: (1) the scope of the proposed statement; (2) whether the person is the subject of an examination; and (3) that the person may be represented by legal counsel during the taking of the statement. (c) If a statement is taken by the commissioner from a person under oath and the statement is recorded, the person must be provided with a transcript or recording of the statement within 30 days of requesting it from the commissioner. Subd. 8. Costs. All bills for examination costs being charged to an insurance company pursuant to subdivision 5 or section 60A.031, subdivision 3, paragraph (c), must: (1) be itemized and, with respect to examiner billings, contain activity detail on a quarterly hourly basis by an individual examiner and disclose the applicable hourly billing rates, together with per-charge detail for related travel or other expenses; and (2) provide a due date no less than 60 days from receipt of the bill. Subd. 9. Completion of examination. An examination under section 60A.031 must not exceed 18 months from the date the commissioner receives the insurance company's first submission pursuant to a scheduling order, unless: (1) the commissioner determines that there has been a material lack of cooperation by the insurance company and advises the company in writing of the specific instances demonstrating a lack of cooperation; (2) the examination is a multistate examination; or (3) the commissioner determines that additional time is necessary to complete the examination and the commissioner notifies the insurance company in writing of the reasons why the examination requires additional time. Subd. 10. Hearing; procedure; judicial review. (a) An insurance company aggrieved by any decision or action of the commissioner under this section as it relates to market analysis may, within 21 days after that decision or action, make a written request to the commissioner for a hearing to determine whether the decision or action complies with the requirements of this section. The commissioner shall hear the party or parties within 21 days after receipt of the request and shall give not less than ten days' written notice of the time and place of the hearing. Within 15 days after the hearing, the commissioner shall affirm, reverse, or modify the previous action and specify the reasons for that decision or action in writing. The effective date of the commissioner's action or decision may be suspended or postponed pending the completion of the hearing before the commissioner. (b) Nothing contained in this section requires the observance at any hearing of formal rules of pleading or evidence. (c) An order or decision of the commissioner is a final decision subject to appeal in accordance with chapter 14. (d) Time used to complete a hearing and appeal under this section must not be counted toward the time frame for completion of an examination under subdivision 9. Subd. 11. Informal disposition. (a) The commissioner must make an attempt to informally resolve any alleged violations of law identified during the examination or investigation. An attempt to informally resolve a violation may consist of a consent order, nonpublic letter of reprimand, or other informal resolution or disposition. (b) The terms of a consent order or other informal disposition that prescribes compliance requirements must be consistent with the requirements of Minnesota law. Subd. 12. Report to the legislature. Each year by February 1, the commissioner must report the following information to the chairs and ranking minority members of the house of representatives and senate committees having jurisdiction over commerce: (1) a listing of the number of pending market conduct exams and the year the exams were commenced; (2) the number of exams closed during the prior year and the current total of costs charged to the companies for each exam; (3) whether the exam is being conducted, in whole or in part, by third-party examiners; and (4) other information that the chairs or ranking minority members may reasonably request, subject to the limitations of section 60A.031, subdivision 4, paragraph (f). History:  2017 c 39 s 3; 2022 c 93 art 2 s 21-24
60A.035 GOVERNMENT CONTROLLED OR OWNED COMPANY PROHIBITED FROM TRANSACTING BUSINESS. (a) No insurance company the voting control or ownership of which is held in whole or substantial part by any government or governmental agency or entity having a tax exemption under section 501(c)(27)(B) or 115 of the Internal Revenue Code of 1986 or which is operated for or by any such government or agency or entity having a tax exemption under section 501(c)(27)(B) or 115 of the Internal Revenue Code of 1986 is authorized to transact insurance in this state. Membership in a mutual company, subscribership in a reciprocal insurer, ownership of stock of an insurer by the alien property custodian or similar official of the United States, or supervision of an insurer by public insurance supervisory authority is not considered to be an ownership, control, or operation of the insurer for the purposes of this section. (b) This section does not apply to an insurance company if its sole insurance business in this state is providing workers' compensation insurance and associated employers' liability coverage to an employer principally located in the insurer's state of domicile whose employee may receive benefits under section 176.041, subdivision 4, provided the operations of the employer are for fewer than 30 consecutive days in this state and provided the employer has no other significant contacts with this state. (c) This section does not apply to a fund established under section 16B.85, subdivision 2. History:   1Sp2003 c 1 art 4 s 1 
60A.052 CERTIFICATES OF AUTHORITY; ENFORCEMENT ACTIONS. Subdivision 1. Grounds. The commissioner may by order take any or all of the following actions: (a) deny, suspend, or revoke a certificate of authority; (b) censure the insurance company; (c) impose a civil penalty as provided for in section 45.027, subdivision 6; or (d) under a written agreement with the insurance company based upon the company's financial condition, impose conditions or restrictions on the insurance company's authority to transact business in Minnesota. In order to take this action the commissioner must find that the order is in the public interest, and the insurance company: (1) has a board of directors or principal management that is incompetent, untrustworthy, or so lacking in insurance company managerial experience as to make its operation hazardous to policyholders, its stockholders, or to the insurance buying public; (2) is controlled directly or indirectly through ownership, management, reinsurance transactions, or other business relations by any person or persons whose business operations are or have been marked by manipulation of any assets, reinsurance, or accounts as to create a hazard to the company's policyholders, stockholders, or the insurance buying public; (3) is in an unsound or unsafe condition; (4) has the actual liabilities that exceed the actual funds of the company; (5) has filed an application for a license which is incomplete in any material respect or contains any statement which, in light of the circumstances under which it was made, contained any misrepresentation or was false, misleading, or fraudulent; (6) has pled guilty, with or without explicitly admitting guilt, pled nolo contendere, or been convicted of a felony, gross misdemeanor, or misdemeanor involving moral turpitude, or similar conduct; (7) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the insurance business; (8) has violated or failed to comply with any order of the insurance regulator of any other state or jurisdiction; (9) has had a certificate of authority denied, suspended, or revoked, has been censured or reprimanded, has been the subject of any other discipline imposed by, or has paid or has been required to pay a monetary penalty or fine to, another state; (10) agents, officers, or directors refuse to submit to examination or perform any related legal obligation; or (11) has violated or failed to comply with, any of the provisions of the insurance laws including chapter 45 or chapters 60A to 72A or any rule or order under those chapters. Subd. 2. Suspension or revocation of authority or censure. If the commissioner determines that one of the conditions listed in subdivision 1 exists, the commissioner may issue an order requiring the insurance company to show cause why any or all of the following should not occur: (1) revocation or suspension of any or all certificates of authority granted to the foreign or domestic insurance company or its agent; (2) censuring of the insurance company; (3) cancellation of all or some of the company's insurance contracts then in force in this state; (4) the imposition of a civil penalty; or (5) under a written agreement with the insurance company based upon the company's financial condition, imposition of conditions or restrictions on the insurance company's authority to transact business in Minnesota. The order shall be calculated to give reasonable notice of the time and place for hearing thereon, and shall state the reasons for the entry of the order. All hearings shall be conducted in accordance with chapter 14. The insurer may waive its right to the hearing. If the insurer is under the supervision or control of the insurance department of the insurer's state of domicile, that insurance department, acting on behalf of the insurer, may waive the insurer's right to the hearing. After the hearing, the commissioner shall enter an order disposing of the matter as the facts require. If the insurance company fails to appear at a hearing after having been duly notified of it, the company shall be considered in default, and the proceeding may be determined against the company upon consideration of the order to show cause, the allegations of which may be considered to be true. Subd. 3. Denial; notice to applicant. Whenever it appears to the commissioner that an application for a certificate of authority should be denied pursuant to subdivision 1, the commissioner shall promptly give a written notice to the applicant of the denial. The notice must state the grounds for the denial and give reasonable notice of the rights of the applicant to request a hearing. A hearing must be held not later than 30 days after the request for hearing is received by the commissioner unless the applicant and the Department of Commerce agree that the hearing may be held at a later date. If no hearing is requested within 30 days of service of the notice, the denial will become final. All hearings shall be conducted in accordance with chapter 14. After the hearing, the commissioner shall enter an order disposing of the matter as the facts require. If the applicant fails to appear at a hearing after having been duly notified of it, the applicant shall be considered in default, and the proceeding may be determined against the applicant upon consideration of the notice denying the application, the allegations of which may be considered to be true. Subd. 4. Actions against lapsed certificate of authority. If a certificate of authority lapses, is surrendered, withdrawn, terminated, or otherwise becomes ineffective, the commissioner may institute a proceeding under this subdivision within two years after the certificate of authority was last effective and enter a revocation or suspension order as of the last date on which the certificate of authority was in effect, or impose a civil penalty as provided for in section 45.027, subdivision 6. Subd. 4a. Withdrawal of insurer from state. No insurer shall withdraw from this state until its direct liability to its policyholders and obligees under all its insurance contracts then in force in this state have been assumed by another licensed insurer according to section 60A.09, subdivision 4a. History:  1992 c 564 art 3 s 2; 1994 c 425 s 1; 1994 c 485 s 6; 1999 c 177 s 3,4; 2000 c 483 s 2,3
60A.06 KINDS OF INSURANCE PERMITTED. Subdivision 1. Statutory lines. Insurance corporations may be authorized to transact in any state or territory in the United States, in the Dominion of Canada, and in foreign countries, when specified in their charters or certificates of incorporation, either as originally granted or as thereafter amended, any of the following kinds of business, upon the stock plan, or upon the mutual plan when the formation of such mutual companies is otherwise authorized by law; and business trusts as authorized by law of this state shall only be authorized to transact in this state the following kind of business hereinafter specified in clause (7) hereof when specified in their "declaration of trust": (1) To insure against loss or damage to property on land and against loss of rents and rental values, leaseholds of buildings, use and occupancy and direct or consequential loss or damage caused by fire, smoke or smudge, water or other fluid or substance, lightning, windstorm, tornado, cyclone, earthquake, collapse and slippage, rain, hail, frost, snow, freeze, change of temperature, weather or climatic conditions, excess or deficiency of moisture, floods, the rising of waters, oceans, lakes, rivers or their tributaries, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, electrical power interruption or electrical breakdown from any cause, railroad equipment, motor vehicles or aircraft, accidental injury to sprinklers, pumps, conduits or containers or other apparatus erected for extinguishing fires, explosion, whether fire ensues or not, except explosions on risks specified in clause (3); provided, however, that there may be insured hereunder the following: (a) explosion of any kind originating outside the insured building or outside of the building containing the property insured; (b) explosion of pressure vessels which do not contain steam or which are not operated with steam coils or steam jackets; and (c) risks under home owners multiple peril policies; (2)(a) To insure vessels, freight, goods, wares, merchandise, specie, bullion, jewels, profits, commissions, bank notes, bills of exchange, and other evidences of debt, bottomry and respondentia interest, and every insurance appertaining to or connected with risks of transportation and navigation on and under water, on land or in the air; (b) To insure all personal property floater risks; (3) To insure against any loss from either direct or indirect damage to any property or interest of the assured or of another, resulting from the explosion of or injury to (a) any boiler, heater or other fired pressure vessel; (b) any unfired pressure vessel; (c) pipes or containers connected with any of said boilers or vessels; (d) any engine, turbine, compressor, pump or wheel; (e) any apparatus generating, transmitting or using electricity; (f) any other machinery or apparatus connected with or operated by any of the previously named boilers, vessels or machines; and including the incidental power to make inspections of and to issue certificates of inspection upon, any such boilers, apparatus, and machinery, whether insured or otherwise; (4) To make contracts of life and endowment insurance, to grant, purchase, or dispose of annuities or endowments of any kind; and, in such contracts, or in contracts supplemental thereto to provide for additional benefits in event of death of the insured by accidental means, total permanent disability of the insured, or specific dismemberment or disablement suffered by the insured, or acceleration of life or endowment or annuity benefits in advance of the time they would otherwise be payable; (5)(a) To insure against loss or damage by the sickness, bodily injury or death by accident of the assured or dependents, or those for whom the assured has assumed a portion of the liability for the loss or damage, including liability for payment of medical care costs or for provision of medical care; (b) To insure against the legal liability, whether imposed by common law or by statute or assumed by contract, of employers for the death or disablement of, or injury to, employees; (6) To guarantee the fidelity of persons in fiduciary positions, public or private, or to act as surety on official and other bonds, and for the performance of official or other obligations; (7) To insure owners and others interested in real or personal property as described in section 68A.04; (8) To insure against loss or damage by breakage of glass, located or in transit; (9)(a) To insure against loss by burglary, theft, or forgery; (b) To insure against loss of or damage to moneys, coins, bullion, securities, notes, drafts, acceptance or any other valuable paper or document, resulting from any cause, except while in the custody or possession of and being transported by any carrier for hire or in the mail; (c) To insure individuals by means of an all risk type of policy commonly known as the "personal property floater" against any kind and all kinds of loss of or damage to, or loss of use of, any personal property other than merchandise; (d) To insure against loss or damage by water or other fluid or substance; (10) To insure against loss from death of domestic animals and to furnish veterinary service; (11) To guarantee merchants and those engaged in business, and giving credit, from loss by reason of giving credit to those dealing with them; this shall be known as credit insurance; (12) To insure against loss or damage to automobiles or other vehicles or aircraft and their contents, by collision, fire, burglary, or theft, and other perils of operation, and against liability for damage to persons, or property of others, by collision with such vehicles or aircraft, and to insure against any loss or hazard incident to the ownership, operation, or use of motor or other vehicles or aircraft; (13) To insure against liability for loss or damage to the property or person of another caused by the insured or by those for whom the insured is responsible, including insurance of medical, hospital, surgical, funeral or other related expense of the insured or other person injured, irrespective of legal liability of the insured, when issued with or supplemental to policies of liability insurance; (14) To insure against loss of or damage to any property of the insured, resulting from the ownership, maintenance or use of elevators, except loss or damage by fire; (15) To insure against attorneys fees, court costs, witness fees and incidental expenses incurred in connection with the use of the professional services of attorneys at law. Subd. 2. Other lines. Any insurance corporation or association heretofore or hereafter licensed to transact within the state any of the kinds or classes of insurance specifically authorized under the laws of this state may, when authorized by its charter, transact within and without the state any lines of insurance germane to its charter powers and not specifically provided for under the laws of this state when these lines, or combinations of lines, of insurance are not in violation of the constitution or the laws of the state and, in the opinion of the commissioner, not contrary to public policy, provided the company or association shall first obtain authority of the commissioner and meet capital or surplus and other solvency and policy form requirements as the commissioner shall prescribe. These additional hazards may be insured against by attachment to, or in extension of, any policy which the company may be authorized to issue under the laws of this state. This subdivision shall apply to companies operating upon the stock or mutual plan, reciprocal or interinsurance exchanges. 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. (d) This subdivision does not prohibit combining life coverage with one or more of the following coverages: (1) specified disease or illness coverage; (2) other limited benefit health coverage; (3) hospital indemnity coverage; (4) other fixed indemnity products, provided that the prescribed minimum standards applicable to those categories of coverage are met. Subd. 4. Vicarious liability; punitive damages. Any insurance corporation or association may insure against vicarious liability for punitive and exemplary damages within any of the kinds of business pertaining to the issuance of liability insurance that the insurance corporation or association is authorized to transact under subdivision 1 or 2. History:  1967 c 395 art 1 s 6; 1969 c 7 s 5; 1973 c 634 s 1; 1986 c 444; 1986 c 455 s 4; 1989 c 125 s 1,2; 1995 c 258 s 1; 1999 c 177 s 5,6; 2000 c 304 s 1; 2001 c 215 s 1; 2008 c 347 s 1; 2011 c 108 s 9
60A.07 AUTHORIZATION AND REQUIREMENTS. Subdivision 1. Incorporation. Three or more persons may form a domestic insurance corporation for any of the purposes specified in subdivision 2 by applying to the Department of Commerce and complying with all applicable organizational requirements and the conditions set out in clauses (1) to (6). The incorporators must subscribe a certificate specifying: (1) the corporation's name, which must distinguish it from all other corporations authorized to do business in this state, and must contain the word "company," "corporation," or "incorporated"; (2) the general nature of the corporation's business and its principal place of business; (3) the period of its duration, if limited; (4) the names and places of residence of the incorporators; (5) the board in which the management of the corporation will be vested, the date of the initial annual meeting at which it will be elected, and the names and addresses of the board members until the first election; and (6) whether the corporation is organized on the stock plan, mutual plan, or otherwise; and, if organized as a stock company, the amount of capital stock, how the capital stock is to be paid in, the number of shares into which it is to be divided, and the par value of each share; and, if there is to be more than one class, a description and the terms of issue of each class and the method of voting on each class. The certificate may contain any other lawful provision defining and regulating the powers and business of the insurance corporation, its officers, directors, trustees, members, or stockholders. Domestic insurance corporations established in this manner are organized under and governed by chapter 302A, except as otherwise provided in subdivision 1d and chapter 66A. Subd. 1a.  MS 2018 [Repealed, 2020 c 80 art 1 s 29] Subd. 1b. Certificate of authority. If the commissioner of commerce is satisfied that the corporation has been organized for legitimate purposes, and under such conditions as to merit and have public confidence, and that all provisions of law applicable to every branch of business in which, by the terms of its certificate, it is authorized to engage, have been complied with, the commissioner shall so certify. When the original certificate and the certificate of incorporation from the secretary of state are filed with the commissioner of commerce, the commissioner shall, within 60 days thereafter, execute and deliver to it a certificate of authority. Subd. 1c. Bylaws. Bylaws may be adopted by the insurance corporation in the manner set forth in section 302A.181. Within 90 days after the adoption of the bylaws or any amendment thereof, a certified copy of the same must be filed with the commissioner of commerce. Subd. 1d. Certificate of incorporation; amendments. The certificate of incorporation of an insurance corporation organized and existing under the laws of this state may be amended in the manner set forth in section 302A.135. Amendments are effective upon the commissioner's approval. Subd. 1e. Application of business corporation act. The provisions of chapter 302A apply to domestic stock corporations formed to carry on the business of insurance, except to the extent those provisions are inconsistent with any provisions contained in this chapter or to the extent in conflict with any provisions contained in chapters 60A to 79A. The provisions of chapter 302A apply to domestic mutual corporations formed to carry on the business of insurance only to the extent provided for in chapter 66A. Subd. 2. Powers of insurers. Corporations may be formed for carrying on any one branch of the business of insurance authorized by law, or any two or more branches thereof, which are permitted by law to be transacted by one company; and business trusts as authorized by law of this state may be formed for carrying on the kind of business of insurance specified in section 60A.06, subdivision 1, clause (7). Subd. 3. Acceptance of laws. Every company, domestic or foreign, shall file with the commissioner its acceptance of the provisions of the insurance laws of the state of Minnesota, and its charter and any amendments thereto, and each such company shall be governed thereby and by those laws relative to corporations in general, so far as applicable and not otherwise specifically provided. No foreign company shall be denied a license in this state because its corporate powers exceed those which it is permitted to exercise under the laws of this state, but no foreign company, which does outside of this state any kind or combination of kinds of insurance not permitted to be done in this state by similar domestic companies, now or hereafter organized, shall be or continue to be authorized to do an insurance business in this state if the commissioner of commerce finds, after ten days' notice sent by certified mail to the home office of the company involved, and an opportunity to be heard, that the doing of such kind or combination of kinds of insurance business impairs the financial solvency of the company or its financial ability to meet its obligations incurred in this state, or finds that the doing of such kinds or combination of kinds of insurance business is prejudicial to the interests of policyholders, creditors or the people of this state. Subd. 4. License required. No insurance company or association, or fraternal benefit society, not specifically exempted therefrom by law, shall transact the business of insurance in this state unless it shall hold a license therefor from the commissioner. Subd. 5.  [Repealed, 1969 c 7 s 6] Subd. 5a. Financial requirements; stock companies. No insurance company operating upon the stock plan shall be initially authorized to transact any one of the kinds of business enumerated in section 60A.06, subdivision 1, clauses (1) to (15), unless it shall have paid-up capital stock and surplus of not less than the amounts specified below. Except as otherwise provided by this subdivision, after initial authorization has been granted, surplus shall be constantly maintained in an amount not less than one-half of the surplus originally required for that kind of business. If the kind of business being transacted is of the type authorized by section 60A.06, subdivision 1, clause (4), surplus shall be constantly maintained after initial authorization in an amount not less than 25 percent of the amount of surplus originally required.          Paid UpCapital Stock  Surplus  Clause (1),  $350,000  $350,000  Clause (2),  $350,000  $350,000  Clause (3),  $200,000  $200,000  Clause (4),  $1,000,000  $2,000,000  Clause (5)(a),  $500,000  $1,000,000  Clause (5)(b),  $500,000  $1,000,000  Clause (6),  $500,000  $500,000  Clause (7),  $500,000  $500,000  Clause (8),  $200,000  $200,000  Clause (9),  $200,000  $200,000  Clause (10),  $200,000  $200,000  Clause (11),  $350,000  $700,000  Clause (12),  $500,000  $1,000,000  Clause (13),  $500,000  $1,000,000  Clause (14),  $200,000  $200,000  Clause (15),  $350,000  $350,000   Subd. 5b.Financial requirements; mutual companies. No insurance company operating upon the mutual plan as provided in chapter 66A, shall be authorized to transact any one of the kinds of business enumerated in section 60A.06, subdivision 1, clauses (1) to (3) and (5) to (15), unless in addition to the requirements specified in chapter 66A it shall have met the following requirements as to surplus: As to a mutual company operating on a nonassessable basis, an initial surplus of not less than the amount of surplus enumerated in subdivision 5a for a stock company authorized to transact that kind of business, provided that after initial authorization has been granted, the surplus shall thereafter be constantly maintained in an amount equal to not less than one-half of such initial surplus; as to a mutual company operating on an assessable basis, an initial surplus of not less than one-half of the amount of surplus enumerated in subdivision 5a for a stock company authorized to transact that kind of business, provided that after initial authorization has been granted, the surplus shall thereafter be constantly maintained in an amount equal to not less than one-half of such initial surplus. No insurance company operating upon the mutual plan shall be authorized to transact the kind of business enumerated in section 60A.06, subdivision 1, clause (4), unless it shall have surplus of not less than $3,000,000; provided that after initial authorization has been granted, the surplus shall thereafter be constantly maintained in an amount of not less than $1,500,000. No insurance company operating upon the mutual plan, other than as provided in chapter 66A, shall be authorized to transact the kind of business enumerated in section 60A.06, subdivision 1, clause (5)(a), unless it shall have a surplus of not less than $1,500,000; provided that after initial authorization has been granted, the surplus thereafter shall be constantly maintained in the amount of not less than $1,000,000. Subd. 5c. Authorization to transact more than one kind of business. Any insurance corporation authorized to transact the kinds of business specified in section 60A.06, subdivision 1, clause (4), may also transact the kinds of business specified in section 60A.06, subdivision 1, clause (5)(a), upon meeting the following financial requirements: As to companies operating upon the stock plan, paid-up capital stock of not less than $1,000,000 and an initial surplus of not less than $2,000,000 which surplus shall thereafter be constantly maintained in the amount of not less than $500,000; as to companies operating on the mutual plan, an initial surplus of not less than $3,000,000 which shall thereafter be constantly maintained in the amount of not less than $1,500,000. Any insurance corporation which prior to January 1, 1949, was authorized to transact personal injury liability insurance and also the kinds of business specified in section 60A.06, subdivision 1, clauses (4) and (5), shall continue to be authorized to transact personal injury liability insurance, providing the corporation continues to meet the revised financial requirements of this subdivision. Any stock company may, when authorized by its articles of incorporation, transact any two or more of the kinds of business specified in section 60A.06, subdivision 1, clauses (1) to (3) and (5) to (15), upon meeting the following financial requirements: paid-up capital stock of not less than $1,000,000 and an initial surplus of not less than $1,000,000 which surplus shall thereafter be constantly maintained in the amount of not less than $500,000; provided, however, that if the sum of the capital stock and surplus requirements specified in subdivision 5a for the kinds of business to be transacted is less than the amount of the capital stock and surplus requirements stated in the foregoing clauses of this sentence, then the company may transact those kinds of business upon meeting the capital stock and surplus requirements specified in subdivision 5a for those kinds of business. Any insurance company operating upon the mutual plan as provided in chapter 66A, may, when authorized by its articles of incorporation, transact any two or more of the kinds of business specified in section 60A.06, subdivision 1, clauses (1) to (3) and (5) to (15), upon meeting the following requirements as to surplus which shall be in addition to the requirements specified in chapter 66A: as to mutual companies operating on a nonassessable basis, an initial surplus of not less than $1,000,000, which surplus shall thereafter be constantly maintained in the amount of not less than $500,000; as to mutual companies operating on an assessable basis, an initial surplus of not less than $750,000, which surplus shall thereafter be constantly maintained in the amount of not less than $375,000; provided, however, that if the sum of the surplus requirements specified in subdivisions 5a and 5b for the kinds of business to be transacted is less than the amount of the surplus requirements stated in the foregoing clauses of this sentence, then the company may transact those kinds of business upon meeting the surplus requirements specified in subdivisions 5a and 5b for those kinds of business. Subd. 5d.  [Repealed, 1993 c 299 s 33] Subd. 5e. Minimum requirements; deficiency. Whenever the commissioner finds that the capital or surplus of a stock company, or the surplus of a mutual company, is less than the minimum requirements prescribed by this section and sections 66A.32 and 66A.33, the commissioner shall determine the amount of the deficiency and issue an order in writing requiring the insurance company to restore the deficiency within such reasonable period as the commissioner shall designate. The commissioner may, by order served upon the insurance company, prohibit the insurance company from issuing any new policies while the deficiency exists. If at the expiration of the designated period the insurance company has not restored the deficiency and filed proof satisfactory to the commissioner, the commissioner shall proceed against the insurance company as provided in chapter 60B; provided, however, that if the surplus of a mutual company operating on the nonassessable basis declines below the minimum requirement prescribed by this section and sections 66A.32 and 66A.33 for such a company, and if its surplus is equal to or greater than the minimum requirement for a mutual company operating on the assessable basis, it may continue to write on the assessable basis by issuing only assessable policies. Subd. 5f. Capital and surplus requirements. (a) Capital and surplus requirements apply to all types of insurance transacted by the insurer, whether or not only a portion of the types of insurance are transacted in this state. The commissioner may for the protection of the public require an insurer to maintain funds in excess of the amounts required under this section and sections 66A.32 and 66A.33, due to the amount, kind, or combination of types of insurance transacted by the insurer. Failure of an insurer to maintain funds as ordered by the commissioner is grounds for suspension or revocation of the insurer's certificate of authority. (b) After June 30, 1991, an insurer may not renew and continue its certificate of authority unless the insurer possesses at least the basic capital and surplus, and additional surplus required by the commissioner under this section and sections 66A.32 and 66A.33. Subd. 6. Reduction of capital stock. When the capital of any domestic stock company is impaired, it may, upon a vote of the majority of the stock, reduce the same to not less than the legal minimum. In this case no part of its assets shall be distributed to the stockholders. Any such company whose capital is not impaired may, by a two-thirds vote of its stock and with the consent of the commissioner, reduce the same to not less than the legal minimum capital and surplus required for such a company. In either case, within ten days after the meeting at which the reduction was made, the company shall submit to the commissioner a certified statement of the proceedings thereof, including the amount of the reduction and its assets and liabilities, verified by its president, secretary, and a majority of its directors. The commissioner shall examine the facts and, if they conform to law and the commissioner is of opinion that injury to the public will not result, the commissioner shall endorse approval upon the statement. Upon filing the same with the secretary of state and paying a filing fee of $5, and duly amending its certificate of incorporation in conformity therewith, it may transact business upon the reduced capital as though the same were its original capital, and the commissioner shall issue a license to that effect. The company may thereafter, by a majority vote of its directors, require the return of every original stock certificate in exchange for a new certificate for such number of shares as each stockholder is entitled to, in the proportion that the reduced capital bears to the original. Subd. 7. New certificate of authority. Upon application, the commissioner shall examine the proceedings of any domestic company to increase or reduce its capital stock and, when found conformable to law, shall revoke the old and issue a new certificate of authority to the company to transact business upon the increased or reduced capital. Subd. 8.  [Repealed, 2005 c 69 art 2 s 19] Subd. 9. Retaliatory provision. When the laws of any other state, territory, or country prohibit the organization of or do not provide for the organization of or the licensing in that state, territory, or country of a class or kind of insurance companies or associations organized under the laws of this state and authorized to transact the business of insurance in this state, then companies or associations of the same kind or class of the other state, territory, or country shall not be licensed to do business in this state. This provision shall not apply to companies or associations, organized under the laws of another state, now licensed to do business in this state. Subd. 10.  [Clause (1) renumbered 66A.32] [Clause (2) renumbered 66A.33] Subd. 11. Officers and employees bonded. Every company shall provide a fidelity bond for its officers and employees. The bond shall be in the amount deemed necessary by the commissioner to adequately protect the public. History:  1967 c 395 art 1 s 7; 1969 c 7 s 7-13; 1969 c 598 s 1; 1969 c 708 s 63; 1973 c 634 s 2-4; 1976 c 213 s 1-4; 1978 c 465 s 1,2; 1978 c 674 s 60; 1980 c 516 s 2; 1983 c 216 art 1 s 15; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 313 s 2; 1986 c 444; 1991 c 325 art 10 s 4; art 14 s 1; 1992 c 564 art 1 s 15,16,54; 1995 c 214 s 3; 1996 c 446 art 2 s 1,2; 2005 c 69 art 2 s 1-6, 18; 2008 c 203 s 3; 2020 c 80 art 1 s 15
60A.078 SHORT TITLE. Sections 60A.078 to 60A.0789 may be cited as the "Insurable Interest Act." History:   2009 c 52 s 1 
60A.0782 DEFINITIONS. Subdivision 1. Terms. For the purpose of sections 60A.078 to 60A.0789, unless the context clearly indicates otherwise, the terms in this section have the meanings given them. Subd. 2. Act. "Act" means sections 60A.078 to 60A.0789. Subd. 3. Business entity. "Business entity" includes, but is not limited to, a joint venture, partnership, corporation, limited liability company, and business trust. Subd. 4. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 5. Legitimate settlement contracts. "Legitimate settlement contracts" mean settlement contracts that comply with Minnesota law governing viatical settlement contracts and that are not prohibited by section 60A.0785 or otherwise part of or in furtherance of an act, practice, or arrangement that is prohibited by sections 60A.078 to 60A.0789. Subd. 6. Life expectancy evaluation. "Life expectancy evaluation" means an evaluation conducted by any person other than the insurer or its authorized representatives for the purpose of projecting or estimating how long a particular individual is expected to live. Subd. 7. Person. "Person" means any natural person or legal entity, including, but not limited to, a partnership, limited liability company, association, trust, or corporation. Subd. 8. Policy. "Policy" means an individual or group policy, group certificate, contract, or arrangement of life insurance affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state. Subd. 9. Policyowner. "Policyowner" means the owner of a policy. Subd. 10. Prospective purchaser. "Prospective purchaser" means any person that may purchase or acquire the policy or a beneficial interest in the policy, but excluding individuals closely related to the insured by blood or law or who have a lawful and substantial interest in the continued life of the insured, or trusts established for the benefit of those individuals, provided those trusts meet the requirements of section 60A.0783, subdivision 2, paragraph (d). Subd. 11. Settlement contract. (a) "Settlement contract" means an agreement between a policyowner and another person establishing the terms under which compensation or anything of value will be paid or which compensation or value is less than the expected death benefit of the insurance policy, in return for the owner's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the policy. Settlement contract also includes: (1) the transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such a policy if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more policies, which policy insures the life of an individual who is a resident of this state; and (2) a premium finance loan made for a policy by a lender to a policyowner on, before, or after the date of issuance of the policy where: (i) the policyowner or the insured receives a guarantee of a future settlement value of the policy; or (ii) the policyowner or the insured agrees to sell the policy or any portion of its death benefit on any date following the issuance of the policy. (b) Settlement contract does not include: (1) a policy loan or accelerated death benefit made by the insurer under the policy's terms; (2) loan proceeds that are used solely to pay premiums for the policy and loan-related costs, including, without limitation, interest, arrangement fees, utilization fees and similar fees, closing costs, legal fees and expenses, trustee fees and expenses, and third-party collateral provider fees and expenses, including fees payable to letter of credit issuers; (3) a loan made by a bank or other licensed financial institution in which the lender takes an interest in a policy solely to secure repayment of a loan or, if there is a default on the loan and the policy is transferred, the transfer of such a policy by the lender, as long as the default itself is not pursuant to an agreement or understanding with any other person for the purpose of evading regulation under sections 60A.078 to 60A.0789; (4) an agreement in which all the parties are closely related to the insured by blood or law or have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured or are trusts established for the benefit of such parties; (5) any designation, consent, or agreement by an insured who is an employee or an employer in connection with the purchase by the employer, or by a trust established by the employer, of life insurance on the life of the employee; (6) a bona fide business succession planning arrangement: (i) between shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders; (ii) between partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partner; or (iii) between members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by its members; or (7) an agreement entered into by a service recipient, or a trust established by the service recipient, and a service provider, or a trust established by the service provider, who performs significant services for the service recipient's trade or business. Subd. 12. Stranger-originated life insurance practices. "Stranger-originated life insurance practices" or "STOLI practices" means an act, practice, or arrangement to initiate a life insurance policy for the benefit of a third-party investor who, at the time of policy origination, has no insurable interest in the insured. STOLI practices include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person or entity, who, at the time of policy inception, could not lawfully initiate the policy themselves, and where, at the time of inception, there is an arrangement or agreement, whether spoken or written, to directly or indirectly transfer the ownership of the policy and/or the policy benefits to a third party. Trusts that are created to give the appearance of insurable interest and are used to initiate policies for investors violate the insurable interest requirements and the prohibition against STOLI practices. History:   2009 c 52 s 2 
60A.0783 INSURABLE INTEREST REQUIRED. Subdivision 1. Insurance on life of another. A person may not procure or cause to be procured or effected a policy upon the life of another individual unless the benefits under the policy are payable to the insured, the personal representatives of the insured's estate, or to a person having, at the time the policy is issued, an insurable interest in the individual insured. Subd. 2. What constitutes an insurable interest. Insurable interest, with reference to insurance on the life of another, includes only the following interests. (a) An individual has an insurable interest in the life of another person to whom the individual is closely related by blood or by law and in whom the individual has a substantial interest engendered by love and affection. (b) An individual has an insurable interest in the life of another person if such individual has a lawful and substantial interest in the continued life of the individual insured, as distinguished from an interest that would arise only by or would be enhanced in value by the death of the individual insured. (c) An individual party to a contract for the purchase or sale of an interest in any business entity and, if applicable, a trust or the trustee of a trust of which the individual is a settlor, has an insurable interest in the life of each other individual party to the contract, but only for the purpose of carrying out the intent and purpose of the contract. (d) A trust, or the trustee of a trust, has an insurable interest in the life of an individual insured under a life insurance policy owned by the trust, or the trustee of the trust acting in a fiduciary capacity, if the insured is the settlor of the trust; an individual closely related by blood or law to the settlor; or an individual in whom the settlor otherwise has an insurable interest if, in each of the situations described in this paragraph, the life insurance proceeds are primarily for the benefit of trust beneficiaries having an insurable interest in the life of the insured and the trust is not used, directly or indirectly, as part of or in furtherance of an act, practice, or arrangement that is otherwise prohibited by sections 60A.078 to 60A.0789. (e) A guardian, trustee, or other fiduciary, acting in a fiduciary capacity, has an insurable interest in the life of any person for whose benefit the fiduciary holds property, and in the life of any other individual in whose life the person has an insurable interest so long as the life insurance proceeds are used primarily for the benefit of persons having an insurable interest in the life of the insured and the guardianship or fiduciary relationship is not used, directly or indirectly, as part of or in furtherance of an act, practice, or arrangement that is otherwise prohibited by sections 60A.078 to 60A.0789. (f) An organization in section 170(c) of the United States Internal Revenue Code of 1986, as amended through December 31, 2008, has an insurable interest in the life of any person who consents in writing to the organization's ownership or purchase of that insurance. (g) A trustee, sponsor, or custodian of assets held in any plan governed by the Employee Retirement Income Security Act of 1974, United States Code, title 29, section 1001, et seq., or in any other retirement or employee benefit plan, has an insurable interest in the life of any participant in the plan provided consent is obtained in writing from the participant before the insurance is purchased. An employer, trustee, sponsor, or custodian may not retaliate or take adverse action against any participant who does not consent to the issuance of insurance on the participant's life. (h) A business entity has an insurable interest in the life of any of the owners, directors, officers, partners, and managers of the business entity or any affiliate or subsidiary of the business entity, or key employees or key persons of the business entity or affiliate or subsidiary, provided consent is obtained in writing from key employees or persons before the insurance is purchased. The business entity or affiliate or subsidiary may not retaliate or take adverse action against any key employee or person who does not consent to the issuance of insurance on the key employee or key person's life. For purposes of this subdivision, a "key employee" or "key person" means an individual whose position or compensation is described in section 101(j)(2)(A)(ii) of the Internal Revenue Code of 1986, as amended through December 31, 2008. (i) A financial institution or other person to whom a debt is owed, whether for the purposes of premium financing or otherwise, has an insurable interest in the life of the borrower limited to the amount of debt owed plus reasonable interest and service charges. Subd. 3. Insured's own life. An individual has an insurable interest in the individual's own life and an individual of competent legal capacity that procures or effects a policy on the individual's own life may designate any person as the beneficiary, provided the policy is not part of or in furtherance of an act, practice, or arrangement that is otherwise prohibited by sections 60A.078 to 60A.0789. Subd. 4. Reliance on statements. An insurer is entitled to rely upon all reasonable statements, declarations, and representations made by an applicant for life insurance relative to the existence of an insurable interest; and no insurer shall incur legal liability, except as set forth in the policy, by virtue of untrue statements, declarations, or representations so relied upon in good faith by the insurer. Subd. 5. Consent of insured. A policy upon the life of an individual, other than a policy of noncontributory group life insurance, may not be effectuated unless, on or before the time the policy is effectuated, the individual insured, having legal capacity to contract, applies for or consents in writing to the policy and its terms. Consent may be given by another in the following cases: (1) a parent or a person having legal custody of a minor may consent to the issuance of a policy on a dependent child; (2) a court-appointed guardian of a person may consent to the issuance of a policy on the person under guardianship; (3) a court-appointed conservator of a person's estate may consent to the issuance of a policy on the person whose estate is under conservatorship; (4) an attorney-in-fact may consent to the issuance of a policy on the person that appointed the attorney-in-fact for the limited purpose of replacing one or more policies with one or more new policies, provided the aggregate amount of life insurance on the person as the result of the replacement remains the same or decreases; (5) a trustee of a revocable trust may consent to the issuance of a policy on the life of a settlor of the trust; and (6) a court of general jurisdiction may give consent to the issuance of a policy upon a showing of facts the court considers sufficient to justify the issuance of the policy. History:   2009 c 52 s 3 
60A.0784 PROHIBITED PRACTICES. It is unlawful for any person to: (1) procure or cause to be procured or effected a policy in violation of section 60A.0783; (2) engage in STOLI practices or otherwise wager on life; (3) solicit, market, or otherwise promote the purchase of a policy for the purpose of or with an emphasis on the subsequent sale of the policy in the secondary market; (4) enter into a premium finance agreement with any person or agency, or any person affiliated with such person or agency, pursuant to which the lender or any person affiliated with the lender shall receive any proceeds, fees, or other consideration, directly or indirectly, from the policy or policyowner or any other person with respect to the premium finance agreement or any settlement contract or other transaction related to such policy that are in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums pursuant to the premium finance agreement or subsequent sale of such agreement; provided, further, that any payments, charges, fees, or other amounts in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums paid under the premium finance agreement shall be remitted to the insured or to the insured's estate if the insured is not living at the time of the determination of the overpayment; or (5) enter into or to offer to enter into a settlement contract prior to the issuance of a policy that is the subject of the settlement contract or proposed settlement contract. History:   2009 c 52 s 4 
60A.0785 PROHIBITION; ENTRY INTO SETTLEMENT CONTRACTS. Subdivision 1. Prohibition. No prospective purchaser of the policy or beneficial interest in the policy shall, at any time prior to issuance of a policy, or during a four-year period commencing with the date of issuance of the policy, enter into a settlement contract or any other agreement the effect of which is to acquire the policy or a beneficial interest in the policy regardless of the date the compensation is to be provided and regardless of the date the assignment, transfer, sale, devise, bequest, or surrender of the policy or beneficial interest in the policy is to occur, unless and until the prospective purchaser has determined, based on reasonable inquiry, which includes but is not limited to questioning the insured and reviewing the broker's files, that none of the following circumstances are present: (1) there was an agreement or understanding, before issuance of the policy, between the insured, policyowner, or owner of a beneficial interest in the policy, and another person to guarantee any liability or to purchase, or stand ready to purchase, the policy or an interest therein, including through an assumption or forgiveness of a loan; or (2) both of the following are present: (i) all or a portion of the policy premiums were funded by means other than by the insured's personal assets or assets provided by a person who is closely related to the insured by blood or law or who has a lawful and substantial economic interest in the continued life of the insured. For purposes of this provision, funds from a premium finance loan are considered assets of the insured or such person only if the insured or such person is contractually obligated to repay the full amount of the loan and to pledge personal assets, other than the policy itself, for loan amounts exceeding the policy's cash value; and (ii) the insured underwent a life expectancy evaluation within the 18-month time period immediately prior to the issuance of the policy and, during the same time period, the results of the life expectancy evaluation were shared with or used by any person for the purpose of determining the actual or potential value of the policy in the secondary market. Nothing in this paragraph shall prevent such a life expectancy evaluation from being shared with or used by the insured or the insured's accountant, attorney, or insurance producer for estate planning purposes so long as the life expectancy evaluation is not used by such persons to determine the actual or potential value of the policy in the secondary market. Subd. 2. Certification. As part of the prospective purchaser's responsibility to make reasonable inquiry, the prospective purchaser shall request, and the settlement broker shall provide, a certification in which the broker certifies that, to the best of the broker's knowledge, any life expectancy evaluation performed on the insured prior to the issuance of the policy was not used by or shared with any other person prior to the issuance of the policy for the purpose of determining the actual or potential value of the policy in the secondary market. Subd. 3. Legitimate insurance transactions. Nothing in sections 60A.078 to 60A.0789 prevents: (1) any policyowner, whether or not the policyowner is also the subject of the insurance, from entering into a legitimate settlement contract; (2) any person from soliciting a person to enter into a legitimate settlement contract; (3) a person from enforcing the payment of proceeds from the interest obtained under a legitimate settlement contract; or (4) the assignment, sale, transfer, devise, or bequest with respect to the death benefit or ownership of any portion of a policy, provided the assignment, sale, transfer, devise, or bequest is connected to a legitimate settlement contract and not part of or in furtherance of STOLI practices. History:   2009 c 52 s 5 
60A.0786 PRESUMPTION OF STOLI PRACTICES. Subdivision 1. Presumption of STOLI practices. A settlement contract, or any agreement the effect of which is to sell or acquire the policy or a beneficial interest in the policy, entered into within the four-year period commencing with the date the policy is issued creates a rebuttable presumption of STOLI practices if either of the following circumstances are present: (1) there was an agreement or understanding, before issuance of the policy, between the insured, policyowner, or owner of a beneficial interest in the policy, and another person to guarantee any liability or to purchase, or stand ready to purchase, the policy or an interest in the policy, including through an assumption or forgiveness of a loan; or (2) both of the following are present: (i) all or a portion of the policy premiums were funded by means other than by the insured's personal assets or assets provided by a person who is closely related to the insured by blood or law or who has a lawful and substantial economic interest in the continued life of the insured. For purposes of this provision, funds from a premium finance loan are considered assets of the insured or that person only if the insured or that person is contractually obligated to repay the full amount of the loan and to pledge personal assets, other than the policy itself, for loan amounts exceeding the policy's cash value; and (ii) the insured underwent a life expectancy evaluation within the 18-month time period immediately prior to the issuance of the policy and, during the same time period, the results of the life expectancy evaluation were shared with or used by any person for the purpose of determining the actual or potential value of the policy in the secondary market. Subd. 2. Not applicable in criminal proceedings. The rebuttable presumption created in this section does not apply in any criminal proceeding. History:   2009 c 52 s 6 
60A.0787 PROCESSING CHANGE OF OWNERSHIP OR BENEFICIARY REQUESTS. Subdivision 1. Obligation to process change of ownership or beneficiary requests. Upon receipt of a properly completed request for change of ownership or beneficiary of a policy and, if applicable, the completed questionnaire described in this section, the insurer shall respond in writing within 30 calendar days with written acknowledgment confirming that the change has been effected or specifying the reasons why the requested change cannot be processed. The insurer shall not unreasonably delay effecting change of ownership or beneficiary and shall not otherwise interfere with any permitted settlement contract entered into in this state. Subd. 2. Written questionnaire. If the insurer receives a request for change of ownership or beneficiary within the four-year period commencing with the date the policy is issued, the insurer may require, as a condition of effecting the requested change, that the policyowner complete and return a written questionnaire designed to determine whether the change request relates to or is made in accordance with a settlement contract and if so, whether the circumstances described in section 60A.0785 are present. The questionnaire shall be in a form approved by the commissioner and shall include, but not be limited to, the following: (1) the definition of settlement contract; (2) an inquiry regarding whether the request for change of ownership or beneficiary relates to or is made in accordance with a settlement contract; (3) if the answer to clause (2) is "yes," then an inquiry regarding whether the circumstances described in section 60A.0785 are present; (4) a disclosure that presenting false material information, or concealing material information, in connection with the questionnaire is defined under the laws of this state as a fraudulent act; and (5) a signed certification by the policyowner that the answers and information provided in and pursuant to the questionnaire are true and complete to the best of the policyowner's knowledge and belief. Subd. 3. Other inquiries. Nothing in this section should be interpreted to limit an insurer's ability to make other inquiries to detect STOLI practices. Subd. 4. Fraternal benefit societies. Nothing in sections 60A.078 to 60A.0789 shall prohibit a fraternal benefit society regulated under chapter 64B from enforcing the terms of its bylaws or rules regarding permitted beneficiaries and owners. History:   2009 c 52 s 7 
60A.0788 FRAUDULENT ACTS. Subdivision 1. Fraudulent acts. A person who commits a fraudulent act as defined in this section commits insurance fraud and may be sentenced under section 609.611, subdivision 3. Subd. 2. List of fraudulent acts. All of the following acts are fraudulent when committed by a person who, with intent to defraud and for the purpose of depriving another of property or for pecuniary gain, commits, or permits any of its employees or its agents to commit them: (1) failing to disclose to the insurer where the insurer has requested such disclosure that the prospective insured has undergone a life expectancy evaluation; (2) misrepresenting a person's state of residence or facilitating the change of the state in which a person resides for the express purpose of evading or avoiding the provisions of sections 60A.078 to 60A.0789; (3) presenting, causing to be presented, or preparing with knowledge or belief that it will be presented to an insurer any false material information, or concealing any material information, as part of, in support of, or concerning a fact material to one or more of the following: (i) a questionnaire as provided for under section 60A.0787; or (ii) any other documents or communications, whether written or verbal, which are intended to detect STOLI practices or demonstrate compliance with sections 60A.078 to 60A.0789; (4) encouraging the insured, policyowner, or owner of a beneficial interest in the policy to falsely state that the circumstances described in section 60A.0785 are not present or aiding in the preparation or execution of documents designed to create the false impression that those circumstances are not present; and (5) failing to request or to provide the broker certification required by section 60A.0785, subdivision 2, or falsely certifying that the life expectancy evaluation in section 60A.0785, subdivision 2, was not shared with any other person prior to the issuance of the policy for the purpose of determining the actual or potential value of the policy in the secondary market. History:   2009 c 52 s 8 
60A.0789 REMEDIES. Subdivision 1. Actions to recover death benefits. (a) If the beneficiary, assignee, or other payee receives the death benefits under a life insurance policy initiated by STOLI practices or a policy procured or effected in violation of section 60A.0783 or section 60A.0785, the personal representative of the insured's estate or other lawfully acting agent may maintain an action to recover such benefits from the person receiving them. (b) Where a person receives the death benefit as a result of a nonwillful violation of sections 60A.078 to 60A.0789, the court may limit the recovery to unjust enrichment, calculated as the benefits received plus interest from the date of receipt, less premiums paid under the policy by the recipient and any consideration paid by the recipient to the insured in connection with the policy. (c) Where a person receives the death benefits as the result of a willful violation of sections 60A.078 to 60A.0789, the court may, in addition to actual damages, order the defendant or defendants to pay exemplary damages in an amount up to two times the death benefits. A pattern of violations of sections 60A.078 to 60A.0789 and conduct involving one or more fraudulent acts are evidence of willfulness. The exemplary damages shall be paid to one or more governmental agencies charged with combating consumer fraud, including the Department of Commerce. (d) The court may award reasonable attorney fees, together with costs and disbursements, to any party that recovers damages in any action brought under this subdivision. (e) An action under this subdivision must be brought within two years after the death of the insured. Subd. 2. Enforceability of contracts. Any contract, agreement, arrangement, or transaction prohibited under sections 60A.078 to 60A.0789 is voidable. Subd. 3. Declaratory judgment action. If, prior to payment of death benefits, the insurer believes the policy was initiated by STOLI practices, the insurer may bring a declaratory judgment action seeking a court order declaring the policy void. Subd. 4. Effect on other law. Sections 60A.078 to 60A.0789 shall not: (1) preempt or limit other civil remedies, including, but not limited to, declaratory judgments, injunctive relief, and interpleaders; (2) preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law; (3) limit the powers granted elsewhere by the laws of this state to the commissioner or an insurance fraud unit or the attorney general to investigate and examine possible violations of law and to take appropriate actions against wrongdoers; or (4) limit the power of this state to punish a person for conduct that constitutes a crime under other laws of this state. History:  2009 c 52 s 9; 2014 c 198 art 4 s 3
60A.08 CONTRACTS OF INSURANCE. Subdivision 1. Policy to contain entire contract. A statement in full of the conditions of insurance shall be incorporated in or attached to every policy, and neither the application of the insured nor the bylaws of the company shall be considered as a warranty or a part of the contract, except in so far as they are so incorporated or attached. Subd. 2. Corporate name; origin and financial statements. Every company, domestic or foreign, shall conduct its business, display all signs and advertisements, and issue all policies, circulars, and other documents and publications in this state, in its own corporate name, and every foreign company shall state conspicuously upon a sign at each agency the state or country of its organization. When a company publishes its assets, it shall in the same connection, and with equal conspicuousness, publish its liabilities, computed on the basis allowed for its annual statements; and any publication purporting to show its capital shall state only the amount thereof which has been actually paid in cash. Subd. 3. Renewal; new policy. Any insurance policy terminating by its provisions at a specified expiration date or limited as to term by any statute and not otherwise renewable may be renewed or extended at the option of the insurer, at the premium rate then required therefor, for a specific additional period or periods by a certificate, and without requiring the issuance of a new policy. The insurer must also post the current policy form on its website, or must inform the policyholder annually in writing that a copy of the current policy form is available on request. Subd. 4. Contracts; application of Minnesota law; prohibitions. All contracts of insurance on property, lives, or interests in this state, shall be deemed to be made in this state. It shall be unlawful for any person, firm, or corporation to solicit or make, or aid in soliciting or making, any contract of insurance not authorized by the laws of this state. Subd. 5. Signatures required. All insurance policies shall be signed by the secretary or an assistant secretary, and by the president or vice-president, or in their absence, by two directors of the insurer. The signatures may be facsimile signatures. Subd. 6. Bankruptcy, insolvency, or dissolution clause. Every bond or policy of insurance issued in this state insuring against either actual loss suffered by the insured, and imposed by law for damages on account of personal injury, death, or injury to property caused by accident, or legal liability imposed upon the insured by reason of such injuries or death, shall, notwithstanding anything in the policy to the contrary, be deemed to contain the following condition: The bankruptcy, insolvency, or dissolution of the insured shall not relieve the insurer of any of its obligations under this policy, and in case an execution against the insured on a final judgment is returned unsatisfied, then such judgment creditor shall have a right of action on this policy against the company to the same extent that the insured would have, had the insured paid the final judgment. Subd. 7. Unsatisfied judgment. When a judgment has been rendered by any court in this state against any company holding the commissioner's certificate, and an execution issued thereon has been returned unsatisfied, in whole or in part, and a certified transcript of the docket entry and the court administrator's certificate of those facts is filed with the commissioner, the commissioner shall forthwith revoke its certificate and give one week's published notice thereof. No new certificate shall issue until such judgment has been fully satisfied and proof thereof filed with the commissioner, and the expenses and fees incurred are paid. During this revocation neither the company, nor any of its officers or agents, shall issue any new policy, take any risk, or transact any business, except such as is absolutely necessary in closing up its affairs in this state. Subd. 8. Policies on which premiums are determined by audits. Any insurance company licensed to do business in this state which issues policies of insurance in this state upon which the premium is determined by means of an audit shall within 60 days from the date of the expiration of any insurance policy so issued request from the insured a statement of the facts and figures necessary to determine the premium thereon. The insured shall furnish such statement of facts and figures within 60 days of the date of the request. Upon failure of the insured to comply within the time specified, then the provisions of this subdivision shall not apply as to such insured. Within 12 months from the date of the expiration of the policy, or within such longer time as the commissioner of commerce may for cause shown direct, the insurer unless it elects to accept the insured's statement shall make a final audit. Failure to make such final audit within the time herein provided shall constitute a waiver of the insurer's right to make such audit and an election to accept the statement furnished by the insured as a basis for determining the premium on such policy. In the event an audit discloses that the insured submitted to the insurer a fraudulent statement of facts and figures, then the insured shall be liable for three times the normal premium. This subdivision shall not apply to policies issued covering workers' compensation. Subd. 9. Misrepresentation by applicant. No oral or written misrepresentation made by the assured, or in the assured's behalf, in the negotiation of insurance, shall be deemed material, or defeat or avoid the policy, or prevent its attaching, unless made with intent to deceive and defraud, or unless the matter misrepresented increases the risk of loss. This subdivision shall not apply to life insurance or accident and health insurance. Subd. 10. Legal expense insurance. No contract of insurance written pursuant to the authority to transact the kind of business enumerated in section 60A.06, subdivision 1, clause (15) shall include any provision interfering with the attorney-client relationship. Subd. 11. Directors' and officers' liability policies. No misrepresentation or omission made in an application or negotiation for any policy providing directors and officers liability coverage for directors or officers of a corporation shall defeat or avoid coverage or prevent the policy from attaching for a director or officer unless the director or officer has signed the application and has actual knowledge of the facts misrepresented or omitted. The application shall be attached to and incorporated into the contract. This subdivision applies with respect to all policies governed by this chapter or issued or renewed in this state. Subd. 12. Rented vehicles. All commercial automobile liability policies must provide coverage for rented vehicles as required in chapter 65B. This coverage can be excess over any and all specific motor vehicle coverage that is applicable. 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 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. Subd. 14. Agreement to rescind policy or release bad faith claim. (a) If the insurer has knowledge of any claims against the insured that would remain unsatisfied due to the financial condition of the insured, the insurer and the insured may not agree to: (1) rescind the policy; or (2) directly or indirectly transfer to, or release to, the insurer the insured's claim or potential claim against the insurer based upon the insurer's refusal to settle a claim against the insured. (b) Before entering into an agreement described in paragraph (a), an insurer must make a good faith effort to ascertain: (1) the existence and identity of all claims against the policy; and (2) the financial condition of the insured. (c) The insured must provide reasonable financial information upon request of the insurer. (d) An agreement made in violation of this section is void and unenforceable. Subd. 15. Classification of insurance filings data. (a) All forms, rates, and related information filed with the commissioner under section 61A.02 shall be nonpublic data until the filing becomes effective. (b) All forms, rates, and related information filed with the commissioner under section 62A.02 shall be nonpublic data until the filing becomes effective. (c) All forms, rates, and related information filed with the commissioner under section 62C.14, subdivision 10, shall be nonpublic data until the filing becomes effective. (d) All forms, rates, and related information filed with the commissioner under section 70A.06 shall be nonpublic data until the filing becomes effective. (e) All forms, rates, and related information filed with the commissioner under section 79.56 shall be nonpublic data until the filing becomes effective. (f) Notwithstanding paragraphs (b) and (c), for all rate increases subject to review under section 2794 of the Public Health Services Act and any amendments to, or regulations, or guidance issued under the act that are filed with the commissioner on or after September 1, 2011, the commissioner: (1) may acknowledge receipt of the information; (2) may acknowledge that the corresponding rate filing is pending review; (3) must provide public access from the Department of Commerce's website to parts I and II of the Preliminary Justifications of the rate increases subject to review; and (4) must provide notice to the public on the Department of Commerce's website of the review of the proposed rate, which must include a statement that the public has 30 calendar days to submit written comments to the commissioner on the rate filing subject to review. (g) Notwithstanding paragraphs (b) and (c), for all proposed premium rates filed with the commissioner for individual health plans, as defined in section 62A.011, subdivision 4, and small group health plans, as defined in section 62K.03, subdivision 12, the commissioner must provide public access on the Department of Commerce's website to compiled data of the proposed changes to rates, separated by health plan and geographic rating area, within ten business days after the deadline by which health carriers, as defined in section 62A.011, subdivision 2, must submit proposed rates to the commissioner for approval. Subd. 16. Foreign language policies and advertising. (a) Insurance policies, endorsements, riders, and any explanatory or advertising material may be issued in a language other than English. In the event of a dispute or complaint regarding the insurance or advertising material, the English language version of the insurance coverage shall control the resolution of the dispute or complaint. Any insurance policy, endorsement, rider, or advertising material required by law to be filed with the commissioner that is prepared in a language other than English must be accompanied by an English language translation certifying that the English version is substantively identical to the filed version. (b) This subdivision does not limit the application of chapter 72A. History:  1967 c 395 art 1 s 8; 1973 c 634 s 5; 1975 c 359 s 23; 1977 c 195 s 1; 1979 c 115 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c 251 s 1; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 1988 c 611 s 1; 1989 c 260 s 2,3; 1991 c 131 s 1; 1996 c 446 art 1 s 1; 2001 c 215 s 2; 2005 c 74 s 1; 2006 c 202 s 2; 2009 c 178 art 1 s 5; 2013 c 84 art 1 s 3; 2013 c 130 s 1; 2017 c 2 art 2 s 1
60A.081 AIRCRAFT INSURANCE. Subdivision 1. Compliance exclusions prohibited; exception. (a) No policy of insurance issued or delivered in this state covering any loss, damage, expense, or liability arising out of the ownership, maintenance, or use of an aircraft, shall exclude or deny coverage because the aircraft is operated in violation of federal or civil air regulations, state law or rules, or local ordinances. This section does not prohibit the use of specific exclusions or conditions in the policy which relate to: (1) certification of an aircraft in a stated category by the federal aviation administration; (2) certification of a pilot in a stated category by the federal aviation administration; (3) establishing requirements for pilot experience; or (4) establishing limitations on the use of the aircraft. (b) An insured's action or failure to act is not a basis for denial of a claim, unless the insured's action or failure to act had a direct causal connection to the loss upon which the claim is based. For purposes of this paragraph, "denial of a claim" includes refusal to pay a claim due to a retroactive termination of the policy on the basis of the insured's action or failure to act. Subd. 2. Liability exclusions prohibited; exception. Except as provided in subdivision 1, no policy of insurance issued or delivered in this state covering an aircraft equipped with passenger seats and covering liability hazards shall be issued excluding coverage for injury to or death of passengers or nonpassengers except as to a policy of insurance exclusively covering "commercial operations" as defined by section 360.013, subdivision 45, where the pilot of the aircraft has in force a separate policy of insurance providing for coverage on the aircraft as required by section 360.59, subdivision 10. Subd. 3. Nonapplication of section. The provisions of this section shall not apply as to any policy issued covering aircraft being used in air commerce as defined by section 360.511, subdivision 4. History:  1969 c 629 s 1; 1976 c 241 s 1; 1985 c 248 s 70; 2008 c 182 s 1
60A.0811 BREACH OF INSURANCE POLICY; RECOVERY OF INTEREST. Subdivision 1. Definitions. For purposes of this section: (1) "insurance policy" means a commercial or professional insurance policy or contract other than: (i) a workers' compensation insurance policy or contract; (ii) a health insurance policy or contract issued, executed, renewed, maintained, or delivered in this state by a health carrier as defined in section 62A.011, subdivision 2; (iii) a life insurance or disability insurance policy or contract; or (iv) a policy or contract issued by a township mutual fire insurance company operating under chapter 65A; (2) "insured" means any named insured, additional insured, or insured under an insurance policy; and (3) "insurer" means an insurer: (i) incorporated or organized in this state; or (ii) admitted, authorized, or licensed to do business or doing business in this state but not incorporated or organized in this state. Insurer does not include the joint underwriting association operating under chapter 62F or 62I; or a township mutual fire insurance company operating under chapter 65A. Subd. 2. Interest. (a) An insured who prevails in any claim against an insurer based on the insurer's breach or repudiation of, or failure to fulfill, a duty to provide services or make payments is entitled to recover ten percent per annum interest on monetary amounts due under the insurance policy, calculated from the date the request for payment of those benefits was made to the insurer. (b) Punitive damages or damages for nonmonetary losses are not recoverable under this section. Subd. 3. Application. This section applies to a court action or arbitration proceeding, including an action seeking declaratory judgment. History:  2009 c 148 s 1; 2012 c 187 art 1 s 10
60A.082 GROUP INSURANCE; BENEFITS CONTINUED IF INSURER CHANGED. A person covered under group life, group accidental death and dismemberment, group disability income or group medical expense insurance, shall not be denied benefits to which the person is otherwise entitled solely because of a change in the insurance company writing the coverage or in the group contract applicable to the person. In the case of one or more carriers replacing or remaining in place after one or more plans have been discontinued, each carrier shall accept any person who was covered under the discontinued plan or plans without denial of benefits to which other persons in the group covered by that carrier are entitled. "Insurance company" shall include a service plan corporation under chapter 62C or 62D. For purposes of satisfying any preexisting condition limitation, the insurance company shall credit the period of time the person was covered by the prior plan, if the person has maintained continuous coverage. The commissioner shall promulgate rules to carry out this section. Nothing in this section shall preclude an employer, union or association from reducing the level of benefits under any group insurance policy or plan. History:  1980 c 459 s 1; 1984 c 464 s 1; 1986 c 444; 1994 c 485 s 7
60A.084 NOTIFICATION ON GROUP POLICIES. An employer providing life or health benefits may not change benefits, limit coverage, or otherwise restrict participation until the certificate holder or enrollee has been notified of any changes, limitations, or restrictions. Notice in a format which meets the requirements of the United States Department of Labor is satisfactory for compliance with this section. History:  1987 c 337 s 3; 2010 c 384 s 5
60A.085 CANCELLATION OF GROUP COVERAGE; NOTIFICATION TO COVERED PERSONS. (a) No cancellation of any group life, group accidental death and dismemberment, group disability income, or group medical expense policy, plan, or contract regulated under chapter 62A or 62C is effective unless the insurer has made a good faith effort to notify all covered persons of the cancellation at least 30 days before the effective cancellation date. For purposes of this section, an insurer has made a good faith effort to notify all covered persons if the insurer has notified all the persons included on the list required by paragraph (b) at the home address given and only if the list has been updated within the last 12 months. (b) At the time of the application for coverage subject to paragraph (a), the insurer shall obtain an accurate list of the names and home addresses of all persons to be covered. (c) Paragraph (a) does not apply if the group policy, plan, or contract is replaced, or if the insurer has reasonable evidence to indicate that it will be replaced, by a substantially similar policy, plan, or contract. (d) In no event shall this section extend coverage under a group policy, plan, or contract more than 120 days beyond the date coverage would otherwise cancel based on the terms of the group policy, plan, or contract. (e) If coverage under the group policy, plan, or contract is extended by this section, then the time period during which affected members may exercise any conversion privilege provided for in the group policy, plan, or contract is extended for the same length of time, plus 30 days. History:  1992 c 564 art 4 s 3; 1994 c 485 s 8; 1995 c 258 s 2
60A.086 RETROACTIVE TERMINATION OF COVERAGE UNDER GROUP POLICIES PROHIBITED. Subdivision 1. Applicability. This section applies to: (1) health plans as defined in section 62A.011, issued to groups; (2) group accident and health insurance; (3) group life insurance; (4) group accidental death and dismemberment insurance; and (5) group disability income insurance. Subd. 2. Requirement. No plan of coverage described in subdivision 1 shall permit the issuer to retroactively cancel, retroactively rescind, or otherwise retroactively terminate the coverage of an employee, dependent, or other covered person under the group coverage, without the written consent of that employee, dependent, or other covered person. For purposes of this subdivision, "covered person" includes a person on continuation coverage or eligible for continuation coverage. Subd. 3. Nonapplicability. (a) This section does not apply where the group policy or contract is lawfully terminated retroactively and not replaced with substantially similar coverage. (b) This section does not apply where the employee, dependent, or other covered person committed fraud or misrepresentation with respect to eligibility under the terms of the group policy or contract or with respect to any other material fact, but retroactive termination without written consent must not be based upon the failure of the employee, dependent, or other covered person to meet the group sponsor's eligibility requirements, if the group sponsor requested the issuer of the coverage to include the person as a covered person. (c) This section does not apply where the issuer of coverage described in subdivision 1 retroactively terminates coverage of an employee, dependent, or other covered person solely because the group sponsor did not notify the issuer of the coverage in advance of the employee's voluntary or involuntary termination from employment, provided that the retroactive termination of coverage is effective no earlier than the end of the day of termination from employment. This paragraph does not affect continuation rights under federal or state law and does not limit the effect of section 62Q.16. History:   1996 c 304 s 1 
60A.09 LIMITS OF RISK; REINSURANCE. Subdivision 1. Maximum risk. No company other than a company authorized to transact the kind of business specified in section 60A.06, subdivision 1, clause (7), shall insure or reinsure in a single risk a larger sum than one-tenth of its net assets, and no company authorized to transact the kind of business specified in section 60A.06, subdivision 1, clause (7), shall insure or reinsure in a single risk a larger sum than two-thirds of its net assets; provided, that in the case of a company with net assets of more than $50,000, any portion of the risk which has been reinsured, as authorized by the laws of this state, shall be deducted before determining the limitation of risk prescribed by this subdivision; and, provided, that a mutual insurance company organized under clause (2)(a) of section 66A.08, subdivision 2, may insure in a single risk, consisting of a creamery or a cheese factory, a sum equal to one percent of its insurance in force. Subd. 2. Reinsurance to be reported by companies other than life. If any company, other than life, shall, directly or indirectly, effect the reinsurance of any risk taken by it, or any part thereof, it shall make a sworn report thereof to the commissioner, at the time of filing its annual statement, or at such other time as the commissioner may request. Subd. 3. Penalty for violation. Every company effecting any reinsurance in violation of the foregoing provisions, and every agent effecting or negotiating the same, shall severally be guilty of a misdemeanor. Subd. 4.  [Repealed, 1991 c 325 art 1 s 16] Subd. 4a. Assumption transactions regulated. No company, whether domestic, foreign, or alien, shall perform an assumption transaction, including an assumption reinsurance agreement, with respect to a policy issued to a Minnesota resident, unless: (1) the assumption agreement has been filed with the commissioner; (2) the assumption agreement specifically provides that the original insurer remains liable to the insured in the event the assuming insurer is unable to fulfill its obligations or the original insurer acknowledges in writing to the commissioner that it remains liable to the insured in the event the assuming insurer is unable to fulfill its obligations; (3) the proposed certificate of assumption to be provided to the policyholder has been filed with the commissioner for review and approval as provided in section 61A.02; and (4) the proposed certificate of assumption contains, in boldface type, the following language: "Policyholder: Please be advised that you retain all rights with respect to your policy against your original insurer in the event the assuming insurer is unable to fulfill its obligations. In such event, your original insurer remains liable to you notwithstanding the terms of its assumption agreement." With respect to residents of Minnesota, the notice to policyholders shall also include a statement as to the effect on guaranty fund coverage, if any, that will result from the transfer. Clauses (2) and (4) above do not apply if the policyholder consents in a signed writing to a release of the original insurer from liability and to a waiver of the protections provided in clauses (2) and (4) after being informed in writing by the insurer of the circumstances relating to and the effect of the assumption, provided that the consent form signed by the policyholder has been filed with and approved by the commissioner. If a company is deemed by the commissioner to be in a hazardous condition or is under a court ordered supervision, rehabilitation, liquidation, conservation or receivership, and the transfer of policies is in the best interest of the policyholders, as determined by the commissioner, a transfer may be effected notwithstanding the provisions in this subdivision by using a different form of consent by policyholders. This may include a form of implied consent and adequate notification to the policyholder of the circumstances requiring the transfer as approved by the commissioner. This paragraph does not apply when a policy is transferred to the Minnesota Life and Health Guaranty Association or to the Minnesota Insurance Guaranty Association. Subd. 5. Reinsurance. (1) Definitions. For the purposes of this subdivision, the word "insurer" shall be deemed to include the word "reinsurer," and the words "issue policies of insurance" shall be deemed to include the words "make contracts of reinsurance." (2) Reinsurance of more than 50 percent of insurance liabilities. Any contract of reinsurance whereby an insurer cedes more than 50 percent of the total of its outstanding insurance liabilities shall, if such insurer is incorporated by or, if an insurer of a foreign country, has its principal office in this state, be subject to the approval, in writing, by the commissioner. (3) Aircraft risks. An insurer authorized to transact the business specified in section 60A.06, subdivision 1, clauses (4) and (5)(a), may through reinsurance assume any risk arising from, related to, or incident to the manufacture, ownership, or operation of aircraft and may retrocede any portion thereof; provided, however, that no insurer may undertake any such reinsurance business without the prior approval of the commissioner and such reinsurance business shall be subject to any regulations which may be promulgated by the commissioner. Any such reinsurance business may be provided through pooling arrangements with other insurers for purposes of spreading the insurance risk. Subd. 6. Bulk reinsurance, regulation. (1) No bulk reinsurance agreement entered into by an insurance company, other than life insurance companies, having a capital and surplus or surplus of $5,000,000 or less, shall be used to reduce the liabilities or expense of the reinsured company until and unless the agreement has been filed with and approved by the commissioner. The commissioner will be deemed to have approved any agreement filed unless the commissioner notifies the insurance company of disapproval within 30 days or requests a reasonable extension of time within such 30 days. (2) No filing shall be made pursuant to the foregoing clause (1) unless the reinsurance agreement be certified under oath by responsible officers of the reinsurer and the reinsured to contain the entire agreement between the parties to the reinsurance agreement. Misrepresentations contained in the reinsurance agreement or in any information supplied to the commissioner relative thereto shall be subject to the penalties for perjury. (3) It shall be unlawful for any reinsurance agreement to contain any provisions which have the effect of nullifying the liability which the reinsurer purports to assume. (4) For the purposes of this subdivision, "bulk reinsurance" shall mean any quota share, surplus aid or portfolio reinsurance agreement which, of itself or in combination with other similar agreements, assumes 20 percent or more of the liability of the reinsured company. (5) Every company effecting any bulk reinsurance in violation of the foregoing provisions, and every person effecting or negotiating the same, shall severally be guilty of a misdemeanor. (6) Reinsurance agreements filed hereunder shall not be matters of public record, but this shall not be construed to limit the disclosure of reinsurance agreements in examination reports. Subd. 7. Title insurance risks. For a company authorized to transact a kind of business specified in section 60A.06, subdivision 1, clause (7), the term "single risk" as used in this section shall mean the insured amount of any policy or contract unless two or more policies or contracts are simultaneously issued on different estates in identical real property, in which event, it means the sum of the insured amounts of all such policies or contracts; provided, any policy or contract that insures a mortgage interest that is excepted in a fee or leasehold policy or contract, and which does not exceed the insured amount of the fee or leasehold policy or contract, shall be excluded in computing the amount of a single risk. History:  1967 c 395 art 1 s 9; Ex1967 c 10 s 1-6; 1973 c 391 s 1; 1978 c 465 s 3; 1980 c 505 s 1,2; 1985 c 248 s 70; 1986 c 444; 1989 c 260 s 4; 1991 c 325 art 1 s 10; art 20 s 1; 1996 c 446 art 1 s 2; 2002 c 336 s 2
60A.091 DEFINITION; QUALIFIED UNITED STATES FINANCIAL INSTITUTION. For purposes of sections 60A.092 and 60A.093, "qualified United States financial institution" means an institution that: (1) is organized or, in the case of a United States office of a foreign banking organization, licensed, under the laws of the United States or any state; (2) is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; and (3) is a member of the Federal Deposit Insurance Corporation, or the National Credit Union Administration. History:   1991 c 325 art 1 s 11 
60A.092 REINSURANCE CREDIT ALLOWED A DOMESTIC CEDING INSURER. Subdivision 1. Credit allowed. Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a deduction from liability on account of reinsurance ceded only when the reinsurance is ceded to an assuming insurer which meets the requirements specified under this section. Subd. 2. Licensed assuming insurer. Reinsurance is ceded to an assuming insurer if the assuming insurer is licensed to transact insurance or reinsurance in this state. For purposes of reinsuring any health risk, an insurer is defined under section 62A.63. Subd. 3. Accredited assuming insurer. Reinsurance is ceded to an assuming insurer if the assuming insurer is accredited by the commissioner as a reinsurer in this state. In order to be eligible for accreditation, a reinsurer must: (1) file with the commissioner evidence of its submission to this state's jurisdiction; (2) submit to this state's authority to examine its books and records; (3) be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state; (4) file annually with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile, a copy of its most recent audited financial statement, and a filing fee of $225; and (5)(i) demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer meets this requirement at the time of its application if it maintains a surplus as regards to policyholders in an amount not less than $20,000,000 and its accreditation has not been denied by the commissioner within 90 days after submission of its application; or (ii) maintains a surplus as regards policyholders in an amount not less than $50,000,000 for long-tail casualty reinsurers. For purposes of this section, "long-tail casualty reinsurance" means insurance for medical or legal malpractice, pollution liability, directors and officers liability, and products liability. The commissioner may determine that an assuming insurer that maintains a surplus as regards policyholders in an amount not less than $20,000,000 is accredited as a reinsurer if there is no detriment to policyholders and the interest of the public, and to not allow accrediting would be a hardship or detriment to the reinsurer. The commissioner shall report to the legislature on any determination to allow accrediting to a long-term casualty reinsurer maintaining a surplus in an amount less than $50,000,000. Clause (5) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. Subd. 4. Similar state standards. Reinsurance is ceded to an assuming insurer if the assuming insurer is domiciled and licensed in, or in the case of a United States branch of an alien assuming insurer is entered through, a state which employs standards regarding credit for reinsurance substantially similar to those applicable under this chapter and the assuming insurer or United States branch of an alien assuming insurer (1) maintains a surplus as regards policyholders in an amount not less than $20,000,000 or maintains a surplus as regards policyholders in an amount not less than $50,000,000 for long-tail casualty reinsurers as provided under subdivision 3, clause (5), and (2) submits to the authority of this state to examine its books and records. Clause (1) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. Subd. 5. Trust fund maintained. The reinsurance is ceded to an assuming insurer if the assuming insurer maintains a trust fund in a qualified United States financial institution for the payment of the valid claims, as determined by the commissioner for the purpose of determining the sufficiency of the trust fund, of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners annual statement form by licensed insurers to enable the commissioner to determine the sufficiency of the trust fund. Subd. 6. Single assuming insurer; trust fund requirements. (a) In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities attributable to business written in the United States and, in addition, a trusteed surplus of not less than $20,000,000 or an additional amount as the commissioner considers necessary, except as provided in paragraph (b). The assuming insurer shall maintain its surplus as regards policyholders in an amount not less than $50,000,000 for long-tail casualty reinsurers as provided under subdivision 3, clause (5). (b) After the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three years, the commissioner may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than 30 percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust. Subd. 7. Underwriters group; trust fund requirements. In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities attributable to business written in the United States. The group shall maintain a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of United States ceding insurers of any member of the group. The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and must be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members. The group shall make available to the commissioner an annual certification by the group's domiciliary regulator and its independent public accountants of the solvency of each underwriter. Subd. 8. Incorporated insurers group; trust fund requirements. A group of incorporated insurers under common administration must: (1) comply with the filing requirements specified in subdivision 7; (2) be under the supervision of the Department for International Trade of the United Kingdom; (3) submit to this state's authority to examine its books and records; (4) bear the expense of the examination; (5) maintain an aggregate policyholders' surplus of $10,000,000,000; (6) maintain the trust in an amount equal to the group's several liabilities attributable to business written in the United States; and (7) maintain a joint trusteed surplus of which $100,000,000 must be held jointly for the benefit of United States ceding insurers of any member of the group. Each member of the group shall make available to the commissioner an annual certification by the member's domiciliary regulator and its independent accountant of the member's solvency. Subd. 9. Trust fund general requirements. (a) The trust must be established in a form approved by the commissioner of commerce. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner. The trust must remain in effect for as long as the assuming insurer shall have outstanding obligations due under the reinsurance agreements subject to the trust. (b) No later than February 28 of each year the trustees of the trust shall report to the commissioner in writing setting forth the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the next following December 31. Subd. 10. Certification of assuming insurers in qualifying jurisdictions. (a) Reinsurance is ceded to an assuming insurer if the assuming insurer has been certified by the commissioner as a reinsurer in this state and secures its obligations according to this subdivision. (b) To be eligible for certification, the assuming insurer must: (1) be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner under paragraph (d); (2) maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the commissioner; (3) maintain financial strength ratings from two or more rating agencies acceptable to the commissioner; (4) agree to submit to the jurisdiction of this state, appoint the commissioner as its agent for service of process in this state, and agree to provide security for 100 percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment; (5) agree to meet filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis; and (6) satisfy any other requirements for certification as determined by the commissioner. (c) An association, including incorporated and individual unincorporated underwriters, may be a certified reinsurer. In addition to satisfying the requirements of paragraph (b), an association must: (1) satisfy its minimum capital and surplus requirements through the capital and surplus equivalents net of liabilities of the association and its members, which includes a joint central fund that may be applied to an unsatisfied obligation of the association or any of its members, in an amount determined by the commissioner to provide adequate protection; (2) ensure the incorporated members of the association are not engaged in a business other than underwriting as a member of the association and are subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and (3) within 90 days after its financial statements are due to be filed with the association's domiciliary regulator, provide to the commissioner an annual certification by the association's domiciliary regulator of the solvency of each underwriter member, or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association. (d) The commissioner shall create and publish a list of qualified jurisdictions under which an assuming insurer licensed and domiciled in the jurisdiction is eligible to be considered by the commissioner to become a certified reinsurer. (e) To determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction must agree to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as a qualified jurisdiction if the commissioner determines that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Additional factors may be considered at the discretion of the commissioner. (f) A list of qualified jurisdictions must be published through the National Association of Insurance Commissioners (NAIC) committee process. The commissioner shall consider the list in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification. (g) United States jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program must be recognized as qualified jurisdictions. (h) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the commissioner may suspend the reinsurer's certification indefinitely, in lieu of revocation. (i) The commissioner shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies acceptable to the commissioner. The commissioner shall publish a list of all certified reinsurers and their ratings. (j) A certified reinsurer covered by paragraphs (k) to (o) shall secure obligations assumed from United States ceding insurers at a level consistent with its rating determined under section 60A.0921, subdivision 1, paragraph (d). (k) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer must maintain security in a form acceptable to the commissioner and consistent with section 60A.093, or in a multibeneficiary trust according to subdivisions 5 to 9, except as otherwise provided in this subdivision. (l) If a certified reinsurer maintains a trust to fully secure its obligations subject to subdivisions 5 to 9, and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subdivision or comparable laws of other United States jurisdictions and for its obligations subject to subdivisions 5 to 9. It is a condition to the grant of certification under this subdivision that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the commissioner, to fund, upon termination of a trust account, any deficiency of any other trust account out of the remaining surplus of each trust. (m) The minimum trusteed surplus requirements provided in subdivisions 5 to 9 are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subdivision, except that the trust shall maintain a minimum trusteed surplus of $10,000,000. (n) With respect to obligations incurred by a certified reinsurer under this subdivision, if the security is insufficient, the commissioner shall reduce the allowable credit by an amount proportionate to the deficiency. The commissioner may impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due. (o) For purposes of this subdivision, a certified reinsurer whose certification has been terminated for any reason must be treated as a certified reinsurer required to secure 100 percent of its obligations. As used in this subdivision, "terminated" means revocation, suspension, voluntary surrender, or inactive status. If the commissioner continues to assign a higher rating as permitted by other provisions of this section, the requirements of this paragraph do not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended. (p) If an applicant for certification has been certified as a reinsurer in an NAIC-accredited jurisdiction, the commissioner may defer to that jurisdiction's certification and the rating assigned by that jurisdiction. The assuming insurer is considered to be a certified reinsurer in this state. (q) A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with this subdivision, and the commissioner shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business. (r) Credit for reinsurance under this section applies only to a reinsurance contract entered into or renewed on or after the effective date of the certification of the assuming insurer. Subd. 10a. Other jurisdictions. The reinsurance is ceded and credit allowed to an assuming insurer not meeting the requirements of subdivision 2, 3, 4, 5, 10, or 10b, but only with respect to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction. Subd. 10b. Credit allowed; reciprocal jurisdiction. (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer meeting each of the following conditions: (1) the assuming insurer must have its head office in or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction. A "reciprocal jurisdiction" means a jurisdiction that is: (i) a non-United States jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subdivision, a "covered agreement" means an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, United States Code, title 31, sections 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in Minnesota or for allowing the ceding insurer to recognize credit for reinsurance; (ii) a United States jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners (NAIC) financial standards and accreditation program; or (iii) a qualified jurisdiction, as determined by the commissioner, which is not otherwise described in item (i) or (ii) and which meets the following additional requirements, consistent with the terms and conditions of in-force covered agreements: (A) provides that an insurer which has its head office or is domiciled in such qualified jurisdiction shall receive credit for reinsurance ceded to a United States-domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by insurers domiciled in such qualified jurisdiction; (B) does not require a United States-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer subject to regulation by the non-United States jurisdiction or as a condition to allow the ceding insurer to recognize credit for such reinsurance; (C) recognizes the United States state regulatory approach to group supervision and group capital, by providing written confirmation by a competent regulatory authority, in such qualified jurisdiction, that insurers and insurance groups that are domiciled or maintain their headquarters in this state or another jurisdiction accredited by the NAIC shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the commissioner or the commissioner of the domiciliary state and will not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and (D) provides written confirmation by a competent regulatory authority in such qualified jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such qualified jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC; (2) the assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, on at least an annual basis as of the preceding December 31 or on the date otherwise statutorily reported to the reciprocal jurisdiction, in the following amounts: (i) no less than $250,000,000; or (ii) if the assuming insurer is an association, including incorporated and individual unincorporated underwriters: (A) minimum capital and surplus equivalents, net of liabilities, or own funds of the equivalent of at least $250,000,000; and (B) a central fund containing a balance of the equivalent of at least $250,000,000; (3) the assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, as follows: (i) if the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction defined in clause (1), item (i), the ratio specified in the applicable covered agreement; (ii) if the assuming insurer is domiciled in a reciprocal jurisdiction defined in clause (1), item (ii), a risk-based capital ratio of 300 percent of the authorized control level, calculated in accordance with the formula developed by the NAIC; or (iii) if the assuming insurer is domiciled in a Reciprocal Jurisdiction defined in clause (1), item (iii), after consultation with the reciprocal jurisdiction and considering any recommendations published through the NAIC Committee Process, such solvency or capital ratio as the commissioner determines to be an effective measure of solvency; (4) the assuming insurer must agree and provide adequate assurance in the form of a properly executed Form RJ-1 of its agreement to the following: (i) the assuming insurer must provide prompt written notice and explanation to the commissioner if it falls below the minimum requirements set forth in clause (2) or (3), or if any regulatory action is taken against the assuming insurer for serious noncompliance with applicable law; (ii) the assuming insurer must consent in writing to the jurisdiction of the courts of Minnesota and to the appointment of the commissioner as agent for service of process. The commissioner may require that consent for service of process be provided to the commissioner and included in each reinsurance agreement. Nothing in this subdivision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws; (iii) the assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained; (iv) each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to 100 percent of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; (v) the assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement which involves this state's ceding insurers, and agree to notify the ceding insurer and the commissioner and to provide security in an amount equal to 100 percent of the assuming insurer's liabilities to the ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement. The security shall be in a form consistent with sections 60A.092, subdivision 10, 60A.093, 60A.096, and 60A.097. For purposes of this section, the term "solvent scheme of arrangement" means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer's home jurisdiction either to finally commute liabilities of duly noticed classed members or creditors of a solvent debtor, or to reorganize or restructure the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer's home jurisdiction; and (vi) the assuming insurer must agree in writing to meet the applicable information filing requirements set forth in clause (5); (5) the assuming insurer or its legal successor must provide, if requested by the commissioner, on behalf of itself and any legal predecessors, the following documentation to the commissioner: (i) for the two years preceding entry into the reinsurance agreement and on an annual basis thereafter, the assuming insurer's annual audited financial statements, in accordance with the applicable law of the jurisdiction of its head office or domiciliary jurisdiction, as applicable, including the external audit report; (ii) for the two years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer's supervisor; (iii) prior to entry into the reinsurance agreement and not more than semiannually thereafter, an updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States; and (iv) prior to entry into the reinsurance agreement and not more than semiannually thereafter, information regarding the assuming insurer's assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in clause (6); (6) the assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met: (i) more than 15 percent of the reinsurance recoverables from the assuming insurer are overdue and in dispute as reported to the commissioner; (ii) more than 15 percent of the assuming insurer's ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or (iii) the aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as otherwise specified in a covered agreement; (7) the assuming insurer's supervisory authority must confirm to the commissioner by December 31, 2021, and annually thereafter, or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in clauses (2) and (3); and (8) nothing in this subdivision precludes an assuming insurer from providing the commissioner with information on a voluntary basis. (b) The commissioner shall timely create and publish a list of reciprocal jurisdictions. The commissioner's list shall include any reciprocal jurisdiction as defined under paragraph (a), clause (1), items (i) and (ii), and shall consider any other reciprocal jurisdiction included on the NAIC list. The commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions in accordance with criteria developed under rules issued by the commissioner. The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, in accordance with a process set forth in rules issued by the commissioner, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under paragraph (a), clause (1), items (i) and (ii). Upon removal of a reciprocal jurisdiction from the list, credit for reinsurance ceded to an assuming insurer which has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to law. (c) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this subdivision and to which cessions shall be granted credit in accordance with this subdivision. The commissioner may add an assuming insurer to the list if an NAIC accredited jurisdiction has added the assuming insurer to a list of assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the commissioner as required under paragraph (a), clause (4), and complies with any additional requirements that the commissioner may impose by rule, except to the extent that they conflict with an applicable covered agreement. (i) If an NAIC-accredited jurisdiction has determined that the conditions set forth in paragraph (a), clause (2), have been met, the commissioner has the discretion to defer to that jurisdiction's determination, and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with this paragraph. The commissioner may accept financial documentation filed with another NAIC-accredited jurisdiction or with the NAIC in satisfaction of the requirements of paragraph (a), clause (2); (ii) When requesting that the commissioner defer to another NAIC-accredited jurisdiction's determination, an assuming insurer must submit a properly executed Form RJ-1 and additional information as the commissioner may require. A state that has received such a request will notify other states through the NAIC Committee Process and provide relevant information with respect to the determination of eligibility. (d) If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this subdivision, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this subdivision in accordance with procedures set forth in rule. While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit, except to the extent that the assuming insurer's obligations under the contract are secured in accordance with this section. If an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of this section. (e) Before denying statement credit or imposing a requirement to post security with respect to paragraph (d) or adopting any similar requirement that will have substantially the same regulatory impact as security, the commissioner shall: (1) communicate with the ceding insurer, the assuming insurer, and the assuming insurer's supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in paragraph (a), clause (2); (2) provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection; (3) after the expiration of 90 days or less, as set out in clause (2), if the commissioner determines that no or insufficient action was taken by the assuming insurer, the commissioner may impose any of the requirements as set out in this paragraph; and (4) provide a written explanation to the assuming insurer of any of the requirements set out in this paragraph. (f) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities. (g) Nothing in this subdivision limits or in any way alters the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in the reinsurance agreement, except as expressly prohibited by applicable law or rule. (h) Credit may be taken under this subdivision only for reinsurance agreements entered into, amended, or renewed on or after January 1, 2022, and only with respect to losses incurred and reserves reported on or after the later of: (1) the date on which the assuming insurer has met all eligibility requirements pursuant to this subdivision; and (2) the effective date of the new reinsurance agreement, amendment, or renewal. This paragraph does not alter or impair a ceding insurer's right to take credit for reinsurance, to the extent that credit is not available under this subdivision, as long as the reinsurance qualifies for credit under any other applicable provision of law. Nothing in this subdivision shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement, except as permitted by the terms of the agreement. Nothing in this subdivision shall limit, or in any way alter, the capacity of parties to any reinsurance agreement to renegotiate the agreement. Subd. 11. Reinsurance agreement requirements. (a) If the assuming insurer is not licensed, certified, or accredited to transact insurance or reinsurance in this state, the credit authorized under subdivisions 4 to 9 shall not be allowed unless the assuming insurer agrees in the reinsurance agreements: (1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, comply with all requirements necessary to give the court jurisdiction, and abide by the final decision of the court or of any appellate court in the event of an appeal; (2) to designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding insurer; and (3) that the credit risk for an intermediary is carried by the assuming insurer. (b) Paragraph (a) is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if an obligation to do so is created in the agreement. (c) Credit will not be granted, nor an asset or a reduction from liability allowed, to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of subdivision 2, 3, 4, 5, 6, 7, or 10, unless the reinsurance contract provides that in the event of the insolvency of the ceding insurer, the reinsurance will be payable under the contract without diminution because of that insolvency. Payments by the reinsurer must be made directly to its receiver or successor, except where the contract of insurance or reinsurance specifically provides for another payee for the reinsurance in the event of insolvency of the ceding insurer according to the applicable requirements of statutes, rules, or orders of the domiciliary state of the ceding insurer. Subd. 12. Concentration risk. (a) A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the commissioner within 30 days after reinsurance recoverables from a single assuming insurer, or group of affiliated assuming insurers, exceeds 50 percent of the domestic ceding insurer's last reported surplus to policyholders, or after it is determined that reinsurance recoverables from a single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification must demonstrate that the exposure is safely managed by the domestic ceding insurer. (b) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the commissioner within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20 percent of the ceding insurer's gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification must demonstrate that the exposure is safely managed by the domestic ceding insurer. Subd. 13. Suspension or revocation by commissioner. (a) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the commissioner may suspend or revoke the reinsurer's accreditation or certification. (b) The commissioner must give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect until after the commissioner's order on hearing, unless: (1) the reinsurer waives its right to a hearing; (2) the commissioner's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subdivision 10, paragraph (p); or (3) the commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner's action. (c) While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit, except to the extent that the reinsurer's obligations under the contract are secured in accordance with section 60A.093. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation, except to the extent that the reinsurer's obligations under the contract are secured in accordance with subdivision 10, paragraphs (j) to (o), or section 60A.093. History:  1991 c 325 art 1 s 12; 1992 c 540 art 2 s 3; 1994 c 426 s 1; 1999 c 177 s 8,9; 2009 c 79 art 5 s 1; 2018 c 125 s 2; 1Sp2021 c 4 art 3 s 1,2
60A.0921 CREDIT FOR REINSURANCE; CERTIFIED REINSURERS. Subdivision 1. Certified reinsurers; credit allowed. (a) Credit for reinsurance shall be allowed from a domestic ceding insurer to an assuming insurer that has been certified as a reinsurer in this state at all times for which statutory financial statement credit for reinsurance is claimed under this section. The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the commissioner. The security shall be in a form consistent with sections 60A.092, subdivision 10, and 60A.093. The amount of security required in order for full credit to be allowed shall correspond with the following requirements:     Ratings Security Required   Secure - 1 0%   Secure - 2 10%   Secure - 3 20%   Secure - 4 50%   Secure - 5 75%   Vulnerable - 6 100%   (b) Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions. (c) The commissioner shall require the certified reinsurer to post 100 percent, for the benefit of the ceding insurer or its estate, security upon the entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer. (d) In order to facilitate the prompt payment of claims, a certified reinsurer shall not be required to post security for catastrophe recoverables for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the commissioner. The one-year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for only the following lines of business as reported on the National Association of Insurance Commissioners (NAIC) annual financial statement related specifically to the catastrophic occurrence will be included in the deferral: (1) Line 1: Fire; (2) Line 2: Allied Lines; (3) Line 3: Farmowners multiple peril; (4) Line 4: Homeowners multiple peril; (5) Line 5: Commercial multiple peril; (6) Line 9: Inland Marine; (7) Line 12: Earthquake; (8) Line 21: Auto physical damage. (e) Credit for reinsurance under this section shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new contract. (f) Nothing in this section prohibits the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section. Subd. 2. Certification procedure. (a) The commissioner shall post notice on the department's website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The commissioner may not take final action on the application until at least 30 days after posting the notice. (b) The commissioner shall issue written notice to an assuming insurer that has applied and been approved as a certified reinsurer. The notice must include the rating assigned the certified reinsurer in accordance with subdivision 1. The commissioner shall publish a list of all certified reinsurers and their ratings. (c) In order to be eligible for certification, the assuming insurer must: (1) be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner under subdivision 3; (2) maintain capital and surplus, or its equivalent, of no less than $250,000,000 calculated in accordance with paragraph (d), clause (8). This requirement may also be satisfied by an association including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents net of liabilities of at least $250,000,000 and a central fund containing a balance of at least $250,000,000; (3) maintain financial strength ratings from two or more rating agencies acceptable to the commissioner. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information. These financial strength ratings shall be one factor used by the commissioner in determining the rating that is assigned to the assuming insurer. Acceptable rating agencies include the following: (i) Standard & Poor's; (ii) Moody's Investors Service; (iii) Fitch Ratings; (iv) A.M. Best Company; or (v) any other nationally recognized statistical rating organization; and (4) ensure that the certified reinsurer complies with any other requirements reasonably imposed by the commissioner. (d) Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include, but are not limited to: (1) certified reinsurer's financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The commissioner shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification;        Ratings Best S&P Moody's Fitch   Secure - 1 A++ AAA Aaa AAA   Secure - 2 A+ AA+, AA, AA- Aa1, Aa2, Aa3 AA+, AA, AA-   Secure - 3 A A+, A A1, A2 A+, A   Secure - 4 A- A- A3 A-   Secure - 5 B++, B- BBB+, BBB, BBB- Baa1, Baa2, Baa3 BBB+, BBB, BBB-   Vulnerable - 6 B, B-C++, C+, C, C-, D, E, F BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, R Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD   (2) the business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations; (3) for certified reinsurers domiciled in the United States, a review of the most recent applicable NAIC annual statement; (4) for certified reinsurers not domiciled in the United States, a review annually of such forms as may be required by the commissioner; (5) the reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership; (6) regulatory actions against the certified reinsurer; (7) the report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in clause (8); (8) for certified reinsurers not domiciled in the United States, audited financial statements (audited United States GAAP basis if available, audited IFRS basis statements are allowed, but must include an audited footnote reconciling equity and net income to a United States GAAP basis, or, with permission of the commissioner, audited IFRS statements with reconciliation to United States GAAP certified by an officer of the company). Upon the initial application for certification, the commissioner will consider audited financial statements for the last two years filed with its non-United States jurisdiction supervisor; (9) the liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding; (10) a certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, which involves United States ceding insurers. The commissioner must receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and (11) other information as determined by the commissioner. (e) Based on the analysis conducted under paragraph (d), clause (5), of a certified reinsurer's reputation for prompt payment of claims, the commissioner may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to United States ceding insurers, provided that the commissioner shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under paragraph (d), clause (1), if the commissioner finds that: (1) more than 15 percent of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more which are not in dispute and which exceed $100,000 for each cedent; or (2) the aggregate amount of reinsurance recoverables on paid losses which are not in dispute that are overdue by 90 days or more exceeds $50,000,000. (f) The assuming insurer must submit such forms as required by the commissioner as evidence of its submission to the jurisdiction of this state, appoint the commissioner as an agent for service of process in this state, and agree to provide security for 100 percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment. The commissioner shall not certify an assuming insurer that is domiciled in a jurisdiction that the commissioner has determined does not adequately and promptly enforce final United States judgments or arbitration awards. (g) The certified reinsurer must agree to meet filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis. All data submitted by certified reinsurers to the commissioner is nonpublic under section 13.02, subdivision 9. The certified reinsurer must file with the commissioner: (1) a notification within ten days of any regulatory actions taken against the certified reinsurer, any change in the provisions of its domiciliary license, or any change in rating by an approved rating agency, including a statement describing such changes and the reasons therefore; (2) an annual report regarding reinsurance assumed, in a form determined by the commissioner; (3) an annual report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in clause (4); (4) an annual audited financial statement, regulatory filings, and actuarial opinion filed with the certified reinsurer's supervisor. Upon the initial certification, audited financial statements for the last two years filed with the certified reinsurer's supervisor; (5) at least annually, an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from United States domestic ceding insurers; (6) a certification from the certified reinsurer's domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction's highest regulatory action level; and (7) any other relevant information as determined by the commissioner. Subd. 3. Change in rating or revocation of certification. (a) In the case of a downgrade by a rating agency or other disqualifying circumstance, the commissioner shall upon written notice assign a new rating to the certified reinsurer in accordance with the requirements of subdivision 2, paragraph (d). (b) The commissioner may suspend, revoke, or otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this section, or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the commissioner to reconsider the certified reinsurer's ability or willingness to meet its contractual obligations. (c) If the rating of a certified reinsurer is upgraded by the commissioner, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the commissioner shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the commissioner, the commissioner shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer. (d) Upon revocation of the certification of a certified reinsurer by the commissioner, the assuming insurer shall be required to post security in accordance with section 60A.093 in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust in accordance with section 60A.092, the commissioner may allow additional credit equal to the ceding insurer's pro rata share of such funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration. Notwithstanding the change of a certified reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of three months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the commissioner to be at high risk of uncollectibility. Subd. 4. Qualified jurisdictions. (a) If, upon conducting an evaluation under this section with respect to the reinsurance supervisory system of any non-United States assuming insurer, the commissioner determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the commissioner shall publish notice and evidence of such recognition in an appropriate manner. The commissioner may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified. (b) In order to determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the reinsurance supervisory system of the non-United States jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and the extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. The commissioner shall determine the appropriate approach for evaluating the qualifications of such jurisdictions, and create and publish a list of jurisdictions whose reinsurers may be approved by the commissioner as eligible for certification. A qualified jurisdiction must agree to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. Additional factors to be considered in determining whether to recognize a qualified jurisdiction, in the discretion of the commissioner, include but are not limited to: (1) the framework under which the assuming insurer is regulated; (2) the structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance; (3) the substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction; (4) the form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used; (5) the domiciliary regulator's willingness to cooperate with United States regulators in general and the commissioner in particular; (6) the history of performance by assuming insurers in the domiciliary jurisdiction; (7) any documented evidence of substantial problems with the enforcement of final United States judgments in the domiciliary jurisdiction. A jurisdiction will not be considered to be a qualified jurisdiction if the commissioner has determined that it does not adequately and promptly enforce final United States judgments or arbitration awards; (8) any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or a successor organization; and (9) other matters as determined by the commissioner. (c) A list of qualified jurisdictions shall be published through the NAIC committee process. The commissioner shall consider this list in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification with respect to the criteria provided under paragraph (b). (d) United States jurisdictions that meet the requirements for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions. Subd. 5. Recognition of certification issued by an NAIC-accredited jurisdiction. (a) If an applicant for certification has been certified as a reinsurer in an NAIC-accredited jurisdiction, the commissioner may defer to that jurisdiction's certification, and to the rating assigned by that jurisdiction, if the assuming insurer submits information in the form required by the commissioner. The assuming insurer shall be considered to be a certified reinsurer in this state. (b) Any change in the certified reinsurer's status or rating in the other jurisdiction shall apply automatically in this state as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the commissioner of any change in its status or rating within ten days after receiving notice of the change. (c) The commissioner may withdraw recognition of the other jurisdiction's rating at any time and assign a new rating in accordance with subdivision 2, paragraph (d). (d) The commissioner may withdraw recognition of the other jurisdiction's certification at any time, with written notice to the certified reinsurer. Unless the commissioner suspends or revokes the certified reinsurer's certification in accordance with subdivision 3, the certified reinsurer's certification shall remain in good standing in this state for a period of three months, which shall be extended if additional time is necessary to consider the assuming insurer's application for certification in this state. Subd. 6. Mandatory funding clause. In addition to the requirements of section 60A.092, subdivision 11, reinsurance contracts entered into or renewed under this section must include a requirement that the certified reinsurer provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer under this section for reinsurance ceded to the certified reinsurer. Subd. 7. Commissioner requirement. The commissioner must comply with all reporting and notification requirements that may be established by the NAIC with respect to certified reinsurers and qualified jurisdictions. History:  2018 c 125 s 3; 1Sp2021 c 4 art 3 s 3
60A.093 REDUCTION FROM LIABILITY FOR REINSURANCE CEDED BY A DOMESTIC INSURER; COLLATERAL REQUIREMENTS. Subdivision 1. Reduction allowed. A reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of section 60A.092 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. Such reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, as security for the payment of obligations under the reinsurance contract with the assuming insurer. Such security must be held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution. The funds held as security may be in any form of security acceptable to the commissioner or in the form of: (1) cash; (2) securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets and, with the exception of United States treasury notes, readily marketable over a national exchange or NASDAQ with maturity dates within one year; or (3) clean, irrevocable, unconditional letters of credit issued or confirmed by a qualified United States financial institution no later than December 31 in respect of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement. Subd. 2. Letters of credit continued acceptance. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation must continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever comes first. The letter of credit of an institution failing the standards of subdivision 1, clause (3), continues to be acceptable for no more than 30 days. History:  1991 c 325 art 1 s 13; 1995 c 214 s 4; 2018 c 125 s 4
60A.094 RULES. The commissioner may adopt rules implementing the provisions of sections 60A.091 to 60A.093. History:   1991 c 325 art 1 s 14 
60A.095 REINSURANCE AGREEMENTS AFFECTED. Sections 60A.091 to 60A.093 apply to all cessions after July 1, 1991, under reinsurance agreements that have had an inception, anniversary, or renewal date not less than six months after July 1, 1991. History:   1991 c 325 art 1 s 15 
60A.096 QUALIFYING LETTER OF CREDIT. Subdivision 1. Generally. An admitted asset or a reduction in liability for reinsurance ceded to an unauthorized assuming insurer providing a letter of credit pursuant to section 60A.093 shall only be allowed when the letter of credit meets the requirements of this section. Subd. 2. Content. The letter of credit must be clean, irrevocable, and unconditional and issued or confirmed by a qualified United States financial institution as defined in section 60A.091. The letter of credit must contain an issue date and date of expiration and must stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented. The letter of credit must also state that it is not subject to any condition or qualification outside of the letter of credit. In addition, the letter of credit must not contain reference to any other agreements, documents, or entities, except as provided in subdivision 10, paragraph (a). As used in this section, "beneficiary" means the domestic insurer for whose benefit the letter of credit has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, including conservator, rehabilitator, or liquidator. Subd. 3. Form. The heading of the letter of credit may include a boxed section which contains the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section must be clearly marked to indicate that the information is for internal identification purposes only. Subd. 4. Reimbursement contingency prohibited. The letter of credit must contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect to it. Subd. 5. Expiration. The term of the letter of credit must be for at least one year and must contain an "evergreen clause" which prevents the expiration of the letter of credit without due notice from the issuer. The "evergreen clause" must provide for a period of no less than 30 days' notice before the expiration date or nonrenewal. Subd. 6. Governing law. The letter of credit must state whether it is subject to and governed by the laws of this state or the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 600) (UCP 600) or International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, and that all drafts drawn under it shall be presentable at an office in the United States of a qualified United States financial institution. Subd. 7. Extensions. If the letter of credit is made subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 600), or any successor publication, then the letter of credit must specifically address and make provision for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in Article 36 of Publication 600, or any other successor publication, occur. Subd. 8.  MS 2016 [Repealed by amendment, 2018 c 125 s 5] Subd. 9. Additional requirements. If the letter of credit is issued by a financial institution authorized to issue letters of credit, other than a qualified United States financial institution as described in section 60A.093, then the following additional requirements must be met: (1) the issuing financial institution shall formally designate the confirming qualified United States financial institution as its agent for the receipt and payment of the drafts; and (2) the "evergreen clause" must provide for no less than 30 days' notice before the expiration date or nonrenewal. Subd. 10. Reinsurance agreements provisions. (a) The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions which: (1) require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover; (2) stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance agreement may be drawn upon at any time, notwithstanding any other provisions in the agreement, and must be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons: to reimburse the ceding insurer for the assuming insurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement on account of cancellations of these policies; to reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer under the terms and provisions of the policies reinsured under the reinsurance agreement; to fund an account with the ceding insurer in an amount at least equal to the deduction, for reinsurance ceded, from the ceding insurer's liabilities for policies ceded under the agreement, including but not limited to, amounts for policy reserves, claims and losses incurred, and unearned premium reserves; and to pay any other amounts the ceding insurer claims are due under the reinsurance agreement; and (3) provide that all of the provisions of this paragraph should be applied without diminution because of insolvency of the ceding insurer or assuming insurer. (b) Nothing in this subdivision precludes the ceding insurer and assuming insurer from providing for: (1) an interest payment, at a rate not in excess of the prime rate of interest, on the amounts held under paragraph (a), clause (2); and (2) the return of any amounts drawn down on the letters of credit in excess of the actual amounts required or, in the case of paragraph (a), clause (2), any amounts that are subsequently determined not to be due. (c) When a letter of credit is obtained in conjunction with a reinsurance agreement covering risks other than life, annuities, and health, where it is customary practice to provide a letter of credit for a specific purpose, then the reinsurance agreement may, in lieu of paragraph (a), clause (2), require that the parties enter into a "trust agreement" which may be incorporated into the reinsurance agreement or be a separate document. Subd. 11. Limitation on use. A letter of credit may not be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with the commissioner unless an acceptable letter of credit with the filing ceding insurer as beneficiary has been issued on or before the date of filing of the financial statement. Further, the reduction for the letter of credit may be up to the amount available under the letter of credit but no greater than the specific obligation under the reinsurance agreement which the letter of credit was intended to secure. Subd. 12.  MS 2016 [Repealed by amendment, 2018 c 125 s 5] History:  1994 c 426 s 2; 2018 c 125 s 5
60A.097 QUALIFYING TRUST AGREEMENTS. Subdivision 1. Requirements. An admitted asset or a reduction in liability for reinsurance ceded to an unauthorized assuming insurer providing a trust fund pursuant to section 60A.093 shall only be allowed if the requirements of this section are met. Subd. 2. Definitions. As used in this section, the following terms have the meanings given: (a) "Beneficiary" means the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, the named beneficiary includes and is limited to the court appointed domiciliary receiver, including a conservator, rehabilitator, or liquidator. (b) "Grantor" means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer. (c) "Obligations" as used in subdivision 3, paragraph (k), means: (1) reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer; (2) reserves for reinsured losses reported and outstanding; (3) reserves for reinsured losses incurred but not reported; and (4) reserves for allocated reinsured loss expenses and unearned premiums. "Obligations" excludes liabilities that are otherwise secured by acceptable means. Subd. 3. Required conditions. (a) The trust agreement must be entered into between the beneficiary, the grantor, and a trustee which must be a qualified United States financial institution as defined in section 60A.091. (b) The trust agreement must create a trust account into which assets must be deposited. (c) All assets in the trust account must be held by the trustee at the trustee's office in the United States. (d) The trust agreement must provide that: (1) the beneficiary shall have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee; (2) no other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets; (3) it is not subject to any conditions or qualifications outside of the trust agreement; and (4) it shall not contain references to any other agreements or documents except as provided for under paragraph (k). (e) The trust agreement must be established for the sole benefit of the beneficiary. (f) The trust agreement must require the trustee to: (1) receive assets and hold all assets in a safe place; (2) determine that all assets are in such form that the beneficiary, or the trustee upon direction by the beneficiary, may whenever necessary negotiate the assets, without consent or signature from the grantor or any other person or entity; (3) furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at intervals no less frequent than the end of each calendar quarter; (4) notify the grantor and the beneficiary within ten days of any deposits to or withdrawals from the trust account; (5) upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and (6) allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary, except that the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset upon condition that the proceeds are paid into the trust account. (g) The trust agreement must provide that at least 30 days, but not more than 45 days, before termination of the trust account, written notification of termination must be delivered by the trustee to the beneficiary. (h) The trust agreement must be made subject to and governed by the laws of the state in which the trust is established. (i) The trust agreement must prohibit invasion of the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee. (j) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith. (k) Notwithstanding other provisions of this section, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities, and accident and health, where it is customary practice to provide a trust agreement for a specific purpose, the trust agreement may, notwithstanding any other conditions in this section, provide that the ceding insurer must undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer for the following purposes: (1) to pay or reimburse the ceding insurer for the assuming insurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer, or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer; (2) to make payment to the assuming insurer of any amounts held in the trust account that exceed 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or (3) where the ceding insurer has received notification of termination of the trust account and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days before the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution as defined in section 60A.091 apart from its general assets, in trust for the uses and purposes specified in clauses (1) and (2) that remain executory after the withdrawal and for any period after the termination date. (l) Assets in the trust account must meet the requirements of section 60A.093, subdivision 1. The trust agreement must stipulate that assets deposited in the trust account shall be valued according to their current fair market value. The agreement may further specify the types of investments to be deposited. If the reinsurance agreement covers life, annuities, or accident and health risks, then the provisions required by this paragraph must be included in the reinsurance agreement. (m) A letter of credit may be a trust asset if the trust agreement, deed of trust, or other binding agreement, as approved by the commissioner, provides that if the letter of trust expires without being renewed or replaced, the trustee must immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiary. Subd. 4. Permitted conditions. (a) The trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than 90 days after receipt by the beneficiary and grantor of the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than 90 days after receipt by the trustee and the beneficiary of the notice. No resignation or removal is effective until a successor trustee has been appointed and approved by the beneficiary and the grantor and all assets in the trust have been duly transferred to the new trustee. (b) The grantor may have the full and unqualified right to vote any shares or stock in the trust account and to receive from time to time payment of any dividends or interest upon any shares of stock or obligations included in the trust account. Interest or dividends must be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor's name. (c) The trustee may be given authority to invest, and accept substitutions of, any funds in the account. No investment or substitution must be made without prior approval of the beneficiary, unless the trust specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions which the trustee determines are at least equal in market value to the assets withdrawn and that are consistent with the restrictions in subdivision 5, paragraph (a), clause (2). (d) The trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets are to be transferred. The transfer may be conditioned upon the trustee receiving, prior to or simultaneously, other specified assets. (e) The trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval by the beneficiary, be delivered to the grantor. Subd. 5. Additional conditions applicable to reinsurance agreements. (a) A reinsurance agreement, which is entered into in conjunction with a trust agreement and the establishment of a trust account, may contain provisions that: (1) require the assuming insurer to enter into a trust agreement and to establish a trust account for the benefit of the ceding insurer, and specifying what the agreement is to cover; (2) require the assuming insurer, before depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate these assets without consent or signature from the assuming insurer or any other entity; (3) require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and (4) stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance agreement, and must be utilized and applied by the ceding insurer or its successors in interest by operation of law, including without limitation any liquidator, rehabilitator, receiver or conservator of the company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes: (i) to reimburse the ceding insurer for the assuming insurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement because of cancellations of the policies; (ii) to reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer pursuant to the provisions of the policies reinsured under the reinsurance agreement; (iii) to fund an account with the ceding insurer in an amount at least equal to the deduction, for reinsurance ceded, from the ceding insurer liabilities for policies ceded under the agreement. The account must include, but not be limited to, amounts for policy reserves, claims and losses incurred, including losses incurred but not reported, loss adjustment expenses, and unearned premium reserves; and (iv) to pay any other amounts the ceding insurer claims are due under the reinsurance agreement. (b) The reinsurance agreement may also contain provisions that: (1) give the assuming insurer the right to seek approval from the ceding insurer to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, and provide that the ceding insurer shall not unreasonably or arbitrarily withhold its approval, provided: (i) the assuming insurer shall, at the time of withdrawal, replace the withdrawn assets with other qualified assets having a current fair market value equal to the market value of the assets withdrawn so as to maintain at all times the deposit in the required amount; or (ii) after withdrawal and transfer, the current fair market value of the trust account is no less than 102 percent of the required amount; (2) provide for: (i) the return of any amount withdrawn in excess of the actual amounts required for paragraph (a), clause (4), items (i), (ii), and (iii), or in the case of paragraph (a), clause (4), item (iv), any amounts that are subsequently determined not to be due; and (ii) interest payments, at a rate not in excess of the prime rate of interest, on the amounts; and (3) permit the award by any arbitration panel or court of competent jurisdiction of: (i) interest at a rate different from that provided in clause (2), item (ii); (ii) court or arbitration costs; (iii) attorney's fees; and (iv) any other reasonable expenses. Subd. 6. Financial reporting. A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with the commissioner when established on or before the date of filing of the financial statement of the ceding insurer. Further, the reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but the reduction must be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure. Subd. 7.  MS 2016 [Repealed by amendment, 2018 c 125 s 6] Subd. 8. Effect of failure to identify beneficiary. The failure of any trust agreement to specifically identify the beneficiary, as defined in subdivision 2, paragraph (a), must not be construed to affect any actions or rights which the commissioner may take or possess pursuant to the laws of this state. History:  1994 c 426 s 3; 2018 c 125 s 6
60A.10 DEPOSITS FOR PROTECTION OF POLICYHOLDERS. Subdivision 1. Domestic companies. (1) Deposit as security for all policyholders required. No company in this state, other than farmers' mutual, or real estate title insurers, shall do business in this state unless it has on deposit with the commissioner, for the protection of both its resident and nonresident policyholders, securities to an amount, the actual market value of which, exclusive of interest, shall never be less than $500,000 or one-half the applicable financial requirement set forth in sections 60A.07, 66A.32, and 66A.33, whichever is less. The securities shall be retained under the control of the commissioner as long as any policies of the depositing company remain in force. (2) Securities defined. For the purpose of this subdivision, the word "securities" means bonds or other obligations of, or bonds or other obligations insured or guaranteed by, the United States, any state of the United States, any municipality of this state, or any agency or instrumentality of the foregoing. (3) Protection of deposit from levy. No judgment creditor or other claimant may levy upon any securities held on deposit with, or for the account of, the commissioner. Upon the entry of an order by a court of competent jurisdiction for the rehabilitation, liquidation or conservation of any depositing company as provided in chapter 60B, that company's deposit together with any accrued income thereon shall be transferred to the commissioner as rehabilitator, liquidator, or conservator. Subd. 2. Like requirement for foreign companies. Any insurance company of any other state of the United States may file with the commissioner a certificate of the insurance commissioner of the other state that, as such officer, there is held in trust by the certifying commissioner and on deposit for the benefit of all the policyholders of the company a deposit of an amount not less than that required by subdivision 1 in par value of such securities as are required or permitted to be deposited by the laws of that state, these securities to be of the character in which insurance companies are authorized to invest under the laws of that state, stating the items of the securities so held, and that the commissioner is satisfied that these securities are worth the value so certified. No deposit shall be required in this state while the deposit, so certified, remains. Subd. 2a. Special deposits. The commissioner may require a special deposit of an individual foreign insurer for the protection of its Minnesota policyholders or claimants. In the event of the filing of a delinquency petition against the insurer in Minnesota, the deposit is subject to chapters 60B, 60C, 61A, and 61B. Subd. 3. Deposits made in compliance with other laws or by foreign companies. The commissioner shall receive and hold in official trust deposits made by any domestic company in compliance with the laws of any other state, to enable it to do business in that state, and in like manner hold deposits made by a foreign company under any law of this state. The company making the deposit shall be entitled to the income thereof and, from time to time, with the commissioner's consent, when not inconsistent with the law under which it was made, may exchange, in whole or in part, the securities composing the deposit for other approved securities of equal value. Upon application by a domestic company, the commissioner may return the whole or any portion of the securities so deposited by it, if satisfied that they are subject to no liability. Upon like application, the commissioner may return to a foreign company any deposit made by it when it appears that the company has ceased to do business in this state or the United States, and the commissioner is satisfied that it is not subject to any liability in this state, or upon the order of any court of competent jurisdiction. A foreign company which has made a deposit, its trustees, receiver, resident manager, or any creditor or policyholder thereof, may, at any time, institute in the District Court of Ramsey County an action against the state and other proper parties to enforce and terminate the trust created by the deposit. The commissioner shall immediately notify the governor of the action, and furnish the necessary information to answer in behalf of the state, and shall carry out such order and decree as the court shall make therein. Subd. 4. Safekeeping of securities on deposit. No later than July 1, 1975, all securities held on deposit with the commissioner pursuant to the laws of this state, or in accordance with an order of the commissioner, shall be deposited for the account of the commissioner in such state or national bank in this state as the depositing insurer may designate and the commissioner may approve. Said deposits shall be made and maintained in accordance with a custodial agreement between the bank and the depositing insurer in a form approved by the commissioner which shall provide as a minimum that (1) the fees of the custodian are to be the obligation of the depositing insurer, and (2) there shall be no exchange, release or transfer of any deposited security unless the commissioner has assented thereto in writing. Securities evidenced by the Federal Reserve book entry system or held in a clearing corporation, as that term is defined in section 60A.11, subdivision 10, must be deposited through an approved custodian or the commissioner of commerce for the account of the commissioner of commerce for the benefit of all policyholders of the depositor. Subd. 5.  [Repealed, 1969 c 494 s 4] Subd. 6. Rules. The commissioner of commerce shall have the power to make such rules as may be necessary for the execution of the functions vested in the commissioner by this section. History:  1967 c 395 art 1 s 10; 1969 c 494 s 3; 1974 c 425 s 1-3; 1978 c 465 s 4; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1Sp1985 c 10 s 50; 1986 c 444; 1986 c 455 s 5; 1991 c 325 art 10 s 5; 1992 c 540 art 2 s 4; 1999 c 177 s 10; 2005 c 69 art 2 s 18; 2014 c 198 art 4 s 4
60A.11 INVESTMENTS PERMITTED FOR DOMESTIC COMPANIES. Subdivision 1. Requirement for payment of capital stock. The capital of every stock company shall be paid in full, in cash, within six months from the date of its certificate of incorporation, and thereupon a majority of the directors shall certify, under oath, to the commissioner that such payment, in cash, has been made by the stockholders for their respective shares, and is held as the capital of the company, and until then no policy shall be issued. Subd. 2.  [Repealed, 1981 c 211 s 42] Subd. 3.  [Repealed, 1981 c 211 s 42] Subd. 4.  [Repealed, 1981 c 211 s 42] Subd. 5.  [Repealed, 1981 c 211 s 42] Subd. 5a.  [Repealed, 1982 c 424 s 9] Subd. 5b.  [Repealed, 1982 c 424 s 9] Subd. 6.  [Repealed, 1981 c 211 s 42] Subd. 7. Investments in name of company or nominee and prohibitions. No officer, director, or member of any committee passing on investments shall borrow any of such funds, or become, directly or indirectly, liable as a surety or endorser for or on account of loans thereof to others, or receive for personal use any fee, brokerage, commission, gift, or other consideration for, or on account of, any loan made by or on behalf of the company. Subd. 8.  [Repealed, 1981 c 211 s 42] Subd. 9. General considerations. The following considerations apply in the interpretation of this section: (a) this section applies to the investments of insurance companies other than life and health insurance companies; (b) the purpose of this section is to protect and further the interests of policyholders, claimants, creditors and the public by providing standards for the development and administration of programs for the investment of the assets of domestic companies. These standards and the investment programs developed by companies must take into account the safety of company's principal, investment yield and growth, stability in the value of the investment, the liquidity necessary to meet the company's expected business needs, and investment diversification; (c) all financial terms relating to insurance companies have the meanings assigned to them under statutory accounting methods. All financial terms relating to noninsurance companies have the meanings assigned to them under generally accepted accounting principles; (d) investments must be valued in accordance with the valuation procedures established by the National Association of Insurance Commissioners, unless the commissioner requires or finds another method of valuation reasonable under the circumstances. Another method of valuation permitted by the commissioner must be at least as conservative as those prescribed in the association's manual. Other invested assets must be valued according to the procedures promulgated by the National Association of Insurance Commissioners, if not addressed in another section, unless the commissioner requires or finds another method of valuation reasonable under the circumstances; (e) a company may elect to hold an investment which qualifies under more than one subdivision, under the subdivision of its choice. Nothing herein prevents a company from electing to hold an investment under a subdivision different from the one in which it previously held the investment; and (f) an investment which qualifies under any provision of the law governing investments of insurance companies when acquired will continue to be a qualified investment for as long as it is held by the insurance company. Subd. 10. Definitions. The following terms have the meanings assigned in this subdivision for purposes of this section: (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, 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) "replicated investment position" means the statement value of the position reported under the heading "Replicated (Synthetic) Asset" on Schedule DB, Part F, of the annual statement of the insurer, or any successor provision; (s) "replication transaction" means a derivative transaction that is intended to replicate the performance of one or more assets that an insurer is authorized to acquire under this section. A derivative transaction that either is authorized by subdivision 18, clause (5), or by subdivision 24, or is entered into as a hedging transaction shall not be considered a replication transaction; (t) "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; (u) "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; (v) "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 (ADRs), repurchase agreements, and reverse repurchase agreements; and (w) "unrestricted surplus" means the amount by which qualified assets exceed 110 percent of required liabilities. Subd. 11. Investments in name of company or nominee and prohibitions. A company's investments shall be held in its own name or the name of its nominee, except that: (a) Investments may be held in the name of a clearing corporation or of a custodian bank or in the name of the nominee of either on the following conditions: (1) the clearing corporation, custodian bank, or nominee must be legally authorized to hold the particular investment for the account of others; (2) where the investment is evidenced by a certificate and held in the name of a custodian bank or the nominee by a custodian bank, a written agreement shall provide that certificates so deposited shall at all times be kept separate and apart from other deposits with the depository, so that at all times they may be identified as belonging solely to the company making the deposit; (3) where a clearing corporation is to act as depository, the investment may be merged or held in bulk in the clearing corporation's or its nominee name with other investments deposited with the clearing corporation by any other person, if a written agreement provides that adequate evidence of the deposit is to be obtained and retained by the company or a custodian bank; and (4) the company shall monitor current publicly available financial information and other pertinent data with respect to the custodian banks. (b) A company may loan securities held by it under this chapter to a broker-dealer registered under the Securities and Exchange Act of 1934 or a member bank. The loan must be evidenced by a written agreement which provides: (1) that the loan will be fully collateralized by cash or obligations issued or guaranteed by the United States or an agency or an instrumentality thereof, and that the collateral will be adjusted each business day during the term of the loan to maintain the required collateralization in the event of market value changes in the loaned securities or collateral; (2) that the loan may be terminated by the company at any time, and that the borrower will return the loaned securities or their equivalent within five business days after termination; (3) that the company has the right to retain the collateral or use the collateral to purchase investments equivalent to the loaned securities if the borrower defaults under the terms of the agreement and that the borrower remains liable for any losses and expenses incurred by the company due to default that are not covered by the collateral. (c) A company may participate through a member bank in the Federal Reserve book-entry system, and the records of the member bank shall at all times show that the investments are held for the company or for specific accounts of the company. (d) An investment may consist of an individual interest in a pool of obligations or a fractional interest in a single obligation if the certificate of participation or interest or the confirmation of participation or interest in the investment shall be issued in the name of the company or the name of the custodian bank or the nominee of either and if the certificate or confirmation must, if held by a custodian bank, be kept separate and apart from the investments of others so that at all times the participation may be identified as belonging solely to the company making the investment. (e) Except as provided in paragraph (c), where an investment is not evidenced by a certificate, adequate evidence of the company's investment shall be obtained from the issuer or its transfer or recording agent and retained by the company, a custodian bank, or clearing corporation. Transfers of ownership of investments held as described in paragraphs (a), clause (3), (c) and (d) may be evidenced by bookkeeping entry on the books of the issuer of the investment or its transfer or recording agent or the clearing corporation without physical delivery of certificates, if any, evidencing the company's investment. (f) A letter of credit may be accepted as a guaranty of other investments, as collateral to secure loans, or in lieu of cash to secure loans of securities, if it is issued by a member bank or any of the 100 largest banks in the world ranked by deposits in dollars or converted into dollar equivalents, as compiled annually by the American Bankers Association or listed in the annual publication of Moody's Bank & Finance Manual and meets the following requirements: (1) has a long-term deposit rating or a long-term debt rating of at least Aa2 as found in the current monthly publication of Moody's Credit Opinions or its equivalent; and (2) qualifies under the guidelines of the National Association of Insurance Commissioners as a clean, irrevocable letter of credit containing an evergreen clause or having a maturity date subsequent to the maturity date of the underlying investment or loan. The company shall monitor current publicly available financial information and other pertinent data with respect to the banks issuing the letters of credit. Subd. 11a. Additional limitations. Under the standards and procedures in sections 60G.20 to 60G.22 for individual insurers, the commissioner may impose additional limitations on all insurers on the types and percentages of investments as the commissioner determines necessary to protect and ensure the safety of the general public. Subd. 12. Investments. (a) A company must comply with section 60A.112. (b) A company's investments must be so diversified that the securities of a single issuer, other than the United States of America or any agency or instrumentality of the United States of America backed by the full faith and credit of the issuer, shall comprise no more than five percent of the company's admitted assets, except where otherwise specified under this chapter. In the case of insurance companies which are subsidiaries of a company, this diversification test must be applied to the assets of the insurance company subsidiary in determining the company's compliance. (c) The investments authorized under subdivisions 12 to 26 shall constitute admitted assets for a company. Subd. 13. United States government obligations. (a) Obligations issued or guaranteed by the United States of America or any agency or instrumentality of the United States of America backed by the full faith and credit of the issuer. Pursuant to section 106 of title I of the Secondary Mortgage Market Enhancement Act of 1984, United States Code, title 15, section 77r-1, included under this paragraph are obligations issued or guaranteed by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association. (b) Obligations issued or guaranteed by an agency or instrumentality of the United States of America other than those backed by the full faith and credit thereof, including rights to purchase or sell these obligations if those rights are traded upon a contract market designated and regulated by a federal agency. The securities of a single issuer under this paragraph shall comprise no more than 20 percent of the company's admitted assets. Subd. 14. Certain bank obligations. (a) Certificates of deposits, time deposits, and bankers' acceptances issued by and other obligations guaranteed by: (i) any bank organized under the laws of the United States or any state, commonwealth, or territory thereof, including the District of Columbia, or of the Dominion of Canada or any province thereof or (ii) any of the 100 largest banks, not a subsidiary or a holding company thereof, in the world ranked by deposits in dollars or converted into dollar equivalents, as compiled annually by the American Bankers Association or listed in the annual publication of Moody's Bank & Finance Manual, which also has a long-term deposit rating or a long-term debt rating of at least Aa2 as found in the current monthly publication of Moody's Credit Opinions or its equivalent. A company may not invest more than five percent of its admitted assets in the obligations of any one bank and may not hold at any time more than ten percent of the outstanding obligations of any one bank. (b) Obligations issued or guaranteed by the International Bank for Reconstruction and Development, the Asian Development Bank, the Inter-American Development Bank, the African Development Bank, the Export-Import Bank, the World Bank or any United States government sponsored organization of which the United States is a member, if the principal and interest is payable in United States dollars. A company may not invest more than five percent of its total admitted assets in the obligations of any one of these banks or organizations, and may not invest more than a total of 15 percent of its total admitted assets in the obligations of all these banks and organizations. Subd. 15. State obligations. (a) Government obligations issued or guaranteed by any state, commonwealth, or territory of the United States of America or by any political subdivision thereof, including the District of Columbia, or by any instrumentality of any state, commonwealth, territory, or political subdivision thereof. The diversification requirement of subdivision 12, paragraph (b), does not apply to government obligations under this paragraph. (b) Revenue obligations issued by any state, commonwealth, or territory of the United States of America or by any political subdivision thereof, including the District of Columbia, or by any instrumentality of any state, commonwealth, territory, or political subdivision thereof. The diversification requirement of subdivision 12, paragraph (b), is applicable to revenue obligations under this paragraph. Subd. 16. Canadian government obligations. (a) Obligations issued or guaranteed by the Dominion of Canada or by any agency or instrumentality of the Dominion of Canada backed by the full faith and credit of the issuer. The diversification requirement of subdivision 12, paragraph (b), does not apply to government obligations under this paragraph. (b) Obligations issued or guaranteed by an agency or instrumentality of the Dominion of Canada other than those backed by the full faith and credit of the issuer. The securities of a single issuer under this paragraph shall comprise no more than 20 percent of the company's admitted assets. (c) Government obligations issued or guaranteed by a province or territory of the Dominion of Canada or by a political subdivision thereof, or by an instrumentality of a province, territory, or political subdivision thereof. The diversification requirement of subdivision 12, paragraph (b), does not apply to government obligations under this paragraph. (d) Revenue obligations issued by a province or territory of the Dominion of Canada or by a political subdivision thereof, or by an instrumentality of a province, territory, or political subdivision thereof. The diversification requirement of subdivision 12, paragraph (b), is applicable to revenue obligations under this paragraph. Subd. 17. Corporate and business trust obligations. Obligations issued, assumed or guaranteed by a corporation or business trust organized under the laws of the United States of America or any state, commonwealth, or territory of the United States, including the District of Columbia, or the laws of the Dominion of Canada or any province or territory of the Dominion of Canada, or obligations traded on a national securities exchange on the following conditions: (a) a company may invest in any obligations traded on a national securities exchange; (b) a company may also invest in any obligations which are secured by adequate security located in the United States or Canada; (c) a company may also invest in previously outstanding or newly issued obligations not qualifying for investment under paragraph (a) or (b) if the corporation or business trust has qualified net earnings. If the obligations are not newly issued, neither principal nor interest payments on the obligations shall have been in arrears (1) for an aggregate of 90 days during the three-year period preceding the date of investment, or (2) where the obligations have been outstanding for less than 90 days, during the period the obligations have been outstanding; (d) a company may invest no more than 15 percent of its total admitted assets in noninvestment grade obligations; (e) a company may invest in federal farm loan bonds and may invest up to 20 percent of its total admitted assets in the obligations of farm mortgage debenture companies; and (f) a company may not invest more than five percent of its admitted assets in the obligations of any one corporation or business trust; provided, however, that a company may invest in the obligations of a corporation without regard to this paragraph or the subdivision 12, paragraph (b), diversification requirement if: (1) the company is wholly owned by the issuer and affiliates of the issuer of the obligations; (2) the company insures solely the issuer of the obligations and its affiliates; (3) the issuer has a net worth, determined on a consolidated basis, which equals or exceeds $100,000,000; and (4) the issuer and its affiliates forgo any and all claims they may have against the Minnesota Insurance Guaranty Association pursuant to chapter 60C in the event of the insolvency of the company. This does not affect the rights of any unaffiliated third-party claimant under section 60C.09, subdivision 1. Subd. 18. Stocks and limited partnerships. (a) Stocks issued or guaranteed by any corporation incorporated under the laws of the United States of America or any state, commonwealth, or territory of the United States, including the District of Columbia, or the laws of the Dominion of Canada or any province or territory of Canada, or stocks or stock equivalents, including American Depository Receipts or unit investment trusts, listed or regularly traded on a national securities exchange on the following conditions: (1) a company may not invest more than a total of 25 percent of its total admitted assets in stocks, stock equivalents, and convertible issues. Not more than ten percent of a company's total admitted assets may be invested in stocks, stock equivalents, and convertible issues not traded or listed on a national securities exchange or designated or approved for designation upon notice of issuance on the NASDAQ/National Market System. This limitation does not apply to investments under clause (4); (2) a company may not invest in more than two percent of its total admitted assets in preferred stocks of any corporation which are traded on a national securities exchange and may also invest in other preferred stocks if the issuer has qualified net earnings and if current or cumulative dividends are not then in arrears; (3) a company may not invest in more than two percent of its total admitted assets in common stocks, common stock equivalents, or securities convertible into common stock or common stock equivalents of any corporation or business trust which are traded on a national securities exchange or designated or approved for designation upon notice of issuance on the NASDAQ/National Market System, and may also invest in other common stocks, stock equivalents, and convertible issues subject to the limitations specified in clause (1); (4) a company may organize or acquire and hold voting control of a corporation or business trust through its ownership of common stock, common stock equivalents, or other securities, provided the corporation or business trust is: (i) a corporation providing investment advisory, banking, management or sale services to an investment company or to an insurance company, (ii) a data processing or computer service company, (iii) a mortgage loan corporation engaged in the business of making, originating, purchasing or otherwise acquiring or investing in, and servicing or selling or otherwise disposing of loans secured by mortgages on real property, (iv) a corporation if its business is owning and managing or leasing personal property, (v) a corporation providing securities underwriting services or acting as a securities broker or dealer, (vi) a real property holding, developing, managing, brokerage or leasing corporation, (vii) any domestic or foreign insurance company, (viii) any alien insurance company, if the organization or acquisition and the holding of the company is subject to the prior approval of the commissioner of commerce, which approval must be given upon good cause shown and is deemed to have been given if the commissioner does not disapprove of the organization or acquisition within 30 days after notification by the company, (ix) an investment subsidiary to acquire and hold investments which the company could acquire and hold directly, if the investments of the subsidiary are considered direct investments for purposes of this chapter and are subject to the same percentage limitations, requirements and restrictions as are contained herein, or (x) any corporation whose business has been approved by the commissioner as complementary or supplementary to the business of the company. A company may invest up to an aggregate of ten percent of its total admitted assets under items (i) to (v) of this clause. The diversification requirement of subdivision 12, paragraph (b), does not apply to this clause; (5) a company may invest in warrants and rights granted by an issuer to purchase securities of the issuer if that security of the issuer, at the time of the acquisition of the warrant or right to purchase, would qualify as an investment under paragraph (a), clause (2) or (3), whichever is applicable, provided that security meets the standards prescribed in the clause at the time of acquisition of the securities; and (6)(i) a company may invest in the securities of any face amount certificate company, unit investment trust, or management type investment company, registered or in the process of registration under the Investment Company Act of 1940 as from time to time amended, provided that the aggregate of all these investments other than in securities of money market mutual funds or mutual funds investing primarily in United States government securities, determined at cost, shall not exceed five percent of its total admitted assets; investments may be made under this clause without regard to the percentage limitations applicable to investments in voting securities; (ii) a company may invest in any proportion of the shares or investment units of an investment company or investment trust, whether or not registered under the Investment Company Act of 1940, which is managed by an insurance company, member bank, trust company regulated by state or federal authority or an investment manager or adviser registered under the Investment Advisers Act of 1940 or qualified to manage the investments of an investment company registered under the Investment Company Act of 1940, provided that the investments of the investment company or investment trust are qualified investments made under this section and that the articles of incorporation, bylaws, trust agreement, investment management agreement, or some other governing instrument limits its investments to investments qualified under this section. (b) A company may invest in or otherwise acquire and hold a limited partnership interest in any limited partnership formed under the laws of any state, commonwealth, or territory of the United States or under the laws of the United States of America. A company may invest in or otherwise acquire and hold a member interest in any limited liability company formed under the laws of any state, commonwealth, or territory of the United States or under the laws of the United States. No limited partnership or limited liability company member interest shall be acquired if the investment, valued at cost, exceeds two percent of the admitted assets of the company or if the investment, plus the book value on the date of the investment of all limited partnership and limited liability company interests then held by the company and held under the authority of this subdivision, exceeds ten percent of the company's admitted assets. Limited partnership and limited liability company interests traded on a national securities exchange must be classified as stock equivalents and are not subject to the percentage limitations contained in this paragraph. Subd. 19. Mortgages on real estate. Up to 25 percent of a company's total admitted assets may be invested in loans or obligations secured by a mortgage or a trust deed on real estate located in any state, commonwealth, or territory of the United States, including the District of Columbia, or in any province or territory of the Dominion of Canada, on the following conditions: (a) a leasehold estate constitutes real estate under this section if its unexpired term on the date of investment is at least five years longer than the term of the obligation secured by it. The obligation must be repayable within the leasehold term in annual or more frequent installments, except that obligations for commercial purposes may begin up to five years after the date of the obligations. The mortgage must entitle the company upon default to be subrogated to all rights of the lessor under the leasehold; (b) the real estate to which the mortgage applies must be (1) improved with permanent buildings, or (2) used for agriculture or pasture, or (3) income-producing, including but not limited to parking lots and leases, royalty or other mineral interests in properties producing oil, gas or other minerals and interests in properties for the harvesting of forest products, or (4) subject to a definite plan for the commencement of development within five years; (c) the real estate to which the mortgage applies must be otherwise unencumbered when the mortgage loan is funded except as provided in paragraph (d) and except for encumbrances which do not unreasonably interfere with the intended use of the real estate as security; (d) the real estate to which the mortgage applies may be subject to a prior mortgage or trust deed if (1) the amount of the obligation is equal to the sum of the company's loan and the other outstanding indebtedness and (2) the company has control over the payments under the prior mortgage or trust deed; (e) the amount of the obligation may not exceed 80 percent of the real estate. If the amount of the obligation exceeds 66-2/3 percent of the market value of the real estate, principal payments must commence within five years after the date of the mortgage loan and principal and interest on the loan shall be fully amortized by regular installments payable during the term of the loan without irregular or balloon payments, unless the schedule of irregular or balloon payments is more favorable to the insurer than regular installments of equal amount would be. The market value shall be established by the written certification of a licensed real estate appraiser qualified to appraise the particular type of real estate involved. The appraisal must be required at the time the loan is made; (f) the maximum term of any obligation shall be 40 years, except as provided in paragraph (g) and except for obligations secured by a mortgage or trust deed which are or are to be insured by a private mortgage insurance company approved by the commissioner; (g) the 25 percent of total admitted asset limitation in the preamble of this subdivision and the maximum amount and term limitations in paragraphs (e) and (f) shall not apply to obligations secured by mortgage or trust deed which are insured or guaranteed by the United States of America or any agency or instrumentality of the United States; (h) a company may invest in collateralized mortgage obligations, mortgage participation certificates and pools issued or administered by a bank or banks and secured by first mortgages or trust deeds on improved real estate located in the United States provided the private placement memorandum, prospectus or other offering circular, or a written agreement with the issuer of the collateralized mortgage obligations, certificate or other pool interest provides that each loan meets the requirements of this subdivision; (i) notwithstanding the restrictions in paragraph (e), if a company disposes of real estate acquired by it under subdivision 20, it may take back a purchase money mortgage from its purchaser in an amount up to 90 percent of the appraised value; and (j) the vendor's equity in a contract for deed shall be treated as a mortgage for purposes of this subdivision. Subd. 20. Real estate. (a) Except as provided in paragraphs (b) to (d), a company may only acquire, hold, and convey real estate which: (1) has been mortgaged to it in good faith by way of security for loans previously contracted, or for money due; (2) has been conveyed to it in satisfaction of debts previously contracted in the course of its dealings; (3) has been purchased at sales on judgments, decrees or mortgages obtained or made for the debts; and (4) is subject to a contract for deed under which the company holds the vendor's interest to secure the payments the vendee is required to make thereunder. All the real estate specified in clauses (1) to (3) must be sold and disposed of within five years after the company has acquired title to it, or within five years after it has ceased to be necessary for the accommodation of the company's business, and the company must not hold this property for a longer period unless the company elects to hold the real estate under another section, or unless it procures a certificate from the commissioner of commerce that its interest will suffer materially by the forced sale thereof, in which event the time for the sale may be extended to the time the commissioner directs in the certificate. The market value of real estate specified in clauses (1) to (3) must be established by the written certification of a licensed real estate appraiser. The appraisal is required at the time the company elects to hold the real estate under clauses (1) to (3). (b) A company may acquire and hold real estate for the convenient accommodation of its business. (c) A company may acquire real estate or any interest in real estate, including oil and gas and other mineral interests, as an investment for the production of income, and may hold, improve or otherwise develop, subdivide, lease, sell and convey real estate so acquired directly or as a joint venture or through a limited, limited liability, or general partnership in which the company is a partner or through a limited liability company in which the company is a member. (d) A company may also hold real estate (1) if the purpose of the acquisition is to enhance the sale value of real estate previously acquired and held by the company under this section, and (2) if the company expects the real estate so acquired to qualify under paragraph (b) or (c) above within five years after acquisition. (e) A company may, after securing the approval of the commissioner, acquire and hold real estate for the purpose of providing necessary living quarters for its employees. The company must dispose of the real estate within five years after it has ceased to be necessary for that purpose unless the commissioner agrees to extend the holding period upon application by the company. (f) A company may not invest more than 25 percent of its total admitted assets in real estate. The cost of any parcel of real estate held for both the accommodation of business and for the production of income must be allocated between the two uses annually. No more than ten percent of a company's total admitted assets may be invested in real estate held under paragraph (b). No more than 15 percent of a company's total admitted assets may be invested in real estate held under paragraph (c). No more than three percent of its total admitted assets may be invested in real estate held under paragraph (e). Upon application by a company, the commissioner of commerce may increase any of these limits up to an additional five percent. Subd. 21. Foreign investments. Obligations of and investments in foreign countries, on the following conditions: (a) a company may acquire and hold any foreign investments which are required as a condition of doing business in the foreign country or necessary for the convenient accommodation of its foreign business. An investment is considered necessary for the convenient accommodation of the insurance company's foreign business only if it is demonstrably and directly related in size and purpose to the company's foreign insurance operations; and (b) a company may also invest not more than five percent of its total admitted assets in any combination of: (1) the obligations of foreign governments, corporations, or business trusts; (2) obligations of federal, provincial, or other political subdivisions backed by the full faith and credit of the foreign governmental unit; (3) or in the stocks or stock equivalents or obligations of foreign corporations or business trusts not qualifying for investment under subdivision 12, if the obligations, stocks or stock equivalents are listed or regularly traded on the London, Paris, Zurich, or Tokyo stock exchange or any similar regular securities exchange not disapproved by the commissioner within 30 days' following notice from the company of its intention to invest in these securities. Subd. 22. Personal property under lease. Personal property for intended lease or rental in the United States or Canada. A company may not invest more than five percent of its total admitted assets under this subdivision. In cases where the asset leased would otherwise be nonadmitted, the asset or associated lease is nonadmitted. Subd. 23. Collateral loans. Obligations having adequate security if: (a) the collateral is legally assigned or delivered to the company; (b) the company has the right to declare the obligation immediately due and payable if the security thereafter depreciates to the point where the investment would not qualify under paragraph (c); provided, that additional qualifying security may be pledged to allow the investment to remain qualified at its face value; (c) the collateral must at the time of delivery or assignment have a market value of at least, in the case of cash, or a letter of credit meeting the requirements of subdivision 11, paragraph (f), equal to and, in all other cases, 1-1/4 times the amount of the unpaid balance of the obligations. A collateral loan made by a company to its parent corporation or an affiliated party must be secured by collateral: (i) with a market value equal to the amount of the unpaid balance of the obligations, and (ii) which is issued or guaranteed by the United States of America or an agency or an instrumentality thereof, or any state or territory thereof, and is secured by the full faith and credit of the United States of America or any state or territory thereof. A company may not invest more than five percent of its total admitted assets under this subdivision. Subd. 24. Options. (a) A company may sell exchange-traded call options against stocks or other securities owned by the company and may purchase exchange-traded call options in a closing transaction against a call option previously written by the company. (b) A company may purchase or sell other exchange-traded call options and may sell or purchase exchange-traded put options only if, to the extent and on terms and conditions the commissioner determines to be consistent with the purposes of this section. Subd. 24a.  [Repealed, 1999 c 177 s 88] Subd. 25. Unrestricted surplus. A company may invest its unrestricted surplus, in securities or property of any kind, without restriction or limitation except as may be imposed on business corporations in general. Subd. 25a. Replication transactions. An insurer engaging in replication transactions shall include all replicated investment positions in calculating compliance with the limitations on investments applicable to the insurer. Replication transactions are permitted only under the authority of subdivision 25. An insurer may invest its unrestricted surplus in a replication transaction only to the extent that the replicated investment position does not cause the total positions represented by the unrestricted surplus to be greater than the total positions represented by the unrestricted surplus as would be permitted in the absence of the replicated investment position. Subd. 26. Rules. (a) The commissioner may adopt appropriate rules to carry out the purpose and provisions of this section. (b) A company may make qualified investments in any other type of investment or exceeding any limitations of quality, quantity, or percentage of admitted assets contained in this section with the written order of the commissioner. This approval is at the discretion of the commissioner, provided that the additional investments allowed by the commissioner's written order may not exceed five percent of the company's admitted assets. (c) Nothing authorized in this subdivision negates or reduces the investment authority granted in subdivisions 1 to 25. History:  1967 c 395 art 1 s 11; 1969 c 7 s 14-16; 1969 c 494 s 5-11; 1974 c 64 s 4,5; 1978 c 465 s 5; 1981 c 211 s 9-26,42; 1Sp1981 c 4 art 4 s 6,7; 1982 c 424 s 10,11; 1982 c 622 s 1; 1983 c 289 s 114 subd 1; 1983 c 340 s 1-8; 1984 c 382 s 3; 1984 c 655 art 1 s 92; 1Sp1985 c 16 art 2 s 17; 1986 c 444; 1987 c 189 s 1,2; 1991 c 325 art 8 s 1-17; art 10 s 6; 1992 c 540 art 2 s 5,6; 1993 c 13 art 2 s 1; 1993 c 299 s 1; 1994 c 425 s 2; 1995 c 214 s 5,6; 1996 c 446 art 2 s 5; 2000 c 350 s 1; 2001 c 131 s 1,2; 2001 c 215 s 3; 2008 c 240 s 6; 2019 c 50 art 1 s 16
60A.112 INVESTMENT POLICY REQUIRED. Each domestic company must have a written investment policy, designed to provide guidance for investment decisions by management. The policy must be approved by its board of directors. The policy must be reviewed by the company's board of directors and reapproved no less often than once every 12 months. The investment policy must address asset type diversification, diversification within asset types, concentration risks, interest rate risk, liquidity, foreign investments, loans secured by real estate, and investment real estate. The policy must set forth, in detail, company practices relating to internal controls regarding the delegation of investment authority within the company. The board of directors must also determine at least annually the extent to which the company has complied with its investment policy within the preceding 12 months and shall adopt a written determination. The company must file, as an attachment to its annual statement, a certification that: (1) the company has a written investment policy meeting the requirements of this section; (2) the company's board of directors has reviewed and approved or reapproved the policy within the period covered by the annual statement; and (3) the company's board of directors performed the compliance review and made the written determination required by this section for the period covered by the annual statement. A company's failure to meet the requirements of this section does not affect its ability to enforce its legal or equitable rights with respect to its investments. History:  1991 c 325 art 18 s 1; 1992 c 540 art 2 s 7
60A.12 ASSETS AND LIABILITIES. Subdivision 1.  [Repealed, 2000 c 350 s 16] Subd. 2.  [Repealed, 1991 c 325 art 8 s 18] Subd. 3.  [Repealed, 2000 c 350 s 16] Subd. 4.  [Repealed, 2000 c 350 s 16] Subd. 5. Loss reserves. When, in the judgment of the commissioner, the loss reserves, calculated in accordance with statutory accounting practices as set forth in the National Association of Insurance Commissioners' accounting practices and procedures manual are inadequate, the commissioner may require the corporation to maintain additional reserves. Subd. 6.  [Repealed, 1978 c 465 s 15] Subd. 7.  [Repealed, 2000 c 350 s 16] Subd. 8.  [Repealed, 2000 c 350 s 16] Subd. 9.  [Repealed, 2000 c 350 s 16] Subd. 10.  [Repealed, 1993 c 299 s 33] History:  1967 c 395 art 1 s 12; 1975 c 359 s 23; 1978 c 465 s 6; 1986 c 444; 1991 c 325 art 16 s 1; 1992 c 540 art 2 s 8; 1992 c 564 art 1 s 17,54; 1993 c 299 s 2; 2000 c 350 s 2
60A.121 VALUATIONS; DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to sections 60A.121 to 60A.127. Subd. 2. Commercial mortgage loan. "Commercial mortgage loan" means a loan by an insurer secured by a mortgage on commercial real estate. "Commercial mortgage loan" does not include loans secured by residential real estate containing four or fewer dwelling units or agricultural real estate. Subd. 2a. Contractual terms. "Contractual terms" means the principal and interest payments of the commercial mortgage loan as scheduled in the mortgage agreement. Subd. 3. Delinquent mortgage loan. "Delinquent mortgage loan" means a loan 90 days delinquent on a required payment of principal or interest. Subd. 4. Distressed mortgage loan. "Distressed mortgage loan" means a loan, other than a delinquent loan, that is determined by the management of the insurer, in the exercise of its prudent investment judgment, to involve circumstances that create a reasonable probability that the loan may become a delinquent mortgage loan or a mortgage loan in foreclosure. Subd. 5. Independent appraiser. "Independent appraiser" means a person not employed by the insurer, by an affiliate of the insurer, or by an investment advisor to the insurer who develops and communicates real estate appraisals and holds a current, valid license issued under section 82B.08, or a similar law enacted by another state. Subd. 6. Internal appraisal. "Internal appraisal" means an appraisal to determine current market value made by an internal appraiser and based upon an evaluation of: (1) the property based upon a physical inspection of the premises; (2) the current and expected stabilized cash flow generated by the property; (3) the current and expected stabilized market rents in the geographic market where the property is located; and (4) the current and stabilized occupancy rates for the geographic market where the property is located. Subd. 7. Internal appraiser. "Internal appraiser" means an individual: (1) employed by an insurer, by an affiliate of the insurer, or by an investment advisor to an insurer; (2) who has training and experience qualifying the individual to appraise the value of commercial real estate; (3) whose direct or indirect compensation is not dependent upon the outcome of the appraisals performed under sections 60A.121 to 60A.126; and (4) who has direct reporting access to the chief investment officer of the insurer. Subd. 8. Insurer. "Insurer" means a domestic insurance company. Subd. 9. Mortgage loan in foreclosure. "Mortgage loan in foreclosure" means (1) a loan in the process of foreclosure including the time required for expiration of any equitable or statutory redemption rights; (2) a loan to a mortgagor who is the subject of a bankruptcy petition and who is not making payments according to the contractual terms; or (3) a loan secured by a mortgage on real estate that is subject to a senior mortgage or other lien that is being foreclosed. Subd. 10. Performing mortgage loan. "Performing mortgage loan" means a mortgage loan current in payment and not in distress. Subd. 10a. Permanently impaired. A commercial mortgage loan will be "permanently impaired" when, based on current information and events, it is probable that an insurer will be unable to collect all amounts due according to the contractual terms. Subd. 11. Real estate owned. "Real estate owned" means real property owned and acquired by an insurer through or in lieu of foreclosure and as to which all equitable or statutory rights of redemption have expired. Subd. 12. Restructured mortgage loan. "Restructured mortgage loan" means a loan where: (1) material delinquent payments or accrued interest are capitalized and added to the balance of an outstanding loan; or (2) the insurer has abated or reduced interest payments below market rates existing at the date of restructuring. History:  1991 c 325 art 19 s 1; 2000 c 350 s 3-5; 2011 c 76 art 1 s 4
60A.122 REQUIRED WRITTEN PROCEDURES FOR VALUATIONS. An insurer shall establish written procedures, approved by the company's board of directors, for the valuation of commercial mortgage loans and real estate owned. The procedures must be made available to the commissioner upon request. The commissioner shall review the insurer's compliance with the procedures in any examination of the insurer under section 60A.031. History:   1991 c 325 art 19 s 2 
60A.123 VALUATION PROCEDURE. Subdivision 1. Requirement. An insurer shall value its commercial mortgage loans and real estate acquired through foreclosure of commercial mortgage loans as provided in this section for the purpose of establishing a valuation allowance or fair values of the investments and for statutory accounting purposes. Subd. 2. Performing mortgage loan. A performing mortgage loan must be carried at its amortized acquisition cost. Subd. 3. Distressed mortgage loan. (a) The insurer shall make an evaluation of the appropriate fair value of its commercial mortgage loans which it classifies as distressed mortgage loans. The fair value must be based upon one or more of the following procedures: (1) an internal appraisal; (2) an appraisal made by an independent appraiser; (3) the value of guarantees or other credit enhancements related to the loan. (b) The insurer will determine the fair value of its distressed mortgage loans through an evaluation of each specific distressed mortgage loan. The fair value must be based upon an internal appraisal or an appraisal conducted by an independent appraiser. (c) For distressed mortgage loans, the insurer shall measure impairment based on the fair value of the collateral less estimated costs to obtain and sell. A valuation allowance should be established for the difference between the adjusted fair value of the collateral and the amortized acquisition cost of its distressed mortgage loans. Subd. 4. Delinquent mortgage loan. (a) The insurer shall make an evaluation of the appropriate fair value of each delinquent mortgage loan. The fair value must be based upon one or more of the following procedures: (1) an internal appraisal; (2) an appraisal by an independent appraiser; (3) the value of guarantees or other credit enhancements related to the loan. (b) The insurer shall either take a charge against its surplus or establish a reserve for the difference between the fair value and the amortized acquisition cost of its delinquent mortgage loans. Subd. 5. Restructured mortgage loan. (a) The insurer shall make an evaluation of the appropriate fair value of each restructured mortgage loan. The fair value must be based upon one or more of the following procedures: (1) an internal appraisal; (2) an appraisal by an independent appraiser; (3) the value of guarantees or other credit enhancements related to the loan. (b) The insurer shall measure impairment based on the fair value of the collateral less estimated costs to obtain and sell. The difference between the adjusted fair value of the collateral and other assets received and the amortized acquisition cost of its restructured mortgage loans must be recorded as a direct write-down and a new cost basis established. Subd. 6. Mortgage loan in foreclosure. (a) The insurer shall make an evaluation of the appropriate fair value of each mortgage loan in foreclosure. The fair value must be based upon an appraisal made by an independent appraiser and must be adjusted for additional expenses, such as insurance, taxes, and legal fees that have been imposed to protect the investment or to obtain clear title to the property to the extent these amounts are expected to be recoverable from the disposition of the property. (b) The insurer shall record as a direct write-down the difference between the fair value and the amortized acquisition cost of its mortgage loans in the process of foreclosure. Subd. 7. Real estate owned. (a) The insurer shall make an evaluation of the appropriate fair value of real estate owned. The fair value must be based upon an appraisal made by an independent appraiser and must be adjusted for additional expenses, such as insurance, taxes, and legal fees that have been imposed to protect the investment or to obtain clear title to the property to the extent these amounts are expected to be recoverable from the disposition of the property. (b) The insurer shall record as a direct write-down the difference between the fair value and the amortized acquisition cost of real estate owned. History:  1991 c 325 art 19 s 3; 2000 c 350 s 6
60A.124 INDEPENDENT AUDIT. The audit report of the independent certified public accountant that performs the audit of an insurer's annual statement as required under section 60A.1291, subdivision 2, should contain a statement as to whether anything, in connection with their audit, came to their attention that caused them to believe that the insurer failed to adopt and consistently apply the valuation procedure as required by sections 60A.122 and 60A.123. History:  1991 c 325 art 19 s 4; 1992 c 540 art 2 s 9; 1995 c 258 s 4; 2009 c 37 art 3 s 10
60A.125 APPRAISAL BY INDEPENDENT APPRAISER. Subdivision 1. Mortgage loans in the process of foreclosure. An insurer may rely upon an appraisal by an independent appraiser to determine the carrying value of mortgage loans in the process of foreclosure only if the date of the appraisal is within six months of the date the foreclosure procedure is begun. If no appraisal exists, the insurer shall acquire an appraisal within six months after the foreclosure proceeding has begun. Subd. 2. Real estate owned. An insurer may rely upon an appraisal by an independent appraiser to determine the carrying value of real estate owned only if the date of the appraisal is within six months of the date when title to the property was acquired. If no appraisal exists, the insurer shall acquire an appraisal within six months after title to the property is acquired. Subd. 3.  [Repealed, 2000 c 350 s 16] History:   1991 c 325 art 19 s 5 
60A.126 REPORTS TO BOARD; VALUATIONS. The management of the insurer shall make periodic reports, at least annually, to its board of directors, or an appropriate committee of the board, as to the application of the insurer's valuation procedures adopted under sections 60A.121 to 60A.127. History:   1991 c 325 art 19 s 6 
60A.127 INDEPENDENT APPRAISALS OF CERTAIN PROPERTIES. Subdivision 1. Random sample appraisal requirement. Each domestic insurer that does not obtain independent appraisals of all distressed, delinquent, and restructured mortgage loans and use such appraisals to determine the carrying values for its annual statement shall obtain independent appraisals of a random sample of those loans for which it did not obtain and use such appraisals. The independent appraisals must be obtained by the insurer no later than 60 days after the filing of the insurer's annual statement. The loans to be sampled do not include loans for which the insurer determined the carrying value on the basis of guarantees or other credit enhancements. Subd. 2. Sampling procedure; rules. The commissioner may adopt rules specifying the percentage of distressed, delinquent, and restructured loans for which the insurer must obtain an independent appraisal. The percentage may vary between insurers or types of loans and may apply to the number of loans, the dollar value of loans, or both. The rules may also specify a procedure for determining how to identify the specific loans for which an appraisal is required. The commissioner may adopt under this subdivision only rules that would require sampling no less extensive than that required by subdivision 3. Subd. 3. Statutory sampling procedure. (a) Unless and until rules authorized by subdivision 2 are adopted, each domestic insurer must: (1) obtain an independent appraisal of five percent of its distressed, delinquent, or restructured loans required to be sampled under subdivision 1; and (2) establish a uniform system of assigning sequential numbers to its distressed, delinquent, or restructured loans based upon the date on which a loan first enters one of those categories, and then obtain an independent appraisal of every 20th loan required to be sampled under subdivision 1, beginning with the tenth loan or with the loan having another number that the commissioner may announce on or within five business days after the due date for filing of the annual statement. (b) A domestic insurer may use a sampling procedure different from that described in paragraph (a) with the prior approval of the commissioner. The commissioner may grant such approval only if the different procedure would result in a sampling that is at least as accurate and as extensive under the circumstances as the method required by paragraph (a). Subd. 4. Record keeping; reporting. The independent appraisals must be kept in the insurer's records and must be available to the commissioner upon request. Each insurer must file with the commissioner an annual report listing each mortgage loan for which the insurer obtained an independent appraisal under this section and showing for each of those loans the appraisal value, the carrying value determined by the insurer, and other information required by the commissioner. The report must be filed with the commissioner no later than 120 days after the filing of the annual report. Subd. 5. Additional requirements. If the commissioner determines, on the basis of the report of independent appraisals required by subdivision 4, that the carrying values shown on the annual statement, determined by methods other than an independent appraisal, overstate the market value of the loans required to be sampled, the commissioner may require any of the following procedures: (1) independent appraisals of additional loans from the loans required to be sampled; (2) filing of a supplement to, or a revision of, the annual statement, showing revised carrying values for all or any appropriate portion of the loans required to be sampled; and (3) a second independent appraisal for any loan for which an independent appraisal was obtained under this section. Subd. 6. Selection of independent appraiser. The insurer shall not obtain more than one-third of the independent appraisals required under this section from any one appraiser or from any one firm. Subd. 7. Powers in this section not limiting. This section does not limit any powers otherwise available to the commissioner. History:   1991 c 325 art 19 s 7 
60A.1285 OTHER IMPAIRMENTS. If distressed or delinquent mortgage loans being valued according to section 60A.123, subdivisions 3 and 4, are determined to be permanently impaired, a direct write-down must be recognized as a realized loss, and a new cost basis established. History:   2000 c 350 s 7 
60A.1291 ANNUAL AUDIT. Subdivision 1. Definitions. The definitions in this subdivision apply to this section. (a) "Accountant" and "independent public accountant" mean an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants and in all states in which the accountant or firm is licensed or is required to be licensed to practice. For Canadian and British companies, the term means a Canadian-chartered or British-chartered accountant. (b) "Affiliate" or "affiliated" means a person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with a person. (c) "Audit committee" means a committee or equivalent body established by the board of directors of an entity for the purpose of overseeing the accounting and financial reporting processes of an insurer or group of insurers, the internal audit function of an insurer or group of insurers, if applicable, and external audits of financial statements of the insurer or group of insurers. The audit committee of any entity that controls a group of insurers may be deemed to be the audit committee for one or more of these controlled insurers solely for the purposes of this section at the election of the controlling person under subdivision 15, paragraph (e). If an audit committee is not designated by the insurer, the insurer's entire board of directors constitutes the audit committee. (d) "Audited financial report" means the report described in subdivision 4. (e) "Indemnification" means an agreement of indemnity or a release from liability where the intent or effect is to shift or limit in any manner the potential liability of the person or firm for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing of other misrepresentations made by the insurer or its representatives. (f) "Independent board member" has the same meaning as described in subdivision 15, paragraph (c). (g) "Internal audit function" means a person or persons that provide independent, objective and reasonable assurance designed to add value and improve an organization's operations and accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. (h) "Internal control over financial reporting" means a process effected by an entity's board of directors, management, and other personnel designed to provide reasonable assurance regarding the reliability of the financial statements, for example, those items specified in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), and includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements, for example, those items specified in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements, for example, those items specified in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c). (i) "SEC" means the United States Securities and Exchange Commission. (j) "Section 404" means Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC's rules and regulations promulgated under it. (k) "Section 404 report" means management's report on "internal control over financial reporting" as defined by the SEC and the related attestation report of the independent certified public accountant as described in paragraph (a). (l) "SOX compliant entity" means an entity that either is required to be compliant with, or voluntarily is compliant with, all of the following provisions of the Sarbanes-Oxley Act of 2002: (i) the preapproval requirements of Section 201 (section 10A(i) of the Securities Exchange Act of 1934); (ii) the audit committee independence requirements of Section 301 (section 10A(m)(3) of the Securities Exchange Act of 1934); and (iii) the internal control over financial reporting requirements of Section 404 (Item 308 of SEC Regulation S-K). Subd. 2. Filing requirements. Every insurance company doing business in this state, including fraternal benefit societies, reciprocal exchanges, service plan corporations licensed pursuant to chapter 62C, and legal service plans licensed pursuant to chapter 62G, unless exempted by the commissioner pursuant to subdivision 9, paragraph (a), or by subdivision 18, shall have an annual audit of the financial activities of the most recently completed calendar year performed by an independent certified public accountant, and shall file the report of this audit with the commissioner on or before June 1 for the immediately preceding year ending December 31. The commissioner may require an insurer to file an audited financial report earlier than June 1 with 90 days' advance notice to the insurer. Extensions of the June 1 filing date may be granted by the commissioner for 30-day periods upon a showing by the insurer and its independent certified public accountant of the reasons for requesting the extension and a determination by the commissioner of good cause for the extension. The request for extension must be submitted in writing not less than ten days before the due date in sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension. If an extension is granted in accordance with this subdivision, a similar extension of 30 days is granted to the filing of management's report of internal control over financial reporting. Every insurer required to file an annual audited financial report pursuant to this subdivision shall designate a group of individuals as constituting its audit committee. The audit committee of an entity that controls an insurer may be deemed to be the insurer's audit committee for purposes of this subdivision at the election of the controlling person. Subd. 3. Exemptions. Foreign and alien insurers filing audited financial reports in another state under the other state's requirements of audited financial reports which have been found by the commissioner to be substantially similar to these requirements are exempt from this section if a copy of the audited financial report, communication of internal control related matters noted in an audit, accountant's letter of qualifications, and report on significant deficiencies in internal controls, which are filed with the other state, are filed with the commissioner in accordance with the filing dates specified in subdivision 2 (Canadian insurers may submit accountants' reports as filed with the Canadian Dominion Department of Insurance); and a copy of any notification of adverse financial condition report filed with the other state is filed with the commissioner within the time specified in subdivision 11. Foreign or alien insurers required to file management's report of internal control over financial reporting in another state are exempt from filing the report in this state provided the other state has substantially similar reporting requirements and the report is filed with the commissioner of the other state within the time specified. This subdivision does not prohibit or in any way limit the commissioner from ordering, conducting, and performing examinations of insurers under the authority of this chapter. Subd. 4. Contents of annual audit; financial report. (a) The annual audited financial report must report, in conformity with statutory accounting practices required or permitted by the commissioner of insurance of the state of domicile, the financial position of the insurer as of the end of the most recent calendar year and the results of its operations, cash flows, and changes in capital and surplus for the year ended. The annual audited financial report must include: (1) a report of an independent certified public accountant; (2) a balance sheet reporting admitted assets, liabilities, capital, and surplus; (3) a statement of operations; (4) a statement of cash flows; (5) a statement of changes in capital and surplus; and (6) notes to the financial statements. (b) The notes required under paragraph (a) are those required by the appropriate National Association of Insurance Commissioners (NAIC) annual statement instructions and National Association of Insurance Commissioners Accounting Practices and Procedures Manual and include reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed under section 60A.13, subdivision 1, with a written description of the nature of these differences. (c) The financial statements included in the audited financial report must be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual statement of the insurer filed with the commissioner. The financial statement must be comparative, presenting the amounts as of December 31 of the current year and the amounts as of the immediately preceding December 31. In the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted. The amounts may be rounded to the nearest $1,000, and all immaterial amounts may be combined. Subd. 5. Designation of independent certified public accountant. Each insurer required by this section to file an annual audited financial report must notify the commissioner in writing of the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit within 60 days after becoming subject to the annual audit requirement. The insurer shall obtain from the accountant a letter which states that the accountant is aware of the provisions that relate to accounting and financial matters in the insurance laws and the rules of the insurance regulatory authority of the state of domicile. The letter shall affirm that the accountant will express an opinion on the financial statements in terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by that insurance regulatory authority, specifying the exceptions believed to be appropriate. A copy of the accountant's letter shall be filed with the commissioner. Subd. 6. Report of disagreements. If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall notify the commissioner of this event within five business days. Within ten business days of this notification, the insurer shall also furnish the commissioner with a separate letter stating whether in the 24 months preceding this event there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of the former accountant, would have caused that person to make reference to the subject matter of the disagreement in connection with the opinion on the financial statements. The disagreements required to be reported in response to this subdivision include both those resolved to the former accountant's satisfaction and those not resolved to the former accountant's satisfaction. Disagreements contemplated by this subdivision are those disagreements between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also in writing request the former accountant to furnish a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for any disagreement. The insurer shall furnish this responsive letter from the former accountant to the commissioner together with its own. Subd. 7. Qualifications of independent certified public accountant. (a) The commissioner shall not recognize any person or firm as a qualified independent certified public accountant that is not in good standing with the American Institute of Certified Public Accountants and in all states in which the accountant is licensed or is required to be licensed to practice, or for a Canadian or British company, that is not a chartered accountant, or that has either directly or indirectly entered into an agreement of indemnity or release from liability (collectively referred to as an indemnification agreement) with respect to the audit of the insurer. Except as otherwise provided, an independent certified public accountant must be recognized as qualified as long as the person conforms to the standards of the person's profession, as contained in the Code of Professional Conduct of the American Institute of Certified Public Accountants and the Code of Professional Conduct of the Minnesota Board of Public Accountancy or similar code and the person is properly licensed in good standing with all required state boards of accountancy. (b) The lead or coordinating audit partner, having primary responsibility for the audit, may not act in that capacity for more than five consecutive years. The person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of five consecutive years. An insurer may make application to the commissioner for relief from this rotation requirement on the basis of unusual circumstances. This application must be made at least 30 days before the end of the calendar year. The commissioner may consider the following factors in determining if the relief should be granted: (1) number of partners, expertise of the partners, or number of insurance clients in the currently registered firm; (2) premium volume of the insurer; or (3) number of jurisdictions in which the insurer transacts business. The insurer shall file, with its annual statement filing, the approval for relief from this paragraph with the states that it is licensed in or doing business in and with the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC. (c) The commissioner shall not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole or in part by an accountant who provides to an insurer, contemporaneously with the audit, the following nonaudit services: (1) bookkeeping or other services related to the accounting records or financial statements of the insurer; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions, or contribution in-kind reports; (4) actuarially oriented advisory services involving the determination of amounts recorded in the financial statements. The accountant may assist an insurer in understanding the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement only if it is reasonable to conclude that the services provided will not be subject to audit procedures during an audit of the insurer's financial statements. An accountant's actuary may also issue an actuarial opinion or certification on an insurer's reserves if the following conditions have been met: (i) neither the accountant nor the accountant's actuary has performed any management functions or made any management decisions; (ii) the insurer has competent personnel, or engages a third-party actuary, to estimate the loss reserves for which management takes responsibility; and (iii) the accountant's actuary tests the reasonableness of the reserves after the insurer's management has determined the amount of the loss reserves; (5) internal audit outsourcing services; (6) management functions or human resources; (7) broker or dealer, investment adviser, or investment banking services; (8) legal services or expert services unrelated to the audit; and (9) any other services that the commissioner determines, by rule, are impermissible. (d) The commissioner shall not recognize as a qualified independent certified public accountant, nor accept any audited financial report, prepared in whole or in part by any natural person who has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, United States Code, title 18, sections 1961 to 1968, or any dishonest conduct or practices under federal or state law, has been found to have violated the insurance laws of this state with respect to any previous reports submitted under this section, or has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this section. (e) The commissioner, after notice and hearing under chapter 14, may find that the accountant is not qualified for purposes of expressing an opinion on the financial statements in the annual audited financial report. The commissioner may require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of this section. Subd. 8. Exemptions to qualifications of certified public accountant. (a) Insurers having direct written and assumed premiums of less than $100,000,000 in any calendar year may request an exemption from subdivision 7, paragraph (c). The insurer shall file with the commissioner a written statement discussing the reasons why the insurer should be exempt from these provisions. If the commissioner finds, upon review of this statement, that compliance with this section would constitute a financial or organizational hardship upon the insurer, an exemption may be granted. (b) A qualified independent certified public accountant who performs the audit may engage in other nonaudit services, including tax services, that are not described in subdivision 7, paragraph (c), only if the activity is approved in advance by the audit committee, in accordance with paragraph (c). (c) All auditing services and nonaudit services provided to an insurer by the qualified independent certified public accountant of the insurer must be preapproved by the audit committee. The preapproval requirement is waived with respect to nonaudit services if the insurer is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a SOX compliant entity or: (1) the aggregate amount of all such nonaudit services provided to the insurer constitutes not more than five percent of the total amount of fees paid by the insurer to its qualified independent certified public accountant during the fiscal year in which the nonaudit services are provided; (2) the services were not recognized by the insurer at the time of the engagement to be nonaudit services; and (3) the services are promptly brought to the attention of the audit committee and approved before the completion of the audit by the audit committee or by one or more members of the audit committee who are the members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee. (d) The audit committee may delegate to one or more designated members of the audit committee the authority to grant the preapprovals required by paragraph (c). The decisions of any member to whom this authority is delegated must be presented to the full audit committee at each of its scheduled meetings. (e) The commissioner shall not recognize an independent certified public accountant as qualified for a particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for that insurer was employed by the independent certified public accountant and participated in the audit of that insurer during the one-year period preceding the date that the most current statutory opinion is due. This paragraph applies only to partners and senior managers involved in the audit. An insurer may make application to the commissioner for relief from this paragraph on the basis of unusual circumstances. (f) The insurer shall file, with its annual statement filing, the approval for relief with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC. Subd. 9. Consolidated or combined audits. (a) The commissioner may allow an insurer to file consolidated or combined audited financial statements required by subdivision 2, in lieu of separate annual audited financial statements, where it can be demonstrated that an insurer is part of a group of insurance companies that has a pooling or 100 percent reinsurance agreement which substantially affects the solvency and integrity of the reserves of the insurer and the insurer cedes all of its direct and assumed business to the pool. An affiliated insurance company not meeting these requirements may be included in the consolidated or combined audited financial statements, if the company's total admitted assets are less than five percent of the consolidated group's total admitted assets. If these circumstances exist, then the company may file a written application to file consolidated or combined audited financial statements. This application must be for a specified period. (b) Upon written application by a domestic insurer, the commissioner may authorize the domestic insurer to include additional affiliated insurance companies in the consolidated or combined audited financial statements. A foreign insurer must obtain the prior written authorization of the commissioner of its state of domicile in order to submit an application for authority to file consolidated or combined audited financial statements. This application must be for a specified period. (c) A consolidated annual audit filing must include a columnar consolidated or combining worksheet. Amounts shown on the audited consolidated or combined financial statement must be shown on the worksheet. Amounts for each insurer must be stated separately. Noninsurance operations may be shown on the worksheet on a combined or individual basis. Explanations of consolidating or eliminating entries must be shown on the worksheet. A reconciliation of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statement of the insurers must be included on the worksheet. Subd. 10. Scope of audit and report of independent certified public accountant. Financial statements furnished pursuant to subdivision 4 must be examined by an independent certified public accountant. The audit of the insurer's financial statements must be conducted in accordance with generally accepted auditing standards. In accordance with AICPA Statement on Auditing Standards (SAS) No. 109, Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement, or its replacement, the independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent required by SAS No. 109, for those insurers required to file a management's report of internal control over financial reporting pursuant to subdivision 17, the independent certified public accountant should consider (as that term is defined in SAS No. 102, Defining Professional Requirements in Statements on Auditing Standards or its replacement) the most recently available report in planning and performing the audit of the statutory financial statements. Consideration should be given to other procedures illustrated in the Financial Condition Examiners Handbook promulgated by the National Association of Insurance Commissioners as the independent certified public accountant deems necessary. Subd. 11. Notification of adverse financial condition. The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to provide written notice within five business days to the board of directors of the insurer or its audit committee of any determination by that independent certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under audit or that the insurer does not meet the minimum capital and surplus requirement of sections 60A.07, 66A.32, and 66A.33 as of that date. An insurer required to file an annual audited financial report who received a notification of adverse financial condition from the accountant shall file a copy of the notification with the commissioner within five business days of the receipt of the notification. The insurer shall provide the independent certified public accountant making the notification with evidence of the report being furnished to the commissioner. If the independent certified public accountant fails to receive the evidence within the required five-day period, the independent certified public accountant shall furnish to the commissioner a copy of the notification to the board of directors or its audit committee within the next five business days. No independent certified public accountant is liable in any manner to any person for any statement made in connection with this subdivision if the statement is made in good faith in compliance with this subdivision. If the accountant becomes aware of facts which might have affected the audited financial report after the date it was filed, the accountant shall take the action prescribed by AU section 561, Subsequent Discovery of Facts Existing at the Date of the Auditor's Report of the Professional Standards issued by the American Institute of Certified Public Accountants, or its replacement. Subd. 12. Communication of internal control related matters noted in an audit. In addition to the annual audited financial report, each insurer shall furnish the commissioner with a written communication as to any unremediated material weaknesses in its internal control over financial reporting noted during the audit. The communication must be prepared by the accountant within 60 days after the filing of the annual audited financial report, and must contain a description of any unremediated material weakness, as the term material weakness is defined by SAS No. 115, Communicating Internal Control Related Matters Identified in an Audit, or its replacement, as of the December 31 immediately preceding so as to coincide with the audited financial report discussed in subdivision 2 in the insurer's internal control over financial reporting noted by the accountant during the course of their audit of the financial statements. If no unremediated material weaknesses were noted, the communication should so state. The insurer is required to provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communication. Subd. 13. Accountant's letter of qualification. The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report a letter stating that the accountant is independent with respect to the insurer and conforms to the standards of the accountant's profession as contained in the Code of Professional Conduct of the American Institute of Certified Public Accountants and the Code of Professional Conduct of the Minnesota Board of Accountancy or similar code; the background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement and whether each is an independent certified public accountant; that the accountant understands that the annual audited financial report and the opinion on it will be filed in compliance with this statute and that the commissioner will be relying on this information in the monitoring and regulation of the financial position of insurers; that the accountant consents to the requirements of subdivision 14 and that the accountant consents and agrees to make available for review by the commissioner, or the commissioner's designee or appointed agent, the work papers, as defined in subdivision 14; a representation that the accountant is properly licensed in good standing by the appropriate state licensing authorities and is a member in good standing in the American Institute of Certified Public Accountants; and a representation that the accountant complies with subdivision 7. Nothing in this section prohibits the accountant from utilizing staff the accountant deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards. Subd. 14. Availability and maintenance of independent certified public accountant's work papers. Work papers are the records kept by the independent certified public accountant of the procedures followed, tests performed, information obtained, and conclusions reached pertinent to the independent certified public accountant's audit of the financial statements of an insurer. Work papers may include audit planning documents, work programs, analyses, memoranda, letters of confirmation and representation, management letters, abstracts of company documents, and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of the audit of the financial statements of an insurer and that support the accountant's opinion. Every insurer required to file an audited financial report shall require the accountant, through the insurer, to make available for review by the examiners the work papers prepared in the conduct of the audit and any communications related to the audit between the accountant and the insurer. The work papers must be made available at the offices of the insurer, at the offices of the commissioner, or at any other reasonable place designated by the commissioner. The insurer shall require that the accountant retain the audit work papers and communications until the commissioner has filed a report on examination covering the period of the audit but no longer than seven years after the period reported upon, provided retention of the working papers beyond the seven years is not required by other professional or regulatory requirements. In the conduct of the periodic review by the examiners, it must be agreed that photocopies of pertinent audit work papers may be made and retained by the commissioner. These copies shall be part of the commissioner's work papers and must be given the same confidentiality as other examination work papers generated by the commissioner. Subd. 15. Requirements for audit committee. (a) The audit committee must be directly responsible for the appointment, compensation, and oversight of the work of any accountant including resolution of disagreements between management and the accountant regarding financial reporting for the purpose of preparing or issuing the audited financial report or related work pursuant to this section. Each accountant shall report directly to the audit committee. (b) The audit committee of an insurer or group of insurers is responsible for overseeing the insurer's internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by subdivision 15a. (c) Each member of the audit committee must be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to paragraph (f) and subdivision 1, paragraph (c). (d) In order to be considered independent for purposes of this section, a member of the audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory, or other compensatory fee from the entity or be an affiliated person of the entity or any subsidiary of the entity. However, if law requires board participation by otherwise nonindependent members, that law shall prevail and such members may participate in the audit committee and be designated as independent for audit committee purposes, unless they are an officer or employee of the insurer or one of its affiliates. (e) If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the state, may remain an audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity or one year from the occurrence of the event that caused the member to be no longer independent. (f) To exercise the election of the controlling person to designate the audit committee for purposes of this section, the ultimate controlling person shall provide written notice to the commissioners of the affected insurers. Notification must be made timely before the issuance of the statutory audit report and include a description of the basis for the election. The election can be changed through notice to the commissioner by the insurer, which shall include a description of the basis for the change. The election remains in effect for perpetuity, until rescinded. (g) The audit committee shall require the accountant that performs for an insurer any audit required by this section to timely report to the audit committee in accordance with the requirements of SAS No. 114, The Auditor's Communication with Those Charged with Governance, or its replacement, including: (1) all significant accounting policies and material permitted practices; (2) all material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and (3) other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences. (h) If an insurer is a member of an insurance holding company system, the reports required by paragraph (g) may be provided to the audit committee on an aggregate basis for insurers in the holding company system, provided that any substantial differences among insurers in the system are identified to the audit committee. (i) The proportion of independent audit committee members shall meet or exceed the following criteria: (1) for companies with prior calendar year direct written and assumed premiums $0 to $300,000,000, no minimum requirements; (2) for companies with prior calendar year direct written and assumed premiums over $300,000,000 to $500,000,000, majority of members must be independent; and (3) for companies with prior calendar year direct written and assumed premiums over $500,000,000, 75 percent or more must be independent. (j) An insurer with direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000 may make application to the commissioner for a waiver from the requirements of this subdivision based upon hardship. The insurer shall file, with its annual statement filing, the approval for relief from this subdivision with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC. This subdivision does not apply to foreign or alien insurers licensed in this state or an insurer that is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a SOX compliant entity. Subd. 15a. Internal audit function requirements. (a) An insurer is exempt from the requirements of this subdivision if: (1) the insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and (2) if the insurer is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000. (b) The insurer or group of insurers shall establish an internal audit function providing independent, objective, and reasonable assurance to the audit committee and insurer management regarding the insurer's governance, risk management, and internal controls. This assurance shall be provided by performing general and specific audits, reviews, and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations. (c) In order to ensure that internal auditors remain objective, the internal audit function must be organizationally independent. Specifically, the internal audit function will not defer ultimate judgment on audit matters to others, and shall appoint an individual to head the internal audit function who will have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships. (d) The head of the internal audit function shall report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact the internal audit function's independence or effectiveness, material findings from completed audits and the appropriateness of corrective actions implemented by management as a result of audit findings. (e) If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in this section at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level. Subd. 16. Conduct of insurer in connection with the preparation of required reports and documents. (a) No director or officer of an insurer shall, directly or indirectly: (1) make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review, or communication required under this section; or (2) omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review, or communication required under this section. (b) No officer or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence any accountant engaged in the performance of an audit pursuant to this section if that person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading. (c) For purposes of paragraph (b), actions that, "if successful, could result in rendering the insurer's financial statements materially misleading" include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead, or fraudulently influence an accountant: (1) to issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances due to material violations of statutory accounting principles prescribed by the commissioner, generally accepted auditing standards, or other professional or regulatory standards; (2) not to perform audit, review, or other procedures required by generally accepted auditing standards or other professional standards; (3) not to withdraw an issued report; or (4) not to communicate matters to an insurer's audit committee. Subd. 17. Management's report of internal control over financial reporting. (a) Every insurer required to file an audited financial report pursuant to this section that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000 or more shall prepare a report of the insurer's or group of insurers' internal control over financial reporting, as these terms are defined in subdivision 1. The report must be filed with the commissioner along with the communication of internal control related matters noted in an audit described under subdivision 12. Management's report of internal control over financial reporting shall be as of the December 31 immediately preceding. (b) Notwithstanding the premium threshold in paragraph (a), the commissioner may require an insurer to file management's report of internal control over financial reporting if the insurer is in any RBC level event, or meets any one or more of the standards of an insurer deemed to be in hazardous financial condition pursuant to sections 60G.20 to 60G.22. (c) An insurer or a group of insurers that is: (1) directly subject to Section 404; (2) part of a holding company system whose parent is directly subject to Section 404; (3) not directly subject to Section 404 but is a SOX compliant entity; or (4) a member of a holding company system whose parent is not directly subject to Section 404 but is a SOX compliant entity; may file its or its parent's Section 404 report and an addendum in satisfaction of this requirement provided that those internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurer's audited statutory financial statements, consisting of those items included in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), were included in the scope of the Section 404 report. The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurer's audited statutory financial statements, consisting of those items included in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), excluded from the Section 404 report. If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurer's audited statutory financial statements and those internal controls were not included in the scope of the Section 404 report, the insurer or group of insurers may either file (i) a report under this subdivision, or (ii) the Section 404 report and a report under this subdivision for those internal controls that have a material impact on the preparation of the insurer's or group of insurer's audited statutory financial statements not covered by the Section 404 report. (d) Management's report of internal control over financial reporting shall include: (1) a statement that management is responsible for establishing and maintaining adequate internal control over financial reporting; (2) a statement that management has established internal control over financial reporting and an assertion, to the best of management's knowledge and belief, after diligent inquiry, as to whether its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles; (3) a statement that briefly describes the approach or processes by which management evaluated the effectiveness of its internal control over financial reporting; (4) a statement that briefly describes the scope of work that is included and whether any internal controls were excluded; (5) disclosure of any unremediated material weaknesses in the internal control over financial reporting identified by management as of the December 31 immediately preceding. Management is not permitted to conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weaknesses in its internal control over financial reporting; (6) a statement regarding the inherent limitations of internal control systems; and (7) signatures of the chief executive officer and the chief financial officer or equivalent position or title. (e) Management shall document and make available upon financial condition examination the basis upon which its assertions, required in paragraph (d), are made. Management may base its assertions, in part, upon its review, monitoring, and testing of internal controls undertaken in the normal course of its activities. (f) Management has discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost-effective manner and, as such, may include assembly of or reference to existing documentation. (g) Management's report on internal control over financial reporting, required by paragraph (a), and any documentation provided in support of the report during the course of a financial condition examination must be kept confidential by the Department of Commerce. Subd. 18. Exemptions. (a) Upon written application of any insurer, the commissioner may grant an exemption from compliance with the provisions of this section. In order to receive an exemption, an insurer must demonstrate to the satisfaction of the commissioner that compliance would constitute a financial or organizational hardship upon the insurer. An exemption may be granted at any time and from time to time for specified periods. Within ten days from the denial of an insurer's written request for an exemption, the insurer may request in writing a hearing on its application for an exemption. This hearing must be held in accordance with chapter 14. Upon written application of any insurer, the commissioner may permit an insurer to file annual audited financial reports on some basis other than a calendar year basis for a specified period. An exemption may not be granted until the insurer presents an alternative method satisfying the purposes of this section. Within ten days from a denial of a written request for an exemption, the insurer may request in writing a hearing on its application. The hearing must be held in accordance with chapter 14. (b) This section applies to all insurers, unless otherwise indicated, required to file an annual audit by subdivision 2, except insurers having less than $1,000,000 of direct written premiums in this state in any calendar year and fewer than 1,000 policyholders or certificate holders of directly written policies nationwide at the end of the calendar year, are exempt from this section for that year, unless the commissioner makes a specific finding that compliance is necessary for the commissioner to carry out statutory responsibilities, except that insurers having assumed premiums from reinsurance contracts or treaties of $1,000,000 or more are not exempt. (c) If an insurer or group of insurers that is exempt from the subdivision 15a requirements no longer qualifies for that exemption, it shall have one year after the year the threshold is exceeded to comply with the requirements. Subd. 19. Canadian and British companies. (a) In the case of Canadian and British insurers, the annual audited financial report means the annual statement of total business on the form filed by these companies with their domiciliary supervision authority and duly audited by an independent chartered accountant. (b) For these insurers the letter required in subdivision 5 shall state that the accountant is aware of the requirements relating to the annual audited statement filed with the commissioner under subdivision 2, and shall affirm that the opinion expressed is in conformity with those requirements. Subd. 20. Commercial mortgage loan valuation procedures. A report of the independent certified public accountant that performs the audit of an insurer's annual statement as required under subdivision 2 shall be filed and contain a statement as to whether anything in connection with the audit came to the accountant's attention that caused the accountant to believe that the insurer failed to adopt and consistently apply the valuation procedures as required by sections 60A.122 and 60A.123. Subd. 21. Examinations. (a) The commissioner or a designated representative shall determine the nature, scope, and frequency of examinations under this section conducted by examiners under section 60A.031. These examinations may cover all aspects of the insurer's assets, condition, affairs, and operations and may include and be supplemented by audit procedures performed by independent certified public accountants. Scheduling of examinations will take into account all relevant matters with respect to the insurer's condition, including results of the National Association of Insurance Commissioners, Insurance Regulatory Information Systems, changes in management, results of market conduct examinations, and audited financial reports. The type of examinations performed by examiners under this section must be compliance examinations, targeted examinations, and comprehensive examinations. (b) Compliance examinations will consist of a review of the accountant's work papers defined under this section and a general review of the insurer's corporate affairs and insurance operations to determine compliance with the Minnesota insurance laws and the rules of the Department of Commerce. The examiners may perform alternative or additional examination procedures to supplement those performed by the accountant when the examiners determine that the procedures are necessary to verify the financial condition of the insurer. (c) Targeted examinations may cover limited areas of the insurer's operations as the commissioner may deem appropriate. (d) Comprehensive examinations will be performed when the report of the accountant as provided for in subdivision 7, paragraph (b), the notification required by subdivision 7, paragraph (c), the results of compliance or targeted examinations, or other circumstances indicate in the judgment of the commissioner or a designated representative that a complete examination of the condition and affairs of the insurer is necessary. (e) Upon completion of each targeted, compliance, or comprehensive examination, the examiner appointed by the commissioner shall make a full and true report on the results of the examination. Each report shall include a general description of the audit procedures performed by the examiners and the procedures of the accountant that the examiners may have utilized to supplement their examination procedures and the procedures that were performed by the registered independent certified public accountant if included as a supplement to the examination. Subd. 22. Penalties. An annual statement, report, or document related to the business of insurance must not be filed with the commissioner or issued to the public if it is signed by anyone who is represented in the instrument as an "accountant," unless the person is qualified as defined by this section. A violation of this subdivision is a violation of section 72A.19 and punishable in accordance with section 72A.25. History:  2009 c 37 art 3 s 11; 2019 c 26 art 1 s 1-4
60A.1295 ACTUARIAL OPINION OF RESERVES AND SUPPORTING DOCUMENTATION. Subdivision 1. Statement of actuarial opinion. Every property and casualty insurance company doing business in this state, unless otherwise exempted by the domiciliary commissioner, shall annually submit the opinion of an appointed actuary entitled "Statement of Actuarial Opinion." This opinion must be filed in accordance with the appropriate National Association of Insurance Commissioners (NAIC) Property and Casualty Annual Statement Instructions. Subd. 2. Actuarial opinion summary. (a) Every property and casualty insurance company domiciled in this state that is required to submit a statement of actuarial opinion shall annually submit an actuarial opinion summary, written by the company's appointed actuary. This actuarial opinion summary must be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and must be considered as a document supporting the actuarial opinion required in subdivision 1. (b) A company licensed but not domiciled in this state shall provide the actuarial opinion summary upon request. Subd. 3. Actuarial report and workpapers. (a) An actuarial report and its underlying workpapers as required by the appropriate NAIC Property and Casualty Annual Statement Instructions must be prepared to support each actuarial opinion. (b) If the insurance company fails to provide a supporting actuarial report and/or workpapers at the request of the commissioner or the commissioner determines that the supporting actuarial report or workpapers provided by the insurance company are otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting actuarial report or workpapers. Subd. 4. Liability. The appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision, or conduct with respect to the actuary's opinion, except in cases of fraud or willful misconduct on the part of the appointed actuary. History:   2013 c 135 art 3 s 6 
60A.1296 CONFIDENTIALITY. Subdivision 1. Actuarial opinion; public document. The statement of actuarial opinion must be provided with the annual statement in accordance with the appropriate National Association of Insurance Commissioners (NAIC) Property and Casualty Annual Statement Instructions and must be treated as a public document. Subd. 2. Supporting materials; confidential and privileged. (a) Documents, materials, or other information in the possession or control of the Department of Commerce that are considered an actuarial report, workpapers, or actuarial opinion summary provided in support of the opinion, and any other material provided by the company to the commissioner in connection with the actuarial report, workpapers, or actuarial opinion summary, are confidential data on individuals or protected nonpublic data as defined in section 13.02, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. (b) This provision shall not be construed to limit the commissioner's authority to: (1) release the documents to the Actuarial Board for Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings and the ABCD establishes procedures satisfactory to the commissioner for preserving the confidentiality of the documents; or (2) use the documents, materials, or other information in furtherance of any regulatory or legal action brought as part of the commissioner's official duties. Subd. 3. Protections. Neither the commissioner nor any person who received the documents, materials, or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subdivision 2. Subd. 4. Exceptions. In order to assist in the performance of the commissioner's duties, the commissioner: (1) may share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subdivision 2 with other state, federal, and international regulatory agencies; with the NAIC and its affiliates and subsidiaries; and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information and has the legal authority to maintain confidentiality; (2) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (3) may enter into agreements governing sharing and use of information consistent with subdivisions 2 to 4. Subd. 5. Nonwaiver. No waiver of applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision 4. History:   2013 c 135 art 3 s 7 
60A.13 ANNUAL STATEMENT, INQUIRIES, RENEWAL LICENSES. Subdivision 1. Annual statements required. Every insurance company, including fraternal benefit societies, and reciprocal exchanges, doing business in this state, shall file with the commissioner, annually, on or before March 1, the appropriate verified National Association of Insurance Commissioners' annual statement blank, prepared in accordance with the association's instructions handbook and following those accounting procedures and practices prescribed by the association's accounting practices and procedures manual, unless the commissioner requires or finds another method of valuation reasonable under the circumstances. Another method of valuation permitted by the commissioner must be at least as conservative as those prescribed in the association's manual. All companies required to file an annual statement under this subdivision may also be required to file with the commissioner and the National Association of Insurance Commissioners a copy of their annual statement in an electronic form prescribed by the commissioner. All Minnesota domestic insurers required to file annual statements under this subdivision must also file quarterly statements with the commissioner for the first, second, and third calendar quarter on or before 45 days after the end of the applicable quarter, prepared in accordance with the association's instruction handbook. All companies required to file quarterly statements under this subdivision may also be required to file the quarterly statements with the commissioner and the National Association of Insurance Commissioners in an electronic form prescribed by the commissioner. In addition, the commissioner may require the filing of any other information determined to be reasonably necessary for the continual enforcement of these laws. The statement may be limited to the insurer's business and condition in the United States unless the commissioner finds that the business conducted outside the United States may detrimentally affect the interests of policyholders in this state. The statements shall also contain a verified schedule showing all details required by law for assessment and taxation. The statement or schedules shall be in the form and shall contain all matters the commissioner may prescribe, and it may be varied as to different types of insurers so as to elicit a true exhibit of the condition of each insurer. Subd. 1a.  [Repealed, 1993 c 375 art 2 s 36] Subd. 2. Commissioner may inquire and require reply under oath. The commissioner may also address to any insurer, including fraternal benefit societies, township mutuals and interinsurance exchanges, or its officers, any inquiry in relation to its transactions or conditions, or any matter connected therewith. Every insurer, or person so addressed, shall reply in writing to such inquiry promptly and truthfully, and such reply shall be verified, if required by the commissioner, by such individual or by such officer or officers of an insurer as the commissioner shall designate. Subd. 3.  [Repealed, 1978 c 793 s 98] Subd. 3a.  [Repealed, 1993 c 299 s 33] Subd. 4.  [Repealed, 1978 c 793 s 98] Subd. 4a.  [Repealed, 2007 c 13 art 2 s 3] Subd. 5. Renewal license. The license issued by the commissioner is perpetual and is considered renewed annually on June 1 upon payment of the renewal license fee, the annual filing fee, and all other fees required by section 60A.14. Subd. 6. Company or agent cannot continue business unless statement is filed. No company shall transact any new business in this state after May 31 in any year unless it shall have previously transmitted its annual statement to the commissioner and filed a copy of its statement with the National Association of Insurance Commissioners. The commissioner may by order annually require that each insurer pay the required fee to the National Association of Insurance Commissioners for the filing of annual statements, but the fee shall not be more than 50 percent greater than the fee set by the National Association of Insurance Commissioners. Failure to file the annual statement with the commissioner or the National Association of Insurance Commissioners is a violation of section 72A.061, subdivision 1. The fee shall be based on the relative premium volume of each insurer. Subd. 7. Exceptions. To file statement. No fraternal benefit society, nor any social corporation paying only sick benefits not exceeding $250 in any one year, or funeral benefits, or aiding those dependent on a member not more than $350, nor any subordinate lodge or council which is, or whose members are, assessed for benefits which are payable by a grand body, shall be required to make such statements. Subd. 8.  [Repealed, 1996 c 446 art 2 s 11] History:  1967 c 395 art 1 s 13; 1978 c 793 s 58; 1981 c 211 s 28-31; 1984 c 592 s 7,8; 1985 c 210 art 1 s 1; 1986 c 444; 1986 c 455 s 6; 1991 c 199 art 1 s 9; 1991 c 325 art 10 s 7; 1992 c 564 art 1 s 18,54; 1993 c 299 s 4,5; 1994 c 425 s 4; 1994 c 426 s 7; 1997 c 187 art 3 s 13; 1999 c 177 s 12; 2005 c 118 s 10
60A.131 OTHER BUSINESS AND INSURANCE INTERESTS, DISCLOSURE. (a) If requested by the commissioner, an insurance company authorized to do business in this state shall disclose to the commissioner any changes in the principal management and directors of the company from that listed on page one of the annual statement within ten days of such change. (b) Every insurance company authorized to do business in this state shall notify the commissioner within ten days after receipt of notice of any acquisition by any person, association or corporation of stock or other equity security in said insurer where such transaction, directly or indirectly, either involves five percent or more of any class of any equity security of said insurer, or such acquisition results in ownership of five percent or more of any equity security of said insurer. (c) All principal management and directors of the company as listed on page one of its annual statement, and any person, association or corporation or any person or persons managing such company under a management contract, who are directly or indirectly the beneficial owners of more than five percent of any class of any equity security of a stock insurer or guaranty fund of a mutual insurer, shall disclose all other interests in excess of five percent which they may have in insurance agencies, other insurance companies, premium finance companies and any other companies whose principal business relates directly to the writing of insurance or the handling of claims, within 30 days following May 21, 1967. Any such interests acquired after May 21, 1967, shall be reported to the commissioner within 30 days. History:  1967 c 609 s 1-4; 1Sp1985 c 10 s 51; 2014 c 222 art 1 s 11
60A.135 REPORT; CERTAIN TRANSACTIONS. Subdivision 1. Requirement. Every insurer domiciled in this state shall file a report with the commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements unless the acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements have been submitted to the commissioner for review, approval, or information purposes pursuant to other provisions of law, rule, or other requirements. Subd. 2. Date due. The report required in subdivision 1 is due within 15 days after the end of the calendar month in which the transactions occur. Subd. 3. Filing. One complete copy of the report, including exhibits or other attachments filed as part of it, must be filed with the National Association of Insurance Commissioners. Subd. 4. Confidentiality. Reports filed with the commissioner pursuant to sections 60A.135 to 60A.137 must be held as nonpublic data as defined in section 13.02, are not subject to subpoena, and may not be made public by the commissioner, the National Association of Insurance Commissioners, or other person, except to insurance departments of other states, without the prior written consent of the insurer to which it pertains. However, the commissioner may publish all or part of a report in the manner the commissioner considers appropriate if, after giving the affected insurer notice and an opportunity to be heard, the commissioner determines that the interest of policyholders, shareholders, or the public will be served by the publication. History:   1995 c 214 s 7 
60A.136 ACQUISITIONS AND DISPOSITIONS OF ASSETS. Subdivision 1. Materiality. No acquisitions or dispositions of assets need be reported pursuant to section 60A.135 if the acquisitions or dispositions are not material. For purposes of sections 60A.135 to 60A.137, a material acquisition (or the aggregate of any series of related acquisitions during any 30-day period) or disposition (or the aggregate of any series of related dispositions during any 30-day period) is one that is nonrecurring and not in the ordinary course of business and involves more than five percent of the reporting insurer's total admitted assets as reported in its most recent statutory statement filed with the commissioner of commerce. Subd. 2. Scope. (a) Asset acquisitions subject to sections 60A.135 to 60A.137 include every purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for this purpose. (b) Asset dispositions subject to sections 60A.135 to 60A.137 include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction, or other disposition. Subd. 3. Information to be reported. (a) The following information is required to be disclosed in a report of a material acquisition or disposition of assets: (1) date of the transaction; (2) manner of acquisition or disposition; (3) description of the assets involved; (4) nature and amount of the consideration given or received; (5) purpose of, or reason for, the transaction; (6) manner by which the amount of consideration was determined; (7) gain or loss recognized or realized by the insurer as a result of the transaction; and (8) name of each person from whom the assets were acquired or to whom they were disposed. (b) Insurers are required to report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers that uses a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is considered to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer's capital and surplus. History:   1995 c 214 s 8 
60A.137 NONRENEWALS, CANCELLATIONS, OR REVISIONS OF CEDED REINSURANCE AGREEMENTS. Subdivision 1. Materiality. (a) No nonrenewals, cancellations, or revisions of ceded reinsurance agreements need be reported pursuant to section 60A.135 if the nonrenewals, cancellations, or revisions are not material. For purposes of sections 60A.135 to 60A.137, a material nonrenewal, cancellation, or revision for: (1) property and casualty business, including accident and health business when written by a property and casualty insurer is one that affects: (i) more than 50 percent of an insurer's ceded written premium; or (ii) more than 50 percent of the insurer's total ceded indemnity and loss adjustment reserves; and (2) life, annuity, and accident and health business, is one that affects more than 50 percent of the total reserve credit taken for business ceded, on an annualized basis as indicated in the insurer's most recently filed statutory statement. (b) With respect to either property and casualty or life, annuity, and accident and health business, either of the following events constitute a material revision that must be reported under section 60A.135: (1) an authorized reinsurer representing more than ten percent of a total cession is replaced by one or more unauthorized reinsurers; or (2) previously established collateral requirements have been reduced or waived for one or more unauthorized reinsurers representing collectively more than ten percent of a total cession. (c) Notwithstanding paragraphs (a) and (b), no filing is required: (1) for property and casualty business, including accident and health business written by a property and casualty insurer if the insurer's total ceded written premium represents, on an annualized basis, less than ten percent of its total written premium for direct and assumed business; or (2) for life, annuity, and accident and health business if the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent of the statutory reserve requirement before any cession. Subd. 2. Information to be reported. (a) The following information is required to be disclosed in a report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements: (1) effective date of the nonrenewal, cancellation, or revision; (2) the description of the transaction with an identification of the initiating entity; (3) purpose of, or reason for, the transaction; and (4) if applicable, the identity of the replacement reinsurers. (b) Insurers are required to report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers that utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is considered to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer's capital and surplus. History:   1995 c 214 s 9 
60A.139 ELECTRONIC NOTICES AND DOCUMENTS. Subdivision 1. Terms defined. In this section, the following words have the meanings given them: (1) "delivered by electronic means" includes: (i) delivery to an email address at which a party has consented to receive notices or documents; or (ii) posting on an electronic network or website accessible via the Internet, mobile application, computer, mobile device, tablet, or other electronic device, together with separate notice of posting, which must be provided by electronic mail to the address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party; and (2) "party" means a recipient of a notice or document required as part of an insurance transaction including, but not limited to, an applicant, an insured, a policyholder, or an annuity contract holder. Subd. 2. Requirements. Subject to subdivision 4, a notice to a party or other document required under applicable law in an insurance transaction or that is to serve as evidence of insurance coverage may be delivered, stored, and presented by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act, chapter 325L. Subd. 3. Equivalent to other required methods. Delivery of a notice or document in accordance with this section is considered equivalent to a delivery method required under applicable law, including delivery by first class mail; first class mail, postage prepaid; certified mail; certificate of mail; or certificate of mailing. Subd. 4. Conditions for electronic delivery. A notice or document may be delivered by electronic means by an insurer to a party under this section if: (1) the party has affirmatively consented to that method of delivery and has not withdrawn the consent; (2) the party, before giving consent, is provided with a clear and conspicuous statement informing the party of: (i) a right or option of the party to have the notice or document provided or made available in paper or another nonelectronic form; (ii) the right of the party to withdraw consent to have a notice or document delivered by electronic means and any fees, conditions, or consequences imposed in the event consent is withdrawn; (iii) whether the party's consent applies: (A) only to the particular transaction as to which the notice or document must be given; or (B) to identified categories of notices or documents that may be delivered by electronic means during the course of the parties' relationship; (iv)(A) the means, after consent is given, by which a party may obtain a paper copy of a notice or document delivered by electronic means; and (B) the fee, if any, for the paper copy; and (v) the procedure a party must follow to withdraw consent to have a notice or document delivered by electronic means and to update information needed to contact the party electronically; (3) the party: (i) before giving consent, is provided with a statement of the hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and (ii) consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means to which the party has given consent; and (4) after consent of the party is given, the insurer, in the event a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies: (i) provides the party with a statement of: (A) the revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means; (B) the right of the party to withdraw consent without the imposition of a fee, condition, or consequence that was not disclosed under clause (2); and (ii) complies with clause (2). Subd. 5. Content or timing not affected. This section does not affect requirements related to content or timing of a notice or document required under applicable law. Subd. 6. Verification or acknowledgement of receipt. If a provision of applicable law requiring a notice or document to be provided to a party expressly requires verification or acknowledgement of receipt of the notice or document, the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgement of receipt. Subd. 7. Failure to obtain consent. The legal effectiveness, validity, or enforceability of a contract or policy of insurance executed by a party may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subdivision 4, clause (3), item (ii). Subd. 8. Withdrawal of consent. (a) A withdrawal of consent by a party does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective. (b) A withdrawal of consent by a party is effective within a reasonable period of time after receipt of the withdrawal by the insurer. (c) Failure by an insurer to comply with subdivision 4, clause (4), may be treated, at the election of the party, as a withdrawal of consent for purposes of this section. Subd. 9. Prior consent. If the consent of a party to receive certain notices or documents in an electronic form is on file with an insurer before August 1, 2013, and, pursuant to this section, an insurer intends to deliver additional notices or documents to the party in an electronic form then, before delivering the additional notices or documents electronically, the insurer shall notify the party of: (1) the notices or documents that may be delivered by electronic means under this section that were not previously delivered electronically; and (2) the party's right to withdraw consent to have notices or documents delivered by electronic means. Subd. 10. Property and casualty policies and endorsements. Notwithstanding any other provisions of this section and of section 60A.08, subdivision 3, standard property and casualty insurance policies and endorsements that do not contain personally identifiable information may be mailed, delivered, or posted on the insurer's website. If the insurer elects to post insurance policies and endorsements on its website in lieu of mailing or delivering them to the insured, it must comply with all of the following conditions: (1) the policy and endorsements must be accessible and remain that way for as long as the policy is in force; (2) after the expiration of the policy, the insurer must archive its expired policies and endorsements for a period of five years and make them available upon request; (3) the policies and endorsements must be posted in a manner that enables the insured to print and save the policy and endorsements using programs or applications that are widely available on the Internet and free to use; (4) the insurer provides the following information in or simultaneously with each declarations page provided at the time of issuance of the initial policy and any renewals of that policy: (i) a description of the exact policy and endorsement forms purchased by the insured; (ii) a method by which the insured may obtain, upon request and without charge, a paper copy of the policy; and (iii) the Internet address where the policy and endorsements are posted; and (5) the insurer provides notice, in the manner it customarily communicates with an insured, of any changes to the forms or endorsements, the insured's right to obtain, upon request and without charge, a paper copy of such forms or endorsements, and the Internet address where such forms or endorsements are posted. Subd. 11. Oral communications. Except as otherwise provided by law, if an oral communication or a recording of an oral communication from a party can be reliably stored and reproduced by an insurer, the oral communication or recording may qualify as a notice or document delivered by electronic means for purposes of this section. If a provision of this title or applicable law requires a signature or notice or document to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by the provision, is attached to or logically associated with the signature, notice, or document. Subd. 12. Effect or other law. This section may not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and National Commerce Act, Public Law 106-229, as amended. Subd. 13. Application. This section does not apply to: (1) a nonprofit health service plan corporation licensed under chapter 62C; (2) a health maintenance organization licensed under chapter 62D; or (3) a health carrier, as defined under section 62A.011, subdivision 2, that is affiliated with a nonprofit health service plan corporation licensed under chapter 62C or a health maintenance organization licensed under chapter 62D. History:   2013 c 130 s 2 
60A.1391 CORPORATE GOVERNANCE ANNUAL DISCLOSURE. Subdivision 1. Scope. (a) Nothing in this section shall be construed to prescribe or impose corporate governance standards and internal procedure beyond that which is required under applicable state corporate law. Nothing in this section shall be construed to limit the commissioner's authority, or the rights or obligations of third parties. (b) The requirements of this section apply to all insurers domiciled in this state. Subd. 2. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Commissioner" means the commissioner of commerce. (c) "Corporate Governance Annual Disclosure (CGAD)" means a confidential report filed by the insurer or insurance group according to this section. (d) "Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in section 60D.15, subdivision 5. (e) "Insurer" has the meaning given in section 60A.705, subdivision 4, except that it does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. (f) "ORSA summary report" means the report filed under section 60D.54. (g) "Senior management" means any corporate officer responsible for reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators and shall include, for example and without limitation, the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operations Officer (COO), Chief Procurement Officer (CPO), Chief Legal Officer (CLO), Chief Information Officer (CIO), Chief Technology Officer (CTO), Chief Revenue Officer (CRO), Chief Visionary Officer (CVO), or any other "C" level executive. Subd. 3. Disclosure and filing requirements. (a) An insurer, or the insurance group of which the insurer is a member, shall, no later than June 1 of each calendar year, submit to the commissioner a Corporate Governance Annual Disclosure (CGAD) that contains the information described in subdivision 4. Notwithstanding any request from the commissioner made pursuant to paragraph (c), if the insurer is a member of an insurance group, the insurer shall submit the report required by this section to the commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC. (b) The CGAD must include a signature of the insurer or insurance group's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer's or the insurance group's board of directors or the appropriate committee thereof. (c) An insurer not required to submit a CGAD under this section shall do so upon the commissioner's request. (d) For purposes of completing the CGAD, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer's or insurance group's risk appetite is determined, or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting. (e) The review of the CGAD and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent Financial Analysis Handbook referenced in paragraph (a). If the CGAD is completed at the insurance group level, then it must be filed with the lead state of the group as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC. In these instances, a copy of the CGAD must also be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer, upon request. (f) Insurers providing information substantially similar to the information required under this section in other documents provided to the commissioner, including proxy statements filed in conjunction with Form B requirements, or other state or federal filings provided to this department shall not be required to duplicate that information in the CGAD, but shall be required to clearly cross-reference the location of the relevant information within the CGAD and attach the referenced document in which the information is included if not already filed with or available to the regulator. (g) Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating where changes have been made. If no changes were made in the information or activities reported by the insurer or insurance group, the filing should so state. Subd. 4. Contents of Corporate Governance Annual Disclosure. (a) The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by this section, provided the CGAD shall contain the material information necessary to permit the commissioner to gain an understanding of the insurer's or group's corporate governance structure, policies, and practices. The commissioner may request additional information deemed material and necessary to provide the commissioner with a clear understanding of the corporate governance policies, the reporting or information system, or controls implementing those policies. Documentation and supporting information shall be maintained and made available upon examination or upon request of the commissioner. (b) The insurer or insurance group shall be as descriptive as possible in completing the CGAD, with inclusion of attachments or example documents that are used in the governance process, as these may provide a means to demonstrate the strengths of their governance framework and practices. (c) The CGAD shall describe the insurer's or insurance group's corporate governance framework and structure including consideration of the following: (1) the board and various committees thereof ultimately responsible for overseeing the insurer or insurance group and the level(s) at which that oversight occurs (e.g., ultimate control level, intermediate holding company, legal entity, etc.). The insurer or insurance group shall describe and discuss the rationale for the current board size and structure; and (2) the duties of the board and each of its significant committees and how they are governed (e.g., bylaws, charters, informal mandates, etc.), as well as how the board's leadership is structured, including a discussion of the roles of Chief Executive Officer and Chairman of the Board within the organization. (d) The insurer or insurance group shall describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors: (1) how the qualifications, expertise, and experience of each board member meet the needs of the insurer or insurance group; (2) how an appropriate amount of independence is maintained on the board and its significant committees; (3) the number of meetings held by the board and its significant committees over the past year as well as the information on director attendance; (4) how the insurer or insurance group identifies, nominates, and elects members to the board and its committees. The discussion should include, for example: (i) whether the nomination committee is in place to identify and select individuals for consideration; (ii) whether term limits are placed on directors; (iii) how the election and reelection processes function; and (iv) whether a board diversity policy is in place and if so, how it functions; and (5) the processes in place for the board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance, including any board or committee training programs that have been put in place. (e) The insurer or insurance group shall describe the policies and practices for directing senior management, including a description of the following factors: (1) any processes or practices (i.e., sustainability standards) to determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, including: (i) identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and (ii) any changes in an officer's or key person's suitability as outlined by the insurer's or insurance group's standards and procedures to monitor and evaluate such changes; (2) the insurer's or insurance group's code of business conduct and ethics, the discussion of which considers, for example: (i) compliance with laws, rules, and regulations; and (ii) proactive reporting of any illegal or unethical behavior; (3) the insurer's or insurance group's processes for performance evaluation, compensation, and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the commissioner to understand how the organization ensures that compensation programs do not encourage or reward excessive risk taking. Elements to be discussed may include, for example: (i) the board's role in overseeing management compensation programs and practices; (ii) the various elements of compensation awarded in the insurer's or insurance group's compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid; (iii) how compensation programs are related to both company and individual performance over time; (iv) whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels; (v) any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and (vi) any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees; and (4) the insurer's or insurance group's plans for CEO and senior management succession. (f) The insurer or insurance group shall describe the processes by which the board, its committees, and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer's business activities, including a discussion of: (1) how oversight and management responsibilities are delegated between the board, its committees, and senior management; (2) how the board is kept informed of the insurer's strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks; and (3) how reporting responsibilities are organized for each critical risk area. The description should allow the commissioner to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the board. This description may include, for example, the following critical risk areas of the insurer: (i) risk management processes (an ORSA Summary Report filer may refer to its ORSA Summary Report pursuant to the Risk Management and Own Risk and Solvency Assessment Model Act); (ii) actuarial function; (iii) investment decision-making processes; (iv) reinsurance decision-making processes; (v) business strategy and finance decision-making processes; (vi) compliance function; (vii) financial reporting and internal auditing; and (viii) market conduct decision-making processes. Subd. 5. Confidentiality. (a) Documents, materials, or other information, including the CGAD, in the possession or control of the department that are obtained by, created by, or disclosed to the commissioner or any other person under this section are recognized by this state as being confidential, protected nonpublic, and containing trade secrets. Those documents, materials, or other information are classified as confidential, protected nonpublic, or both, are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action. However, the commissioner may use the documents, materials, or other information in the furtherance of a regulatory or legal action brought as a part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. Nothing in this section shall be construed to require written consent of the insurer before the commissioner may share or receive confidential documents, materials, or other CGAD-related information pursuant to paragraph (c) below to assist in the performance of the commissioner's regular duties. (b) Neither the commissioner nor any person who received documents, materials, or other CGAD-related information, through examination or otherwise, while acting under the authority of the commissioner, or with whom the documents, materials, or other information are shared pursuant to this section are permitted or required to testify in any private civil action concerning documents, materials, or information subject to this subdivision that are classified as confidential, protected nonpublic, or both. (c) In order to assist in the performance of the commissioner's regulatory duties, the commissioner: (1) may, upon request, share documents, materials, or other CGAD-related information, including the confidential, protected nonpublic, and privileged documents, materials, or information subject to this subdivision including trade secret information or documents, with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in section 60D.215, with the NAIC, and with third-party consultants pursuant to subdivision 7, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, material, or other information and has verified in writing the legal authority to maintain confidentiality; and (2) may receive documents, materials, or other CGAD-related information, including otherwise confidential, protected nonpublic, and privileged documents, materials, or information including trade secret information or documents, from regulatory officials of other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in section 60D.215 and from the NAIC, and shall maintain as confidential, protected nonpublic, or privileged any documents, materials, or information received with notice or the understanding that it is confidential, protected nonpublic, or privileged under the laws of the jurisdiction that is the source of the document, material, or information. (d) The sharing of information and documents by the commissioner pursuant to this section shall not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution, and enforcement of the provisions of this section. (e) No waiver of any applicable privilege or claim of confidentiality in the documents, trade-secret materials, or other CGAD-related information shall occur as a result of disclosure of such CGAD-related information or documents to the commissioner under this subdivision or as a result of sharing as authorized under this section. Subd. 6. NAIC and third-party consultants. (a) The commissioner may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as may be reasonably necessary to assist the commissioner in reviewing the CGAD and related information or the insurer's compliance with this section. (b) Any person retained under paragraph (a) shall be under the direction and control of the commissioner and shall act in a purely advisory capacity. (c) The NAIC and third-party consultants shall be subject to the same confidentiality standards and requirements as the commissioner. (d) As part of the retention process, a third-party consultant shall verify to the commissioner, with notice to the insurer, that it is free of a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this section. (e) A written agreement with the NAIC or a third-party consultant governing sharing and use of information provided pursuant to this section shall contain the following provisions and expressly require the written consent of the insurer prior to making public information provided under this section: (1) specific procedures and protocols for maintaining the confidentiality and security of CGAD-related information shared with the NAIC or a third-party consultant pursuant to this section; (2) procedures and protocols for sharing by the NAIC only with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; (3) a provision specifying that ownership of the CGAD-related information shared with the NAIC or a third-party consultant remains with the department and the NAIC's or third-party consultant's use of the information is subject to the direction of the commissioner; (4) a provision that prohibits the NAIC or a third-party consultant from storing the information shared pursuant to this section in a permanent database after the underlying analysis is completed; (5) a provision requiring the NAIC or third-party consultant to provide prompt notice to the commissioner and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer's CGAD-related information; and (6) a requirement that the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this section. Subd. 7. Sanctions. Any insurer failing, without just cause, to timely file the CGAD as required in this section shall be required to pay a penalty of $1,000 for each day's delay, to be recovered by the commissioner and to be paid into the general fund of this state. The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer. History:   2019 c 26 art 4 s 1 
60A.14 FEES. 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 an application for an initial certification of authority to be admitted to transact business in this state, $1,500; (2) for filing certified copy of certificate of articles of incorporation, $100; (3) for filing annual statement, $225; (4) for filing certified copy of amendment to certificate or articles of incorporation, $100; (5) for filing bylaws, $75 or amendments thereto, $75; (6) 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, $30; (7) for filing forms, rates, and compliance certifications under section 60A.315, $140 per filing, or $125 per filing when submitted via electronic filing system. Filing fees may 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. Subd. 2. Retaliatory provisions. When, by the laws of any other state or nation, any fines, penalties, licenses, or fees additional to, or in excess of, those imposed by this section upon foreign insurance companies and their agents, are imposed upon insurance companies of this state or their agents doing business in such state, the same fines, penalties, licenses, and fees shall be imposed upon all insurance companies of that state and their agents doing business in this state, so long as such laws of such other state remain in force. This subdivision does not apply to agent appointment fees required under subdivision 1, clause (6). History:  1967 c 395 art 1 s 14; 1969 c 7 s 17; 1969 c 291 s 4; 1974 c 5 s 1; 1978 c 470 s 2; 1978 c 793 s 59; 1981 c 307 s 2; 1983 c 289 s 114 subd 1; 1983 c 328 s 3; 1984 c 592 s 9; 1984 c 655 art 1 s 92; 1987 c 358 s 94; 1Sp1989 c 1 art 10 s 2; 1991 c 233 s 42; 1991 c 325 art 10 s 8; 1992 c 513 art 3 s 24; 1994 c 485 s 9; 1994 c 632 art 4 s 23; 1999 c 223 art 2 s 4; 2001 c 117 art 2 s 4; 2001 c 215 s 5; 2002 c 330 s 1; 2002 c 336 s 3; 2005 c 74 s 2; 2005 c 132 s 1; 1Sp2005 c 1 art 4 s 4; 2009 c 37 art 2 s 6; 2013 c 85 art 6 s 2
60A.16 MERGERS AND CONSOLIDATIONS. 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 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. Subd. 2. Procedure to be followed. (1) Plan of merger. The merger or consolidation of insurance corporations can be effected only as a result of a plan of merger adopted, approved, and filed as follows: (a) A resolution containing the plan of merger shall be approved by the affirmative vote of a majority of the directors of the board of each constituent corporation. The plan of merger shall prescribe the terms and conditions of merger or consolidation, and the mode of carrying the same into effect, with such other details and provisions as are deemed necessary. In the case of merging or consolidating stock insurance corporations or stock and mutual insurance corporations, such plan of merger may prescribe that stock of one or more of such corporations shall be converted, in whole or in part, into stock or other securities of a corporation which is not a merging or consolidating corporation or into cash. (b) The plan of merger, or a summary of the plan approved by the commissioner, shall be submitted to the respective shareholders or members, as the case may be, of each constituent corporation, for consideration at a regular meeting or at a special meeting duly called for the purpose of considering and acting upon the plan. Written notice of the meeting, which shall state that the purpose of the meeting is to consider the proposed plan of merger, shall be given to each shareholder or member entitled to vote upon the plan of merger not less than 30 nor more than 60 days before the meeting. The plan of merger must be approved by the affirmative vote of the holders of two-thirds of the voting power of the shareholders or members present or represented at the meeting of each constituent corporation; provided, however, that in the case of a merger, except one in which any shares of the surviving insurance corporation are to be converted into shares or other securities of another corporation or into cash, the agreement need not be submitted to the shareholders or members of that one of the insurance corporations into which it has been agreed the others shall be merged. Upon receiving the approval of the shareholders or members of each constituent corporation, articles of merger shall be prepared that contain the plan of merger and a statement that the plan has been approved by each corporation under this section. (c) The articles of merger and plan of merger shall be delivered to the commissioner of commerce, who, if the plan of merger is reasonable and if the provisions thereof providing for any transfer of assets and assumption of liabilities are fair and equitable to the claimants and policyholders, shall issue an order approving the merger. Copies of the articles of merger, certified by the commissioner of commerce, shall be delivered to the surviving corporation or its legal representative. (2) Articles of incorporation of new company. (a) If the plan of merger is for a consolidation into a new insurance corporation to be formed under any law or laws of this state, articles of incorporation for such new insurance corporation shall be prepared and delivered to the commissioner of commerce together with the articles of merger as provided in clause (1) hereof. (b) Such articles shall be prepared, executed, approved, filed and recorded in the form and manner prescribed in, or applicable to, the particular law or laws under which the new insurance corporation is to be formed. (3) Abandonment. A proposed merger or consolidation may be abandoned at any time prior to approval by the commissioner under the provision for abandonment, if any, set forth in the plan of merger. (4) Mutual insurance holding companies. In the case of a merger of two mutual insurance holding companies under section 66A.40, subdivision 2, paragraph (c), the procedures set forth in subdivisions 1, 2, 3, 4, and 6 shall apply, subject to the following: (a) the plan of merger must be fair and reasonable to the members of each constituent corporation; (b) no member of either constituent corporation on the effective date of the merger shall lose membership solely on account of the merger; (c) membership and voting rights in each respective constituent corporation for purposes of the meeting of the members held to consider the plan of merger shall be determined in accordance with the articles and bylaws of that constituent corporation as of a record date established in the plan of merger; and (d) the commissioner may require changes to the plan or require certain undertakings from the surviving corporation to assure compliance with this clause. Subd. 3. Consummation of merger. (1) A merger of one or more insurance corporations into a domestic insurance corporation shall be effective when the articles of merger have been approved and filed in the office of the commissioner of commerce, or at a later date specified in the articles of merger. (2) A consolidation of insurance corporations into a new domestic insurance corporation shall be effective when the articles of merger and the new articles of incorporation have been approved and filed in the office of the commissioner of commerce, or at a later date as specified in the plan of merger. (3) A merger or consolidation of one or more domestic insurance corporations into a foreign insurance corporation shall be effective according to the provisions of law of the jurisdiction in which the foreign insurance corporation was formed, but not until the articles of merger have been filed in accordance with subdivision 2, clause (1). Subd. 4. Effect of merger or consolidation. Upon the consummation of the merger or consolidation as provided in subdivision 3, the effect of the merger or consolidation shall be: (1) That the several corporate parties to the plan of merger shall be one insurance corporation, which shall be: (a) in the case of a merger, that one of the constituent insurance corporations into which it has been agreed the others shall be merged and which shall survive the merger for that purpose, or (b) in the case of a consolidation, the new insurance corporation into which it has been agreed the others shall be consolidated; (2) The separate existence of the constituent insurance corporations shall cease, except that of the surviving insurance corporation in the case of a merger; (3) The surviving or new insurance corporation, as the case may be, shall possess all the rights, privileges and franchises possessed by each of the former insurance corporations so merged or consolidated except that such surviving or new corporation shall not thereby acquire authority to engage in any insurance business or exercise any right which an insurance corporation may not be formed under the laws of this state to engage in or exercise; (4) All the property, real, personal and mixed, of each of the constituent insurance corporations, and all debts due on whatever account to any of them, including without limitation subscriptions for shares, premiums on existing policies, and other choses in action belonging to any of them, shall be taken and be deemed to be transferred to and invested in such surviving or new insurance corporation, as the case may be, without further act or deed; (5) The surviving or new insurance corporation shall be responsible for all the liabilities and obligations of each of the insurance corporations merged or consolidated, in accordance with the terms of the agreement for merger or consolidation; but the rights of the creditors of the constituent insurance corporations, or of any persons dealing with such insurance corporations shall not be impaired by such merger or consolidation, and any claim existing or action or proceeding pending by or against any of the constituent insurance corporations may be prosecuted to judgment as if the merger or consolidation had not taken place, or the surviving or new insurance corporation may be proceeded against or substituted in its place. Subd. 5. Nonconsenting shareholders. (1) When an insurance corporation having capital stock has become a party to a merger or consolidation agreement, as hereinbefore provided, any shareholder of such an insurance corporation who voted against the merger or consolidation at the meeting at which it was authorized, may, at any time within 20 days after such authorization was given, object thereto in writing and demand payment for the shares held. (2) If, after such a demand by a shareholder, the insurance corporation and the shareholder cannot agree upon the value of the shares at the time the merger or consolidation was authorized, such value shall be ascertained by three disinterested persons, one of whom shall be named by the shareholder, another by the insurance corporation and the third by the two thus chosen. The finding of the appraisers shall be final, and if their award is not paid by the insurance corporation within 30 days after it is made, it may be recovered in an action by the shareholder against the insurance corporation. The liability of the insurance corporation to the dissenting shareholder for the value of the shares so agreed upon or awarded shall also be a liability of the surviving or new insurance corporation, as the case may be. Upon payment by the insurance corporation or by the surviving or new corporation to the shareholder of the agreed or awarded price of the shares, the shareholder shall forthwith transfer and assign the shares held at, and in accordance with, the request of the corporation. (3) A shareholder shall not be entitled to payment for shares under the provisions of this subdivision unless the value of the corporate assets which would remain after such payment would be at least equal to the aggregate amount of its debts and liabilities including outstanding capital stock. Subd. 6. Disclosure of expenses; prohibitions and penalty. All actual expenses and costs incident to proceedings under the provisions of this section shall be paid by the surviving or new company and an itemized statement of the expenses and costs shall be filed with the commissioner prior to formal approval. No officer of any such company or employee of the Department of Commerce, shall receive any compensation, gratuity or otherwise, directly or indirectly, for in any manner aiding, promoting, or assisting in such consolidation or merger. Any officer, director, or stockholder of any company, or any employee of the state, violating, or consenting to the violation of, the provisions of this subdivision shall be punished by a fine of not less than $20,000 and by imprisonment for not less than one year. History:  1967 c 395 art 1 s 16; 1973 c 521 s 1; 1976 c 181 s 2; 1983 c 289 s 114 subd 1; 1984 c 628 art 3 s 11; 1984 c 655 art 1 s 92; 1986 c 444; 1999 c 177 s 13-15; 2001 c 215 s 6; 2005 c 69 art 2 s 18; 2020 c 80 art 1 s 16,17
60A.161 INSURER DOMESTICATION AND CONVERSION. Subdivision 1. Approval as a domestic insurer. Any insurer that is organized under the laws of any other state and is admitted to do business in this state for the purpose of writing insurance may become a domestic insurer of this state by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by designating its principal place of business at a place in this state. The domestic insurer will be entitled to like certificates and licenses to transact business in this state and is subject to the authority and jurisdiction of this state. Subd. 2. Conversion to foreign insurer. A domestic insurer of this state may, upon the approval of the commissioner, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon the transfer shall cease to be a domestic insurer and shall be admitted to this state if qualified as a foreign insurer. The commissioner shall approve any proposed transfer unless the commissioner determines that the transfer is not in the interest of the policyholders of this state. Subd. 3. Effects. The certificate of authority, agents appointments and licenses, rates, policy forms, and other items which the commissioner of commerce allows, in the commissioner's discretion, which are in existence at the time any insurer licensed to transact the business of insurance in this state transfers its corporate domicile to this or any other state by redomestication, merger, consolidation, or any other lawful method shall continue in full force and effect upon such transfer if such insurer remains duly qualified to transact the business of insurance in this state. All outstanding policies of any transferring insurer remain in full force and effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the commissioner. However, every transferring insurer shall notify the commissioner of the details of the proposed transfer and shall file promptly resulting amendments to corporate documents filed or required to be filed with the commissioner. Subd. 4. Authority to adopt rules. The commissioner of commerce may adopt rules to carry out the purposes of this section. History:   1990 c 424 s 1 
60A.171 REHABILITATION AND CANCELLATION OF INDEPENDENT AGENT CONTRACTS BY INSURANCE COMPANIES. Subdivision 1. Termination rights and obligations. (a) After an agency contractual relationship has been in effect for a period of three years, an insurance company writing fire or casualty loss insurance in this state may not terminate the agency contractual relationship with any appointed agent unless the company has provided written notice of termination to the agent at least 60 days in advance of the effective date of the termination. (b) The notice of termination must include the reasons for termination. (c) An insurance company may not terminate an agency contract based upon any of the following: (1) an adverse loss experience for a single year; (2) the geographic location of the agent's auto and homeowners insurance business; or (3) the performance of obligations required of an insurer under Minnesota Statutes. (d) For purposes of this section, "fire or casualty loss insurance" means any line of insurance which an insurance agent with a personal lines, property, or casualty license under sections 60K.30 to 60K.56 may write in this state. Subd. 2. Agent request to renew insurance contract. The company shall at the request of the agent renew any insurance contract written by the agent for the company for not more than one year for fire or casualty loss insurance during a period of 18 months after the effective date of the termination, but in the event any risk does not meet current underwriting standards of the company, the company may decline its renewal, provided that the company shall give the agent not less than 60 days' notice of its intention not to renew the contract of insurance. The company shall not reduce the agent's commissions, unless the company is reducing the commissions for other appointed agents in the state at the same time. Subd. 3. Authority to write new contract limited. No new insurance or bond contract shall be written by the agent for the company after the effective date of the termination without the written approval of the company. The agent may increase liability on renewal or in force business for not more than one year for the insured after the effective date of the termination if the increased liability meets the current underwriting standards of the company. Subd. 3a.  [Renumbered subd 4] Subd. 4.  MS 1990 [Renumbered subd 5] Subd. 4.  MS 2004 [Repealed, 2005 c 74 s 13] Subd. 5.  MS 1990 [Renumbered subd 6] Subd. 5. Earlier termination allowed. Nothing contained in this section prohibits the earlier termination of an amendment or addendum subsequent to the inception date of the original agency agreement provided that the subsequent amendment or addendum provides for termination on shorter notice and the agent agrees in writing to the earlier termination. Subd. 6.  MS 1990 [Renumbered subd 7] Subd. 6. Limitation on refusal to renew business during contract term. During the term of the contract the company shall not refuse to renew such business from the agent as would be in accordance with the company's current underwriting standards. Subd. 7.  MS 1990 [Renumbered subd 8] Subd. 7. Nonapplication of section. The provisions of this section do not apply to the termination of an agent's contract for insolvency, abandonment, gross and willful misconduct, or failure to pay over to the company money due to the company after receipt by the agent of a written demand therefor, or after revocation of the agent's license by the commissioner of commerce. This section does not apply to the termination of an agent's contract if the agent is directly employed by the company or if the agent writes 80 percent or more of the agent's gross annual insurance business for one company or any or all of its subsidiaries. Subd. 8.  MS 1990 [Renumbered subd 9] Subd. 8. Application to contract between agent and fire and casualty loss company. All future and presently existing agency contractual relationships between an agent and a company writing fire or casualty loss insurance in this state are subject to the provisions of this section. Subd. 9. Penalties. If it is found, after notice and an opportunity to be heard as determined by the commissioner of commerce, that an insurance company has violated this section, the insurance company shall be subject to a civil action by the agent for actual damages suffered because of the premature termination of the contract by the company. The commissioner of commerce shall employ the department's investigative and enforcement authority if the commissioner has a reason to believe that an insurer has violated this section. An insurer found in violation of this section is subject to a civil penalty imposed by the commissioner not to exceed $10,000 per violation. Subd. 10. Compliance relief. In the event that a company's compliance with this section is demonstrated to the satisfaction of the commissioner to represent a hazard or potential hazard to the financial integrity of the company, the commissioner may, after a hearing, issue an order relieving the company from its obligation to provide the renewal policies otherwise required by this section. Subd. 11. Business solicitation in notice of nonrenewal prohibited. Upon termination of an agency, a company is prohibited from soliciting business in the notice of nonrenewal required by section 60A.37. If termination of an agency contract is the ground for nonrenewal of a policy of homeowner's insurance, as defined in section 65A.27, subdivision 4, the company must provide notice to the policyholder that the policy is not being renewed due to the termination of the company's contract with the agency. If the agency is unable to replace the homeowner's insurance policy with a suitable policy from another insurer, the agent must notify the policyholder of the policyholder's right to renew with the company terminating the agency contract. The company must renew the policy if the insured or the insured's agent makes a written request for the renewal before the renewal date. Subd. 12. Cancellation of line of business as cancellation or termination of agency. For purposes of this section, a cancellation or termination of an agent's contract is considered to have occurred if the company cancels a line of insurance business or a volume of insurance business that equals or exceeds 75 percent of the insurance business placed by that agent with the company. History:  1977 c 287 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 92 s 1-3; 1991 c 39 s 1; 1996 c 446 art 1 s 4,5; 2001 c 117 art 2 s 5; 2005 c 74 s 4,5; 2005 c 132 s 2
60A.172 INSURANCE AGENCY CONTRACTS; CANCELLATION. (a) An insurer may not cancel a written agreement with an agent or reduce or restrict an agent's underwriting authority with respect to property or casualty insurance, based solely on the loss ratio experience on that agent's book of business, if: the insurer required the agent to submit the application for underwriting approval, all material information on the application was fully completed, and the agent has not omitted or altered any information provided by the applicant. (b) For purposes of this section, "loss ratio experience" means the ratio of claims paid divided by the premiums paid. (c) This section applies only to agents who write 80 percent or more of their gross annual insurance business for one company or any or all of its subsidiaries, and are not in the direct employ of the company. History:  1987 c 288 s 1; 1989 c 170 s 1; 1992 c 379 s 1
60A.173 EFFECTIVE DATE. Section 60A.172 is effective January 1, 1987, and applies to cancellations begun as of that date. As a condition of doing business in the state of Minnesota, an insurer shall promptly reinstate any agreements canceled under section 60A.172 and shall restore any authority reduced or restricted under section 60A.172 from January 1, 1987, until May 29, 1987. History:   1987 c 288 s 2 
60A.174 SEVERABILITY. If section 60A.173 is determined by a final, nonappealable order of any Minnesota or federal court of competent jurisdiction to be invalid or unconstitutional, section 60A.172 is effective May 29, 1987. History:   1987 c 288 s 3 
60A.175 AGENT COMMISSIONS. (a) An insurer that cancels a written agreement with an agent under section 60A.171 or 60A.172 or cancels a line of business sold by the agent must pay to the agent all commissions, bonuses, and other compensation earned by that agent prior to or after termination. The commission rate must be the rate in effect at the time of the notice of termination. (b) An insurer may not reduce agent commissions, bonuses, or other compensation contained in written agreements without first providing written notice of the change to the agent at least 180 days before its effective date. History:  1989 c 170 s 2; 1991 c 39 s 2
60A.1755 AGENT ERRORS AND OMISSIONS INSURANCE; CHOICE OF SOURCE. An insurance company shall not require an insurance agent to maintain insurance coverage for the agent's errors and omissions from a specific insurance company. This section does not apply if the insurance producer is a captive producer or employee of the insurance company imposing the requirement, or if that insurance company or affiliated broker-dealer pays for or contributes to the premiums for the errors and omissions coverage. For purposes of this section, "captive producer" means a producer that writes 80 percent or more of the producer's gross annual insurance business for that insurance company or any or all of its subsidiaries. Nothing in this section shall prohibit an insurance company from requiring an insurance producer to maintain errors and omissions coverage or requiring that errors and omissions coverage meet certain criteria. History:   2009 c 178 art 1 s 6 
60A.176 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to this section and section 60A.177. Subd. 2.  [Repealed, 1991 c 207 s 8] Subd. 3. Agent. "Agent" means an agent who is not an employee of the insurer, who has an agency contractual relationship that has been in effect for five or more years, and who writes 80 percent or more of the agent's business through one insurer or its subsidiaries. Subd. 4. Insurer. "Insurer" means an insurance company writing property or casualty loss insurance in this state through agents. History:  1990 c 457 s 1; 1991 c 207 s 1
60A.177 INVOLUNTARY TERMINATION OF AN AGENT BY THE INSURER. Subdivision 1. Termination review process. An insurer shall establish a termination review process for an agent involuntarily terminated by the insurer. The review process is available for use at the option of the agent. The review process must be completed within 15 days of the request or before the date of termination, whichever is later. Subd. 2. Notice; hearing. If an agent is terminated by an insurer, the agent may request a hearing before the board of review. If an insurer initiates the termination of an agent's agreement, the written notice of termination must advise the agent of the agent's right to a hearing before the board of review. Upon receipt of an agent's request for a hearing, the commissioner shall establish a hearing date within 30 days of the request or longer with the approval of the agent and the insurer. The agent and the insurer shall be notified in writing of the date, time, and place of the hearing. The hearing provided for under this section is not subject to chapter 14. The review board shall provide the parties to the hearing with an opportunity to present evidence and arguments in support of their respective positions. Subd. 3. Board of review. A three-member board of review shall be selected from a list of ten agents and ten insurer representatives compiled by the commissioner. One member shall be selected by the agent and one by the insurer. The third member shall be mutually agreed upon by both parties. If the parties do not agree upon a third member, the commissioner shall request the American Arbitration Association to provide the commissioner with three names of potential members. If the American Arbitration Association declines to provide the names, the commissioner of the Bureau of Mediation Services shall provide the names. The agent member and the insurer member shall each strike one person from the list. The remaining person shall be selected as the third member of the review board. The insurer and the agent shall each pay one-half of the fee charged by the third member. The board member selected by the agent may not be a relative of the agent. The board members selected by the agent and insurer may not be presently or formerly associated with an insurer represented by the agent. An insurer is immune from civil liability to the agent for disclosures made at the hearing. This immunity does not extend to disclosures made in bad faith or with knowledge of their falseness. Subd. 4. Board's determination. Upon completion of the hearing, the board of review shall determine if the termination of the agent's agreement is justified. If in the opinion of the board of review an involuntary termination is not justified, and in the absence of a reasonable contractual financial provision for termination as determined by the board, the board shall order the insurer to pay an amount of compensation that the board considers appropriate to the agent. If in the opinion of the board of review a voluntary termination was not voluntary and the insurer is not justified in terminating the agent's agreement, and in the absence of a reasonable contractual financial provision for termination as determined by the board, the board shall order the insurer to pay an amount of compensation that the board considers appropriate to the agent. Subd. 5. Appeal. A final determination of the board of review under subdivision 4 may be appealed to district court by either party for a trial de novo. If the insurer appeals and the agent prevails, the insurer is responsible for the agent's legal fees as approved by the court. Subd. 6. Civil penalty. A person who intimidates or coerces a member of the board of review is subject to a civil penalty imposed by the commissioner in an amount not to exceed $25,000. Subd. 7. Exemption. This section does not apply to an agent whose license has expired, is revoked, or is currently under suspension. Subd. 8. Administrative penalties. Failure to comply with a final order or determination of the review board constitutes a basis for disciplinary action under section 45.027, subdivision 7. History:  1990 c 457 s 2; 1991 c 207 s 2-5; 1992 c 379 s 2
60A.178 LIFE OR HEALTH INSURANCE SALES QUOTAS. No insurer, its officers, or managers shall require licensed property and casualty agents to sell a specified number of life or health insurance policies or a specified dollar amount of life and health insurance as a condition of selling property-casualty insurance. No insurer, its officers, or managers may reduce or restrict an agent's underwriting authority on property-casualty insurance policies based upon the sale of life or health insurance. The provisions of this section do not apply to agents who are directly employed by the insurer or who write 80 percent or more of their gross annual insurance business for one company or any or all of its subsidiaries. History:   1995 c 152 s 1 
60A.179 LIFE OR HEALTH INSURANCE SALES QUOTAS FOR EXCLUSIVE AGENTS. Subdivision 1. Application. This section applies to licensed insurance agents as defined by section 60A.176. Subd. 2. Prohibited practice. No insurer shall require an agent who has been licensed as an agent three years or more to sell a specified number of life or health insurance policies or a specified dollar amount of life and health insurance in relation to the sale of other insurance products. No insurer may terminate an agent's contract or reduce or restrict an agent's underwriting authority on property and casualty insurance policies based upon the sale of life or health insurance. History:   1996 c 446 art 1 s 6 
60A.19 FOREIGN COMPANIES. Subdivision 1. Requirements. Any insurance company of another state, upon compliance with all laws governing such corporations in general and with the foregoing provisions so far as applicable and the following requirements, shall be admitted to do business in this state: (1) It shall deposit with the commissioner a certified copy of its charter or certificate of incorporation and its bylaws, and a statement showing its financial condition and business, verified by its president and secretary or other proper officers; (2) It shall furnish the commissioner satisfactory evidence of its legal organization and authority to transact the proposed business and that its capital, assets, deposits with the proper official of its own state, amount insured, number of risks, reserve and other securities, and guaranties for protection of policyholders, creditors, and the public, comply with those required of like domestic companies; (3) By a duly executed instrument filed in the office of the commissioner, it shall appoint the commissioner and successors in office its lawful attorneys in fact and therein irrevocably agree that legal process in any action or proceeding against it may be served upon them with the same force and effect as if personally served upon it, so long as any of its liability exists in this state; (4) It shall appoint, as its agents in this state, residents thereof, and obtain from the commissioner a license to transact business; (5) Regardless of what lines of business an insurer of another state is seeking to write in this state, the lines of business it is licensed to write in its state of incorporation shall be the basis for establishing the financial requirements it must meet for admission in this state or for continuance of its authority to write business in this state; (6) No insurer of another state shall be admitted to do business in this state for a line of business that it is not authorized to write in its state of incorporation, unless the statutes of that state prohibit all insurers from writing that line of business. Subd. 2. Service of garnishee process. When garnishee process is served upon the commissioner, as attorney for any insurance company, no garnishee fee shall be paid the commissioner. After the receipt of copy of the process the insurance company may demand of the attorney of the person making the garnishee the proper fees, and if the demand is not complied with before the day fixed for the disclosure of the garnishee, the proceeding may be dismissed. Subd. 3. Commissioner appointed attorney for service of process. Before any corporation, association, or company issuing policies of insurance of any character and not organized or existing pursuant to the laws of this state is admitted to or authorized to transact the business of insurance in this state, it shall, by a duly executed instrument to be filed in the office of the commissioner, constitute and appoint the commissioner and successors in office its true and lawful attorney, upon whom proofs of loss, any notice authorized or required by any contract with the company to be served on it, summonses and all lawful processes in any action or legal proceeding against it may be served, and that the authority thereof shall continue in force irrevocable so long as any liability of the company remains outstanding in this state. This instrument shall contain a provision and agreement declaring that the company, association, or corporation desires to transact the business of insurance in this state, and that it will accept a license therefor according to the laws of this state. In case of the failure of any such insurance company to comply with any of the provisions of this subdivision and subdivision 4, or if it shall violate any of the conditions or agreements contained in the instrument filed, its right to transact insurance business in this state shall cease and it shall be the duty of the commissioner to immediately declare its license revoked; and, in case of revocation, the company shall not be again licensed to transact business in this state for the period of one year from date of the revocation. Subd. 4. Service of process. The service of process authorized by this section shall be made in compliance with section 45.028, subdivision 2. Subd. 5. Provision as to alien companies. (1) Deposit. Such company of any foreign country, except fraternal benefit societies, shall not be admitted until, besides complying with the foregoing requirements, it has made a deposit with the commissioner in accordance with section 60A.10, subdivision 4, or with the proper officer of some other state of the United States, of a sum not less than the deposit required of a like company by the laws of this state and this deposit shall be of the same class of securities and subject to the same limitations required for the deposit of domestic companies that must by law maintain a deposit. This deposit shall be in exclusive trust for all its policyholders and creditors in the United States, and for all purposes of the insurance laws shall be deemed assets of the company. (2) Trustees, investments and funds. Any company of a foreign country may duly appoint one or more citizens of the United States, approved by the commissioner, to hold funds or other property for the benefit of its policyholders and creditors therein. A certified copy of their appointment and of the instrument of trust shall be filed with the commissioner, who shall have the same authority in the premises as in the case of the affairs of all companies. These funds shall be invested in the same securities as required of other insurance companies and, together with the deposits required, shall constitute the assets of the company in respect to its policyholders and creditors in the United States. Subd. 6. Retaliatory provisions. (1) In the event that a domestic insurance company, after complying with all reasonable laws and rulings of any other state or country, is refused permission by that state or country to transact business therein after the commissioner of commerce of Minnesota has determined that that company is solvent and properly managed and after the commissioner has so certified to the proper authority of that other state or country, then, and in every such case, the commissioner may forthwith suspend or cancel the certificate of authority of every insurance company organized under the laws of that other state or country to the extent that it insures, or seeks to insure, in this state against any of the risks or hazards which that domestic company seeks to insure against in that other state or country. Without limiting the application of the foregoing provision, it is hereby determined that any law or ruling of any other state or country which prescribes to a Minnesota domestic insurance company the premium rate or rates for life insurance issued or to be issued outside that other state or country shall not be reasonable. (2) This section does not apply to insurance companies organized or domiciled in a state or country, the laws of which do not impose retaliatory taxes, fines, deposits, penalties, licenses, or fees or which grant, on a reciprocal basis, exemptions from retaliatory taxes, fines, deposits, penalties, licenses, or fees to insurance companies domiciled in this state. Subd. 7. Policy not invalidated by occurrence of hostilities. No policy of insurance issued to a resident of this state shall be invalidated by the occurrence of hostilities between any foreign country and the United States. Subd. 8.  MS 2010 [Renumbered, 60A.198 subd 8] History:  1967 c 395 art 1 s 19; 1969 c 291 s 3; 1971 c 145 s 21; 1974 c 425 s 4; 1977 c 195 s 2; 1978 c 465 s 7; 1983 c 289 s 114 subd 1; 1984 c 592 s 38,39; 1984 c 609 s 3; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1989 c 1 art 10 s 4; 1991 c 291 art 9 s 2; 1992 c 511 art 7 s 2; 1992 c 564 art 1 s 54; art 2 s 3; 1994 c 485 s 10; 1994 c 632 art 4 s 24; 1999 c 177 s 16; 1999 c 243 art 7 s 1; 2000 c 394 art 2 s 4,5; 2011 c 108 s 10
60A.195 CITATION. Sections 60A.195 to 60A.209 shall be known and may be cited as the "Minnesota Surplus Lines Insurance Act." History:   1981 c 221 s 1 
60A.196 DEFINITIONS. Unless the context otherwise requires, the following terms have the meanings given them for the purposes of sections 60A.195 to 60A.209: (a) "Affiliated group" means a group which includes the insured and any entity, or group of entities, that controls, is controlled by, or is under common control with the insured. An entity has control over another entity when: (1) the entity directly, indirectly, or acting through one or more persons owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the other entity; or (2) the entity controls in any manner the election of a majority of the directors or trustees of the other entity. (b) "Alien insurer" means any insurer which is incorporated or otherwise organized outside of the United States. (c) "Association" means an association registered under section 60A.208. (d) "Eligible surplus lines insurer" means a nonadmitted insurer recognized as eligible to write insurance business under sections 60A.195 to 60A.209. (e) "Exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements: (1) the person employs or retains a qualified risk manager to negotiate insurance coverage; (2) the person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months; (3) the person meets at least one of the following criteria: (i) the person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to clause (4); (ii) the person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to clause (4); (iii) the person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate; (iv) the person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to clause (4); or (v) the person is a municipality with a population in excess of 50,000 persons. (4) Effective January 1, 2015, and every five years thereafter, the amounts in clause (3), items (i), (ii), and (iv), shall be adjusted to reflect the percentage change for the five-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. (f) "Home state" means the state in which an insured maintains its principal place of business, or in the case of an individual, the individual's principal residence. If 100 percent of the insured risk is located out of the state, the term means the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated. If more than one insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the term means the home state of the member of the affiliated group that has the largest percentage of premium attributed to it under that insurance contract. (g) "Ineligible surplus lines insurer" means a nonadmitted insurer not recognized as an eligible surplus lines insurer under sections 60A.195 to 60A.209. (h) "Insurance laws" means chapters 60 to 79 inclusive. (i) "Nonadmitted insurance" means any property and casualty insurance permitted to be placed directly or through a surplus lines broker with a nonadmitted insurer in this state only under sections 60A.195 to 60A.209. (j) "Nonadmitted insurer" means an insurer not licensed to engage in the business of insurance in Minnesota, but does not include a risk retention group, as the term is defined in section 2(a)(4) of the Liability Risk Retention Act of 1986, United States Code, title 15, section 3901(a)(4). (k) "Qualified risk manager" means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements: (1) the person is an employee of, or third-party consultant retained by, the commercial policyholder; (2) the person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance; (3) the person: (i) has a bachelor's degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a state insurance commissioner or other state regulatory official or entity to demonstrate minimum competence in risk management and has three years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; (ii) has a designation as a Chartered Property and Casualty Underwriter (CPCU) issued by the American Institute for CPCU/Insurance Institute of America, an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America, a Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education and Research, a RIMS Fellow (RF) issued by the Global Risk Management Institute, or any other designation, certification, or license determined by a state insurance commissioner or other state insurance regulatory official or entity to demonstrate minimum competency in risk management; (iii) has at least seven years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance and one of the designations specified in item (ii); (iv) has at least ten years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or (v) has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by a state insurance commissioner or other state regulatory official or entity to demonstrate minimum competence in risk management. (l) "Stamping" means electronically assigning a unique identifying number that is specific to a submitted policy, contract, or insurance document. (m) "Surplus lines broker" or "broker" means an individual, firm, or corporation which is licensed in this state to sell, solicit, or negotiate insurance on properties, risks, or exposures located or to be performed in this state with nonadmitted insurers only under sections 60A.195 to 60A.209. History:  1981 c 221 s 2; 1987 c 337 s 11; 2008 c 366 art 17 s 1; 2011 c 108 s 11
60A.197 RATES AND FORMS. (a) Rates used by eligible and ineligible surplus lines insurers shall not be subject to the insurance laws except that a rate shall not be unfairly discriminatory. (b) Forms used by eligible and ineligible surplus lines insurers pursuant to sections 60A.195 to 60A.209 shall not be subject to the insurance laws, except that a policy shall not contain language which misrepresents the true nature of the policy or class of policies. History:   1981 c 221 s 3 
60A.198 TRANSACTION OF NONADMITTED INSURANCE. Subdivision 1. License required. A person, as defined in section 60A.02, subdivision 7, shall not act in any other manner as an agent or broker in the transaction of nonadmitted insurance unless licensed under sections 60A.195 to 60A.209. A surplus lines license is not required for a licensed agent who assists in the placement of nonadmitted insurance with a surplus lines broker pursuant to sections 60A.195 to 60A.209. This subdivision does not apply to nonadmitted insurance procured by a surplus lines broker when an insured's home state is a state other than Minnesota. Subd. 2. Compliance with statutory provisions. A person shall not offer, solicit, make a quotation on, sell, or issue a policy of insurance, binder, or any other evidence of insurance with a nonadmitted insurer, except in compliance with sections 60A.195 to 60A.209. This subdivision does not apply when an insured's home state is a state other than Minnesota. Subd. 3. Procedure for obtaining license. A person licensed as an agent in this state pursuant to other law may obtain a surplus lines license by doing the following: (a) filing an application in the form and with the information the commissioner may reasonably require to determine the ability of the applicant to act in accordance with sections 60A.195 to 60A.209; (b) maintaining an agent's license in this state; (c) registering with the association created pursuant to section 60A.2085; (d) agreeing to file with the commissioner of revenue all returns required by chapter 297I and paying to the commissioner of revenue all amounts required under chapter 297I; (e) agreeing to file all documents required pursuant to section 60A.2086 and to pay the stamping fee assessed pursuant to section 60A.2085, subdivision 7; and (f) paying a fee as prescribed by section 60K.55. Subd. 4. Broker's powers. A surplus lines broker may do any or all of the following: (a) place insurance on risks in this state with eligible surplus lines insurers; (b) place insurance on risks in this state with ineligible surplus lines insurers in strict compliance with section 60A.209. If the insurance is provided through the participation of several nonadmitted insurers and the broker has reason to believe that a substantial portion of the insurance would be assumed by eligible surplus lines insurers, then with respect to the ineligible surplus lines insurers, the insured or the insured's representative shall be informed as provided in section 60A.209, subdivision 1, clause (a); or (c) engage in any other acts expressly or implicitly authorized by sections 60A.195 to 60A.209 and the other insurance laws. Subd. 5. Disclosures. Before placement of insurance with an eligible surplus lines insurer, a surplus lines broker shall inform an insured or the insured's representative that coverage may be placed in conformance with sections 60A.195 to 60A.209 with an insurer not licensed in this state and that payment of loss is not guaranteed in the event of insolvency of the eligible surplus lines insurer. Subd. 6.  [Repealed, 2000 c 394 art 2 s 28] Subd. 7. Participation in national producer database for surplus lines brokers. For the purposes of carrying out the provisions of the Nonadmitted and Reinsurance Reform Act of 2010, the commissioner is authorized to utilize the national insurance producer database of the National Association of Insurance Commissioners, or any other equivalent uniform national database, for the licensure of surplus lines brokers and for renewal of the licenses. Subd. 8. Insurance from unlicensed foreign companies. Any person, firm, or corporation whose home state is Minnesota, that procures insurance on any property, interests, or risks of any nature other than life insurance directly from a nonadmitted insurer, must agree to file with the commissioner of revenue all returns required under chapter 297I and pay to the commissioner of revenue any amounts required to be paid under chapter 297I. Upon that agreement, the commissioner of commerce shall issue a license, good for one year. Insurance procured under the license is valid and the provisions of the policies are considered to be in accordance, and construed as if identical in effect, with the standard policy prescribed by the laws of this state. The insurers may enter the state to perform any act necessary or proper in the conduct of the business. History:  1981 c 221 s 4; 1983 c 328 s 7; 1984 c 592 s 40; 1986 c 444; 1987 c 337 s 12; 1989 c 260 s 6; 1990 c 480 art 6 s 2; 1993 c 375 art 10 s 4; 1994 c 632 art 4 s 25; 2000 c 394 art 2 s 6; 2001 c 12 s 1; 2001 c 117 art 2 s 6; 2009 c 178 art 1 s 7,8; 1967 c 395 art 1 s 19; 1969 c 291 s 3; 1971 c 145 s 21; 1974 c 425 s 4; 1977 c 195 s 2; 1978 c 465 s 7; 1983 c 289 s 114 subd 1; 1984 c 592 s 38,39; 1984 c 609 s 3; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1989 c 1 art 10 s 4; 1991 c 291 art 9 s 2; 1992 c 511 art 7 s 2; 1992 c 564 art 1 s 54; art 2 s 3; 1994 c 485 s 10; 1994 c 632 art 4 s 24; 1999 c 177 s 16; 1999 c 243 art 7 s 1; 2000 c 394 art 2 s 4,5; 2011 c 108 s 10,12,49
60A.199 EXAMINATIONS. Subdivision 1. Examination of books and records. If the commissioner considers it necessary, the commissioner may examine the books and records of a surplus lines broker to determine whether the broker is conducting business in accordance with sections 60A.195 to 60A.209. For the purposes of facilitating examinations, the broker shall allow the commissioner free access at reasonable times to all of the broker's books and records relating to the transactions to which sections 60A.195 to 60A.209 apply. If an examination is conducted, the cost of the examination shall be paid by the surplus line agent or agency. Subd. 2.  [Repealed, 2000 c 394 art 2 s 28] Subd. 3.  [Repealed, 2000 c 394 art 2 s 28] Subd. 4.  [Repealed, 2000 c 394 art 2 s 28] Subd. 5.  [Repealed, 2000 c 394 art 2 s 28] Subd. 6.  [Repealed, 2000 c 394 art 2 s 28] Subd. 6a.  [Repealed, 2000 c 394 art 2 s 28] Subd. 7.  [Repealed, 2000 c 394 art 2 s 28] Subd. 8.  [Repealed, 2000 c 394 art 2 s 28] Subd. 9.  [Repealed, 2000 c 394 art 2 s 28] Subd. 10.  [Repealed, 2000 c 394 art 2 s 28] Subd. 11.  [Repealed, 2000 c 394 art 2 s 28] History:  1981 c 221 s 5; 1984 c 592 s 41; 1Sp1985 c 14 art 15 s 2; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 1987 c 268 art 2 s 2-10; art 17 s 41; 1990 c 480 art 1 s 46; 1993 c 375 art 10 s 5,6; 1995 c 264 art 13 s 2,3; 2011 c 108 s 13
60A.201 PLACEMENT OF INSURANCE BY BROKER. Subdivision 1. Restrictions. Insurance shall not be placed by the surplus lines broker with a nonadmitted insurer when coverage is available from a licensed insurer. Subd. 2. Availability of other coverage; presumption. There shall be a rebuttable presumption that the following coverages are available from a licensed insurer: (a) all mandatory automobile insurance coverages required by chapter 65B; (b) private passenger automobile physical damage coverage; (c) homeowners and property insurance on owner-occupied dwellings whose value is less than $500,000. This figure shall be changed annually by the commissioner by the same percentage as the Consumer Price Index for the Minneapolis-St. Paul Metropolitan Area is changed; (d) any coverage readily available from three or more licensed insurers unless the licensed insurers quote a premium and terms not competitive with a premium and terms quoted by an eligible surplus lines insurer; and (e) workers' compensation insurance, except excess workers' compensation insurance which is not available from the Workers' Compensation Reinsurance Association. Subd. 3. Unavailability of other coverage; presumption. There shall be a rebuttable presumption that the following coverages are unavailable from a licensed insurer: (a) coverages where one portion of the risk is acceptable to licensed insurers but another portion of the same risk is not acceptable. The entire coverage may be placed with eligible surplus lines insurers if it can be shown that the eligible surplus lines insurer will accept the entire coverage but not the rejected portion alone; and (b) any coverage that the broker is unable to procure after diligent search among licensed insurers. Subd. 4.  [Repealed, 2009 c 178 art 1 s 69] Subd. 5. Streamlined application for exempt commercial purchasers. A surplus lines broker is not required to make a diligent search to determine whether the full amount or type of insurance can be obtained from licensed insurers when the broker is seeking to procure or place nonadmitted insurance for an exempt commercial purchaser provided: (1) the broker procuring or placing the nonadmitted insurance has disclosed to the exempt commercial purchaser that the insurance may or may not be available from a licensed insurer that may provide greater protection with more regulatory oversight; and (2) the exempt commercial purchaser has subsequently requested in writing for the broker to procure or place the insurance from a nonadmitted insurer. History:  1981 c 221 s 6; 1992 c 564 art 1 s 21; 2009 c 178 art 1 s 9; 2011 c 108 s 14
60A.202 EVIDENCE OF PLACEMENT OF INSURANCE BY BROKER. Subdivision 1. Restriction. Only a surplus lines broker shall issue evidence of placement of insurance with a nonadmitted insurer. Subd. 2. Written communication of coverage to be delivered. A broker shall, within seven working days after the date on which the risk was bound or the insured or applicant was advised that coverage has been or will be obtained, deliver to the insured or the insured's representative a policy, a written binder, a certificate or other written evidence of insurance placed with a nonadmitted insurer. Subd. 3. Contents of written communication. The written communication showing that insurance has been obtained shall identify all known nonadmitted insurers directly assuming any risk of loss. If there is more than one nonadmitted insurer, any document issued or certified by the broker pursuant to subdivision 2 shall specify, to the extent known by the broker, whether the obligation is joint or several, and if the obligation is several, the proportion of the obligation assumed by each insurer. History:  1981 c 221 s 7; 2011 c 108 s 15
60A.203 RETENTION OF RECORDS. Each surplus lines broker shall keep a separate account of each transaction entered into pursuant to sections 60A.195 to 60A.209. Evidence of these transactions shall be documented in the form and manner designated by the commissioner and retained by the broker for a minimum of five years. The forms must be readily available for review and audit by the commissioner. History:  1981 c 221 s 8; 1992 c 564 art 1 s 22; 2011 c 108 s 16
60A.204 FEES AND COMMISSIONS. Subdivision 1.  [Repealed by amendment, 2010 c 384 s 6] Subd. 2. Regulation of fees and commissions. A surplus lines broker may charge a fee and commission, in addition to the premium, that is not excessive or discriminatory. The broker shall maintain complete documentation of all fees and commissions charged. Subd. 3.  [Repealed by amendment, 2010 c 384 s 6] History:  1981 c 221 s 9; 2010 c 384 s 6; 2011 c 108 s 17
60A.205 COMPENSATION. Subdivision 1. Authorization. A surplus lines broker may be compensated by an eligible surplus lines insurer and the broker may compensate a licensed agent in this state for obtaining nonadmitted insurance business. A licensed agent authorized by the broker may collect a premium on behalf of the broker, and as between the insured and the broker, the broker shall be considered to have received the premium if the premium payment has been made to the agent. Subd. 2. Consequences of receipt. If an eligible surplus lines insurer has assumed a risk, and if the premium for that risk has been received by the broker who placed the insurance, then as between the insurer and the insured, the insurer shall be considered to have received the premium due to it for the coverage and shall be liable to the insured for any loss covered by the insurance and for the unearned premium upon cancellation of the insurance, regardless of whether the broker is indebted to the insurer. History:  1981 c 221 s 10; 2009 c 178 art 1 s 10; 2011 c 108 s 18,19
60A.206 QUALIFICATION AS ELIGIBLE SURPLUS LINES INSURER. Subdivision 1. Insurers to be recognized by commissioner. A surplus lines broker shall place nonadmitted insurance only with insurers which are in a stable and unimpaired financial condition. An insurer recognized by the commissioner as an eligible surplus lines insurer pursuant to subdivision 2 shall be considered to meet the requirements of this subdivision. Recognition as an eligible surplus lines insurer shall be conditioned upon the insurers continued compliance with sections 60A.195 to 60A.209. Subd. 2. Application for recognition. An insurer not otherwise licensed to engage in the business of insurance in Minnesota may apply for recognition as an eligible surplus lines insurer by filing an application in the form and with the information as reasonably required by the commissioner regarding the insurer's financial stability, reputation, integrity and operating plans, accompanied by a license fee of $500. The commissioner may delegate to an association the power to process and make recommendations on applications for recognition as an eligible surplus lines insurer. Notwithstanding delegation by the commissioner, an applicant may file an application directly with the commissioner. Subd. 3. Standards to be met by insurers. (a) The commissioner shall recognize the insurer as an eligible surplus lines insurer when satisfied that the insurer is in a stable, unimpaired financial condition and that the insurer is qualified to provide coverage in compliance with sections 60A.195 to 60A.209. If filed with full supporting documentation before July 1 of any year, applications submitted under subdivision 2 shall be acted upon by the commissioner before December 31 of the year of submission. (b) The commissioner shall not authorize a foreign insurer as an eligible surplus lines insurer unless the insurer: (1) is domiciled within a United States jurisdiction and authorized to write the type of insurance in its domiciliary jurisdiction; and (2) has capital and surplus or its equivalent under the laws of its domiciliary jurisdiction which equals the greater of: (i) the minimum capital and surplus requirements under the laws of Minnesota; or (ii) $15,000,000. The requirements of item (i) may be satisfied by an insurer's possessing less than the minimum capital and surplus upon an affirmative finding of acceptability by the commissioner. The finding shall be based upon factors such as quality of management, capital and surplus of any parent company, company underwriting profit and investment income trends, market availability, and company record and reputation within the industry. In no event shall the commissioner make an affirmative finding of acceptability when the surplus lines insurer's capital and surplus is less than $4,500,000. (c) Eligible surplus lines insurers domiciled within the United States shall file an annual statement and an annual financial audit, under the terms and conditions of section 60A.13, subdivisions 1, 3a, and 6, and are subject to the penalties of section 72A.061, and are subject to section 60A.03, subdivision 5, in regard to those requirements. The commissioner also has the powers provided in section 60A.13, subdivision 2, in regard to eligible surplus lines insurers. (d) Eligible surplus lines insurers domiciled outside the United States shall file an annual statement on the standard nonadmitted insurers information office financial reporting format as prescribed by the National Association of Insurance Commissioners and an annual financial audit performed by an independent accounting firm. The commissioner shall not prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from, an alien insurer that is included on the Quarterly Listing of Alien Insurers maintained by the National Association of Insurance Commissioners International Insurers Department. Subd. 4. Removal of insurers. When the commissioner considers it necessary, the commissioner may request information about or examine the affairs of any eligible surplus lines insurer at the expense of the insurer, to determine whether the insurer should continue to remain on the list of eligible surplus lines insurers. If the commissioner determines that it is in the public interest to remove an insurer from the list because the insurer no longer meets the requirements of sections 60A.195 to 60A.209, or is no longer qualified to provide coverage under sections 60A.195 to 60A.209, the commissioner shall do so. If an insurer removed from the list desires a hearing pursuant to the Administrative Procedure Act, the hearing shall be scheduled within 30 days following request for the hearing. Subd. 5. Trust fund to be maintained. Before recognition as an eligible surplus lines insurer in this state, an alien insurer shall maintain a trust fund in the United States in cash, marketable securities, or other substantially equivalent instruments of at least $1,500,000 with a United States bank which is a member of the Federal Reserve System or which is on deposit with regulatory authorities in this or another state for the benefit of all United States policyholders and beneficiaries. A trust fund required under this subdivision shall not have an expiration date which is at any time less than five years in the future, on a continuing basis. Subd. 6. Alternative means of compliance. Subdivisions 3 and 5 shall not apply to a group including incorporated and unincorporated, individual alien insurers which, in place of the requirements prescribed in subdivisions 3 and 5, maintain assets as provided in subdivision 3 and hold in trust for all policyholders and beneficiaries in the United States not less than $50,000,000 in the aggregate. The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and must be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members. Subd. 7. Appointment of agent for service of process. Each eligible surplus lines insurer shall appoint the commissioner as its resident agent, for purposes of service of process. History:  1981 c 221 s 11; 1986 c 444; 1987 c 358 s 95; 1992 c 564 art 1 s 23; 1994 c 426 s 8; 1994 c 485 s 11; 2011 c 108 s 20,21; 2012 c 187 art 1 s 11
60A.207 POLICIES TO INCLUDE NOTICE. Each policy, cover note, or instrument evidencing nonadmitted insurance from an eligible surplus lines insurer which is delivered to an insured or a representative of an insured shall have printed, typed, or stamped upon its face in not less than 10 point type, the following notice: "THIS INSURANCE IS ISSUED PURSUANT TO THE MINNESOTA SURPLUS LINES INSURANCE ACT. THE INSURER IS AN ELIGIBLE SURPLUS LINES INSURER BUT IS NOT OTHERWISE LICENSED BY THE STATE OF MINNESOTA. IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED." This notice shall not be covered or concealed in any manner. History:  1981 c 221 s 12; 2006 c 204 s 5; 2011 c 108 s 22
60A.208 BROKER ASSOCIATION. Subdivision 1. Broker's right to associate. Surplus lines brokers may associate and the commissioner may register the association for one or more of the following purposes: (a) advising the commissioner as to the availability of nonadmitted insurance coverage and market practices and standards for nonadmitted insurers and brokers; (b) collecting and furnishing records and statistics; or (c) submitting recommendations regarding administration of sections 60A.195 to 60A.209. Subd. 2. Filing requirements. (a) Each association shall file with the commissioner for approval all of the following: (1) a copy of the association's constitution and articles of agreement or association, or the association's certificate of incorporation and bylaws and any rules governing the association's activities; and (2) an agreement that, as a condition of continued registration under subdivision 1, the commissioner may examine the association. (b) Each association shall file with the commissioner and keep current all of the following: (1) a list of members; and (2) the name and address of a resident of this state upon whom notices or orders of the commissioner or process issued by the commissioner may be served. Subd. 3. Commissioner's powers; suspension of registration. The commissioner may refuse to register, or may suspend or revoke the registration of an association for any of the following reasons: (a) it reasonably appears that the association will not be able to carry out the purposes of sections 60A.195 to 60A.209; (b) the association fails to maintain and enforce rules which will assure that members of the association and persons associated with those members comply with sections 60A.195 to 60A.209, other applicable chapters of the insurance laws and rules promulgated under either; (c) the rules of the association do not assure a fair representation of its members in the selection of directors and in the administration of its affairs; (d) the rules of the association do not provide for an equitable allocation of reasonable dues, fees, and other charges among members; (e) the rules of the association impose a burden on competition; or (f) the association fails to meet other applicable requirements prescribed in sections 60A.195 to 60A.209. Subd. 4. Membership limited to brokers. An association shall deny membership to any person who is not a broker. Subd. 5. Association is voluntary. No broker may be compelled to join an association as a condition of receiving a license or continuing to be licensed under sections 60A.195 to 60A.209. Subd. 6. Financial statement to be filed. Each association shall annually file a certified audited financial statement. Subd. 7. Reports and recommendations by the association. An association may submit reports and make recommendations to the commissioner regarding the financial condition of any eligible surplus lines insurer. These reports and recommendations shall not be considered to be public information. There shall not be liability on the part of, or a cause of action of any nature shall not arise against, eligible surplus lines insurers, the association or its agents or employees, the directors, or the commissioner or authorized representatives of the commissioner, for statements made by them in any reports or recommendations made under this subdivision. Subd. 8. Operating assessment. (a) Upon request from the association, the commissioner may approve the levy of an assessment of not more than one-half of one percent of premiums charged pursuant to sections 60A.195 to 60A.209 for operation of the association to the extent that the operation relieves the commissioner of duties otherwise required of the commissioner pursuant to sections 60A.195 to 60A.209. Any assessment so approved may be subtracted from the premium tax owed by the broker under chapter 297I. (b) The association may revoke the membership and the commissioner may revoke the license in this state, of any broker who fails to pay an assessment when due, if the assessment has been approved by the commissioner. History:  1981 c 221 s 13; 2000 c 394 art 2 s 7; 2011 c 108 s 23
60A.2085 SURPLUS LINES ASSOCIATION OF MINNESOTA. Subdivision 1. Association created; duties. There is hereby created a nonprofit association to be known as the Surplus Lines Association of Minnesota. The association is not a state agency for purposes of chapter 16A, 16B, 16C, or 43A. All surplus lines brokers are members of this association. Section 60A.208 does not apply to the association created pursuant to the provisions of this section. The association shall perform its functions under the plan of operation established under subdivision 3 and must exercise its powers through a board of directors established under subdivision 2 as set forth in the plan of operation. The association shall be authorized and have the duty to: (1) receive, record, and stamp all nonadmitted insurance documents that surplus lines brokers are required to file with the association; (2) prepare and deliver monthly to the commissioners of revenue and commerce a report regarding surplus lines business. The report must include a list of all the business procured during the preceding month, in the form the commissioners prescribe; (3) educate its members regarding the surplus lines law of this state including insurance tax responsibilities and the rules and regulations of the commissioners of revenue and commerce relative to nonadmitted insurance; (4) communicate with organizations of agents, brokers, and admitted insurers with respect to the proper use of the surplus lines market; (5) employ and retain persons necessary to carry out the duties of the association; (6) borrow money necessary to effect the purposes of the association and grant a security interest or mortgage in its assets, including the stamping fees charged pursuant to subdivision 7 in order to secure the repayment of any such borrowed money; (7) enter contracts necessary to effect the purposes of the association; (8) provide other services to its members that are incidental or related to the purposes of the association; (9) form and organize itself as a nonprofit corporation under chapter 317A, with the powers set forth in section 317A.161 that are not otherwise limited by this section or in its articles, bylaws, or plan of operation; (10) file such applications and take such other action as necessary to establish and maintain the association as tax exempt pursuant to the federal income tax code; (11) recommend to the commissioner of commerce revisions to Minnesota law relating to the regulation of nonadmitted insurance in order to improve the efficiency and effectiveness of that regulation; and (12) take other actions reasonably required to implement the provisions of this section. Subd. 2. Board of directors. (a) The commissioner shall appoint an interim board of five directors within 30 days of May 30, 2008. The interim board must: (1) establish a plan of operation within 60 days after the appointment of the interim board; (2) create a stamping office that is operational no later than December 31, 2008; and (3) conduct an election for a board of directors by the membership after December 31, 2008, and no later than one year after the appointment of the interim board. (b) Once the responsibilities of the interim board in paragraph (a) are fulfilled, the association shall function through a board of directors composed of the following: (1) one director appointed by the commissioner of revenue; (2) one director appointed by the commissioner of commerce; and (3) at least five but no more than seven directors elected by the members. The elected directors must be members of the association. Directors may serve until their successors are appointed or elected and their terms are completed as outlined in the plan of operation. Subd. 3. Plan of operation. (a) The plan of operation shall provide for the formation, operation, and governance of the association as a nonprofit corporation under chapter 317A. The plan of operation must provide for the election of a board of directors by the members of the association. The board of directors shall elect officers as provided for in the plan of operation. The plan of operation shall establish the manner of voting and may weigh each member's vote to reflect the annual nonadmitted insurance premium written by the member. Members employed by the same or affiliated employers may consolidate their premiums written and delegate an individual officer or partner to represent the member in the exercise of association affairs, including service on the board of directors. (b) The plan of operation shall provide for an independent audit once each year of all the books and records of the association and a report of such independent audit shall be made to the board of directors, the commissioner of revenue, and the commissioner of commerce, with a copy made available to each member to review at the association office. (c) The plan of operation and any amendments to the plan of operation shall be submitted to the commissioner and shall be effective upon approval in writing by the commissioner. The association and all members shall comply with the plan of operation or any amendments to it. Failure to comply with the plan of operation or any amendments shall constitute a violation for which the commissioner may issue an order requiring discontinuance of the violation. (d) If the interim board of directors fails to submit a suitable plan of operation within 60 days following the creation of the interim board, or if at any time thereafter the association fails to submit required amendments to the plan, the commissioner may submit to the association a plan of operation or amendments to the plan, which the association must follow. The plan of operation or amendments submitted by the commissioner shall continue in force until amended by the commissioner or superseded by a plan of operation or amendment submitted by the association and approved by the commissioner. A plan of operation or an amendment submitted by the commissioner constitutes an order of the commissioner. Subd. 4. Reporting requirement. The association shall file with the commissioner: (1) a copy of its plan of operation and any amendments to it; (2) a current list of its members revised at least annually; and (3) the name and address of a member of the board residing in this state upon whom notices or orders of the commissioner or processes issued at the direction of the commissioner may be served. Subd. 5. Examination. The commissioner shall, at such times as deemed necessary, make or cause to be made an examination of the association. The officers, managers, agents, and employees of the association may be examined at any time, under oath, and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation. The commissioner shall furnish a copy of the examination report to the association. If the commissioner finds the association to be in violation of this section, the commissioner may issue an order requiring the discontinuance of the violation. Subd. 6. Immunity. There shall be no liability on the part of and no causes of action of any nature shall arise against the association, its directors, officers, agents, or employees for any action taken or omitted by them in the performance of their powers and duties under this section, absent gross negligence or willful misconduct. Subd. 7. Stamping fee. The services performed by the association shall be funded by a stamping fee assessed for each premium-bearing document submitted to the association. The stamping fee shall be established by the board of directors of the association from time to time. The stamping fee shall be paid by the insured to the surplus lines broker and remitted to the association by the surplus lines broker in the manner established by the association. Subd. 8. Data classification. Unless otherwise classified by statute, a temporary classification under section 13.06, or federal law, information obtained by the commissioner from the association is public, except that any data identifying insureds or the Social Security number of a broker or any information derived therefrom is private data on individuals or nonpublic data as defined in section 13.02, subdivisions 9 and 12. History:  2008 c 366 art 17 s 2; 2009 c 178 art 1 s 11-14; 2011 c 108 s 24-27
60A.2086 LICENSEE'S DUTY TO SUBMIT DOCUMENTS; PENALTY. Subdivision 1. Submission of documents to Surplus Lines Association of Minnesota; certification. (a) A surplus lines broker shall submit every insurance policy or contract issued under the broker's license to the Surplus Lines Association of Minnesota for recording and stamping. The submission and stamping must be effected through electronic means. The submission must include: (1) the name of the insured; (2) a description and location of the insured property or risk; (3) the amount insured; (4) the gross premiums charged or returned; (5) the name of the nonadmitted insurer from whom coverage has been procured; (6) the kind or kinds of insurance procured; and (7) the amount of premium subject to tax. (b) The submission of insurance policies or contracts to the Surplus Lines Association of Minnesota constitutes a certification by the surplus lines broker, or by the insurance producer who presented the risk to the surplus lines broker for placement as a surplus lines risk, that the insurance policies or contracts were procured in accordance with sections 60A.195 to 60A.209. Subd. 2. Stamping requirement; penalty. (a) It shall be unlawful for an insurance agent, broker, or surplus lines broker to deliver in this state any nonadmitted insurance policy or contract unless the insurance document is stamped by the association. A surplus lines broker's failure to comply with the requirements of this subdivision shall not affect the validity of the coverage. (b) Any insurance agent or surplus lines broker who delivers in this state any insurance policy or contract that has not been stamped by the association shall be subject to a penalty payable to the commissioner as follows: (1) $50 for delivery of the first unstamped policy; (2) $250 for delivery of a second unstamped policy; and (3) $1,000 per policy for delivery of any additional unstamped policies. History:  2008 c 366 art 17 s 3; 2011 c 108 s 28,29
60A.209 INSURANCE PROCURED FROM INELIGIBLE INSURERS. Subdivision 1. Authorization; regulation. A resident of this state may obtain insurance from an ineligible surplus lines insurer in this state through a surplus lines broker. The broker shall first attempt to place the insurance with a licensed insurer, or if that is not possible, with an eligible surplus lines insurer. If coverage is not obtainable from a licensed insurer or an eligible surplus lines insurer, the broker shall certify to the commissioner, on a form prescribed by the commissioner, that these attempts were made. Upon obtaining coverage from an ineligible surplus lines insurer, the broker shall: (a) Have printed, typed, or stamped in red ink upon the face of the policy in not less than 10-point type the following notice: "THIS INSURANCE IS ISSUED PURSUANT TO THE MINNESOTA SURPLUS LINES INSURANCE ACT. THIS INSURANCE IS PLACED WITH AN INSURER THAT IS NOT LICENSED BY THE STATE NOR RECOGNIZED BY THE COMMISSIONER OF COMMERCE AS AN ELIGIBLE SURPLUS LINES INSURER. IN CASE OF ANY DISPUTE RELATIVE TO THE TERMS OR CONDITIONS OF THE POLICY OR THE PRACTICES OF THE INSURER, THE COMMISSIONER OF COMMERCE WILL NOT BE ABLE TO ASSIST IN THE DISPUTE. IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED." The notice may not be covered or concealed in any manner; and (b) Collect from the insured appropriate premium taxes, as provided under chapter 297I, and report the transaction to the commissioner of revenue on a form prescribed by the commissioner. If the insured fails to pay the taxes when due, the insured shall be subject to a civil fine of not more than $3,000, plus accrued interest from the inception of the insurance. Subd. 2. Penalty. Except as provided in this section, a person who assists or in any manner aids directly or indirectly in the procurement of insurance from an ineligible surplus lines insurer in this state is guilty of a misdemeanor, punishable by imprisonment for not more than one year, or by a fine of not more than $1,000, or both. Subd. 3. Duty to report. Each insured in this state who procures, causes to be procured, or continues or renews insurance with an ineligible surplus lines insurer or any self-insurer in this state who procures or continues excess of loss, catastrophe, or other insurance upon a subject of insurance resident, located, or to be performed within this state, other than insurance procured pursuant to section 60A.201 or subdivision 1 must file with the commissioner of revenue all returns and pay to the commissioner of revenue all amounts required under chapter 297I. Subd. 4.  [Repealed, 2000 c 394 art 2 s 28] Subd. 5.  [Repealed, 2000 c 394 art 2 s 28] Subd. 6. Ineligible surplus lines insurers; liability on policies or contracts. Except with respect to placement pursuant to section 60A.198, subdivision 4, if an ineligible insurer offering benefits under a written contract which constitutes the transaction of insurance or which offers benefits substantially similar to benefits under policies of insurance, whether or not the benefits are identified or described as insurance, fails to pay a claim or loss within the provision of the contract, any person who assisted or aided, directly or indirectly, in the procurement of the contract shall be liable to the person to whom the obligations are owed for the full amount of the claim or loss, in the manner provided by the contract. History:  1981 c 221 s 14; 1983 c 289 s 114 subd 1; 1984 c 628 art 3 s 11; 1984 c 655 art 1 s 92; 1987 c 268 art 2 s 11,12; 2000 c 394 art 2 s 8; 2010 c 389 art 6 s 1; 2011 c 108 s 30
60A.2095 CONSTRUCTION. Nothing in sections 60A.195 to 60A.209 shall be construed to permit the state to impose requirements beyond those granted by the Liability Risk Retention Act, Public Law 99-563. History:   1987 c 337 s 13 
60A.21 UNAUTHORIZED INSURERS PROCESS ACT. Subdivision 1. Purpose. The purpose of the Unauthorized Insurers Process Act is to subject certain insurers to the jurisdiction of courts of this state in suits by or on behalf of insureds or beneficiaries under insurance contracts. The legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such state interest the legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing it exercises its power to protect its residents and to define for the purpose of this statute what constitutes doing business in this state and also exercises powers and privileges available to the state by virtue of Public Law 15, 79th Congress of the United States, chapter 20, 1st Session, section 340, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states. Subd. 2. Service of process upon unauthorized insurer. (1) Any of the following acts in this state effected by mail or otherwise by an unauthorized foreign or alien insurer: (a) the issuance or delivery of contracts of insurance to residents of this state or to corporations authorized to do business therein; (b) the solicitation of applications for such contracts; (c) the collection of premiums, membership fees, assessments, or other considerations for such contracts; or (d) any other transaction of insurance business, is equivalent to and shall constitute an appointment by such insurer of the commissioner of commerce and the commissioner's successor or successors in office to be its true and lawful attorney upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such contract of insurance and any such act shall be signification of its agreement that such service of process is of the same legal force and validity as personal service of process in this state upon such insurer. (2) Such service of process shall be made in compliance with section 45.028, subdivision 2. (3) Service of process in any such action, suit, or proceeding shall in addition to the manner provided in clause (2) of this subdivision be valid if served upon any person within this state who, in this state on behalf of such insurer, is: (a) soliciting insurance, or (b) making, issuing, or delivering any contract of insurance, or (c) collecting or receiving any premium, membership fee, assessment, or other consideration for insurance; and if a copy of such process is sent within ten days thereafter by certified mail by the plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant and the defendant's receipt, or the receipt issued by the post office with which the letter is certified showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith are filed with the administrator of the court in which such action is pending on or before the date the defendant is required to appear or within such further time as the court may allow. (4) No plaintiff or complainant shall be entitled to a judgment by default under this subdivision until the expiration of 30 days from the date of the filing of the affidavit of compliance. (5) Nothing in this subdivision contained shall limit or abridge the right to serve any process, notice, or demand upon any insurer in any other manner now or hereafter permitted by law. (6) The provisions of this section shall not apply to surplus line insurance lawfully effectuated under Minnesota law, or to reinsurance, nor to any action or proceeding against an unauthorized insurer arising out of: (a) wet marine and transportation insurance; (b) insurance on or with respect to subjects located, resident, or to be performed wholly outside this state, or on or with respect to vehicles or aircraft owned and principally garaged outside this state; (c) insurance on property or operations of railroads engaged in interstate commerce; or (d) insurance on aircraft or cargo of such aircraft, or against liability, other than employer's liability, arising out of the ownership, maintenance, or use of such aircraft, where the policy or contract contains a provision designating the commissioner as its attorney for the acceptance of service of lawful process in any action or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such policy, or where the insurer enters a general appearance in any such action. Subd. 3. Defense of action by unauthorized insurer. (1) Before any unauthorized foreign or alien insurer shall file or cause to be filed any pleading in any action, suit, or proceeding instituted against it such unauthorized insurer shall: (a) Deposit with the administrator of the court in which such action, suit, or proceeding is pending cash or securities or file with such administrator a bond with good and sufficient sureties to be approved by the court in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in such action; or (b) procure a certificate of authority to transact the business of insurance in this state. (2) The court in any action, suit, or proceeding in which service is made in the manner provided in clauses (2) or (3) of subdivision 2 hereof, may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of clause (1) of this subdivision and to defend such action. (3) Nothing in clause (1) is to be construed to prevent an unauthorized foreign or alien insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in clauses (2) and (3) of subdivision 2 hereof on the ground either (a) that such unauthorized insurer has not done any of the acts enumerated in clause (1) of subdivision 2 hereof, or (b) that the person on whom service was made pursuant to clause (3) of subdivision 2 hereof, was not doing any of the acts therein enumerated. Subd. 4. Attorney fees and judgment. In any action hereunder against an unauthorized foreign or alien insurer upon a contract of insurance issued or delivered in this state to a resident thereof or to a corporation authorized to do business therein, if the insurer has failed for 30 days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include such fee in any judgment that may be rendered in such action. Failure of an insurer to defend any such action shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause. Subd. 5. Constitutionality. If any provision of this section or the application thereof to any person or circumstances is held invalid such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application and to this end the provisions of this section are declared to be severable. Subd. 6. Citation. This section may be cited as the "Unauthorized Insurers Process Act." History:  1967 c 395 art 1 s 21; 1978 c 674 s 60; 1983 c 289 s 114 subd 1; 1984 c 592 s 42; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 1992 c 564 art 2 s 4; 1994 c 485 s 12; 1994 c 632 art 4 s 26
60A.22 SPECIAL PROVISIONS AS TO STOCK COMPANIES; STOCKHOLDERS, OFFICERS, DIRECTORS AND INVESTORS. Subdivision 1. Shareholders' rights. (1) If an insurance corporation has given notice to shareholders of a proposal to amend the articles of incorporation, which proposed amendment would substantially change the corporate purposes or would extend the duration of the corporation, a shareholder may, at any time prior to the date of the meeting at which such proposed amendment is to be voted upon, file a written objection to such amendment in the office of the secretary or president of the corporation and demand payment for shares held; provided, that such demand shall be of no force and effect if such shareholder votes in favor of the amendment, or at any time consents thereto in writing, or if the proposed amendment be not in fact effected. (2) If, after such a demand by a shareholder, the corporation and the shareholder cannot agree upon the fair cash value of the shares at the time such amendment was authorized, such value shall be determined by three disinterested appraisers, one of whom shall be named by the shareholder, another by the corporation, and the third by the two thus chosen. The determination of a majority of the appraisers in good faith made shall be final, and if the amount so determined is not paid by the corporation within 30 days after it is made, such amount may be recovered in an action by the shareholder against the corporation. The corporation shall not be required to make payment of such amount except upon transfer to it of the shares for which such payment was demanded and upon surrender of the certificate or certificates evidencing the same. (3) A shareholder shall not be entitled to payment for shares under the provisions of this subdivision unless the value of the corporate assets which would remain after such payment would be at least equal to the aggregate amount of its debts and liabilities exclusive of stated capital. Subd. 2. Transactions of principal stockholders, directors, and officers in equity securities. (1) Every person who is directly or indirectly the beneficial owner of more than ten percent of any class of any equity security of a domestic stock insurance company, or who is a director or an officer of such company, shall file in the office of the commissioner of commerce on or before January 31, 1966, or within ten days after becoming such beneficial owner, director, or officer, a statement, in such form as the commissioner of commerce may prescribe, of the amount of all equity securities of such company of which that person is the beneficial owner, and within ten days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, shall file in the office of the commissioner of commerce a statement, in such form as the commissioner of commerce may prescribe, indicating ownership at the close of the calendar month and such changes in ownership as may have occurred during such calendar month. (2) For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director, or officer by reason of that person's relationship to such company, any profit realized by that person from any purchase and sale, or any sale and purchase, of any equity security of such company within any period of less than six months, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of such beneficial owner, director, or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six months. Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the company, or by the owner of any security of the company in the name and in behalf of the company if the company shall fail or refuse to bring such suit within 60 days after request or shall fail diligently to prosecute the same thereafter; but no such suit shall be brought more than two years after the date such profit was realized. This clause shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the commissioner of commerce by rules may exempt as not comprehended within the purpose of this clause. (3) It shall be unlawful for any such beneficial owner, director, or officer, directly or indirectly, to sell any equity security of such company if the person selling the security or that person's principal (a) does not own the security sold, or (b) if owning the security, does not deliver it against such sale within 20 days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation; but no person shall be deemed to have violated this clause on proving, notwithstanding the exercise of good faith, the inability to make such delivery or deposit within such time, or without causing undue inconvenience or expense. (4) The provisions of clause (2) shall not apply to any purchase and sale, or sale and purchase, and the provisions of clause (3) shall not apply to any sale, of any equity security of a domestic stock insurance company not then or theretofore held by the person in an investment account, by a dealer in the ordinary course of business and incident to the establishment or maintenance by the person of a primary or secondary market, otherwise than on an exchange as defined in the federal Securities Exchange Act of 1934, for such security. The commissioner of commerce may, by such rules as the commissioner deems necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market. (5) The provisions of this subdivision shall not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules as the commissioner of commerce may adopt in order to carry out the purposes of this subdivision. Subd. 3. Regulation of proxies, consents, and authorizations. (1) It shall be unlawful for any person, in contravention of such rules as the commissioner of commerce may prescribe as necessary or appropriate in the public interest or for the protection of investors, to solicit or to permit the use of that person's name to solicit any proxy or consent or authorization in respect of any equity security of a domestic stock insurance company. (2) Unless proxies, consents, or authorizations in respect of an equity security of a domestic stock insurance company are solicited by or on behalf of the management of such company from the holders of record of such security in accordance with the rules prescribed under clause (1), prior to any annual or other meeting of the holders of such security, such company shall, in accordance with such rules as the commissioner of commerce may prescribe as necessary or appropriate in the public interest or for the protection of investors, if required thereby, file with the commissioner of commerce and transmit to all holders of record of such security information substantially equivalent to the information which would be required to be transmitted if a solicitation were made. Subd. 4. Securities excepted. The provisions of subdivisions 2 and 3 hereof shall not apply to equity securities of a domestic stock insurance company if (a) any equity security of such company shall be registered, or shall be required to be registered, pursuant to section 12 of the federal Securities Exchange Act of 1934, or if (b) such company shall not have equity securities held of record by 100 or more persons on the last day of the year next preceding the year in which the provisions of subdivisions 2 and 3 hereof would apply except for the provisions of this clause (b). Subd. 5. Rules. The commissioner of commerce shall have the power to make such rules as may be necessary for the execution of the functions vested in the commissioner by subdivisions 2 and 3 hereof, and may for such purpose classify domestic stock insurance companies, securities, and other persons or matters within the commissioner's jurisdiction. No provision of subdivisions 2 and 3 hereof imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule of the commissioner of commerce, notwithstanding that such rule may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason. Subd. 6. Definitions. (1) The term "equity security" when used in this section means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the commissioner of commerce shall deem to be of similar nature and consider necessary or appropriate, by such rules as the commissioner may prescribe in the public interest or for the protection of investors, to treat as an equity security. (2) The term "domestic stock insurance company" when used in this section includes a domestic stock and mutual insurance company as defined in sections 66A.36 to 66A.43. History:  1967 c 395 art 1 s 22; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c 248 s 70; 1986 c 444; 2005 c 69 art 2 s 18
60A.23 MISCELLANEOUS. Subdivision 1. Liability of directors and officers generally. If a company be at any time under liability for losses exceeding its net assets, and the president and directors, or any of them, knowing it, directly or indirectly, issue or consent to the issue of further insurance, each shall be personally liable for any loss under this insurance; and if any of them insures or allows to be insured on a single risk a larger sum than is authorized by law, that person shall be personally liable for any loss thereon above the amount which might lawfully be insured. Subd. 2. Liability of directors and officers of mutual company. No director or other officer of any mutual company shall, officially or privately, guarantee a policyholder thereof against an assessment to which the policyholder would otherwise be liable. When the directors of any mutual company fail for 30 days after entry of any judgment, or for six months after the accruing of any other indebtedness against it, to levy and deliver for collection any assessment required by law for payment thereof, or to apply the proceeds thereof in either case, each shall be personally liable for the amount thereof, and for all debts and claims then outstanding or which may accrue until the assessment shall be levied and put in process of collection. When the treasurer unreasonably fails to collect and properly apply the proceeds of any such assessment the treasurer shall be personally liable, not exceeding the total assessment, to any person entitled thereto, and shall be repaid only out of funds thereafter collected thereon. Subd. 3. Conflict of interest and compensation in mutual fire company. No officer or other person employed to determine the character of a risk, and decide the question of its acceptance by any mutual fire company other than a town or farmers company, shall receive a commission or other payment therefrom, but that person's compensation shall be by fixed salary and such share, if any, of the net profits as the directors may determine; and such officer or person shall not be an employee of any other officer or agent of the company, nor interested in the officer's or agent's business. Subd. 4. Dividends; limitations. Domestic stock companies shall follow the dividend limitation and reporting requirements set forth in chapter 60D. Subd. 5. Provisions as to fidelity and surety companies. (1) Requirements and acceptability. No company for guaranteeing the fidelity of persons in fiduciary positions, public or private, or for acting as surety, shall transact any business in this state until it shall have satisfied the commissioner that it has complied with all the provisions of law and obtained the commissioner's certificate to that effect. Thereupon it shall be authorized to execute as sole or joint surety any bond, undertaking, or recognizance which, by any municipal or other law, or by the rules or regulations of any municipal or other board, body, organization, or officer, is required or permitted to be made, given, tendered, or filed for the security or protection of any person, corporation, or municipality, or any department thereof, or of any other organization, conditioned for the doing or omitting of anything in such bond or other instrument specified or provided; and any and all courts, judges, officers, and heads of departments, boards, and municipalities required or permitted to accept or approve of the sufficiency of any such bond or instrument may in their discretion accept the same when executed, or the conditions thereof guaranteed solely or jointly by any such company, and the same shall be in all respects full compliance with every law or other provisions for the execution or guaranty by one surety or by two or more sureties, or that sureties shall be residents or householders, or landowners, or all or either. (2) Limits of risk. No fidelity or surety company shall insure or reinsure in a single risk, less any portion thereof reinsured, a larger sum than one-tenth of its net assets. Subd. 6. Company's principal place of business to be designated. When a company establishes any agency in a place other than that of its principal place of business, all signs, cards, pamphlets, or other printed matter issued shall designate such principal place. Subd. 7.  [Repealed, 1989 c 330 s 37] 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 for the benefit of employees or members of an association providing life, medical or hospital care, accident, sickness or disability insurance, or pharmacy benefits, 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 $1,500 for the initial application and $1,500 for each three-year renewal. All licenses are for a period of three 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. History:  1967 c 395 art 1 s 23; Ex1967 c 1 s 6; 1969 c 497 s 1; 1975 c 145 s 1; 1975 c 271 s 6; 1975 c 359 s 23; 1976 c 134 s 78; 1978 c 465 s 8; 1980 c 528 s 1; 1Sp1981 c 4 art 2 s 44,45; 1982 c 424 s 130; 1983 c 154 s 1; 1983 c 289 s 114 subd 1; 1983 c 328 s 8; 1984 c 592 s 43; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 337 s 14; 1987 c 358 s 96; 1990 c 422 s 10; 1992 c 564 art 4 s 4; 1993 c 299 s 6; 1994 c 425 s 5; 1995 c 233 art 2 s 56; 1995 c 258 s 5; 1997 c 200 art 1 s 41; 1999 c 223 art 2 s 5; 2001 c 215 s 7; 2004 c 228 art 2 s 1; 2005 c 132 s 3; 2009 c 178 art 1 s 15
60A.235 STANDARDS FOR DETERMINING WHETHER CONTRACTS ARE HEALTH PLAN CONTRACTS OR STOP LOSS CONTRACTS. Subdivision 1. Findings and purpose. The purpose of this section is to establish a standard for the determination of whether an insurance policy or other evidence or coverage should be treated as a policy of accident and sickness insurance or a stop loss policy for the purpose of the regulation of the business of insurance. The laws regulating the business of insurance in Minnesota impose distinctly different requirements upon accident and sickness insurance policies and stop loss policies. In particular, the regulation of accident and sickness insurance in Minnesota includes measures designed to reform the health insurance market, to minimize or prohibit selective rating or rejection of employee groups or individual group members based upon health conditions, and to provide access to affordable health insurance coverage regardless of preexisting health conditions. The health care reform provisions enacted in Minnesota will only be effective if they are applied to all insurers and health carriers who in substance, regardless of purported form, engage in the business of issuing health insurance coverage to employees of an employee group. This section applies to insurance companies and health carriers and the policies or other evidence of coverage that they issue. This section does not apply to employers or the benefit plans they establish for their employees. Subd. 2. Definitions. For purposes of this section, the terms defined in this subdivision have the meanings given. (a) "Attachment point" means the claims amount incurred by an insured group beyond which the insurance company or health carrier incurs a liability for payment. (b) "Direct coverage" means coverage under which an insurance company or health carrier assumes a direct obligation to an individual, under the policy or evidence of coverage, with respect to health care expenses incurred by the individual or a member of the individual's family. (c) "Expected claims" means the amount of claims that, in the absence of a stop loss policy or other insurance or evidence of coverage, are projected to be incurred by an employer-sponsored plan covering health care expenses. (d) "Expected plan claims" means the expected claims less the projected claims in excess of the specific attachment point, adjusted to be consistent with the employer's aggregate contract period. (e) "Health plan" means a health plan as defined in section 62A.011 and includes group coverage regardless of the size of the group. (f) "Health carrier" means a health carrier as defined in section 62A.011. Subd. 3. Health plan policies issued as stop loss coverage. (a) An insurance company or health carrier issuing or renewing an insurance policy or other evidence of coverage, that provides coverage to an employer for health care expenses incurred under an employer-sponsored plan provided to the employer's employees, retired employees, or their dependents, shall issue the policy or evidence of coverage as a health plan if the policy or evidence of coverage: (1) has a specific attachment point for claims incurred per individual that is lower than $20,000; or (2) has an aggregate attachment point that is lower than 110 percent of expected claims. (b) An insurer shall determine the number of persons in a group, for the purposes of this section, on a consistent basis, at least annually. Where the insurance policy or evidence of coverage applies to a contract period of more than one year, the dollar amounts set forth in paragraph (a), clause (1), must be multiplied by the length of the contract period expressed in years. (c) A policy or evidence of coverage issued by an insurance company or health carrier that provides direct coverage of health care expenses of an individual including a policy or evidence of coverage administered on a group basis is a health plan regardless of whether the policy or evidence of coverage is denominated as stop loss coverage. Subd. 3a. Actuarial certification. An insurer shall file with the commissioner annually on or before March 15, an actuarial certification certifying that the insurer is in compliance with this section and section 60A.236. The certification shall be in a form and manner, and shall contain information, specified by the commissioner. A copy of the certification shall be retained by the insurer at its principal place of business. Subd. 4. Compliance. (a) An insurance company or health carrier that is required to issue a policy or evidence of coverage as a health plan under this section shall, even if the policy or evidence of coverage is denominated as stop loss coverage, comply with all the laws of this state that apply to the health plan, including, but not limited to, chapters 62A, 62C, 62D, 62E, 62L, and 62Q. (b) With respect to an employer who had been issued a policy or evidence of coverage denominated as stop loss coverage before August 1, 2009, compliance with this section is required as of the first renewal date occurring on or after August 1, 2009, and applies to policies issued or renewed on or after that date. History:  1995 c 258 s 6; 2009 c 178 art 1 s 16; 2017 c 2 art 2 s 2
60A.236 STOP LOSS REGULATION; SMALL EMPLOYER COVERAGE. A contract providing stop loss coverage, issued or renewed to a small employer, as defined in section 62L.02, subdivision 26, or to a plan sponsored by a small employer, must include a claim settlement period no less favorable to the small employer or plan than the following: (1) claims incurred during the contract period; and (2) paid by the plan during the contract period or within three months after expiration of the contract period. History:  1995 c 258 s 7; 2017 c 2 art 2 s 3
60A.24 EXEMPTIONS FROM INSURANCE LAWS OF THIS STATE. The following are exempt from all insurance laws of the state: All organizations listed in section 64B.38 of the laws relating to fraternal benefit societies. History:  1967 c 395 art 1 s 24; 1985 c 49 s 41; 1992 c 564 art 1 s 54
60A.25 INSOLVENT COMPANIES. Subdivision 1. Notification of policyholders. Whenever any foreign or domestic insurance company authorized to transact the business of insurance in Minnesota is adjudicated insolvent, or whenever its policies are declared null and void by court order, the commissioner of commerce shall ascertain the names and last known addresses of all Minnesota policyholders of said company, and shall notify all Minnesota policyholders within 30 days of such adjudication or court order. In the case of foreign insurers authorized to do business in this state, the commissioner of commerce may elect to notify all of the company's licensed agents in Minnesota with a directive that the agents notify all insureds of the company's insolvency or that its policies have been declared null and void. Subd. 2. Remittance of premiums. Every agency contract written by an insurance company writing property and casualty insurance in Minnesota shall contain or be construed to contain the following provision: "Notwithstanding any other provision of this contract, the obligation of the agent to remit written premiums to the company shall be changed upon the commencement of any administrative or legal proceeding by any state against the carrier regarding its financial condition. After the commencement of the proceedings, the obligation of the agent to remit premiums shall be confined to the premiums earned before the commencement of the proceedings. The agent shall not owe or remit to the company or to the liquidator or receiver any premiums that are unearned as of the date of the commencement of the delinquency proceedings, and any unearned premiums in the possession of the agent on the date shall be returned promptly by the agent to the insured or, with the approval of the insured, be used to purchase new coverage for the insured with a different insurer." History:  1967 c 368 s 1; 1971 c 527 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 455 s 7
60A.26 SUSPENSION OF INSURERS; NOTIFICATIONS AND REPORTS. Subdivision 1. Other states. The commissioner of commerce shall notify the insurance departments of all other states whenever, under any law then in effect, the commissioner suspends the right of a foreign or domestic insurer to transact business in this state. Subd. 2. NAIC. The commissioner of commerce shall report public regulatory actions, investigative information, and complaints to the appropriate reporting system or database of the National Association of Insurance Commissioners. History:  1967 c 369 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1995 c 258 s 8
60A.27 DISCIPLINE OF INSURER BY ANOTHER STATE; NOTICE TO COMMISSIONER. Subdivision 1. Requirement. An insurance company licensed to transact business in this state is hereby required to notify the commissioner of commerce within ten business days of the happening of any one or more of the following: (1) the suspension or revocation of its right to transact business in another state; or (2) the receipt by the insurance company of an order to show why its license should not be suspended or revoked. Subd. 2. Penalty. Any insurance company which fails to notify the commissioner of commerce within the time period specified in subdivision 1 is subject to a penalty of not more than $500, or suspension, or both. History:  1967 c 448 s 1,2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1991 c 325 art 21 s 1; 2017 c 98 s 3
60A.28 DOCUMENTS FILED WITH COMMISSIONER, VERIFICATION. The commissioner of commerce may require that any document required by law to be filed with the commissioner, be accompanied by a sworn verification of its contents by a responsible officer of the corporation filing it. The commissioner shall prescribe the form of the verification by rule. History:  1967 c 457 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444
60A.29 NONPROFIT RISK INDEMNIFICATION TRUST ACT. Subdivision 1. Title. This section may be cited as the "Nonprofit Risk Indemnification Trust Act." Subd. 2. Purpose. The purpose of this section is to authorize the establishment of trust funds for the purpose of indemnifying nonprofit beneficiary organizations and their officers, directors, and agents for financial loss due to the imposition of legal liability or for damage or destruction of property, and to regulate the operation of trust funds established under this section. Subd. 3. Approval of commissioner. No trust fund with the purpose of indemnifying multiple nonprofit beneficiary organizations shall be established without the prior approval of the commissioner of the Department of Commerce. The commissioner shall withhold approval of any trust fund that fails to comply with the provisions and requirements of this section. Subd. 4. Eligible beneficiaries. No organization, corporation, agency, or program shall be a beneficiary of any trust fund established under this section unless it is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1954, as amended through December 30, 1985. No trust fund established under this section shall agree to indemnify the state of Minnesota, any political subdivision of the state, or any hospital licensed pursuant to section 144.55. No trust fund established under this section shall indemnify any beneficiary for loss or damage to property permanently located outside the boundaries of this state or for legal liabilities arising from operations or activities occurring outside this state, except where those operations or activities are of a nonroutine nature; provided, however, that this restriction shall not apply to a beneficiary which is incorporated under the laws of this state and has its principal office located in this state. Subd. 5. Ineligible risks. No trust fund established under this section shall indemnify any beneficiary for liabilities incurred under the Workers' Compensation Act, or for benefits provided to employees pursuant to any medical, dental, life, or disability income protection plan. Subd. 6. Benefit schedules. Every trust fund established under this section shall establish in its bylaws or plan of operation a schedule of benefits, to be approved by the commissioner, governing the indemnification of beneficiaries of the trust. The schedule of benefits shall include all conditions, limitations, and exclusions relevant to indemnification. Subd. 7. Indemnification agreements. Every trust fund established under this section shall provide each of its beneficiaries with a written indemnification agreement specifying the rights and obligations of the trust fund and the beneficiary under the agreement. Each form of indemnification agreement shall be filed with and approved by the commissioner. Subd. 8. Contributions. The trust fund shall establish contributions required of beneficiaries necessary to fund the operations of the fund. All contribution schedules shall be filed with and approved by the commissioner prior to use. Contributions must be based on sound actuarial principles and be adequate to fund the operation of the trust fund. Contributions may not be excessive, in relation to the benefits provided, or unfairly discriminatory. Subd. 9. Risk pooling or sharing agreements prohibited. No trust fund established under this section shall enter into an agreement with any other trust fund whereby the risks assumed by each are pooled or shared. Subd. 10. Board of trustees. Every trust fund established under this section shall be governed by a board of no fewer than five trustees. The initial trustees need not be appointed or elected by the beneficiaries of the trust fund. During the second year following the creation of an authorized trust fund, at least one-fourth of all its trustees in office shall have been elected or appointed by the beneficiaries. After the end of the second year following the creation of an authorized trust fund, a majority of all trustees in office shall have been elected or appointed by the beneficiaries. All trustees serving during the first two years following the creation of an authorized trust fund shall be elected or appointed for one-year terms. All trustees serving thereafter shall be elected or appointed for two-year terms, provided that the trustees may be elected or appointed for one-year terms to the extent necessary in order to create staggered terms. Any trustee may be removed at any time, with or without cause, by a majority vote of the beneficiaries. The board of trustees shall meet no fewer than four times each year. Subd. 11. Trustees; compensation. No trustee shall be paid a salary or receive other compensation for service as a trustee, except that the bylaws or plan of operation may provide for reimbursement for actual expenses incurred on behalf of the trust fund and for the payment of a reasonable per diem amount for attendance at meetings of the board. Subd. 12. Bylaws; plan of operation. The trustees of each trust fund authorized under this section shall cause to be adopted a set of bylaws or plan of operation which shall govern the operation of the trust fund. All bylaws or plans of operation or amendments to them are subject to prior approval by the commissioner. The commissioner shall adopt rules governing the content and approval of bylaws or plans of operation. Subd. 13. Financial statement; report on operations. Every trust fund authorized under this section shall, by June 1 of every year, file with the commissioner a financial statement for the previous year's operations. The financial statement must include the opinion of a certified public accountant that the statement was prepared in conformity with generally accepted accounting principles. Also by June 1 of every year, every trust fund must file with the commissioner, on forms provided by the department, a report summarizing the trust fund's operations during the previous year. Subd. 14. Financial standards. Every authorized trust fund shall have and maintain financial assets sufficient to satisfy all current and future financial obligations and responsibilities to beneficiaries. The commissioner shall adopt rules establishing minimum financial standards for authorized trust funds. Subd. 15. Contracts; fees. Authorized trust funds may enter into contracts with risk management service providers, actuarial consultants, or other vendors as are necessary to ensure the effective and efficient operation of the trust fund. Fees paid to vendors for services provided must not be excessive. Subd. 16. Reinsurance. Authorized trust funds may insure or reinsure their obligations and liabilities with: (1) insurance companies authorized to do business in Minnesota, pursuant to section 60A.06; (2) insurance companies similarly authorized in any other state of the United States; (3) insurance companies not authorized in Minnesota or any other state if the unauthorized insurance company establishes reinsurance security in favor of the ceding trust fund conforming to the general rules for allowance of reinsurance credits stated in the Financial Condition Examiners Handbook adopted by the National Association of Insurance Commissioners; or (4) other trust funds organized under this section or under similar laws of any other state if the reinsuring trust fund establishes reinsurance security as specified in clause (3) in favor of the ceding trust fund. Subd. 17. Interbeneficiary cause of action. No beneficiary shall have any cause of action against any other beneficiary arising solely out of the insolvency or inability of the trust fund to meet its obligations. Subd. 18. Examination. The commissioner may examine authorized trust funds to the same extent and with the same purpose as is provided, with respect to insurance companies, by section 60A.031. Subd. 19. Security deposit. As a condition of authorization, every trust fund shall deposit with the commissioner an acceptable security of a value equal to not less than $500,000. In the event that a trust fund fails to honor the obligations assumed by it under trust agreements issued to its beneficiaries, use of the security deposit shall revert to the commissioner for the purpose of executing the trust fund's obligations to its beneficiaries. The commissioner shall adopt rules governing the amount of security required and the acceptable forms of security. Subd. 20. Rules. The commissioner may adopt rules to enforce and administer the requirements of this section. Subd. 21. Trust funds not subject to insurance rules. Trust funds established under this section shall not be considered insurance companies or to be in the business of insurance nor shall they be subject to regulation by the commissioner, except as provided for in this section. Subd. 22. Foreign trust funds. A trust fund organized and existing under the laws of another state for the sole purpose of indemnifying nonprofit beneficiary organizations and their officers, directors, and agents for financial loss due to the imposition of legal liability or for damage or destruction of property, as provided in subdivisions 2 and 4, may apply to the commissioner for authority to operate within this state, provided that: (1) the trust fund has been continuously in operation for a period of not less than five years prior to the date it applies for authorization under this subdivision, during which period it must have issued only nonassessable indemnification agreements to its beneficiaries, and during each of those years the trust fund received not less than $1,000,000 in contributions from beneficiaries for protections afforded by the trust fund; (2) the trust fund has been authorized by and is subject to regulation and examination by the department of insurance of its domiciliary state; (3) the trust fund must file with the commissioner its trust agreement, bylaws or plan of operation, schedule of benefits, forms of indemnification agreements, and contribution schedules applicable to beneficiaries in this state; (4) the trust fund must be governed by a board of not fewer than five trustees, all of whom must be elected by the beneficiaries of the trust fund, and none of whom may receive compensation for service as a trustee; (5) the trust fund has, as of the last day of the calendar year immediately prior to its application for authority, a net fund balance surplus of not less than $1,000,000, as evidenced by its financial statements certified by an independent certified public accountant in accordance with generally accepted accounting principles consistently applied; and (6) the trust fund must, upon and at all times after authorization by the commissioner, maintain a registered office within this state. Subd. 23. Standards for authorization. Within 60 days after receipt of the documents specified under subdivision 22 and supporting evidence which establishes compliance with the standards set forth under that subdivision, the commissioner shall grant to the trust fund a certificate of authority to conduct operations in this state. The operations in this state are subject to the limitations and standards set forth in subdivisions 4 to 22. In the event an authorized foreign trust fund violates one of those subdivisions or the rules of the commissioner applicable to foreign trust funds, the commissioner may suspend or revoke the certificate of authority. Subd. 24. Rules. The commissioner may adopt rules to enforce and administer requirements of subdivisions 22 and 23. History:  1985 c 248 s 70; 1986 c 455 s 8; 1987 c 337 s 15-20
60A.315 EXPEDITED FORM AND RATE FILING. Subdivision 1. Authority. An insurer or rate service organization otherwise required to file rates and forms may use the expedited filing procedure under this section for homeowner's insurance as defined in section 65A.27, subdivision 4, and automobile insurance as governed by chapter 65B. Subd. 2. Compliance certifications. An insurer or rate service organization shall file with the Department of Commerce on a prescribed form a description of the policy, amendment, or endorsement and a written certification signed by an officer of the insurer or the rate service organization that the forms, policies, amendments, and endorsements comply with all applicable Minnesota statutes, rules, and case law, and a copy of the policy, amendment, or endorsement. If the filing will impact rates, the filing must comply with section 70A.06, subdivisions 1 and 1a. Forms and rates filed under this procedure are effective upon receipt by the department. Anyone using the expedited filing procedures authorized by this section must provide copies of the form filings within 24 hours of receiving a request from the commissioner. Insurers may comply with this requirement by providing the form filings in paper or electronic format. Subd. 3. Application of law. If an insurer uses the services of a rate service organization for purposes of filing a certificate of compliance under this section, the certification by the rate service organization under subdivision 2 does not excuse the insurer from its obligation to ensure that its filing complies with all applicable Minnesota statutes, rules, and case law. Subd. 4. Fees. In order to be effective, the filing must be accompanied by payment of the filing fee applicable to the policy, amendment, endorsement, or rate unless the fee is remitted in accordance with an alternative procedure allowed under section 60A.14. Subd. 5. Record keeping. The insurer or rate service organization shall retain the policy, amendment, or endorsement for at least five years after that policy, amendment, or endorsement ceased providing coverage to any Minnesota policyholder, and shall provide to the Department of Commerce upon request a copy of any form in use pursuant to these filing procedures. Subd. 6. Audits; penalties. The commissioner is authorized to conduct audits and investigations under section 45.027 and this chapter to determine if the insurers are complying with Minnesota law in the issuance of policies described under this section. If the policy filings contain provisions that are inconsistent with or violate Minnesota law, the commissioner may take action against the insurer under section 45.027. The commissioner shall assess the insurer for the costs of the investigation performed by the department and shall deposit all such assessments into the revolving fund established under section 60A.03. History:   2005 c 74 s 3 
60A.32 RATE FILING FOR CROP HAIL INSURANCE. Subdivision 1. Authority. An insurer issuing policies of insurance against crop damage by hail in this state shall file its insurance rates with the commissioner using the expedited filing procedure under subdivision 2. The insurance rates must be filed before February 1 of the year in which a policy is issued. Subd. 2. Compliance certifications. In addition to the proposed rates, an insurer shall file with the Department of Commerce on a form prescribed by the commissioner a written certification, signed by an officer of the insurer, that the rates comply with section 70A.04. Rates filed under this procedure are effective upon the date of receipt or on a subsequent date requested by the insurer. Subd. 3. Fee. In order to be effective, the filing must be accompanied by payment of the applicable filing fee. History:  1988 c 688 art 9 s 1; 1995 c 24 s 1; 1999 c 177 s 17; 2009 c 178 art 1 s 17
60A.35 SCOPE. Except as specifically limited in section 60A.351, sections 60A.35 to 60A.38 apply to all commercial liability and/or property insurance policies issued by companies licensed to do business in this state except ocean marine insurance, accident and health insurance, excess insurance, surplus lines insurance, and reinsurance. History:  1987 c 337 s 23; 1994 c 485 s 65
60A.351 RENEWAL OF INSURANCE POLICY WITH ALTERED RATES. If an insurance company licensed to do business in this state offers or purports to offer to renew any commercial liability and/or property insurance policy at less favorable terms as to the dollar amount of coverage or deductibles, higher rates, and/or higher rating plan, the new terms, the new rates and/or rating plan may take effect on the renewal date of the policy if the insurer has sent to the policyholder notice of the new terms, new rates and/or rating plan at least 30 days prior to the expiration date. If the insurer has not so notified the policyholder, the policyholder may elect to cancel the renewal policy within the 60-day period after receipt of the notice. Earned premium for the period of coverage, if any, shall be calculated pro rata upon the prior rate. This section does not apply to ocean marine insurance, accident and health insurance, reinsurance, and coverage under the federal Terrorism Risk Insurance Act. This section does not apply if the change relates to guide "a" rates or excess rates also known as "consent to rates" or if there has been any change in the risk insured. History:  1986 c 455 s 58; 1987 c 337 s 21; 1994 c 485 s 65; 2002 c 330 s 2; 2005 c 74 s 6; 2007 c 104 s 1
60A.352 WORKERS' COMPENSATION INSURANCE. In addition to the requirements of Minnesota Statutes 1984, section 176.185, subdivision 1, a policy of insurance issued to cover the liability to pay compensation under Minnesota Statutes 1984, chapter 176, shall comply with sections 60A.35 to 60A.38. History:  1986 c 455 s 59; 1987 c 337 s 22; 1994 c 485 s 65
60A.36 MIDTERM CANCELLATION. Subdivision 1. Reason for cancellation. No insurer may cancel a policy of commercial liability and/or property insurance during the term of the policy, except for one or more of the following reasons: (1) nonpayment of premium; (2) misrepresentation or fraud made by or with the knowledge of the insured in obtaining the policy or in pursuing a claim under the policy; (3) actions by the insured that have substantially increased or substantially changed the risk insured; (4) refusal of the insured to eliminate known conditions that increase the potential for loss after notification by the insurer that the condition must be removed; (5) substantial change in the risk assumed, except to the extent that the insurer should reasonably have foreseen the change or contemplated the risk in writing the contract; (6) loss of reinsurance by the insurer which provided coverage to the insurer for a significant amount of the underlying risk insured. A notice of cancellation under this clause shall advise the policyholder that the policyholder has ten days from the date of receipt of the notice to appeal the cancellation to the commissioner of commerce and that the commissioner will render a decision as to whether the cancellation is justified because of the loss of reinsurance within 30 business days after receipt of the appeal; (7) a determination by the commissioner that the continuation of the policy could place the insurer in violation of the insurance laws of this state; or (8) nonpayment of dues to an association or organization, other than an insurance association or organization, where payment of dues is a prerequisite to obtaining or continuing the insurance. This provision for cancellation for failure to pay dues does not apply to persons who are retired at 62 years of age or older or who are disabled according to Social Security standards. Subd. 2. Notice. Cancellation under subdivision 1, clauses (2) to (8), shall not be effective before 60 days after notice to the policyholder. The notice of cancellation shall contain a specific reason for cancellation as provided in subdivision 1. A policy shall not be canceled for nonpayment of premium pursuant to subdivision 1, clause (1), unless the insurer, at least ten days before the effective cancellation date, has given notice to the policyholder of the amount of premium due and the due date. The notice shall state the effect of nonpayment by the due date. No cancellation for nonpayment of premium shall be effective if payment of the amount due is made before the effective date in the notice. Subd. 2a. Third-party notices. An insurer shall provide notice to a third party if: (1) the policyholder has, separately from the certificate, notified the insurer of the identity of the third party; and (2) the third party is a licensing authority authorized by statute to receive the notice or a state, city, or county governmental unit on whose behalf the insured is providing services. Subd. 3. New policies. Subdivisions 1 and 2 do not apply to any insurance policy that has not been previously renewed if the policy has been in effect less than 90 days at the time the notice of cancellation is mailed or delivered. No cancellation under this subdivision is effective until at least ten days after the written notice to the policyholder. Subd. 4. Longer-term policies. A policy may be issued for a term longer than one year or for an indefinite term with a clause providing for cancellation by the insurer for the reasons stated in subdivision 1 by giving notice as required by subdivision 2 at least 60 days before any anniversary date. Subd. 5. Rescission. (a) No insurer may rescind or void a contract of liability or property insurance unless there was material misrepresentation, material omission, or fraud made by or with the knowledge of the insured in obtaining the contract or in pursuing a claim under the policy. (b) No misrepresentation or omission shall be material unless knowledge by the insurer of the facts misrepresented or omitted would have led to a refusal by the insurer to make such a contract. In determining the question of materiality, evidence of the practice of the insurer with respect to the acceptance or rejection of similar risks shall be admissible. (c) For purposes of this section, a representation is a statement as to past or present fact, made to an insurer or the insurer's agent by the applicant as an inducement for issuing a contract of commercial liability or property insurance. A misrepresentation is a false representation, and the facts misrepresented are those facts which make the representation false. (d) This subdivision does not limit the right to cancel the policy prospectively for the reasons stated in subdivision 1, clause (2). History:  1987 c 337 s 24; 1994 c 485 s 13; 1996 c 446 art 1 s 7; 2010 c 384 s 7
60A.37 NONRENEWAL. Subdivision 1. Notice required. At least 60 days before the date of expiration provided in the policy, a notice of intention not to renew the policy beyond the agreed expiration date must be made to the policyholder by the insurer. If the notice is not given at least 60 days before the date of expiration provided in the policy, the policy shall continue in force until 60 days after a notice of intent not to renew is received by the policyholder. Subd. 2. Exceptions. This section does not apply if the policyholder has insured elsewhere, has accepted replacement coverage, or has requested or agreed to nonrenewal. History:   1987 c 337 s 25 
60A.38 INTERPRETATION AND PENALTIES. Subdivision 1. Sections not exclusive. Sections 60A.35 to 60A.38 are not exclusive, and the commissioner may also consider other provisions of Minnesota law to be applicable to the circumstances or situations addressed by sections 60A.35 to 60A.38. The rights provided by sections 60A.35 to 60A.38 are in addition to and do not prejudice any other rights the policyholder may have at common law, under statute, or rules. Subd. 2. Penalties. A violation of any provisions of sections 60A.35 to 60A.38 shall be deemed to be an unfair trade practice in the business of insurance and shall subject the violator to the penalties provided by sections 72A.17 to 72A.32 in addition to any other penalty provided by law. Subd. 3. Notices required. All notices required by sections 60A.35 to 60A.38 shall only be made by first class mail addressed to the policyholder's last known address or by delivery to the policyholder's last known address. Notice by first class mail is effective upon deposit in the United States mail. In addition to giving notice to the policyholder, the insurer must also give notice to the agent of record, if any, in the manner specified for the policyholder. Subd. 4. Proof of mailing notice. Unless otherwise specifically required, United States Postal Service proof of mailing of the notice of cancellation, reduction in the limits of liability of coverage, or nonrenewal of an insurance policy is sufficient proof the proper notice has been given. History:  1987 c 337 s 26; 1990 c 475 s 1
60A.39 CERTIFICATES OF INSURANCE. Subdivision 1. Issuance. A licensed insurer or insurance producer may provide to a third party a certificate of insurance which documents insurance coverage. For the purposes of this chapter, a certificate of insurance is a document that provides evidence of property or liability insurance coverage and the amount of insurance issued, and does not convey any contractual rights to the certificate holder. Subd. 2. Approval. An insurer or licensed producer shall not issue a certificate of insurance or other document or instrument that either affirmatively or negatively amends, extends, or alters the coverage provided by an approved policy, form, or endorsement without the written approval of the commissioner. Subd. 3. Required statement. A certificate or memorandum of property or casualty insurance when issued to any person other than the policyholder must contain the following or similar statement: "This certificate or memorandum of insurance does not affirmatively or negatively amend, extend, or alter the coverage afforded by the insurance policy." Subd. 4. Cancellation notice. A certificate provided to a third party must not provide for notice of cancellation that exceeds the statutory notice of cancellation provided to the policyholder or a period of notice specified in the policy. Subd. 5. Filing. An insurer not using the standard ACORD or ISO form "Certificate of Insurance" shall file with the commissioner, prior to its use, a similar alternative "Certificate of Insurance" covering the same information for use by the insurer. Filed forms may not be amended at the request of a third party. Subd. 6. Opinion letters. A licensed insurance producer may not issue, in lieu of a certificate, an agent's opinion letter or other correspondence that is inconsistent with this section. History:  2009 c 178 art 1 s 18; 2010 c 384 s 8-10
60A.41 SUBROGATION AGAINST INSUREDS PROHIBITED. (a) An insurance company providing insurance coverage or its reinsurer for that underlying insurance coverage may not proceed against its insured in a subrogation action where the loss was caused by the nonintentional acts of the insured. (b) An insurance company providing insurance coverage or its reinsurer for that underlying insurance coverage may not subrogate itself to the rights of its insured to proceed against another person if that other person is insured for the same loss, by the same company. This provision applies only if the loss was caused by the nonintentional acts of the person against whom subrogation is sought. (c) This provision does not apply to or affect claims of a surety against its principal. (d) Nothing in this section prevents an insurer from allocating the loss internally to the at-fault insured for purposes of underwriting, agency, and claims information. History:  1989 c 201 s 1; 1990 c 399 s 1
60A.42 DISABILITY INCOME COVERAGE; PROHIBITED PROVISION. No policy, contract, certificate, or agreement offered or issued in this state providing for disability income protection coverage may contain a provision purporting to reserve discretion to the insurer to interpret the terms of the contract or provide a standard of review that is inconsistent with the laws of this state, or less favorable to the enrollee when a claim is denied than a preponderance of the evidence standard. History:   2015 c 59 s 1 
60A.50 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 60A.50 to 60A.592, the terms in subdivisions 2 to 13 have the meanings given them. Subd. 2. Adjusted RBC report. "Adjusted RBC report" means an RBC report which has been adjusted by the commissioner in accordance with section 60A.51, subdivision 3. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce or the commissioner of health, whichever commissioner otherwise regulates the health organization. Subd. 4. Corrective order. "Corrective order" means an order issued by the commissioner specifying corrective actions which the commissioner has determined are required. Subd. 5. Domestic health organization. "Domestic health organization" means a health organization domiciled in this state. Subd. 6. Foreign health organization. "Foreign health organization" means a health organization that is licensed to do business in this state but is not domiciled in this state. Subd. 7. NAIC. "NAIC" means the National Association of Insurance Commissioners. Subd. 8. Health organization. "Health organization" means an entity licensed under this chapter or chapter 62C or 62D. This definition does not include an organization that is licensed or regulated as either a life and health insurer or a property and casualty insurer that is otherwise subject to either the life or property and casualty risk-based capital requirements. Subd. 9. RBC instructions. "RBC instructions" means the RBC report including risk-based capital instructions adopted by the NAIC, as these RBC instructions may be amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC. Subd. 10. RBC level. "RBC level" means a health organization's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where: (1) "company action level RBC" means, with respect to any health organization, the product of 2.0 and its authorized control level RBC; (2) "regulatory action level RBC" means the product of 1.5 and its authorized control level RBC; (3) "authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions; and (4) "mandatory control level RBC" means the product of .70 and the authorized control level RBC. Subd. 11. RBC plan. "RBC plan" means a comprehensive financial plan containing the elements specified in section 60A.52, subdivision 2. If the commissioner rejects the RBC plan, and it is revised by the health organization, with or without the commissioner's recommendation, the plan must be called the "revised RBC plan." Subd. 12. RBC report. "RBC report" means the report required in section 60A.51. Subd. 13. Total adjusted capital. "Total adjusted capital" means the sum of: (1) a health organization's statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed; and (2) such other items, if any, as the RBC instructions may provide. History:   2004 c 285 art 1 s 1 
60A.51 RBC REPORTS. Subdivision 1. Submissions. A domestic health organization shall, on or before each April 1, prepare and submit to the commissioner a report of its RBC levels as of the end of the calendar year just ended, in a form and containing the information required by the RBC instructions. In addition, a domestic health organization shall file its RBC report: (1) with the NAIC in accordance with the RBC instructions; and (2) with the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report not later than the later of: (i) 15 days from the receipt of notice to file its RBC report with that state; or (ii) the filing date. Subd. 2. Determination. A health organization's RBC must be determined in accordance with the formula set forth in the RBC instructions. The formula must take the following into account, and may adjust for the covariance between, determined in each case by applying the factors in the manner set forth in the RBC instructions: (1) asset risk; (2) credit risk; (3) underwriting risk; and (4) all other business risks and such other relevant risks as are set forth in the RBC instructions. Subd. 2a. Excess of capital. An excess of capital (net worth) over the amount produced by the risk-based capital requirements contained in sections 60A.50 to 60A.592 and the formulas, schedules, and instructions referenced in sections 60A.50 to 60A.592 is desirable in the business of health insurance. Subd. 3. Adjusted report. If a domestic health organization files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the health organization of the adjustment. The notice must contain a statement of the reason for the adjustment. An RBC report as so adjusted is referred to as an "adjusted RBC report." History:  2004 c 285 art 1 s 2; 2019 c 26 art 3 s 1
60A.52 COMPANY ACTION LEVEL EVENT. Subdivision 1. Definition. "Company action level event" means the following events: (1) the filing of an RBC report by a health organization that indicates that the health organization's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC. If a health organization has total adjusted capital greater than or equal to its company action level RBC but less than the product of its authorized control level RBC multiplied by three, and triggers the trend test determined in accordance with the trend test calculation included in the health RBC instructions; (2) notification by the commissioner to the health organization of an adjusted RBC report that indicates an event in clause (1), provided the health organization does not challenge the adjusted RBC report under section 60A.56; or (3) if, pursuant to section 60A.56, a health organization challenges an adjusted RBC report that indicates the event in clause (1), the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge. Subd. 2. RBC plan required. In the event of a company action level event, the health organization shall prepare and submit to the commissioner an RBC plan that: (1) identifies the conditions that contribute to the company action level event; (2) contains proposals of corrective actions that the health organization intends to take and that would be expected to result in the elimination of the company action level event; (3) provides projections of the health organization's financial results in the current year and at least the two succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory balance sheets, operating income, net income, capital and surplus, and RBC levels. The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense, and benefit component; (4) identifies the key assumptions impacting the health organization's projections and the sensitivity of the projections to the assumptions; and (5) identifies the quality of, and problems associated with, the health organization's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case. Subd. 3. RBC plan submission. The RBC plan must be submitted: (1) within 45 days of the company action level event; or (2) if the health organization challenges an adjusted RBC report pursuant to section 60A.56, within 45 days after notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge. Subd. 4. RBC plan implementation. Within 60 days after the submission by a health organization of an RBC plan to the commissioner, the commissioner shall notify the health organization whether the RBC plan must be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the RBC plan is unsatisfactory, the notification to the health organization must set forth the reasons for the determination, and may set forth proposed revisions which will render the RBC plan satisfactory, in the judgment of the commissioner. Upon notification from the commissioner, the health organization shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan to the commissioner: (1) within 45 days after the notification from the commissioner; or (2) if the health organization challenges the notification from the commissioner under section 60A.56, within 45 days after a notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge. Subd. 5. Unsatisfactory plan. In the event of a notification by the commissioner to a health organization that the health organization's RBC plan or revised RBC plan is unsatisfactory, the commissioner may, at the commissioner's discretion, subject to the health organization's right to a hearing under section 60A.56, specify in the notification that the notification constitutes a regulatory action level event. Subd. 6. Additional filing. Every domestic health organization that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the health organization is authorized to do business if: (1) the state has an RBC provision substantially similar in section 60A.57, subdivision 1; and (2) the insurance commissioner of that state has notified the health organization of its request for the filing in writing, in which case the health organization shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of: (i) 15 days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or (ii) the date on which the RBC plan or revised RBC plan is filed under subdivisions 3 and 4. History:  2004 c 285 art 1 s 3; 2019 c 26 art 3 s 2
60A.53 REGULATORY ACTION LEVEL EVENT. Subdivision 1. Definition. "Regulatory action level event" means, with respect to a health organization, any of the following events: (1) the filing of an RBC report by the health organization that indicates that the health organization's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC; (2) notification by the commissioner to a health organization of an adjusted RBC report that indicates the event in clause (1), provided the health organization does not challenge the adjusted RBC report under section 60A.56; (3) if, pursuant to section 60A.56, the health organization challenges an adjusted RBC report that indicates the event in clause (1), the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge; (4) the failure of the health organization to file an RBC report by the filing date, unless the health organization has provided an explanation for the failure that is satisfactory to the commissioner and has cured the failure within ten days after the filing date; (5) the failure of the health organization to submit an RBC plan to the commissioner within the time period set forth in section 60A.52, subdivision 3; (6) notification by the commissioner to the health organization that: (i) the RBC plan or revised RBC plan submitted by the health organization is, in the judgment of the commissioner, unsatisfactory; and (ii) notification constitutes a regulatory action level event with respect to the health organization, provided the health organization has not challenged the determination under section 60A.56; (7) if, pursuant to section 60A.56, the health organization challenges a determination by the commissioner under clause (6), the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge; (8) notification by the commissioner to the health organization that the health organization has failed to adhere to its RBC plan or revised RBC plan, but only if the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, provided the health organization has not challenged the determination under section 60A.50; or (9) if, pursuant to section 60A.56, the health organization challenges a determination by the commissioner under clause (8), the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge. Subd. 2. Commissioner's duties. In the event of a regulatory action level event the commissioner shall: (1) require the health organization to prepare and submit an RBC plan or, if applicable, a revised RBC plan; (2) perform any examination or analysis the commissioner considers necessary of the assets, liabilities, and operations of the health organization, including a review of its RBC plan or revised RBC plan; and (3) after the examination or analysis, issue a corrective order specifying the corrective actions the commissioner determines are required. Subd. 3. Corrective actions. In determining corrective actions, the commissioner may take into account factors the commissioner considers relevant with respect to the health organization based upon the commissioner's examination or analysis of the assets, liabilities, and operations of the health organization, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or revised RBC plan must be submitted: (1) within 45 days after the occurrence of the regulatory action level event; (2) if the health organization challenges an adjusted RBC report pursuant to section 60A.56 and the challenge is not frivolous in the judgment of the commissioner within 45 days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge; or (3) if the health organization challenges a revised RBC plan pursuant to section 60A.56 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge. Subd. 4. Consultants. The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the health organization's RBC plan or revised RBC plan, examine or analyze the assets, liabilities, and operations, including contractual relationships, of the health organization and formulate the corrective order with respect to the health organization. The fees, costs, and expenses relating to consultants must be borne by the affected health organization or such other party as directed by the commissioner. History:   2004 c 285 art 1 s 4 
60A.54 AUTHORIZED CONTROL LEVEL EVENT. Subdivision 1. Definition. "Authorized control level event" means any of the following events: (1) the filing of an RBC report by the health organization that indicates that the health organization's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC; (2) the notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in clause (1), provided the health organization does not challenge the adjusted RBC report under section 60A.56; (3) if, pursuant to section 60A.56, the health organization challenges an adjusted RBC report that indicates the event in clause (1), notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge; (4) the failure of the health organization to respond, in a manner satisfactory to the commissioner, to a corrective order, provided the health organization has not challenged the corrective order under section 60A.56; or (5) if the health organization has challenged a corrective order under section 60A.56 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the health organization to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner. Subd. 2. Commissioner's duties. In the event of an authorized control level event with respect to a health organization, the commissioner shall: (1) take such actions as are required under section 60A.53 regarding a health organization with respect to which a regulatory action level event has occurred; or (2) if the commissioner considers it to be in the best interests of the policyholders and creditors of the health organization and of the public, take such actions as are necessary to cause the health organization to be placed under regulatory control under chapter 60B. In the event the commissioner takes such actions, the authorized control level event is considered sufficient grounds for the commissioner to take action under chapter 60B, and the commissioner shall have the rights, powers, and duties with respect to the health organization as are set forth in chapter 60B. In the event the commissioner takes actions under this clause pursuant to an adjusted RBC report, the health organization is entitled to the protections afforded health organizations under sections 60B.11 and 60B.13 pertaining to summary proceedings. History:   2004 c 285 art 1 s 5 
60A.55 MANDATORY CONTROL LEVEL EVENT. Subdivision 1. Definition. "Mandatory control level event" means any of the following events: (1) the filing of an RBC report which indicates that the health organization's total adjusted capital is less than its mandatory control level RBC; (2) notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in clause (1), provided the health organization does not challenge the adjusted RBC report under section 60A.56; or (3) if, pursuant to section 60A.56, the health organization challenges an adjusted RBC report that indicates the event in clause (1), notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge. Subd. 2. Commissioner's duties. (a) In the event of a mandatory control level event, the commissioner shall take such actions as are necessary to place the health organization under regulatory control under section 60B.13. In that event, the mandatory control level event is considered sufficient grounds for the commissioner to take action under section 60B.13, and the commissioner shall have the rights, powers, and duties with respect to the health organization as are set forth in section 60B.13. If the commissioner takes actions pursuant to an adjusted RBC report, the health organization is entitled to the protections of sections 60B.11 and 60B.13 pertaining to summary proceedings. (b) Notwithstanding paragraph (a), the commissioner may forgo action for up to 90 days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period. History:   2004 c 285 art 1 s 6 
60A.56 HEARINGS. Upon the occurrence of any of the following events, the health organization has the right to a confidential departmental hearing, on a record, at which the health organization may challenge any determination or action by the commissioner. The health organization shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under clause (1), (2), (3), or (4). Upon receipt of the health organization's request for a hearing, the commissioner shall set a date for the hearing, which must be no less than ten nor more than 30 days after the date of the health organization's request. The events include: (1) notification to a health organization by the commissioner of an adjusted RBC report; (2) notification to a health organization by the commissioner that: (i) the health organization's RBC plan or revised RBC plan is unsatisfactory; and (ii) notification constitutes a regulatory action level event with respect to the health organization; (3) notification to a health organization by the commissioner that the health organization has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event with respect to the health organization in accordance with its RBC plan or revised RBC plan; or (4) notification to a health organization by the commissioner of a corrective order with respect to the health organization. History:   2004 c 285 art 1 s 7 
60A.57 ACCESS TO AND USE OF RBC INFORMATION. Subdivision 1. Confidentiality; prohibition on announcements. Section 60A.67, subdivisions 1 and 2, apply to sections 60A.50 to 60A.592. Subd. 2. Prohibition for rate making or premium setting. The RBC instructions, RBC reports, adjusted RBC reports, RBC plans, and revised RBC plans are intended solely for use by the commissioner in monitoring the solvency of health organizations and the need for possible corrective action with respect to health organizations and shall not be used by the commissioner for rate making nor considered or introduced as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that a health organization or any affiliate is authorized to write. History:   2004 c 285 art 1 s 8 
60A.58 SUPPLEMENTAL PROVISIONS. Subdivision 1. Effect. Sections 60A.50 to 60A.592 are supplemental to any other provisions of the laws of this state, and must not preclude or limit any other powers or duties of the commissioner under such laws, including, but not limited to, chapter 60B and sections 62D.041, 62D.042, 62D.18, and 62D.181. Subd. 2. Exemption. The commissioner may exempt from the application of sections 60A.50 to 60A.592 a domestic health organization that: (1) writes direct business only in this state; (2) assumes no reinsurance in excess of five percent of direct premium written; and (3) writes direct annual premiums for comprehensive medical business of $2,000,000 or less. History:   2004 c 285 art 1 s 9 
60A.59 FOREIGN HEALTH ORGANIZATIONS. Subdivision 1. RBC report. (a) A foreign health organization shall, upon the written request of the commissioner, submit to the commissioner an RBC report as of the end of the calendar year just ended the later of: (1) the date an RBC report would be required to be filed by a domestic health organization under sections 60A.50 to 60A.592; or (2) 15 days after the request is received by the foreign health organization. (b) A foreign health organization shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state. Subd. 2. RBC plan. In the event of a company action level event, regulatory action level event, or authorized control level event with respect to a foreign health organization as determined under the RBC statute applicable in the state of domicile of the health organization or, if no RBC statute is in force in that state, under sections 60A.50 to 60A.592, if the insurance commissioner of the state of domicile of the foreign health organization fails to require the foreign health organization to file an RBC plan in the manner specified under that state's RBC statute or, if no RBC statute is in force in that state, under section 60A.52, the commissioner may require the foreign health organization to file an RBC plan with the commissioner. In such event, the failure of the foreign health organization to file an RBC plan with the commissioner shall be grounds to order the health organization to cease and desist from writing new insurance business in this state. This section does not limit the commissioner's authority to require a foreign insurer to file a copy of the risk-based capital plan submitted to the commissioner in the state of domicile. Subd. 3. Liquidation of property. In the event of a mandatory control level event with respect to a foreign health organization, if no domiciliary receiver has been appointed with respect to the foreign health organization under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign health organization, the commissioner may make application to the district court permitted under chapter 60B with respect to the liquidation of property of foreign health organizations found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application. History:   2004 c 285 art 1 s 10 
60A.591 IMMUNITY. There is no liability on the part of, and no cause of action arises against, the commissioner or the department or its employees or agents for any action taken by them in the performance of their powers and duties under sections 60A.50 to 60A.592. History:   2004 c 285 art 1 s 11 
60A.592 NOTICES. All notices by the commissioner to a health organization that may result in regulatory action under sections 60A.50 to 60A.592 are effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission are effective upon the health organization's receipt of notice. History:   2004 c 285 art 1 s 12 
60A.60 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 60A.60 to 60A.696, the terms defined in this section have the meanings given them. Subd. 2. Adjusted risk-based capital report. "Adjusted risk-based capital report" means a risk-based capital report that has been adjusted by the commissioner according to section 60A.61, subdivision 5. Subd. 3. Corrective order. "Corrective order" means an order issued by the commissioner specifying corrective actions that the commissioner has determined are required. Subd. 4. Domestic insurer. "Domestic insurer" means an insurance company incorporated or organized in this state. Subd. 5. Foreign insurer. "Foreign insurer" means an insurance company that is admitted to do business in this state under section 60A.19 but is not incorporated or organized in this state. Subd. 6. NAIC. "NAIC" means the National Association of Insurance Commissioners. Subd. 7. Life and/or health insurer. "Life and/or health insurer" means an insurance company authorized to transact business under section 60A.06, subdivision 1, clause (4), or a property and casualty insurer transacting business only under section 60A.06, subdivision 1, clause (5)(a). Subd. 8. Property and casualty insurer. "Property and casualty insurer" means an insurance company authorized to transact business under section 60A.06, subdivision 1, clauses (1), (2), (3), (5), (6), (8), (9), (10), (11), (12), (13), (14), and (15), but does not include monoline mortgage guaranty insurers, and financial guaranty insurers. Subd. 9. Negative trend. "Negative trend" means negative trend over a period of time, as determined according to the "trend test calculation" included in the risk-based capital instructions. Subd. 10. Risk-based capital instructions. "Risk-based capital instructions" means the risk-based capital report including risk-based capital instructions adopted by the NAIC, as those risk-based instructions may be amended by the NAIC from time to time according to the procedures adopted by the NAIC. Subd. 11. Risk-based capital level. "Risk-based capital level" means an insurer's company action level risk-based capital, regulatory action level risk-based capital, authorized control level risk-based capital, or mandatory control level risk-based capital where: (1) "company action level risk-based capital" means, with respect to an insurer, the product of 2.0 and its authorized control level risk-based capital; (2) "regulatory action level risk-based capital" means the product of 1.5 and its authorized control level risk-based capital; (3) "authorized control level risk-based capital" means the number determined under the risk-based capital formula according to the risk-based capital instructions; (4) "mandatory control level risk-based capital" means the product of .70 and the authorized control level risk-based capital. Subd. 12. Risk-based capital plan. "Risk-based capital plan" means a comprehensive financial plan containing the elements specified in section 60A.62, subdivision 2. If the commissioner rejects the risk-based capital plan, and it is revised by the insurer, with or without the commissioner's recommendation, the plan must be called the "revised risk-based capital plan." Subd. 13. Risk-based capital report. "Risk-based capital report" means the report required in section 60A.61. Subd. 14. Total adjusted capital. "Total adjusted capital" means the sum of: (1) an insurer's statutory capital and surplus as determined in accordance with statutory accounting applicable to the annual statement required to be filed under section 60A.13; and (2) other items, if any, as the risk-based capital instructions may provide. History:  1995 c 253 s 2; 2011 c 61 s 2
60A.61 RISK-BASED CAPITAL REPORTS. Subdivision 1. General requirements. Every domestic insurer shall, on or before each March 1, prepare and submit to the commissioner a report of its risk-based capital levels as of the end of the calendar year just ended, in a form and containing the information required by the risk-based capital instructions. In addition, every domestic insurer shall file its risk-based capital report: (1) with the NAIC according to the risk-based capital instructions; and (2) with the insurance commissioner in a state in which the insurer is authorized to do business, if the insurance commissioner has notified the insurer of its request in writing, in which case the insurer shall file its risk-based capital report not later than the later of: (i) 15 days from the receipt of notice to file its risk-based capital report with that state; or (ii) March 1. Subd. 2. Life and/or health insurers. A life and/or health insurer's risk-based capital must be determined according to the formula set forth in the risk-based capital instructions. The formula must take into account, and may adjust for the covariance between: (1) the risk with respect to the insurer's assets; (2) the risk of adverse insurance experience with respect to the insurer's liabilities and obligations; (3) the interest rate risk with respect to the insurer's business; and (4) all other business risks and other relevant risks set forth in the risk-based capital instructions; determined in each case by applying the factors in the manner set forth in the risk-based capital instructions. Subd. 3. Property and casualty insurers. A property and casualty insurer's risk-based capital must be determined according to the formula set forth in the risk-based capital instructions. The formula must take into account, and may adjust for the covariance between: (1) asset risk; (2) credit risk; (3) underwriting risk; and (4) all other business risks and other relevant risks set forth in the risk-based capital instructions; determined in each case by applying the factors in the manner set forth in the risk-based capital instructions. Subd. 4. Maintaining additional capital. An excess of capital over the amount produced by the risk-based capital requirements contained in sections 60A.60 to 60A.696 and the formulas, schedules, and instructions referenced in sections 60A.60 to 60A.696 is desirable in the business of insurance. Accordingly, insurers should seek to maintain capital above the risk-based capital levels required by sections 60A.60 to 60A.696. Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in sections 60A.60 to 60A.696. Subd. 5. Adjusted risk-based capital report. If a domestic insurer files a risk-based capital report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the risk-based capital report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice must contain a statement of the reason for the adjustment. A risk-based capital report as so adjusted is referred to as an "adjusted risk-based capital report." History:   1995 c 253 s 3 
60A.62 COMPANY ACTION LEVEL EVENT. Subdivision 1. Definition. "Company action level event" means any of the following events: (1) the filing of a risk-based capital report by an insurer which indicates that: (i) the insurer's total adjusted capital is greater than or equal to its regulatory action level risk-based capital but less than its company action level risk-based capital; (ii) if a life and/or health insurer, the insurer has total adjusted capital that is greater than or equal to its company action level risk-based capital but less than the product of its authorized control level risk-based capital and 3.0 and has a negative trend; or (iii) if a property and casualty insurer, the insurer has total adjusted capital which is greater than or equal to its company action level risk-based capital but less than the product of its authorized control level risk-based capital and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the property and casualty risk-based capital instructions; (2) the notification by the commissioner to the insurer of an adjusted risk-based capital report that indicates an event in clause (1), provided the insurer does not challenge the adjusted risk-based report under section 60A.66; or (3) if, pursuant to section 60A.66, an insurer challenges an adjusted risk-based capital report that indicates the event in clause (1), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge. Subd. 2. Plan. In the event of a company action level event, the insurer shall prepare and submit to the commissioner a risk-based capital plan that: (1) identifies the conditions that contribute to the company action level event; (2) contains proposals of corrective actions that the insurer intends to take and would be expected to result in the elimination of the company action level event; (3) provides projections of the insurer's financial results in the current year and at least the four succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projected statutory balance sheets, income statements, and cash flow statements. The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense, and benefit component; (4) identifies the key assumptions impacting the insurer's projections and the sensitivity of the projections to the assumptions; and (5) identifies the quality of, and problems associated with, the insurer's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case. Subd. 3. Submission. The risk-based capital plan must be submitted: (1) within 45 days of the company action level event; or (2) if the insurer challenges an adjusted risk-based capital report pursuant to section 60A.66, within 45 days after notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge. Subd. 4. Notification by commissioner. Within 60 days after the submission by an insurer of a risk-based capital plan to the commissioner, the commissioner shall notify the insurer whether the risk-based capital plan must be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the risk-based capital plan is unsatisfactory, the notification to the insurer must set forth the reasons for the determination, and may set forth proposed revisions that will render the risk-based capital plan satisfactory, in the judgment of the commissioner. Upon notification from the commissioner, the insurer shall prepare a revised risk-based capital plan, that may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised risk-based capital plan to the commissioner: (1) within 45 days after the notification from the commissioner; or (2) if the insurer challenges the notification from the commissioner under section 60A.66, within 45 days after a notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge. Subd. 5. Unsatisfactory plan. In the event of a notification by the commissioner to an insurer that the insurer's risk-based capital plan or revised risk-based capital plan is unsatisfactory, the commissioner may at the commissioner's discretion, subject to the insurer's right to a hearing under section 60A.66, specify in the notification that the notification constitutes a regulatory action level event. Subd. 6. Filings to other states. Every domestic insurer that files a risk-based capital plan or revised risk-based capital plan with the commissioner shall file a copy of the risk-based capital plan or revised risk-based capital plan with the insurance commissioner in any state in which the insurer is authorized to do business if: (1) the state has a risk-based capital provision substantially similar to section 60A.67, subdivision 1; and (2) the insurance commissioner of that state has notified the insurer of its request for the filing in writing, in which case the insurer shall file a copy of the risk-based capital plan or revised risk-based capital plan in that state no later than the later of: (i) 15 days after the receipt of notice to file a copy of its risk-based capital plan or revised risk-based plan with the state; or (ii) the date on which the risk-based capital plan or revised risk-based capital plan is filed under section 60A.62, subdivisions 3 and 4. History:  1995 c 253 s 4; 2013 c 135 art 3 s 8
60A.63 REGULATORY ACTION LEVEL EVENT. Subdivision 1. Definition. "Regulatory action level event" means, with respect to an insurer, any of the following events: (1) the filing of a risk-based capital report by the insurer that indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level risk-based capital but less than its regulatory action level risk-based capital; (2) the notification by the commissioner to an insurer of an adjusted risk-based capital report that indicates the event in clause (1), provided the insurer does not challenge the adjusted risk-based capital report under section 60A.66; (3) if, pursuant to section 60A.66, the insurer challenges an adjusted risk-based capital report that indicates the event in clause (1), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge; (4) the failure of the insurer to file a risk-based capital report by March 1, unless the insurer has provided an explanation for the failure that is satisfactory to the commissioner and has cured the failure within ten days after March 1; (5) the failure of the insurer to submit a risk-based capital plan to the commissioner within the time period set forth in section 60A.62, subdivision 3; (6) notification by the commissioner to the insurer that: (i) the risk-based capital plan or revised risk-based capital plan submitted by the insurer is, in the judgment of the commissioner, unsatisfactory; and (ii) the notification constitutes a regulatory action level event with respect to the insurer, provided the insurer has not challenged the determination under section 60A.66; (7) if, pursuant to section 60A.66, the insurer challenges a determination by the commissioner under clause (6), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the challenge; (8) notification by the commissioner to the insurer that the insurer has failed to adhere to its risk-based capital plan or revised risk-based capital plan, but only if the failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event according to its risk-based capital plan or revised risk-based capital plan and the commissioner has so stated in the notification, provided the insurer has not challenged the determination under section 60A.66; or (9) if, pursuant to section 60A.66, the insurer challenges a determination by the commissioner under clause (8), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the challenge. Subd. 2. Commissioner's duties. In the event of a regulatory action level event, the commissioner shall: (1) require the insurer to prepare and submit a risk-based capital plan, or, if applicable, a revised risk-based capital plan; (2) examine or analyze as the commissioner considers necessary the assets, liabilities, and operations of the insurer including reviewing its risk-based capital plan or revised risk-based capital plan; and (3) subsequent to the examination or analysis, issue a corrective order specifying the corrective actions the commissioner determines are required. Subd. 3. Corrective action. In determining corrective actions, the commissioner may take into account factors considered relevant with respect to the insurer based upon the commissioner's examination or analysis of the assets, liabilities and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the risk-based capital instructions. The risk-based capital plan or revised risk-based capital plan must be submitted: (1) within 45 days after the occurrence of the regulatory action level event; (2) if the insurer challenges an adjusted risk-based capital report pursuant to section 60A.66 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge; or (3) if the insurer challenges a revised risk-based capital plan pursuant to section 60A.66 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge. Subd. 4. Examination and review. The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the insurer's risk-based capital plan or revised risk-based capital plan, examine or analyze the assets, liabilities, and operations of the insurer and formulate the corrective order with respect to the insurer. The fees, costs, and expenses relating to consultants shall be borne by the affected insurer or other party as directed by the commissioner. History:   1995 c 253 s 5 
60A.64 AUTHORIZED CONTROL LEVEL EVENT. Subdivision 1. Definition. "Authorized control level event" means any of the following events: (1) the filing of a risk-based capital report by the insurer that indicates that the insurer's total adjusted capital is greater than or equal to its mandatory control level risk-based capital but less than its authorized control level risk-based capital; (2) the notification by the commissioner to the insurer of an adjusted risk-based capital report that indicates the event in clause (1), provided the insurer does not challenge the adjusted risk-based capital report under section 60A.66; (3) if, pursuant to section 60A.66, the insurer challenges an adjusted risk-based capital report that indicates the event in clause (1), notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge; (4) the failure of the insurer to respond, in a manner satisfactory to the commissioner, to a corrective order, provided the insurer has not challenged the corrective order under section 60A.66; or (5) if the insurer has challenged a corrective order under section 60A.66 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the insurer to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner. Subd. 2. Commissioner's duties. In the event of an authorized control level event with respect to an insurer, the commissioner shall: (1) take the actions required under section 60A.63 regarding an insurer with respect to which a regulatory action level event has occurred; or (2) if the commissioner considers it to be in the best interests of the policyholders and creditors of the insurer and of the public, take the actions necessary to cause the insurer to be placed under regulatory control under chapter 60B. In the event the commissioner takes these actions, the authorized control level event is considered sufficient grounds for the commissioner to take action under chapter 60B, and the commissioner has the rights, powers, and duties with respect to the insurer set forth in chapter 60B. In the event the commissioner takes actions under this clause pursuant to an adjusted risk-based capital report, the insurer is entitled to the protections afforded to insurers under section 60B.11 pertaining to summary proceedings. History:   1995 c 253 s 6 
60A.65 MANDATORY CONTROL LEVEL EVENT. Subdivision 1. Definition. "Mandatory control level event" means any of the following events: (1) the filing of a risk-based capital report that indicates that the insurer's total adjusted capital is less than its mandatory control level risk-based capital; (2) notification by the commissioner to the insurer of an adjusted risk-based capital report that indicates the event in clause (1), provided the insurer does not challenge the adjusted risk-based capital report under section 60A.66; or (3) if, pursuant to section 60A.66, the insurer challenges an adjusted risk-based capital report that indicates the event in clause (1), notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge. Subd. 2. Commissioner's duties. In the event of a mandatory control level event: (1) with respect to a life and/or health insurer, the commissioner shall take the actions necessary to place the insurer under regulatory control under chapter 60B. In that event, the mandatory control level event is considered sufficient grounds for the commissioner to take action under chapter 60B, and the commissioner has the rights, powers, and duties with respect to the insurer set forth in chapter 60B. If the commissioner takes actions pursuant to an adjusted risk-based capital report, the insurer is entitled to the protections of section 60B.11 pertaining to summary proceedings. However, the commissioner may forgo action for up to 90 days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period; and (2) with respect to a property and casualty insurer, the commissioner shall take the actions necessary to place the insurer under regulatory control under chapter 60B, or, in the case of an insurer that is writing no business and that is running off its existing business, may allow the insurer to continue its run-off under the supervision of the commissioner. In either event, the mandatory control level event is sufficient grounds for the commissioner to take action under chapter 60B, and the commissioner has the rights, powers, and duties with respect to the insurer set forth in chapter 60B. If the commissioner takes actions pursuant to an adjusted risk-based capital report, the insurer is entitled to the protections of section 60B.11 pertaining to summary proceedings. However, the commissioner may forgo action for up to 90 days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period. History:   1995 c 253 s 7 
60A.66 HEARINGS. Upon: (1) notification to an insurer by the commissioner of an adjusted risk-based report; (2) notification to an insurer by the commissioner that: (i) the insurer's risk-based capital plan or revised risk-based capital plan is unsatisfactory; and (ii) the notification constitutes a regulatory action level event with respect to the insurer; (3) notification to an insurer by the commissioner that the insurer has failed to adhere to its risk-based capital plan or revised risk-based capital plan and that the failure has substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer according to its risk-based capital plan or revised risk-based capital plan; or (4) notification to an insurer by the commissioner of a corrective order with respect to the insurer, the insurer has the right to a confidential hearing conducted in accordance with chapter 14, on a record, at which the insurer may challenge any determination or action by the commissioner. The insurer shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under clause (1), (2), (3), or (4). Upon receipt of the insurer's request for a hearing, the commissioner shall set a date for the hearing no less than ten nor more than 30 days after the date of the insurer's request. History:   1995 c 253 s 8 
60A.67 CONFIDENTIALITY. Subdivision 1. Generally. All risk-based capital reports, to the extent the information in them is not required to be set forth in a publicly available annual statement schedule, and risk-based capital plans, including the results or report of an examination or analysis of an insurer performed pursuant to sections 60A.60 to 60A.696, and any corrective order issued by the commissioner pursuant to an examination or analysis, with respect to a domestic insurer or foreign insurer that are filed with the commissioner constitute information that might be damaging to the insurer if made available to its competitors, and shall be maintained by the commissioner as nonpublic data as defined in section 13.02, subdivision 9. This information is not subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to sections 60A.60 to 60A.696 or other provision of the insurance laws of this state. Subd. 2. Prohibition on announcements. The comparison of an insurer's total adjusted capital to any of its risk-based capital levels is a regulatory tool that may indicate the need for possible corrective action with respect to the insurer and is not intended as a means to rank insurers generally. Except as otherwise required under sections 60A.60 to 60A.696, the making, publishing, dissemination, circulating, or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to the risk-based capital levels of an insurer, or of any component derived in the calculation, by an insurer, agent, broker, or other person engaged in any manner in the insurance business would be misleading and is prohibited. However, if a materially false statement with respect to the comparison regarding an insurer's total adjusted capital to its risk-based capital levels, or any of them, or an inappropriate comparison of any other amount to the insurer's risk-based capital levels is published in a written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity of the statement, or the inappropriateness, as the case may be, then the insurer may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement. This subdivision does not prohibit an insurance company or its holding company from disclosing information about its risk-based capital levels in the notes to its financial statements if required by pronouncements of the American Institute of Certified Public Accountants or the Financial Accounting Standards Board, or making this disclosure as required by other governmental regulatory agencies. Subd. 3. Prohibition on use in ratemaking. The risk-based capital instructions, risk-based capital reports, adjusted risk-based capital reports, risk-based capital plans, and revised risk-based capital plans are intended solely for use by the commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers. This information shall not be used by the commissioner for ratemaking nor considered or introduced as evidence in a rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for a line of insurance that an insurer or an affiliate is authorized to write. History:  1995 c 253 s 9; 1996 c 446 art 2 s 6
60A.68 SUPPLEMENTAL PROVISIONS; RULES; EXEMPTION. (a) Sections 60A.60 to 60A.696 are supplemental to other laws of this state and do not preclude or limit other powers or duties of the commissioner under those laws, including, but not limited to, chapters 60B and 60G. (b) The commissioner may exempt from the application of sections 60A.60 to 60A.696 a domestic property and casualty insurer that: (1) writes direct business only in this state; (2) writes direct annual premiums of $2,000,000 or less; and (3) assumes no reinsurance in excess of five percent of direct premium written. History:   1995 c 253 s 10 
60A.69 FOREIGN INSURERS. Subdivision 1. Reporting requirements. A foreign insurer shall, upon the written request of the commissioner, submit to the commissioner a risk-based capital report as of the end of the calendar year just ended not later than the later of: (1) the date a risk-based capital report would be required to be filed by a domestic insurer under sections 60A.60 to 60A.696; or (2) fifteen days after the request is received by the foreign insurer. A foreign insurer shall, at the written request of the commissioner, promptly submit to the commissioner copies of all risk-based capital plans that are filed by the insurer with the insurance commissioners of other states. Subd. 2. A risk-based capital plan requirement. In the event of a company action level event, regulatory action level event, or authorized control level event with respect to a foreign insurer as determined under the risk-based capital statute applicable in the state of domicile of the insurer, or, if no risk-based capital statute is in force in that state, under sections 60A.60 to 60A.696, if the insurance commissioner of the state of domicile of the foreign insurer fails to require the foreign insurer to file a risk-based capital plan in the manner specified under that state's risk-based capital statute, or, if no risk-based capital statute is in force in that state, under section 60A.62, the commissioner may require the foreign insurer to file a risk-based capital plan with the commissioner. In this event, the failure of the foreign insurer to file a risk-based capital plan with the commissioner shall be grounds to order the insurer to cease and desist from writing new insurance business in this state. This section does not limit the commissioner's authority to require a foreign insurer to file a copy of the risk-based capital plan submitted to the commissioner in the state of domicile. Subd. 3. Liquidation of property. In the event of a mandatory control level event with respect to a foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the commissioner may make application to the district court permitted under chapter 60B with respect to the liquidation of property of foreign insurers found in this state, and the occurrence of the mandatory control level event is adequate grounds for the application. History:   1995 c 253 s 11 
60A.695 IMMUNITY. There is no liability on the part of, and no cause of action arises against, the commissioner or the commerce department or its employees or agents for an action taken by them in the performance of their powers and duties under sections 60A.60 to 60A.696. History:   1995 c 253 s 12 
60A.696 NOTICES. All notices by the commissioner to an insurer that may result in regulatory action under sections 60A.60 to 60A.696 are effective upon dispatch if transmitted by registered or certified mail, or in the case of other transmission is effective upon the insurer's receipt of the notice. History:   1995 c 253 s 13 
60A.70 TITLE. Sections 60A.70 to 60A.756 may be cited as the "Reinsurance Intermediary Act." History:   1991 c 325 art 11 s 1 
60A.705 DEFINITIONS. Subdivision 1. Terms. For purposes of sections 60A.70 to 60A.756, the terms defined in this section have the meanings given them. Subd. 2. Actuary. "Actuary" means a person who is a member in good standing of the American Academy of Actuaries. Subd. 3. Controlling person. "Controlling person" means a person, firm, association, or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control, or activities of the reinsurance intermediary. Subd. 4. Insurer. "Insurer" means any person, firm, association, or corporation duly licensed in this state pursuant to the applicable provisions of the insurance law as an insurer. Subd. 5. Licensed producer. "Licensed producer" means an agent, broker, or reinsurance intermediary licensed pursuant to the applicable provision of the insurance law. Subd. 6. Reinsurance intermediary. "Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager. Subd. 7. Reinsurance intermediary-broker; RB. "Reinsurance intermediary-broker" or "RB" means any person, other than an officer or employee of the ceding insurer, firm, association, or corporation who solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of this insurer. Subd. 8. Reinsurance intermediary-manager; RM. "Reinsurance intermediary-manager" or "RM" means any person, firm, association, or corporation who has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department, or underwriting office, and acts as an agent for that reinsurer whether known as an RM, manager, or other similar term. However, the following persons are not considered an RM, with respect to that reinsurer, for the purposes of sections 60A.70 to 60A.756: (1) an employee of the reinsurer; (2) a United States manager of the United States branch of an alien reinsurer; (3) an underwriting manager which, pursuant to contract, manages all or part of the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to the Holding Company Act, and whose compensation is not based on the volume of premiums written; or (4) the manager of a group, association, pool, or organization of insurers which engage in joint underwriting or joint reinsurance and who are subject to examination by the insurance commissioner of the state in which the manager's principal business office is located. Subd. 9. Reinsurer. "Reinsurer" means a person, firm, association, or corporation licensed in this state as an insurer with the authority to assume reinsurance. Subd. 10. To be in violation. "To be in violation" means that the reinsurance intermediary, insurer, or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of sections 60A.70 to 60A.756. Subd. 11. Qualified United States financial institution. "Qualified United States financial institution" means an institution that: (1) is organized, or in the case of a United States office of a foreign banking organization, is licensed, under the laws of the United States or any state; (2) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and (3) has been determined by either the commissioner, or the securities valuation office of the National Association of Insurance Commissioners, to meet the standards of financial condition and standing considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner. History:  1991 c 325 art 11 s 2; 1995 c 214 s 10
60A.71 LICENSURE. Subdivision 1. Reinsurance intermediary-broker requirements. No person, firm, association, or corporation shall act as an RB in this state if the RB maintains an office either directly or as a member or employee of a firm or association, or an officer, director, or employee of a corporation: (1) in this state, unless the RB is a licensed producer in this state; or (2) in another state, unless the RB is a licensed producer in this state or another state having a law substantially similar to this law or the RB is licensed in this state as a nonresident reinsurance intermediary. Subd. 2. Reinsurance intermediary-manager requirements. No person, firm, association, or corporation shall act as an RM: (1) for a reinsurer domiciled in this state, unless the RM is a licensed producer in this state; (2) in this state, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer, director, or employee of a corporation in this state, unless the RM is a licensed producer in this state; or (3) in another state for a nondomestic insurer, unless the RM is a licensed producer in this state or another state having a law substantially similar to this law or the person is licensed in this state as a nonresident reinsurance intermediary. Subd. 3. Bond and insurance requirements for reinsurance intermediary-manager. The commissioner may require an RM subject to subdivision 2 to: (1) file a bond in an amount from an insurer acceptable to the commissioner for the protection of the reinsurer; and (2) maintain an errors and omissions policy in an amount acceptable to the commissioner. Subd. 4. Terms. (a) The commissioner may issue a reinsurance intermediary license to any person, firm, association, or corporation who has complied with the requirements of sections 60A.70 to 60A.756. The license issued to a firm or association will authorize all the members of the firm or association and any designated employees to act as reinsurance intermediaries under the license, and these persons shall be named in the application and any supplements to it. The license issued to a corporation shall authorize all of the officers, and any designated employees and directors of the corporation to act as reinsurance intermediaries on behalf of the corporation, and all these persons shall be named in the application and any supplements to it. (b) If the applicant for a reinsurance intermediary license is a nonresident, the applicant, as a condition precedent to receiving or holding a license, shall designate the commissioner as agent for service of process in the manner, and with the same legal effect, provided for by sections 60A.70 to 60A.756 for designation of service of process upon unauthorized insurers. The applicant shall also furnish the commissioner with the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting the nonresident reinsurance intermediary may be served. The licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and the change shall not become effective until acknowledged by the commissioner. Subd. 5. Refusal to issue. The commissioner may refuse to issue a reinsurance intermediary license if, in the commissioner's judgment, the applicant, anyone named on the application, or any member, principal, officer, or director of the applicant, is not trustworthy, or that any controlling person of the applicant is not trustworthy to act as a reinsurance intermediary, or that any of the foregoing has given cause for revocation or suspension of the license, or has failed to comply with any prerequisite for the issuance of the license. Upon written request, the commissioner will furnish a summary of the basis for refusal to issue a license. This document is privileged and not subject to chapter 13. Subd. 6. Attorneys exemption. Licensed attorneys at law of this state when acting in their professional capacity as such are exempt from this section. Subd. 7. Duration; fees. (a) Each applicant for a reinsurance intermediary license shall pay to the commissioner a fee of $200 for an initial two-year license and a fee of $150 for each renewal. Applications shall be submitted on forms prescribed by the commissioner. (b) Initial licenses issued under this chapter are valid for a period not to exceed 24 months and expire on October 31 of the renewal year assigned by the commissioner. Each renewal reinsurance intermediary license is valid for a period of 24 months. (c) All fees are nonreturnable, except that an overpayment of any fee may be refunded upon proper application. History:  1991 c 325 art 11 s 3; 1997 c 200 art 1 s 42; 1999 c 223 art 2 s 6; 2008 c 344 s 6; 1Sp2021 c 4 art 3 s 4
60A.715 REQUIRED CONTRACT PROVISIONS; REINSURANCE INTERMEDIARY-BROKERS. Transactions between an RB and the insurer it represents in this capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization must, at a minimum, provide that: (1) the insurer may terminate the RB's authority at any time; (2) the RB will render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to the RB, and remit all funds due to the ceding insurer or the assuming reinsurer within 30 days of the month of receipt; (3) all funds collected for the ceding insurer's or the assuming reinsurer's account will be held by the RB in a fiduciary capacity: (i) in a bank that is a qualified United States financial institution; or (ii) in direct obligations of, or obligations guaranteed or insured by, the United States, its agencies, or its instrumentalities, excluding mortgage-backed securities, or in obligations described in section 60A.11, subdivision 17, paragraphs (a) and (b). Investments made under item (ii) must be traded on a national securities exchange, and shall be restricted to the following: direct obligations of the United States government or an agency of the United States government, municipal bonds or corporate bonds or notes with credit ratings of at least AA by Standard & Poors or equivalent ratings from a comparable rating service, or commercial paper with a short-term rating of at least A-1 by Standard & Poors or an equivalent rating from a comparable rating service, but in no event shall the obligations be rated other than in the highest category established by the Securities Valuation Office of the National Association of Insurance Commissioners. The RB shall invest fiduciary funds under item (ii) only if authorized in writing by the ceding insurer or assuming reinsurer in whose account the funds are held, shall secure the investments with security acceptable to the ceding insurer or assuming reinsurer on whose account the funds are held, and shall be responsible for any losses on investments made pursuant to item (ii). At least 50 percent of the funds invested under clause (3), based on the prior 30 days' average balance, must be invested in instruments that mature in no more than 120 days. In no case shall an investment mature in greater than three years from the date of purchase. Investments made pursuant to clause (3) should emphasize safety, liquidity, and diversification. The RB is required to structure those investments so that funds are available to remit on a timely basis to the ceding insurer or the assuming reinsurer in accordance with clause (2); (4) the RB will comply with section 60A.72; (5) the RB will comply with the written standards established by the insurer for the cession or retrocession of all risks; and (6) the RB will disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded. History:  1991 c 325 art 11 s 4; 1995 c 163 s 1; 1998 c 323 s 1
60A.72 BOOKS AND RECORDS; REINSURANCE INTERMEDIARY-BROKERS. Subdivision 1. Records of transactions. For at least ten years after expiration of each contract of reinsurance transacted by the RB, the RB will keep a complete record for each transaction showing: (1) the type of contract, limits, underwriting restrictions, classes or risks, and territory; (2) period of coverage, including effective and expiration dates, cancellation provisions, and notice required of cancellation; (3) reporting and settlement requirements of balances; (4) rate used to compute the reinsurance premium; (5) names and addresses of assuming reinsurers; (6) rates of all reinsurance commissioners, including the commissions on any retrocessions handled by the RB; (7) related correspondence and memoranda; (8) proof of placement; (9) details regarding retrocessions handled by the RB including the identity of retrocessionaires and percentage of each contract assumed or ceded; (10) financial records, including, but not limited to, premium and loss accounts; and (11) when the RB procures a reinsurance contract on behalf of a licensed ceding insurer: (i) directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (ii) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative. Subd. 2. Access by insurer. The insurer will have access and the right to copy and audit all accounts and records maintained by the RB related to its business in a form usable by the insurer. History:   1991 c 325 art 11 s 5 
60A.725 DUTIES OF INSURERS UTILIZING THE SERVICES OF A REINSURANCE INTERMEDIARY-BROKER. (a) An insurer shall not engage the services of a person, firm, association, or corporation to act as an RB on its behalf unless the person is licensed as required by section 60A.71, subdivision 1. (b) An insurer may not employ an individual who is employed by an RB with which it transacts business, unless the RB is under common control with the insurer and subject to chapter 60D. (c) The insurer shall annually obtain a copy of statements of the financial condition of each RB with which it transacts business. History:   1991 c 325 art 11 s 6 
60A.73 REQUIRED CONTRACT PROVISIONS; REINSURANCE INTERMEDIARY-MANAGERS. Subdivision 1. Approval by commissioner. Transactions between an RM and the reinsurer it represents in this capacity must only be entered into pursuant to a written contract, specifying the responsibilities of each party. The contract shall be approved by the reinsurer's board of directors. At least 30 days before the reinsurer assumes or cedes business through this producer, a true copy of the approved contract must be filed with the commissioner for approval. The contract must, at a minimum, contain the provisions in subdivisions 2 to 14. Subd. 2. Terminations. The reinsurer may terminate the contract for cause upon written notice to the RM. The reinsurer may immediately suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination. Subd. 3. Periodic accounting. The RM will render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to the RM, and remit all funds due under the contract to the reinsurer on not less than a monthly basis. Subd. 4. Handling of funds. All funds collected for the reinsurer's account will be held by the RM in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein and may be invested in direct obligations of, or obligations guaranteed or insured by, the United States, its agencies, or its instrumentalities, excluding mortgage-backed securities. These funds may not be invested in obligations whose maturities exceed 90 days. The RM may retain no more than three months estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate account for each reinsurer that it represents. Subd. 5. Business records. For at least ten years after expiration of each contract of reinsurance transacted by the RM, the RM will keep a complete record for each transaction showing: (1) the type of contract, limits, underwriting restrictions, classes or risks, and territory; (2) period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks; (3) reporting and settlement requirements of balances; (4) rate used to compute the reinsurance premium; (5) names and addresses of reinsurers; (6) rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM; (7) related correspondence and memoranda; (8) proof of placement; (9) details regarding retrocessions handled by the RM, as permitted by section 60A.74, subdivision 4, including the identity of retrocessionaires and percentage of each contract assumed or ceded; (10) financial records, including, but not limited to, premium and loss accounts; and (11) when the RM places a reinsurance contract on behalf of a ceding insurer: (i) directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (ii) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that the reinsurer has delegated binding authority to the representative. Subd. 6. Reinsurer access to records. The reinsurer will have access and the right to copy all accounts and records maintained by the RM related to its business in a form usable by the reinsurer. Subd. 7. Nonassignment of contract. The contract cannot be assigned in whole or in part by the RM. Subd. 8. Underwriting and rating standards. The RM will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks. Subd. 9. Charges and commissions. The rates, terms and purposes of commission, charges, and other fees which the RM may levy against the reinsurer will be specified in the contract. Subd. 10. Claims settlement. If the contract permits the RM to settle claims on behalf of the reinsurer, the contract will specify that: (1) all claims will be reported to the reinsurer in a timely manner; (2) a copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim: (i) has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer; (ii) involves a coverage dispute; (iii) may exceed the RM's claims settlement authority; (iv) is open for more than six months; or (v) is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer; (3) all claim files will be the joint property of the reinsurer and RM. However, upon an order of liquidation of the reinsurer the files become the sole property of the reinsurer or its estate. The RM shall have reasonable access to and the right to copy the files on a timely basis; and (4) settlement authority granted to the RM may be terminated for cause upon the reinsurer's written notice to the RM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination. Subd. 11. Interim profits. If the contract provides for a sharing of interim profits by the RM, interim profits will not be paid until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business, or a later period set by the commissioner for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to section 60A.74, subdivision 3. Subd. 12. Certified financial statement. The RM will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant. Subd. 13. On-site review by reinsurer. The reinsurer shall periodically, at least semiannually, conduct an on-site review of the underwriting and claims processing operations of the RM. Subd. 14. Disclosure of insurer relationship. The RM will disclose to the reinsurer any relationship it has with any insurer before ceding or assuming any business with the insurer pursuant to this contract. Subd. 15. Responsibility of reinsurer. Within the scope of its actual or apparent authority, the acts of the RM are considered to be the acts of the reinsurer on whose behalf it is acting. History:  1991 c 325 art 11 s 7; 1995 c 163 s 2
60A.735 PROHIBITED ACTS. The RM shall not: (1) cede retrocessions on behalf of the reinsurer, except that the RM may cede facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for these retrocessions. These guidelines must include a list of reinsurers with which these automatic agreements are in effect, and for each reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules; (2) commit the reinsurer to participate in reinsurance syndicates; (3) appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which the producer is appointed; (4) without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer's policyholder's surplus as of December 31 of the last complete calendar year; (5) collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer; (6) jointly employ an individual who is employed by the reinsurer unless such RM is under common control with the reinsurer subject to chapter 60D; (7) appoint a sub-RM. History:   1991 c 325 art 11 s 8 
60A.74 DUTIES OF REINSURER UTILIZING THE SERVICES OF A REINSURANCE INTERMEDIARY-MANAGER. Subdivision 1. Licensed persons to be used. A reinsurer shall not engage the services of any person, firm, association, or corporation to act as an RM on its behalf unless the person is licensed as required by section 60A.71, subdivision 2. Subd. 2. Annual financial statements to be obtained. The reinsurer shall annually obtain a copy of statements of the financial condition of each RM which the reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the commissioner. Subd. 3. Loss reserve opinions. If an RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the RM. This opinion must be in addition to any other required loss reserve certification. Subd. 4. Binding authority. Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the RM. Subd. 5. Notification of termination. Within 30 days of termination of a contract with an RM, the reinsurer shall provide written notification of the termination to the commissioner. Subd. 6. Restriction on board appointments. A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder, or subproducer of its RM. This subdivision does not apply to relationships governed by chapter 60D or, if applicable, the Business Transacted With Producer Controlled Insurer Act, sections 60J.06 to 60J.11. History:  1991 c 325 art 11 s 9; 1993 c 13 art 1 s 16; 2000 c 260 s 12
60A.745 EXAMINATION AUTHORITY; REINSURANCE INTERMEDIARY - BROKER. (a) A reinsurance intermediary is subject to examination by the commissioner. The commissioner shall have access to all books, bank accounts, and records of the reinsurance intermediary in a form usable to the commissioner. (b) An RM may be examined as if it were the reinsurer. History:   1991 c 325 art 11 s 10 
60A.75 VIOLATIONS. Subdivision 1. Administrative and civil penalties and liabilities. A reinsurance intermediary, insurer, or reinsurer found by the commissioner, after a hearing conducted in accordance with chapter 14, to be in violation of any provision of sections 60A.70 to 60A.756, shall: (1) for each separate violation, pay a penalty in an amount not exceeding $5,000; and (2) be subject to revocation or suspension of its license. Subd. 2. Civil remedies. (a) If it was found that because of the violation the insurer or reinsurer has suffered loss or damage, the commissioner may maintain a civil action for recovery of compensatory damages for the benefit of the reinsurer or insurer and its policyholders and creditors or seek other appropriate relief. (b) If an order of rehabilitation or liquidation of the insurer has been entered pursuant to chapter 60B, and the receiver appointed under that order determines that the reinsurance intermediary or any other person has violated sections 60A.70 to 60A.756, or any rule or order adopted under those sections, and the insurer suffered any loss or damage, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer. Subd. 3. Judicial review. The decision, determination, or order of the commissioner pursuant to subdivision 1 is subject to judicial review pursuant to chapter 14. Subd. 4. Other penalties. Nothing contained in this section affects the right of the commissioner to impose any other penalties provided in the insurance laws. History:  1991 c 325 art 11 s 11; 1995 c 214 s 11
60A.755 SCOPE. Nothing contained in sections 60A.70 to 60A.756 is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors, or other third parties or confer any rights to these persons. History:   1991 c 325 art 11 s 12 
60A.756 RULES. The commissioner may adopt rules for the implementation and administration of sections 60A.70 to 60A.756. History:   1991 c 325 art 11 s 13 
60A.76 PURPOSE AND SCOPE. Sections 60A.76 to 60A.768 apply to all individual and group accident and health insurance coverages as defined in section 60A.06, subdivision 1, paragraph (5)(a), including single premium credit disability insurance. Other credit insurance is not subject to sections 60A.76 to 60A.768. When an insurer determines that adequacy of its health insurance reserves requires reserves in excess of the minimum standards specified in sections 60A.76 to 60A.768, the increased reserves must be held and must be considered the minimum reserves for that insurer. With respect to any block of contracts, or with respect to an insurer's health business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. The prospective gross premium valuation must take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of: all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect. The prospective gross premium valuation must be performed whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer's health business as a whole. In the event inadequacy is found to exist, immediate loss recognition must be made and the reserves restored to adequacy. Adequate reserves, inclusive of claim, premium, and contract reserves, if any, must be held with respect to all contracts, regardless of whether contract reserves are required for such contracts under sections 60A.76 to 60A.768. Whenever minimum reserves, as defined in sections 60A.76 to 60A.768, exceed reserve requirements as determined by a prospective gross premium valuation, such minimum reserves remain the minimum requirement under sections 60A.76 to 60A.768. History:   2004 c 285 art 2 s 1 
60A.761 GLOSSARY OF TECHNICAL TERMS USED. Subdivision 1. Scope. As used in sections 60A.76 to 60A.768, the terms in subdivisions 2 to 21 have the meanings given them. Subd. 2. Annual claim cost. "Annual claim cost" means the net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6 would cover expenses and profit or contingencies. Subd. 3. Claims accrued. "Claims accrued" means that portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or before the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. This liability is sometimes referred to as a liability for "accrued" benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established. Subd. 4. Claims reported. "Claims reported" means when an insurer has been informed that a claim has been incurred, if the date reported is on or before the valuation date, the claim is considered as a reported claim for annual statement purposes. Subd. 5. Claims unaccrued. "Claims unaccrued" means that portion of claims incurred on or before the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. This liability is sometimes referred to as a liability for "unaccrued" benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest) must be established. Subd. 6. Claims unreported. "Claims unreported" means when an insurer has not been informed, on or before the valuation date, concerning a claim that has been incurred on or prior to the valuation date, the claim is considered as an unreported claim for annual statement purposes. Subd. 7. Date of disablement. "Date of disablement" means the earliest date the insured is considered as being disabled under the definition of disability in the contract, based on a doctor's evaluation or other evidence. Normally this date will coincide with the start of any elimination period. Subd. 8. Elimination period. "Elimination period" means a specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable. Subd. 9. Gross premium. "Gross premium" means the amount of premium charged by the insurer. It includes the net premium (based on claim cost) for the risk, together with any loading for expenses, profit, or contingencies. Subd. 10. Group insurance. "Group insurance" includes blanket insurance and franchise insurance and any other forms of group insurance. Subd. 11. Level premium. "Level premium" means a premium calculated to remain unchanged throughout either the lifetime of the policy, or for some shorter projected period of years. The premium need not be guaranteed; in which case, although it is calculated to remain level, it may be changed if any of the assumptions on which it was based are revised at a later time. Generally, the annual claim costs are expected to increase each year and the insurer, instead of charging premiums that correspondingly increase each year, charges a premium calculated to remain level for a period of years or for the lifetime of the contract. In this case, the benefit portion of the premium is more than needed to provide for the cost of benefits during the earlier years of the policy and less than the actual cost in the later years. The building of a prospective contract reserve is a natural result of level premiums. Subd. 12. Long-term care insurance. "Long-term care insurance" means a qualified long-term care insurance policy or rider as defined in section 62S.01, subdivision 18, and a nonqualified long-term insurance policy or rider as defined in section 62A.46, subdivision 2. Subd. 13. Modal premium. "Modal premium" refers to the premium paid on a contract based on a premium term which could be annual, semiannual, quarterly, monthly, or weekly. Thus if the annual premium is $100 and if, instead, monthly premiums of $9 are paid then the modal premium is $9. Subd. 14. Negative reserve. "Negative reserve" means normally the terminal reserve is a positive value. However, if the values of the benefits are decreasing with advancing age or duration it could be a negative value, called a negative reserve. Subd. 15. Preliminary term reserve method. "Preliminary term reserve method" means that under this method of valuation the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserves will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium (or stream of changing valuation premiums) becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period. Subd. 16. Present value of amounts not yet due on claims. "Present value of amounts not yet due on claims" means the reserve for "claims unaccrued" which may be discounted at interest. Subd. 17. Rating block. "Rating block" means a grouping of contracts determined by the valuation actuary based on common characteristics, such as a policy form or forms having similar benefit designs. Subd. 18. Reserve. "Reserve" includes all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued. An insurer under its contracts promises benefits, which result in: (a) claims which have been incurred, that is, for which the insurer has become obligated to make payment, on or prior to the valuation date. On these claims, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or (b) claims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves. Subd. 19. Terminal reserve. "Terminal reserve" means the reserve at the end of a contract year, and is defined as the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums. Subd. 20. Unearned premium reserve. "Unearned premium reserve" means that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Thus if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis. Subd. 21. Valuation net modal premium. "Valuation net modal premium" means the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium. History:   2004 c 285 art 2 s 2 
60A.762 CATEGORIES OF RESERVES. The following sections set forth minimum standards for three categories of health insurance reserves: (1) section 60A.763, claim reserves; (2) section 60A.764, premium reserves; and (3) section 60A.765, contract reserves. Adequacy of an insurer's health insurance reserves is to be determined on the basis of all three categories combined. However, sections 60A.76 to 60A.768 emphasize the importance of determining appropriate reserves for each of the three categories separately. History:   2004 c 285 art 2 s 3 
60A.763 CLAIM RESERVES. Subdivision 1. Generally. (a) Claim reserves are required for all incurred but unpaid claims on all health insurance policies. (b) Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims. (c) Claim reserves for prior valuation years are to be tested for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability. Subd. 2. Minimum standards for claim reserves for disability income. (a) The maximum interest rate for claim reserves is specified in section 60A.768. (b) Minimum standards with respect to morbidity are those specified in section 60A.768, except that, at the option of the insurer: (1) for claims with a duration from date of disablement of less than two years, reserves may be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities; and (2) for group disability income claims with a duration from date of disablement of more than two years but less than five years, reserves may, with the approval of the commissioner, be based on the insurer's experience for which the insurer maintains underwriting and claim administration control. The request for approval of a plan of modification to the reserve basis must include: (i) an analysis of the credibility of the experience; (ii) a description of how all of the insurer's experience is proposed to be used in setting reserves; (iii) a description and quantification of the margins to be included; (iv) a summary of the financial impact that the proposed plan of modification would have had on the insurer's last filed annual statement; (v) a copy of the approval of the proposed plan of modification by the commissioner of the state of domicile; and (vi) any other information deemed necessary by the commissioner. (c) For contracts with an elimination period, the duration of disablement must be measured as dating from the time that benefits would have begun to accrue had there been no elimination period. Subd. 3. Minimum standards for claim reserves for all other benefits. (a) The maximum interest rate for claim reserves is specified in section 60A.768. (b) The reserve must be based on the insurer's experience, if the experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities. Subd. 4. Claim reserve methods generally. A generally accepted actuarial reserving method or other reasonable method if the method is approved by the commissioner before the statement date, or a combination of methods as described in this section, may be used to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, must be determined in the aggregate. History:   2004 c 285 art 2 s 4 
60A.764 PREMIUM RESERVES. Subdivision 1. Generally. (a) Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation. (b) If premiums due and unpaid are carried as an asset, the premiums must be treated as premiums in force, subject to unearned premium reserve determination. The value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums must be carried as an offsetting liability. (c) The gross premiums paid in advance for a period of coverage beginning after the next premium due date which follows the date of valuation may be appropriately discounted to the valuation date and must be held either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum. Subd. 2. Minimum standards for unearned premium reserves. (a) The minimum unearned premium reserve with respect to a contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with the premium determined on the basis of: (1) the valuation net modal premium on the contract reserve basis applying to the contract; or (2) the gross modal premium for the contract if no contract reserve applies. (b) However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. The reserve must never be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve, to the extent not provided for elsewhere. Subd. 3. Premium reserve methods generally. The insurer may employ suitable approximations and estimates, including, but not limited to, groupings, averages, and aggregate estimation, in computing premium reserves. Approximations or estimates should be tested periodically to determine the continuing adequacy and reliability. History:   2004 c 285 art 2 s 5 
60A.765 CONTRACT RESERVES REQUIRED. (a) Contract reserves are required, unless otherwise specified in paragraph (b) for: (1) all individual and group contracts with which level premiums are used; or (2) all individual and group contracts with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. This evaluation may be applied on a rating block basis if the total premiums for the block were developed to support the total risk assumed and expected expenses for the block each year, and a qualified actuary certifies the premium development. The actuary must state in the certification that premiums for the rating block were developed such that each year's premium was intended to cover that year's costs without any prefunding. If the premium is also intended to recover costs for any prior years, the actuary must also disclose the reasons for and magnitude of the recovery. The values specified in this clause must be determined on the basis specified in section 60A.766, subdivisions 1 to 4. (b) Contracts not requiring a contract reserve are: (1) contracts that cannot be continued after one year from issue; or (2) contracts already in force on August 1, 2004, for which no contract reserve was required under the immediately preceding standards. (c) The contract reserve is in addition to claim reserves and premium reserves. (d) The methods and procedures for contract reserves must be consistent with those for claim reserves for a contract, or else appropriate adjustment must be made when necessary to assure provision for the aggregate liability. The definition of the date of incurral must be the same in both determinations. History:   2004 c 285 art 2 s 6 
60A.766 MINIMUM STANDARDS FOR CONTRACT RESERVES. Subdivision 1. Basis. (a) Minimum standards with respect to morbidity are those set forth in section 60A.768. Valuation net premiums used under each contract must have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of insured, contract duration, and period for which gross premiums have been calculated. Contracts for which tabular morbidity standards are not specified in section 60A.768 must be valued using tables established for reserve purposes by a qualified actuary and acceptable to the commissioner. The morbidity tables must contain a pattern of incurred claims cost that reflects the underlying morbidity and must not be constructed for the primary purpose of minimizing reserves. (b) The maximum interest rate is specified in section 60A.768. (c) Termination rates used in the computation of reserves must be on the basis of a mortality table as specified in section 60A.768 except as noted in clauses (1) to (3): (1) under contracts for which premium rates are not guaranteed, and where the effects of insurer underwriting are specifically used by policy duration in the valuation morbidity standard or for return of premium or other deferred cash benefits, total termination rates may be used at ages and durations where these exceed specified mortality table rates, but not in excess of the lesser of: (i) 80 percent of the total termination rate used in the calculation of the gross premiums; or (ii) eight percent; (2) for long-term care individual policies or group certificates issued after January 1, 1997, the contract reserve may be established on a basis of separate: (i) mortality as specified in section 60A.768; and (ii) terminations other than mortality, where the terminations are not to exceed: A. for policy years one through four, the lesser of 80 percent of the voluntary lapse rate used in the calculation of gross premiums and eight percent; B. for policy years five and later, the lesser of 100 percent of the voluntary lapse rate used in the calculation of gross premiums and four percent; (3) where a morbidity standard specified in section 60A.768 is on an aggregate basis, the morbidity standard may be adjusted to reflect the effect of insurer underwriting by policy duration. The adjustments must be appropriate to the underwriting and be acceptable to the commissioner. Subd. 2. Reserve method. (a) For insurance, except long-term care and return of premium or other deferred cash benefits, the minimum reserve is the reserve calculated on the two-year full preliminary term method; that is, under which the terminal reserve is zero at the first and also the second contract anniversary. (b) For long-term care insurance, the minimum reserve is the reserve calculated as follows: (1) for individual policies and group certificates issued on or before December 31, 1991, reserves calculated on the two-year full preliminary term methods; (2) for individual policies and group certificates issued on or after January 1, 1992, reserves calculated on the one-year full preliminary term method. (c) For return of premium or other deferred cash benefits, the minimum reserve is the reserve calculated as follows: (1) on the one-year preliminary term method if the benefits are provided at any time before the 20th anniversary; (2) on the two-year preliminary term method if the benefits are only provided on or after the 20th anniversary. The preliminary term method may be applied only in relation to the date of issue of a contract. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions, for example projected inflation rates, or for other reasons, are to be applied immediately as of the effective date of adoption of the adjusted basis. Subd. 3. Negative reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero. Subd. 4. Nonforfeiture benefits for long-term care insurance. The contract reserve on a policy basis must not be less than the net single premium for the nonforfeiture benefits at the appropriate policy duration, where the net single premium is computed according to the specifications in this section. While the consideration for nonforfeiture benefits in this section is specific to long-term care insurance, similar consideration may be applicable for other lines of business. Subd. 5. Alternative valuation methods and assumptions generally. Provided the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified in this section, an insurer may use any reasonable assumptions as to interest rates, termination and mortality rates, and rates of morbidity or other contingency. Also, subject to the preceding condition, the insurer may employ methods other than the methods stated in this section in determining a sound value of its liabilities under such contracts, including, but not limited to, the following: the net level premium method; the one-year full preliminary term method; prospective valuation on the basis of actual gross premiums with reasonable allowance for future expenses; the use of approximations such as those involving age groupings, groupings of several years of issue, average amounts of indemnity, and grouping of similar contract forms; the computation of the reserve for one contract benefit as a percentage of, or by other relation to, the aggregate contract reserves exclusive of the benefit or benefits so valued; and the use of a composite annual claim cost for all or any combination of the benefits included in the contracts valued. Subd. 6. Test for adequacy and reasonableness of contract reserves. Annually, an appropriate review must be made of the insurer's prospective contract liabilities on contracts valued by tabular reserves, to determine the continuing adequacy and reasonableness of the tabular reserves giving consideration to future gross premiums. The insurer shall make appropriate increments to such tabular reserves if such tests indicate that the basis of such reserves is no longer adequate; subject, however, to the minimum standards of subdivisions 1 to 4. In the event a company has a contract or a group of related similar contracts for which future gross premiums will be restricted by contract, department rule, or for other reasons, such that the future gross premiums reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the company shall establish contract reserves for such shortfall in the aggregate. History:   2004 c 285 art 2 s 7 
60A.767 REINSURANCE. Increases to or credits against reserves carried, arising because of reinsurance assumed or reinsurance ceded, must be determined in a manner consistent with sections 60A.76 to 60A.768 and with all applicable provisions of the reinsurance contracts which affect the insurer's liabilities. History:   2004 c 285 art 2 s 8 
60A.768 SPECIFIC STANDARDS FOR MORBIDITY, INTEREST, AND MORTALITY. Subdivision 1. Morbidity. A. Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows: (1) Disability Income Benefits Due to Accident or Sickness. (a) Contract Reserves: Contracts issued on or after January 1, 2004: The 1985 Commissioners Individual Disability Tables A (85CIDA); or The 1985 Commissioners Individual Disability Tables B (85CIDB). Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A or Tables B as the minimum standard. The insurer may, however, elect to use the other tables with respect to any subsequent statement year. (b) Claim Reserves: For claims incurred on or after January 1, 2004: The 1985 Commissioners Individual Disability Table A (85CIDA) with claim termination rates multiplied by the following adjustment factors:      Duration Adjustment Factor Adjusted TerminationRates*  2 0.366 0.04172  3 0.366 0.04063  4 0.366 0.04355  5 0.365 0.04088  6 0.365 0.04271  7 0.365 0.04380  8 0.365 0.04344  9 0.370 0.04292  10 0.370 0.04107  11 0.370 0.03848  12 0.370 0.03478  13 0.370 0.03034  5 0.371 0.07346  6 0.435 0.07531  7 0.500 0.07245  8 0.564 0.06655  9 0.613 0.05520  10 0.663 0.04705  11 0.712 0.04486  12 0.756 0.04309  13 0.800 0.04080  14 0.844 0.03882  15 0.888 0.03730  16 0.932 0.03448  17 0.976 0.03026  18 1.020 0.02856  19 1.049 0.02518  20 1.078 0.02264  21 1.107 0.02104  22 1.136 0.01932  23 1.165 0.01865  24 1.195 0.01792  4 1.204 0.10114  5 1.199 0.07434  6 and later 1.000 **   *The adjusted termination rates derived from the application of the adjustment factors to the DTS Valuation Table termination rates shown in exhibits 3a, 3b, 3c, 4, and 5 (Transactions of the Society of Actuaries (TSA) XXXVII, pages 457-463) is displayed. The adjustment factors for age, elimination period, class, sex, and cause displayed in exhibits 3a, 3b, 3c, and 4 should be applied to the adjusted termination rates shown in this table. **Applicable DTS Valuation Table duration rate from exhibits 3c and 4 (TSA XXXVII, pages 462-463). The 85CIDA table so adjusted for the computation of claim reserves shall be known as 85CIDC (The 1985 Commissioners Individual Disability Table C). (2) Hospital Benefits, Surgical Benefits, and Maternity Benefits (Scheduled benefits or fixed time period benefits only). (a) Contract Reserves. Contracts issued on or after January 1, 1982: The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, page 63. Refer to the paper (in the same volume, page 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf. (b) Claim Reserves: No specific standard. See (6). (3) Cancer Expense Benefits (Scheduled benefits or fixed time period benefits only). (a) Contract Reserves: Contracts issued on or after January 1, 2004: The 1985 NAIC Cancer Claim Cost Tables. (b) Claim Reserves: No specific standard. See (6). (4) Accidental Death Benefits. (a) Contract Reserves: Contracts issued on or after January 1, 2004: The 1959 Accidental Death Benefits Table. (b) Claim Reserves: Actual amount incurred. (5) Single Premium Credit Disability. (a) Contract Reserves: (i) For contracts issued on or after January 1, 2004: (I) For plans having less than a 30-day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by 12 percent. (ii)(II) For plans having a 30-day and greater elimination period, the 85CIDA for a 14-day elimination period with the adjustment in item (I). (b) Claim Reserves: Claim reserves are to be determined as provided in section 60A.763. (6) Other Individual Contract Benefits. (a) Contract Reserves: For all other individual contract benefits, morbidity assumptions are to be determined as provided in section 60A.765. (b) Claim Reserves: For all benefits other than disability, claim reserves are to be determined as provided in section 60A.763. B. Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows: (1) Disability Income Benefits Due to Accident or Sickness. (a) Contract Reserves: Contracts issued on or after January 1, 2004: The 1987 Commissioners Group Disability Income Table (87CGDT). (b) Claim Reserves: For claims incurred on or after January 1, 2004: The 1987 Commissioners Group Disability Income Table (87CGDT); (2) Single Premium Credit Disability (a) Contract Reserves: (i) For contracts issued on or after January 1, 2004: (I) For plans having less than a 30-day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by 12 percent. (ii)(II) For plans having a 30-day and greater elimination period, the 85CIDA for a 14-day elimination period with the adjustment in item (I). (b) Claim Reserves: Claim reserves are to be determined as provided in section 60A.763. (3) Other Group Contract Benefits. (a) Contract Reserves: For all other group contract benefits, morbidity assumptions are to be determined as provided in section 60A.765. (b) Claim Reserves: For all benefits other than disability, claim reserves are to be determined as provided in section 60A.763. Subd. 2. Interest. A. For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract. B. For claim reserves on policies that require contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurred date. C. For claim reserves on policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurred date, reduced by 100 basis points. Subd. 3. Mortality. A. For individual long-term care insurance policies or group long-term care insurance certificates issued on or after January 1, 2004, the mortality basis used must be the 1983 Group Annuity Mortality Table without projection. B. Other mortality tables adopted by the NAIC and adopted by the commissioner may be used in the calculation of the minimum reserves if appropriate for the type of benefits and if approved by the commissioner. The request for approval must include the proposed mortality table and the reason that the standard specified in subsection A is inappropriate. C. For single premium credit insurance using the 85CIDA table, no separate mortality must be assumed. History:   2004 c 285 art 2 s 9 
60A.803 LIFE AND HEALTH REINSURANCE AGREEMENTS. Subdivision 1. Scope. This section applies to: (1) all domestic life and accident and sickness insurers; (2) all other licensed life and accident and sickness insurers which are not subject to a substantially similar regulation in their domiciliary state; and (3) licensed insurers with respect to their accident and sickness business. This section does not apply to assumption reinsurance, yearly renewable term reinsurance, or certain nonproportional reinsurance such as stop loss or catastrophe reinsurance. Subd. 2. Accounting requirements. No insurer subject to this section shall, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the commissioner if, by the terms of the reinsurance agreement, in substance or effect, any of the conditions in paragraphs (a) to (k) exist: (a) The renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period, are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall, using assumptions equal to the applicable statutory reserve basis on the business reinsured. Those expenses include commissions, premium taxes, and direct expenses including, but not limited to, billing, valuation, claims, and maintenance expected by the company at the time the business is reinsured. (b) The ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, shall not be considered to be a deprivation of surplus or assets. (c) The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement, except that neither offsetting experience refunds against current and prior years' losses under the agreement nor payment by the ceding insurer of an amount equal to the current and prior years' losses under the agreement upon voluntary termination of in force reinsurance by the ceding insurer is considered such a reimbursement to the reinsurer for negative experience. Voluntary termination does not include situations where termination occurs because of unreasonable provisions which allow the reinsurer to reduce its risk under the agreement. An example of such a provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding company to prematurely terminate the reinsurance treaty. (d) The ceding insurer must, at specific points in time scheduled in the agreement, terminate or automatically recapture all or part of the reinsurance ceded. (e) The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the reinsured policies. It is improper for a ceding company to pay reinsurance premiums, or other fees or charges to a reinsurer, which are greater than the direct premiums collected by the ceding company. (f) The reinsurance agreement does not transfer all of the significant risk inherent in the business being reinsured. The following table identifies, for a representative sampling of products or type of business, the risks that are considered to be significant. For products not specifically included, the risks determined to be significant must be consistent with this table. Risk categories: (1) morbidity; (2) mortality; (3) lapse, which is the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy; (4) credit quality (C1), which is the risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in interest rate; (5) reinvestment (C3), which is the risk that interest rates will fall and funds reinvested (coupon payments or money received upon asset maturity or call) will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase; and (6) disintermediation (C3), which is the risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals. RISK CATEGORY + = Significant 0 = Insignificant           1 2 3 4 5 6  + 0 + 0 0 0  + 0 + + + 0  0 + 0 + + 0  0 0 + + + +  0 0 + + + +  0 0 0 + + +  0 0 + + + +  0 + + + + +  0 + + + + +  0 + + 0 0 0  0 + + + + +  0 + + 0 0 0  0 + + + + +  0 + + + + +  0 + + + + +  0 + + + + +  0 + + + + +   *LTC = Long-Term Care Insurance LTD = Long-Term Disability Insurance (g)(1) The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding company does not, other than for the classes of business excepted in clause (2), either transfer the underlying assets to the reinsurer or legally segregate such assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the commissioner that legally segregates, by contract or contract provision, the underlying assets. (2) Notwithstanding the requirements of clause (1), the assets supporting the reserves for the following classes of business and any classes of business that do not have a significant credit quality, reinvestment or disintermediation risk, may be held by the ceding company without segregation of the assets: (i) Health Insurance - LTC/LTD; (ii) Traditional Nonpar Permanent; (iii) Traditional Par Permanent; (iv) Adjustable Premium Permanent; (v) Indeterminate Premium Permanent; and/or (vi) Universal Life Fixed Premium (no dump-in premiums allowed). The associated formula for determining the reserve interest rate adjustment must reflect the ceding company's investment earnings and incorporate all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula: Rate = 2(I+CG) / (X + Y - I - CG)     I is the net investment income   CG is capital gains less capital losses   X is the current year cash and invested assets plus investmentincome due and accrued less borrowed money   Y is the same as X but for the prior year   (h) Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within 90 days of the settlement date. (i) The ceding insurer is required to make representations or warranties not reasonably related to the business being reinsured. (j) The ceding insurer is required to make representations or warranties about future performance of the business being reinsured. (k) The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged. Subd. 3. Commissioner approval. Notwithstanding subdivision 2, an insurer subject to this section may, with the prior approval of the commissioner, take such reserve credit or establish such asset as the commissioner deems consistent with state insurance law or rules. Subd. 4. Filing. (a) Agreements entered into after August 1, 1994, that involve the reinsurance of business issued prior to the effective date of the agreements, along with any subsequent amendments thereto, shall be filed by the ceding company with the commissioner within 30 days from their date of execution. Each filing shall include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion with respect to valuation of reserves shall consider this section and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with the commissioner. The actuary shall maintain adequate documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that the work conforms to this section. (b) Any increase in surplus net of federal income tax resulting from arrangements described in paragraph (a) must be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the capital and surplus account of the annual statement) and recognition of the surplus increase as income must be reflected on a net of tax basis in the "Reinsurance ceded" line of the annual statement as earnings emerge from the business reinsured. Subd. 5. Written agreements. No reinsurance agreement or amendment to any agreement may be used to reduce any liability or to establish any asset in any financial statement filed with the commissioner, unless the agreement, amendment, or a binding letter or intent has been duly executed by both parties no later than the "as of date" of the financial statement. In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement must be executed within a reasonable period of time, not exceeding 90 days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded. The reinsurance agreement must provide that: (1) the agreement constitutes the entire agreement between the parties with respect to the business being reinsured under it and that there are no understandings between the parties other than as expressed in the agreement; and (2) any change or modification to the agreement is null and void unless made by amendment to the agreement and signed by both parties. Subd. 6. Reserve credits. Insurers subject to this section shall reduce to zero by December 31, 1995, any reserve credits or assets established with respect to reinsurance agreements entered into prior to August 1, 1994, that under the provisions of this section would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements have been in compliance with laws or regulations in existence immediately preceding August 1, 1994. History:   1994 c 426 s 9 
60A.90 SCOPE. Sections 60A.90 to 60A.94 apply to all domestic, foreign, and alien insurers who are authorized to transact business in this state. History:   1991 c 325 art 12 s 1 
60A.91 FILING REQUIREMENTS. (a) A domestic, foreign, and alien insurer who is authorized to transact insurance in this state shall annually on or before March 1 of each year, file with the National Association of Insurance Commissioners (NAIC) a copy of its annual statement convention blank, along with additional filings prescribed by the commissioner for the preceding year. The information filed with the National Association of Insurance Commissioners must be in the same format and scope as that required by the commissioner and must include the signed jurat page and the actuarial certification. Amendments and addenda to the annual statement filing subsequently filed with the commissioner must also be filed with the NAIC. (b) Foreign insurers that are domiciled in a state that has a law substantially similar to paragraph (a) is considered to be in compliance with this section. History:   1991 c 325 art 12 s 2 
60A.92 IMMUNITY. In the absence of actual malice, members of the NAIC, their duly authorized committees, subcommittees, and task forces, their delegates, NAIC employees, and all others charged with the responsibility of collecting, reviewing, analyzing, and disseminating the information developed from the filing of the annual statement convention blanks are acting as agents of the commissioner under the authority of sections 60A.90 to 60A.94 and are not subject to civil liability for libel, slander, or any other cause of action by virtue of their collection, review, and analysis or dissemination of the data and information collected from the filings required under sections 60A.90 to 60A.94. History:   1991 c 325 art 12 s 3 
60A.93 CONFIDENTIALITY. All financial analysis ratios and examination synopses concerning insurance companies that are submitted to the department by the National Association of Insurance Commissioners' Insurance Regulatory Information System are confidential and may not be disclosed by the department. History:   1991 c 325 art 12 s 4 
60A.94 REVOCATION OF CERTIFICATE OF AUTHORITY. The commissioner may suspend, revoke, or refuse to renew the certificate of authority of an insurer failing to file its annual statement when due or within any extension of time that the commissioner, for good cause, may have granted. History:   1991 c 325 art 12 s 5 
60A.951 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to sections 60A.951 to 60A.956. Subd. 2. Authorized person. "Authorized person" means the county attorney, sheriff, or chief of police responsible for investigations in the county where the suspected insurance fraud occurred; the superintendent of the Bureau of Criminal Apprehension; the commissioner of commerce; the Commerce Fraud Bureau; the commissioner of labor and industry; the attorney general; or any duly constituted criminal investigative department or agency of the United States. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce for insurers regulated by the commissioner of commerce, and means the commissioner of health for insurers regulated by the commissioner of health. Subd. 4. Insurance fraud. "Insurance fraud" occurs when a person presents or causes to be presented to any insurer, or prepares with knowledge or belief that it will be so presented, a written or oral statement, including a computer-generated document, an electronic claim filing, or other electronic transmission, that contains materially false or misleading information, or a material and misleading omission, concerning: (1) an application for the issuance of an insurance policy; (2) the rating of an insurance policy; (3) a claim for payment, reimbursement, or benefits payable under an insurance policy to an insured, a beneficiary, or a third party; (4) premiums on an insurance policy; or (5) payments made in accordance with the terms of an insurance policy. Subd. 4a. Insurance policy or policy. "Insurance policy" or "policy" means the written instrument in which are set forth the terms of any certificate of insurance, binder of coverage, or contract of insurance, including a certificate, binder, or contract issued by a state-assigned risk plan; benefit plan; nonprofit hospital service plan; motor club service plan; or surety bond, cash bond, or any other alternative to insurance authorized by the Minnesota Financial Responsibility Act. Subd. 4b. Insurance professional. "Insurance professional" means sales agents, agencies, managing general agents, brokers, producers, claims representatives, adjusters, and third-party administrators. Subd. 4c. Insurance transaction. "Insurance transaction" means a transaction by, between, or among: (1) an insurer or a person who acts on behalf of an insurer; and (2) an insured, claimant, applicant for insurance, public adjuster, insurance professional, practitioner who performs professional services as defined by section 319B.02, subdivision 19, attorney, or any person who acts on behalf of any of the foregoing for the purpose of obtaining insurance or reinsurance, calculating insurance premiums, submitting a claim, negotiating or adjusting a claim, or otherwise obtaining insurance, self-insurance, or reinsurance, or obtaining the benefits or annuities thereof or therefrom. Subd. 5. Insurer. "Insurer" means insurance company, risk retention group as defined in section 60E.02, service plan corporation as defined in section 62C.02, health maintenance organization as defined in section 62D.02, community integrated service network as defined in section 62N.02, fraternal benefit society regulated under chapter 64B, township mutual company regulated under chapter 67A, joint self-insurance plan or multiple employer trust regulated under chapter 60F, 62H, or section 471.617, subdivision 2, persons administering a self-insurance plan as defined in section 60A.23, subdivision 8, clause (2), paragraphs (a) and (d), and the Workers' Compensation Reinsurance Association established in section 79.34. Subd. 5a. Person. "Person" means a natural person, company, corporation, unincorporated association, partnership, professional corporation, and any other entity. Subd. 5b. Premium. "Premium" means consideration paid or payable for coverage under an insurance policy. Premium includes any payment, whether due within the insurance policy term or otherwise; any deductible payment, whether advanced by the insurer or insurance professional and subject to reimbursement by the insured or otherwise; any self-insured retention or payment, whether advanced by the insurer or insurance professional and subject to reimbursement by the insured or otherwise; and any collateral or security to be provided to collateralize any such obligations to pay. Subd. 6. Relevant information. "Relevant information" includes, but is not limited to: (1) pertinent insurance policy information, including the application for a policy; (2) policy premium payment records; (3) a history of previous claims made by the insured including, where the insured is a corporation, limited liability company, or partnership, a history of claims by a subsidiary or any affiliates, and a history of claims of any other business association in which individual officers or partners or their family members are known to be involved; (4) material relating to the investigation, including the statement of any person and the proof of loss; (5) billing records; and (6) any other information which an authorized person identifies and which appears reasonably related to the investigation. History:  1994 c 574 s 1; 1995 c 258 s 9,10; 1997 c 225 art 2 s 1; 2002 c 331 s 2-8; 2013 c 135 art 3 s 22
60A.952 DISCLOSURE OF INFORMATION. Subdivision 1. Request. After receiving a written request from an authorized person stating that the authorized person has reason to believe that a crime or civil fraud has been committed in connection with an insurance claim, insurance transaction, payment, or application, an insurer must release to the authorized person all relevant information in the insurer's possession. Subd. 2. Notice to and cooperation with the Commerce Fraud Bureau. Any insurer or insurance professional that has reasonable belief that an act of insurance fraud will be, is being, or has been committed, shall furnish and disclose all relevant information to the Commerce Fraud Bureau or to any authorized person and cooperate fully with any investigation conducted by the Commerce Fraud Bureau. Any person that has a reasonable belief that an act of insurance fraud will be, is being, or has been committed, or any person who collects, reviews, or analyzes information concerning insurance fraud may furnish and disclose any information in its possession concerning the act to the Commerce Fraud Bureau, any authorized person, or to an authorized representative of an insurer that requests the information for the purpose of detecting, prosecuting, or preventing insurance fraud. The insurer may also release relevant information to any person authorized to receive the information under section 72A.502, subdivision 2. If disclosure is made to an authorized person other than the Commerce Fraud Bureau, a copy of the disclosure must be sent to the Commerce Fraud Bureau. Subd. 3. Immunity from liability. If insurers, insurance support organizations as defined in section 72A.491, subdivision 12, agents acting on the insurers' behalf, or authorized persons release information in good faith under this section, whether orally or in writing, they are immune from any liability, civil or criminal, for the release or reporting of the information. Subd. 4. Tolling of time periods. If an insurer has a reasonable or probable cause to believe that an insurance fraud has been committed in connection with an insurance claim, and has properly notified the Commerce Fraud Bureau of its suspicions according to subdivision 2, the notification tolls any applicable time period in any unfair claims practices statute or related regulations, or any action on the claim against the insurer to whom the claim had been presented for bad faith, until 30 days after determination by the Commerce Fraud Bureau and notice to the insurer that the division will not recommend action on the claim. Subd. 5. Reward for information. The Commerce Fraud Bureau, in cooperation with authorized insurers and insurance professionals, may establish a voluntary fund to reward persons not connected with the insurance industry who provide information or furnish evidence leading to the arrest and conviction of persons responsible for insurance fraud. History:  1994 c 574 s 2; 2002 c 331 s 9-12; 2013 c 135 art 3 s 22; 2014 c 310 s 2
60A.953 ENFORCEMENT; REFUSAL TO COOPERATE WITH AN INVESTIGATION. The intentional failure to provide relevant information as required by section 60A.952, subdivision 1, or to provide notification of insurance fraud as required by section 60A.952, subdivision 2, is punishable as a misdemeanor. It is unlawful for any person to knowingly or intentionally interfere with the enforcement of the provisions of sections 60A.951 to 60A.956 or investigation of suspected or actual violations of sections 60A.951 to 60A.956 and is punishable as a misdemeanor. History:  1994 c 574 s 3; 2002 c 331 s 13
60A.954 INSURANCE ANTIFRAUD PLAN. Subdivision 1. Establishment. An insurer shall institute, implement, and maintain an antifraud plan. For the purpose of this section, the term insurer does not include reinsurers, the Workers' Compensation Reinsurance Association, self-insurers, and excess insurers. Within 30 days after instituting or materially modifying an antifraud plan, the insurer shall notify the commissioner in writing. The notice must include the name of the person responsible for administering the plan. An antifraud plan shall establish procedures to: (1) prevent insurance fraud, including: internal fraud involving the insurer's officers, employees, or agents; fraud resulting from misrepresentations on applications for insurance; and claims fraud; (2) report insurance fraud to appropriate law enforcement authorities; and (3) cooperate with the prosecution of insurance fraud cases. Subd. 2. Review. The commissioner may review each insurer's antifraud plan to determine whether it complies with the requirements of this section. If the commissioner finds that an insurer's antifraud plan does not comply with the requirements of this section, the commissioner shall disapprove the plan and send a notice of disapproval, along with the reasons for disapproval, to the insurer. An insurer whose antifraud plan has been disapproved by the commissioner shall submit a new plan to the commissioner within 60 days after the plan was disapproved. The commissioner may examine an insurer's procedures to determine whether the insurer is complying with its antifraud plan. The commissioner shall withhold from public inspection any part of an insurer's antifraud plan for so long as the commissioner deems the withholding to be in the public interest. History:  1994 c 574 s 4; 1995 c 258 s 11; 2022 c 93 art 2 s 25
60A.955 CLAIM FORMS TO CONTAIN FRAUD WARNING. All insurance claim forms issued by an insurer for use in submitting a claim for payment or a claim for any other benefit pursuant to a policy shall clearly contain a warning substantially as follows: "A person who files a claim with intent to defraud or helps commit a fraud against an insurer is guilty of a crime." An insurer may comply with this section by including the warning on an addendum attached to the claim form. The absence of the required warning does not constitute a defense in a prosecution for a violation of chapter 609 or any other chapter of Minnesota Statutes. History:  1994 c 574 s 5; 1995 c 258 s 12
60A.956 OTHER LAW ENFORCEMENT AUTHORITY. Nothing in sections 60A.951 to 60A.956 preempts the authority of or relieves the duty of any other law enforcement agencies to investigate and prosecute alleged violations of law, prevents or prohibits a person from voluntarily disclosing any information concerning insurance fraud to any law enforcement agency other than the Commerce Fraud Bureau, or limits any of the powers granted elsewhere by the laws of this state to the commissioner of commerce to investigate alleged violations of law and to take appropriate action. History:  2002 c 331 s 14; 2013 c 135 art 3 s 22
60A.957 DEFINITIONS. Subdivision 1. Terms. For purposes of sections 60A.957 to 60A.9585, the terms defined in this section have the meanings given them. Subd. 2. Advertising. "Advertising" means any written, electronic, or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed directly before the public in this state, for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequeath, or transfer the death benefit or ownership of a life insurance policy pursuant to a viatical settlement contract. Subd. 3. Business of viatical settlements. "Business of viatical settlements" means an activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothecating, or in any other manner acquiring an interest in a life insurance policy by means of a viatical settlement contract. Subd. 4. Chronically ill. "Chronically ill" means: (1) being unable to perform at least two activities of daily living (for example, eating, toileting, transferring, bathing, dressing, or continence); (2) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or (3) having a level of disability similar to that described in clause (1) as determined by the United States Secretary of Health and Human Services. Subd. 5. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 6. Financing entity. "Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a viatical settlement contract, but: (1) whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and (2) who has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts. Financing entity does not include a nonaccredited investor or a viatical settlement purchaser. Subd. 7. Fraudulent viatical settlement act. "Fraudulent viatical settlement act" includes: (a) acts or omissions committed by any person who, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits its employees or its agents to engage in acts including: (1) presenting, causing to be presented or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, viatical settlement broker, viatical settlement purchaser, viatical settlement investment agent, financing entity, insurer, insurance producer, or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one or more of the following: (i) an application for the issuance of a viatical settlement contract or insurance policy; (ii) the underwriting of a viatical settlement contract or insurance policy; (iii) a claim for payment or benefit pursuant to a viatical settlement contract or insurance policy; (iv) premiums paid on an insurance policy or as a result of a viatical settlement purchase agreement; (v) payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract, viatical settlement purchase agreement, or insurance policy; (vi) the reinstatement or conversion of an insurance policy; (vii) the solicitation, offer, effectuation, or sale of a viatical settlement contract, insurance policy, or viatical settlement purchase agreement; (viii) the issuance of written evidence of viatical settlement contract, viatical settlement purchase agreement, or insurance; or (ix) a financing transaction; and (2) employing any plan, financial structure, device, scheme, or artifice to defraud related to viaticated policies; (b) acts or omissions in the furtherance of a fraud or to prevent the detection of a fraud committed by any person, its employees, or its agents, to: (1) remove, conceal, alter, destroy, or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of viatical settlements; (2) misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person; (3) transact the business of viatical settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of viatical settlements; or (4) file with the commissioner or the equivalent chief insurance regulatory official of another jurisdiction a document containing false information or otherwise conceal information about a material fact from the commissioner; (c) commit embezzlement, theft, misappropriation, or conversion of money, funds, premiums, credits, or other property of a viatical settlement provider, insurer, viator, insurance policyowner, or any other person engaged in the business of viatical settlements or insurance; or (d) attempt to commit, assist, aid, or abet in the commission of, or conspiracy to commit, the acts or omissions specified in this subdivision. Subd. 8. Life insurance producer. "Life insurance producer" means any person licensed in this state as a resident or nonresident insurance producer who has received qualification or authority for life insurance pursuant to chapter 60K. Subd. 9. Person. "Person" means a natural person or a legal entity, including, without limitation, an individual, partnership, limited liability company, association, trust, or corporation. Subd. 10. Policy. "Policy" means an individual or group policy, group certificate, contract, or arrangement of life insurance owned by a resident of this state, regardless of whether delivered or issued for delivery in this state. Subd. 11. Related provider trust. "Related provider trust" means a titling trust or other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust shall have a written agreement with the licensed viatical settlement provider under which the licensed viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to viatical settlement transactions available to the commissioner as if those records and files were maintained directly by the licensed viatical settlement provider. Subd. 12. Special purpose entity. "Special purpose entity" means a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide either directly or indirectly access to institutional capital markets: (1) for a financing entity or licensed viatical settlement provider; or (2) in connection with a transaction in which: (i) the securities in the special purpose entity are acquired by the viator or by "qualified institutional buyers" as defined in Rule 144 promulgated under the Securities Act of 1933, as amended; or (ii) the securities pay a fixed rate of return commensurate with established asset-backed institutional capital markets. Subd. 13. Terminally ill. "Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in 24 months or less. Subd. 14. Viatical settlement broker. "Viatical settlement broker" means a person, including a life insurance producer as provided in section 60A.9572, who, working exclusively on behalf of a viator and for a fee, commission, or other valuable consideration, offers or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers or one or more viatical settlement brokers. Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent only the viator, and not the insurer or the viatical settlement provider, and owes a fiduciary duty to the viator to act according to the viator's instructions and in the best interests of the viator. Viatical settlement broker does not include an attorney, certified public accountant, or a financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser. Subd. 15. Viatical settlement contract. (a) "Viatical settlement contract" means a written agreement between a viator and a viatical settlement provider establishing the terms under which compensation or anything of value is or will be paid, which compensation or value is less than the expected death benefits of the policy, in return for the viator's present or future assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the insurance policy or certificate of insurance. Viatical settlement contract also includes the transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such a policy if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts, which life insurance contract insures the life of a person residing in this state. (b) Viatical settlement contract includes a premium finance loan made for a life insurance policy by a lender to a viator on, before, or after the date of issuance of the policy where: (1) the viator or the insured receives on the date of the premium finance loan a guarantee of a future viatical settlement value of the policy; or (2) the viator or the insured agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy. (c) Viatical settlement contract does not include: (1) a policy loan or accelerated death benefit made by the insurer pursuant to the policy's terms; (2) loan proceeds that are used solely to pay: (i) premiums for the policy; and (ii) the costs of the loan, including, without limitation, interest, arrangement fees, utilization fees and similar fees, closing costs, legal fees and expenses, trustee fees and expenses, and third-party collateral provider fees and expenses, including fees payable to letter of credit issuers; (3) a loan made by a bank or other licensed financial institution in which the lender takes an interest in a life insurance policy solely to secure repayment of a loan or, if there is a default on the loan and the policy is transferred, the transfer of a policy by the lender, provided that neither the default itself nor the transfer of the policy in connection with the default is pursuant to an agreement or understanding with any other person for the purposes of evading regulation under sections 60A.957 to 60A.9585; (4) a loan made by a lender that does not violate chapter 59A, provided that the premium finance loan is not described in clause (3); (5) an agreement where all the parties (i) are closely related to the insured by blood or law or (ii) have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or are trusts established primarily for the benefit of the parties; (6) any designation, consent, or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee; (7) a bona fide business succession planning arrangement: (i) between one or more shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders; (ii) between one or more partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partners; or (iii) between one or more members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by its members; (8) an agreement entered into by a service recipient, or a trust established by the service recipient, and a service provider, or a trust established by the service provider, who performs significant services for the service recipient's trade or business; or (9) any other contract, transaction, or arrangement exempted from the definition of viatical settlement contract by the commissioner based on a determination that the contract, transaction, or arrangement is not of the type intended to be regulated by sections 60A.957 to 60A.9585. Subd. 16. Viatical settlement investment agent. (a) "Viatical settlement investment agent" means a person who is an appointed or contracted agent of a licensed viatical settlement provider who solicits or arranges the funding for the purchase of a viatical settlement by a viatical settlement purchaser and who is acting on behalf of a viatical settlement provider. (b) A viatical settlement investment agent shall not have any contact directly or indirectly with the viator or insured or have knowledge of the identity of the viator or insured. (c) A viatical settlement investment agent is deemed to represent the viatical settlement provider of whom the viatical settlement investment agent is an appointed or contracted agent. Subd. 17. Viatical settlement provider. (a) "Viatical settlement provider" means a person, other than a viator, that enters into or effectuates a viatical settlement contract with a viator resident in this state. (b) Viatical settlement provider does not include: (1) a bank, savings bank, savings and loan association, credit union, or other licensed lending institution; (2) a premium finance company making premium finance loans and exempted by the commissioner from the licensing requirement under the premium finance laws that takes an assignment of a life insurance policy solely as collateral for a loan; (3) the issuer of the life insurance policy; (4) an authorized or eligible insurer that provides stop-loss coverage or financial guaranty insurance to a viatical settlement provider, purchaser, financing entity, special purpose entity, or related provider trust; (5) a natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit; (6) a financing entity; (7) a special purpose entity; (8) a related provider trust; (9) a viatical settlement purchaser; or (10) any other person that the commissioner determines is not the type of person intended to be covered by the definition of viatical settlement provider. Subd. 18. Viatical settlement purchase agreement. "Viatical settlement purchase agreement" means a contract or agreement, entered into by a viatical settlement purchaser, to which the viator is not a party, to purchase a life insurance policy or an interest in a life insurance policy, that is entered into for the purpose of deriving an economic benefit. Subd. 19. Viatical settlement purchaser. (a) "Viatical settlement purchaser" means a person who provides a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy, or a person who owns or acquires or is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance policy that has been or will be the subject of a viatical settlement contract, for the purpose of deriving an economic benefit. (b) Viatical settlement purchaser does not include: (1) a licensee under sections 60A.957 to 60A.9585; (2) an accredited investor or qualified institutional buyer as defined, respectively, in Rule 501(a) or Rule 144A promulgated under the federal Securities Act of 1933, as amended; (3) a financing entity; (4) a special purpose entity; or (5) a related provider trust. Subd. 20. Viaticated policy. "Viaticated policy" means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract. Subd. 21. Viator. (a) "Viator" means the owner of a life insurance policy or a certificate holder under a group policy that resides in this state and enters or seeks to enter into a viatical settlement contract. For purposes of sections 60A.957 to 60A.9585, a viator shall not be limited to an owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed. If there is more than one viator on a single policy and the viators are residents of different states, the transaction is governed by the law of the state in which the viator having the largest percentage ownership resides or, if the viators hold equal ownership, the state of residence of one viator agreed upon in writing by all the viators. (b) Viator does not include: (1) a licensee under sections 60A.957 to 60A.9585, including a life insurance producer acting as a viatical settlement broker pursuant to sections 60A.957 to 60A.9585; (2) a qualified institutional buyer as defined in Rule 144A promulgated under the federal Securities Act of 1933, as amended; (3) a financing entity; (4) a special purpose entity; or (5) a related provider trust. History:   2009 c 62 s 2 
60A.9572 LICENSE AND BOND REQUIREMENTS. Subdivision 1. Provider or broker license required. A person shall not operate as a viatical settlement provider or viatical settlement broker in this state without first obtaining a license from the commissioner of the state of residence of the viator. Subd. 2. Agent license required. A person shall not operate as a viatical settlement investment agent in this state without first obtaining a license from the commissioner of the state of residence of the viatical settlement purchaser. If there is more than one purchaser of a single policy and the purchasers are residents of different states, the viatical settlement purchase agreement shall be governed by the law of the state in which the purchaser having the largest percentage ownership resides or, if the purchasers hold equal ownership, the state of residence of one purchaser agreed upon in writing by all purchasers. Subd. 3. Life insurance producer. (a) An insurance producer who is currently licensed with the life line of authority and has been licensed in good standing for at least one year is deemed to meet the licensing requirements of this section and is permitted to operate as a viatical settlement broker. (b) Not later than 30 days from the first day of operating as a viatical settlement broker, the life insurance producer shall notify the commissioner that the life insurance producer is acting as a viatical settlement broker on a form prescribed by the commissioner, and shall pay any applicable fee to be determined by the commissioner. Notification includes an acknowledgment by the life insurance producer that the life insurance producer will operate as a viatical settlement broker in accordance with sections 60A.957 to 60A.9585. (c) The insurer that issued the policy being viaticated is not responsible for any act or omission of a viatical settlement broker or viatical settlement provider arising out of or in connection with the viatical settlement transaction, unless the insurer receives compensation for the placement of a viatical settlement contract from the viatical settlement provider or viatical settlement broker in connection with the viatical settlement contract. (d) A person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator, whose compensation is not paid directly or indirectly by the viatical settlement provider, may negotiate viatical settlement contracts on behalf of the viator without having to obtain a license as a viatical settlement broker. Subd. 4. Application. An application for a viatical settlement provider, viatical settlement broker, or viatical settlement investment agent license shall be made to the commissioner by the applicant on a form prescribed by the commissioner, and these applications shall be accompanied by the fees specified in section 60A.964. Subd. 5. Renewals. A license may be renewed from year to year on the anniversary date upon payment of the annual renewal fees specified in section 60A.964. Failure to pay the fees by the renewal date results in expiration of the license. Subd. 6. Disclosures. The applicant shall provide information on forms required by the commissioner. The commissioner shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders who hold more than ten percent of the shares of the company, partners, officers, members, and employees, and the commissioner may, in the exercise of the commissioner's discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member of the legal entity who may materially influence the applicant's conduct meets the standards of sections 60A.957 to 60A.9585. Subd. 7. Legal entity license. A license issued to a legal entity authorizes all partners, officers, members, and designated employees to act as viatical settlement providers, viatical settlement brokers, or viatical settlement investment agents, as applicable, under the license, and all those persons shall be named in the application and any supplements to the application. Subd. 8. Investigation. Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and issue a license if the commissioner finds that the applicant: (1) if a viatical settlement provider, has provided a detailed plan of operation; (2) is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for; (3) has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for; (4) if a viatical settlement provider or a viatical settlement broker, has demonstrated evidence of financial responsibility in a format prescribed by the commissioner through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this state or a deposit of cash, certificates of deposit, or securities or any combination thereof in an amount to be determined by the commissioner. The commissioner shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this clause have been filed with one or more states where the applicant is licensed as a viatical settlement provider or a viatical settlement broker. The commissioner may ask for evidence of financial responsibility at any time the commissioner deems necessary. Any surety bond issued pursuant to this clause shall be in favor of this state and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices by the viatical settlement provider or a viatical settlement broker; (5) if a legal entity, provides a certificate of good standing from the state of its domicile; and (6) if a viatical settlement provider or viatical settlement broker, has provided an antifraud plan that meets the requirements of section 60A.9583. Subd. 9. Consent to service of process. The commissioner shall not issue a license to a nonresident applicant, unless a written designation of an agent for service of process is filed and maintained with the commissioner or the applicant has filed with the commissioner the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner. Subd. 10. Duty to supplement information. A viatical settlement provider, viatical settlement broker, or viatical settlement investment agent shall provide to the commissioner new or revised information about officers, ten percent or more stockholders, partners, directors, members, or designated employees within 30 days of the change. Subd. 11. Training required. An individual licensed as a viatical settlement broker shall complete on an annual basis six hours of training related to viatical settlements and viatical settlement transactions, as required by the commissioner; provided, however, that a life insurance producer who is operating as a viatical settlement broker pursuant to subdivision 3 shall not be subject to the requirements of this subdivision. Any person failing to meet the requirements of this subdivision is subject to the penalties imposed by the commissioner. History:  2009 c 62 s 3; 2010 c 384 s 11
60A.9573 LICENSE REVOCATION AND DENIAL. Subdivision 1. Grounds. The commissioner may suspend, revoke, or refuse to issue or renew the license of a viatical settlement provider, viatical settlement broker, or viatical settlement investment agent if the commissioner finds that: (1) there was any material misrepresentation in the application for the license; (2) the licensee or any officer, partner, member, or key management personnel has been convicted of fraudulent or dishonest practices, is subject to a final administrative action, or is otherwise shown to be untrustworthy or incompetent; (3) the viatical settlement provider demonstrates a pattern of unreasonable payments to viators; (4) the licensee or any officer, partner, member, or key management personnel has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or to a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment of conviction has been entered by the court; (5) the viatical settlement provider has entered into any viatical settlement contract that has not been approved pursuant to sections 60A.957 to 60A.9585; (6) the viatical settlement provider has failed to honor contractual obligations set out in a viatical settlement contract or a viatical settlement purchase agreement; (7) the licensee no longer meets the requirements for initial licensure; (8) the viatical settlement provider has assigned, transferred, or pledged a viaticated policy to a person other than a viatical settlement provider licensed in this state, a viatical settlement purchaser, an accredited investor or qualified institutional buyer as defined respectively in Rule 501(a) or Rule 144A promulgated under the federal Securities Act of 1933, as amended, a financing entity, a special purpose entity, or a related provider trust; or (9) the licensee or any officer, partner, member, or key management personnel has violated any provision of sections 60A.957 to 60A.9585. Subd. 2. Bad faith by broker or producer. The commissioner may suspend, revoke, or refuse to renew the license of a viatical settlement broker or a life insurance producer operating as a viatical settlement broker pursuant to sections 60A.957 to 60A.9585 if the commissioner finds that the viatical settlement broker or life insurance producer has violated the provisions of sections 60A.957 to 60A.9585 or has otherwise engaged in bad faith conduct with one or more viators. Subd. 3. License enforcement actions. Section 45.027 applies to any action taken by the commissioner to deny a license application or suspend, revoke, or refuse to renew the license of a viatical settlement provider, viatical settlement broker, or viatical settlement investment agent, or suspend, revoke, or refuse to renew a license of a life insurance producer operating as a viatical settlement broker pursuant to sections 60A.957 to 60A.9585. History:   2009 c 62 s 4 
60A.9574 APPROVAL OF VIATICAL SETTLEMENT CONTRACTS AND DISCLOSURE STATEMENTS. A person shall not use a viatical settlement contract form or provide to a viator a disclosure statement form in this state unless first filed with and approved by the commissioner. The commissioner shall disapprove a viatical settlement contract form or disclosure statement form if, in the commissioner's opinion, the contract or provisions fail to meet the requirements of sections 60A.9577, 60A.9579, 60A.9582, and 60A.9583, subdivision 2, or are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair to the viator. At the commissioner's discretion, the commissioner may require the submission of advertising material. History:   2009 c 62 s 5 
60A.9575 REPORTING REQUIREMENTS AND PRIVACY. Subdivision 1. Annual statement. A viatical settlement provider shall file with the commissioner on or before March 1 of each year an annual statement containing the following information: (1) for each policy viaticated, the date that the viatical settlement contract was entered into; the life expectancy of the viator at the time of the contract; the face amount of the policy; the amount paid by the viatical settlement provider to viaticate the policy; and if the viator has died, the date of death and the total insurance premiums paid by the viatical settlement provider to maintain the policy in force; (2) a breakdown by disease category of applications received, accepted, and rejected; (3) a breakdown of policies viaticated by issuer and policy type; (4) the number of secondary market versus primary market transactions; (5) the portfolio size; and (6) the amount of outside borrowings. The information shall be limited to only those transactions where the viator is a resident of this state. Individual transaction data regarding the business of viatical settlements or data that could compromise the privacy of personal, financial, and health information of the viator or insured shall be filed with the commissioner on a confidential basis. Subd. 2. Identity disclosure restrictions. Except as otherwise allowed or required by law, a viatical settlement provider, viatical settlement broker, or viatical settlement investment agent, insurance company, insurance producer, information bureau, rating agency or company, or any other person with actual knowledge of an insured's identity, shall not disclose that identity as an insured, or the insured's financial or medical information to any other person unless the disclosure: (1) is necessary to effect a viatical settlement between the viator and a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure; (2) is necessary to effect a viatical settlement purchase agreement between the viatical settlement purchaser and a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure; (3) is provided in response to an investigation or examination by the commissioner or any other governmental officer or agency or pursuant to section 45.027; (4) is a term of or condition to the transfer of a policy by one viatical settlement provider to another viatical settlement provider; (5) is necessary to permit a financing entity, related provider trust, or special purpose entity to finance the purchase of policies by a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure; (6) is necessary to allow a viatical settlement provider or viatical settlement broker or an authorized representative to make contacts for the purpose of determining health status; or (7) is required to purchase stop-loss coverage or financial guaranty insurance. History:   2009 c 62 s 6 
60A.9577 DISCLOSURE TO VIATOR. Subdivision 1. Application disclosures by provider and broker. With an application for a viatical settlement, a viatical settlement provider or viatical settlement broker shall provide the viator with at least the following disclosures no later than the time the application for the viatical settlement contract is signed by all parties. The disclosures shall be provided in a separate document that is signed by the viator and the viatical settlement provider or viatical settlement broker, and shall provide the following information: (1) that a viatical settlement broker represents exclusively the viator, and not the insurer or the viatical settlement provider, and owes a fiduciary duty to the viator, including a duty to act according to the viator's instructions and in the best interests of the viator; (2) some or all of the proceeds of the viatical settlement may be taxable under federal income tax and state franchise and income taxes, and assistance should be sought from a professional tax advisor; (3) proceeds of the viatical settlement could be subject to the claims of creditors; (4) receipt of the proceeds of a viatical settlement may adversely affect the viator's eligibility for Medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies; (5) the viator has the right to rescind a viatical settlement contract before the earlier of 30 calendar days after the date upon which the viatical settlement contract is executed by all parties or 15 calendar days after the viatical settlement proceeds have been paid to the viator, as provided in section 60A.9579, subdivision 3. Rescission, if exercised by the viator, is effective only if both notice of the rescission is given, and the viator repays all proceeds and any premiums, loans, and loan interest paid on account of the viatical settlement within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment by the viator or the viator's estate of all viatical settlement proceeds and any premiums, loans, and loan interest to the viatical settlement within 60 days of the insured's death; (6) funds will be sent to the viator within three business days after the viatical settlement provider has received the insurer or group administrator's written acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated; (7) entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator. Assistance should be sought from a financial adviser; (8) the disclosure document shall contain the following language: "All medical, financial, or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured's identity or the identity of family members, a spouse, or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years."; and (9) following execution of a viatical contract, the insured may be contacted for the purpose of determining the insured's health status and to confirm the insured's residential or business street address and telephone number, or as otherwise provided in sections 60A.957 to 60A.9585. This contact shall be limited to once every three months if the insured has a life expectancy of more than one year, and no more than once per month if the insured has a life expectancy of one year or less. Contacts shall be made only by a viatical settlement provider licensed in the state in which the viator resided at the time of the viatical settlement, or by the authorized representative of a duly licensed viatical settlement provider. Disclosure to a viator under this subdivision includes distribution of a brochure describing the process of viatical settlements. The National Association of Insurance Commissioners form for the brochure shall be used unless another form is developed or approved by the commissioner. Subd. 2. Contract disclosures by provider. A viatical settlement provider shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and provide the following information: (1) the affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be viaticated; (2) the document includes the name, business address, and telephone number of the viatical settlement provider; (3) any affiliations or contractual arrangements between the viatical settlement provider and the viatical settlement broker; (4) if an insurance policy to be viaticated has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be viaticated, the viator shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with the viator's insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement; (5) state the dollar amount of the current death benefit payable to the viatical settlement provider under the policy or certificate. If known, the viatical settlement provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate, and the extent to which the viator's interest in those benefits will be transferred as a result of the viatical settlement contract; and (6) state whether the funds will be escrowed with an independent third party during the transfer process, and if so, provide the name, business address, and telephone number of the independent third-party escrow agent, and the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents. Subd. 3. Contract disclosures by broker. A viatical settlement broker shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and provide the following information: (1) the name, business address, and telephone number of the viatical settlement broker; (2) a full, complete, and accurate description of all offers, counteroffers, acceptances, and rejections relating to the proposed viatical settlement contract; (3) a written disclosure of any affiliations or contractual arrangements between the viatical settlement broker and any person making an offer in connection with the proposed viatical settlement contracts; (4) the name of each broker who receives compensation and the amount of compensation received by that broker, which compensation includes anything of value paid or given to the broker in connection with the life settlement contract; and (5) where any portion of the viatical settlement broker's compensation, as defined in clause (4), is taken from a proposed viatical settlement offer, the broker shall also disclose the total amount of the viatical settlement offer and the percentage of the viatical settlement offer comprised by the viatical settlement broker's compensation. Subd. 4. Ownership and beneficiary changes. If the viatical settlement provider transfers ownership or changes the beneficiary of the insurance policy, the provider shall communicate in writing the change in ownership or beneficiary to the insured within 20 days after the change. Subd. 5. Contract disclosures by provider or agent. A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures prior to the date the viatical settlement purchase agreement is signed by all parties. The disclosures shall be conspicuously displayed in any viatical purchase contract or in a separate document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent, and shall make the following disclosures to the viatical settlement purchaser: (1) the purchaser will receive no returns, for example, dividends and interest, until the insured dies and a death claim payment is made; (2) the actual annual rate of return on a viatical settlement contract is dependent upon an accurate projection of the insured's life expectancy, and the actual date of the insured's death. An annual guaranteed rate of return is not determinable; (3) the viaticated life insurance contract should not be considered a liquid purchase since it is impossible to predict the exact timing of its maturity and the funds are probably not available until the death of the insured. There is no established secondary market for resale of these products by the purchaser; (4) the purchaser may lose all benefits or may receive substantially reduced benefits if the insurer goes out of business during the term of the viatical investment; (5) the purchaser is responsible for payment of the insurance premium or other costs related to the policy, if required by the terms of the viatical purchase agreement. These payments may reduce the purchaser's return. If a party other than the purchaser is responsible for the payment, the name and address of that party shall also be disclosed; (6) the purchaser is responsible for payment of the insurance premiums or other costs related to the policy if the insured returns to health. Disclose the amount of the premiums, if applicable; (7) the name, business address, and telephone number of the independent third party providing escrow services and the relationship to the broker; (8) the amount of any trust fees or other expenses to be charged to the viatical settlement purchaser shall be disclosed; (9) whether the purchaser is entitled to a refund of all or part of the purchaser's investment under the settlement contract if the policy is later determined to be null and void; (10) that group policies may contain limitations or caps in the conversion rights, additional premiums may have to be paid if the policy is converted, name the party responsible for the payment of the additional premiums and, if a group policy is terminated and replaced by another group policy, state that there may be no right to convert the original coverage; (11) the risks associated with policy contestability including, but not limited to, the risk that the purchaser will have no claim or only a partial claim to death benefits should the insurer rescind the policy within the contestability period; (12) whether the purchaser will be the owner of the policy in addition to being the beneficiary, and if the purchaser is the beneficiary only and not also the owner, the special risks associated with that status, including, but not limited to, the risk that the beneficiary may be changed or the premium may not be paid; and (13) the experience and qualifications of the person who determines the life expectancy of the insured, for example, in-house staff, independent physicians, and specialty firms that weigh medical and actuarial data; the information this projection is based on; and the relationship of the projection maker to the viatical settlement provider, if any. Disclosure to a viatical settlement purchaser under this subdivision includes the distribution of a brochure describing the process of investment in viatical settlements. The National Association of Insurance Commissioners form for the brochure shall be used unless one is developed by the commissioner. Subd. 6. Transfer or sale disclosures by provider or agent. A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures no later than at the time of the assignment, transfer, or sale of all or a portion of an insurance policy. The disclosures shall be contained in a document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent, and shall make the following disclosures to the viatical settlement purchaser: (1) disclose all the life expectancy certifications obtained by the provider in the process of determining the price paid to the viator; (2) state whether premium payments or other costs related to the policy have been escrowed. If escrowed, state the date upon which the escrowed funds will be depleted and whether the purchaser will be responsible for payment of premiums thereafter and, if so, the amount of the premiums; (3) state whether premium payments or other costs related to the policy have been waived. If waived, disclose whether the investor will be responsible for payment of the premiums if the insurer that wrote the policy terminates the waiver after purchase and the amount of those premiums; (4) disclose the type of policy offered or sold, for example, whole life, term life, universal life, or a group policy certificate; any additional benefits contained in the policy; and the current status of the policy; (5) if the policy is term insurance, disclose the special risks associated with term insurance including, but not limited to, the purchaser's responsibility for additional premiums if the viator continues the term policy at the end of the current term; (6) state whether the policy is contestable; (7) state whether the insurer that wrote the policy has any additional rights that could negatively affect or extinguish the purchaser's rights under the viatical settlement contract, what these rights are, and under what conditions these rights are activated; and (8) state the name and address of the person responsible for monitoring the insured's condition. Describe how often the monitoring of the insured's condition is done, how the date of death is determined, and how and when this information will be transmitted to the purchaser. Subd. 7. Agreement voidable. The viatical settlement purchase agreement is voidable by the purchaser at any time within three days after the disclosures mandated by subdivisions 4 and 5 are received by the purchaser. History:   2009 c 62 s 7 
60A.9579 GENERAL RULES. Subdivision 1. Provider requirements. (a) A viatical settlement provider entering into a viatical settlement contract shall first obtain: (1) if the viator is the insured, a written statement from a licensed attending physician that the viator is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract; and (2) a document in which the insured consents to the release of the insured's medical records to a licensed viatical settlement provider, viatical settlement broker, and the insurance company that issued the life insurance policy covering the life of the insured. (b) Within 20 days after a viator executes documents necessary to transfer any rights under an insurance policy or within 20 days of entering any agreement, option, promise, or any other form of understanding, expressed or implied, to viaticate the policy, the viatical settlement provider shall give written notice to the insurer that issued that insurance policy that the policy has or will become a viaticated policy. The notice shall be accompanied by the documents required by paragraph (c). (c) The viatical provider shall deliver a copy of the medical release required under paragraph (a), clause (2), a copy of the viator's application for the viatical settlement contract, the notice required under paragraph (b), and a request for verification of coverage to the insurer that issued the life insurance policy that is the subject of the viatical transaction. The National Association of Insurance Commissioners form for verification of coverage shall be used unless another form is developed or approved by the commissioner. (d) The insurer shall respond to a request for verification of coverage submitted on an approved form by a viatical settlement provider or viatical settlement broker within 30 calendar days of the date the request is received and shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at this time regarding the validity of the insurance contract or possible fraud. The insurer shall accept a request for verification of coverage made on a National Association of Insurance Commissioners form or any other form approved by the commissioner. The insurer shall accept an original or facsimile or electronic copy of a request and any accompanying authorization signed by the viator. Failure by the insurer to meet its obligations under this subdivision is a violation of sections 60A.9581, subdivision 3, and 60A.9585. (e) Prior to or at the time of execution of the viatical settlement contract, the viatical settlement provider shall obtain a witnessed document in which the viator consents to the viatical settlement contract, represents that the viator has a full and complete understanding of the viatical settlement contract, that the viator has a full and complete understanding of the benefits of the life insurance policy, acknowledges that the viator is entering into the viatical settlement contract freely and voluntarily and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness or condition was diagnosed after the life insurance policy was issued. (f) If a viatical settlement broker performs any of these activities required of the viatical settlement provider, the provider is deemed to have fulfilled the requirements of this section. Subd. 2. Confidentiality of personal information. All personal information solicited or obtained by any licensee shall be subject to sections 72A.49 to 72A.505. Subd. 3. General right of rescission. A viatical settlement contract entered into in this state shall provide the viator with an absolute right to rescind the contract before the earlier of 30 calendar days after the date upon which the viatical settlement contract is executed by all parties or 15 calendar days after the viatical settlement proceeds have been sent to the viator as provided in subdivision 6. Rescission by the viator may be conditioned upon the viator both giving notice and repaying to the viatical settlement provider within the rescission period all proceeds of the settlement and any premiums, loans, and loan interest paid by or on behalf of the viatical settlement provider in connection with or as a consequence of the viatical settlement. If the insured dies during the rescission period, the viatical settlement contract is deemed to have been rescinded, subject to repayment to the viatical settlement provider or purchaser of all viatical settlement proceeds, and any premiums, loans, and loan interest that have been paid by the viatical settlement provider or purchaser, which shall be paid within 60 calendar days of the death of the insured. In the event of any rescission, if the viatical settlement provider has paid commissions or other compensation to a viatical settlement broker in connection with the rescinded transaction, the viatical settlement broker shall refund all commissions and compensation to the viatical settlement provider within five business days following receipt of written demand from the viatical settlement provider, which demand shall be accompanied by either the viator's notice of rescission if rescinded at the election of the viator, or notice of the death of the insured if rescinded by reason of the death of the insured within the applicable rescission period. Subd. 4. Right to rescind after mandated disclosures. The purchaser shall have the right to rescind a viatical settlement contract within three days after the disclosures mandated by section 60A.9577, subdivisions 5 and 6, are received by the purchaser. Subd. 5. Payment of settlement proceeds. The viatical settlement provider shall instruct the viator to send the executed documents required to effect the change in ownership, assignment, or change in beneficiary directly to the independent escrow agent. Within three business days after the date the escrow agent receives the document, or from the date the viatical settlement provider receives the documents, if the viator erroneously provides the documents directly to the provider, the provider shall pay or transfer the proceeds of the viatical settlement into an escrow or trust account maintained in a state- or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary forms to the viatical settlement provider or related provider trust or other designated representative of the viatical settlement provider. Upon the escrow agent's receipt of the acknowledgment of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the viator. Subd. 6. Tendering consideration. Failure to tender consideration to the viator for the viatical settlement contract within the time set forth in the disclosure pursuant to section 60A.9577, subdivision 1, clause (6), renders the viatical settlement contract voidable by the viator for lack of consideration until the time consideration is tendered to and accepted by the viator. Funds shall be deemed sent by a viatical settlement provider to a viator as of the date that the escrow agent either releases funds for wire transfer to the viator or places a check for delivery to the viator by United States mail or other nationally recognized delivery service. Subd. 7. Health status contacts. Contacts with the insured for the purpose of determining the health status of the insured by the viatical settlement provider or viatical settlement broker after the viatical settlement has occurred shall only be made by the viatical settlement provider or broker licensed in this state or its authorized representatives and shall be limited to once every three months for insureds with a life expectancy of more than one year, and to no more than once per month for insureds with a life expectancy of one year or less. The provider or broker shall explain the procedure for these contacts at the time the viatical settlement contract is entered into. The limitations in this subdivision shall not apply to any contacts with an insured for reasons other than determining the insured's health status. Viatical settlement providers and viatical settlement brokers shall be responsible for the actions of their authorized representatives. History:   2009 c 62 s 8 
60A.9581 PROHIBITED PRACTICES AND CONFLICTS OF INTEREST. Subdivision 1. Solicitations and sales to controlled person. With respect to any viatical settlement contract or insurance policy, no viatical settlement broker knowingly shall solicit an offer from, effectuate a viatical settlement with, or make a sale to any viatical settlement provider, viatical settlement purchaser, viatical settlement investment agent, financing entity, or related provider trust that is controlling, controlled by, or under common control with the viatical settlement broker unless this relationship is disclosed to the viator. Subd. 2. Payment to controlled broker. With respect to any viatical settlement contract or insurance policy, no viatical settlement provider knowingly may enter into a viatical settlement contract with a viator, if, in connection with a viatical settlement contract, anything of value will be paid to a viatical settlement broker that is controlling, controlled by, or under common control with the viatical settlement provider or the viatical settlement purchaser, viatical settlement investment agent, financing entity, or related provider trust that is involved in a viatical settlement contract unless this relationship is disclosed to the viator. Subd. 3. Fraudulent viatical settlement act. A violation of subdivisions 1 and 2 is deemed a fraudulent viatical settlement act. Subd. 4. Advertising. (a) No viatical settlement provider shall enter into a viatical settlement contract unless the viatical settlement promotional, advertising, and marketing materials, as may be prescribed by rule, have been filed with the commissioner. In no event shall any marketing materials expressly reference that the insurance is "free" for any period of time. The inclusion of any reference in the marketing materials that would cause a viator to reasonably believe that the insurance is free for any period of time shall be considered a violation of sections 60A.957 to 60A.9585. (b) No life insurance producer, insurance company, viatical settlement broker, viatical settlement provider, or viatical settlement investment agent shall make any statement or representation to the applicant or policyholder in connection with the sale or financing of a life insurance policy to the effect that the insurance is free or without cost to the policyholder for any period of time unless provided in the policy. History:   2009 c 62 s 9 
60A.9582 ADVERTISING FOR VIATICAL SETTLEMENTS AND VIATICAL SETTLEMENTS PURCHASE AGREEMENTS. Subdivision 1. Application. This section applies to any advertising of viatical settlement contracts, viatical purchase agreements, or related products or services intended for dissemination in this state, including Internet advertising viewed by persons located in this state. Where disclosure requirements are established pursuant to federal regulation, this section shall be interpreted so as to minimize or eliminate conflict with federal regulation wherever possible. Subd. 2. System of control. Every viatical settlement licensee shall establish and at all times maintain a system of control over the content, form, and method of dissemination of all advertisements of its contracts, products, and services. All advertisements, regardless of by whom written, created, designed, or presented, shall be the responsibility of the viatical settlement licensees, as well as the individual who created or presented the advertisement. A system of control shall include regular routine notification, at least once a year, to agents and others authorized by the viatical settlement licensee who disseminate advertisements of the requirements and procedures for approval prior to the use of any advertisements not furnished by the viatical settlement licensee. Subd. 3. Form and content. Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a viatical settlement contract or viatical settlement purchase agreement, product, or service shall be sufficiently complete and clear so as to avoid deception and it shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the commissioner from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed. Subd. 4. False and misleading advertisements. Certain viatical settlement advertisements are deemed false and misleading on their face and are prohibited. False and misleading viatical settlement advertisements include, but are not limited to, the following representations: (1) "guaranteed," "fully secured," "100 percent secured," "fully insured," "secure," "safe," "backed by rated insurance companies," "backed by federal law," "backed by state law," "state guaranty funds," or similar representations; (2) "no risk," "minimal risk," "low risk," "no speculation," "no fluctuation," or similar representations; (3) "qualified or approved for individual retirement accounts (IRAs), Roth IRAs, 401(k) plans, simplified employee pensions (SEP), 403(b), Keogh plans, TSA, other retirement account rollovers," "tax deferred," or similar representations; (4) utilization of the word "guaranteed" to describe the fixed return, annual return, principal, earnings, profits, investment, or similar representations; (5) "no sales charges or fees" or similar representations; (6) "high yield," "superior return," "excellent return," "high return," "quick profit," or similar representations; and (7) purported favorable representations or testimonials about the benefits of viatical settlement contracts or viatical settlement purchase agreements as an investment, taken out of context from newspapers, trade papers, journals, radio and television programs, and all other forms of print and electronic media. Subd. 5. Disclosures regulated. (a) The information required to be disclosed under this section shall not be minimized, rendered obscure, or presented in ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading. (b) An advertisement shall not omit material information or use words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving viators, purchasers, or prospective purchasers as to the nature or extent of any benefit, loss covered, premium payable, or state or federal tax consequence. The fact that the viatical settlement contract or viatical settlement purchase agreement offered is made available for inspection prior to consummation of the sale, or an offer is made to refund the payment if the viator is not satisfied or that the viatical settlement contract or viatical settlement purchase agreement includes a "free look" period that satisfies or exceeds legal requirements, does not remedy misleading statements. (c) An advertisement shall not use the name or title of a life insurance company or a life insurance policy unless the advertisement has been approved by the insurer. (d) An advertisement shall not represent that premium payments will not be required to be paid on the life insurance policy that is the subject of a viatical settlement contract or viatical settlement purchase agreement in order to maintain that policy, unless that is the fact. (e) An advertisement shall not state or imply that interest charged on an accelerated death benefit or a policy loan is unfair, inequitable, or in any manner an incorrect or improper practice. (f) The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import shall not be used with respect to any benefit or service unless true. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the payment or use other appropriate language. (g) Testimonials, appraisals, or analysis used in advertisements must be genuine; represent the current opinion of the author; be applicable to the viatical settlement contract or viatical settlement purchase agreement product or service advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective viators or purchasers as to the nature or scope of the testimonials, appraisal, analysis, or endorsement. In using testimonials, appraisals, or analysis, a licensee under sections 60A.957 to 60A.9585 makes as its own all the statements contained therein, and the statements are subject to all the provisions of this section. (h) If the individual making a testimonial, appraisal, analysis, or endorsement has a financial interest in the party making use of the testimonial, appraisal, analysis, or endorsement, either directly or through a related entity as a stockholder, director, officer, employee, or otherwise, or receives any benefit directly or indirectly other than required union-scale wages, that fact shall be prominently disclosed in the advertisement. (i) An advertisement shall not state or imply that a viatical settlement contract or viatical settlement purchase agreement, benefit, or service has been approved or endorsed by a group of individuals, society, association, or other organization unless that is the fact and unless any relationship between an organization and the viatical settlement licensee is disclosed. If the entity making the endorsement or testimonial is owned, controlled, or managed by the viatical settlement licensee, or receives any payment or other consideration from the viatical settlement licensee for making an endorsement or testimonial, that fact shall be disclosed in the advertisement. (j) When an endorsement refers to benefits received under a viatical settlement contract or viatical settlement purchase agreement, all pertinent information shall be retained for a period of five years after its use. Subd. 6. Statistics. An advertisement shall not contain statistical information unless it accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified. Subd. 7. Disparaging advertisements. An advertisement shall not disparage insurers, viatical settlement providers, viatical settlement brokers, viatical settlement investment agents, insurance producers, policies, services, or methods of marketing. Subd. 8. Licensee's name. The name of the viatical settlement licensee shall be clearly identified in all advertisements about the licensee or its viatical settlement contract or viatical settlement purchase agreements, products, or services, and if any specific viatical settlement contract or viatical settlement purchase agreement is advertised, the viatical settlement contract or viatical settlement purchase agreement shall be identified either by form number or some other appropriate description. If an application is part of the advertisement, the name of the viatical settlement provider shall be shown on the application. Subd. 9. Licensee disclosure. An advertisement shall not use a trade name, group designation, name of the parent company of a viatical settlement licensee, name of a particular division of the viatical settlement licensee, service mark, slogan, symbol, or other device or reference without disclosing the name of the viatical settlement licensee, if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the viatical settlement licensee, or to create the impression that a company other than the viatical settlement licensee would have any responsibility for the financial obligation under a viatical settlement contract or viatical settlement purchase agreement. Subd. 10. Government sponsorship; misleading advertisements. An advertisement shall not use any combination of words, symbols, or physical materials that by their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a government program or agency or otherwise appear to be of such a nature that they tend to mislead prospective viators or purchasers into believing that the solicitation is in some manner connected with a government program or agency. Subd. 11. State licensure. An advertisement may state that a viatical settlement licensee is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that a competing viatical settlement licensee may not be so licensed. The advertisement may ask the audience to consult the licensee's website or contact the Department of Commerce to find out if the state requires licensing and, if so, whether the viatical settlement provider, viatical settlement broker, or viatical settlement investment agent is licensed. Subd. 12. Government entity endorsement. An advertisement shall not create the impression that the viatical settlement provider, its financial condition or status, the payment of its claims, or the merits, desirability, or advisability of its viatical settlement contracts or viatical settlement purchase agreement forms are recommended or endorsed by any government entity. Subd. 13. Name. The name of the actual licensee shall be stated in all of its advertisements. An advertisement shall not use a trade name, any group designation, name of any affiliate or controlling entity of the licensee, service mark, slogan, symbol, or other device in a manner that would have the capacity or tendency to mislead or deceive as to the true identity of the actual licensee or create the false impression that an affiliate or controlling entity would have any responsibility for the financial obligation of the licensee. Subd. 14. Government approval. An advertisement shall not directly or indirectly create the impression that any division or agency of the state or of the United States government endorses, approves, or favors: (1) any viatical settlement licensee or its business practices or methods of operation; (2) the merits, desirability, or advisability of any viatical settlement contract or viatical settlement purchase agreement; (3) any viatical settlement contract or viatical settlement purchase agreement; or (4) any life insurance policy or life insurance company. Subd. 15. Time frame disclosure. If the advertiser emphasizes the speed with which the viatication will occur, the advertising must disclose the average time frame from completed application to the date of offer and from acceptance of the offer to receipt of the funds by the viator. Subd. 16. Average purchase price. If the advertising emphasizes the dollar amounts available to viators, the advertising shall disclose the average purchase price as a percent of face value obtained by viators contracting with the licensee during the past six months. History:   2009 c 62 s 10 
60A.9583 FRAUD PREVENTION AND CONTROL. Subdivision 1. Fraudulent viatical settlement acts, interference, and participation of convicted felons prohibited. (a) A person who commits a fraudulent viatical settlement act commits insurance fraud and may be sentenced under section 609.611, subdivision 3. (b) A person shall not knowingly or intentionally interfere with the enforcement of the provisions of sections 60A.957 to 60A.9585 or investigations of suspected or actual violations of sections 60A.957 to 60A.9585. (c) A person in the business of viatical settlements shall not knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of viatical settlements. Subd. 2. Fraud warning required. (a) Viatical settlements contracts and purchase agreement forms and applications for viatical settlements, regardless of the form of transmission, shall contain the following statement or a substantially similar statement: "Any person who knowingly presents false information in an application for insurance or viatical settlement contract or a viatical settlement purchase agreement is guilty of a crime and may be subject to fines and confinement in prison." (b) The lack of a statement as required in paragraph (a) does not constitute a defense in any prosecution for a fraudulent viatical settlement act. Subd. 3. Mandatory reporting of fraudulent viatical settlement acts. Any person engaged in the business of viatical settlements having knowledge or a reasonable suspicion that a fraudulent viatical settlement act is being, will be, or has been committed shall provide to the commissioner such information as required by, and in a manner prescribed by, the commissioner. Subd. 4. Viatical settlement antifraud initiatives. (a) Viatical settlement providers and viatical settlement brokers shall have in place antifraud initiatives reasonably calculated to detect, prosecute, and prevent fraudulent viatical settlement acts. At the discretion of the commissioner, the commissioner may order, or a licensee may request and the commissioner may grant, such modifications of the following required initiatives as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications may reasonably be expected to accomplish the purpose of this section. (b) Antifraud initiatives shall include: (1) fraud investigators, who may be viatical settlement provider or viatical settlement broker employees or independent contractors; and (2) an antifraud plan, which shall be submitted to the commissioner. The antifraud plan shall include, but not be limited to: (i) a description of the procedures for detecting and investigating possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications; (ii) a description of the procedures for reporting possible fraudulent viatical settlement acts to the commissioner; (iii) a description of the plan for antifraud education and training of underwriters and other personnel; and (iv) a description or chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent viatical settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications. (c) Antifraud plans submitted to the commissioner shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action. History:   2009 c 62 s 11 
60A.9585 UNFAIR TRADE PRACTICE. A violation of sections 60A.957 to 60A.9585, including the commission of a fraudulent viatical settlement act, shall be considered an unfair trade practice under section 72A.20. History:   2009 c 62 s 12 
60A.964 FEES. Subdivision 1. Amount. The licensing fee for a viatical settlement provider, viatical settlement broker, or viatical settlement investment agent license is $750 for initial licensure and $250 for each annual renewal. The fees must be limited to the cost of license administration and enforcement and must be deposited in the state treasury, credited to a special account, and appropriated to the commissioner. Subd. 2. Automatic revocation. A license is automatically revoked for failure to pay the licensing fee within the terms prescribed by the commissioner. History:  1995 c 151 s 5; 1999 c 250 art 3 s 6; 2009 c 62 s 13
60A.975 DEFINITIONS. Subdivision 1. Application. For purposes of sections 60A.975 and 60A.976, the definitions in this section have the meanings given them. Subd. 2. Annuity issuer. "Annuity issuer" means an insurer that issues an insurance contract used to fund periodic payments under a structured settlement agreement. Subd. 3. Structured settlement. "Structured settlement" means an arrangement for periodic payment of damages entered on behalf of a minor or incompetent person for personal injuries established by settlement or judgment. Subd. 4. Structured settlement agreement. "Structured settlement agreement" means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement. History:   2001 c 131 s 4 
60A.976 ANNUITY ISSUERS FINANCIAL REQUIREMENTS. An annuity purchased to finance a structured settlement agreement may be purchased only from an annuity issuer with a financial rating equivalent to A.M. Best Company A+ Class 8 or better; or a Standard & Poor's AA or better. History:   2001 c 131 s 5 
60A.985 DEFINITIONS. Subdivision 1. Terms. As used in sections 60A.985 to 60A.9857, the following terms have the meanings given. Subd. 2. Authorized individual. "Authorized individual" means an individual known to and screened by the licensee and determined to be necessary and appropriate to have access to the nonpublic information held by the licensee and its information systems. Subd. 3. Consumer. "Consumer" means an individual, including but not limited to an applicant, policyholder, insured, beneficiary, claimant, and certificate holder who is a resident of this state and whose nonpublic information is in a licensee's possession, custody, or control. Subd. 4. Cybersecurity event. "Cybersecurity event" means an event resulting in unauthorized access to, or disruption or misuse of, an information system or nonpublic information stored on an information system. Cybersecurity event does not include the unauthorized acquisition of encrypted nonpublic information if the encryption, process, or key is not also acquired, released, or used without authorization. Cybersecurity event does not include an event with regard to which the licensee has determined that the nonpublic information accessed by an unauthorized person has not been used or released and has been returned or destroyed. Subd. 5. Encrypted. "Encrypted" means the transformation of data into a form which results in a low probability of assigning meaning without the use of a protective process or key. Subd. 6. Information security program. "Information security program" means the administrative, technical, and physical safeguards that a licensee uses to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle nonpublic information. Subd. 7. Information system. "Information system" means a discrete set of electronic information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of nonpublic electronic information, as well as any specialized system such as industrial or process controls systems, telephone switching and private branch exchange systems, and environmental control systems. Subd. 8. Licensee. "Licensee" means any person licensed, authorized to operate, or registered, or required to be licensed, authorized, or registered by the Department of Commerce or the Department of Health under chapters 59A to 62M, 62Q to 62V, and 64B to 79A. Subd. 9. Multifactor authentication. "Multifactor authentication" means authentication through verification of at least two of the following types of authentication factors: (1) knowledge factors, such as a password; (2) possession factors, such as a token or text message on a mobile phone; or (3) inherence factors, such as a biometric characteristic. Subd. 10. Nonpublic information. "Nonpublic information" means electronic information that is not publicly available information and is: (1) any information concerning a consumer which because of name, number, personal mark, or other identifier can be used to identify the consumer, in combination with any one or more of the following data elements: (i) Social Security number; (ii) driver's license number or nondriver identification card number; (iii) financial account number, credit card number, or debit card number; (iv) any security code, access code, or password that would permit access to a consumer's financial account; or (v) biometric records; or (2) any information or data, except age or gender, in any form or medium created by or derived from a health care provider or a consumer that can be used to identify a particular consumer and that relates to: (i) the past, present, or future physical, mental, or behavioral health or condition of any consumer or a member of the consumer's family; (ii) the provision of health care to any consumer; or (iii) payment for the provision of health care to any consumer. Subd. 11. Person. "Person" means any individual or any nongovernmental entity, including but not limited to any nongovernmental partnership, corporation, branch, agency, or association. Subd. 12. Publicly available information. "Publicly available information" means any information that a licensee has a reasonable basis to believe is lawfully made available to the general public from: federal, state, or local government records; widely distributed media; or disclosures to the general public that are required to be made by federal, state, or local law. For the purposes of this definition, a licensee has a reasonable basis to believe that information is lawfully made available to the general public if the licensee has taken steps to determine: (1) that the information is of the type that is available to the general public; and (2) whether a consumer can direct that the information not be made available to the general public and, if so, that such consumer has not done so. Subd. 13. Risk assessment. "Risk assessment" means the risk assessment that each licensee is required to conduct under section 60A.9851, subdivision 3. Subd. 14. State. "State" means the state of Minnesota. Subd. 15. Third-party service provider. "Third-party service provider" means a person, not otherwise defined as a licensee, that contracts with a licensee to maintain, process, or store nonpublic information, or is otherwise permitted access to nonpublic information through its provision of services to the licensee. History:  1Sp2021 c 4 art 3 s 5; 2022 c 55 art 1 s 14
60A.9851 INFORMATION SECURITY PROGRAM. Subdivision 1. Implementation of an information security program. Commensurate with the size and complexity of the licensee, the nature and scope of the licensee's activities, including its use of third-party service providers, and the sensitivity of the nonpublic information used by the licensee or in the licensee's possession, custody, or control, each licensee shall develop, implement, and maintain a comprehensive written information security program based on the licensee's risk assessment and that contains administrative, technical, and physical safeguards for the protection of nonpublic information and the licensee's information system. Subd. 2. Objectives of an information security program. A licensee's information security program shall be designed to: (1) protect the security and confidentiality of nonpublic information and the security of the information system; (2) protect against any threats or hazards to the security or integrity of nonpublic information and the information system; (3) protect against unauthorized access to, or use of, nonpublic information, and minimize the likelihood of harm to any consumer; and (4) define and periodically reevaluate a schedule for retention of nonpublic information and a mechanism for its destruction when no longer needed. Subd. 3. Risk assessment. The licensee shall: (1) designate one or more employees, an affiliate, or an outside vendor authorized to act on behalf of the licensee who is responsible for the information security program; (2) identify reasonably foreseeable internal or external threats that could result in unauthorized access, transmission, disclosure, misuse, alteration, or destruction of nonpublic information, including threats to the security of information systems and nonpublic information that are accessible to, or held by, third-party service providers; (3) assess the likelihood and potential damage of the threats identified pursuant to clause (2), taking into consideration the sensitivity of the nonpublic information; (4) assess the sufficiency of policies, procedures, information systems, and other safeguards in place to manage these threats, including consideration of threats in each relevant area of the licensee's operations, including: (i) employee training and management; (ii) information systems, including network and software design, as well as information classification, governance, processing, storage, transmission, and disposal; and (iii) detecting, preventing, and responding to attacks, intrusions, or other systems failures; and (5) implement information safeguards to manage the threats identified in its ongoing assessment, and no less than annually, assess the effectiveness of the safeguards' key controls, systems, and procedures. Subd. 4. Risk management. Based on its risk assessment, the licensee shall: (1) design its information security program to mitigate the identified risks, commensurate with the size and complexity of the licensee, the nature and scope of the licensee's activities, including its use of third-party service providers, and the sensitivity of the nonpublic information used by the licensee or in the licensee's possession, custody, or control; (2) determine which of the following security measures are appropriate and implement any appropriate security measures: (i) place access controls on information systems, including controls to authenticate and permit access only to authorized individuals, to protect against the unauthorized acquisition of nonpublic information; (ii) identify and manage the data, personnel, devices, systems, and facilities that enable the organization to achieve business purposes in accordance with their relative importance to business objectives and the organization's risk strategy; (iii) restrict physical access to nonpublic information to authorized individuals only; (iv) protect, by encryption or other appropriate means, all nonpublic information while being transmitted over an external network and all nonpublic information stored on a laptop computer or other portable computing or storage device or media; (v) adopt secure development practices for in-house developed applications utilized by the licensee; (vi) modify the information system in accordance with the licensee's information security program; (vii) utilize effective controls, which may include multifactor authentication procedures for any authorized individual accessing nonpublic information; (viii) regularly test and monitor systems and procedures to detect actual and attempted attacks on, or intrusions into, information systems; (ix) include audit trails within the information security program designed to detect and respond to cybersecurity events and designed to reconstruct material financial transactions sufficient to support normal operations and obligations of the licensee; (x) implement measures to protect against destruction, loss, or damage of nonpublic information due to environmental hazards, such as fire and water damage, other catastrophes, or technological failures; and (xi) develop, implement, and maintain procedures for the secure disposal of nonpublic information in any format; (3) include cybersecurity risks in the licensee's enterprise risk management process; (4) stay informed regarding emerging threats or vulnerabilities and utilize reasonable security measures when sharing information relative to the character of the sharing and the type of information shared; and (5) provide its personnel with cybersecurity awareness training that is updated as necessary to reflect risks identified by the licensee in the risk assessment. Subd. 5. Oversight by board of directors. If the licensee has a board of directors, the board or an appropriate committee of the board shall, at a minimum: (1) require the licensee's executive management or its delegates to develop, implement, and maintain the licensee's information security program; (2) require the licensee's executive management or its delegates to report in writing, at least annually, the following information: (i) the overall status of the information security program and the licensee's compliance with sections 60A.985 to 60A.9858; and (ii) material matters related to the information security program, addressing issues such as risk assessment, risk management and control decisions, third-party service provider arrangements, results of testing, cybersecurity events or violations and management's responses thereto, and recommendations for changes in the information security program; and (3) if executive management delegates any of its responsibilities under this section, it shall oversee the development, implementation, and maintenance of the licensee's information security program prepared by the delegate and shall receive a report from the delegate complying with the requirements of the report to the board of directors. Subd. 6. Oversight of third-party service provider arrangements. (a) A licensee shall exercise due diligence in selecting its third-party service provider. (b) A licensee shall require a third-party service provider to implement appropriate administrative, technical, and physical measures to protect and secure the information systems and nonpublic information that are accessible to, or held by, the third-party service provider. Subd. 7. Program adjustments. The licensee shall monitor, evaluate, and adjust, as appropriate, the information security program consistent with any relevant changes in technology, the sensitivity of its nonpublic information, internal or external threats to information, and the licensee's own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to information systems. Subd. 8. Incident response plan. (a) As part of its information security program, each licensee shall establish a written incident response plan designed to promptly respond to, and recover from, any cybersecurity event that compromises the confidentiality, integrity, or availability of nonpublic information in its possession, the licensee's information systems, or the continuing functionality of any aspect of the licensee's business or operations. (b) The incident response plan shall address the following areas: (1) the internal process for responding to a cybersecurity event; (2) the goals of the incident response plan; (3) the definition of clear roles, responsibilities, and levels of decision-making authority; (4) external and internal communications and information sharing; (5) identification of requirements for the remediation of any identified weaknesses in information systems and associated controls; (6) documentation and reporting regarding cybersecurity events and related incident response activities; and (7) the evaluation and revision, as necessary, of the incident response plan following a cybersecurity event. Subd. 9. Annual certification to commissioner. (a) Subject to paragraph (b), by April 15 of each year, an insurer domiciled in this state shall certify in writing to the commissioner that the insurer is in compliance with the requirements set forth in this section. Each insurer shall maintain all records, schedules, and data supporting this certificate for a period of five years and shall permit examination by the commissioner. To the extent an insurer has identified areas, systems, or processes that require material improvement, updating, or redesign, the insurer shall document the identification and the remedial efforts planned and underway to address such areas, systems, or processes. Such documentation must be available for inspection by the commissioner. (b) The commissioner must post on the department's website, no later than 60 days prior to the certification required by paragraph (a), the form and manner of submission required and any instructions necessary to prepare the certification. History:   1Sp2021 c 4 art 3 s 6 
60A.9852 INVESTIGATION OF A CYBERSECURITY EVENT. Subdivision 1. Prompt investigation. If the licensee learns that a cybersecurity event has or may have occurred, the licensee, or an outside vendor or service provider designated to act on behalf of the licensee, shall conduct a prompt investigation. Subd. 2. Investigation contents. During the investigation, the licensee, or an outside vendor or service provider designated to act on behalf of the licensee, shall, at a minimum and to the extent possible: (1) determine whether a cybersecurity event has occurred; (2) assess the nature and scope of the cybersecurity event, if any; (3) identify whether any nonpublic information was involved in the cybersecurity event and, if so, what nonpublic information was involved; and (4) perform or oversee reasonable measures to restore the security of the information systems compromised in the cybersecurity event in order to prevent further unauthorized acquisition, release, or use of nonpublic information in the licensee's possession, custody, or control. Subd. 3. Third-party systems. If the licensee learns that a cybersecurity event has or may have occurred in a system maintained by a third-party service provider, the licensee will complete the steps listed in subdivision 2 or confirm and document that the third-party service provider has completed those steps. Subd. 4. Records. The licensee shall maintain records concerning all cybersecurity events for a period of at least five years from the date of the cybersecurity event and shall produce those records upon demand of the commissioner. History:   1Sp2021 c 4 art 3 s 7 
60A.9853 NOTIFICATION OF A CYBERSECURITY EVENT. Subdivision 1. Notification to the commissioner. Each licensee shall notify the commissioner of commerce or commissioner of health, whichever commissioner otherwise regulates the licensee, without unreasonable delay but in no event later than five business days from a determination that a cybersecurity event has occurred when either of the following criteria has been met: (1) this state is the licensee's state of domicile, in the case of an insurer, or this state is the licensee's home state, in the case of a producer, as those terms are defined in chapter 60K and the cybersecurity event has a reasonable likelihood of materially harming: (i) any consumer residing in this state; or (ii) any part of the normal operations of the licensee; or (2) the licensee reasonably believes that the nonpublic information involved is of 250 or more consumers residing in this state and that is either of the following: (i) a cybersecurity event impacting the licensee of which notice is required to be provided to any government body, self-regulatory agency, or any other supervisory body pursuant to any state or federal law; or (ii) a cybersecurity event that has a reasonable likelihood of materially harming: (A) any consumer residing in this state; or (B) any part of the normal operations of the licensee. Subd. 2. Information; notification. A licensee making the notification required under subdivision 1 shall provide the information in electronic form as directed by the commissioner. The licensee shall have a continuing obligation to update and supplement initial and subsequent notifications to the commissioner concerning material changes to previously provided information relating to the cybersecurity event. The licensee shall provide as much of the following information as possible: (1) date of the cybersecurity event; (2) description of how the information was exposed, lost, stolen, or breached, including the specific roles and responsibilities of third-party service providers, if any; (3) how the cybersecurity event was discovered; (4) whether any lost, stolen, or breached information has been recovered and, if so, how this was done; (5) the identity of the source of the cybersecurity event; (6) whether the licensee has filed a police report or has notified any regulatory, government, or law enforcement agencies and, if so, when such notification was provided; (7) description of the specific types of information acquired without authorization. Specific types of information means particular data elements including, for example, types of medical information, types of financial information, or types of information allowing identification of the consumer; (8) the period during which the information system was compromised by the cybersecurity event; (9) the number of total consumers in this state affected by the cybersecurity event. The licensee shall provide the best estimate in the initial report to the commissioner and update this estimate with each subsequent report to the commissioner pursuant to this section; (10) the results of any internal review identifying a lapse in either automated controls or internal procedures, or confirming that all automated controls or internal procedures were followed; (11) description of efforts being undertaken to remediate the situation which permitted the cybersecurity event to occur; (12) a copy of the licensee's privacy policy and a statement outlining the steps the licensee will take to investigate and notify consumers affected by the cybersecurity event; and (13) name of a contact person who is familiar with the cybersecurity event and authorized to act for the licensee. Subd. 3. Notification to consumers. (a) If a licensee is required to submit a report to the commissioner under subdivision 1, the licensee shall notify any consumer residing in Minnesota if, as a result of the cybersecurity event reported to the commissioner, the consumer's nonpublic information was or is reasonably believed to have been acquired by an unauthorized person, and there is a reasonable likelihood of material harm to the consumer as a result of the cybersecurity event. Consumer notification is not required for a cybersecurity event resulting from the good faith acquisition of nonpublic information by an employee or agent of the licensee for the purposes of the licensee's business, provided the nonpublic information is not used for a purpose other than the licensee's business or subject to further unauthorized disclosure. The notification must be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement or with any measures necessary to determine the scope of the breach, identify the individuals affected, and restore the reasonable integrity of the data system. The notification may be delayed to a date certain if the commissioner determines that providing the notice impedes a criminal investigation. The licensee shall provide a copy of the notice to the commissioner. (b) For purposes of this subdivision, notice required under paragraph (a) must be provided by one of the following methods: (1) written notice to the consumer's most recent address in the licensee's records; (2) electronic notice, if the licensee's primary method of communication with the consumer is by electronic means or if the notice provided is consistent with the provisions regarding electronic records and signatures in United States Code, title 15, section 7001; or (3) if the cost of providing notice exceeds $250,000, the affected class of consumers to be notified exceeds 500,000, or the licensee does not have sufficient contact information for the subject consumers, notice as follows: (i) email notice when the licensee has an email address for the subject consumers; (ii) conspicuous posting of the notice on the website page of the licensee; and (iii) notification to major statewide media. (c) Notwithstanding paragraph (b), a licensee that maintains its own notification procedure as part of its information security program that is consistent with the timing requirements of this subdivision is deemed to comply with the notification requirements if the licensee notifies subject consumers in accordance with its program. (d) A waiver of the requirements under this subdivision is contrary to public policy, and is void and unenforceable. Subd. 4. Notice regarding cybersecurity events of third-party service providers. (a) In the case of a cybersecurity event in a system maintained by a third-party service provider, of which the licensee has become aware, the licensee shall treat such event as it would under subdivision 1 unless the third-party service provider provides the notice required under subdivision 1. (b) The computation of a licensee's deadlines shall begin on the day after the third-party service provider notifies the licensee of the cybersecurity event or the licensee otherwise has actual knowledge of the cybersecurity event, whichever is sooner. (c) Nothing in sections 60A.985 to 60A.9858 shall prevent or abrogate an agreement between a licensee and another licensee, a third-party service provider, or any other party to fulfill any of the investigation requirements imposed under section 60A.9854 or notice requirements imposed under this section. Subd. 5. Notice regarding cybersecurity events of reinsurers to insurers. (a) In the case of a cybersecurity event involving nonpublic information that is used by the licensee that is acting as an assuming insurer or in the possession, custody, or control of a licensee that is acting as an assuming insurer and that does not have a direct contractual relationship with the affected consumers, the assuming insurer shall notify its affected ceding insurers and the commissioner of its state of domicile within three business days of making the determination that a cybersecurity event has occurred. (b) The ceding insurers that have a direct contractual relationship with affected consumers shall fulfill the consumer notification requirements imposed under subdivision 3 and any other notification requirements relating to a cybersecurity event imposed under this section. (c) In the case of a cybersecurity event involving nonpublic information that is in the possession, custody, or control of a third-party service provider of a licensee that is an assuming insurer, the assuming insurer shall notify its affected ceding insurers and the commissioner of its state of domicile within three business days of receiving notice from its third-party service provider that a cybersecurity event has occurred. (d) The ceding insurers that have a direct contractual relationship with affected consumers shall fulfill the consumer notification requirements imposed under subdivision 3 and any other notification requirements relating to a cybersecurity event imposed under this section. (e) Any licensee acting as an assuming insurer shall have no other notice obligations relating to a cybersecurity event or other data breach under this section. Subd. 6. Notice regarding cybersecurity events of insurers to producers of record. (a) In the case of a cybersecurity event involving nonpublic information that is in the possession, custody, or control of a licensee that is an insurer or its third-party service provider and for which a consumer accessed the insurer's services through an independent insurance producer, the insurer shall notify the producers of record of all affected consumers no later than the time at which notice is provided to the affected consumers. (b) The insurer is excused from this obligation for those instances in which it does not have the current producer of record information for any individual consumer or in those instances in which the producer of record is no longer appointed to sell, solicit, or negotiate on behalf of the insurer. History:   1Sp2021 c 4 art 3 s 8 
60A.9854 POWER OF COMMISSIONER. (a) The commissioner of commerce or commissioner of health, whichever commissioner otherwise regulates the licensee, shall have power to examine and investigate into the affairs of any licensee to determine whether the licensee has been or is engaged in any conduct in violation of sections 60A.985 to 60A.9857. This power is in addition to the powers which the commissioner has under section 60A.031. Any such investigation or examination shall be conducted pursuant to section 60A.031. (b) Whenever the commissioner of commerce or commissioner of health has reason to believe that a licensee has been or is engaged in conduct in this state which violates sections 60A.985 to 60A.9857, the commissioner of commerce or commissioner of health may take action that is necessary or appropriate to enforce those sections. History:   1Sp2021 c 4 art 3 s 9 
60A.9855 CONFIDENTIALITY. Subdivision 1. Licensee information. Any documents, materials, or other information in the control or possession of the department that are furnished by a licensee or an employee or agent thereof acting on behalf of a licensee pursuant to section 60A.9851, subdivision 9; section 60A.9853, subdivision 2, clauses (2), (3), (4), (5), (8), (10), and (11); or that are obtained by the commissioner in an investigation or examination pursuant to section 60A.9854 shall be classified as confidential, protected nonpublic, or both; shall not be subject to subpoena; and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's duties. Subd. 2. Certain testimony prohibited. Neither the commissioner nor any person who received documents, materials, or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subdivision 1. Subd. 3. Information sharing. In order to assist in the performance of the commissioner's duties under sections 60A.985 to 60A.9858, the commissioner: (1) may share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subdivision 1, with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information; (2) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; (3) may share documents, materials, or other information subject to subdivision 1, with a third-party consultant or vendor provided the consultant agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information; and (4) may enter into agreements governing sharing and use of information consistent with this subdivision. Subd. 4. No waiver of privilege or confidentiality. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision 3. Any document, material, or information disclosed to the commissioner under this section about a cybersecurity event must be retained and preserved by the licensee for five years. Subd. 5. Certain actions public. Nothing in sections 60A.985 to 60A.9857 shall prohibit the commissioner from releasing final, adjudicated actions that are open to public inspection pursuant to chapter 13 to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries. Subd. 6. Classification, protection, and use of information by others. Documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners or a third-party consultant pursuant to sections 60A.985 to 60A.9857 are classified as confidential, protected nonpublic, and privileged; are not subject to subpoena; and are not subject to discovery or admissible in evidence in a private civil action. History:   1Sp2021 c 4 art 3 s 10 
60A.9856 EXCEPTIONS. Subdivision 1. Generally. The following exceptions shall apply to sections 60A.985 to 60A.9857: (1) a licensee with fewer than 25 employees is exempt from sections 60A.9851 and 60A.9852; (2) a licensee subject to and in compliance with the Health Insurance Portability and Accountability Act, Public Law 104-191, 110 Stat. 1936 (HIPAA), is considered to comply with sections 60A.9851, 60A.9852, and 60A.9853, subdivisions 3 to 5, provided the licensee submits a written statement certifying its compliance with HIPAA; (3) a licensee affiliated with a depository institution that maintains an information security program in compliance with the interagency guidelines establishing standards for safeguarding customer information as set forth pursuant to United States Code, title 15, sections 6801 and 6805, shall be considered to meet the requirements of section 60A.9851 provided that the licensee produce, upon request, documentation satisfactory to the commission that independently validates the affiliated depository institution's adoption of an information security program that satisfies the interagency guidelines; (4) an employee, agent, representative, or designee of a licensee, who is also a licensee, is exempt from sections 60A.9851 and 60A.9852 and need not develop its own information security program to the extent that the employee, agent, representative, or designee is covered by the information security program of the other licensee; and (5) an employee, agent, representative, or designee of a producer licensee, as defined under section 60K.31, subdivision 6, who is also a licensee, is exempt from sections 60A.985 to 60A.9857. Subd. 2. Exemption lapse; compliance. In the event that a licensee ceases to qualify for an exception, such licensee shall have 180 days to comply with sections 60A.985 to 60A.9858. History:   1Sp2021 c 4 art 3 s 11 
60A.9857 PENALTIES. In the case of a violation of sections 60A.985 to 60A.9856, a licensee may be penalized in accordance with section 60A.052. History:   1Sp2021 c 4 art 3 s 12 
60A.9858 EXCLUSIVITY. Notwithstanding any other provision of law, sections 60A.985 to 60A.9857 establish the exclusive state standards applicable to licensees for data security, the investigation of a cybersecurity event, and notification of a cybersecurity event. History:   1Sp2021 c 4 art 3 s 13 
60A.99 INTERSTATE INSURANCE PRODUCT REGULATION COMPACT. Subdivision 1. Enactment and form. The Interstate Insurance Product Regulation Compact is enacted into law and entered into with all other states legally joining in it in substantially the following form: Article I. Purposes The purposes of this Compact are, through means of joint and cooperative action among the Compacting States: 1. To promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products; 2. To develop uniform standards for insurance products covered under the Compact; 3. To establish a central clearinghouse to receive and provide prompt review of insurance products covered under the Compact and, in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more Compacting States; 4. To give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standard; 5. To improve coordination of regulatory resources and expertise between state insurance departments regarding the setting of uniform standards and review of insurance products covered under the Compact; 6. To create the Interstate Insurance Product Regulation Commission; and 7. To perform these and such other related functions as may be consistent with the state regulation of the business of insurance. Article II. Definitions For purposes of this Compact: 1. "Advertisement" means any material designed to create public interest in a Product, or induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy, as more specifically defined in the Rules and Operating Procedures of the Commission. 2. "Bylaws" mean those bylaws established by the Commission for its governance, or for directing or controlling the Commission's actions or conduct. 3. "Compacting State" means any State which has enacted this Compact legislation and which has not withdrawn pursuant to Article XIV, Section 1, or been terminated pursuant to Article XIV, Section 2. 4. "Commission" means the "Interstate Insurance Product Regulation Commission" established by this Compact. 5. "Commissioner" means the chief insurance regulatory official of a State including, but not limited to commissioner, superintendent, director or administrator. 6. "Domiciliary State" means the state in which an Insurer is incorporated or organized; or, in the case of an alien Insurer, its state of entry. 7. "Insurer" means any entity licensed by a State to issue contracts of insurance for any of the lines of insurance covered by this Act. 8. "Member" means the person chosen by a Compacting State as its representative to the Commission, or his or her designee. 9. "Noncompacting State" means any State which is not at the time a Compacting State. 10. "Operating Procedures" mean procedures promulgated by the Commission implementing a Rule, Uniform Standard, or a provision of this Compact. 11. "Product" means the form of a policy or contract, including any application, endorsement, or related form which is attached to and made a part of the policy or contract, and any evidence of coverage or certificate, for an individual or group annuity, life insurance, disability income or long-term care insurance product that an Insurer is authorized to issue. 12. "Rule" means a statement of general or particular applicability and future effect promulgated by the Commission, including a Uniform Standard developed pursuant to Article VII of this Compact, designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of the Commission, which shall have the force and effect of law in the Compacting States. 13. "State" means any state, district, or territory of the United States of America. 14. "Third Party Filer" means an entity that submits a Product filing to the Commission on behalf of an Insurer. 15. "Uniform Standard" means a standard adopted by the Commission for a Product line, pursuant to Article VII of this Compact, and shall include all of the Product requirements in aggregate; provided, that each Uniform Standard shall be construed, whether express or implied, to prohibit the use of any inconsistent, misleading or ambiguous provisions in a Product and the form of the Product made available to the public shall not be unfair, inequitable or against public policy as determined by the Commission. Article III. Establishment of the Commission and Venue 1. The Compacting States hereby create and establish a joint public agency known as the "Interstate Insurance Product Regulation Commission." Pursuant to Article IV, the Commission will have the power to develop Uniform Standards for Product lines, receive and provide prompt review of Products filed therewith, and give approval to those Product filings satisfying applicable Uniform Standards; provided, it is not intended for the Commission to be the exclusive entity for receipt and review of insurance product filings. Nothing herein shall prohibit any Insurer from filing its product in any State wherein the Insurer is licensed to conduct the business of insurance; and any such filing shall be subject to the laws of the State where filed. 2. The Commission is a body corporate and politic, and an instrumentality of the Compacting States. 3. The Commission is solely responsible for its liabilities except as otherwise specifically provided in this Compact. 4. Venue is proper and judicial proceedings by or against the Commission shall be brought solely and exclusively in a Court of competent jurisdiction where the principal office of the Commission is located. Article IV. Powers of the Commission The Commission shall have the following powers: 1. To promulgate Rules, pursuant to Article VII of this Compact, which shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in this Compact; 2. To exercise its rulemaking authority and establish reasonable Uniform Standards for Products covered under the Compact, and Advertisement related thereto, which shall have the force and effect of law and shall be binding in the Compacting States, but only for those Products filed with the Commission, provided, that a Compacting State shall have the right to opt out of such Uniform Standard pursuant to Article VII, to the extent and in the manner provided in this Compact, and, provided further, that any Uniform Standard established by the Commission for long-term care insurance products may provide the same or greater protections for consumers as, but shall not provide less than, those protections set forth in the National Association of Insurance Commissioners' Long-Term Care Insurance Model Act and Long-Term Care Insurance Model Regulation, respectively, adopted as of 2001. The Commission shall consider whether any subsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance Model Regulation adopted by the NAIC require amending of the Uniform Standards established by the Commission for long-term care insurance products; 3. To receive and review in an expeditious manner Products filed with the Commission, and rate filings for disability income and long-term care insurance Products, and give approval of those Products and rate filings that satisfy the applicable Uniform Standard, where such approval shall have the force and effect of law and be binding on the Compacting States to the extent and in the manner provided in the Compact; 4. To receive and review in an expeditious manner Advertisement relating to long-term care insurance products for which Uniform Standards have been adopted by the Commission, and give approval to all Advertisement that satisfies the applicable Uniform Standard. For any product covered under this Compact, other than long-term care insurance products, the Commission shall have the authority to require an insurer to submit all or any part of its Advertisement with respect to that product for review or approval prior to use, if the Commission determines that the nature of the product is such that an Advertisement of the product could have the capacity or tendency to mislead the public. The actions of the Commission as provided in this section shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in the Compact; 5. To exercise its rulemaking authority and designate Products and Advertisement that may be subject to a self-certification process without the need for prior approval by the Commission; 6. To promulgate Operating Procedures, pursuant to Article VII of this Compact, which shall be binding in the Compacting States to the extent and in the manner provided in this compact; 7. To bring and prosecute legal proceedings or actions in its name as the Commission; provided, that the standing of any state insurance department to sue or be sued under applicable law shall not be affected; 8. To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence; 9. To establish and maintain offices; 10. To purchase and maintain insurance and bonds; 11. To borrow, accept or contract for services of personnel, including, but not limited to, employees of a Compacting State; 12. To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of the Compact, and determine their qualifications; and to establish the Commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation and qualifications of personnel; 13. To accept any and all appropriate donations and grants of money, equipment, supplies, materials and services, and to receive, utilize and dispose of the same; provided that at all times the Commission shall strive to avoid any appearance of impropriety; 14. To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold, improve or use, any property, real, personal or mixed; provided that at all times the Commission shall strive to avoid any appearance of impropriety; 15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose of any property, real, personal or mixed; 16. To remit filing fees to Compacting States as may be set forth in the Bylaws, Rules or Operating Procedures; 17. To enforce compliance by Compacting States with Rules, Uniform Standards, Operating Procedures and Bylaws; 18. To provide for dispute resolution among Compacting States; 19. To advise Compacting States on issues relating to Insurers domiciled or doing business in Noncompacting jurisdictions, consistent with the purposes of this Compact; 20. To provide advice and training to those personnel in state insurance departments responsible for product review, and to be a resource for state insurance departments; 21. To establish a budget and make expenditures; 22. To borrow money; 23. To appoint committees, including advisory committees comprising Members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and such other interested persons as may be designated in the Bylaws; 24. To provide and receive information from, and to cooperate with law enforcement agencies; 25. To adopt and use a corporate seal; and 26. To perform such other functions as may be necessary or appropriate to achieve the purposes of this Compact consistent with the state regulation of the business of insurance. Article V. Organization of the Commission 1. Membership, Voting and Bylaws a. Each Compacting State shall have and be limited to one Member. Each Member shall be qualified to serve in that capacity pursuant to applicable law of the Compacting State. Any Member may be removed or suspended from office as provided by the law of the State from which he or she shall be appointed. Any vacancy occurring in the Commission shall be filled in accordance with the laws of the Compacting State wherein the vacancy exists. Nothing herein shall be construed to affect the manner in which a Compacting State determines the election or appointment and qualification of its own Commissioner. b. Each Member shall be entitled to one vote and shall have an opportunity to participate in the governance of the Commission in accordance with the Bylaws. Notwithstanding any provision herein to the contrary, no action of the Commission with respect to the promulgation of a Uniform Standard shall be effective unless two-thirds of the Members vote in favor thereof. c. The Commission shall, by a majority of the Members, prescribe Bylaws to govern its conduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, of the Compact, including, but not limited to: i. Establishing the fiscal year of the Commission; ii. Providing reasonable procedures for appointing and electing members, as well as holding meetings, of the Management Committee; iii. Providing reasonable standards and procedures: (i) for the establishment and meetings of other committees, and (ii) governing any general or specific delegation of any authority or function of the Commission; iv. Providing reasonable procedures for calling and conducting meetings of the Commission that consist of a majority of Commission members, ensuring reasonable advance notice of each such meeting and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public's interest, the privacy of individuals, and insurers' proprietary information, including trade secrets. The Commission may meet in camera only after a majority of the entire membership votes to close a meeting en toto or in part. As soon as practicable, the Commission must make public (i) a copy of the vote to close the meeting revealing the vote of each Member with no proxy votes allowed, and (ii) votes taken during such meeting; v. Establishing the titles, duties and authority and reasonable procedures for the election of the officers of the Commission; vi. Providing reasonable standards and procedures for the establishment of the personnel policies and programs of the Commission. Notwithstanding any civil service or other similar laws of any Compacting State, the Bylaws shall exclusively govern the personnel policies and programs of the Commission; vii. Promulgating a code of ethics to address permissible and prohibited activities of commission members and employees; and viii. Providing a mechanism for winding up the operations of the Commission and the equitable disposition of any surplus funds that may exist after the termination of the Compact after the payment and/or reserving of all of its debts and obligations. d. The Commission shall publish its bylaws in a convenient form and file a copy thereof and a copy of any amendment thereto, with the appropriate agency or officer in each of the Compacting States. 2. Management Committee, Officers and Personnel a. A Management Committee comprising no more than 14 members shall be established as follows: i. One member from each of the six Compacting States with the largest premium volume for individual and group annuities, life, disability income and long-term care insurance products, determined from the records of the NAIC for the prior year; ii. Four members from those Compacting States with at least two percent of the market based on the premium volume described above, other than the six Compacting States with the largest premium volume, selected on a rotating basis as provided in the Bylaws; and iii. Four members from those Compacting States with less than two percent of the market, based on the premium volume described above, with one selected from each of the four zone regions of the NAIC as provided in the Bylaws. b. The Management Committee shall have such authority and duties as may be set forth in the Bylaws, including but not limited to: i. Managing the affairs of the Commission in a manner consistent with the Bylaws and purposes of the Commission; ii. Establishing and overseeing an organizational structure within, and appropriate procedures for, the Commission to provide for the creation of Uniform Standards and other Rules, receipt and review of product filings, administrative and technical support functions, review of decisions regarding the disapproval of a product filing, and the review of elections made by a Compacting State to opt out of a Uniform Standard; provided that a Uniform Standard shall not be submitted to the Compacting States for adoption unless approved by two-thirds of the members of the Management Committee; iii. Overseeing the offices of the Commission; and iv. Planning, implementing, and coordinating communications and activities with other state, federal and local government organizations in order to advance the goals of the Commission. c. The Commission shall elect annually officers from the Management Committee, with each having such authority and duties, as may be specified in the Bylaws. d. The Management Committee may, subject to the approval of the Commission, appoint or retain an executive director for such period, upon such terms and conditions and for such compensation as the Commission may deem appropriate. The executive director shall serve as secretary to the Commission, but shall not be a Member of the Commission. The executive director shall hire and supervise such other staff as may be authorized by the Commission. 3. Legislative and Advisory Committees a. A legislative committee comprising state legislators or their designees shall be established to monitor the operations of, and make recommendations to, the Commission, including the Management Committee; provided that the manner of selection and term of any legislative committee member shall be as set forth in the Bylaws. Prior to the adoption by the Commission of any Uniform Standard, revision to the Bylaws, annual budget or other significant matter as may be provided in the Bylaws, the Management Committee shall consult with and report to the legislative committee. b. The Commission shall establish two advisory committees, one of which shall comprise consumer representatives independent of the insurance industry, and the other comprising insurance industry representatives. c. The Commission may establish additional advisory committees as its Bylaws may provide for the carrying out of its functions. 4. Corporate Records of the Commission The Commission shall maintain its corporate books and records in accordance with the Bylaws. 5. Qualified Immunity, Defense, and Indemnification a. The Members, officers, executive director, employees, and representatives of the Commission shall be immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused by or arising out of any actual or alleged act, error or omission that occurred, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing in this paragraph shall be construed to protect any such person from suit and/or liability for any damage, loss, injury or liability caused by the intentional or willful and wanton misconduct of that person. b. The Commission shall defend any Member, officer, executive director, employee, or representative of the Commission in any civil action seeking to impose liability arising out of any actual or alleged act, error, or omission that occurred within the scope of Commission employment, duties, or responsibilities, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties, or responsibilities; provided, that nothing herein shall be construed to prohibit that person from retaining his or her own counsel; and provided further, that the actual or alleged act, error, or omission did not result from that person's intentional or willful and wanton misconduct. c. The Commission shall indemnify and hold harmless any Member, officer, executive director, employee, or representative of the Commission for the amount of any settlement or judgment obtained against that person arising out of any actual or alleged act, error, or omission that occurred within the scope of Commission employment, duties, or responsibilities, or that such person had a reasonable basis for believing occurred within the scope of Commission employment, duties, or responsibilities, provided, that the actual or alleged act, error, or omission did not result from the intentional or willful and wanton misconduct of that person. Article VI. Meetings and Acts of the Commission 1. The Commission shall meet and take such actions as are consistent with the provisions of this Compact and the Bylaws. 2. Each Member of the Commission shall have the right and power to cast a vote to which that Compacting State is entitled and to participate in the business and affairs of the Commission. A Member shall vote in person or by such other means as provided in the Bylaws. The Bylaws may provide for Members' participation in meetings by telephone or other means of communication. 3. The Commission shall meet at least once during each calendar year. Additional meeting shall be held as set forth in the Bylaws. Article VII. Rules and Operating Procedures: Rulemaking Functionsof the Commission and Opting Out of Uniform Standards 1. Rulemaking Authority. The Commission shall promulgate reasonable Rules, including Uniform Standards, and Operating Procedures in order to effectively and efficiently achieve the purposes of this Compact. Notwithstanding the foregoing, in the event the Commission exercises its rulemaking authority in a manner that is beyond the scope of the purposes of this Act, or the powers granted hereunder, then such an action by the Commission shall be invalid and have no force and effect. 2. Rulemaking Procedure. Rules and Operating Procedures shall be made pursuant to a rulemaking process that conforms to the Model State Administrative Procedure Act of 1981 as amended, as may be appropriate to the operations of the Commission. Before the Commission adopts a Uniform Standard, the Commission shall give written notice to the relevant state legislative committee(s) in each Compacting State responsible for insurance issues of its intention to adopt the Uniform Standard. The Commission in adopting a Uniform Standard shall consider fully all submitted materials and issue a concise explanation of its decision. 3. Effective Date and Opt Out of a Uniform Standard. A Uniform Standard shall become effective 90 days after its promulgation by the Commission or such later date as the Commission may determine; provided, however, that a Compacting State may opt out of a Uniform Standard as provided in this Article. "Opt out" shall be defined as any action by a Compacting State to decline to adopt or participate in a promulgated Uniform Standard. All other Rules and Operating Procedures, and amendments thereto, shall become effective as of the date specified in each Rule, Operating Procedure, or amendment. 4. Opt Out Procedure. A Compacting State may opt out of a Uniform Standard, either by legislation or regulation duly promulgated by the Insurance Department under the Compacting State's Administrative Procedure Act. If a Compacting State elects to opt out of a Uniform Standard by regulation, it must (a) give written notice to the Commission no later than ten business days after the Uniform Standard is promulgated, or at the time the State becomes a Compacting State and (b) find that the Uniform Standard does not provide reasonable protections to the citizens of the State, given the conditions in the State. The Commissioner shall make specific findings of fact and conclusions of law, based on a preponderance of the evidence, detailing the conditions in the State which warrant a departure from the Uniform Standard and determining that the Uniform Standard would not reasonably protect the citizens of the State. The Commissioner must consider and balance the following factors and find that the conditions in the State and needs of the citizens of the State outweigh: (i) the intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for the Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted by the Commission provides reasonable protections to consumers of the relevant Product. Notwithstanding the foregoing, a Compacting State may, at the time of its enactment of this Compact, prospectively opt out of all Uniform Standards involving long-term care insurance products by expressly providing for such opt out in the enacted Compact, and such an opt out shall not be treated as a material variance in the offer or acceptance of any State to participate in this Compact. Such an opt out shall be effective at the time of enactment of this Compact by the Compacting State and shall apply to all existing Uniform Standards involving long-term care insurance products and those subsequently promulgated. 5. Effect of Opt Out. If a Compacting State elects to opt out of a Uniform Standard, the Uniform Standard shall remain applicable in the Compacting State electing to opt out until such time the opt out legislation is enacted into law or the regulation opting out becomes effective. Once the opt out of a Uniform Standard by a Compacting State becomes effective as provided under the laws of that State, the Uniform Standard shall have no further force and effect in that State unless and until the legislation or regulation implementing the opt out is repealed or otherwise becomes ineffective under the laws of the State. If a Compacting State opts out of a Uniform Standard after the Uniform Standard has been made effective in that State, the opt out shall have the same prospective effect as provided under Article XIV for withdrawals. 6. Stay of Uniform Standard. If a Compacting State has formally initiated the process of opting out of a Uniform Standard by regulation, and while the regulatory opt out is pending, the Compacting State may petition the Commission, at least 15 days before the effective date of the Uniform Standard, to stay the effectiveness of the Uniform Standard in that State. The Commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable manner and there is a likelihood of success. If a stay is granted or extended by the Commission, the stay or extension thereof may postpone the effective date by up to 90 days, unless affirmatively extended by the Commission; provided, a stay may not be permitted to remain in effect for more than one year unless the Compacting State can show extraordinary circumstances which warrant a continuance of the stay, including, but not limited to, the existence of a legal challenge which prevents the Compacting State from opting out. A stay may be terminated by the Commission upon notice that the rulemaking process has been terminated. 7. Not later than 30 days after a Rule or Operating Procedure is promulgated, any person may file a petition for judicial review of the Rule or Operating Procedure; provided, that the filing of such a petition shall not stay or otherwise prevent the Rule or Operating Procedure from becoming effective unless the court finds that the petitioner has a substantial likelihood of success. The court shall give deference to the actions of the Commission consistent with applicable law and shall not find the Rule or Operating Procedure to be unlawful if the Rule or Operating Procedure represents a reasonable exercise of the Commission's authority. Article VIII. Commission Records and Enforcement 1. The Commission shall promulgate Rules establishing conditions and procedures for public inspection and copying of its information and official records, except such information and records involving the privacy of individuals and insurers' trade secrets. The Commission may promulgate additional Rules under which it may make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure, and may enter into agreements with such agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions. 2. Except as to privileged records, data and information, the laws of any Compacting State pertaining to confidentiality or nondisclosure shall not relieve any Compacting State Commissioner of the duty to disclose any relevant records, data or information to the Commission; provided, that disclosure to the Commission shall not be deemed to waive or otherwise affect any confidentiality requirement; and further provided, that, except as otherwise expressly provided in this Act, the Commission shall not be subject to the Compacting State's laws pertaining to confidentiality and nondisclosure with respect to records, data and information in its possession. Confidential information of the Commission shall remain confidential after such information is provided to any Commissioner. 3. The Commission shall monitor Compacting States for compliance with duly adopted Bylaws, Rules, including Uniform Standards, and Operating Procedures. The Commission shall notify any noncomplying Compacting State in writing of its noncompliance with Commission Bylaws, Rules or Operating Procedures. If a noncomplying Compacting State fails to remedy its noncompliance within the time specified in the notice of noncompliance, the Compacting State shall be deemed to be in default as set forth in Article XIV. 4. The Commissioner of any State in which an Insurer is authorized to do business, or is conducting the business of insurance, shall continue to exercise his or her authority to oversee the market regulation of the activities of the Insurer in accordance with the provisions of the State's law. The Commissioner's enforcement of compliance with the Compact is governed by the following provisions: a. With respect to the Commissioner's market regulation of a Product or Advertisement that is approved or certified to the Commission, the content of the Product or Advertisement shall not constitute a violation of the provisions, standards or requirements of the Compact except upon a final order of the Commission, issued at the request of a Commissioner after prior notice to the Insurer and an opportunity for hearing before the Commission. b. Before a Commissioner may bring an action for violation of any provision, standard or requirement of the Compact relating to the content of an Advertisement not approved or certified to the Commission, the Commission, or an authorized Commission officer or employee, must authorize the action. However, authorization pursuant to this paragraph does not require notice to the Insurer, opportunity for hearing or disclosure of requests for authorization or records of the Commission's action on such requests. Article IX. Dispute Resolution The Commission shall attempt, upon the request of a Member, to resolve any disputes or other issues that are subject to this Compact and which may arise between two or more Compacting States, or between Compacting States and Noncompacting States, and the Commission shall promulgate an Operating Procedure providing for resolution of such disputes. Article X. Product Filing and Approval 1. Insurers and Third Party Filers seeking to have a Product approved by the Commission shall file the Product with, and pay applicable filing fees to, the Commission. Nothing in this Act shall be construed to restrict or otherwise prevent an insurer from filing its Product with the insurance department in any State wherein the insurer is licensed to conduct the business of insurance, and such filing shall be subject to the laws of the States where filed. 2. The Commission shall establish appropriate filing and review processes and procedures pursuant to Commission Rules and Operating Procedures. Notwithstanding any provision herein to the contrary, the Commission shall promulgate Rules to establish conditions and procedures under which the Commission will provide public access to Product filing information. In establishing such Rules, the Commission shall consider the interests of the public in having access to such information, as well as protection of personal medical and financial information and trade secrets, that may be contained in a Product filing or supporting information. 3. Any Product approved by the Commission may be sold or otherwise issued in those Compacting States for which the Insurer is legally authorized to do business. Article XI. Review of Commission Decisions Regarding Filings 1. Not later than 30 days after the Commission has given notice of a disapproved Product or Advertisement filed with the Commission, the Insurer or Third Party Filer whose filing was disapproved may appeal the determination to a review panel appointed by the Commission. The Commission shall promulgate Rules to establish procedures for appointing such review panels and provide for notice and hearing. An allegation that the Commission, in disapproving a Product or Advertisement filed with the Commission, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with Article III, Section 4. 2. The Commission shall have authority to monitor, review and reconsider Products and Advertisement subsequent to their filing or approval upon a finding that the product does not meet the relevant Uniform Standard. Where appropriate, the Commission may withdraw or modify its approval after proper notice and hearing, subject to the appeal process in Section 1 above. Article XII. Finance 1. The Commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization. To fund the cost of its initial operations, the Commission may accept contributions and other forms of funding from the National Association of Insurance Commissioners, Compacting States, and other sources. Contributions and other forms of funding from other sources shall be of such a nature that the independence of the Commission concerning the performance of its duties shall not be compromised. 2. The Commission shall collect a filing fee from each Insurer and Third Party Filer filing a product with the Commission to cover the cost of the operations and activities of the Commission and its staff in a total amount sufficient to cover the Commission's annual budget. 3. The Commission's budget for a fiscal year shall not be approved until it has been subject to notice and comment as set forth in Article VII of this Compact. 4. The Commission shall be exempt from all taxation in and by the Compacting states. 5. The Commission shall not pledge the credit of any Compacting State, except by and with the appropriate legal authority of that Compacting State. 6. The Commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds under its control. The internal financial accounts of the Commission shall be subject to the accounting procedures established under its Bylaws. The financial accounts and reports including the system of internal controls and procedures of the Commission shall be audited annually by an independent certified public accountant. Upon the determination of the Commission, but no less frequently than every three years, the review of the independent auditor shall include a management and performance audit of the Commission. The Commission shall make an Annual Report to the Governor and legislature of the Compacting States, which shall include a report of the independent audit. The Commission's internal accounts shall not be confidential and such materials may be shared with the Commissioner of any Compacting State upon request provided, however, that any work papers related to any internal or independent audit and any information regarding the privacy of individuals and insurers' proprietary information, including trade secrets, shall remain confidential. 7. No Compacting State shall have any claim to or ownership of any property held by or vested in the Commission or to any Commission funds held pursuant to the provisions of this Compact. Article XIII. Compacting States, Effective Date and Amendment 1. Any State is eligible to become a Compacting State. 2. The Compact shall become effective and binding upon legislative enactment of the Compact into law by two Compacting States; provided, the Commission shall become effective for purposes of adopting Uniform Standards for, reviewing, and giving approval or disapproval of, Products filed with the Commission that satisfy applicable Uniform Standards only after 26 States are Compacting States or, alternatively, by States representing greater than 40 percent of the premium volume for life insurance, annuity, disability income and long-term care insurance products, based on records of the NAIC for the prior year. Thereafter, it shall become effective and binding as to any other Compacting State upon enactment of the Compact into law by that State. 3. Amendments to the Compact may be proposed by the Commission for enactment by the Compacting States. No amendment shall become effective and binding upon the Commission and the Compacting States unless and until all Compacting States enact the amendment into law. Article XIV. Withdrawal, Default and Termination 1. Withdrawal a. Once effective, the Compact shall continue in force and remain binding upon each and every Compacting State; provided, that a Compacting State may withdraw from the Compact ("Withdrawing State") by enacting a statute specifically repealing the statute which enacted the Compact into law. b. The effective date of withdrawal is the effective date of the repealing statute. However, the withdrawal shall not apply to any product filings approved or self-certified, or any Advertisement of such products, on the date the repealing statute becomes effective, except by mutual agreement of the Commission and the Withdrawing State unless the approval is rescinded by the Withdrawing State as provided in Paragraph e of this section. c. The Commissioner of the Withdrawing State shall immediately notify the Management Committee in writing upon the introduction of legislation repealing this Compact in the Withdrawing State. d. The Commission shall notify the other Compacting States of the introduction of such legislation within ten days after its receipt of notice thereof. e. The Withdrawing State is responsible for all obligations, duties and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal, except to the extent those obligations may have been released or relinquished by mutual agreement of the Commission and the Withdrawing State. The Commission's approval of Products and Advertisement prior to the effective date of withdrawal shall continue to be effective and be given full force and effect in the Withdrawing State, unless formally rescinded by the Withdrawing State in the same manner as provided by the laws of the Withdrawing State for the prospective disapproval of products or advertisement previously approved under state law. f. Reinstatement following withdrawal of any Compacting State shall occur upon the effective date of the Withdrawing State reenacting the Compact. 2. Default a. If the Commission determines that any Compacting State has at any time defaulted ("Defaulting State") in the performance of any of its obligations or responsibilities under this Compact, the Bylaws or duly promulgated Rules or Operating Procedures, then, after notice and hearing as set forth in the Bylaws, all rights, privileges and benefits conferred by this Compact on the Defaulting State shall be suspended from the effective date of default as fixed by the Commission. The grounds for default include, but are not limited to, failure of a Compacting State to perform its obligations or responsibilities, and any other grounds designated in Commission Rules. The Commission shall immediately notify the Defaulting State in writing of the Defaulting State's suspension pending a cure of the default. The Commission shall stipulate the conditions and the time period within which the Defaulting State must cure its default. If the Defaulting State fails to cure the default within the time period specified by the Commission, the Defaulting State shall be terminated from the Compact and all rights, privileges and benefits conferred by this Compact shall be terminated from the effective date of termination. b. Product approvals by the Commission or product self-certifications, or any Advertisement in connection with such product, that are in force on the effective date of termination shall remain in force in the Defaulting State in the same manner as if the Defaulting State had withdrawn voluntarily pursuant to Section 1 of this article. c. Reinstatement following termination of any Compacting State requires a reenactment of the Compact. 3. Dissolution of Compact a. The Compact dissolves effective upon the date of the withdrawal or default of the Compacting State which reduces membership in the Compact to one Compacting State. b. Upon the dissolution of this Compact, the Compact becomes null and void and shall be of no further force or effect, and the business and affairs of the Commission shall be wound up and any surplus funds shall be distributed in accordance with the Bylaws. Article XV. Severability and Construction 1. The provisions of this Compact shall be severable; and if any phrase, clause, sentence, or provision is deemed unenforceable, the remaining provisions of the Compact shall be enforceable. 2. The provisions of this Compact shall be liberally construed to effectuate its purposes. Article XVI. Binding Effect of Compact and Other Laws 1. Other Laws a. Nothing herein prevents the enforcement of any other law of a Compacting State, except as provided in Paragraph b of this section. b. For any Product approved or certified to the Commission, the Rules, Uniform Standards, and any other requirements of the Commission shall constitute the exclusive provisions applicable to the content, approval, and certification of such Products. For Advertisement that is subject to the Commission's authority, any Rule, Uniform Standard, or other requirement of the Commission which governs the content of the Advertisement shall constitute the exclusive provision that a Commissioner may apply to the content of the Advertisement. Notwithstanding the foregoing, no action taken by the Commission shall abrogate or restrict: (i) the access of any person to state courts; (ii) remedies available under state law related to breach of contract, tort, or other laws not specifically directed to the content of the Product; (iii) state law relating to the construction of insurance contracts; or (iv) the authority of the attorney general of the state, including but not limited to maintaining any actions or proceedings, as authorized by law. c. All insurance products filed with individual States shall be subject to the laws of those States. 2. Binding Effect of this Compact a. All lawful actions of the Commission, including all Rules and Operating Procedures promulgated by the Commission, are binding upon the Compacting States. b. All agreements between the Commission and the Compacting States are binding in accordance with their terms. c. Upon the request of a party to a conflict over the meaning or interpretation of Commission actions, and upon a majority vote of the Compacting States, the Commission may issue advisory opinions regarding the meaning or interpretation in dispute. d. In the event any provision of this Compact exceeds the constitutional limits imposed on the legislature of any Compacting State, the obligations, duties, powers or jurisdiction sought to be conferred by that provision upon the Commission shall be ineffective as to that Compacting State, and those obligations, duties, powers, or jurisdiction shall remain in the Compacting State and shall be exercised by the agency thereof to which those obligations, duties, powers, or jurisdiction are delegated by law in effect at the time this Compact becomes effective. Subd. 2. Commission representative. The commissioner of commerce is the representative of this state to the commission. History:   2006 c 255 s 3 
60A.991 INTERSTATE INSURANCE PRODUCT REGULATION COMPACT OPT OUT ADMINISTRATION. Subdivision 1. Access to courts. The commissioner must opt out by regulation of any uniform standard that permits a product to deny a consumer's access to the courts to resolve a dispute related to the product. In addition to opting out, the commissioner must petition the commission for a stay of the effective date of the standard. Subd. 2. Deference by courts. A decision by the commissioner to opt out by regulation shall be given deference by the courts. History:   2006 c 255 s 4 
60B.01 TITLE, CONSTRUCTION, AND PURPOSE. Subdivision 1. Short title. Sections 60B.01 to 60B.61 may be cited as the "Insurers Rehabilitation and Liquidation Act" and shall appear in the next edition of Minnesota Statutes as chapter 60B but subject to the provisions of section 3C.10, subdivision 1. Subd. 2. Construction; no limitation of powers. Sections 60B.01 to 60B.61 shall not be interpreted to limit the powers granted the commissioner by other provisions of the law. Subd. 3. Liberal construction. Sections 60B.01 to 60B.61 shall be liberally construed to effect the purpose stated in subdivision 4. Subd. 4. Purpose. The purpose of sections 60B.01 to 60B.61 is the protection of the interests of insureds, creditors, and the public generally, with minimum interference with the normal prerogatives of proprietors, through: (a) early detection of any potentially dangerous condition in an insurer, and prompt application of appropriate corrective measures, neither unduly harsh nor subject to the kind of publicity that would needlessly damage or destroy the insurer; (b) improved methods for rehabilitating insurers, by enlisting the advice and management expertise of the insurance industry; (c) enhanced efficiency and economy of liquidation, through clarification and specification of the law, to minimize legal uncertainty and litigation; (d) equitable apportionment of any unavoidable loss; (e) lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process, and by extension of the scope of personal jurisdiction over debtors of the insurer outside this state; and (f) regulation of the insurance business by the impact of the law relating to delinquency procedures and substantive rules on the entire insurance business. History:  1969 c 708 s 1; 1984 c 480 s 16; 1984 c 655 art 2 s 19 subd 4
60B.02 PERSONS COVERED. The proceedings authorized by sections 60B.01 to 60B.61 may be applied to: (1) all insurers who are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future; (2) all insurers who purport to do an insurance business in this state; (3) all insurers who have insureds resident in this state; (4) all other persons organized or in the process of organizing with the intent to do an insurance business in this state; and (5) all nonprofit service plan corporations incorporated or operating under the Nonprofit Health Service Plan Corporation Act, all health maintenance organizations operating under chapter 62D, any health plan incorporated under chapter 317A, all fraternal benefit societies operating under chapter 64B, except those associations enumerated in section 64B.38, all township mutual or other companies operating under chapter 67A, and all reciprocals or interinsurance exchanges operating under chapter 71A. History:  1969 c 708 s 2; 1971 c 568 s 24; 1985 c 49 s 41; 1989 c 304 s 137; 1992 c 564 art 1 s 54; 1995 c 186 s 16; 1995 c 234 art 1 s 1; 1997 c 225 art 2 s 62; 2020 c 80 art 2 s 1
60B.03 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 60B.01 to 60B.61, the following terms have the meanings given in this section. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce of the state of Minnesota and, in that commissioner's absence or disability, a deputy or other person duly designated to act in that commissioner's place. In the context of rehabilitation or liquidation of a health maintenance organization, "commissioner" means the commissioner of health of the state of Minnesota and, in that commissioner's absence or disability, a deputy or other person duly designated to act in that commissioner's place. Subd. 3. Receiver. "Receiver" means receiver, liquidator, rehabilitator, or conservator, as the context requires. Subd. 4. Insurer. "Insurer" means any person who is doing, has done, purports to do or is licensed to do an insurance business and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, or conservation by, a commissioner. For purposes of sections 60B.01 to 60B.61, all other persons included under section 60B.02 shall be deemed to be insurers. Subd. 5. Delinquency proceeding. "Delinquency proceeding" means any proceeding commenced under sections 60B.01 to 60B.61 against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer, and any summary proceeding under sections 60B.11 to 60B.14. Subd. 6. State. "State" means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any other possession of the United States. Subd. 7. Foreign country. "Foreign country" means territory not in any state. Subd. 8. Domiciliary state. "Domiciliary state" or "state of domicile" means the state in which an insurer is incorporated or organized or, in the case of an alien insurer, the state in which the insurer has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and on deposit for the benefit of policyholders and creditors in the United States. Subd. 9. Ancillary state. "Ancillary state" means any state other than a domiciliary state. Subd. 10. Reciprocal state. "Reciprocal state" means any state other than this state in which in substance and effect sections 60B.21, subdivision 1; 60B.54, subdivisions 1 and 3; 60B.55; and 60B.57 to 60B.60; are in force, and in which provisions are in force requiring that the commissioner be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers. Subd. 11. General assets. "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or held in a separate account in connection with contracts on a variable basis, or otherwise encumbered for the security or benefit of specified persons or limited classes of persons, and as to specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets. Subd. 12. Preferred claim. "Preferred claim" means any claim with respect to which the law accords priority of payment from the general assets of the insurer. Subd. 13. Special deposit claim. "Special deposit claim" means any claim secured by a deposit made pursuant to law for the security or benefit of one or more limited classes of persons, but not including any claim secured by general assets. Subd. 14. Secured claim. "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise, and any claims against a separate account in connection with a contract on a variable basis, but not including special deposit claims, or claims against general assets. The term also includes claims which have become liens upon specific assets by reason of judicial process, except where they have been invalidated. Subd. 15. Insolvency or insolvent. "Insolvency" or "insolvent" means: (a) For an insurer organized under sections 67A.01 to 67A.26, the inability to pay any uncontested debt as it becomes due. (b) For purposes of a liquidation under section 64B.43, subdivision 4, a fraternal authorized control level event under circumstances the commissioner determines will not be promptly remedied pursuant to the plan submitted under section 64B.43, subdivision 3, a society's inability to pay its debts or meet its obligations as they mature, or that a society's assets do not exceed its liabilities plus the greater of any surplus required by law to be constantly maintained. (c) For any other insurer, that it is unable to pay its debts or meet its obligations as they mature or that its assets do not exceed its liabilities plus the greater of (1) any capital and surplus required by law to be constantly maintained, or (2) its authorized and issued capital stock. For purposes of this subdivision, "assets" includes one-half of the maximum total assessment liability of the policyholders of the insurer, and "liabilities" includes reserves required by law. For policies issued on the basis of unlimited assessment liability, the maximum total liability, for purposes of determining solvency only, shall be deemed to be that amount that could be obtained if there were 100 percent collection of an assessment at the rate of ten mills per dollar of insurance written by it and in force. Subd. 16. Fair consideration. "Fair consideration" is given for property or an obligation: (a) when in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or services are rendered or obligation is incurred or an antecedent debt is satisfied; or (b) when such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared to the value of the property or obligation obtained. Subd. 17. Creditor. "Creditor" is a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent. Subd. 18. Transfer. "Transfer" includes the sale and every other method, direct or indirect, of disposing of or of parting with property or with an interest therein or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily or involuntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor. Subd. 19. Alien insurer. "Alien insurer" means an insurer incorporated or organized in a foreign country. Subd. 20. Affiliate or affiliated. An "affiliate" of, or a person "affiliated" with, a specific person is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. Subd. 21. Netting agreement. "Netting agreement" means: (1) a contract or agreement, including terms and conditions incorporated by reference in it, including a master agreement, which master agreement, together with all schedules, confirmations, definitions, and addenda to it and transactions under any of them, shall be treated as one netting agreement, that documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and that provides for the netting, liquidation, setoff, termination, acceleration, or close-out, under or in connection with one or more qualified financial contracts or present or future payment or delivery obligations or payment or delivery entitlements under it, including liquidation or close-out values relating to those obligations or entitlements, among the parties to the netting agreement; (2) any master agreement or bridge agreement for one or more master agreements described in clause (1); or (3) any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in clause (1) or (2); provided that any contract or agreement described in clause (1) or (2) relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts. Subd. 22. Qualified financial contract. (a) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, and any similar agreement that the commissioner determines to be a qualified financial contract for the purposes of this chapter. (b) "Commodity contract" means: (1) a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the Commodity Exchange Act, United States Code, title 7, section 1, et seq., or a board of trade outside the United States; (2) an agreement that is subject to regulation under Section 19 of the Commodity Exchange Act, United States Code, title 7, section 1, et seq., and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract; (3) an agreement or transaction that is subject to regulation under Section 4c(b) of the Commodity Exchange Act, United States Code, title 7, section 1, et seq., and that is commonly known to the commodities trade as a commodity option; (4) any combination of the agreements or transactions referred to in this paragraph; or (5) any option to enter into an agreement or transaction referred to in this paragraph. (c) "Forward contract," "repurchase agreement," "securities contract," and "swap agreement" shall have the meanings set forth in the Federal Deposit Insurance Act, United States Code, chapter 12, section 1821(e)(8)(D), as amended from time to time. History:  1969 c 708 s 3; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1990 c 538 s 1; 1992 c 564 art 1 s 24; 1995 c 234 art 1 s 2; 1997 c 225 art 2 s 62; 2001 c 7 s 13; 2009 c 37 art 3 s 12; 2010 c 275 art 1 s 2,3; 2018 c 175 s 1
60B.04 JURISDICTION AND VENUE. Subdivision 1. Actions by commissioner. Except as provided in subdivision 2, no delinquency proceeding shall be commenced under sections 60B.01 to 60B.61 by anyone other than the commissioner, including an acting commissioner, of this state and no court shall have jurisdiction to entertain, hear, or determine any proceeding under sections 60B.01 to 60B.61 commenced by any other person. Subd. 2. Actions by judgment creditors. (a) The judgment creditors of three or more unrelated judgments may commence proceedings under the conditions and in the manner prescribed in this subdivision by serving notice upon the commissioner and the insurer of intention to file a petition for liquidation under section 60B.20 or 60B.53. Each of the judgments must: (1) have been rendered against the insurer by a court in this state having jurisdiction over the subject matter and the insurer; (2) have been entered more than 60 days before the service of notice; (3) not have been paid in full; (4) not be the subject of a valid contract between the insurer and any judgment creditor for payment of the judgment, unless the contract has been breached by the insurer; and (5) not be a judgment on which an appeal or review is pending. (b) If any one of the judgments in favor of a petitioning creditor remains unpaid for 30 days after service of the notice, and the commissioner has not then filed a petition for liquidation, the creditor may file in the name of the commissioner a verified petition for liquidation of the insurer under section 60B.20 or 60B.53 alleging the conditions stated in this subdivision. The commissioner shall be served and joined in the action. Subd. 3. Exclusiveness of proceedings. No court of this state shall have jurisdiction to entertain, hear, or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership of any insurer, or praying for an injunction or restraining order or other relief preliminary to, incidental to, or relating to such proceedings other than in accordance with sections 60B.01 to 60B.61, except that the voluntary dissolution or liquidation of a solvent insurer may occur as otherwise permitted by law, and any court of this state shall have jurisdiction to entertain, hear and determine a petition for voluntary dissolution or liquidation where otherwise permitted by law upon it being established to the satisfaction of the court, after notice to the commissioner, that the insurer is solvent. Subd. 4. Change of venue. Venue for proceedings arising under sections 60B.01 to 60B.61 shall be laid initially as specified in the sections providing for such proceedings. All other actions and proceedings initiated by the receiver may be commenced and tried where the delinquency proceedings are then pending, or where venue would be laid by other applicable law. All other actions and proceedings against the receiver shall be commenced and tried in the county where the delinquency proceedings are pending. At any time upon motion of any party, venue may be changed by order of the court or the presiding judge thereof to any other district court in this state, as the convenience of the parties and witnesses and the ends of justice may require. This subdivision relates only to venue and is not jurisdictional. Subd. 5. Personal jurisdiction, grounds. In addition to other grounds for jurisdiction provided by the law of this state, a court of this state having jurisdiction of the subject matter has jurisdiction over a person served pursuant to rule 4 of Minnesota Rules of Civil Procedure in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state: (a) if the person served is obligated to the insurer in any way as an incident to an agency or brokerage arrangement that may exist or has existed between the insurer and the agent or broker, in any action on or incident to the obligation; (b) if the person served is a reinsurer who has at any time written a policy of reinsurance for an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; or (c) if the person served is or has been an officer, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from the relationship with the insurer. Subd. 6. Forum non conveniens. If the court on motion of any party finds that any action commenced under subdivision 5 should as a matter of substantial justice be tried in a forum outside this state, the court may enter an order to stay further proceedings on the action in this state. History:  1969 c 708 s 4; 1994 c 465 art 2 s 5
60B.05 INJUNCTIONS AND ORDERS. Subdivision 1. Injunctions in this state. Any receiver appointed in a proceeding under sections 60B.01 to 60B.61 may at any time apply for and any court of general jurisdiction in this state may grant, under the relevant sections of rules of Minnesota Rules of Civil Procedure, such restraining orders, temporary and permanent injunctions, and other orders as are deemed necessary and proper to prevent: (a) the transaction of further business; (b) the transfer of property; (c) interference with the receiver or with the proceedings; (d) waste of the insurer's assets; (e) dissipation and transfer of bank accounts; (f) the institution or further prosecution of any actions or proceedings; (g) the obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer or its assets; (h) the levying of execution against the insurer or its assets; (i) the making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer; (j) the withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or (k) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders or the administration of the proceeding. Subd. 2. Injunctions elsewhere. The receiver may apply to any court outside of this state for the relief described in subdivision 1. History:   1969 c 708 s 5 
60B.06 COSTS AND EXPENSES OF LITIGATION. In any proceeding under sections 60B.01 to 60B.61, the court may award such costs and other expenses of litigation as justice requires, without regard to the limitations otherwise prescribed by law. If costs and expenses are taxed against the commissioner, they shall be paid from funds appropriated to the Department of Commerce. History:  1969 c 708 s 6; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92
60B.07 COOPERATION OF OFFICERS AND EMPLOYEES. Subdivision 1. Duty to cooperate. Any officer, manager, trustee, agent or general agent of any insurer and any other person with executive authority over or in charge of any segment of the insurer's affairs having notice of the proceedings shall cooperate with the commissioner in any proceeding under sections 60B.01 to 60B.61 or any investigation preliminary or incidental to the proceeding. "To cooperate" includes, but is not limited to, the following: (a) to reply promptly in writing to any inquiry from the commissioner requesting such a reply; and (b) to make available and deliver to the commissioner any books, accounts, documents, or other records, or information or property of or pertaining to the insurer and in that person's possession, custody, or control. Subd. 2. Duty not to obstruct. No person shall obstruct or interfere with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto. Subd. 3. Right to defend. This section shall not render it illegal to resist by legal proceedings the petition for liquidation or other delinquency proceedings, other orders or the request or demand for cooperation under subdivision 1. Subd. 4. Sanction. Any person included within subdivision 1 who fails to cooperate with the commissioner, or any person who obstructs or interferes with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto, may be fined not more than $10,000 or imprisoned in the county jail not more than one year or both. History:  1969 c 708 s 7; 1984 c 628 art 3 s 11; 1986 c 444
60B.09 COMMISSIONER'S REPORTS. Subdivision 1. General report of proceedings. The commissioner shall include in a biennial report: (a) the names of the insurers proceeded against under sections 60B.15, 60B.20, 60B.52, 60B.53, and 60B.55, and such other facts as indicate in reasonable detail formal proceedings under sections 60B.01 to 60B.61; and (b) such facts as generally indicate the utilization and effectiveness of proceedings under sections 60B.11, 60B.12, and 60B.13. Subd. 2. Special reports. (a) The commissioner shall include in the biennial report, not later than the second biennial report following the initiation of any formal proceedings under sections 60B.01 to 60B.61, a detailed analysis of the basic causes and the contributing factors making the initiation of formal proceedings necessary, and shall make recommendations for remedial legislation if any. For this purpose the commissioner may appoint and determine the compensation of a special assistant who shall be in the unclassified service, qualified to conduct the study and prepare the analysis. (b) The commissioner shall include in the biennial report, not later than the biennial report following discharge of the receiver, a detailed study of the delinquency proceeding for each insurer subjected to a formal proceeding, with an analysis of the problems faced and their solutions. The commissioner shall also suggest alternative solutions, as well as other material of interest, for the purpose of assisting and guiding liquidators or rehabilitators in the future. Subd. 3. Reports on insurers subject to proceedings. The commissioner as receiver shall make and file annual reports and any other required reports for the companies proceeded against under sections 60B.15, 60B.20, 60B.52, 60B.53, and 60B.55 in the manner and form and within the time required by law of insurers authorized to do business in this state, and under the same penalties for failure to do so. History:  1969 c 708 s 9; 1982 c 560 s 40; 1986 c 444; 1994 c 465 art 2 s 6,7
60B.10 CONTINUATION OF DELINQUENCY PROCEEDINGS. Every proceeding commenced before May 25, 1969 is deemed to have commenced under sections 60B.01 to 60B.61 for the purpose of conducting the proceeding thereafter, except that in the discretion of the commissioner the proceeding may be continued, in whole or in part, as it would have been continued had sections 60B.01 to 60B.61 not been enacted. History:   1969 c 708 s 10 
60B.11 COMMISSIONER'S SUMMARY ORDERS. Subdivision 1. Summary order after hearing. Whenever the commissioner has reasonable cause to believe, and determines, after a hearing held as prescribed in subdivision 3, that any insurer has committed or engaged in, or is committing or engaging in or is about to commit or engage in any act, practice, or transaction that would subject it to formal delinquency proceedings under sections 60B.01 to 60B.61, the commissioner may make and serve upon the insurer and any other persons involved such orders other than seizure orders under sections 60B.12 and 60B.13 as are reasonably necessary to correct, eliminate, or remedy such conduct, condition, or ground. Subd. 2. Summary order before hearing. If the conditions of subdivision 1 are satisfied, and if it appears to the commissioner that irreparable harm to the property or business of the insurer or to the interests of its policyholders, creditors, or the public may occur unless the commissioner issues with immediate effect the orders described in subdivision 1, the commissioner may make and serve such orders without notice and before hearing, simultaneously serving upon the insurer notice of the hearing upon such order. Subd. 3. Service, notice, hearing. The notice of hearing under subdivision 1 or 2 and the summary order issued under subdivision 1 or 2 shall be served personally or by sending a copy of such notice of order by prepaid certified mail. The notice of hearing under subdivision 1 shall state the time and place of hearing, and the conduct, condition, or ground upon which the commissioner would base an order; the notice of hearing under subdivision 2 shall state the time and place of hearing. Unless mutually agreed between the commissioner and the insurer, the hearing shall occur not less than ten days nor more than 30 days after notice is served and shall be either in Ramsey County or in some other place convenient to the parties to be designated by the commissioner. Subd. 4. Judicial relief. If the commissioner issues a summary order before hearing under subdivision 2, the insurer may at any time waive the commissioner's hearing and the summary decision shall be treated as a final decision in a contested case under chapter 14, and the insurer may apply for immediate judicial relief by means of any remedy afforded by law without first exhausting administrative remedies. Subsequent to a hearing the insurer or any person whose interests are substantially affected shall be entitled to judicial review in accordance with chapter 14 of any order issued by the commissioner. Subd. 5. Sanction. If any person has violated any order issued under this section which as to that person was then still in effect, that person shall be liable to forfeit a sum not to exceed $10,000. The penalty shall be imposed and collected in an action brought by the attorney general and shall be paid into the state treasury to the credit of the general fund. Subd. 6. Enforcement by injunction. The commissioner may apply for and any court of general jurisdiction may grant, under the relevant sections of Minnesota Rules of Civil Procedure, such restraining orders, temporary and permanent injunctions, and other orders as are deemed necessary to enforce a summary order. History:  1969 c 399 s 1; 1969 c 708 s 11; 1978 c 674 s 60; 1982 c 424 s 130; 1986 c 444
60B.12 COURT'S SEIZURE ORDER. Subdivision 1. Issuance. Upon the filing by the commissioner in any district court in this state of a verified petition establishing to the satisfaction of the court that sufficient grounds exist for a formal delinquency proceeding against an insurer under sections 60B.01 to 60B.61 and that the interests of policyholders, creditors, or the public will be endangered by delay, and setting out the order deemed necessary by the commissioner, the court shall issue forthwith, ex parte and without a hearing, an order which may (a) authorize the commissioner to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer and of the premises occupied by it for the transaction of its business, and (b) until further order of the court, enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from transaction of its business except with the written consent of the commissioner, and (c) provide such other terms as the court deems appropriate for the protection of the insurer, its policyholders, its creditors, and the public during the duration of the order. The order shall also direct the service of a copy of the order forthwith upon the insurer and all persons in possession of any property seized under the order. Subd. 2. Duration. The court shall specify in the order what its duration shall be and order the insurer to appear at a specified time within the duration of the order and show cause why the order should not be continued in effect. The duration of the order may be such time as the court deems necessary for the commissioner to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may hold such hearings as it deems desirable after such notice as it deems appropriate, and may set aside, extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under sections 60B.01 to 60B.61 after having had a reasonable opportunity to do so. The issuance of an order of the court pursuant to a formal proceeding under sections 60B.01 to 60B.61 vacates the seizure order. Subd. 3. Anticipatory breach. Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer. History:   1969 c 708 s 12 
60B.13 COMMISSIONER'S SEIZURE ORDER. Subdivision 1. Issuance. If it appears to the commissioner that an emergency exists whereby the interests of the creditors, policyholders, or the public will be endangered by the delay incident to applying for a court seizure order, then on any ground that would justify a court seizure order under section 60B.12, without notice and without applying to the court, the commissioner may issue a seizure order which must contain a verified statement of the grounds of action. As directed by the seizure order, the commissioner or any representatives of the commissioner shall forthwith take possession and control of all or any part of the property, books, accounts, documents, and other records of the insurer, and of the premises occupied by the insurer for the transaction of its business. The commissioner shall retain possession and control until the order is vacated by the commissioner, is set aside by order of court, is replaced by an order of the court pursuant to a proceeding commenced under subdivision 2, a formal proceeding under sections 60B.01 to 60B.61, or until the expiration of ten days without a filing by the commissioner of a petition for a court order as required by subdivision 2. Subd. 2. Judicial review. Within ten days after the issuance of a seizure order under subdivision 1, the commissioner shall file with a district court a petition under section 60B.12, subdivision 1, for a court order of seizure, with written or oral notice of such petition to the insurer to the extent feasible; otherwise, the commissioner shall state to the court in writing the efforts made to give notice or the reasons why notice is not feasible. Thereafter, the matter shall proceed as provided in section 60B.12, except that the commissioner's seizure order shall remain in effect as provided in subdivision 1. Subd. 3. Duty to assist commissioner. Every law enforcement officer shall assist the commissioner in making and enforcing any such seizure, and every sheriff and police department shall furnish such deputies, patrol officers, or officers as are necessary to assist the commissioner. Subd. 4. Anticipatory breach. Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer. History:  1969 c 708 s 13; 1986 c 444
60B.14 CONDUCT OF HEARINGS IN SUMMARY PROCEEDINGS. Subdivision 1. Confidentiality of commissioner's hearings. The commissioner shall hold all hearings in summary proceedings privately unless the insurer requests a public hearing, in which case the hearing shall be public. Subd. 2. Confidentiality of court hearings. The court may hold all hearings in summary proceedings and judicial reviews thereof privately in chambers, and shall do so on request of the insurer proceeded against. Subd. 3. Records. In all summary proceedings and judicial reviews thereof, all records of the company, other documents, and all Department of Commerce files and court records and papers, so far as they pertain to or are a part of the record of the summary proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless the court, after hearing arguments from the parties in chambers, shall order otherwise, or unless the insurer requests that the matter be made public. Until such court order, all papers filed with the court administrator shall be held in a confidential file. Subd. 4. Parties. If at any time it appears to the court that any person whose interest is or will be substantially affected by an order did not appear at the hearing and has not been served, the court may order that notice be given and the proceedings be adjourned to give that person opportunity to appear on such terms as may be just. Subd. 5. Sanctions. Any person having possession or custody of and refusing to deliver any of the property, books, accounts, documents, or other records of an insurer against which a seizure order or a summary order has been issued by the commissioner or by the court, may be fined not more than $20,000 or imprisoned in the county jail for not more than one year or both. History:  1969 c 708 s 14; 1983 c 289 s 114 subd 1; 1984 c 628 art 3 s 11; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1986 c 3 art 1 s 82
60B.15 GROUNDS FOR REHABILITATION. The commissioner may apply by verified petition to the District Court for Ramsey County or for the county in which the principal office of the insurer is located for an order directing the commissioner to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds: (1) any ground on which the commissioner may apply for an order of liquidation under section 60B.20, whenever the commissioner believes that the insurer may be successfully rehabilitated without substantial increase in the risk of loss to creditors of the insurer, its policyholders or to the public; (2) that the commissioner has reasonable cause to believe that there has been theft from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer or other illegal conduct in, by or with respect to the insurer, which endanger assets in an amount threatening insolvency of the insurer; (3) that substantial and unexplained discrepancies exist between the insurer's records and the most recent annual report or other official company reports; (4) that the insurer, after written demand by the commissioner, has failed to remove any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, if the person has been found by the commissioner after notice and hearing to be dishonest or untrustworthy in a way affecting the insurer's business such as is the basis for action under section 60A.052; (5) that control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in one or more persons found by the commissioner after notice and hearing to be dishonest or untrustworthy such as is the basis for action under section 60A.052; (6) that the insurer, after written demand by the commissioner, has failed within a reasonable period of time to terminate the employment and status and all influences on management of any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee or other person if the person has refused to submit to lawful examination under oath by the commissioner concerning the affairs of the insurer, whether in this state or elsewhere; (7) that after lawful written demand by the commissioner the insurer has failed to submit promptly any of its own property, books, accounts, documents, or other records, or those of any subsidiary or related company within the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer, to reasonable inspection or examination by the commissioner or an authorized representative. If the insurer is unable to submit the property, books, accounts, documents, or other records of a person having executive authority in the insurer, it shall be excused from doing so if it promptly and effectively terminates the relationship of the person to the insurer; (8) that without first obtaining the written consent of the commissioner, or if required by law, the written consent of the attorney general, the insurer has transferred, or attempted to transfer, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business of any other person; (9) that the insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator or sequestrator or similar fiduciary of the insurer or its property otherwise than as authorized under sections 60B.01 to 60B.61, and that such appointment has been made or is imminent, and that such appointment might divest the courts of this state of jurisdiction or prejudice orderly delinquency proceedings under sections 60B.01 to 60B.61; (10) that within the previous year the insurer has willfully violated its charter or articles of incorporation or its bylaws or any applicable insurance law or regulation of any state, or of the federal government, or any valid order of the commissioner under section 60B.11 in any manner or as to any matter which threatens substantial injury to the insurer, its creditors, its policyholders or the public, or having become aware within the previous year of an unintentional or willful violation has failed to take all reasonable steps to remedy the situation resulting from the violation and to prevent the same violations in the future; (11) that the directors of the insurer are deadlocked in the management of the insurer's affairs and that the members or shareholders are unable to break the deadlock and that irreparable injury to the insurer, its creditors, its policyholders, or the public is threatened by reason thereof; (12) that the insurer has failed to pay for 60 days after due date any obligation to this state or any political subdivision thereof or any judgment entered in this state, except that such nonpayment shall not be a ground until 60 days after any good faith effort by the insurer to contest the obligation or judgment has been terminated, whether it is before the commissioner or in the courts; (13) that the insurer has failed to file its annual report or other report within the time allowed by law, and after written demand by the commissioner has failed to give an adequate explanation immediately; (14) that two-thirds of the board of directors, or the holders of a majority of the shares entitled to vote, or a majority of members or policyholders of an insurer subject to control by its members or policyholders, consent to rehabilitation under sections 60B.01 to 60B.61; (15) that the insurer is engaging in a systematic practice of reaching settlements with and obtaining releases from policyholders or third-party claimants and then unreasonably delaying payment of or failing to pay the agreed-upon settlements; (16) that the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors, or the public; (17) that within the previous 12 months the insurer has systematically attempted to compromise with its creditors on the ground that it is financially unable to pay its claims in full; (18) in the context of a health maintenance organization, "insurer" when used in clauses (1) to (17) means "health maintenance organization." In addition to the grounds in clauses (1) to (17), any one of the following constitutes grounds for rehabilitation of a health maintenance organization: (a) the health maintenance organization is unable or is expected to be unable to meet its debts as they become due; (b) grounds exist under section 62D.042, subdivision 7; (c) the health maintenance organization's liabilities exceed the current value of its assets, exclusive of intangibles and, where the guaranteeing organization's financial condition no longer meets the requirements of sections 62D.041 and 62D.042, exclusive of any deposits, letters of credit, or guarantees provided by any guaranteeing organization under chapter 62D; (d) in addition to grounds under clause (16), within the last year the health maintenance organization has failed, and the commissioner of health expects such failure to continue in the future, to make comprehensive medical care adequately available and accessible to its enrollees and the health maintenance organization has not successfully implemented a plan of corrective action pursuant to section 62D.121, subdivision 7; and (e) in addition to grounds under clause (16), within the last year the directors or officers of the health maintenance organization willfully violated the requirements of section 317A.251, or having become aware within the previous year of an unintentional or willful violation of section 317A.251, have failed to take all reasonable steps to remedy the situation resulting from the violation and to prevent the same violation in the future; (19) an affiliate of the insurer has been placed in conservatorship, rehabilitation, liquidation, or other court supervision such that the insurer's financial condition may be jeopardized. History:  1969 c 708 s 15; 1971 c 568 s 25; 1986 c 444; 1990 c 538 s 2; 1992 c 564 art 1 s 25; 1993 c 13 art 2 s 1
60B.16 REHABILITATION ORDERS. Subdivision 1. Appointment of rehabilitator. An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the commissioner and successors in office rehabilitator and shall direct the rehabilitator forthwith to take possession of the assets of the insurer and to administer them under the orders of the court. The recording of the order with any county recorder in the state imparts the same notice as a deed, bill of sale, or other evidence of title duly recorded with that county recorder. Subd. 2. Anticipatory breach. Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer. History:  1969 c 708 s 16; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 6
60B.17 POWERS AND DUTIES OF REHABILITATOR. Subdivision 1. Special deputy commissioner. The commissioner as rehabilitator shall employ a special deputy commissioner to rehabilitate the insurer. The special deputy shall have all of the powers of the rehabilitator granted under this section. Subject to court approval, the commissioner shall make arrangements for compensation as are necessary to obtain a special deputy of proven ability. The special deputy shall serve at the pleasure of the commissioner. Subd. 2. General power. Subject to court approval, the rehabilitator may take such action as that person deems necessary or expedient to reform and revitalize the insurer. The rehabilitator shall have all the powers of the officers and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator and shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer. The power of the rehabilitator of a health maintenance organization includes the power to transfer coverage obligations to a solvent and voluntary health maintenance organization, insurer, or nonprofit health service plan, and to assign provider contracts of the insolvent health maintenance organization to an assuming health maintenance organization, insurer, or nonprofit health service plan permitted to enter into such agreements. The rehabilitator shall not be required to meet the notice requirements of section 62D.121. Transferees of coverage obligations or provider contracts shall have no liability to creditors or obligees of the health maintenance organization except those liabilities expressly assumed. Subd. 3. Advice from experts. The rehabilitator may consult with and obtain formal or informal advice and aid of insurance experts. Subd. 4. Pursuit of insurer's claims against insiders. If the rehabilitator finds that there has been criminal or tortious conduct or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, broker, employee, or other person, the rehabilitator may pursue all appropriate legal remedies on behalf of the insurer. Subd. 5. Reorganization plan. The rehabilitator may prepare a plan for the reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer. Upon application of the rehabilitator for approval of the plan, and after such notice and hearing as the court prescribes, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. If it is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the equities of policyholders of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as are necessary. Subd. 6. Fraudulent transfers. The rehabilitator shall have the power to avoid fraudulent transfers under sections 60B.30 and 60B.31. Subd. 7. Coordination of activities with guaranty associations. The rehabilitator shall coordinate activities with those of each guaranty association having an interest in the rehabilitation and shall submit a report detailing how coordination will be achieved to the court for its approval within 30 days following appointment, or within the time the court, in its discretion, may establish. Subd. 8. Plan of rehabilitation for a health maintenance organization. (a) The rehabilitator of a health maintenance organization, after consultation with the board of directors of the health maintenance organization, has the sole authority to propose a plan of rehabilitation. (b) The court shall approve a plan of rehabilitation of a health maintenance organization if it meets the following criteria: (1) the plan provides for payments to lien claimants equal to the value of each lien claim on the date of approval of the plan and may provide for payment of lien claims beyond the effective date of the plan and beyond the original repayment period for the obligation underlying the claim where the plan provides sufficient protection for the lien claim during the period for such claim under the rehabilitation plan; (2) the plan provides for payment in full of each prior class of claims before payment of the next class; (3) the plan provides for payment in full of all claims for taxes of the United States government, except for claims for interest accruing during the rehabilitation or claims for penalties. The plan may provide for payment of the claims over any period of time up to ten years after the effective date of the plan; and (4) the plan is fair and equitable as to each class of claims for which the plan does not provide full payment. In determining whether the plan is fair and equitable to these claimants, the court shall consider the feasibility of the plan, the health maintenance organization's ability to generate a significant surplus, the health maintenance organization's need to expend money to change or expand its business, and the injury to enrollees through loss of coverage if such a plan is not approved. (c) The plan may provide for transfer of the health maintenance contracts and liquidation of the health maintenance organization. (d) The court's approval of a plan of rehabilitation discharges the health maintenance organization from all claims except to the extent provided in the plan. History:  1969 c 708 s 17; 1977 c 273 s 17; 1986 c 444; 1990 c 538 s 3,4; 1992 c 564 art 1 s 26
60B.171 USE, SALE, OR TRANSFER OF ASSETS DURING REHABILITATION. Subdivision 1. Rehabilitator authority to use, sell, or transfer assets. In addition to the powers of the rehabilitator provided in this chapter, during rehabilitation of a health maintenance organization, the rehabilitator may use, sell, or transfer assets as provided in this section. Subd. 2. Ordinary course of business. (a) The rehabilitator may use, sell, or transfer assets in which a person has a lien, which are not cash or cash equivalents, in the ordinary course of business without approval of the court, except that the rehabilitator must provide sufficient protection for that lien unless the lienholder consents. (b) The rehabilitator may use, sell, or transfer cash or cash equivalents in which any person has a lien in the ordinary course of business only if: (1) each person who has a lien in the assets consents; or (2) after notice and a hearing, the court finds that the rehabilitator has or will provide the person who has a lien with sufficient protection for that lien. Subd. 3. Out of the ordinary course of business. (a) The rehabilitator may use, sell, or transfer assets in which any person has a lien out of the ordinary course of business with court approval where: (1) the person that has a lien consents; or (2) the rehabilitator provides sufficient protection for that lien. Sufficient protection includes, but is not limited to, equivalent substitute collateral or payments in the amount approximately equal to decrease in value or amount of collateral. (b) Any sale or transfer shall be free and clear of all lien interests if: (1) all persons with liens in the assets to be sold or transferred consent to the sale or transfer; (2) the consideration for the sale or transfer exceeds the total amount of all liens in the assets to be transferred; (3) the rehabilitator provides sufficient protection for all lien claims in the assets; or (4) other law permits a sale or transfer free and clear of any lien. History:   1990 c 538 s 5 
60B.18 ACTIONS BY AND AGAINST REHABILITATOR. Subdivision 1. Stays in pending litigation. On request of the rehabilitator, any court in this state before which any action or proceeding by or against an insurer is pending when a rehabilitation order against the insurer is entered shall stay the action or proceeding for such time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The court that entered the rehabilitation order shall order the rehabilitator to take such action respecting the pending litigation as the court deems necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer. Subd. 2. Statute of limitations on claims by insurer. The time between the filing of a petition for rehabilitation against an insurer and denial of the petition or an order of rehabilitation shall not be considered to be a part of the time within which any action may be commenced by the insurer. Any action by the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the order of rehabilitation is entered. Subd. 3. Statute of limitations on claims against insurer. The time between the filing of a petition for rehabilitation against an insurer and the denial of the petition or an order of rehabilitation shall not be considered to be a part of the time within which any action may be commenced against the insurer. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the order of rehabilitation is entered or the petition is denied. History:   1969 c 708 s 18 
60B.181 NOTICE REGARDING REHABILITATION OR LIQUIDATION PROCEEDING. In an insolvency proceeding against a health maintenance organization, at the time the rehabilitator or liquidator gives notice to creditors and enrollees according to section 60B.26, the rehabilitator or liquidator shall also give notice that any interested party may request in writing notice of subsequent actions or hearings in the proceeding. After the initial notice, the rehabilitator or liquidator may give notice only to those with a direct stake in any action or hearing and to those who have requested notice in writing. However, the rehabilitator or liquidator must give all claimants who timely file proofs of claims notice of any plan of rehabilitation or liquidation. History:   1990 c 538 s 6 
60B.19 TERMINATION OF REHABILITATION. Subdivision 1. Transformation to liquidation. Whenever the rehabilitator believes that further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders, or the public, or would be futile, the rehabilitator may petition the court for an order of liquidation. A petition under this subdivision shall have the same effect as a petition under section 60B.20. The court shall permit the directors to defend against the petition and shall order payment from the estate of the insurer of such costs and other expenses of defense as justice requires. Subd. 2. Order to return to company. The rehabilitator may at any time petition the court for an order terminating rehabilitation of an insurer. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under section 60B.15 no longer exist, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make that finding and issue that order at any time upon its own motion. History:  1969 c 708 s 19; 1986 c 444
60B.191 CLAIMS REGARDING REHABILITATION AND LIQUIDATION OF HEALTH MAINTENANCE ORGANIZATIONS. Subdivision 1. Priority of claims. The rehabilitator or liquidator of a health maintenance organization shall, in lieu of the classification otherwise provided in this chapter, classify all approved claims into the following classes: (1) claims for ordinary and necessary expenses of operating and administering the health maintenance organization during rehabilitation or liquidation proceeding. Administrative expenses of a rehabilitation proceeding shall constitute administrative expenses of the liquidation proceeding; (2) claims of the United States government for unpaid taxes; (3) claims by persons employed by the health maintenance organization for services rendered within the four months before the initiation of any insolvency proceeding, up to $1,000. Employee claimants shall not be entitled to any lien claim or other claim under chapter 514; (4) claims by all providers for health care goods and services to the extent covered under a health maintenance contract between enrollees and the health maintenance organization, and claims by enrollees for coverage under a health maintenance contract with the health maintenance organization; (5) claims which are not secured by any perfected lien or security interest in assets of the health maintenance organization and which are not otherwise classified; or (6) claims subordinated under this chapter, chapter 62D, or by agreement with the health maintenance organization or the commissioner of health. Subd. 2. Claims for malpractice. As to a health maintenance organization, a claim shall be classified as an unsecured claim if it is made by an enrollee, a parent or guardian of an enrollee, or a person seeking contribution based on injuries to an enrollee, for damages of any type related to death or bodily illness or injury based on improper provisions or failure to provide health care goods or services by a health maintenance organization and its employees, or a provider and its employees to an enrollee of the health maintenance organization. However, a claimant who has secured a judgment or settlement shall receive any insurance proceeds received by the health maintenance organization based on the claims or the medical care provided to the enrollee, other than reinsurance payable because the aggregate value of services to an enrollee exceeds a certain amount, less any expenses, including reasonable attorneys' fees the health maintenance organization incurred in defending the claim or prosecuting its claim against the insurer. This section does not expand the liability of health maintenance organizations on bodily injury to enrollees. History:   1990 c 538 s 7 
60B.193 LIABILITY OF ENROLLEES. Upon any Minnesota state district court's order of rehabilitation or liquidation of a health maintenance organization under this chapter, all providers of health care goods or services to enrollees of the health maintenance organization, regardless of whether they have a written contract with the health maintenance organization, are prohibited from attempting to collect or collecting payment for authorized referrals from any enrollee of the health maintenance organization for goods or services to the extent the health maintenance organization is obligated to cover the goods and services under a health maintenance contract with the enrollee. A provider's only recourse is to file a claim against the health maintenance organization in the insolvency proceeding and to receive payment in the proceeding. History:   1990 c 538 s 8 
60B.20 GROUNDS FOR LIQUIDATION. The commissioner may apply by verified petition to the District Court for Ramsey County or for the county in which the principal office of the insurer is located for an order to liquidate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds: (1) any ground on which the commissioner may apply for an order of rehabilitation under section 60B.15, whenever the commissioner believes that attempts to rehabilitate the insurer would substantially increase the risk of loss to its creditors, its policyholders, or the public, or would be futile, or that rehabilitation would serve no useful purpose; (2) that the insurer is or is about to become insolvent; (3) that the insurer has not transacted the business for which it was organized or incorporated during the previous 12 months or has transacted only a token such business during that period, although authorized to do so throughout that period, or that more than 12 months after incorporation it has failed to become authorized to do the business for which it was organized or incorporated; (4) that the insurer has commenced, or within the previous year has attempted to commence, voluntary dissolution or liquidation otherwise than as provided in section 60B.04, subdivision 3 in the case of a solvent insurer; (5) that the insurer has concealed records or assets from the commissioner or improperly removed them from the jurisdiction, or the commissioner believes that the insurer is about to do so; (6) that the insurer does not satisfy the requirements that would be applicable if it were seeking initial authorization in this state to do the business for which it was organized or incorporated, except for: (i) requirements that are intended to apply only at the time the initial authorization to do business is obtained, and not thereafter; and (ii) requirements that are expressly made inapplicable by the laws establishing the requirements; (7) that the holders of two-thirds of the shares entitled to vote, or two-thirds of the members or policyholders entitled to vote in an insurer controlled by its members or policyholders, have consented to a petition; (8) in the context of a health maintenance organization, "insurer" when used in clauses (1) to (7) means "health maintenance organization." In addition to the grounds in clauses (1) to (7), any one of the following constitutes grounds for liquidation of a health maintenance organization: (i) the health maintenance organization is unable or is expected to be unable to meet its debts as they become due; (ii) grounds exist under section 62D.042, subdivision 7; (iii) the health maintenance organization's liabilities exceed the current value of its assets, exclusive of intangibles and, where the guaranteeing organization's financial condition no longer meets the requirements of sections 62D.041 and 62D.042, exclusive of any deposits, letters of credit, or guarantees provided by any guaranteeing organization under chapter 62D; (iv) within the last year the health maintenance organization has failed, and the commissioner of health expects failure to continue in the future, to make comprehensive medical care adequately available and accessible to its enrollees and the health maintenance organization has not successfully implemented a plan of corrective action pursuant to section 62D.121, subdivision 7; and (v) within the last year the directors or officers of the health maintenance organization willfully violated the requirements of section 317A.251, or having become aware within the previous year of an unintentional or willful violation of section 317A.251, have failed to take all reasonable steps to remedy the situation resulting from the violation and to prevent the same violation in the future. History:  1969 c 708 s 20; 1986 c 444; 1990 c 538 s 9
60B.21 LIQUIDATION ORDERS. Subdivision 1. Order to liquidate. An order to liquidate the business of a domestic insurer shall appoint the commissioner and successors in office liquidator and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the orders of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the date of the filing of the petition for liquidation. The commissioner may recover and reduce the same to possession except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are prescribed in section 60B.55, subdivision 3, for ancillary receivers appointed in this state as to assets located in this state. The recording of the order with any county recorder in this state imparts the same notice as a deed, bill of sale, or other evidence of title duly recorded with that county recorder. Subd. 2. Fixing of rights. Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members, and all other persons interested in its estate are fixed as of the date of filing of the petition for liquidation, except as provided in sections 60B.22, 60B.25, clause (22), and 60B.39. Subd. 3. Alien insurer. An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States shall be the only assets and business included under the order. Subd. 4. Declaration of insolvency. At the time of petitioning for an order of liquidation, or at any time thereafter, the commissioner may petition the court to declare the insurer insolvent, and after such notice and hearing as it deems proper, the court may make the declaration. History:  1969 c 708 s 21; 1976 c 181 s 2; 1986 c 444; 1999 c 177 s 18; 2005 c 4 s 7
60B.22 CONTINUANCE OF COVERAGE. Subdivision 1. Length of continued coverage. All insurance policies or similar contracts of coverage issued by the insurer shall continue in force: (a) for a period of 30 days from the date of entry of the liquidation order; (b) until the normal expiration of the policy or contract coverage; (c) until the insured has replaced the coverage with equivalent coverage in another insurer; or (d) until the liquidator has effected a transfer of the policy or contract obligation pursuant to section 60B.25, clause (8), whichever time is less. Subd. 2. Legal status of continued coverage. If the coverage continued under this section is replaced by coverage that is not equivalent, the coverage continued under this section shall be excess coverage over the replacement coverage to the extent of the deficiency. Claims arising during the continuation of coverage shall be treated as if they arose immediately before the petition for liquidation. Coverage under this subdivision shall not satisfy any legal obligation of the insured to carry insurance protection or other coverage, whether the obligation is created by law or by contract. History:  1969 c 708 s 22; 1993 c 299 s 7
60B.23 DISSOLUTION OF INSURER. The commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this state at the time the commissioner applies for a liquidation order. If the court issues a liquidation order, it also shall order dissolution if the commissioner has petitioned for it. The court shall order dissolution of the corporation upon petition by the commissioner at any time after a liquidation order has been granted. If the dissolution has not previously occurred, it shall be effected by operation of law upon the discharge of the liquidator. The commissioner shall file a dissolution with the secretary of state pursuant to section 302A.711, subdivision 2, paragraphs (a), clauses (1), (2), and (5), and (b); and subdivisions 3 and 4. History:  1969 c 708 s 23; 1986 c 444; 2005 c 69 art 2 s 9
60B.25 POWERS OF LIQUIDATOR. The liquidator shall report to the court monthly, or at other intervals specified by the court, on the progress of the liquidation in whatever detail the court orders. The liquidator shall coordinate activities with those of each guaranty association having an interest in the liquidation and shall submit a report detailing how coordination will be achieved to the court for its approval within 30 days following appointment, or within the time which the court, in its discretion, may establish. Subject to the court's control, the liquidator may: (1) Appoint a special deputy to act under sections 60B.01 to 60B.61 and determine the deputy's compensation. The special deputy shall have all powers of the liquidator granted by this section. The special deputy shall serve at the pleasure of the liquidator. (2) Appoint or engage employees and agents, actuaries, accountants, appraisers, consultants, and other personnel deemed necessary to assist in the liquidation without regard to chapter 14. (3) Fix the compensation of persons under clause (2), subject to the control of the court. (4) Defray all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. If the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the liquidator may advance the costs so incurred out of the appropriation made to the Department of Commerce. Any amounts so paid shall be deemed expense of administration and shall be repaid for the credit of the Department of Commerce out of the first available money of the insurer. (5) Hold hearings, subpoena witnesses and compel their attendance, administer oaths, examine any person under oath and compel any person to subscribe to testimony after it has been correctly reduced to writing, and in connection therewith require the production of any books, papers, records, or other documents which the liquidator deems relevant to the inquiry. (6) Collect all debts and money due and claims belonging to the insurer, wherever located, and for this purpose institute timely action in other jurisdictions, in order to forestall garnishment and attachment proceedings against such debts; do such other acts as are necessary or expedient to collect, conserve, or protect its assets or property, including sell, compound, compromise, or assign for purposes of collection, upon such terms and conditions as the liquidator deems best, any bad or doubtful debts; and pursue any creditor's remedies available to enforce claims. (7) Conduct public and private sales of the property of the insurer in a manner prescribed by the court. (8) Use assets of the estate to transfer coverage obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under section 60B.44. (9) Acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon, or otherwise dispose of or deal with any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable, except that no transaction involving property the market value of which exceeds $10,000 shall be concluded without express permission of the court. The liquidator may also execute, acknowledge, and deliver any deeds, assignments, releases, and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation. In cases where real property sold by the liquidator is located other than in the county where the liquidation is pending, the liquidator shall cause to be recorded with the county recorder for the county in which the property is located a certified copy of the order of appointment. (10) Borrow money on the security of the insurer's assets or without security and execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation. (11) Enter into such contracts as are necessary to carry out the order to liquidate, and affirm or disavow any contracts to which the insurer is a party. (12) Continue to prosecute and institute in the name of the insurer or in the liquidator's own name any suits and other legal proceedings, in this state or elsewhere, and abandon the prosecution of claims the liquidator deems unprofitable to pursue further. If the insurer is dissolved under section 60B.23, the liquidator may apply to any court in this state or elsewhere for leave to be substituted for the insurer as plaintiff. (13) Prosecute any action which may exist in behalf of the creditors, members, policyholders, or shareholders of the insurer against any officer of the insurer, or any other person. (14) Remove any records and property of the insurer to the offices of the commissioner or to such other place as is convenient for the purposes of efficient and orderly execution of the liquidation. (15) Deposit in one or more banks in this state such sums as are required for meeting current administration expenses and dividend distributions. (16) Deposit with the State Board of Investment for investment pursuant to section 11A.24, all sums not currently needed, unless the court orders otherwise. (17) Record or file any necessary documents for record in the office of any county recorder or record office in this state or elsewhere where property of the insurer is located. (18) Assert all defenses available to the insurer as against third persons, including statutes of limitations, statutes of frauds, and the defense of usury. A waiver of any defense by the insurer after a petition for liquidation has been filed shall not bind the liquidator. (19) Exercise and enforce all the rights, remedies, and powers of any creditor, shareholder, policyholder, or member, including any power to avoid any transfer or lien that may be given by law and that is not included within sections 60B.30 and 60B.32. (20) Intervene in any proceeding wherever instituted that might lead to the appointment of a receiver or trustee, and act as the receiver or trustee whenever the appointment is offered. (21) Enter into agreements with any receiver or commissioner of any other state relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business in both states. (22) Collect from an insured any unpaid earned premium or retrospectively rated premium due the insurer based on the termination of coverage under section 60B.22. Premium on surety business is considered earned at inception if no policy term can be determined. All other premium will be considered earned and will be prorated over the determined policy term, regardless of any provision in the bond, guaranty, contract, or other agreement. (23) Exercise all powers now held or hereafter conferred upon receivers by the laws of this state not inconsistent with sections 60B.01 to 60B.61. (24) The enumeration in this section of the powers and authority of the liquidator is not a limitation, nor does it exclude the right to do such other acts not herein specifically enumerated or otherwise provided for as are necessary or expedient for the accomplishment of or in aid of the purpose of liquidation. (25) The power of the liquidator of a health maintenance organization includes the power to transfer coverage obligations to a solvent and voluntary health maintenance organization, insurer, or nonprofit health service plan, and to assign provider contracts of the insolvent health maintenance organization to an assuming health maintenance organization, insurer, or nonprofit health service plan permitted to enter into such agreements. The liquidator is not required to meet the notice requirements of section 62D.121. Transferees of coverage obligations or provider contracts shall have no liability to creditors or obligees of the health maintenance organization except those liabilities expressly assumed. History:  1969 c 708 s 25; 1976 c 181 s 2; 1977 c 273 s 18; 1980 c 607 art 14 s 46; 1982 c 424 s 130; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1990 c 538 s 10; 1991 c 199 art 1 s 10; 1991 c 325 art 5 s 1; 1999 c 177 s 19; 2005 c 4 s 8
60B.26 NOTICE TO CREDITORS AND OTHERS. Subdivision 1. Notice required. (a) The liquidator shall give notice of the liquidation order as soon as possible by first class mail and either by telegram or telephone to the commissioner of commerce of each jurisdiction in which the insurer is licensed to do business, by first class mail and by telephone to the Department of Labor and Industry of this state if the insurer is or has been an insurer of workers' compensation, by first class mail within this state and by airmail outside this state to all agents of the insurer having a duty under this chapter, by first class mail, if the insurer is a surety company to every district court judge exercising probate jurisdiction and the court administrator of all courts of record in this state and upon receipt of such notice it shall be the duty of those judges and court administrators to notify and require every executor, administrator, guardian, trustee, or other fiduciary having filed a bond on which such company is surety, to forthwith file a new bond with new sureties, and by first class mail within this state and by airmail outside this state at the last known address to all persons known or reasonably expected to have claims against the insurer, including all policyholders. The liquidator also shall publish a notice three consecutive times in a newspaper of general circulation in the county in which the liquidation is pending or in Ramsey County, the last publication to be not less than three months before the earliest deadline specified in the notice under subdivision 2. (b) Notice to agents shall inform them of their duties under this chapter and inform them what information they must communicate to policyholders. Notice to policyholders shall include notice of impairment and termination of coverage under section 60B.22. When it is applicable, notice to policyholders shall include (1) notice of withdrawal of the insurer from the defense of any case in which the policyholder is interested, and (2) notice of the right to file a claim under section 60B.40, subdivision 2. (c) Within 15 days of the date of entry of the order, the liquidator shall report to the court what notice has been given. The court may order such additional notice as it deems appropriate. Subd. 2. Notice respecting claim filing. Notice to potential claimants under subdivision 1 shall require claimants to file with the court their claims together with proper proofs thereof under section 60B.38, on or before a date the liquidator specifies in the notice, which shall be no less than six months nor more than one year after entry of the order, except that the liquidator need not require persons claiming unearned premiums or subscription rates and persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. The liquidator may specify different dates for the filing of different kinds of claims. Notice to potential claimants shall include notice of the existence of any guaranty association charged by statute with the guaranty of the obligations of the insurer. Where procedures have been established by the association for the filing of claims this notice shall include an explanation of those procedures. Subd. 3. Notice conclusive. If notice is given in accordance with this section, the distribution of the assets of the insurer under sections 60B.01 to 60B.61 shall be conclusive with respect to all claimants, whether or not they received notice. History:  Ex1967 c 1 s 6; 1969 c 708 s 26; 1975 c 359 s 23; 1977 c 273 s 21; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 1995 c 189 s 8; 1996 c 277 s 1; 1999 c 177 s 20
60B.28 ACTIONS BY AND AGAINST LIQUIDATOR. Subdivision 1. Termination of actions against insurer by order appointing liquidator. Upon issuance of any order appointing the commissioner liquidator of a domestic insurer or of an alien insurer domiciled in this state, all actions and all proceedings against the insurer whether in this state or elsewhere shall be abated and the liquidator shall not intervene in them, except as provided in this section. Whenever in the liquidator's judgment an action in this state has proceeded to a point where fairness or convenience would be served by its continuation to judgment, the liquidator may apply to the court for leave to defend or to be substituted for the insurer, and if the court gives leave, the action shall not be abated. Whenever in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, with approval of the court the liquidator may intervene in the action. The liquidator may defend any action in which the liquidator intervenes under this section at the expense of the estate of the insurer. Subd. 2. Statutes of limitations on claims by insurer. The liquidator may, within two years subsequent to the entry of an order for liquidation or within such further time as applicable law permits, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim or for filing any claim, proof of claim, proof of loss, demand, notice or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case the period had not expired at the date of the filing of the petition, the liquidator may, for the benefit of the estate, take any such action or do any such act, required of or permitted to the insurer, within a period of 60 days subsequent to the entry of an order for liquidation, or within such further period as is permitted by the agreement, or in the proceeding or by applicable law, or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party. Subd. 3. Statutes of limitations on claims against insurer. The time between the filing of a petition for liquidation against an insurer and the denial of the petition shall not be considered to be a part of the time within which any action may be commenced against the insurer. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the petition is denied. History:  1969 c 708 s 28; 1986 c 444
60B.29 COLLECTION AND LIST OF ASSETS. Subdivision 1. List of assets required. As soon as practicable after the liquidation order, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented as the court requires. One copy shall be filed in the office of the court administrator of the court having jurisdiction over the liquidation proceedings and one copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed. Subd. 2. Liquidation of assets. The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation as rapidly and economically as the liquidator can. History:  1969 c 708 s 29; 1986 c 444; 1Sp1986 c 3 art 1 s 82
60B.30 FRAUDULENT TRANSFERS PRIOR TO PETITION. Subdivision 1. Definition and effect. Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under sections 60B.01 to 60B.61 is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay, or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under sections 60B.01 to 60B.61, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor or obligee for a present fair equivalent value, and except that any purchaser, lienor or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation, may retain the property, lien, or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee. Subd. 2. Perfection of transfers. (a) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under section 60B.32, subdivision 3. (b) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee. (c) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created. (d) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition. (e) This subdivision applies whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers. Subd. 3. Fraudulent reinsurance transactions. Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subdivision 1 if: (a) the transaction consists of the termination, adjustment, or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transaction, unless the reinsurer gives a present fair equivalent value for the release; and (b) any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced. Subd. 4. Fraudulent transfers to affiliates. Any distribution, other than stock dividends paid by the insurer on its capital stock, made by the insurer to an affiliate owning more than 50 percent of the voting stock of the insurer during the five years preceding the filing of a successful petition for rehabilitation or liquidation under sections 60B.01 to 60B.61 shall be deemed fraudulent and may be avoided by the receiver; except that: (a) no distribution shall be recoverable if the insurer shows that when paid, it was lawful, reasonable, and that the insurer did not know, and could not reasonably have known, that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations; (b) any person who was an affiliate owning more than 50 percent of the voting stock of the insurer at the time the distributions were paid shall be liable only up to the amount of distributions received. Any person who was an affiliate that controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions that person would have received if they had been paid immediately. If two persons are liable with respect to the same distribution, they shall be jointly and severally liable; (c) the maximum amount recoverable under this subdivision shall be the amount needed in addition to all other available assets of the insurer to pay its contractual obligations; (d) if any person liable under clause (b) is insolvent, all its affiliates that controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate. History:  1969 c 708 s 30; 1977 c 273 s 19; 1986 c 444
60B.31 FRAUDULENT TRANSFERS AFTER PETITION. Subdivision 1. Effect of petition; real property. After a petition for rehabilitation or liquidation, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The recording of a copy of the petition for or order of rehabilitation or liquidation with the county recorder in the county where any real property in question is located is constructive notice of the commencement of a proceeding in rehabilitation or liquidation. The exercise by a court of the United States or any state of jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale. Subd. 2. Effect of petition; personal property. After a petition for rehabilitation or liquidation and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted: (a) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. (b) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property or any part thereof to the insurer or upon the insurer's order, with the same effect as if the petition were not pending. (c) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith unless that person has reasonable cause to believe that the petition is not well founded. (d) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or in behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator. Subd. 3. Negotiability. Nothing in sections 60B.01 to 60B.61 shall impair the negotiability of currency or negotiable instruments. History:  1969 c 708 s 31; 1976 c 181 s 2; 1986 c 444
60B.32 VOIDABLE PREFERENCES AND LIENS. Subdivision 1. Preferences. (a) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under sections 60B.01 to 60B.61 the effect of which transfer may be to enable the creditor to obtain a greater percentage of debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, transfers otherwise qualifying shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation or within two years before the filing of the successful petition for liquidation, whichever time is shorter. (b) Any preference may be avoided by the liquidator, if (1) the insurer was insolvent at the time of the transfer, or (2) the transfer was made within four months before the filing of the petition, or (3) the creditor receiving it or to be benefited thereby or an agent of the creditor acting with reference thereto had reasonable cause to believe at the time when the transfer was made that the insurer was insolvent or was about to become insolvent, or (4) the creditor receiving it was an officer, employee, attorney, or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not the creditor held such position, or any shareholder holding directly or indirectly more than five percent of any class of any equity security issued by the insurer, or any other person with whom the insurer did not deal at arm's length. Where the preference is voidable, the liquidator may recover the property or, if it has been converted, its value from any person who has received or converted the property, except a bona fide purchaser from or lienor of the debtor's transferee for a present fair equivalent value. Where the bona fide purchaser or lienor has given less than fair equivalent value, that person shall have a lien upon the property to the extent of the consideration actually given. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator. Subd. 2. Perfection of transfers. (a) A transfer of property other than real property is deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee. (b) A transfer of real property is deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee. (c) A transfer which creates an equitable lien is not deemed to be perfected if there are available means by which a legal lien could be created. (d) A transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition. (e) This subdivision applies whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers. Subd. 3. Liens by legal or equitable proceedings. (a) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time. (b) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subdivision 2, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien could not, however, become superior and such a purchase could not create superior rights for the purpose of subdivision 2 through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action, or ruling. Subd. 4. Twenty-one days rule. A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subdivision 2 to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within 21 days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan shall have the same effect as a transfer for or on account of a new and contemporaneous consideration. Subd. 5. Indemnifying transfers also voidable. If any lien deemed voidable under subdivision 1, paragraph (b), has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a petition under sections 60B.01 to 60B.61 which results in a liquidation order, the indemnifying transfer or lien shall also be deemed voidable. Subd. 6. Avoidance of lien. The property affected by any lien deemed voidable under subdivisions 1, paragraph (b), and 5 is discharged from the lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the liquidator, except that the court may on due notice order the lien to be preserved for the benefit of the estate and the court may direct that a conveyance be executed which is adequate to evidence the title of the liquidator. Subd. 7. Hearings to determine rights. The court shall have summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator within such reasonable times as the court fixes. Subd. 8. Surety's liability discharged. The liability of a surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided or, where the property is retained under subdivision 7 to the extent of the amount paid to the liquidator. Subd. 9. Setoff of new advances. If a creditor has been preferred and afterward in good faith gives the insurer further credit without security of any kind for property which becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from the creditor. Subd. 10. Reexamination of attorney's fees. If an insurer, directly or indirectly, within four months before the filing of a successful petition for liquidation under sections 60B.01 to 60B.61 or at any time in contemplation of a proceeding to liquidate it, pays money or transfers property to an attorney at law for services rendered or to be rendered, the transaction may be examined by the court on its own motion or shall be examined by the court on petition of the liquidator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefit of the estate. Subd. 11. Personal liability. (a) Every officer, manager, employee, shareholder, member, subscriber, attorney, or any other person acting on behalf of the insurer who knowingly participates in giving any preference when that person has reasonable cause to believe the insurer to be or about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is reasonable cause to so believe if the transfer was made within four months before the date of filing of the successful petition for liquidation. (b) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under subdivision 1, paragraph (b), shall be personally liable therefor and shall be bound to account to the liquidator. (c) Nothing in this subdivision shall prejudice any other claim by the liquidator against any person. History:  1969 c 708 s 32; 1986 c 444; 2020 c 83 art 1 s 6
60B.33 CLAIMS OF HOLDERS OF VOID OR VOIDABLE RIGHTS. Subdivision 1. Disallowance for failure to surrender property. No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance, voidable under sections 60B.01 to 60B.61, shall be allowed unless the creditor surrenders the preference, lien, conveyance, transfer, assignment, or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within 30 days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding. Subd. 2. Time for filing. A claim allowable under subdivision 1 by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment, or encumbrance may be filed as an excused late filing under section 60B.37 if filed within 30 days from the date of the avoidance or within the further time allowed by the court under subdivision 1. History:  1969 c 708 s 33; 1986 c 444
60B.335 FEDERAL HOME LOAN BANK RIGHTS; COLLATERAL PLEDGED BY INSURER-MEMBERS. Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given. (b) "Federal home loan bank" means a federal home loan bank established under the federal Home Loan Bank Act, United States Code, title 12, section 1421 et seq. (c) "Insurer-member" means an insurer that is a member of a federal home loan bank. Subd. 2. Certain rights provided. (a) Notwithstanding any law to the contrary, after the seventh day following the filing of a delinquency proceeding, a federal home loan bank must not be stayed or prohibited from exercising the federal home loan bank's rights regarding collateral pledged by an insurer-member. (b) If a federal home loan bank exercises rights regarding collateral pledged by an insurer-member subject to a delinquency proceeding, the federal home loan bank must repurchase any outstanding capital stock that is in excess of the amount of federal home loan bank stock that the insurer-member is required to hold as a minimum investment, to the extent the federal home loan bank determines in good faith that the repurchase is: (1) permissible under applicable laws, regulations, regulatory obligations, and the federal home loan bank's capital plan; and (2) consistent with the federal home loan bank's current capital stock practices applicable to the federal home loan bank's entire membership. Subd. 3. Process and timeline required. Following the appointment of a receiver for an insurer-member, the federal home loan bank must, within ten business days after the date a request is received from the receiver, provide a process and establish a timeline for: (1) release of collateral that exceeds the amount required to support secured obligations remaining after any repayment of loans, as determined in accordance with the applicable agreements between the federal home loan bank and the insurer-member; (2) release of any of the insurer-member's collateral remaining in the federal home loan bank's possession following repayment in full of the insurer-member's outstanding secured obligations; (3) payment of fees owed by the insurer-member and the operation of the insurer-member's deposits and other accounts with the federal home loan bank; and (4) possible redemption or repurchase of federal home loan bank stock or excess stock of any class that an insurer-member is required to own. Subd. 4. Options; renew or restructure. Upon request from a receiver, the federal home loan bank must provide the options available for an insurer-member subject to a delinquency proceeding to renew or restructure a loan to defer associated prepayment fees, subject to: (1) market conditions; (2) the terms of any loans outstanding to the insurer-member; (3) the federal home loan bank's applicable policies; and (4) the federal home loan bank's compliance with federal laws and regulations. Subd. 5. Void transfers prohibited. (a) Notwithstanding any law to the contrary, the receiver for an insurer-member is prohibited from voiding any transfer of, or any obligation to transfer, money or any other property arising under or in connection with: (1) any federal home loan bank security agreement; (2) any pledge, security, collateral, or guarantee agreement; or (3) any other similar arrangement or credit enhancement relating to a federal home loan bank security agreement made in the ordinary course of business and in compliance with the applicable federal home loan bank agreement. (b) A transfer may be voided under this section if the transfer was made with intent to hinder, delay, or defraud the insurer-member, the receiver for the insurer-member, or existing or future creditors. (c) This section does not affect a receiver's rights regarding advances to an insurer-member in delinquency proceedings pursuant to Code of Federal Regulations, title 12, part 1266.4. History:   2022 c 93 art 2 s 26 
60B.34 SETOFFS AND COUNTERCLAIMS. Subdivision 1. Setoffs allowed in general. Mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under sections 60B.01 to 60B.61 shall be set off and the balance only shall be allowed or paid, except as provided in subdivision 2. Subd. 2. Exceptions. No setoff or counterclaim shall be allowed in favor of any person where: (a) the obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle that person to share as a claimant in the assets of the insurer; (b) the obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; (c) the obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or (d) the obligation of the person is to pay premiums, whether earned or unearned, to the insurer. History:  1969 c 708 s 34; 1986 c 444
60B.35 ASSESSMENTS. Subdivision 1. Report to court. As soon as practicable but not more than two years from the date of an order of liquidation under section 60B.21 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth: (a) the reasonable value of the assets of the insurer; (b) the insurer's probable total liabilities; and (c) the probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment. Subd. 2. Levy of assessment. (a) Upon the basis of the report provided in subdivision 1, including any supplements and amendments thereto, the court may levy ex parte one or more assessments against all members of the insurer who are subject to assessment. (b) Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount that the sum of the probable liabilities, the expenses of administration, and the estimated cost of collection of the assessment exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically. Subd. 3. Order to show cause. After levy of assessment under subdivision 2, the court shall issue an order directing each member who has not paid the assessment pursuant to the order to show cause why the liquidator shall not have a judgment therefor. If a member of the insurer also appears to be indebted to the insurer apart from the assessment, the court, upon application of the liquidator, may also direct the member to show cause why the member should not pay the other indebtedness. Liability for such indebtedness shall be determined in the same manner and at the same time as the liability to pay the assessment. Subd. 4. Notice. The liquidator shall give notice of the order to show cause by publication if so directed by the court and by first class mail to each member liable thereunder mailed at least 20 days before the return day of the order to show cause to the last known address as it appears on the records of the insurer. Subd. 5. Orders and hearings. (a) If a member does not appear and serve duly verified objections upon the liquidator upon the return day of the order to show cause under subdivision 3, the court shall make an order adjudging the member liable for the amount of the assessment against the member and other indebtedness, pursuant to subdivision 3, together with costs, and the liquidator shall have a judgment against the member therefor. (b) If on such return day, the member appears and serves duly verified objections upon the liquidator, the court may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. Any order made by a referee under this clause shall have the same force and effect as if it were a judgment of the court, subject to review by the court upon application within 30 days. Subd. 6. Collection. The liquidator may enforce any order or collect any judgment under subdivision 5 by any lawful means. History:  1969 c 708 s 35; 1986 c 444
60B.365 REINSURER'S LIABILITY. Subdivision 1. Generally. The amount recoverable by the liquidator from reinsurers must not be reduced as a result of the delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement, except as provided in subdivision 2. Subd. 2. Payments. Payments by the reinsurer must be made directly to the ceding insurer or its receiver, except where the contract of insurance or reinsurance specifically provides for another payee for the reinsurance in the event of insolvency of the ceding insurer according to the applicable requirements of statutes, rules, or orders of the domiciliary state of the ceding insurer. The receiver and reinsurer are entitled to recover from a person who unsuccessfully makes a claim directly against the reinsurer the receiver's attorneys' fees and expenses incurred in preventing any collection by the person. History:   1999 c 177 s 21 
60B.37 FILING OF CLAIMS. Subdivision 1. Deadline for filing. Proof of all claims must be filed with the court in the form required by section 60B.38 on or before the last day for filing specified in the notice required under section 60B.26, except that proof of preferred ownership claims and proprietary claims under section 60B.44, subdivisions 10 and 11, need not be filed at all, and proof of claims for unearned premiums or subscription rates and claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires. Subd. 2. Excused late filings. For a good cause shown, the liquidator shall recommend and the court shall permit a claimant making a late filing to share in dividends, whether past or future, as if the claimant were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation. Good cause includes but is not limited to the following: (a) that existence of a claim was not known to the claimant and that the claimant filed within 30 days after learning of it; (b) that a claim for unearned premiums or for cash surrender values or other investment values in life insurance or annuities which was not required to be filed was omitted from the liquidator's recommendations to the court under section 60B.45, and that it was filed within 30 days after the claimant learned of the omission; (c) that a transfer to a creditor was avoided under sections 60B.30 to 60B.32 or was voluntarily surrendered under section 60B.33, and that the filing satisfies the conditions of section 60B.33; (d) that valuation under section 60B.43 of security held by a secured creditor shows a deficiency, which is filed within 30 days after the valuation; (e) that a claim was contingent and became absolute, and was filed within 30 days after it became absolute; and (f) that the claim is for workers' compensation benefits and the time limitations and other requirements of chapter 176 have been met. Subd. 3. Unexcused late filings. The liquidator may consider any claim filed late which is not covered by subdivision 2, and permit it to receive dividends, other than the first dividend, which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late filing claimant shall receive, at each distribution, the same percentage of the amount allowed on the claim as is then being paid to other claimants of the same priority plus the same percentage of the amount allowed on the claim as is then being paid to claimants of any lower priority. This shall continue until the claim has been paid in full. History:  1969 c 708 s 37; 1986 c 444; 1991 c 325 art 6 s 1
60B.38 PROOF OF CLAIM. Subdivision 1. Contents of proof of claim. (a) Proof of claim shall consist of a verified statement that includes all of the following that are applicable: (1) The particulars of the claim, including the consideration given for it. (2) The identity and amount of the security on the claim. (3) The payments made on the debt, if any. (4) That the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to the claim. (5) Any right of priority of payment or other specific right asserted by the claimant. (6) A copy of any written instrument which is the foundation of the claim. (7) In the case of any third-party claim based on a liability policy issued by the insurer, a conditional release of the insured pursuant to section 60B.40, subdivision 1. (8) The name and address of the claimant and the claimant's attorney, if any. (b) No claim need be considered or allowed if it does not contain all the information under paragraph (a) which may be applicable. The liquidator may require that a prescribed form be used and may require that other information and documents be included. Subd. 2. Supplementary information. At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subdivision 1, and may take testimony under oath, require production of affidavits or depositions or otherwise obtain additional information or evidence. Subd. 3. Conclusiveness of judgments. No judgment or order against an insured or the insurer entered after the filing of a successful petition for liquidation and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four months before the filing of the petition need be considered as evidence of liability or of the quantum of damages. History:  1969 c 708 s 38; 1986 c 444; 2020 c 83 art 1 s 7
60B.39 SPECIAL CLAIMS. Subdivision 1. Claims contingent on judgments. The claim of a third party which is contingent only on that person first obtaining a judgment against the insured shall be considered and may be allowed as if there were no such contingency. Subd. 2. Claims under terminated policies. Any claim that would have become absolute if there had been no termination of coverage under section 60B.22, and which was not covered by insurance acquired to replace the terminated coverage, shall be allowed as if the coverage had remained in effect, unless at least ten days before the insured event occurred either the claimant had actual notice of the termination or notice was mailed to the claimant as prescribed by section 60B.26, subdivision 1, or this chapter. If allowed the claim shall share in distributions under section 60B.44, subdivision 9. Subd. 3. Other contingent claims. A claim may be allowed even if contingent, if it is filed in accordance with section 60B.37, subdivision 2. It may be allowed and may participate in all dividends declared after it is filed, to the extent that it does not prejudice the orderly administration of the liquidation. Subd. 4. Immature claims. Claims that are due except for the passage of time shall be treated as absolute claims are treated, except that where justice requires the court may order them discounted at the legal rate of interest. Subd. 5. Claim by rating bureau. The rating bureau in carrying out its responsibilities may file a claim with the liquidator for all sums paid or to be paid by it. Subd. 6. Claims under the Insurance Guaranty Association Act. The board of directors of the Insurance Guaranty Association may file a claim with the liquidator for all claims to which the association has been subrogated under section 60C.11, subdivision 1. History:  1969 c 708 s 39; 1971 c 145 s 22; 1986 c 444; 1996 c 305 art 1 s 16; 1999 c 177 s 22
60B.40 SPECIAL PROVISIONS FOR THIRD-PARTY CLAIMS. Subdivision 1. Third-party's claim. Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator. The filing of the claim shall release the insured's liability to the third party on that cause of action in the amount of the applicable policy or contract limit, but the liquidator shall also insert in any form used for the filing of third-party claims appropriate language to constitute such a release. The release shall be void if the coverage is avoided by the liquidator. Subd. 2. Insured's claim. Whether or not the third party files a claim, the insured may file a claim on the insured's own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within 60 days after mailing of the notice required by section 60B.26, subdivision 1, paragraph (b), whichever is later, the insured is an unexcused late filer. Subd. 3. Procedure for insured's claim. The liquidator shall make recommendations to the court under section 60B.45 for the allowance of an insured's claim under subdivision 2 after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action, and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, the liquidator shall reconsider the claim on the basis of additional information and amend the recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate. As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like priority, based on the lesser of (a) the amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expenses of defense, or (b) the amount allowed on the claims by the court. After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subdivision shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator. Subd. 4. Multiple claims. If several claims founded upon one policy or contract of coverage are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy or contract is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy or contract limit. Claims by the insured shall be evaluated as in subdivision 3. If any insured's claim is subsequently reduced under subdivision 3, the amount thus freed shall be apportioned ratably among the claims which have been reduced under this subdivision. History:  1969 c 708 s 40; 1986 c 444; 2020 c 83 art 1 s 8
60B.41 DISPUTED CLAIMS. Subdivision 1. Notice of rejection and request for hearing. When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant and the claimant's attorney by first class mail at the address shown in the proof of claim. Within 60 days from the mailing of the notice, the claimant may file objections with the court. If no such filing is made, the claimant may not further object to the determination. Subd. 2. Notice of hearing. Whenever objections are filed with the court, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or the claimant's attorney and to any other persons directly affected, not less than ten nor more than 20 days before the date of the hearing. The matter may be heard by the court or by a court appointed referee. History:  1969 c 708 s 41; 1986 c 444
60B.42 CLAIMS OF SURETY. Whenever a creditor whose claim against an insurer is secured in whole or in part by the undertaking of another person fails to prove and file that claim, the other person may do so in the creditor's name, and shall be subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that the person discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any dividend until the amount paid to the creditor on the undertaking plus the dividends paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held in trust for such other person. History:  1969 c 708 s 42; 1986 c 444
60B.43 SECURED CREDITORS' CLAIMS. Subdivision 1. Determining value of security. The value of any security held by a secured creditor shall be determined in one of the following ways, as the court directs: (a) by converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor; or (b) by agreement, arbitration, compromise, or litigation between the creditor and the liquidator; or (c) as to separate account assets, by converting the same into money and allocating the converted assets among the holders of contracts on a variable basis in accordance with the terms of said contracts. Subd. 2. Treatment of claims. The determination shall be under the supervision and control of the court. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders the security to the liquidator, the entire claim shall be allowed as if unsecured. History:  1969 c 708 s 43; 1986 c 444
60B.435 QUALIFIED FINANCIAL CONTRACTS. Subdivision 1. Exercise of contractual rights. Notwithstanding any other provision of this chapter, including any other provision of this chapter permitting the modification of contracts, or other law of a state, no person shall be stayed or prohibited from exercising: (1) a contractual right to cause the termination, liquidation, acceleration, or close-out of obligations under or in connection with any netting agreement or qualified financial contract with an insurer because of: (i) the insolvency, financial condition, or default of the insurer at any time, provided that the right is enforceable under applicable law other than this chapter; or (ii) the commencement of a formal delinquency proceeding under this chapter; (2) any right under a pledge, security, collateral, reimbursement or guarantee agreement or arrangement or any other similar security arrangement, or arrangement or other credit enhancement relating to one or more netting agreements or qualified financial contracts; (3) subject to any provision of section 60B.34, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with one or more qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a state or a foreign jurisdiction approved by the Securities Valuation Office (SVO) of the National Association of Insurance Commissioners as eligible for netting; or (4) if a counterparty to a master netting agreement or a qualified financial contract with an insurer subject to a proceeding under this chapter terminates, liquidates, closes out, or accelerates the agreement or contract, damages shall be measured as of the date or dates of termination, liquidation, close-out, or acceleration. The amount of a claim for damages shall be actual direct compensatory damages calculated in accordance with subdivision 6. Subd. 2. Termination of agreement; transfer to insurer's receiver. Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under this chapter shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract. For purposes of this subdivision, the term "walkaway clause" means a provision in a netting agreement or a qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or acceleration of the netting agreement or qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in part solely because of the party's status as a nondefaulting party. Any limited two-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer. Any such property or amount shall, except to the extent it is subject to one or more secondary liens or encumbrances, or rights of netting or setoff, be a general asset of the insurer. Subd. 3. Transfer by receiver. In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this chapter, the receiver shall either: (1) transfer to one party, other than an insurer subject to a proceeding under this chapter, all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding, including: (i) all rights and obligations of each party under each netting agreement and qualified financial contract; and (ii) all property, including any guarantees or other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract; or (2) transfer none of the netting agreements, qualified financial contracts, rights, obligations, or property referred to in clause (1), with respect to the counterparty and any affiliate of the counterparty. Subd. 4. Transfer by receiver; obligation to notify certain parties. If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, then the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by 12:00 noon, the receiver's local time, on the business day following the transfer. For purposes of this subdivision, "business day" means a day other than a Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed. Subd. 5. Avoidance of transfer by receiver. Notwithstanding any other provision of this chapter, a receiver may not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract, or any pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract, that is made before the commencement of a formal delinquency proceeding under this chapter. However, a transfer may be avoided under section 60B.32 if the transfer was made with actual intent to hinder, delay, or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors. Subd. 6. Disaffirmance or repudiation by receiver; damages. (a) In exercising the receiver's rights of disaffirmance or repudiation with respect to any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either: (1) disaffirm or repudiate all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding; or (2) disaffirm or repudiate none of the netting agreements and qualified financial contracts referred to in clause (1), with respect to the person or any affiliate of the person. (b) Notwithstanding any other provision of this chapter, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding conservation or rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the petition for liquidation or, if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for conservation or rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract. The term "actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering, but does include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims. Subd. 7. Sources of contractual right. The term "contractual right" as used in this section includes any right set forth in a rule or bylaw of a derivatives clearing organization as defined in the Commodity Exchange Act, a multilateral clearing organization as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991, a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodities Exchange Act, or a board of trade as defined in the Commodity Exchange Act, or in a resolution of the governing board thereof and any right, whether or not evidenced in writing, arising under statutory or common law, or under law merchant, or by reason of normal business practice. Subd. 8. Affiliates of insurer; nonapplication. The provisions of this section shall not apply to persons who are affiliates of the insurer that is the subject of the proceeding. Subd. 9. Allocating among accounts. All rights of counterparties under this chapter shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts and entered into on behalf of that separate account. History:   2010 c 275 art 1 s 4 
60B.44 ORDER OF DISTRIBUTION. Subdivision 1. Deductible provision. The distribution of claims from the insurer's estate shall be in the order stated in this section with a descending degree of preference for each subdivision. Every claim in each class shall be paid in full or adequate funds retained for the payment before the members of the next class receive any payment. No subclasses shall be established within any class. Subd. 2. Administration costs. The costs and expenses of administration, including but not limited to the following: The actual and necessary costs of preserving or recovering the assets of the insurer; compensation for all services rendered in the liquidation; any necessary filing fees; the fees and mileage payable to witnesses; and reasonable attorney's fees. Subd. 3.  [Repealed, 1999 c 177 s 88] Subd. 4. Loss claims; including claims not covered by a guaranty association. All claims under policies or contracts of coverage for losses incurred including third-party claims, and all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies or contracts. All claims under life insurance and annuity policies, including funding agreements issued pursuant to section 61A.276, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to an employee shall be treated as a gratuity. Claims not covered by a guaranty association are loss claims. Subd. 4a. Unearned premiums. Claims under nonassessable policies or contracts of coverage for unearned premiums or subscription rates or other refunds. Subd. 4b. Federal government. Claims of the federal government. Subd. 4c. Wages. (a) Debts due to employees for services performed, not to exceed $1,000 to each employee, that have been earned within one year before the filing of the petition for liquidation, subject to payment of applicable federal, state, or local government taxes required by law to be withheld from the debts. Officers are not entitled to the benefit of this priority. In cases where there are no claims and no potential claims of the federal government in the estate, these claims will have priority over claims in subdivision 4. (b) The priority in paragraph (a) is in lieu of other similar priority authorized by law as to wages or compensation of employees. Subd. 5.  [Repealed, 1999 c 177 s 88] Subd. 6. Residual classification. All other claims including claims of any state or local government, not falling within other classes under this section. Claims, including those of any governmental body for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under subdivision 9. Subd. 7. Judgments. Claims based solely on judgments. If a claimant files a claim and bases it both on the judgment and on the underlying facts, the claim shall be considered first by the liquidator on the basis of the underlying facts, giving the judgment such weight as the liquidator deems appropriate. The claim as allowed on the underlying facts shall receive the priority it would receive in the absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment shall be treated as if it were a claim based solely on a judgment. Subd. 8. Interest on claims already paid. Interest at the legal rate compounded annually on all claims in the classes under subdivisions 2 to 7 from the date of the petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared. The liquidator, with the approval of the court, may make reasonable classifications of claims for purposes of computing interest, may make approximate computations, and may ignore certain classifications and time periods as de minimis. Subd. 9. Miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in subdivision 8. (a) claims under section 60B.39, subdivision 2; (b) claims subordinated by section 60B.61; (c) except to the extent excused or otherwise permitted pursuant to section 60B.37, claims filed late; (d) portions of claims subordinated under subdivision 6; and (e) claims or portions of claims payment of which is provided by other benefits or advantages recovered or recoverable by the claimant. Subd. 10. Preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited to the amount set forth in section 60B.46, subdivision 2, paragraph (b). Interest at the legal rate shall be added to each claim, as in subdivisions 8 and 9. Subd. 11. Proprietary claims. The claims of shareholders or other owners. History:  1969 c 708 s 44; 1985 c 255 s 1; 1986 c 444; 1987 c 337 s 27-30; 1999 c 177 s 23-27; 2001 c 131 s 6
60B.45 LIQUIDATOR'S RECOMMENDATIONS TO THE COURT. Subdivision 1. Recommended claims. The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as the liquidator deems necessary. The liquidator may compound, compromise, or in any other manner negotiate the amount for which claims will be recommended to the court. Unresolved disputes shall be determined under section 60B.41. As often as practicable, the liquidator shall present to the court reports of claims against the insurer with recommendations. The reports shall include the name and address of each claimant, the particulars of the claim and the amount of the claim finally recommended, if any. As soon as reasonably possible after the last day for filing claims, the liquidator shall present a list of all claims not already reported. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment values and the amounts owed. If the insurer has issued policies or contracts of coverage on the advance premium plan, the liquidator shall report the persons to whom, according to the records of insurer, unearned premiums or subscription rates are owed and the amounts owed. Subd. 2. Allowance of claims. The court may approve, disapprove, or modify any report on claims by the liquidator, except that the liquidator's agreements with other parties shall be final and binding on the court on claims settled for $500 or less. No claim under a policy of insurance shall be allowed for an amount in excess of the applicable policy limits. History:  1969 c 708 s 45; 1986 c 444
60B.46 DISTRIBUTION OF ASSETS. Subdivision 1. Payments to creditors. Under the direction of the court, the liquidator shall pay dividends in a manner that will assure the proper recognition of priorities and reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third-party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and approved by the court. The court may take into consideration the contributions of the respective parties, including guaranty associations, shareholders, and policy owners, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of the insurer. No distribution to stockholders of the insurer shall be permitted by the court unless the total amount of assessments levied by guaranty associations with respect to the insurer have been repaid. Subd. 2. Excess assets. (a) Upon liquidation of a domestic mutual insurance company, any assets held in excess of its liabilities and the amounts which may be paid to its members as provided under paragraph (b) shall be paid into the state treasury to the credit of the general fund. (b) The maximum amount payable upon liquidation to any member for and on account of membership in a domestic mutual insurance company, in addition to the insurance benefits promised in the policy, shall be the total of all premium payments made by the member with interest at the legal rate compounded annually. Subd. 3. Payments to guaranty associations. Within 120 days of a final determination of insolvency of a company by a court of competent jurisdiction of this state or as soon thereafter as is practical, the liquidator shall make application to the court for approval of a proposal to disburse assets out of the company's marshalled assets, from time to time as the assets become available, to the Minnesota Insurance Guaranty Association, to the Minnesota Life and Health Insurance Guaranty Association, and to any entity or person performing a similar function in another state. Subd. 4. Contents of proposal. The proposal shall at least include provisions for: (1) reserving amounts for the payment of expenses of administration, the payment of claims of secured creditors to the extent of the value of their security, and the payment of claims having a higher priority than those of the guaranty associations; (2) disbursements of the assets marshalled to date and subsequent disbursements of assets as they become available; (3) equitable allocation of disbursements to each of the guaranty associations entitled thereto; (4) the securing by the liquidator from each of the guaranty associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator the assets previously disbursed to them as may be required to pay claims of secured creditors and those claims having a higher priority than those of the guaranty association. No bond shall be required of a guaranty association; and (5) a full report to be made by the guaranty association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the guaranty association on the assets, and any other matter as the court may direct. Subd. 5. Disbursements. (a) The proposal shall provide for disbursements to the guaranty associations in amounts estimated to be at least equal to the claim payments made or to be made thereby for which the guaranty association could assess a claim against the liquidator. The proposal shall further provide that if the assets available for distribution from time to time do not equal or exceed the amount of such claim payments made or to be made by the guaranty association, then disbursements shall be in the amount of the available assets. (b) The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming, or guaranteeing policies or contracts of insurance under the acts creating these associations. Subd. 6. Notice of application. Notice of the application shall be given to the guaranty associations in, and to the commissioners of insurance of, each of the states. The notice shall be deemed to have been given when deposited in the United States mail, certified first class postage prepaid, at least 30 days prior to submission of the application to the court. Action on the application may be taken by the court provided the above required notice has been given and provided further that the liquidator's proposal complies with subdivision 4, clauses (1) and (2). History:  1969 c 399 s 1; 1969 c 708 s 46; 1977 c 273 s 20; 1985 c 255 s 2-5; 1986 c 444; 2020 c 83 art 1 s 9
60B.47 UNCLAIMED AND WITHHELD FUNDS. Subdivision 1. Unclaimed funds. All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member, or other person who is unknown or cannot be found or who is under disability with no person legally competent to receive that person's distributive share, shall be deposited with the commissioner of management and budget to the credit of the general fund, and shall be paid over without interest except in accordance with section 60B.44 to the person entitled thereto or a legal representative upon proof satisfactory to the commissioner of management and budget of a right thereto. Any amount on deposit not claimed within six years from the discharge of the liquidator is deemed abandoned and shall become the property of the state. The commissioner of management and budget shall at the end of each fiscal year transfer these amounts to the general fund. Subd. 2. Withheld funds. All funds withheld under section 60B.40 and not distributed shall upon discharge of the liquidator be deposited with the commissioner of management and budget and paid in accordance with section 60B.40. Any sums remaining which under section 60B.40 would revert to the undistributed assets of the insurer shall be transferred to the commissioner of management and budget and become the property of the state under subdivision 1, unless the commissioner petitions the court to reopen the liquidation under section 60B.49. History:  1969 c 399 s 1; 1969 c 708 s 47; 1986 c 444; 2003 c 112 art 2 s 50; 2009 c 101 art 2 s 109
60B.48 TERMINATION OF PROCEEDINGS. Subdivision 1. Liquidator's application. When all assets justifying the expense of collection and distribution have been collected and distributed under sections 60B.01 to 60B.61, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders deemed appropriate, including an order to transfer to the state treasury to the credit of the general fund any remaining funds that are uneconomic to distribute. Subd. 2. Application by others. Any other person may apply to the court at any time for an order under subdivision 1. If the application is denied, the applicant shall pay the costs and expenses of the liquidator in resisting the application, including a reasonable attorney's fee. History:  1969 c 399 s 1; 1969 c 708 s 48
60B.49 REOPENING LIQUIDATION. After the liquidation proceeding has been terminated and the liquidator discharged, the commissioner or other interested party may at any time petition the court to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it shall so order. History:   1969 c 708 s 49 
60B.50 DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF LIQUIDATION. Whenever it appears to the commissioner that the records of an insurer in process of liquidation or completely liquidated are no longer useful, the commissioner may recommend to the court what records should be retained for future reference and what should be disposed of. The court shall enter an order thereon. The commissioner shall immediately submit to the state Historical Society a copy of the court order, and on written application of the Historical Society within three months after receipt from the commissioner of the copy of the court order, the commissioner shall deliver to the society such records which are to be disposed of as the society deems of historical significance and shall destroy the remainder, whether or not the records have been photographed or otherwise reproduced. Until further order of the court, the commissioner shall keep all records the court orders preserved. History:  1969 c 708 s 50; 1986 c 444
60B.51 EXTERNAL AUDIT OF RECEIVER'S BOOKS. The court in which the proceeding is pending may, as it deems desirable, cause audits to be made of the books of the commissioner relating to any receivership established under sections 60B.01 to 60B.61, and a report of each audit shall be filed with the commissioner and with the court. The books, records, and other documents of the receivership shall be made available to the auditor at any time without notice. The expense of each audit shall be considered a cost of administration of the receivership. History:   1969 c 708 s 51 
60B.52 CONSERVATION OF PROPERTY OF FOREIGN OR ALIEN INSURERS FOUND IN THIS STATE. Subdivision 1. Grounds for petition. If a domiciliary liquidator has not been appointed, the commissioner may apply to the District Court for Ramsey County by verified petition for an order directing the commissioner to conserve the property of an alien insurer not domiciled in this state or a foreign insurer on any one or more of the following grounds: (a) any of the grounds in section 60B.15; (b) any of the grounds in section 60B.20; (c) that any of its property has been sequestered by official action in its domiciliary state, or in any other state; (d) that enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent; (e) that its certificate of authority to do business in this state has been revoked or that none was ever issued, and there are residents of this state with outstanding claims or outstanding policies. Subd. 2. Terms of order. The court may issue the order in whatever terms it deems appropriate. The recording of the order with any county recorder in this state imparts the same notice as a deed, bill of sale, or other evidence of title duly recorded with that county recorder. Subd. 3. Transformation to liquidation or ancillary receivership. The conservator may at any time petition for and the court may grant an order under section 60B.53 to liquidate the assets of a foreign or alien insurer under conservation or, if appropriate, for an order under section 60B.55 to be appointed ancillary receiver. Subd. 4. Order to return to company. The conservator may at any time petition the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such finding and issue such order at any time upon its own motion. History:  1969 c 708 s 52; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 9
60B.53 LIQUIDATION OF PROPERTY OF FOREIGN OR ALIEN INSURERS FOUND IN THIS STATE. Subdivision 1. Grounds for petition. If no domiciliary receiver has been appointed, the commissioner may apply to the District Court for Ramsey County by verified petition for an order directing the commissioner to liquidate the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state, on any of the following grounds: (a) Any of the grounds in section 60B.15. (b) Any of the grounds in section 60B.20. (c) Any of the grounds in section 60B.52. Subd. 2. Terms of order. If it appears to the court that the best interests of creditors, policyholders, and the public so require, the court may issue an order to liquidate in whatever terms it deems appropriate. The recording of the order with any county recorder in this state imparts the same notice as a deed, bill of sale, or other evidence of title duly recorded with that county recorder. Subd. 3. Conversion to ancillary proceedings. If a domiciliary liquidator is appointed in a reciprocal state while a liquidation is proceeding under this section, the liquidator under this section shall thereafter act as ancillary receiver under section 60B.55. If a domiciliary liquidator is appointed in a nonreciprocal state while a liquidation is proceeding under this section, the liquidator under this section may petition the court for permission to act as ancillary receiver under section 60B.55. Subd. 4. Federal receivership. On the same grounds as are specified in subdivision 1, the commissioner may petition any appropriate federal district court to be appointed receiver to liquidate that portion of the insurer's assets and business over which the court will exercise jurisdiction, or any lesser part thereof that the commissioner deems desirable for the protection of the policyholders and creditors in this state. The commissioner may accept appointment as federal receiver if another person files a petition. History:  1969 c 708 s 53; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 10
60B.54 FOREIGN DOMICILIARY RECEIVERS IN OTHER STATES. Subdivision 1. Property rights and title; reciprocal state. The domiciliary liquidator of an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books, accounts, and other records of the insurer located in this state. The date of vesting shall be the date of the filing of the petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state; otherwise, the date of vesting shall be the date of entry of the order directing possession to be taken. The domiciliary liquidator shall have the immediate right to recover balances due from agents and to obtain possession of the books, accounts, and other records of the insurer located in this state. The domiciliary liquidator also shall have the right to recover the other assets of the insurer located in this state, subject to section 60B.55, subdivision 2. Subd. 2. Property rights and title; state not a reciprocal state. If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the commissioner of this state shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books, accounts, and other records of the insurer located in this state, at the same time that the domiciliary liquidator is vested with title in the domicile. The commissioner of this state may petition for a conservation or liquidation order under section 60B.52 or 60B.53, or for an ancillary receivership under section 60B.55, or after approval by the District Court for Ramsey County may transfer title to the domiciliary liquidator, as the interests of justice and the equitable distribution of the assets require. Subd. 3. Filing claims. Claimants residing in this state may file claims with the liquidator or ancillary receiver, if any, in this state or with the domiciliary liquidator, if the domiciliary law permits. The claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceedings. History:  1969 c 708 s 54; 1986 c 444
60B.55 ANCILLARY FORMAL PROCEEDINGS. Subdivision 1. Appointment of ancillary receiver in this state. If a domiciliary liquidator has been appointed for an insurer not domiciled in this state, the commissioner shall file a petition with the District Court for Ramsey County requesting appointment as ancillary receiver in this state: (a) if the commissioner finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver; (b) if ten or more persons resident in this state having claims against the insurer file a petition with the commissioner requesting appointment of an ancillary receiver; or (c) if the protection of creditors or policyholders in this state so requires. Subd. 2. Terms of order. The court may issue an order appointing an ancillary receiver in whatever terms it deems appropriate. The recording of the order with any county recorder in this state imparts the same notice as a deed, bill of sale, or other evidence of title duly recorded with that county recorder. Subd. 3. Property rights and title; ancillary receivers in this state. When a domiciliary liquidator has been appointed in a reciprocal state, the ancillary receiver appointed in this state under subdivision 1 shall have the sole right to recover all the assets of the insurer in this state not already recovered by the domiciliary liquidator, except that the domiciliary liquidator shall be entitled to and have the sole right to recover balances due from agents and the books, accounts, and other records of the insurer. The ancillary receiver shall have the right to recover balances due from agents and books, accounts, and other records of the insurer, if such action is necessary to protect the assets because of inaction by the domiciliary liquidator. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. The ancillary receiver shall promptly transfer all remaining assets to the domiciliary liquidator. Subject to this section, the ancillary receiver and deputies shall have the same powers and be subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this state. Subd. 4. Property rights and title; foreign ancillary receivers. When a domiciliary liquidator has been appointed in this state, ancillary receivers appointed in reciprocal states shall have, as to assets and books, accounts, and other records located in their respective states, corresponding rights and powers to those prescribed in subdivision 3 for ancillary receivers appointed in this state. History:  1969 c 708 s 55; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 11
60B.56 ANCILLARY SUMMARY PROCEEDINGS. The commissioner has the sole discretionary authority to institute proceedings under sections 60B.11 to 60B.13 at the request of the commissioner or other appropriate official of the domiciliary state of any foreign or alien insurer having property located in this state. History:  1969 c 708 s 56; 1986 c 444
60B.57 CLAIMS OF NONRESIDENTS AGAINST INSURERS DOMICILED IN THIS STATE. Subdivision 1. Filing claims. In a liquidation proceeding begun in this state against an insurer domiciled in this state, claimants residing in foreign countries or in states not reciprocal states must file claims in this state, and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary liquidator. Claims must be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding. Subd. 2. Proving claims. Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this state as provided in sections 60B.01 to 60B.61, or in ancillary proceedings, if any, in the reciprocal states. If notice of the claim and opportunity to appear and be heard is afforded the domiciliary liquidator of this state as provided in section 60B.58 with respect to ancillary proceedings in this state, the final allowance of claims by the courts in ancillary proceedings in reciprocal states shall be conclusive as to amount and as to priority against special deposits or other security located in the ancillary states, but shall not be conclusive with respect to priorities against general assets under section 60B.44. History:   1969 c 708 s 57 
60B.58 CLAIMS OF RESIDENTS AGAINST INSURERS DOMICILED IN RECIPROCAL STATES. Subdivision 1. Filing claims. In a liquidation proceeding in a reciprocal state against an insurer domiciled in that state, claimants against the insurer who reside within this state may file claims either with the ancillary receiver, if any, in this state, or with the domiciliary liquidator. Claims must be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding. Subd. 2. Proving claims. Claims belonging to claimants residing in this state may be proved either in the domiciliary state under the law of that state or in ancillary proceedings, if any, in this state. If a claimant who elects to prove a claim in this state shall file the claim with the court in the manner provided in sections 60B.37 and 60B.38. The ancillary receiver shall make recommendation to the court as under section 60B.45. The ancillary receiver also shall arrange a date for hearing if necessary under section 60B.41 and shall give notice to the liquidator in the domiciliary state, either by certified mail or by personal service at least 40 days prior to the date set for hearing. If a domiciliary liquidator, within 30 days after the giving of such notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of intention to contest the claim, the domiciliary liquidator shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to amount and as to priority against special deposits or other security located in this state. History:  1969 c 708 s 58; 1978 c 674 s 60; 1986 c 444
60B.59 ATTACHMENT, GARNISHMENT AND LEVY OF EXECUTION. During the pendency in this or any other state of a liquidation proceeding, whether or not called by that name, no action or proceeding in the nature of an attachment, garnishment, or levy of execution shall be commenced or maintained in this state or elsewhere against the delinquent insurer or its assets. History:   1969 c 708 s 59 
60B.60 INTERSTATE PRIORITIES. Subdivision 1. Priorities. In a liquidation proceeding in this state involving one or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from general assets regardless of where such assets are located. Subd. 2. Priority of special deposit claims. The owners of special deposit claims against an insurer for which a liquidator is appointed in this or any other state shall be given priority against the special deposits in accordance with the statutes governing the creation and maintenance of the deposits. If there is a deficiency in any deposit so that the claims secured by it are not fully discharged from it, the claimants may claim against a security fund share in the general assets, but the sharing shall be deferred until general creditors having the same priority, and also claimants against other special deposits having the same priority who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit. Subd. 3. Priority of secured claims. The owner of a secured claim against an insurer for which a liquidator has been appointed in this or any other state may surrender the security and file a claim as a general creditor, or the claim may be discharged by resort to the security in accordance with section 60B.43, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors having the same priority. History:  1969 c 708 s 60; 1986 c 444; 1994 c 425 s 6,7
60B.61 SUBORDINATION OF CLAIMS FOR NONCOOPERATION. If an ancillary receiver in another state or foreign country, whether or not called by that name, fails to transfer to the domiciliary liquidator in this state any assets within the receiver's control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims, shall be placed in the class of claims under section 60B.44, subdivision 9. History:  1969 c 708 s 61; 1986 c 444
60C.01 CITATION. This chapter may be cited as the "Minnesota Insurance Guaranty Association Act." History:   1971 c 145 s 1 
60C.02 SCOPE, PURPOSES, AND CONSTRUCTION. Subdivision 1. Scope. This chapter applies to all kinds of direct insurance, except: (1) life; (2) annuity; (3) title; (4) accident and sickness; (5) credit; (6) vendor's single interest or collateral protection or any similar insurance protecting the interests of a creditor arising out of a creditor debtor transaction; (7) mortgage guaranty; (8) financial guaranty or other forms of insurance offering protection against investment risks; (9) ocean marine; (10) a transaction or combination of transactions between a person, including affiliates of the person, and an insurer, including affiliates of the insurer, that involves the transfer of investment or credit risk unaccompanied by transfer of insurance risk; (11) insurance provided by or guaranteed by government; or (12) insurance of warranties or service contracts, including insurance that provides for the repair, replacement, or services of goods or property, or indemnification for repair, replacement or service, for the operation or structural failure of the goods or property due to a defect in materials, workmanship or normal wear and tear, or provides reimbursement for the liability insured by the user of agreement or service contracts that provide these benefits. Subd. 2. Purposes. The purposes of this chapter are to provide a mechanism for the payment of covered claims under certain insurance policies and surety bonds, to the extent provided in this chapter, minimize excessive delay in payment and to avoid financial loss to claimants or policyholders because of the liquidation of an insurer, and to provide an association to assess the cost of the protection among insurers. Subd. 3. Construction. This chapter shall be liberally construed to effect the purposes stated in subdivision 2. History:  1971 c 145 s 2; 1975 c 359 s 23; 1976 c 185 s 1,2; 1982 c 424 s 12; 1988 c 541 s 1; 1991 c 325 art 6 s 2; 1994 c 426 s 10; 1997 c 52 s 1; 2003 c 74 s 1
60C.03 DEFINITIONS. Subdivision 1. Scope. For the purposes of this chapter, the following terms have the meanings given in this section. Subd. 2. Account. "Account" means any of the five accounts created under section 60C.04. Subd. 3. Association. "Association" means the Minnesota Insurance Guaranty Association created under section 60C.04. Subd. 4. Net direct written premiums. "Net direct written premiums" means direct gross premiums written in this state on surety bonds and insurance policies not excepted from the scope of this chapter by section 60C.02, less return premiums thereon and dividends paid or credited to policyholders on such direct business. Subd. 5. Person. "Person" means any individual, corporation, partnership, association, or voluntary organization, and includes governmental entities. Subd. 6. Member insurer. "Member insurer" means any person, including reciprocals or interinsurance exchanges operating under chapter 71A and township mutual fire insurance companies operating under sections 67A.01 to 67A.26, who (1) writes any kind of insurance not excepted from the scope of this chapter by section 60C.02, and (2) is licensed to transact insurance business in this state, except any nonprofit service plan incorporated or operating under sections 62C.01 to 62C.23 and any health plan incorporated under chapter 317A, and includes an insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn. An insurer ceases to be a member insurer the day following the termination or expiration of its license to transact the kinds of insurance to which this chapter applies. The insurer remains liable as a member insurer for any and all obligations, including obligations for assessments levied before the termination or expiration with respect to an insurer that became an insolvent insurer before the termination or expiration of the insurer's license. Subd. 7. Resident. "Resident" means: (a) an individual person who fixes habitation in this state without any intention of removing therefrom and who, whenever absent therefrom, intends to return; or (b) any other person whose principal place of business is located in this state at the time of the insured event. Subd. 8. Insolvent insurer. "Insolvent insurer" means an insurer licensed to transact insurance in this state, either at the time the policy was issued, or when the insured event occurred, and against whom a final order of liquidation has been entered after April 30, 1979, with a finding of insolvency by a court of competent jurisdiction in the insurer's state of domicile. An insurer placed under administrative supervision under sections 60G.01 to 60G.09 or determined to be in hazardous financial condition under sections 60G.20 to 60G.22 is not an insolvent insurer as a result of that placement or determination. Subd. 9. Affiliate. "Affiliate" means a person other than a natural person who directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person. Subd. 10. Financial guaranty insurance. "Financial guaranty insurance" includes any insurance under which loss is payable upon proof of occurrence of any of the following events to the damage of an insured claimant or obligee: (1) failure of any obligor or obligors on any debt instrument or other monetary obligation, including common or preferred stock, to pay when due the principal, interest, dividend or purchase price of such instrument or obligation, whether such failure is the result of a financial default or insolvency and whether or not such obligation is incurred directly or as guarantor by, or on behalf of, another obligor which has also defaulted; (2) changes in the level of interest rates whether short term or long term, or in the difference between interest rates existing in various markets; (3) changes in the rate of exchange or currency, or from the inconvertibility of one currency into another for any reason; and (4) changes in the value of specific assets or commodities, or price levels in general. Subd. 11. Ocean marine insurance. "Ocean marine insurance" means a form of insurance, regardless of the name, label, or marketing designation of the insurance policy, that insures against maritime perils or risks and other related perils or risks, that are usually insured against by traditional marine insurance, such as hull and machinery, marine builders risk, and marine protection and indemnity. Perils and risks insured against include without limitation loss, damage, expense, or legal liability of the insured for loss, damage, or expense arising out of or incident to ownership, operation, chartering, maintenance, use, repair, or construction of a vessel, craft, or instrumentality in use in ocean or inland waterways for commercial purposes, including liability of the insured for personal injury, illness, or death or for loss or damage to the property of the insured or another person. History:  1971 c 145 s 3; 1973 c 35 s 20; 1976 c 185 s 3; 1981 c 260 s 1; 1982 c 555 s 1; 1982 c 589 s 1; 1986 c 444; 1988 c 541 s 2-4; 1989 c 304 s 137; 1991 c 325 art 6 s 3,4; art 21 s 2; 1993 c 299 s 8; 1997 c 52 s 2-4; 2003 c 74 s 2,3; 2011 c 61 s 3
60C.04 CREATION. All insurers subject to the provisions of this chapter shall form an organization to be known as the Minnesota Insurance Guaranty Association. All insurers defined as member insurers in section 60C.03, subdivision 6, are and shall remain members of the association as a condition of their authority to transact insurance business or to execute surety bonds in this state. An insurer's membership obligations under this chapter shall survive any merger, consolidation, restructuring, incorporation, or reincorporation. The association shall perform its functions under a plan of operation established and approved under section 60C.07 and shall exercise its powers through a board of directors established under section 60C.08. For purposes of administration and assessment the association shall be divided into five separate accounts: (1) the automobile insurance account, (2) the township mutuals account, (3) the fidelity and surety bond account, (4) the account for all other insurance to which this chapter applies, and (5) the workers' compensation insurance account. History:  1971 c 145 s 4; 1976 c 185 s 4; 1981 c 346 s 35; 1991 c 325 art 6 s 5
60C.05 POWERS AND DUTIES. Subdivision 1. Required duties. The association shall: (a) Be deemed the insurer to the extent of its obligation on the covered claims and have the right to pursue and retain salvage and subrogation recoverables on covered claim obligations to the extent paid or acknowledged in writing as an obligation by the association. The association shall not be deemed the insolvent insurer for any purpose relating to the issue of whether the association is amenable to the personal jurisdiction of the courts of any state. (b) Allocate claims paid and expenses incurred among the five accounts and assess member insurers separately for each account the amounts necessary to pay the obligations of the association under clause (a), the expenses of handling claims, the cost of examinations under section 60C.15, and other expenses authorized by this chapter. (c) Notify claimants in this state as considered necessary by the commissioner, to the extent records are available to the association. If sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation is sufficient. (d) Handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the commissioner, but the designation may be declined. (e) Reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association and shall pay the other expenses of the association authorized by this chapter. (f) Notify each member insurer of its assessment not later than 30 days before it is due. (g) Issue to each insurer paying an assessment under this chapter a certificate of contribution, in a form prescribed by the commissioner, for the amount so paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer in its financial statement as an asset in the form and for the amount, if any, and period of time the commissioner approves. (h) Have the right to appoint or substitute and to direct legal counsel retained under insurance policies for the defense of covered claims. Subd. 2. Authorized powers. The association may: (a) Employ or retain the persons necessary to handle claims and perform other duties of the association. (b) Borrow funds necessary to effect the purposes of this chapter, in accord with the plan of operation. (c) Sue or be sued. (d) Negotiate and become a party to the contracts necessary to carry out the purpose of this chapter. (e) Perform other acts necessary or proper to effectuate the purpose of this chapter. (f) Subject to section 60C.06, subdivision 6, refund to the member insurers in proportion to the contribution of each member insurer to that account the amount by which the assets of the account exceed the liabilities, if at the end of the calendar year the board of directors finds that the assets of the association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year. (g) Request the court to disapprove or modify any claim for which approval is sought under the provisions of section 60B.45, subdivision 2, or 60B.58, subdivision 2. History:  1971 c 145 s 5; 1976 c 185 s 5; 1985 c 255 s 6; 1988 c 541 s 5,6; 1997 c 52 s 5; 2003 c 74 s 4
60C.06 ASSESSMENTS. Subdivision 1. Determination of amount. The assessments of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the preceding calendar year on the kinds of insurance in the account bear to the net direct written premiums of all member insurers for the preceding calendar year on the kinds of insurance in the account. No member insurer may be assessed in any year on any account in an amount greater than two percent of that member insurer's net direct written premiums for the preceding calendar year on the kinds of insurance in the account. Subd. 2. Insufficient amount. If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any account an amount sufficient to make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available. Subd. 3. Exemption or deferral. The association shall exempt or defer, in whole or in part, the assessment of any member insurer, if the commissioner determines that the assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance. Subd. 4. Set off. Each member insurer may set off against any assessment, authorized payments made on covered claims and expenses incurred in the payment of the claims by the member insurer if, in the absence of the payment, they would be chargeable to the account for which the assessment is made. Subd. 5.  [Repealed, 1988 c 541 s 14] Subd. 6.  [Repealed, 1997 c 52 s 15] History:  1971 c 145 s 6; 1978 c 465 s 9; 1987 c 268 art 2 s 13; 1988 c 541 s 7; 1991 c 325 art 6 s 6
60C.07 PLAN OF OPERATION. Subdivision 1. Required submission. The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto become effective upon written approval from the commissioner. If the association fails to submit a suitable plan of operation within 90 days following July 1, 1971, or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate reasonable rules necessary to effectuate the provisions of this chapter. The rules continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner. Subd. 2. Contents. The plan of operation shall: (a) Establish the procedures whereby all the powers and duties of the association under section 60C.05 will be performed. (b) Establish procedures for handling assets of the association. (c) Establish the amount and method of reimbursement of members of the board of directors under section 60C.08, subdivision 3. (d) Establish procedures by which claims may be filed with the association. (e) Establish regular places and times for meetings for the board of directors. (f) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors. (g) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the commissioner within 30 days after the action or decision. (h) Establish the procedures whereby selections for the board of directors will be submitted to the commissioner. (i) Contain additional provisions necessary or proper for the execution of the powers and duties of the association. (j) Establish procedures for the disposition of liquidating dividends or other money received from the estate of insolvent insurers. Subd. 3. Delegation authority. The plan of operation may provide that any or all powers and duties of the association, except those under section 60C.05, subdivisions 1, clause (b) and 2, clause (b), are delegated to a corporation, association or other organization which performs or will perform functions similar to those of this association, or its equivalent in two or more states. The corporation, association, or organization shall be reimbursed as a servicing facility would be reimbursed and shall be paid for its performance of any other functions of the association. A delegation under this subdivision shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association or organization which extends protection not substantially less favorable and effective than that provided by this chapter. History:  1971 c 145 s 7; 1997 c 52 s 6; 2003 c 74 s 5
60C.08 BOARD OF DIRECTORS. Subdivision 1. Composition. The board of directors of the association shall consist of nine persons. Two of the directors shall be public members and seven shall be insurer members. The public members shall be appointed by the commissioner. Public members may include licensed insurance agents. The insurer members of the board shall be selected by association members subject to the approval of the commissioner. Vacancies on the board shall be filled for the remaining period of the term in the same manner as initial appointments. The term of appointment for all members is two years. Subd. 2. Commissioner's duty. In approving selections to the board, the commissioner shall consider among other things whether member insurers are fairly represented. Subd. 3. Member reimbursement. Members of the board may be reimbursed from the assets of the association for reasonable and necessary sums expended by them as members of the board of directors. History:  1971 c 145 s 8; 1Sp1985 c 10 s 55; 1987 c 337 s 31
60C.09 COVERED CLAIMS. Subdivision 1. Definition. A covered claim is any unpaid claim, including one for unearned premium, which: (a) arises out of and is within the coverage of an insurance policy issued by a member insurer if the insurer becomes an insolvent insurer after April 30, 1979; (b) arises out of a class of business which is not excepted from the scope of this chapter by section 60C.02; and (c) is made by: (i) a policyholder, or an insured beneficiary under a policy, who, at the time of the insured event, was a resident of this state; or (ii) a person designated in the policy as having an insurable interest in or related to property situated in this state at the time of the insured event; or (iii) an obligee or creditor under any surety bond, who, at the time of default by the principal debtor or obligor, was a resident of this state; or (iv) a third-party claimant under a liability policy or surety bond, if: (a) the insured or the third-party claimant was a resident of this state at the time of the insured event; (b) the claim is for bodily or personal injuries suffered in this state by a person who when injured was a resident of this state; or (c) the claim is for damages to real property situated in this state at the time of damage; or (v) an assignee of a person who except for the assignment might have claimed under item (i), (ii), or (iii). For purposes of paragraph (c), item (ii), unit owners of units in a common interest community are considered as having an insurable interest. A covered claim also includes any unpaid claim which arises or exists within 30 days after the time of entry of a final order of liquidation with a finding of insolvency by a court of competent jurisdiction unless prior thereto the insured replaces the policy or causes its cancellation or the policy expires on its expiration date. A covered claim does not include claims filed with the guaranty fund after the final date set by the court for the filing of claims except for workers' compensation claims that have met the time limitations and other requirements of chapter 176. Subd. 2. Further definition. In addition to subdivision 1, a covered claim does not include: (1) claims by an affiliate of the insurer; (2) claims due a reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries, reinsurance recoveries, contribution, indemnification, or otherwise. This clause does not prevent a person from presenting the excluded claim to the insolvent insurer or its liquidator, but the claims shall not be asserted against another person, including the person to whom the benefits were paid or the insured of the insolvent insurer, except to the extent that the claim is outside the coverage of the policy issued by the insolvent insurer; and (3) any claims, resulting from insolvencies which occur after July 31, 1996, by an insured whose net worth exceeds $25,000,000 on December 31 of the year prior to the year in which the insurer becomes an insolvent insurer; provided that an insured's net worth on that date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries and affiliates as calculated on a consolidated basis; (4) any claims under a policy written by an insolvent insurer with a deductible or self-insured retention of $300,000 or more, nor that portion of a claim that is within an insured's deductible or self-insured retention; (5) claims that are a fine, penalty, interest, or punitive or exemplary damages. Subd. 3. Limitation of amount. Payment of a covered claim, whether upon a single policy or multiple policies of insurance, is limited to no more than $300,000. In the case of claim for unearned premium by a single claimant, the entire claim up to $300,000 shall be allowed excluding retrospective or experience-rated insurance plans or premiums subject to adjustment after termination of the policy. The limitation on the amount of payment for a covered claim does not apply to claims for workers' compensation insurance. In no event is the association obligated to the policyholder or claimant in an amount in excess of the obligation of the insurer under the policy from which the claim arises. For insolvencies occurring on or after October 1, 1985, no deductible applies to claims eligible for payment under the assigned claims plan under sections 65B.63 to 65B.65. Subd. 4. Aggregate limitation. Except in the case of a claim for benefits under workers' compensation coverage, any obligation of the association to or on behalf of an insured and its affiliates on covered claims ceases when $10,000,000 has been paid in the aggregate by the association and any one or more associations similar to the association of any other state or states, to or on behalf of that insured, its affiliates, and additional insureds on covered claims or allowed claims arising under the policy or policies of any one insolvent insurer. History:  1971 c 145 s 9; 1976 c 185 s 6; 1981 c 260 s 2; 1981 c 346 s 36; 1982 c 555 s 2; 1982 c 589 s 2; 1983 c 203 s 1; 1986 c 444; 1987 c 337 s 32; 1988 c 541 s 8; 1991 c 325 art 6 s 7; 1996 c 446 art 2 s 7; 1997 c 52 s 7; 1999 c 11 art 3 s 3; 2003 c 74 s 6
60C.10 EVALUATION OF CLAIMS. Subdivision 1. Board to determine. The board shall determine whether claims submitted for payment are covered claims. Subd. 2.  [Repealed, 1981 c 260 s 4] Subd. 3. Claim denial; notification of appeal and review rights. If the board finds that a claim for which the claimant has requested payment out of the fund is not a covered claim or the board reduces the amount of or rejects the claim, the board shall notify the claimant in writing of the rights the claimant has under section 60C.12. History:  1971 c 145 s 10; 1981 c 260 s 3; 1986 c 444
60C.11 EFFECT OF PAID CLAIMS. Subdivision 1. Assignment upon recovery. The rights under the policy of a person recovering under this chapter shall be deemed to have been assigned by the person to the association to the extent of the recovery. Subd. 2. Required cooperation. Every insured or claimant seeking the protection of this chapter shall cooperate with the association to the same extent as the insured would have been required to cooperate with the insurer. Subd. 3. Limitation on action against insured. The association has no cause of action against the insured of the insurer for any sums it has paid out except the causes of action the insurer would have had if the sums had been paid by the insurer. Subd. 4. Insurer operating on plan with assessment liability. In the case of an insurer operating on a plan with assessment liability, payments of claims of the association do not operate to reduce the liability of insureds to the receiver, liquidator or statutory successor for unpaid assessments. Subd. 5. Priority of claims expenses in liquidation proceedings. The expenses of the association or similar organization in handling claims are accorded the same priority as the liquidator's expenses. The association and a similar organization in another state must be recognized as claimants in the liquidation of an insolvent insurer for amounts paid by them on covered claims as determined under this chapter or similar laws in other states and must receive dividends and other distributions at the priority set forth in chapter 60B. The receiver, liquidator, or statutory successor of an insolvent insurer is bound by determinations of covered claim eligibility under this chapter and by settlements of claims made by the association or a similar organization in another state. The court having jurisdiction shall grant the claims priority equal to that which the claimant would have been entitled against the assets of the insolvent insurer in the absence of this chapter. Subd. 6. Statement of claims paid; periodic filing. The association shall periodically file with the receiver or liquidator of the insurer statements of the covered claims paid by the association and estimates of anticipated claims against the association which shall preserve the rights of the association against the assets of the insurer. Subd. 7. Authorized recovery in certain insolvencies. The association may recover the amount of any covered claim including claim handling expenses paid, resulting from insolvencies which occur after July 31, 1996, on behalf of an insured who has a net worth of $25,000,000 as provided in section 60C.09, subdivision 2, clause (3), on December 31 of the year immediately preceding the date the insurer becomes an insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this chapter. History:  1971 c 145 s 11; 1986 c 444; 1996 c 446 art 2 s 8; 1997 c 52 s 8; 2003 c 74 s 7
60C.12 APPEAL AND REVIEW. Subdivision 1. Appeal. A claimant whose claim has been declared to be not covered or reduced by the board under section 60C.10 may appeal to the board within 30 days after the claimant has been notified of the board's decision and of the rights of the claimant under this section. Subd. 2. Review. Decisions of the board under subdivision 1 are subject to appeal to the commissioner of commerce who may overturn, affirm, or modify the board's actions or take other action the commissioner considers appropriate. The appeal to the commissioner must be in the manner provided in chapter 14. Subd. 3. Judicial review. A final action or order of the commissioner under this subdivision is subject to judicial review in the manner provided by chapter 14. In lieu of the appeal to the commissioner under subdivision 2, a claimant may seek judicial review of the board's actions. History:  1971 c 145 s 12; 1986 c 444; 1987 c 337 s 33
60C.13 EXHAUSTION OF OTHER COVERAGE. Subdivision 1. Other policy coverage. Any person having a claim under another policy whether or not the policy is a policy of a member insurer, which claim arises out of the same facts which give rise to the covered claim, shall be first required to exhaust the person's right under the other policy. Any amount payable on a covered claim under this chapter shall be reduced by the amount of any recovery under such insurance policy. For purposes of this subdivision, another insurance policy does not include a workers' compensation policy. Subd. 2. Other guaranty association coverage. Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the state of residence of the insured except that if the claim is a first party claim for damage to property with a permanent location, that person shall seek recovery first from the association of the state in which the property is located, and if it is a workers' compensation claim, that person shall seek recovery first from the association of the residence of the claimant. Any recovery under this chapter shall be reduced by the amount of recovery from any other insurance guaranty association or its equivalent. History:  1971 c 145 s 13; 1986 c 444; 1988 c 541 s 9; 1991 c 325 art 6 s 8; 1997 c 52 s 9
60C.14 DUTIES AND POWERS OF COMMISSIONER. Subdivision 1. Mandatory powers and duties. The commissioner shall: (a) Notify the association of the issuance of any order of liquidation of a member insurer not later than three days after the commissioner has knowledge of the issuance of the order. (b) Upon request of the board of directors provide the association with a statement of the net direct written premiums of each member insurer. Subd. 2. Optional powers and duties. The commissioner may: (a) Suspend or revoke, after notice and hearing, the certificate of authority to transact insurance or to execute surety bonds in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a fine on any member insurer which fails to pay an assessment when due. The fine shall not exceed five percent of the unpaid assessment per month, except that no fine shall be less than $100 per month. (b) Revoke the designation of any servicing facility if the commissioner finds claims are being handled unsatisfactorily. (c) Disclose to the board of directors information regarding any member insurer, or any company seeking admission to transact insurance business in this state, whose financial condition may be hazardous to policyholders or to the public. This disclosure does not violate any data privacy requirement or any obligation to treat the information as privileged. This disclosure does not change the data privacy or privileged status of the information. Board members shall not disclose the information to anyone else or use the information for any purpose other than their duties as board members. Subd. 3. Judicial review. Any final action or order of the commissioner under this chapter shall be subject to judicial review in a court of competent jurisdiction. History:  1971 c 145 s 14; 1976 c 185 s 7; 1986 c 444; 1991 c 325 art 21 s 3; 1997 c 52 s 10
60C.15 PREVENTION OF INSOLVENCIES. To aid in the detection and prevention of insurer insolvencies: (1) The board of directors may upon majority vote make recommendations to the commissioner on matters generally related to improving or enhancing regulation for solvency. (2) The board of directors may, at the conclusion of any domestic insurer insolvency in which the association was obligated to pay covered claims, prepare and submit to the commissioner a report on the history and causes of the insolvency, based on the information available to the association. History:  1971 c 145 s 15; 1986 c 444; 1988 c 541 s 10; 1997 c 52 s 11
60C.16 EXAMINATION OF ASSOCIATION. The association is subject to examination and regulation by the commissioner. The board of directors shall submit each year a financial report for the preceding calendar year in a form approved by the commissioner. History:  1971 c 145 s 16; 2003 c 74 s 8
60C.17 TAX EXEMPTION. The association is exempt from payment of all taxes imposed under chapter 297I and all fees and all other taxes levied by this state or any of its subdivisions except taxes levied on real or personal property. History:  1971 c 145 s 17; 2000 c 394 art 2 s 9
60C.18 RECOGNITION OF ASSESSMENTS IN RATES. Subdivision 1. Recognition required. The rates and premiums charged for insurance policies and fidelity and surety bonds to which this chapter applies may include amounts sufficient to recoup a sum equal to the amounts paid to the association by the member insurer less any amounts returned to the member insurer by the association. The rates shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments paid by the member insurer. Subd. 2.  [Repealed, 2003 c 74 s 11] History:  1971 c 145 s 18; 1976 c 185 s 8; 1988 c 541 s 11; 2003 c 74 s 9
60C.19 IMMUNITY. There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, the association or its agents or employees, the board of directors, or a person serving as an alternative or substitute representative of a director, or the commissioner, or the commissioner's representatives for action taken or a failure to act by them in the performance of their powers and duties under this chapter. History:  1971 c 145 s 19; 1986 c 444; 1997 c 52 s 12
60C.195 STAY OF PROCEEDINGS. All proceedings in which the insolvent insurer is a party or is obligated to defend a party in a court in this state shall, subject to waiver by the association in specific cases involving covered claims, be stayed for six months and additional time that may be determined by the court. The stay must run from the date of the final order of liquidation with a finding of insolvency is entered or an ancillary proceeding is instituted in the state, whichever is later. The proceedings are stayed to permit proper defense by the association of all pending causes of action. As to covered claims arising from a judgment under decision, verdict, or finding based on the default of the insolvent insurer or its failure to defend an insured, the association, either on its own behalf or on behalf of an insured, may apply to have the judgment, order, decision, verdict, or finding set aside by the same court or administrator that made the judgment, order, decision, verdict, or finding and must be permitted to defend the claim on the merits. The liquidator, receiver, or statutory successor of an insolvent insurer covered by this chapter must permit access by the board or its authorized representative to the insolvent insurer's records that are necessary for the board in carrying out its functions under this chapter with regard to covered claims. In addition, the liquidator, receiver, or statutory successor must provide the board or its representative with copies of those records upon request by the board and at the expense of the board. History:   1997 c 52 s 13 
60C.20 UNFAIR TRADE PRACTICES. It is an unfair trade practice, subject to regulation under sections 72A.17 through 72A.32, for any insurer or agent to make use in any manner of the protection given policyholders by this chapter as a reason for buying insurance. History:   1971 c 145 s 20 
60C.21 INSOLVENCY; NOTICE OF GUARANTY FUND PROTECTION. Subdivision 1. Notice required. No person, including an insurer, agent, or affiliate of an insurer or agent shall sell, or offer for sale, a covered property and casualty insurance policy, unless the notice, in the form specified in subdivision 2, is given or obtained with or as a part of the application for that policy. For telephonic sales, the notice may be given or obtained either with or as part of the application for, or at the time of delivery of, that policy, and the person offering the policy shall document the fact that the notice was given. This section does not apply to renewals, unless the renewal increases the dollar amount of a coverage by more than 100 percent. The notice must be given or obtained in writing or in the same medium as the application for insurance. Subd. 2. Form. The notice required under subdivision 1 must be in the following form: "NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN INSOLVENCY UNDER THE MINNESOTA INSURANCE GUARANTY ASSOCIATION LAW The financial strength of your insurer is one of the most important things for you to consider when determining from whom to purchase a property or liability insurance policy. It is your best assurance that you will receive the protection for which you purchased the policy. If your insurer becomes insolvent, you may have protection from the Minnesota Insurance Guaranty Association as described below but to the extent that your policy is not protected by the Minnesota Insurance Guaranty Association or if it exceeds the guaranty association's limits, you will only have the assets, if any, of the insolvent insurer to satisfy your claim. Residents of Minnesota who purchase property and casualty or liability insurance from insurance companies licensed to do business in Minnesota are protected, SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer becomes insolvent. This protection is provided by the Minnesota Insurance Guaranty Association. Minnesota Insurance Guaranty Association (insert current address) The maximum amount that the Minnesota Insurance Guaranty Association will pay in regard to a claim under all policies issued by the same insurer is limited to $300,000. This limit does not apply to workers' compensation insurance. Protection by the guaranty association is subject to other substantial limitations and exclusions. If your claim exceeds the guaranty association's limits, you may still recover a part or all of that amount from the proceeds from the liquidation of the insolvent insurer, if any exist. Funds to pay claims may not be immediately available. The guaranty association assesses insurers licensed to sell property and casualty or liability insurance in Minnesota after the insolvency occurs. Claims are paid from the assessment. THE PROTECTION PROVIDED BY THE GUARANTY ASSOCIATION IS NOT A SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES THAT ARE WELL MANAGED AND FINANCIALLY STABLE. IN SELECTING AN INSURANCE COMPANY OR POLICY, YOU SHOULD NOT RELY ON PROTECTION BY THE GUARANTY ASSOCIATION. THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE POLICYHOLDERS OF PROPERTY AND CASUALTY INSURANCE POLICIES OF THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES INSOLVENT. THIS NOTICE IN NO WAY IMPLIES THAT THE COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS. ALL PROPERTY AND CASUALTY INSURANCE POLICIES ARE REQUIRED TO PROVIDE THIS NOTICE." Additional language may be added to the notice if approved by the commissioner prior to its use in the form. Subd. 3. Effect of notice. The distribution, delivery, contents, or interpretation of the notice required by this section shall not mean that the policy would be covered in the event of the insolvency of a member insurer if coverage is not otherwise provided by this chapter. Failure to receive the notice does not give the policyholder, certificate holder, or any other interested party any greater rights than those provided by this chapter. Subd. 4. Exemption. This section does not apply to fraternal benefit societies regulated under chapter 64B or to fidelity or surety bonds, policies, or contracts. History:  1992 c 540 art 2 s 10; 1997 c 52 s 14; 2011 c 52 s 1; 2012 c 185 s 1
60C.22 NOTICE FOR POLICY OR CONTRACT NOT COVERED. A policy or contract not covered by the Minnesota Life and Health Insurance Guaranty Association or the Minnesota Insurance Guaranty Association must contain the following notice in 10-point type, stamped in red ink on the policy or contract and the application: "THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE MINNESOTA INSURANCE GUARANTY ASSOCIATION. IN THE CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED. ONLY THE ASSETS OF THIS INSURER WILL BE AVAILABLE TO PAY YOUR CLAIM." This section does not apply to fraternal benefit societies regulated under chapter 64B. History:  1992 c 540 art 2 s 11; 1993 c 248 s 1
60D.09 PENALTIES. Subdivision 1. Failure to file registration statement; civil penalty. An insurer failing, without just cause, to file a registration statement as required in section 60D.19 shall pay a penalty of $1,000 for each day's delay, to be recovered by the commissioner and paid into the general fund. The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer. Subd. 2. Failure to provide notice and filing regarding affiliated transaction or agreement; civil penalty. An insurer failing, without just cause, to provide the appropriate notice and filing under section 60D.20 regarding an affiliated transaction or agreement, shall pay a penalty of $5,000, to be recovered by the commissioner and paid into the general fund. Subd. 3. Certain contracts and agreements; cease and desist and void orders. Whenever it appears to the commissioner that an insurer subject to sections 60D.15 to 60D.29 or a director, officer, employee, or agent of an insurer has engaged in a transaction or entered into a contract that is subject to section 60D.20 and that would have been disapproved by the commissioner, the commissioner may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing, the commissioner may also order the insurer to void any contracts and restore the status quo if the action is in the best interest of the policyholders, creditors, or the public. Subd. 4. Criminal penalties. Whenever it appears to the commissioner that any insurer or any director, officer, employee or agent thereof has committed a willful violation of sections 60D.15 to 60D.29, the commissioner may cause criminal proceedings to be instituted by the district court for the county in which the principal office of the insurer is located or if such insurer has no such office in the state, then by the District Court for Ramsey County against such insurer or the responsible director, officer, employee or agent thereof. Any person who willfully violates sections 60D.15 to 60D.29 shall be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. History:  1971 c 288 s 9; 1992 c 464 art 2 s 1; 2014 c 198 art 5 s 1
60D.15 DEFINITIONS. Subdivision 1. Terms. For purposes of this chapter, the terms in subdivisions 2 to 10 have the meanings given them, unless the context otherwise requires. Subd. 2. Affiliate. An "affiliate" of, or person "affiliated" with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. Subd. 3. Commissioner. The term "commissioner" means the commissioner of commerce, the commissioner's deputies, or the Commerce Department, as appropriate. Subd. 4. Control. The term "control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with, corporate office held by, or court appointment of, the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by section 60D.19, subdivision 11, that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect. Subd. 4a. Enterprise risk. "Enterprise risk" means an activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's risk-based capital to fall into company action level as set forth in sections 60A.50 to 60A.696 or would cause the insurer to be in hazardous financial condition in accordance with the standards of section 60G.20. Subd. 4b. Groupwide supervisor. "Groupwide supervisor" means the regulatory official authorized to engage in conducting and coordinating groupwide supervision activities who is determined or acknowledged by the commissioner under section 60D.217 to have sufficient significant contacts with the internationally active insurance group. Subd. 5. Insurance holding company system. An "insurance holding company system" consists of two or more affiliated persons, one or more of which is an insurer. Subd. 6. Insurer. The term "insurer" means a company qualified and licensed by the commissioner to transact the business of insurance, but does not include an insurance solicitor, agent, or agency. The term also does not include: (1) agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state; or (2) nonprofit medical and hospital service associations. Subd. 6a. Internationally active insurance group. "Internationally active insurance group" means an insurance holding company system that (1) includes an insurer registered under section 60D.19; and (2) meets the following criteria: (i) premiums written in at least three countries, (ii) the percentage of gross premiums written outside the United States is at least ten percent of the insurance holding company system's total gross written premiums, and (iii) based on a three-year rolling average, the total assets of the insurance holding company system are at least $50,000,000,000 or the total gross written premiums of the insurance holding company system are at least $10,000,000,000. Subd. 7. Person. A "person" is an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but does not include any joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property. Subd. 8. Security holder. A "security holder" of a specified person is one who owns any security of the person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any security of the person. Subd. 9. Subsidiary. A "subsidiary" of a specified person is an affiliate controlled by the person directly or indirectly through one or more intermediaries. Subd. 10. Voting security. The term "voting security" includes any security convertible into or evidencing a right to acquire a voting security. History:  1991 c 325 art 14 s 2; 1992 c 564 art 1 s 27; 2014 c 198 art 5 s 2; 2019 c 26 art 2 s 1,2
60D.16 SUBSIDIARIES OF INSURERS. Subdivision 1. Authorization. A domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries engaged in the following kinds of business: (1) any kind of insurance business authorized by the jurisdiction in which it is incorporated; (2) acting as an insurance broker or as an insurance agent for its parent or for any of its parent's insurer subsidiaries; (3) investing, reinvesting, or trading in securities for its own account, that of its parent, any subsidiary of its parent, or any affiliate or subsidiary; (4) management of any investment company subject to or registered pursuant to the Investment Company Act of 1940, as amended, including related sales and services; (5) acting as a broker-dealer subject to or registered pursuant to the Securities Exchange Act of 1934, as amended; (6) rendering investment advice to governments, government agencies, corporations, or other organizations or groups; (7) rendering other services related to the operations of an insurance business including, but not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal, and collection services; (8) ownership and management of assets that the parent corporation could itself own or manage; (9) acting as administrative agent for a governmental instrumentality which is performing an insurance function; (10) financing of insurance premiums, agents, and other forms of consumer financing; (11) any other business activity determined by the commissioner to be reasonably ancillary to an insurance business; and (12) owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified in this section. Subd. 2. Additional investment authority. In addition to investments in common stock, preferred stock, debt obligations, and other securities otherwise permitted, a domestic insurer may also: (a) Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts that do not exceed the lesser of ten percent of the insurer's assets or 50 percent of the insurer's surplus as regards policyholders, provided that after the investments, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. In calculating the amount of these investments, investments in domestic or foreign insurance subsidiaries must be excluded, and there must be included: (1) total net money or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; and (2) all amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus, of a subsidiary subsequent to its acquisition or formation. (b) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer provided that the subsidiary agrees to limit its investments in any asset so that the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in paragraph (a) or other statutes applicable to the insurer. For the purpose of this paragraph, "the total investment of the insurer" includes: (1) any direct investment by the insurer in an asset; and (2) the insurer's proportionate share of any investment in an asset by any subsidiary of the insurer, which must be calculated by multiplying the amount of the subsidiary's investment by the percentage of the ownership of the subsidiary. (c) With the approval of the commissioner, invest any greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, if after the investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. Subd. 3. Exemption from investment restrictions. Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries made pursuant to subdivision 2 are not subject to any of the otherwise applicable restrictions or prohibitions applicable to these investments of insurers. Subd. 4. Qualification of investment; when determined. Whether any investment pursuant to subdivision 2 meets the applicable requirements is to be determined before the investment is made, by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends. Subd. 5. Cessation of control. If an insurer ceases to control a subsidiary, it shall dispose of any investment in it made pursuant to this section within three years from the time of the cessation of control or within any further time the commissioner prescribes, unless at any time after the investment has been made, the investment meets the requirements for investment under any other provision of law, and the insurer has notified the commissioner of this fact. History:   1991 c 325 art 14 s 3 
60D.17 ACQUISITION OF CONTROL OF OR MERGER WITH DOMESTIC INSURER. Subdivision 1. Filing requirements. (a) No person other than the issuer shall: (1) make a tender offer for or a request or invitation for tenders of, or enter into any agreement to exchange securities or, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if, after the consummation thereof, the person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the insurer; or (2) enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or any person controlling a domestic insurer unless, at the time the offer, request, or invitation is made or the agreement is entered into, or before the acquisition of the securities if no offer or agreement is involved, the person has filed with the commissioner and has sent to the insurer, a statement containing the information required by this section and the offer, request, invitation, agreement, or acquisition has been approved by the commissioner in the manner prescribed in this section. (b) For purposes of this section, a controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any manner, shall file with the commissioner, with a copy to the insurer, confidential notice of its proposed divestiture at least 30 days before the cessation of control. The commissioner shall determine those instances in which the party or parties seeking to divest or to acquire a controlling interest in an insurer will be required to file for and obtain approval of the transaction. (c) With respect to a transaction subject to this section, the acquiring person must also file a preacquisition notification with the commissioner, which must contain the information set forth in section 60D.18, subdivision 3, paragraph (b). A failure to file the notification may be subject to penalties specified in section 60D.18, subdivision 5. (d) For purposes of this section, a domestic insurer includes a person controlling a domestic insurer unless the person as determined by the commissioner is either directly or through its affiliates primarily engaged in business other than the business of insurance. For the purposes of this section, "person" does not include any securities broker holding, in the usual and customary brokers function, less than 20 percent of the voting securities of an insurance company or of any person that controls an insurance company. (e) The statement filed with the commissioner pursuant to subdivisions 1 and 2 must remain confidential until the transaction is approved by the commissioner, except that all attachments filed with the statement remain confidential after the approval unless the commissioner, in the commissioner's discretion, determines that confidential treatment of any of this information will interfere with enforcement of this section. Subd. 2. Content of statement. The statement to be filed with the commissioner shall be made under oath or affirmation and shall contain the following: (a) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in subdivision 1 is to be effected, hereinafter called "acquiring party"; and (1) if the person is an individual, the principal occupation and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations during the past ten years; and (2) if the person is not an individual, a report of the nature of its business operations during the past five years or for a lesser period as the person and any predecessors have been in existence; an informative description of the business intended to be done by the person and the person's subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of such person, or who perform or will perform functions appropriate to such positions. The list must include for each individual the information required by clause (1). (b) The source, nature, and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction in which funds were or are to be obtained for this purpose, including any pledge of the insurer's stock, or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing the consideration, provided, however, that where a source of the consideration is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential, if the person filing the statement so requests. (c) Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years of each acquiring party, or for a lesser period as the acquiring party and any predecessors have been in existence, and similar unaudited information as of a date not earlier than 90 days before the filing of the statement. (d) Any plans or proposals that each acquiring party may have to liquidate the insurer, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management. (e) The number of shares of any security referred to in subdivision 1 that each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement, or acquisition referred to in subdivision 1 and a statement as to the method by which the fairness of the proposal was arrived at. (f) The amount of each class of any security referred to in subdivision 1 that is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party. (g) A full description of any contracts, arrangements, or understandings with respect to any security referred to in subdivision 1 in which any acquiring party is involved, including but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description must identify the persons with whom the contracts, arrangements, or understandings have been entered into. (h) A description of the purchase of any security referred to in subdivision 1 during the 12 calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid for it. (i) A description of any recommendations to purchase any security referred to in subdivision 1 made during the 12 calendar months preceding the filing of the statement, by any acquiring party, or by anyone based upon interviews or at the suggestion of the acquiring party. (j) Copies of all tender offers for, requests, or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in subdivision 1 and, if distributed, of additional soliciting material relating to them. (k) The term of any agreement, contract, or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities referred to in subdivision 1 for tender, and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard to it. (l) An agreement by the person required to file the statement referred to in subdivision 1 that it will provide the annual report, specified in section 60D.19, subdivision 11a, for so long as control exists. (m) A consent by the person required to file the statement referred to in subdivision 1 that the person and all subsidiaries within its control in the insurance holding company system will provide information to the commissioner upon request as necessary to evaluate enterprise risk to the insurer. (n) Additional information the commissioner may by rule prescribe as necessary or appropriate for the protection of policyholders of the insurer or in the public interest. If the person required to file the statement referred to in subdivision 1 is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information called for by paragraphs (a) to (n) must be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If a partner, member, or person is a corporation, or the person required to file the statement referred to in subdivision 1 is a corporation the commissioner may require that the information called for by paragraphs (a) to (n) be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than ten percent of the outstanding voting securities of the corporation. If any material change occurs in the facts set forth in the statement filed with the commissioner and sent to the insurer pursuant to this section, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, must be filed with the commissioner and sent to the insurer within two business days after the person learns of the change. Subd. 3. Alternative filing materials. If any offer, request, invitation, agreement, or acquisition referred to in subdivision 1 is proposed to be made by means of a registration statement under the Securities Act of 1933, or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subdivision 1 may utilize these documents in furnishing the information called for by that statement. Subd. 4. Approval by commissioner; hearings. (a) The commissioner shall approve any merger or other acquisition of control referred to in subdivision 1 unless, after a public hearing, the commissioner finds that: (1) after the change of control, the domestic insurer referred to in subdivision 1 would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed, unless the domestic insurer is in rehabilitation or other court-ordered supervision and the acquiring party commits to a plan that would enable the domestic insurer to satisfy the requirements for the issuance of a license within a reasonable amount of time; (2) the effect of the merger or other acquisition of control would be substantially to lessen competition in insurance in this state or tend to create a monopoly therein in applying the competitive standard in this subdivision: (i) the informational requirements of section 60D.18, subdivision 3, paragraph (b), and the standards of section 60D.18, subdivision 4, paragraph (c), shall apply; (ii) the merger or other acquisition shall not be disapproved if the commissioner finds that any of the situations meeting the criteria provided by section 60D.18, subdivision 4, paragraph (c), exist; and (iii) the commissioner may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time; (3) the financial condition of any acquiring party is such as might jeopardize the financial stability of the insurer, or prejudice the interest of its policyholders; (4) the plans or proposals that the acquiring party has to liquidate the insurer, sell its assets, or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of the insurer and not in the public interest; (5) the competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control; or (6) the acquisition is likely to be hazardous or prejudicial to the insurance buying public. (b) The public hearing referred to in paragraph (a) must be held 30 days after the statement required by subdivision 1 is filed, and at least 20 days' notice of it shall be given by the commissioner to the person filing the statement. Not less than seven days notice of the public hearing shall be given by the person filing the statement to the insurer and to other persons designated by the commissioner. The commissioner shall make a determination within 30 days after the conclusion of the hearing. At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interest may be affected by it may present evidence, examine and cross-examine witnesses, and offer oral and written arguments and may conduct discovery proceedings in the same manner as is presently allowed in the district courts of this state. All discovery proceedings must be concluded not later than three days before the start of the public hearing. (c) If the proposed acquisition of control will require the approval of more than one commissioner, the public hearing referred to in paragraph (b) may be held on a consolidated basis upon request of the person filing the statement referred to in subdivision 1. The person shall file the statement referred to in subdivision 1 with the National Association of Insurance Commissioners (NAIC) within five days of making the request for a public hearing. A commissioner may opt out of a consolidated hearing, and shall provide notice to the applicant of the opt-out within ten days of the receipt of the statement referred to in subdivision 1. A hearing conducted on a consolidated basis must be public and must be held within the United States before the commissioners of the states in which the insurers are domiciled. The commissioners shall hear and receive evidence. A commissioner may attend the hearing, in person or by telecommunication. In this paragraph, the term "commissioner" when used in reference to an official from a state other than Minnesota means the state official charged with the responsibility of supervising the business of insurance in that state. (d) In connection with a change of control of a domestic insurer, any determination by the commissioner that the person acquiring control of the insurer shall be required to maintain or restore the capital of the insurer to the level required by the laws and regulations of this state shall be made not later than 60 days after the date of notification of the change in control submitted pursuant to section 60D.17, subdivision 1. (e) The commissioner may retain at the acquiring person's expense any attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as may be reasonably necessary to assist the commissioner in reviewing the proposed acquisition of control. Subd. 5. Exemptions. This section does not apply to: (1) Any transaction that is subject to section 60A.16, dealing with the merger or consolidation of two or more insurers. (2) Any offer, request, invitation, agreement, or acquisition that the commissioner by order exempts from this section as (i) not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer, or (ii) as otherwise not comprehended within the purposes of this section. Subd. 6. Violations. The following are violations of this section: (1) the failure to file any statement, amendment, or other material required to be filed pursuant to subdivision 1 or 2; or (2) the effectuation or any attempt to effectuate an acquisition of control of, divestiture of, or merger with, a domestic insurer unless the commissioner has approved it. Subd. 7. Jurisdiction, consent to service of process. The courts of this state have jurisdiction over every person not resident, domiciled, or authorized to do business in this state who files a statement with the commissioner under this section, and overall actions involving the person arising out of violations of this section, and the person is deemed to have performed acts equivalent to and constituting an appointment by the person of the commissioner to be the person's true and lawful attorney upon whom may be served all lawful process in any action, suit, or proceeding arising out of violations of this section. Copies of all lawful process shall be served on the commissioner in compliance with section 45.028, subdivision 2. History:  1991 c 325 art 14 s 4; 1992 c 540 art 2 s 12; 1992 c 564 art 1 s 28; 2014 c 198 art 5 s 3-7
60D.18 ACQUISITIONS INVOLVING INSURERS NOT OTHERWISE COVERED. Subdivision 1. Definitions. The following definitions apply for the purposes of this section only: (a) "Acquisition" means an agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance, and mergers. (b) An "involved insurer" includes an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger. Subd. 2. Scope. (a) Except as exempted in paragraph (b), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state. (b) This section does not apply to the following: (1) a purchase of securities solely for investment purposes so long as such securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under section 60D.15, subdivision 4, it is not solely for investment purposes unless the commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and such disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of this state; (2) the acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if preacquisition notification is filed with the commissioner in accordance with subdivision 3, paragraph (a), 30 days before the proposed effective date of the acquisition. However, the preacquisition notification is not required for exclusion from this section, if the acquisition would otherwise be excluded from this section by any other clause of this paragraph; (3) the acquisition of already affiliated persons; (4) an acquisition if, as an immediate result of the acquisition; (i) in no market would the combined market share of the involved insurers exceed five percent of the total market; (ii) there would be no increase in any market share; or (iii) in no market would the combined market share of the involved insurers exceed 12 percent of the total market; and the market share increases by more than two percent of the total market. For the purpose of this clause, a "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state; (5) an acquisition for which a preacquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; and (6) an acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternative to improving the condition; the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner to the commissioner of this state. Subd. 3. Preacquisition notification; waiting period. (a) An acquisition covered by subdivision 2 may be subject to an order pursuant to subdivision 4 unless the acquiring person files a preacquisition notification and the waiting period has expired. The acquired person may file a preacquisition notification. The commissioner shall give confidential treatment to information submitted under this section in the same manner as provided in section 60D.22. (b) The preacquisition notification must be in the form and contain the information as prescribed by the National Association of Insurance Commissioners relating to those markets that, under subdivision 2, paragraph (b), clause (5), cause the acquisition not to be exempted from the provisions of this section. The commissioner may require the additional material and information as the commissioner deems necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subdivision 4. The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the person indicating that person's ability to render an informed opinion. (c) The waiting period required begins on the date of receipt of the commissioner of a preacquisition notification and ends on the earlier of the 30th day after the date of its receipt, or termination of the waiting period by the commissioner. Before the end of the waiting period, the commissioner on a onetime basis may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the 30th day after receipt of the additional information by the commissioner or termination of the waiting period by the commissioner. Subd. 4. Competitive standard. (a) The commissioner may enter an order under subdivision 5 with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly therein or if the insurer fails to file adequate information in compliance with subdivision 3. (b) In determining whether a proposed acquisition would violate the competitive standard of paragraph (a), the commissioner shall consider the following: (1) Any acquisition covered under subdivision 2 involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standards: (i) if the market is highly concentrated and the involved insurers possess the following shares of the market:     INSURER A INSURER B  4 percent 4 percent or more  10 percent 2 percent or more  15 percent 1 percent or more, or   (ii) if the market is not highly concentrated and the involved insurers possess the following shares of the market:     INSURER A INSURER B  5 percent 5 percent or more  10 percent 4 percent or more  15 percent 3 percent or more  19 percent 1 percent or more   A highly concentrated market is one in which the share of the four largest insurers is 75 percent or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two insurers are involved, exceeding the total of the two columns in the table is prima facie evidence of violation of the competitive standard in paragraph (a). For the purpose of this clause, the insurer with the largest share of the market shall be deemed to be insurer A. (2) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven percent or more of the market over a period of time extending from any base year five to ten years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subdivision 2 involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in clause (1) if: (i) there is a significant trend toward increased concentration in the market; (ii) one of the insurers involved is one of the insurers in a grouping of such large insurers showing the requisite increase in the market share; and (iii) another involved insurer's market is two percent or more. (3) For the purposes of paragraph (b): (i) The term "insurer" includes any company or group of companies under common management, ownership, or control. (ii) The term "market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state, and the relevant geographical market is assumed to be this state. (iii) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner. (iv) Even though an acquisition is not prima facie violative of the competitive standard under paragraph (b), clauses (1) and (2), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under paragraph (b), clauses (1) and (2), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this paragraph include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market. (c) An order may not be entered under subdivision 5 if: (1) the acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits which would arise from such economies exceed the public benefits which would arise from not lessening competition; or (2) the acquisition will substantially increase the availability of insurance, and the public benefits of such increase exceed the public benefits which would arise from not lessening competition. Subd. 5. Orders and penalties. If an acquisition violates the standards of this section, the commissioner may enter an order: (1) requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation; or (2) denying the application of an acquired or acquiring insurer for a license to do business in this state. The order must not be entered unless there is a hearing, the notice of the hearing is issued before the end of the waiting period and not less than 15 days before the hearing, and the hearing is concluded and the order is issued no later than 60 days after the end of the waiting period. Every order must be accompanied by a written decision of the commissioner setting forth findings of fact and conclusions of law. An order entered under this paragraph shall not become final earlier than 30 days after it is issued, during which time the involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon the plan or other information, the commissioner shall specify the conditions, if any, under the time period during which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified. An order pursuant to this subdivision does not apply if the acquisition is not consummated. Any person who violates a cease and desist order of the commissioner and while the order is in effect, may after notice and hearing and upon order of the commissioner, be subject at the discretion of the commissioner to any one or more of the following: (1) a monetary penalty of not more than $10,000 for every day of violation; (2) suspension or revocation of the person's license. Any insurer or other person who fails to make any filing required by this section and who also fails to demonstrate a good faith effort to comply with the filing requirement, is subject to a fine of not more than $50,000. Subd. 6. Inapplicable provisions. Sections 60D.24, subdivisions 2 and 3; and 60D.25 do not apply to acquisitions covered under subdivision 2. History:  1991 c 325 art 14 s 5; 2014 c 198 art 5 s 8,9
60D.19 REGISTRATION OF INSURERS. Subdivision 1. Registration. Every domestic insurer that is a member of an insurance holding company system shall register with the commissioner. Any insurer that is subject to registration under this section shall register within 15 days after it becomes subject to registration, and annually thereafter by June 1 of each year for the previous calendar year, unless the commissioner for good cause shown extends the time for registration, and then within such extended time. The commissioner may require any insurer authorized to do business in the state that is a member of an insurance holding company system, and that is not subject to registration under this section, to furnish a copy of the registration statement, the summary specified in subdivision 3 or other information filed by the insurance company with the insurance regulatory authority of domiciliary jurisdiction. Subd. 2. Information and form required. Every insurer subject to registration shall file the registration statement with the commissioner on a form and in a format prescribed by the National Association of Insurance Commissioners, containing the following current information: (1) the capital structure, general financial condition, ownership, and management of the insurer and any person controlling the insurer; (2) the identity and relationship of every member of the insurance holding company system; (3) the following agreements in force, and transactions currently outstanding or that have occurred during the last calendar year between the insurer and its affiliates: (i) loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates; (ii) purchases, sales, or exchange of assets; (iii) transactions not in the ordinary course of business; (iv) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business; (v) all management agreements, service contracts, and all cost-sharing arrangements; (vi) reinsurance agreements; (vii) dividends and other distributions to shareholders; and (viii) consolidated tax allocation agreements; (4) any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system; (5) if requested by the commissioner, financial statements of or within an insurance holding company system and all affiliates including, but not limited to, annual audited financial statements filed with the United States Securities and Exchange Commission (SEC) pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. An insurer required to file financial statements pursuant to this clause may satisfy the request by providing the commissioner with the most recently filed parent corporation financial statements that have been filed with the SEC; (6) other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the commissioner; (7) statements that the insurer's board of directors oversees corporate governance and internal controls and that the insurer's officers or senior management have approved and implemented, and continue to maintain and monitor, corporate governance and internal control procedures; and (8) any other information required by the commissioner by rule. Subd. 3. Summary of changes to registration statement. All registration statements must contain a summary outlining all items in the current registration statement representing changes from the prior registration statement. Subd. 4. Materiality. No information need be disclosed on the registration statement filed pursuant to subdivision 2 if the information is not material for the purposes of this section. Unless the commissioner by rule or order provides otherwise; sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of one percent or less of an insurer's admitted assets as of the 31st day of December next preceding shall not be deemed material for purposes of this section. Subd. 5.  [Repealed, 1994 c 425 s 18] Subd. 6. Information of insurers. Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer where such information is reasonably necessary to enable the insurer to comply with the provisions of this chapter. Subd. 7. Termination of registration. The commissioner shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system. Subd. 8. Consolidated filing. The commissioner may require or allow two or more affiliated insurers subject to registration to file a consolidated registration statement. Subd. 9. Alternative registration. The commissioner may allow an insurer that is authorized to do business in this state and that is part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subdivision 1 and to file all information and material required to be filed under this section. Subd. 10. Exemptions. The provisions of this section do not apply to any insurer, information, or transaction if and to the extent that the commissioner by rule or order shall exempt the same from the provisions of this section. Subd. 11. Disclaimer. Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer or the disclaimer may be filed by the insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming the affiliation. A disclaimer of affiliation is deemed to have been granted unless the commissioner, within 30 days following receipt of a complete disclaimer, notifies the filing party that the disclaimer is disallowed. In the event of disallowance, the disclaiming party may request an administrative hearing, which must be granted. The disclaiming party is relieved of its duty to register under this section if approval of the disclaimer has been granted by the commissioner, or if the disclaimer is deemed to have been approved. Subd. 11a. Enterprise risk filing. The ultimate controlling person of an insurer subject to registration shall also file an annual enterprise risk report. The report must, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report must be filed with the lead state commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners. Subd. 12. Violations. The failure to file a registration statement or any summary of the registration statement or enterprise risk filing required by this section within the time specified for the filing is a violation of this section. History:  1991 c 325 art 14 s 6; 2006 c 204 s 6; 2014 c 198 art 5 s 10-15
60D.20 STANDARDS AND MANAGEMENT OF AN INSURER WITHIN A HOLDING COMPANY SYSTEM. Subdivision 1. Transactions within an insurance holding company system. (a) Transactions within an insurance holding company system to which an insurer subject to registration is a party are subject to the following standards: (1) the terms shall be fair and reasonable; (2) agreements for cost-sharing services and management shall include the provisions required by rule issued by the commissioner; (3) charges or fees for services performed shall be reasonable; (4) expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied; (5) the books, accounts, and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions including this accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties; and (6) the insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. (b) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in clauses (1) to (7), may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into the transaction at least 30 days prior thereto, or a shorter period the commissioner permits, and the commissioner has not disapproved it within this period. The notice for amendments or modifications must include the reasons for the change and the financial impact on the domestic insurer. Informal notice must be reported, within 30 days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any: (1) sales, purchases, exchanges, loans or extensions of credit, guarantees, or investments provided the transactions are equal to or exceed: (i) with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets, or 25 percent of surplus as regards policyholders; (ii) with respect to life insurers, three percent of the insurer's admitted assets; each as of the 31st day of December next preceding; (2) loans or extensions of credit to any person who is not an affiliate, where the insurer makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit provided the transactions are equal to or exceed: (i) with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders; (ii) with respect to life insurers, three percent of the insurer's admitted assets; each as of the 31st day of December next preceding; (3) reinsurance agreements or modifications to those agreements, including: (i) all reinsurance pooling agreements; and (ii) agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three years, equals or exceeds five percent of the insurer's surplus as regards policyholders, as of the 31st day of December next preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurer; (4) all management agreements, service contracts, tax allocation agreements, guarantees, and all cost-sharing arrangements; (5) guarantees when made by a domestic insurer; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of one percent of the insurer's admitted assets or ten percent of surplus as regards policyholders as of the 31st day of December next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this paragraph; (6) direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount which, together with its present holdings in the investments, exceeds 2-1/2 percent of the insurer's surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to section 60D.16, or in nonsubsidiary insurance affiliates that are subject to the provisions of sections 60D.15 to 60D.29, are exempt from this requirement; and (7) any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders. Nothing contained in this section authorizes or permits any transactions that, in the case of an insurer not a member of the same insurance holding company system, would be otherwise contrary to law. (c) A domestic insurer may not enter into transactions which are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the commissioner determines that the separate transactions were entered into over any 12-month period for the purpose, the commissioner may exercise the authority under section 60D.25. (d) The commissioner, in reviewing transactions pursuant to paragraph (b), shall consider whether the transactions comply with the standards set forth in paragraph (a), and whether they may adversely affect the interests of policyholders. (e) The commissioner shall be notified within 30 days of any investment of the domestic insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation's voting securities. Subd. 2. Dividends and other distributions. (a) Subject to the limitations and requirements of this subdivision, the board of directors of any domestic insurer within an insurance holding company system may authorize and cause the insurer to declare and pay any dividend or distribution to its shareholders as the directors deem prudent from the earned surplus of the insurer. An insurer's earned surplus, also known as unassigned funds, shall be determined in accordance with the accounting procedures and practices governing preparation of its annual statement. Dividends which are paid from sources other than an insurer's earned surplus as of the end of the immediately preceding quarter for which the insurer has filed a quarterly or annual statement as appropriate, or are extraordinary dividends or distributions may be paid only as provided in paragraphs (d), (e), and (f). (b) The insurer shall notify the commissioner within five business days following declaration of a dividend declared pursuant to paragraph (a) and at least ten days prior to its payment. The commissioner shall promptly consider the notification filed pursuant to this paragraph, taking into consideration the factors described in subdivision 4. (c) The commissioner shall review at least annually the dividends paid by an insurer pursuant to paragraph (a) for the purpose of determining if the dividends are reasonable based upon (1) the adequacy of the level of surplus as regards policyholders remaining after the dividend payments, and (2) the quality of the insurer's earnings and extent to which the reported earnings include extraordinary items, such as surplus relief reinsurance transactions and reserve destrengthening. (d) No domestic insurer shall pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until: (1) 30 days after the commissioner has received notice of the declaration of it and has not within the period disapproved the payment; or (2) the commissioner has approved the payment within the 30-day period. (e) For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding 12 months exceeds the greater of (1) ten percent of the insurer's surplus as regards policyholders on December 31 of the preceding year; or (2) the net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a life insurer, not including realized capital gains, for the 12-month period ending on December 31 of the preceding year, but does not include pro rata distributions of any class of the insurer's own securities. (f) Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution that is conditional upon the commissioner's approval, and the declaration shall confer no rights upon shareholders until: (1) the commissioner has approved the payment of such a dividend or distribution; or (2) the commissioner has not disapproved the payment within the 30-day period referred to above. (g) For purposes of state law, dividends paid to an insurer's parent company from an insurer, which is a member of an insurance holding company system, are not considered income to the parent company. Subd. 3. Management of domestic insurers subject to registration. (a) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with sections 60D.15 to 60D.29. (b) Nothing in sections 60D.15 to 60D.29 precludes a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property, or services with one or more other persons under arrangements meeting the standards of subdivision 1, paragraph (a), clause (1). (c) Not less than one-third of the directors of a domestic insurer, and not less than one-third of the members of each committee of the board of directors of any domestic insurer shall be persons who are not officers or employees of the insurer or of any entity controlling, controlled by, or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or any such entity. At least one such person must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee of the board. (d) The board of directors of a domestic insurer shall establish one or more committees comprised solely of directors who are not officers or employees of the insurer or of any entity controlling, controlled by, or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the insurer, and recommending to the board of directors the selection and compensation of the principal officers. (e) Paragraphs (c) and (d) do not apply to a domestic insurer if the person controlling the insurer, such as an insurer, a mutual insurance holding company, or a publicly held corporation, has a board of directors and committees of the board that meet the requirements of paragraphs (c) and (d) with respect to the controlling entity. (f) An insurer may make application to the commissioner for a waiver from the requirements of this subdivision, if the insurer's annual direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, is less than $300,000,000. An insurer may also make application to the commissioner for a waiver from the requirements of this subdivision based upon unique circumstances. The commissioner may consider various factors including, but not limited to, the type of business entity, volume of business written, availability of qualified board members, or ownership or organizational structure of the entity. Subd. 4. Adequacy of surplus. For purposes of this chapter, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, must be considered: (1) the size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; (2) the extent to which the insurer's business is diversified among the several lines of insurance; (3) the number and size of risks insured in each line of business; (4) the extent of the geographical dispersion of the insurer's insured risks; (5) the nature and extent of the insurer's reinsurance program; (6) the quality, diversification and liquidity of the insurer's investment portfolio; (7) the recent past and projected future trend in the size of the insurer's investment portfolio; (8) the surplus as regards policyholders maintained by other comparable insurers; (9) the adequacy of the insurer's reserves; (10) the quality and liquidity of investments in affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the commissioner's judgment the investment so warrants; and (11) the quality of the insurer's earnings and the extent to which the reported earnings include extraordinary items, such as surplus relief reinsurance transactions and reserve destrengthening. History:  1991 c 325 art 14 s 7; 1992 c 464 art 1 s 8; 1993 c 299 s 9,10; 1994 c 425 s 8; 1999 c 177 s 28; 2002 c 330 s 3; 2014 c 198 art 5 s 16,17
60D.21 EXAMINATION. Subdivision 1. Power of commissioner. Subject to the limitation contained in this section and in addition to the powers that the commissioner has under chapter 60A relating to the examination of insurers, the commissioner shall also have the power to examine an insurer registered under section 60D.19 and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, or by an entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis. Subd. 1a. Access to books and records. (a) The commissioner may order an insurer registered under section 60D.19 to produce the records, books, or other information papers in the possession of the insurer or its affiliates that are reasonably necessary to determine compliance with sections 60D.15 to 60D.29. (b) To determine compliance with sections 60D.15 to 60D.29, the commissioner may order an insurer registered under section 60D.19 to produce information not in the possession of the insurer if the insurer can obtain access to the information pursuant to contractual relationships, statutory obligations, or other method. In the event the insurer cannot obtain the information requested by the commissioner, the insurer shall provide the commissioner a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of the information. Whenever it appears to the commissioner that the detailed explanation is without merit, the commissioner may require, after notice and hearing, the insurer to pay a penalty of $5,000 for each day's delay, or may suspend or revoke the insurer's license. Subd. 2. Use of consultants. The commissioner may retain at the registered insurer's expense the attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff that are reasonably necessary to assist in the conduct of the examination under subdivision 1. Any person so retained shall be under the direction and control of the commissioner and shall act in a purely advisory capacity. Subd. 3. Expenses. Each registered insurer producing for examination records, books, and papers pursuant to subdivision 1 is liable for and shall pay the expense of the examination in accordance with section 60A.03. Subd. 4. Compelling production. In the event the insurer fails to comply with an order, the commissioner may examine the affiliates to obtain the information. The commissioner may also issue subpoenas, administer oaths, and to examine under oath any person for purposes of determining compliance with this section. Upon the failure or refusal of a person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court. Every person is obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the state. The person is entitled to the same fees and mileage, if claimed, as a witness in district court. The fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses and their testimony, must be itemized and charged against, and be paid by, the company being examined. History:  1991 c 325 art 14 s 8; 2014 c 198 art 5 s 18-20
60D.215 SUPERVISORY COLLEGES. Subdivision 1. Power of commissioner. With respect to any insurer registered under section 60D.19, and in accordance with subdivision 3, the commissioner may also participate in a supervisory college for a domestic insurer that is part of an insurance holding company system with international operations in order to determine compliance by the insurer with sections 60D.15 to 60D.29. The powers of the commissioner with respect to supervisory colleges include, but are not limited to, the following: (1) initiating the establishment of a supervisory college; (2) clarifying the membership and participation of other supervisors in the supervisory college; (3) clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a groupwide supervisor; (4) coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and (5) establishing a crisis management plan. Subd. 2. Expenses. Each registered insurer subject to this section is liable for and shall pay the reasonable expenses of the commissioner's participation in a supervisory college in accordance with subdivision 3, including reasonable travel expenses. For purposes of this section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates, and the commissioner may establish a regular assessment to the insurer for the payment of these expenses. A registered insurer's liability for expenses under this subdivision is limited to the actual, incurred costs of the commissioner's participation in their supervisory college. Subd. 3. Supervisory college. In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management, and governance processes, and as part of the examination of individual insurers in accordance with section 60D.21, the commissioner may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies. The commissioner may enter into agreements in accordance with section 60D.22 providing the basis for cooperation between the commissioner and the other regulatory agencies, and the activities of the supervisory college. Nothing in this section delegates to the supervisory college the authority of the commissioner to regulate or supervise the insurer or its affiliates within its jurisdiction. History:  2014 c 198 art 5 s 21; 1Sp2015 c 1 art 3 s 10
60D.217 GROUPWIDE SUPERVISION OF INTERNATIONALLY ACTIVE INSURANCE GROUPS. (a) The commissioner is authorized to act as the groupwide supervisor for any internationally active insurance group in accordance with the provisions of this section. However, the commissioner may otherwise acknowledge another regulatory official as the groupwide supervisor where the internationally active insurance group: (1) does not have substantial insurance operations in the United States; (2) has substantial insurance operations in the United States, but not in this state; or (3) has substantial insurance operations in the United States and this state, but the commissioner has determined pursuant to the factors set forth in subsections (b) and (f) that the other regulatory official is the appropriate groupwide supervisor. An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the commissioner make a determination or acknowledgment as to a groupwide supervisor pursuant to this section. (b) In cooperation with other state, federal, and international regulatory agencies, the commissioner will identify a single groupwide supervisor for an internationally active insurance group. The commissioner may determine that the commissioner is the appropriate groupwide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this state. However, the commissioner may acknowledge that a regulatory official from another jurisdiction is the appropriate groupwide supervisor for the internationally active insurance group. The commissioner shall consider the following factors when making a determination or acknowledgment under this subsection: (1) the place of domicile of the insurers within the internationally active insurance group that hold the largest share of the group's written premiums, assets, or liabilities; (2) the place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group; (3) the location of the executive offices or largest operational offices of the internationally active insurance group; (4) whether another regulatory official is acting or is seeking to act as the groupwide supervisor under a regulatory system that the commissioner determines to be: (i) substantially similar to the system of regulation provided under the laws of this state; or (ii) otherwise sufficient in terms of providing for groupwide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and (5) whether another regulatory official acting or seeking to act as the groupwide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation. However, a commissioner identified under this section as the groupwide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the groupwide supervisor. The acknowledgment of the groupwide supervisor shall be made after consideration of the factors listed in clauses (1) to (5), and shall be made in cooperation with and subject to the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group, and in consultation with the internationally active insurance group. (c) Notwithstanding any other provision of law, when another regulatory official is acting as the groupwide supervisor of an internationally active insurance group, the commissioner shall acknowledge that regulatory official as the groupwide supervisor. However, in the event of a material change in the internationally active insurance group that results in: (1) the internationally active insurance group's insurers domiciled in this state holding the largest share of the group's premiums, assets, or liabilities; or (2) this state being the place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group, the commissioner shall make a determination or acknowledgment as to the appropriate groupwide supervisor for such an internationally active insurance group pursuant to subsection (b). (d) Pursuant to section 60D.21, the commissioner is authorized to collect from any insurer registered pursuant to section 60D.19 all information necessary to determine whether the commissioner may act as the groupwide supervisor of an internationally active insurance group or if the commissioner may acknowledge another regulatory official to act as the groupwide supervisor. Prior to issuing a determination that an internationally active insurance group is subject to groupwide supervision by the commissioner, the commissioner shall notify the insurer registered pursuant to section 60D.19 and the ultimate controlling person within the internationally active insurance group. The internationally active insurance group shall have not less than 30 days to provide the commissioner with additional information pertinent to the pending determination. The commissioner shall publish in the State Register and on the department's website the identity of internationally active insurance groups that the commissioner has determined are subject to groupwide supervision by the commissioner. (e) If the commissioner is the groupwide supervisor for an internationally active insurance group, the commissioner is authorized to engage in any of the following groupwide supervision activities: (1) assess the enterprise risks within the internationally active insurance group to ensure that: (i) the material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management; and (ii) reasonable and effective mitigation measures are in place; or (2) request, from any member of an internationally active insurance group subject to the commissioner's supervision, information necessary and appropriate to assess enterprise risk, including but not limited to information about the members of the internationally active insurance group regarding: (i) governance, risk assessment, and management; (ii) capital adequacy; and (iii) material intercompany transactions; (3) coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of such internationally active insurance group that are engaged in the business of insurance; (4) communicate with other state, federal and international regulatory agencies for members within the internationally active insurance group and share relevant information subject to the confidentiality provisions of section 60D.22, through supervisory colleges as set forth in section 60D.215 or otherwise; (5) enter into agreements with or obtain documentation from any insurer registered under section 60D.19, any member of the internationally active insurance group, and any other state, federal, and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the commissioner's role as groupwide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation shall not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not domiciled or incorporated in this state is doing business in this state or is otherwise subject to jurisdiction in this state; and (6) other groupwide supervision activities, consistent with the authorities and purposes enumerated above, as considered necessary by the commissioner. (f) If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the NAIC is the groupwide supervisor, the commissioner is authorized to reasonably cooperate, through supervisory colleges or otherwise, with groupwide supervision undertaken by the groupwide supervisor, provided that: (1) the commissioner's cooperation is in compliance with the laws of this state; and (2) the regulatory official acknowledged as the groupwide supervisor also recognizes and cooperates with the commissioner's activities as a groupwide supervisor for other internationally active insurance groups where applicable. Where such recognition and cooperation is not reasonably reciprocal, the commissioner is authorized to refuse recognition and cooperation. (g) The commissioner is authorized to enter into agreements with or obtain documentation from any insurer registered under section 60D.19, any affiliate of the insurer, and other state, federal, and international regulatory agencies for members of the internationally active insurance group, that provide the basis for or otherwise clarify a regulatory official's role as groupwide supervisor. (h) A registered insurer subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner's participation in the administration of this section, including the engagement of attorneys, actuaries, and any other professionals and all reasonable travel expenses. History:   2019 c 26 art 2 s 3 
60D.22 CONFIDENTIALITY. Subdivision 1. Classification protection and use of information by commissioner. Documents, materials, or other information in the possession or control of the department that are obtained by or disclosed to the commissioner or any other person in the course of an examination or investigation made pursuant to section 60D.21 and all information reported pursuant to sections 60D.17, except as provided in section 60D.17, subdivision 1, paragraph (e); 60D.18; 60D.19; and 60D.20, are classified as confidential or protected nonpublic or both, are not subject to subpoena, and are not subject to discovery or admissible in evidence in a private civil action. However, the commissioner may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer to which it pertains unless the commissioner, after giving the insurer and its affiliates who would be affected by this action notice and opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication of it, in which event the commissioner may publish all or any part in the manner the commissioner deems appropriate. Subd. 2. Testimonial privilege. Neither the commissioner nor any person who received documents, materials, or other information while acting under the authority of the commissioner or with whom these documents, materials, or other information are shared pursuant to sections 60D.15 to 60D.29 is permitted or required to testify in a private civil action concerning documents, materials, or information subject to subdivision 1 that are classified as confidential, protected nonpublic, or both. Subd. 3. Sharing of information. In order to assist in the performance of the commissioner's duties, the commissioner: (1) may share documents, materials, or other information, including the confidential, protected nonpublic, and privileged documents, materials, or information subject to this section, with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, including members of any supervisory college described in section 60D.215, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information, and has verified in writing the legal authority to maintain confidentiality; (2) notwithstanding clause (1), may only share confidential, protected nonpublic, and privileged documents, materials, or information reported pursuant to section 60D.19 with commissioners of states having statutes or regulations substantially similar to subdivision 1 and who have agreed in writing not to disclose this information; (3) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential, protected nonpublic, or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (4) shall enter into written agreements with the NAIC governing sharing and use of information provided pursuant to sections 60D.15 to 60D.29 consistent with this clause that shall: (i) specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC and its affiliates and subsidiaries pursuant to sections 60D.15 to 60D.29, including procedures and protocols for sharing by the NAIC with other state, federal, or international regulators; (ii) specify that ownership of information shared with the NAIC and its affiliates and subsidiaries pursuant to sections 60D.15 to 60D.29 remains with the commissioner and the NAIC's use of the information is subject to the direction of the commissioner; (iii) require prompt notice to be given to an insurer whose confidential or protected nonpublic information in the possession of the NAIC pursuant to sections 60D.15 to 60D.29 is subject to a request or subpoena to the NAIC for disclosure or production; and (iv) require the NAIC and its affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the NAIC and its affiliates and subsidiaries may be required to disclose confidential or protected nonpublic information about the insurer shared with the NAIC and its affiliates and subsidiaries pursuant to sections 60D.15 to 60D.29. Subd. 4. Responsibility for administration, execution, and enforcement. The sharing of information by the commissioner pursuant to sections 60D.15 to 60D.29 does not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution, and enforcement of the provisions of sections 60D.15 to 60D.29. Subd. 5. Disclosure not deemed to be waiver of privilege or confidentiality. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information occurs as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision 3. Subd. 6. Classification protection and use by others. Documents, materials, or other information in the possession or control of the NAIC pursuant to sections 60D.15 to 60D.29 are confidential, protected nonpublic, or privileged, are not subject to subpoena, and are not subject to discovery or admissible in evidence in a private civil action. History:  1991 c 325 art 14 s 9; 2014 c 198 art 5 s 22
60D.23 RULES. The commissioner may adopt the rules and orders that are necessary to carry out the provisions of this chapter. History:   1991 c 325 art 14 s 10 
60D.24 INJUNCTIONS, PROHIBITIONS AGAINST VOTING SECURITIES, SEQUESTRATION OF VOTING SECURITIES. Subdivision 1. Injunctions. Whenever it appears to the commissioner that any insurer or any director, officer, employee, or agent of the insurer has committed or is about to commit a violation of this chapter or of any rule or order issued by the commissioner, the commissioner may apply to the district court for the county in which the principal office of the insurer is located or if the insurer has no such office in this state then to the District Court for Ramsey County for an order enjoining the insurer or the director, officer, employee, or agent of the insurer from violating or continuing to violate this chapter or any rule or order, and for other equitable relief as the nature of the case and the interest of the insurer's policyholders or the public requires. Subd. 2. Voting of securities; when prohibited. No security that is the subject of any agreement or arrangement regarding acquisition, or that is acquired or to be acquired, in contravention of the provisions of this chapter or of any rule or order issued by the commissioner may be voted at any shareholder's meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though the securities were not issued and outstanding. No action taken at the meeting shall be invalidated by the voting of the securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. If an insurer or the commissioner has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of this chapter or of any rule or order issued by the commissioner, the insurer or the commissioner may apply to the district court for the county in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement, or acquisition made in contravention of section 60D.16 or any rule or order issued by the commissioner to enjoin the voting of any security so acquired, to void any vote of the security already cast at any meeting of shareholders and for other equitable relief as the nature of the case and the interest of the insurer's policyholders or the public requires. Subd. 3. Sequestration of voting securities. In any case where a person has acquired or is proposing to acquire any voting securities in violation of this chapter or any rule or order issued by the commissioner, the District Court for Ramsey County or the district court for the county in which the insurer has its principal place of business may, on such notice as the court considers appropriate, upon the application of the insurer or the commissioner seize or sequester any voting securities of the insurer owned directly or indirectly by the person, and issue any order with respect thereto as may be appropriate to effectuate the provisions of this chapter. Notwithstanding any other provisions of law, for the purposes of this chapter the sites of the ownership of the securities of domestic insurers shall be considered to be in this state. History:   1991 c 325 art 14 s 11 
60D.25 RECEIVERSHIP. Whenever it appears to the commissioner that any person has committed a violation of this chapter that so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders or the public, then the commissioner may proceed as provided in chapter 60B to take possessions of the property of the domestic insurer and to conduct the business of that insurer. History:   1991 c 325 art 14 s 12 
60D.26 RECOVERY. (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order shall have a right to recover on behalf of the insurer, (1) from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock, or (2) any payment in the form of a bonus, termination settlement or extraordinary lump-sum salary adjustment made by the insurer or its subsidiary(s) to a director, officer, or employee, where the distribution or payment pursuant to clause (1) or (2) is made at any time during the one year preceding the petition for liquidation, conservation, or rehabilitation, as the case may be, subject to the limitations of paragraphs (b), (c), and (d). (b) No such distribution shall be recoverable if the parent or affiliate shows that when paid the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations. (c) Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time such distributions were paid shall be liable up to the amount of distributions or payments under paragraph (a), the person received. Any person who otherwise controlled the insurer at the time the distributions were declared is liable up to the amount of distributions the person would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they are jointly and severally liable. (d) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds. (e) To the extent that any person liable under paragraph (c) is insolvent or otherwise fails to pay claims due from it pursuant to this paragraph, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid, is jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation or holding company or person who otherwise controlled it. History:   1991 c 325 art 14 s 13 
60D.27 REVOCATION, SUSPENSION, OR NONRENEWAL OF INSURER'S LICENSE. Whenever it appears to the commissioner that any person has committed a violation of this chapter that makes the continued operation of an insurer contrary to the interests of policyholders or the public, the commissioner may, after giving notice and an opportunity to be heard, determine to suspend, revoke, or refuse to renew the insurer's license or authority to do business in this state for the period the commissioner finds is required for the protection of policyholders or the public. The determination must be accompanied by specific findings of fact and conclusions of law. History:   1991 c 325 art 14 s 14 
60D.28 JUDICIAL REVIEW, MANDAMUS. (a) Any person aggrieved by any act, determination, rule or order, or any other action of the commissioner pursuant to this chapter may appeal therefrom to the District Court for Ramsey County. The court shall conduct its review without a jury and by trial de novo, except that if all parties, including the commissioner, so stipulate, the review shall be confined to the record. Portions of the record may be introduced by stipulation into evidence in a trial de novo as to those parties so stipulated. (b) The filing of an appeal pursuant to this section shall stay the application of the rule, order, or other action of the commissioner to the appealing party unless the court, after giving the party notice and an opportunity to be heard, determines that the stay would be detrimental to the interest of policyholders or the public. (c) Any person aggrieved by any failure of the commissioner to act or make a determination required by this chapter may petition the District Court for Ramsey County for a writ in the nature of a mandamus or a peremptory mandamus directing the commissioner to act or make this determination immediately. History:   1991 c 325 art 14 s 15 
60D.29 CONFLICT WITH OTHER LAWS. All laws and parts of laws of this state inconsistent with this chapter are superseded with respect to matters covered by this chapter. History:   1991 c 325 art 14 s 16 
60D.30 ELIGIBILITY DETERMINATION. Section 302A.521, subdivision 3, applies to a corporation that is a member of an insurance holding company system, except if a determination for advancement is not made under section 302A.521, subdivision 6, clauses (1) to (4), the corporation that is a member of an insurance holding company system may make the determination that a person is entitled to payment or reimbursement of expenses in advance of the final disposition of a proceeding upon receipt of a written affirmation as provided in section 302A.521, subdivision 3. History:   2005 c 74 s 7 
60D.50 PURPOSE AND SCOPE. (a) The purpose of sections 60D.50 to 60D.58 is to provide the requirements for maintaining a risk management framework and completing an Own Risk and Solvency Assessment (ORSA) and provide guidance and instructions for filing an ORSA Summary Report with the commissioner. (b) Sections 60D.50 to 60D.58 apply to all insurers domiciled in this state unless exempt pursuant to section 60D.55. History:   2014 c 198 art 6 s 1 
60D.51 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 60D.50 to 60D.58, the terms in this section have the meanings given them. Subd. 2. Insurance group. For the purpose of conducting an ORSA, "insurance group" means those insurers and affiliates included within an insurance holding company system as defined in section 60D.15, subdivision 5. Subd. 3. Insurer. "Insurer" has the meaning given in section 60D.15, subdivision 6, except that it does not include agencies, authorities, or instrumentalities of the United States, its possessions or territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. Subd. 4. Own Risk and Solvency Assessment or ORSA. "Own Risk and Solvency Assessment" or "ORSA" means a confidential internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer's or insurance group's current business plan, and the sufficiency of capital resources to support those risks. Subd. 5. ORSA Guidance Manual. "ORSA Guidance Manual" means the current version of the Own Risk and Solvency Assessment Guidance Manual developed and adopted by the National Association of Insurance Commissioners (NAIC) and as amended from time to time. A change in the ORSA Guidance Manual is effective on the January 1 following the calendar year in which the changes have been adopted by the NAIC. Subd. 6. ORSA Summary Report. "ORSA Summary Report" means a confidential high-level summary of an insurer's or insurance group's ORSA. History:   2014 c 198 art 6 s 2 
60D.52 RISK MANAGEMENT FRAMEWORK. An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer. History:   2014 c 198 art 6 s 3 
60D.53 ORSA REQUIREMENT. Subject to section 60D.55, an insurer, or the insurance group of which the insurer is a member, shall regularly conduct an ORSA consistent with a process comparable to the ORSA Guidance Manual. The ORSA must be conducted no less than annually but also at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member. History:   2014 c 198 art 6 s 4 
60D.54 ORSA SUMMARY REPORT. Subdivision 1. Required submission. Upon the commissioner's request and no more than once per year, an insurer shall submit to the commissioner an ORSA Summary Report or any combination of reports that together contain the information described in the ORSA Guidance Manual, applicable to the insurer or the insurance group of which it is a member. Notwithstanding any request from the commissioner, if the insurer is a member of an insurance group, the insurer shall submit the reports required by this subdivision if the commissioner is the lead state commissioner of the insurance group as determined by the procedures adopted by the National Association of Insurance Commissioners. Subd. 2. Attestation. The reports in subdivision 1 shall include a signature of the insurer's or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process attesting to the best of the executive's belief and knowledge that the insurer applies the enterprise risk management process described in the ORSA Summary Report and that a copy of the report has been provided to the insurer's board of directors or the appropriate committee of the board. Subd. 3. Alternative compliance. An insurer may comply with subdivision 1 by providing the most recent and substantially similar reports provided by the insurer or another member of an insurance group of which the insurer is a member to the commissioner of another state, or to a supervisor or regulator of a foreign jurisdiction, if that report provides information that is comparable to the information described in the ORSA Guidance Manual. A report in a language other than English must be accompanied by a translation of the report into the English language. History:   2014 c 198 art 6 s 5 
60D.55 EXEMPTION. Subdivision 1. Annual premium levels. An insurer is exempt from the requirements of sections 60D.50 to 60D.58 if: (1) the insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and (2) the insurance group of which the insurer is a member has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000. Subd. 2. Summary report required. (a) If an insurer qualifies for exemption pursuant to subdivision 1, clause (1), but the insurance group of which the insurer is a member does not qualify for exemption pursuant to subdivision 1, clause (2), then the ORSA Summary Report that may be required pursuant to section 60D.54 must include every insurer within the insurance group. This requirement may be satisfied by the submission of more than one ORSA Summary Report for any combination of insurers, provided any combination of reports includes every insurer within the insurance group. (b) If an insurer does not qualify for exemption pursuant to subdivision 1, clause (1), but the insurance group of which it is a member qualifies for exemption pursuant to subdivision 1, clause (2), then the only ORSA Summary Report that may be required pursuant to section 60D.54 is the report applicable to that insurer. Subd. 3. Waiver. An insurer that does not qualify for exemption pursuant to subdivision 1 may apply to the commissioner for a waiver from the requirements of sections 60D.50 to 60D.58 based on unique circumstances. In deciding whether to grant the insurer's request for waiver, the commissioner may consider the type and volume of business written, ownership and organizational structure, and any other factor the commissioner considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the commissioner shall coordinate with the lead state commissioner and with the other domiciliary commissioners in considering whether to grant the insurer's request for a waiver. Subd. 4. Additional requirements. Notwithstanding the exemptions in this section, the commissioner may require that an insurer maintain a risk management framework, conduct an ORSA, and file an ORSA Summary Report: (1) based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests; and (2) if the insurer has risk-based capital for a company action level event as set forth in section 60A.52 or 60A.62, meets one or more of the standards of an insurer deemed to be in a hazardous financial condition pursuant to section 60G.20, or otherwise exhibits qualities of a troubled insurer as determined by the commissioner. Subd. 5. Consequences of loss of exemption. If an insurer that qualifies for an exemption pursuant to subdivision 1 subsequently no longer qualifies for that exemption due to changes in premium as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer has one year following the year the threshold is exceeded to comply with sections 60D.50 to 60D.58. History:   2014 c 198 art 6 s 6 
60D.56 CONTENTS OF ORSA SUMMARY REPORT. Subdivision 1. Preparation and documentation. The ORSA Summary Report shall be prepared by the insurer consistent with the ORSA Guidance Manual, subject to the requirements of subdivision 2. Documentation and supporting information shall be maintained by the insurer and made available upon examination or upon request of the commissioner. Subd. 2. Review. The review of the ORSA Summary Report, and any additional requests for information, shall be made by the commissioner using similar procedures currently used in the analysis and examination of multistate or global insurers and insurance groups. History:   2014 c 198 art 6 s 7 
60D.57 CONFIDENTIALITY. Subdivision 1. Classification protection and use of information by commissioner. Documents, materials, or other information, including the ORSA Summary Report, in the possession of or control of the department that are obtained by, created by, or disclosed to the commissioner or any other person under sections 60D.50 to 60D.58 are recognized by this state as being confidential and containing trade secrets. Those documents, materials, or other information are classified as confidential or protected nonpublic or both, are not subject to subpoena, and are not subject to discovery or admissible in evidence in a private civil action. However, the commissioner may use the documents, materials, or other information in the furtherance of a regulatory or legal action brought as a part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. Subd. 2. Testimonial privilege. Neither the commissioner nor any person who received documents, materials, or other ORSA-related information, through examination or otherwise, while acting under the authority of the commissioner or with whom the documents, materials, or other information are shared pursuant to sections 60D.50 to 60D.58 is permitted or required to testify in a private civil action concerning documents, materials, or information subject to subdivision 1 that are classified as confidential, protected nonpublic, or both. Subd. 3. Sharing of information. In order to assist in the performance of the commissioner's regulatory duties, the commissioner: (1) may, upon request, share documents, materials, or other ORSA-related information, including the confidential, protected nonpublic, and privileged documents, materials, or information subject to subdivision 1, including proprietary and trade secret documents and materials with other state, federal, and international financial regulatory agencies, including members of a supervisory college, as defined in section 60D.215, with the National Association of Insurance Commissioners and with third-party consultants designated by the commissioner, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; (2) may receive documents, materials, or other ORSA-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of a supervisory college, as defined in section 60D.215, and from the National Association of Insurance Commissioners, and shall maintain as confidential, protected nonpublic, or privileged documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (3) shall enter into a written agreement with the National Association of Insurance Commissioners or a third-party consultant governing sharing and use of information provided pursuant to sections 60D.50 to 60D.58, consistent with this subdivision that: (i) specifies procedures and protocols regarding the confidentiality and security of information shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to sections 60D.50 to 60D.58, including procedures and protocols for sharing by the National Association of Insurance Commissioners with other state regulators from states in which the insurance group has domiciled insurers. The agreement must provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; (ii) specifies that ownership of information shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to sections 60D.50 to 60D.58 remains with the commissioner and the National Association of Insurance Commissioner's or a third-party consultant's use of the information is subject to the direction of the commissioner; (iii) prohibits the National Association of Insurance Commissioners or a third-party consultant from storing the information shared pursuant to sections 60D.50 to 60D.58 in a permanent database after the underlying analysis is completed; (iv) requires prompt notice to be given to an insurer whose confidential or protected nonpublic information in the possession of the National Association of Insurance Commissioners or a third-party consultant pursuant to sections 60D.50 to 60D.58 is subject to a request or subpoena to the National Association of Insurance Commissioners or a third-party consultant for disclosure or production; (v) requires the National Association of Insurance Commissioners or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the National Association of Insurance Commissioners or a third-party consultant may be required to disclose confidential or protected nonpublic information about the insurer shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to sections 60D.50 to 60D.58; and (vi) in the case of an agreement involving a third-party consultant, provides for the insurer's written consent. Subd. 4. Responsibility for administration, execution, and enforcement. The sharing of information and documents by the commissioner pursuant to sections 60D.50 to 60D.58 does not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution, and enforcement of sections 60D.50 to 60D.58. Subd. 5. Disclosure not deemed to be waiver of privilege or confidentiality. No waiver of an applicable privilege or claim of confidentiality in the documents, proprietary and trade secret materials, or other ORSA-related information occurs as a result of disclosure of ORSA-related information or documents to the commissioner under this subdivision or as a result of sharing as authorized in sections 60D.50 to 60D.58. Subd. 6. Classification, protection, and use of information by others. Documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners or a third-party consultant pursuant to sections 60D.50 to 60D.58 are confidential, protected nonpublic, and privileged, are not subject to subpoena, and are not subject to discovery or admissible in evidence in a private civil action. History:   2014 c 198 art 6 s 8 
60D.58 SANCTIONS. An insurer failing, without just cause, to timely file the ORSA Summary Report as required in sections 60D.50 to 60D.58 shall pay a penalty of $1,000 for each day's delay to be recovered by the commissioner and to be paid into the general fund. The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer. History:   2014 c 198 art 6 s 9 
60E.01 PURPOSE. The purpose of sections 60E.01 to 60E.14 is to regulate the formation and operation of risk retention groups and purchasing groups in this state formed under the federal Liability Risk Retention Act of 1986, to the extent permitted by that law. History:  1987 c 192 s 1; 1993 c 299 s 11
60E.02 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 60E.01 to 60E.14, the terms defined in this section have the meanings given them. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce in Minnesota or the commissioner, director, or superintendent of insurance in any other state. Subd. 3. Completed operations liability. "Completed operations liability" means liability arising out of the installation, maintenance, or repair of a product at a site which is not owned or controlled by a person who performs that work; or a person who hires an independent contractor to perform that work; but includes liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability. Subd. 4. Domicile. "Domicile," for purposes of determining the state in which a purchasing group is domiciled, means for a corporation, the state in which the purchasing group is incorporated; and for an unincorporated entity, the state of its principal place of business. Subd. 5. Hazardous financial condition. "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able to meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or to pay other obligations in the normal course of business. Subd. 6. Insurance. "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this state. Subd. 7. Liability. "Liability": (1) means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses, because of injuries to other persons, damage to their property, or other damage or loss to other persons resulting from or arising out of: (a) a business (whether profit or nonprofit), trade, product, services (including professional services), premises, or operations; or (b) an activity of a state or local government, or an agency or political subdivision of a state or local government; and (2) does not include personal risk liability and an employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act, United States Code, title 45, section 51, et seq. Subd. 8. Personal risk liability. "Personal risk liability" means liability for damages because of injury to a person, damage to property, or other loss or damage resulting from personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in subdivision 7. Subd. 9. Plan of operation or feasibility study. "Plan of operation" or "feasibility study" means an analysis that presents the expected activities and results of a risk retention group including, at a minimum: (1) information sufficient to verify that its members are engaged in business or activities similar or related with respect to the liability to which the members are exposed by virtue of any related, similar or common business, trade, product, services, premises, or operations; (2) for each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer; (3) historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available; (4) pro forma financial statements and projections; (5) appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition; (6) identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies, and reinsurance agreements; (7) identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license, and a description of its status in each state; and (8) other matters prescribed by the commissioner for liability insurance companies authorized by the insurance laws of the state. Subd. 10. Product liability. "Product liability" means liability for damages because of personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from the loss of use of property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of a person for those damages if the product involved was in the possession of the person when the incident giving rise to the claim occurred. Subd. 11. Purchasing group. "Purchasing group" means a group that: (1) has as one of its purposes the purchase of liability insurance on a group basis; (2) purchases the insurance only for its group members and only to cover their similar or related liability exposure, as described in clause (3); (3) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of a related, similar, or common business, trade, product, services, premises, or operations; and (4) is domiciled in a state. Subd. 12. Risk retention group. "Risk retention group" means a corporation or other limited liability association: (1) whose primary activity consists of assuming and spreading all, or a portion, of the liability exposure of its group members; (2) which is organized for the primary purpose of conducting the activity described under clause (1); (3) which: (a) is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of a state; or (b) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before that date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of the state, except that the group shall be considered to be a risk retention group only if it has been engaged in business continuously since that date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Risk Retention Act of 1986; (4) which does not exclude a person from membership in the group solely to provide for members of the group a competitive advantage over that person; (5) which: (a) has as its members only persons who have an ownership interest in the group and which has as its owners only persons who are members who are provided insurance by the risk retention group; or (b) has as its sole owner an organization which has as its members only persons who comprise the membership of the risk retention group and which has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by that group; (6) whose members are engaged in businesses or activities similar or related with respect to the liability of which the members are exposed by virtue of any related, similar, or common business trade, product, services, premises, or operations; (7) whose activities do not include the provision of insurance other than: (a) liability insurance for assuming and spreading all or a portion of the liability of its group members; and (b) reinsurance with respect to the liability of any other risk retention group, or any members of the other group, which is engaged in businesses or activities so that the group or member meets the requirement described in clause (6) from membership in the risk retention group which provides the reinsurance; and (8) the name of which includes the phrase "risk retention group." Subd. 13. State. "State" means a state of the United States or the District of Columbia. History:  1987 c 192 s 2; 1993 c 299 s 12,13
60E.03 RISK RETENTION GROUPS CHARTERED IN THIS STATE. A risk retention group shall be chartered and licensed to write only liability insurance pursuant to sections 60E.01 to 60E.14 and, except as provided elsewhere in sections 60E.01 to 60E.14, must comply with all of the laws, rules, and requirements applicable to insurers chartered and licensed in this state and with section 60E.04 to the extent those requirements are not a limitation on laws, rules, or requirements of this state. Notwithstanding any other provision to the contrary, all risk retention groups chartered in this state shall file with the department and the National Association of Insurance Commissioners (NAIC), an annual statement in a form prescribed by the NAIC, and in diskette form if required by the commissioner, and completed in accordance with its instructions and the NAIC accounting practices and procedures manual. Before it may offer insurance in a state, each risk retention group shall also submit for approval to the commissioner of commerce a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten days of a change. The group shall not offer any additional kinds of liability insurance, in this state or in any other state, until a revision of the plan or study is approved by the commissioner. At the time of filing its application for charter, the risk retention group shall provide to the commissioner in summary form the following information: the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the commissioner shall forward the information to the National Association of Insurance Commissioners. Providing notification to the NAIC is in addition to and shall not be sufficient to satisfy the requirements of section 60E.04 or any other sections of this chapter. History:  1987 c 192 s 3; 1993 c 299 s 14
60E.04 RISK RETENTION GROUPS NOT CHARTERED IN THIS STATE. Subdivision 1. Regulation. Risk retention groups chartered and licensed in states other than this state and seeking to do business as a risk retention group in this state must observe and abide by the laws of this state as set forth in subdivisions 2 to 12. Subd. 2. Notice of operations and designation of commissioner as agent. (a) Before offering insurance in this state, a risk retention group shall submit to the commissioner on a form prescribed by the NAIC: (1) a statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, date of chartering, its principal place of business, and other information including information on its membership, the commissioner may require to verify that the risk retention group is qualified under section 60E.02, subdivision 12; (2) a copy of its plan of operations or a feasibility study and revisions of the plan or study submitted to the state in which the risk retention group is chartered and licensed; provided, however, that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to a line or classification of liability insurance that was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986, and was offered before that date by a risk retention group that had been chartered and operating for not less than three years before that date. (b) The risk retention group shall submit a copy of any revision to its plan of operation or feasibility study required by section 60E.03 at the same time that the revision is submitted to the commissioner of its chartering state. (c) The risk retention group shall submit a statement of registration, for which a filing fee shall be determined by the commissioner, that designates the commissioner as its agent for the purpose of receiving service of legal documents or process. Subd. 3. Financial condition. A risk retention group doing business in this state shall submit to the commissioner: (1) a copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist, under criteria established by the National Association of Insurance Commissioners; (2) a copy of each examination of the risk retention group as certified by the commissioner or public official conducting the examination; (3) upon request by the commissioner, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group; and (4) the information required to verify its continuing qualification as a risk retention group under section 60E.02, subdivision 12. Subd. 4. Taxation. (a) Each risk retention group must file with the commissioner of revenue all returns and pay to the commissioner of revenue all amounts required under chapter 297I. (b) To the extent licensed agents or brokers are utilized in accordance with section 60E.12, they shall report to the commissioner of revenue the premiums for direct business for risks resident or located within this state which the licensees have placed with or on behalf of a risk retention group not chartered in this state. (c) To the extent that insurance agents or brokers are utilized in accordance with section 60E.12, each agent or broker shall keep a complete and separate record of all policies procured from each risk retention group, which must be open to examination by the commissioner, as provided in section 60A.031 and by the commissioner of revenue. These records must, for each policy and each kind of insurance provided, include the following: (1) the limit of liability; (2) the time period covered; (3) the effective date; (4) the name of the risk retention group which issued the policy; (5) the gross premium charged; and (6) the amount of return premiums, if any. Subd. 5. Compliance with unfair claims settlement practices law. A risk retention group, its agents and representatives, shall comply with sections 72A.20, subdivision 12, and 72A.201. Subd. 6. Deceptive, false, or fraudulent practices. A risk retention group shall comply with sections 72A.17 to 72A.32 regarding deceptive, false, or fraudulent acts or practices. However, if the commissioner seeks an injunction regarding this conduct, the injunction must be obtained from a court of competent jurisdiction. Subd. 7. Examination regarding financial condition. A risk retention group must submit to an examination by the commissioner to determine its financial condition if the commissioner of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within 60 days after a request by the commissioner of commerce. The examination must be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioner's Examiner Handbook. Subd. 8. Notice to purchasers. An application form for insurance from a risk retention group and the front and declaration pages of a policy issued by a risk retention group must contain in 10-point type, the following notice: NOTICE This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and rules of your state. State insurance insolvency guaranty funds are not available for your risk retention group. Subd. 9. Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are prohibited: (1) the solicitation or sale of insurance by a risk retention group to a person who is not eligible for membership in the group; and (2) the solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired. Subd. 10. Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this state if an insurance company is directly or indirectly a member or owner of the risk retention group, other than in the case of a risk retention group all of whose members are insurance companies. Subd. 11. Prohibited coverage. The terms of an insurance policy issued by a risk retention group shall not provide, or be construed to provide, coverage prohibited by state statute or declared unlawful by the highest court of the state whose law applies to the policy. Subd. 12. Delinquency proceedings. A risk retention group not chartered in this state and doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state insurance commissioner if there has been a finding of financial impairment after an examination under section 60E.04, subdivision 7. Subd. 13. Penalties. A risk retention group that violates any provision of this chapter is subject to fines and penalties including revocation of its right to do business in this state, applicable to licensed insurers generally. History:  1987 c 192 s 4; 1988 c 719 art 2 s 2; 1991 c 325 art 21 s 4; 1993 c 299 s 15-22; 1997 c 31 art 2 s 2; 2000 c 394 art 2 s 10
60E.05 COMPULSORY ASSOCIATIONS. No risk retention group shall be required or permitted to join or contribute financially to an insurance insolvency guaranty fund, or similar mechanism, in this state, nor shall any risk retention group, or its insureds, or claimants against its insureds receive a benefit from the fund for claims arising out of the operations of the risk retention group. When a purchasing group obtains insurance covering its members' risks from an insurer not authorized in this state or a risk retention group, no such risks, wherever resident or located, shall be covered by any insurance guaranty fund or similar mechanism in this state. When a purchasing group obtains insurance covering its members' risks from an authorized insurer, only risks resident or located in this state shall be covered by the Minnesota Guaranty Association under chapter 60C. Notwithstanding chapter 62I, the commissioner may require or exempt a risk retention group from participation in any mechanism established or authorized under the law of this state for the equitable apportionment among insurers of liability insurance losses and expenses incurred on policies written through this mechanism, and the risk retention group shall submit sufficient information to the commissioner to enable the commissioner to apportion on a nondiscriminatory basis the risk retention group's proportionate share of these losses and expenses. History:  1987 c 192 s 5; 1993 c 299 s 23
60E.06 COUNTERSIGNATURES NOT REQUIRED. A policy of insurance issued to a risk retention group or a member of that group shall not be required to be countersigned as otherwise provided in chapters 60A to 72A. History:   1987 c 192 s 6 
60E.07 PURCHASING GROUPS; EXEMPTION FROM CERTAIN LAWS RELATING TO THE GROUP PURCHASE OF INSURANCE. A purchasing group and its insurer or insurers are subject to all applicable laws of this state, except that a purchasing group and its insurer or insurers are exempt, in regard to liability insurance for the purchasing group, from any law that would: (1) prohibit the establishment of a purchasing group; (2) make it unlawful for an insurer to provide or offer to provide insurance on a basis providing, to a purchasing group or its members, advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages, or other matters; (3) prohibit a purchasing group or its members from purchasing insurance on a group basis described in clause (2); (4) prohibit a purchasing group from obtaining insurance on a group basis because the group has not been in existence for a minimum period of time or because any member has not belonged to the group for a minimum period of time; (5) require that a purchasing group must have a minimum number of members, common ownership or affiliation, or certain legal form; (6) require that a certain percentage of a purchasing group must obtain insurance on a group basis; (7) otherwise discriminate against a purchasing group or any of its members; or (8) require that any insurance policy issued to a purchasing group or any of its members be countersigned by an insurance agent or broker residing in this state. History:  1987 c 192 s 7; 1993 c 299 s 24
60E.08 NOTICE AND REGISTRATION REQUIREMENTS OF PURCHASING GROUPS. Subdivision 1. Notice to commissioner. A purchasing group that intends to do business in this state shall, prior to doing business, furnish notice to the commissioner on forms prescribed by the NAIC which shall: (1) identify the state in which the group is domiciled; (2) identify all other states in which the group intends to do business; (3) specify the lines and classifications of liability insurance which the purchasing group intends to purchase; (4) identify the insurance company or companies from which the group intends to purchase its insurance and the domicile of the company; (5) specify the method by which, and the person or persons, if any, through whom insurance will be offered to its members whose risks are resident or located in this state; (6) identify the principal place of business of the group; and (7) provide other information required by the commissioner to verify that the purchasing group is qualified under section 60E.02, subdivision 11. Subd. 2. Notice of change. A purchasing group shall, within ten days, notify the commissioner of any changes in any items set forth in subdivision 1. Subd. 3. Service of process. The purchasing group shall register with and designate the commissioner or other appropriate authority as its agent solely for the purpose of receiving service of legal documents or process for which a filing fee shall be determined by the commissioner. These requirements do not apply to a purchasing group that only purchases insurance that was authorized under the federal Product Liability Risk Retention Act of 1981, and that in any state of the United States: (1) was domiciled before April 2, 1986, and is domiciled on and after October 27, 1986, in any state of the United States; (2) before October 27, 1986, purchased insurance from an insurance carrier licensed in any state, and since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state; and (3) was a purchasing group under the requirements of the federal Product Liability Retention Act of 1981 before October 27, 1986. Subd. 4. Additional information. Each purchasing group that is required to give notice pursuant to subdivision 1 shall also furnish information required by the commissioner to: (1) verify that the entity qualifies as a purchasing group; (2) determine where the purchasing group is located; and (3) determine appropriate tax treatment. History:  1987 c 192 s 8; 1993 c 299 s 25
60E.09 RESTRICTIONS ON INSURANCE PURCHASED BY PURCHASING GROUPS. A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of the state. A purchasing group which obtains liability insurance from an insurer not admitted in this state or a risk retention group shall inform each of the members of the group which have a risk resident or located in this state that the risk is not protected by an insurance insolvency guaranty fund in this state, and that the risk retention group or insurer may not be subject to all insurance laws and regulations of this state. No purchasing group may purchase insurance providing for a deductible or self-insured retention applicable to the group as a whole, however, coverage may provide for a deductible or self-insured retention applicable to individual members. Purchases of insurance by purchasing groups are subject to the same standards regarding aggregate limits which are applicable to all purchases of group insurance. History:  1987 c 192 s 9; 1993 c 299 s 26
60E.095 PURCHASING GROUP TAXATION. Premium taxes paid for coverage of risks resident or located in this state by a purchasing group or any members of the purchasing group must be paid to the commissioner of revenue as provided in chapter 297I. History:  1993 c 299 s 27; 2000 c 394 art 2 s 11
60E.10 ADMINISTRATIVE AND PROCEDURAL AUTHORITY REGARDING RISK RETENTION GROUPS AND PURCHASING GROUPS. The commissioner of commerce may use any of the powers established under the insurance laws of this state to enforce the laws of this state not specifically preempted by the Product Liability Risk Retention Act of 1981, as amended by the Risk Retention Amendments of 1986. This includes, but is not limited to, the commissioner's administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders, impose penalties, and seek injunctive relief. With regard to an investigation, administrative proceedings, or litigation, the commissioner can rely on the procedural laws of the state. The injunctive authority of the commissioner in regard to risk retention groups is restricted by the requirement that an injunction be issued by a court of competent jurisdiction. History:  1987 c 192 s 10; 1993 c 299 s 28
60E.12 DUTY ON AGENTS OR BROKERS TO OBTAIN LICENSE. Subdivision 1. Risk retention groups. No person, firm, association, or corporation shall act or aid in any manner in soliciting, negotiating, or procuring liability insurance in this state from a risk retention group unless the person, firm, association, or corporation is licensed as an insurance agent or broker in accordance with chapter 60K. Subd. 2. Purchasing groups. (a) No person, firm, association, or corporation shall act or aid in any manner in soliciting, negotiating, or procuring liability insurance in this state for a purchasing group from an authorized insurer or a risk retention group chartered in a state unless the person, firm, association, or corporation is licensed as an insurance agent or broker in accordance with chapter 60K. (b) No person, firm, association, or corporation shall act or aid in any manner in soliciting, negotiating, or procuring liability insurance coverage in this state for any member of a purchasing group under a purchasing group's policy unless the person, firm, association, or corporation is licensed as an insurance agent or broker in accordance with chapter 60K. (c) No person, firm, association, or corporation shall act or aid in any manner in soliciting, negotiating, or procuring liability insurance from an insurer not authorized to do business in this state on behalf of a purchasing group located in this state unless the person, firm, association, or corporation is licensed as a surplus lines agent or excess line broker in accordance with sections 60A.195 to 60A.209. Subd. 3. Agent or broker residence requirement. For purposes of acting as an agent or broker for a risk retention group or purchasing group pursuant to subdivisions 1 and 2, the requirement of residence in this state does not apply. Subd. 4. Notice to insureds. Every person, firm, association, or corporation licensed pursuant to chapter 60A, on business placed with risk retention groups or written through a purchasing group, shall inform each prospective insured of the provisions of the notice required by section 60E.04, subdivision 8, in the case of a risk retention group and section 60E.09 in the case of a purchasing group. History:  1987 c 192 s 12; 1993 c 299 s 29
60E.13 BINDING EFFECT OF ORDERS ISSUED IN UNITED STATES DISTRICT COURT. An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance, or operating, in a state, or in all states or in a territory or possession of the United States, upon a finding that the group is in a hazardous financial condition or financially impaired condition shall be enforceable in the courts of the state. History:  1987 c 192 s 13; 1993 c 299 s 30
60E.14 RULES. The commissioner may adopt rules relating to risk retention groups as may be necessary or desirable to carry out the provisions of sections 60E.01 to 60E.14. History:   1987 c 192 s 14 
60F.01 ESTABLISHMENT. Any three or more employers, excluding the state and its political subdivisions as described in section 471.617, subdivision 1, who are authorized to transact business in Minnesota may jointly self-insure for any property and/or casualty or automobile liability. Joint plans must meet all conditions and terms of this chapter. History:   1987 c 337 s 34 
60F.02 EXCESS STOP-LOSS COVERAGE. A joint self-insurance plan must include aggregate excess stop-loss coverage and individual excess stop-loss coverage provided by an insurance company licensed by the state of Minnesota. Aggregate excess stop-loss coverage must include provisions to cover the excess claims of incurred, unpaid claim liability even in the event of plan termination. The joint plan must bear the risk of coverage for any member of the pool that becomes insolvent with outstanding contribution due by providing a surety bond from a Minnesota licensed surety in the amount of one year's contribution. In addition, the plan of self-insurance must have participants fund an amount at least equal to the point at which the excess or stop-loss insurer must assume 100 percent of the excess coverage limits of additional liability. A joint self-insurance plan must submit its proposed excess or stop-loss insurance contract to the commissioner of commerce at least 30 days prior to the proposed plan's effective date and at least 30 days subsequent to any renewal date. The commissioner shall review the contract to determine if it meets the standards established by this chapter and respond within a 30-day period. An excess or stop-loss insurance plan must be noncancelable for a minimum term of one year. History:   1987 c 337 s 35 
60F.03 LIMITATION ON ADMINISTRATIVE SERVICES. No joint self-insurance plan may offer marketing, risk management, or administrative services unless these services are provided by vendors duly licensed by the commissioner to provide these services. No vendor of these services may be a trustee of a joint self-insurance plan for which they provide marketing, risk management, or administrative services. History:   1987 c 337 s 36 
60F.04 APPLICABILITY OF PROVISIONS. A joint self-insurance plan is subject to the requirements of the applicable parts of chapters 60A, 65A, 65B, 72B, and 72C, and section 72A.20, unless otherwise specifically exempt. A joint self-insurance plan must offer a plan which complies with all applicable rules and statutes. History:   1987 c 337 s 37 
60F.05 FUND MANAGEMENT. Funds collected from the participants under joint self-insurance plans must be held in trust subject to the following requirements: (a) A board of trustees elected by the participants shall serve as fund managers on behalf of participants. Trustees must be plan participants. No participants may be represented by more than one trustee. A minimum of three and a maximum of seven trustees may be elected. Trustees shall receive no remuneration, but they may be reimbursed for actual and reasonable expenses incurred in connection with duties as trustees. (b) Trustees must be bonded in an amount not less than $100,000 nor more than $500,000 from a licensed bonding company. (c) Investment of plan funds is subject to the same restrictions as are applicable to political subdivisions pursuant to section 118A.04. All investments must be managed by a bank or other investment organization licensed to operate in Minnesota. (d) Trustees, on behalf of the fund, shall file annual reports with the commissioner of commerce within 30 days immediately following the end of each calendar year. The reports must summarize the financial condition of the fund, itemize collection from participants, and detail all fund expenditures. History:  1987 c 337 s 38; 1996 c 399 art 2 s 12
60F.06 RULES. The commissioner of commerce shall adopt rules to ensure the solvency and operation of all self-insured plans subject to this chapter. The commissioner may examine the joint self-insurance plans pursuant to sections 60A.03 and 60A.031. History:  1987 c 337 s 39; 1995 c 233 art 2 s 56
60F.07 REVENUE FEE. A joint self-insurance plan shall pay a two percent revenue fee. This revenue must be computed based on two percent of the paid claims level for the most recently completed calendar year. This revenue must be deposited in the general fund. History:   1987 c 337 s 40 
60F.08 APPLICABILITY. A joint self-insurance plan is not an insurer for purposes of chapter 60C. History:   1987 c 337 s 41 
60G.01 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to this chapter. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce, except that "commissioner" means the commissioner of health for administrative supervision of health maintenance organizations. Subd. 3. Consent. "Consent" means agreement to administrative supervision by the insurer. Subd. 4. Department. "Department" means the Department of Commerce, except that "department" means the Department of Health for administrative supervision of health maintenance organizations. Subd. 5. Insurer. "Insurer" means and includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuities as limited to: (1) any insurer who is doing an insurer business, or has transacted insurance in this state, and against whom claims arising from that transaction may exist now or in the future; (2) any fraternal benefit society which is subject to chapter 64B; (3) nonprofit health service plan corporations subject to chapter 62C; (4) cooperative life and casualty companies subject to sections 61A.39 to 61A.52; and (5) health maintenance organizations regulated under chapter 62D. History:  1991 c 325 art 2 s 1; 1992 c 464 art 1 s 9; 1995 c 234 art 1 s 3-5; 1997 c 225 art 2 s 62
60G.02 NOTICE TO COMPLY WITH WRITTEN REQUIREMENTS OF COMMISSIONER; NONCOMPLIANCE; ADMINISTRATIVE SUPERVISION. Subdivision 1. Administrative supervision. An insurer may be subject to administrative supervision by the commissioner if upon examination or at any other time it appears in the commissioner's discretion that: (1) the insurer's condition renders the continuance of its business hazardous to the public or to its insureds; (2) the insurer has refused to permit examination of its books, papers, accounts, records, or affairs by the commissioner, the commissioner's deputies, employees, or duly commissioned examiners; (3) a domestic insurer has unlawfully removed from this state books, papers, accounts, or records necessary for an examination of the insurer; (4) the insurer has failed to promptly comply with the applicable financial reporting statutes or rules and departmental requests relating thereto; (5) the insurer has neglected or refused to observe an order of the commissioner to make good, within the time prescribed by law, any prohibited deficiency in its capital, capital stock, or surplus; (6) the insurer is continuing to transact insurance or write business after its license has been revoked or suspended by the commissioner; (7) the insurer, by contract or otherwise, has unlawfully or has in violation of an order of the commissioner or has without first having obtained written approval of the commissioner if approval is required by law: (i) totally reinsured its entire outstanding business, or (ii) merged or consolidated substantially its entire property or business with another insurer; (8) the insurer engaged in any transaction in which it is not authorized to engage under the laws of this state; (9) the insurer refused to comply with a lawful order of the commissioner; (10) the insurer has failed to comply with the applicable provisions of the laws of this state; (11) the business of the insurer is being conducted fraudulently; or (12) the insurer gives its consent. Subd. 2. Notification. If the commissioner determines that at least one of the conditions specified in subdivision 1 exists and places the insurer under supervision, the commissioner may: (1) notify the insurer of the commissioner's determination; (2) furnish to the insurer a written list of the requirements to abate this determination; and (3) notify the insurer that it is under the supervision of the commissioner and that the commissioner is applying and enforcing the provisions of this chapter. If placed under administrative supervision, an insurer may request review as provided under chapter 14. Subd. 3. Requirement compliance. If placed under administrative supervision, the insurer shall have 60 days, or another period of time as designated by the commissioner, to comply with the requirements of the commissioner as provided under this chapter. If it is determined after notice and hearing that the insurer has not complied with the requirements of the commissioner at the end of the supervision period, the commissioner may extend the period. If the insurer complies with the requirements of the commissioner, the commissioner shall release the insurer from supervision. History:   1991 c 325 art 2 s 2 
60G.03 CONFIDENTIALITY OF CERTAIN PROCEEDINGS AND RECORDS. Subdivision 1. Confidentiality. Notwithstanding any other provision of law and except as provided in this section, proceedings, hearings, notices, correspondence, reports, records, and other information in the possession of the commissioner or the department relating to the supervision of any insurer are confidential. Subd. 2. Access. The personnel of the department shall have access to these proceedings, hearings, notices, correspondence, reports, records, or information as permitted by the commissioner. Subd. 3. Open hearings; disclosure. The commissioner may open the proceedings or hearings or disclose the notices, correspondence, reports, records, or information to a department, agency, or instrumentality of this or another state or the United States if the commissioner determines that the disclosure is necessary or proper for the enforcement of the laws of this or another state or the United States. Subd. 4. Public disclosure. The commissioner may open the proceedings or hearings or make public the notices, correspondence, reports, records, or other information if the commissioner determines that it is in the best interest of the public or in the best interest of the insurer, its insureds, creditors, or the general public. Subd. 5. Exemption. This section does not apply to hearings, notices, correspondence, reports, records, or other information obtained upon the appointment of a receiver for the insurer by a court of competent jurisdiction. History:   1991 c 325 art 2 s 3 
60G.04 PROHIBITED ACTS DURING PERIOD OF SUPERVISION. During the period of supervision, the commissioner shall serve as the administrative supervisor. The commissioner may require that the insurer shall not do any of the following things during the period of supervision without the prior approval of the commissioner: (1) dispose of, convey, or encumber its assets or its business in force; (2) withdraw funds from its bank accounts; (3) lend its funds; (4) invest its funds; (5) transfer its property; (6) incur debt, obligation, or liability; (7) merge or consolidate with another company; (8) approve new premiums or renew policies; (9) enter into a new reinsurance contract or treaty; (10) terminate, surrender, forfeit, convert, or lapse an insurance policy, certificate, or contract, except for nonpayment of premiums due; (11) release, pay, or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on an insurance policy, certificate, or contract; (12) make a material change in management; or (13) increase salaries and benefits of officers or directors or make preferential payment of bonuses, dividends, or other payments determined preferential by the commissioner. History:   1991 c 325 art 2 s 4 
60G.05 REVIEW AND STAY OF ACTION. During the period of supervision, the insurer may contest an action taken or proposed to be taken by the commissioner as provided under chapter 14. The insurer must show that the action being complained of is detrimental to the condition of the insurer. History:   1991 c 325 art 2 s 5 
60G.06 ADMINISTRATIVE ELECTION OF PROCEEDINGS. Nothing contained in this chapter precludes the commissioner from initiating judicial proceedings to place an insurer in rehabilitation or liquidation proceedings under the laws of this state, regardless of whether the commissioner has previously initiated administrative supervision proceedings under this chapter against the insurer. History:   1991 c 325 art 2 s 6 
60G.07 RULES. The commissioner may adopt rules necessary for the implementation of this chapter. History:   1991 c 325 art 2 s 7 
60G.08 IMMUNITY. There shall be no liability on the part of, and no cause of action may be brought against the commissioner or the department or its employees or agents for any action taken by them in the performance of their powers and duties under this chapter. History:   1991 c 325 art 2 s 8 
60G.09 APPLICATION. Sections 60G.01 to 60G.08 apply to domestic insurers and any other insurer doing business in this state whose state of domicile has requested the commissioner of commerce to apply sections 60G.01 to 60G.08. History:   1991 c 325 art 2 s 9 
60G.20 STANDARDS. Subdivision 1. Hazardous consideration. The following standards, either singly or a combination of two or more, may be considered by the commissioner to determine whether the continued operation of any insurer, whether domestic, foreign, or alien, transacting an insurance business in this state may be considered hazardous to the policyholders, creditors or the general public. The commissioner may consider: (1) an adverse finding reported in financial condition and market conduct examination reports; (2) the National Association of Insurance Commissioners insurance regulatory information system and its related reports; (3) the ratios of commission expense, general insurance expense, policy benefits, and reserve increases as to annual premium and net investment income which may lead to an impairment of capital and surplus; (4) whether the insurer's asset portfolio when viewed in light of current economic conditions is not of sufficient value, liquidity, or diversity to assure the company's ability to meet its outstanding obligations as they mature; (5) the ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the company's remaining surplus after taking into account the insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer; (6) whether the insurer's operating loss in the last 12-month period or any shorter period of time, including, but not limited to, net capital gain or loss, change in nonadmitted assets, and cash dividends paid to shareholders, is greater than 50 percent of the insurer's remaining surplus as regards policyholders in excess of the minimum required; (7) whether any affiliate, subsidiary, or reinsurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations; (8) contingent liabilities, pledges, or guaranties which either individually or collectively involve a total amount which in the opinion of the commissioner may affect the solvency of the insurer; (9) whether any "controlling person" of an insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer; (10) the age and collectibility of receivables; (11) whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation necessary to serve the insurer in the position; (12) whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry; (13) whether management of an insurer either has filed a false or misleading sworn financial statement, or has released a false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer; (14) whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner; or (15) whether the company has experienced or will experience in the foreseeable future cash flow or liquidity problems. Subd. 2. Commissioner's authority. For the purposes of making a determination of an insurer's financial condition under subdivision 1, the commissioner may: (1) disregard any credit or amount receivable resulting from transactions with a reinsurer which is insolvent, impaired, or otherwise subject to a delinquency proceeding; (2) make appropriate adjustments to asset values attributable to investments in or transactions with the corporation's parents, subsidiaries, or affiliates; (3) refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; or (4) increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next 12-month period. History:   1991 c 325 art 3 s 1 
60G.21 COMMISSIONER'S ORDER. Subdivision 1. Authorization. If the commissioner determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to the policyholders or the general public, then the commissioner may, upon the commissioner's determination, issue an order requiring the insurer to: (1) reduce the total amount of present and potential liability for policy benefits by reinsurance; (2) reduce, suspend, or limit the volume of business being accepted or renewed; (3) reduce general insurance and commission expenses by methods specified by the commissioner; (4) increase the insurer's capital and surplus; (5) suspend or limit the declaration and payment of dividend by an insurer to its stockholders or to its policyholders; (6) file reports in a form acceptable to the commissioner concerning the market value of an insurer's assets; (7) limit or withdraw from certain investments or discontinue certain investment practices to the extent the commissioner considers necessary; (8) document the adequacy of premium rates in relation to the risks insured; or (9) file, in addition to regular annual statements, interim financial reports on the form adopted by the National Association of Insurance Commissioners or in the format adopted by the commissioner. Subd. 2. Review. An insurer subject to an order under subdivision 1 may request, within 30 days of issuance of the order, a hearing as provided under chapter 14 to review that order. All hearings conducted under this section are closed and private. History:   1991 c 325 art 3 s 2 
60G.22 JUDICIAL REVIEW. Any order or decision of the commissioner is subject to review as provided under chapter 14 at the request of a party whose interests are substantially affected by the order or decision. History:   1991 c 325 art 3 s 3 
60H.01 SHORT TITLE. This chapter may be cited as the "Managing General Agents Act." History:   1991 c 325 art 4 s 1 
60H.02 DEFINITIONS. Subdivision 1. Application. The terms defined in this section apply to this chapter. Subd. 2. Actuary. "Actuary" means a person who is a member in good standing of the American Academy of Actuaries. Subd. 3. Insurer. "Insurer" means a person, firm, association, or corporation duly licensed in this state as an insurance company. Subd. 4. Managing general agent. (a) "Managing general agent" means a person, firm, association or corporation who: (1) manages all or part of the insurance business of an insurer, including the management of a separate division, department, or underwriting office, and (2) acts as an agent for the insurer whether known as a managing general agent, manager, or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premium equal to or more than five percent of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year, together with one or more of the following activities related to the business produced: (i) adjusts or pays claims in excess of an amount determined by the commissioner, or (ii) negotiates reinsurance on behalf of the insurer. (b) Notwithstanding paragraph (a), the following persons shall not be considered as managing general agents for the purposes of this chapter: (1) an employee of the insurer; (2) a United States manager of the United States branch of an alien insurer; (3) an underwriting manager who, pursuant to contract, manages all or a part of the insurance or reinsurance operation of the insurer, is under common control with the insurer, subject to the Insurance Holding Company Act, chapter 60D, and whose compensation is not based on the volume of premiums written; or (4) an attorney in fact authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange under powers of attorney. Subd. 5. Underwrite. "Underwrite" means the authority to accept or reject risk on behalf of the insurer. History:  1991 c 325 art 4 s 2; 1995 c 214 s 12
60H.03 LICENSURE. Subdivision 1. Risks located in state. A managing general agent representing an insurer licensed in this state with respect to risks located in this state must be licensed in this state. Subd. 2. Risks located outside of state. A managing general agent representing an insurer domiciled in this state with respect to risks located outside this state must be licensed in this state as a managing general agent. The license may be a nonresident license. Subd. 3. Requirements. The commissioner may require a bond in an amount acceptable for the protection of the insurer. The commissioner may require the managing general agent to maintain an errors and omissions policy. Subd. 4. Term and fees. The term of a managing general agent license issued under this section and the license fees imposed are the same as those applicable to a licensed insurance agent under chapter 60K. History:  1991 c 325 art 4 s 3; 2000 c 483 s 5; 2000 c 488 art 2 s 2
60H.04 REQUIRED CONTRACT PROVISIONS. No person, firm, association, or corporation acting in the capacity of a managing general agent shall place business with an insurer unless there is in force a written contract between the parties. The contract must specify the responsibilities of each party and, where both parties share responsibility for a particular function, must specify the division of the responsibilities. The contract must include the following minimum provisions: (a) The insurer may terminate the contract for cause upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination. (b) The managing general agent must give accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis. (c) All funds collected for the account of an insurer must be held by the managing general agent in the name of the insurer in a fiduciary capacity in a bank which is a member of the Federal Reserve System. This account must be used for all payments on behalf of the insurer. The managing general agent may retain no more than three months estimated claims payments and allocated loss adjustment expenses. A managing general agent shall deposit only trust funds in a trust account and shall not commingle personal funds or other funds in a trust account, except that a managing general agent may deposit and maintain a sum in a trust account from personal funds, which sum shall be specifically identified and used to pay service charges or satisfy the minimum balance requirements relating to the trust account. (d) Separate records of business written by the managing general agent must be maintained. The insurer shall have access to and the right to copy all accounts and records related to its business in a form usable by the insurer, and the commissioner shall have access to all books, bank accounts, and records of the managing general agent in a form usable to the commissioner. The records shall be retained on a basis acceptable to the commissioner. (e) The contract may not be assigned in whole or part by the managing general agent. (f) Appropriate underwriting guidelines, including: (1) the maximum annual premium volume; (2) the basis of the rates to be charged; (3) the types of risks which may be written; (4) maximum limits of liability; (5) applicable exclusions; (6) territorial limitations; (7) policy cancellation provisions; and (8) the maximum policy period. The insurer shall have the right to cancel or nonrenew any policy of insurance subject to the applicable laws and regulations concerning the cancellation and nonrenewal of insurance policies. (g) If the contract permits the managing general agent to settle claims on behalf of the insurer: (1) All claims must be reported to the insurer in a timely manner. (2) A copy of the claim file must be sent to the insurer at its request or as soon as it becomes known that the claim: (i) has the potential to exceed an amount determined by the commissioner or exceeds the limit set by the insurer, whichever is less; (ii) involves a coverage dispute; (iii) may exceed the managing general agent's claim settlement authority; (iv) is open for more than six months; or (v) is closed by payment of an amount set by the commissioner or an amount set by the insurer, whichever is less. (3) All claim files are the joint property of the insurer and managing general agent. However, upon an order of liquidation of the insurer the files become the sole property of the insurer or its estate. The managing general agent shall have reasonable access to and the right to copy the files on a timely basis. (4) Any settlement authority granted to the managing general agent may be terminated for cause upon the insurer's written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination. (h) Where electronic claims files are in existence, the contract must address the timely transmission of the data. (i) If the contract provides for a sharing of interim profits by the managing general agent, and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits will not be paid to the managing general agent until one year after they are earned for property insurance business and five years after they are earned on casualty business and not until the profits have been verified as provided under section 60H.05. (j) The managing general agent shall not: (1) bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which the automatic agreements are in effect, the coverage and amounts or percentages that may be reinsured, and commission schedules; (2) commit the insurer to participate in insurance or reinsurance syndicates; (3) appoint an agent without assuring that the agent is lawfully licensed to transact the type of insurance for which that person is appointed; (4) without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed one percent of the insurer's policyholder's surplus as of December 31 of the last completed calendar year; (5) collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer; (6) permit its subagent to serve on the insurer's board of directors; (7) jointly employ an individual who is employed with the insurer; or (8) appoint a submanaging general agent. (k) The contract term may not be for an unreasonable period of time, but in no circumstance may the term exceed five years. (l) The insurer may not authorize the managing general agent to establish the amount of the loss reserves. History:   1991 c 325 art 4 s 4 
60H.05 DUTIES OF INSURERS. Subdivision 1. Independent financial examination. The insurer shall have on file an independent financial examination, in a form acceptable to the commissioner, of each managing general agent with which it has done business. Subd. 2. On-site review. The insurer shall periodically, at least semiannually, conduct an on-site review of the underwriting and claims processing operation of the managing general agent and maintain on its records the results of that review. Subd. 3. Officer of insurer. Except as authorized under section 60H.04, paragraph (j), clause (1), binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer not affiliated with the managing general agent. Subd. 4. Written notification. Within 30 days of entering into or termination of a contract with a managing general agent, the insurer shall provide written notification of the appointment or termination to the commissioner. Notices of appointment of a managing general agent must include a statement of duties which the managing general agent is expected to perform on behalf of the insurer, the lines of insurance for which the managing general agent is to be authorized to act, and any other information the commissioner may request. Subd. 5. Review of books and records. An insurer shall review its books and records each quarter to determine if a licensed agent has become a managing general agent as defined in section 60H.02, subdivision 4. If the insurer determines that an agent has become a managing general agent, the insurer shall promptly notify the agent and the commissioner of the determination and the insurer and agent must fully comply with this chapter within 30 days. Subd. 6. Prohibited appointments. An insurer shall not appoint to its board of directors an officer, director, employee, subagent, or controlling shareholder of its managing general agents. This section does not apply to relationships governed by the Insurance Holding Company Act, chapter 60D, or, if applicable, the Business Transacted With Producer Controlled Insurer Act, chapter 60J. History:  1991 c 325 art 4 s 5; 2000 c 260 s 13
60H.06 EXAMINATION AUTHORITY. A managing general agent may be examined as if it were the insurer. History:   1991 c 325 art 4 s 6 
60H.07 ACTS OF MANAGING GENERAL AGENT. The acts of the managing general agent are considered to be the acts of the insurer on whose behalf it is acting. History:   1991 c 325 art 4 s 7 
60H.08 PENALTIES AND LIABILITIES. Subdivision 1. Commissioner's authority. If the commissioner finds pursuant to the procedural requirements of section 45.027 that a person has violated a provision of this chapter, the commissioner may take any action authorized under that section. Subd. 2. Additional penalty. In addition to authority granted by section 45.027 for each separate violation, the commissioner may impose a penalty of up to $10,000 for each day the violation continues and order the managing general agent to reimburse the insurer, rehabilitator, or liquidator of the insurer for any losses incurred by the insurer caused by a violation of this chapter committed by the managing general agent. Subd. 3. Civil remedies. (a) If the commissioner finds that because of the violation that the insurer has suffered loss or damage, the commissioner may maintain a civil action for recovery of compensatory damages for the benefit of the insurer and its policyholders and creditors or other appropriate relief. (b) If an order of rehabilitation or liquidation of the insurer has been entered pursuant to chapter 60B, and the receiver appointed under that order determines that the managing general agent or any other person has violated this chapter, or any rule or order adopted under this chapter, and the insurer suffered loss or damage, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer. Subd. 4. Judicial review. The decision, determination, or order of the commissioner under subdivision 1 is subject to judicial review as provided under chapter 14. Subd. 5. Imposition of other penalties. Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for by law. Subd. 6. Policyholder rights. Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, and auditors. History:  1991 c 325 art 4 s 8; 1995 c 214 s 13
60H.09 RULES. The commissioner of commerce may adopt rules for the implementation and administration of this chapter. History:   1991 c 325 art 4 s 9 
60J.06 SHORT TITLE. Sections 60J.06 to 60J.11 may be cited as the "Business Transacted with Producer Controlled Insurer Act." History:   1992 c 540 art 1 s 1 
60J.07 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to sections 60J.06 to 60J.11. Subd. 2. Accredited state. "Accredited state" means a state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established from time to time by the National Association of Insurance Commissioners (NAIC). Subd. 3. Captive insurer. "Captive insurer" means an insurance company owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, an insurance organization owned by the insureds whose exclusive purpose is to insure risks to member organizations or group members and their affiliates. Subd. 4. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 5. Control. "Control" or "controlled" has the meaning given in section 60D.15, subdivision 4. Subd. 6. Controlled insurer. "Controlled insurer" means a licensed insurer which is controlled, directly or indirectly, by a producer. Subd. 7. Controlling producer. "Controlling producer" means a producer who, directly or indirectly, controls an insurer. Subd. 8. Licensed insurer. "Licensed insurer" or "insurer" means any person, firm, association, or corporation licensed to transact a property/casualty insurance business in this state. The following entities are not licensed insurers for the purposes of sections 60J.06 to 60J.11: (1) all risk retention groups as defined in the Superfund Amendments Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613; the Risk Retention Act, United States Code, title 15, section 3901, et seq.; and chapter 60; (2) all residual market pools and joint underwriting authorities or associations; and (3) all captive insurers. Subd. 9. Producer. "Producer" means an insurance broker or any other person, firm, association, or corporation, when, for any compensation, commission or other thing of value, the person, firm, association, or corporation acts or aids in any manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association, or corporation. History:   1992 c 540 art 1 s 2 
60J.08 APPLICATION. Sections 60J.06 to 60J.11 apply to licensed insurers, either domiciled in this state or domiciled in a state that is not an accredited state having in effect a substantially similar law. All provisions of chapter 60D, to the extent they are not superseded by sections 60J.06 to 60J.11, apply to all parties within holding company systems subject to sections 60J.06 to 60J.11. History:   1992 c 540 art 1 s 3 
60J.09 MINIMUM STANDARDS. Subdivision 1. Application. The provisions of this section apply if, in any calendar year, the aggregate amount of gross written premium on business placed with a controlled insurer by a controlling producer is equal to or greater than five percent of the admitted assets of the controlled insurer, as reported in the controlled insurer's quarterly statement filed as of September 30 of the prior year. Subd. 2. Exemption. Notwithstanding subdivision 1, this section does not apply under the following conditions: (1) the controlling producer: (i) places insurance only with the controlled insurer, or only with the controlled insurer and a member of the controlled insurer's holding company system, or the controlled insurer's parent, affiliate, or subsidiary and receives no compensation based upon the amount of premiums written in connection with the insurance; and (ii) accepts insurance placements only from nonaffiliated subproducers and not directly from insureds; and (2) the controlled insurer, except for insurance business written through a residual market facility, accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer. Subd. 3. Required contract provisions. A controlled insurer shall not accept business from a controlling producer and a controlling producer shall not place business with a controlled insurer unless there is a written contract between the controlling producer and the insurer specifying the responsibilities of each party. The contract must be approved by the board of directors of the insurer and contain the following minimum provisions: (1) the controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination; (2) the controlling producer shall submit accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the controlling producer; (3) the controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date must be fixed so that premiums or installments collected are remitted no later than 90 days after the effective date of any policy placed with the controlled insurer under this contract; (4) all funds collected for the controlled insurer's account shall be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System, in accordance with the provisions of the insurance law as applicable. Funds of a controlling producer not required to be licensed in this state must be maintained in compliance with the requirements of the controlling producer's domiciliary jurisdiction; (5) the controlling producer shall maintain separately identifiable records of business written for the controlled insurer; (6) the contract may not be assigned in whole or in part by the controlling producer; (7) the controlled insurer shall provide the controlling producer with its underwriting standards, rules, and procedures, manuals specifying the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to the standards, rules, procedures, rates, and conditions. The standards, rules, procedures, rates, and conditions must be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer; (8) the rates and terms of the controlling producer's commissions, charges, or other fees and the purposes for those charges or fees. The rates of the commissions, charges, and other fees may be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this clause and clause (7), examples of "comparable business" include the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business; (9) if the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then the compensation may not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. In no event may the commissions be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified as provided under subdivision 5; (10) a limit on the controlling producer's writings in relation to the controlled insurer's surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling producer shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and (11) the controlling producer may negotiate but may not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which the automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules. Subd. 4. Audit committee. A controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall annually meet with management, the insurer's independent certified public accountants, and an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner to review the adequacy of the insurer's loss reserves. Subd. 5. Reporting requirements. In addition to any other required loss reserve certification, the controlled insurer shall annually, on April 1 of each year, file with the commissioner an opinion of an independent casualty actuary, or other independent loss reserve specialist acceptable to the commissioner, reporting loss ratios for each line of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year end, including incurred but not reported, on business placed by the producer. The controlled insurer shall annually report to the commissioner the amount of commissions paid to the producer, the percentage the amount represents of the net premiums written, and comparable amounts and percentage paid to noncontrolling producers for placements of the same kinds of insurance. History:   1992 c 540 art 1 s 4 
60J.10 DISCLOSURE. The producer, prior to the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship between the producer and the controlled insurer; except that, if the business is placed through a subproducer who is not a controlling producer, the controlling producer shall retain in the producer's records a signed commitment from the subproducer that the subproducer is aware of the relationship between the insurer and the producer and that the subproducer has or will notify the insured. History:   1992 c 540 art 1 s 5 
60J.11 PENALTIES. Subdivision 1. Cease and desist order. If the commissioner believes that the controlling producer or any other person has not materially complied with sections 60J.06 to 60J.11 or any rule or order, after notice and opportunity to be heard, the commissioner may order the controlling producer to cease placing business with the controlled insurer. Subd. 2. Commissioner's authority. If the commissioner finds pursuant to the procedural requirements of section 45.027, that a person has violated a provision of this chapter, the commissioner may take any action authorized under that section. Subd. 3. Civil action by commissioner. The commissioner may maintain a civil action or intervene in an action brought by or on behalf of the insurer or policyholder for recovery of compensatory damages for the benefit of the insurer or policyholder or other appropriate relief. Subd. 4. Civil action by receiver. If an order for liquidation or rehabilitation of the controlled insurer has been entered under chapter 60B and the receiver appointed under that order believes that the controlling producer or any other person has not materially complied with sections 60J.06 to 60J.11, or any rule or order, and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer. Subd. 5. Additional penalties and rights. Nothing contained in this section affects the right of the commissioner to impose any other penalties provided for in the insurance law. Nothing contained in this section is intended to or shall in any manner alter or affect the rights of policyholders, claimants, creditors, or other third parties. History:   1992 c 540 art 1 s 6 
60K.30 PURPOSE AND SCOPE. (a) Sections 60K.30 to 60K.56 govern the qualifications and procedures for the licensing of insurance producers. (b) Except as to the underlying requirement that a surplus lines agent or broker obtain an insurance producer license, this chapter does not apply to surplus lines agents or brokers licensed under sections 60A.195 to 60A.209, except as provided in sections 60K.39 and 60K.53, subdivision 2. History:   2001 c 117 art 1 s 1 
60K.31 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 60K.30 to 60K.56, the terms in subdivisions 2 to 18 have the meanings given them. The definitions in section 60A.02 are applicable to terms not defined in this section, unless the language or context clearly indicates that a different meaning is intended. Subd. 1a. Agent of record. "Agent of record" means an insurance producer, as defined in subdivision 6, who enters into an agreement with: (1) a policyholder who has individual health insurance coverage from an insurance company that the producer represents; or (2) an applicant for individual health insurance coverage from an insurance company the producer represents. Subd. 1b. Agent of record agreement. "Agent of record agreement" means an agreement documenting the agreement referenced in subdivision 1a, and that is signed by the agent of record and either a policyholder or applicant for individual health insurance coverage. Subd. 2. Business entity. "Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 3a. Fingerprint. "Fingerprint" means an impression of the lines on the finger taken for purpose of identification. Subd. 4. Home state. "Home state" means the District of Columbia and any state or territory of the United States in which an insurance producer maintains the producer's principal place of residence or principal place of business and is licensed to act as an insurance producer. Subd. 4a. Individual health plan. "Individual health plan" means a health plan as defined in section 62A.011, subdivision 4. Subd. 5. Insurance. "Insurance" means any of the lines of authority in section 60A.06. Subd. 6. Insurance producer. "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance. Subd. 7. License. "License" means a document issued by the commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier. Subd. 8. Limited line credit insurance. "Limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the commissioner determines should be designated a form of limited line credit insurance. Subd. 9. Limited line credit insurance producer. "Limited line credit insurance producer" means a person who sells, solicits, or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group, or individual policy. Subd. 10. Limited lines insurance. "Limited lines insurance" means those lines of insurance defined in section 60K.38, subdivision 1, paragraph (c), or any other line of insurance that the commissioner considers necessary to recognize for the purposes of complying with section 60K.39, subdivision 6. Subd. 11. Limited lines producer. "Limited lines producer" means a person authorized by the commissioner to sell, solicit, or negotiate limited lines insurance. Subd. 12. Negotiate. "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers. Subd. 13. Person. "Person" means an individual or a business entity. Subd. 14. Sell. "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company. Subd. 15. Solicit. "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company. Subd. 16. Terminate. "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance. Subd. 17. Uniform Business Entity Application. "Uniform Business Entity Application" means the current version of the Uniform Business Entity Application for resident and nonresident business entities of the National Association of Insurance Commissioners. Subd. 18. Uniform Application. "Uniform Application" means the current version of the Uniform Application for resident and nonresident producer licensing of the National Association of Insurance Commissioners. History:  2001 c 117 art 1 s 2; 2002 c 379 art 1 s 19; 2009 c 63 s 25,78; 2010 c 384 s 12; 2015 c 58 s 1,2; 2017 c 23 s 1
60K.32 LICENSE REQUIRED. A person shall not sell, solicit, or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority under sections 60K.30 to 60K.56. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier. History:  2001 c 117 art 1 s 3; 2002 c 379 art 1 s 20
60K.33 CRIMINAL PENALTY. A person who acts or assumes to act as an insurance producer without a license issued under this chapter is guilty of a gross misdemeanor. History:   2001 c 117 art 1 s 4 
60K.34 EXCEPTIONS TO LICENSING. Subdivision 1. License not required. Nothing in sections 60K.30 to 60K.56 requires an insurer to obtain an insurance producer license. In this section, the term "insurer" does not include an insurer's officers, directors, employees, subsidiaries, or affiliates. Subd. 2. Specific exceptions. A license as an insurance producer is not required of the following: (1) a fraternal benefit society representative exempted pursuant to section 60K.35; (2) an officer, director, or employee of an insurer or of an insurance producer if the officer, director, or employee does not receive any commission on policies written or sold to insure risks residing, located, or to be performed in this state and: (i) the officer, director, or employee's activities are executive, administrative, managerial, clerical, or a combination of these, and are only indirectly related to the sale, solicitation, or negotiation of insurance; (ii) the officer, director, or employee's function relates to underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance; or (iii) the officer, director, or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation, or negotiation of insurance; (3) a person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance; or for the purpose of enrolling individuals under plans; issuing certificates under plans or otherwise assisting in administering plans; or performs administrative services related to mass-marketed property and casualty insurance; where no commission is paid to the person for the service; (4) an employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, directors, or trustees are engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees, or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts; (5) employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation, or negotiation of insurance; (6) a person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, if the person does not sell, solicit, or negotiate insurance that would insure risks residing, located, or to be performed in this state; (7) a person who is not a resident of this state who sells, solicits, or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract, if the person is otherwise licensed as an insurance producer to sell, solicit, or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state; (8) a salaried full-time employee who counsels or advises the employee's employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer if the employee does not sell or solicit insurance or receive a commission; or (9) rental vehicle companies and their employees in connection with the offer of rental vehicle personal accident insurance under section 72A.125. History:  2001 c 117 art 1 s 5; 2002 c 379 art 1 s 21
60K.35 FRATERNAL BENEFIT SOCIETY REPRESENTATIVES. Representatives of fraternal benefit societies who solicit and negotiate insurance contracts are considered to be insurance producers and are subject to the licensing requirements of this chapter, provided that no insurance producer's license is required of: (1) any officer, employee, or secretary of a fraternal benefit society or of any subordinate lodge or branch who devotes substantially all of that person's time to activities other than the solicitation or negotiation of insurance contracts and who receives no commission or other compensation directly dependent upon the number or amount of contracts solicited or negotiated; or (2) any agent or representative of a fraternal benefit society who devotes, or intends to devote, less than 50 percent of that person's time to the solicitation and procurement of insurance contracts for that society. Any person who in the preceding calendar year has solicited and procured life insurance in excess of $50,000 face amount, or, in the case of any other kinds of insurance that the society may write, on the persons of more than 25 individuals, and who has received or will receive a commission or other compensation in the total amount of $1,000 or more, is presumed to be devoting, or intending to devote, 50 percent of that person's time to the solicitation or procurement of insurance contracts for that society. History:   2001 c 117 art 1 s 6 
60K.36 EXAMINATIONS. Subdivision 1. Requirement. A resident individual applying for an insurance producer license shall pass a written examination unless exempt under subdivision 2 or section 60K.40. The examination must test the knowledge of the individual concerning the lines of authority for which the application is made, the duties and responsibilities of an insurance producer, and the insurance laws and rules of this state. Examinations required by this section must be approved by the commissioner. Subd. 2. Examination not required. A resident individual applying for a limited lines credit insurance, title insurance, travel insurance, or bail bonds license is not required to take a written examination. Subd. 3. Administration. The commissioner may make arrangements, including contracting with an outside testing service, for administering examinations. Subd. 4. Course of study. The examination must be given only after the applicant has completed a program of studies, through classroom study, verifiable self-study, or a combination of both, which must not include a course sponsored by, offered by, or affiliated with an insurance company or its producers; except that this limitation does not preclude a bona fide professional association of insurance producers, not acting on behalf of an insurer, from offering courses. The course of study must consist of 20 hours per major line of authority in which the producer seeks to be licensed. The program of studies or study course must have been approved by the commissioner in order to qualify under this subdivision. If the applicant has been previously licensed for the particular line of insurance in the state of Minnesota, the requirement of a program of studies or a study course must be waived. A certification of compliance by the organization offering the course must accompany the applicant's license application. Subd. 4a. Exemptions. A prelicensing program of studies does not apply to: (1) an applicant for the limited lines farm property liability line of authority or the variable life and variable annuity line of authority; (2) an applicant who has received a two-year Minnesota vocational school degree in insurance; (3) an applicant who has received a four-year college degree in business with an insurance emphasis; (4) an applicant for the life line of authority who holds any of the following professional designations or successor designations: Certified Employee Benefit Specialist (CEBS), Chartered Financial Consultant (ChFC), Certified Insurance Counselor (CIC), Certified Financial Planner (CFP), Chartered Life Underwriter (CLU), Fellow of the Life Management Institute (FLMI), or Life Underwriter Training Council Fellow (LUTCF); (5) an applicant for the health line of authority who holds any of the following professional designations or successor designations: Registered Health Underwriter (RHU), Certified Employee Benefit Specialist (CEBS), Registered Employee Benefits Counselor (REBC), or Health Insurance Associate (HIA); or (6) an applicant for the Property, Casualty, or Personal Lines P & C lines of authority who provides satisfactory evidence of currently holding any of the following professional designations or successor designations: Accredited Advisor in Insurance (AAI), Associate in Risk Management (ARM), Certified Insurance Counselor (CIC), or Chartered Property and Casualty Underwriter (CPCU). Subd. 5. Failure to appear or pass. An individual who fails to appear for the examination as scheduled or fails to pass the examination shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination. Subd. 6. Results; validity. Examination results are valid for three years from the date of the examination. History:  2001 c 117 art 1 s 7; 2005 c 100 s 3; 2009 c 63 s 26,27,78; 2010 c 347 art 6 s 1; 2012 c 157 s 1
60K.361 INSURANCE EDUCATION. (a) Prelicense education must consist of 20 hours of education per line of authority. (b) The course must include an introduction to insurance and insurance-related concepts covering all of the major lines of authority except variable life and variable annuities. The course must consist of the following: (1) rules, regulations, and law; (2) basic fundamentals of insurance; (3) property: (i) types of policies; (ii) policy provisions; (iii) perils, exclusions, deductibles, and liability; and (iv) evaluating needs; (4) casualty: (i) types of policies; (ii) policy provisions; (iii) perils, exclusions, deductibles, and liability; and (iv) evaluating needs; (5) life: (i) types of policies; (ii) policy provisions; and (iii) group insurance; and (6) accident and health: (i) types of policies; (ii) policy provisions; and (iii) group insurance. (c) Courses that cover a specific major line of authority must include the following: (1) life: (i) types of life insurance policies; and (ii) Minnesota laws, rules, and regulations pertinent to life insurance; (2) accident and health: (i) types of health insurance policies; and (ii) Minnesota laws, rules, and regulations pertinent to accident and health insurance; (3) property: (i) personal lines; (ii) commercial lines; and (iii) Minnesota laws, rules, and regulations pertinent to property insurance; (4) casualty: (i) personal lines; (ii) commercial lines; and (iii) Minnesota laws, rules, and regulations pertinent to casualty insurance; and (5) personal lines: (i) types of property/casualty personal lines insurance policies; and (ii) Minnesota laws, rules, and regulations pertinent to property/casualty personal lines insurance. History:  2009 c 63 s 28,78; 2010 c 384 s 13
60K.365 PRODUCER TRAINING REQUIREMENTS FOR LONG-TERM CARE INSURANCE PRODUCTS. (a) An individual may not sell, solicit, or negotiate long-term care insurance unless the individual is licensed as an insurance producer for accident and health or sickness insurance or life insurance and has completed an initial training course and ongoing training every 24 months thereafter. The training must meet the requirements of paragraph (b). (b) The initial training course required by this section must be no less than eight hours, and the ongoing training courses required by this section must be no less than four hours every 24 months. The courses must be approved by the commissioner and may be approved as continuing education courses under section 60K.56. The courses must consist of topics related to long-term care insurance, long-term care services, and qualified state long-term care insurance partnership programs, including, but not limited to: (1) state and federal regulations and requirements and the relationship between qualified state long-term care insurance partnership programs and other public and private coverage of long-term care services, including Medicaid/Minnesota medical assistance; (2) available long-term care services and providers; (3) changes or improvements in long-term care services or providers; (4) alternatives to the purchase of private long-term care insurance; (5) the effect of inflation on benefits and the importance of inflation protection; and (6) consumer suitability standards and guidelines. The training required by this section must not include training that is insurer or company product specific or that includes any sales or marketing information, materials, or training, other than those required by state or federal law. (c) Insurers shall obtain verification that a producer has received the training required by this section before a producer is permitted to sell, solicit, or negotiate the insurer's long-term care insurance products. Insurers shall maintain records verifying that the producer has received the training contained in this section and make that verification available to the commissioner upon request. (d) The satisfaction of these initial training requirements in any state shall be deemed to satisfy the initial training requirements of this section. (e) Nonresident producers selling partnership policies shall be expected to demonstrate knowledge about unique aspects of the Minnesota medical assistance system. An insurer offering partnership products in Minnesota shall maintain records verifying that its nonresident producers have attained the required training and make that verification available to the commissioner upon request. History:   2007 c 57 art 3 s 32 
60K.366 PRODUCER TRAINING REQUIREMENTS FOR FLOOD INSURANCE PRODUCTS. An individual may not sell, solicit, or negotiate flood insurance through the National Flood Insurance Program (NFIP) unless the individual is licensed as an insurance producer for one or more lines of authority under section 60K.38, subdivision 1, paragraph (b), clauses (3), (4), and (6), and has in addition to the training otherwise required by this chapter satisfied the minimum training and education requirements established by the Federal Emergency Management Agency (FEMA) for all insurance producers who sell insurance through the NFIP and published at 70 Federal Register 52, 117. Upon request of the commissioner, an issuer must demonstrate to the commissioner that its appointed producers who sell flood insurance through the NFIP have complied with the minimum training and education requirements established by FEMA. History:   2013 c 135 art 1 s 1 
60K.37 APPLICATION FOR LICENSE. Subdivision 1. Resident insurance producer. A person is a resident of this state if that person resides in this state or the principal place of business of that person is maintained in this state. Application for a license claiming residency in this state constitutes an election of residency in this state. A license issued upon an application claiming residency in this state is void if the licensee, while holding a resident license in this state, obtains a resident license in, or claims to be a resident of, any other state or jurisdiction or if the licensee ceases to be a resident of this state. Subd. 2. Individuals. A person applying for a resident insurance producer license shall make application to the commissioner on the Uniform Application and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall find that the individual: (1) is at least 18 years of age; (2) has not committed any act that is a ground for denial, suspension, or revocation set forth in section 60K.43; (3) has completed, where required by the commissioner, a prelicensing course of study for the lines of authority for which the person has applied; (4) has paid the fees set forth in section 60K.55; and (5) has successfully passed the examinations for the lines of authority for which the person has applied. Subd. 2a. Criminal history record check; fingerprints. (a) An individual applying for a resident insurance producer license must: (1) consent to a criminal history record check; (2) submit a fingerprint card in a form acceptable to the commissioner; and (3) pay the fee required to perform criminal history record checks with the Minnesota Bureau of Criminal Apprehension and the Federal Bureau of Investigation. (b) The commissioner may contract for the collection and transmission of fingerprints required under this chapter and may order the fee for collecting and transmitting fingerprints to be payable directly to the contractor by the applicant. The commissioner may agree to a reasonable fingerprinting fee to be charged by the contractor. (c) The commissioner must treat and maintain an applicant's fingerprints and any criminal history record information obtained under this chapter as confidential and must apply security measures consistent with the standards specified by the Criminal Justice Information Services Division of the Federal Bureau of Investigation for the electronic storage of fingerprints and necessary identifying information. The commissioner must limit the use of records solely to the purposes authorized in this chapter. The fingerprints and any criminal history record information must not be subject to subpoena, other than one issued in a criminal action or investigation. (d) The commissioner may receive criminal history record information from another government agency in lieu of the Minnesota Bureau of Criminal Apprehension. Subd. 3. Businesses. (a) A business entity acting as an insurance producer is required to obtain an insurance producer license. Application must be made using the Uniform Business Entity Application. Before approving the application, the commissioner shall find that: (1) the business entity has paid the fees set forth in section 60K.55; and (2) the business entity has designated an individual licensed producer responsible for the business entity's compliance with the insurance laws and rules of this state. (b) A business entity insurance producer license does not grant authority to any individual officer, director, partner, member, or employee to act as an insurance producer. Subd. 4. Service of process. Application for a license under this chapter constitutes appointment of the commissioner as the person's agent for service of process under section 45.028. Subd. 5. Additional documentation. The commissioner may require any documents reasonably necessary to verify the information contained in an application. Subd. 6. Limited line credit insurance instruction. An insurer that sells, solicits, or negotiates any form of limited line credit insurance shall provide to each individual whose duties will include selling, soliciting, or negotiating limited line credit insurance a program of instruction that may be approved by the commissioner. Subd. 7. Variable life and variable annuity. A resident individual applying for a variable life and variable annuity license shall demonstrate that the applicant holds a current license as a life insurance producer. History:  2001 c 117 art 1 s 8; 2005 c 100 s 4; 2009 c 63 s 29,78
60K.38 LICENSE. Subdivision 1. Issuance. (a) Unless denied a license under section 60K.43, a person who has met the requirements of sections 60K.36 and 60K.37 must be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the lines of authority in paragraphs (b) and (c). (b) An individual insurance producer may receive qualification for a license in one or more of the following major lines: (1) life insurance: coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income; (2) accident and health or sickness insurance: coverage for sickness, bodily injury, or accidental death, and may include benefits for disability income; (3) property insurance: coverage for the direct or consequential loss or damage to property of every kind; (4) casualty insurance: coverage against legal liability, including that for death, injury, or disability, or damage to real or personal property; (5) variable life and variable annuity products insurance: coverage provided under variable life insurance contracts and variable annuities; and (6) personal lines: property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes. (c) An individual insurance producer may receive qualification for a license in one or more of the following limited lines: (1) limited line credit insurance; (2) farm property and liability insurance; (3) title insurance; (4) travel insurance; and (5) bail bonds. Subd. 2. Period of effectiveness. An insurance producer license remains in effect unless revoked or suspended as long as the fee set forth in section 60K.55 is paid, continuing education requirements for resident individual producers are met, and all additional documentation required by the commissioner is provided by the renewal date. Subd. 3. Lapsed license. An individual insurance producer who allows the license to lapse may, within 12 months from the due date of the renewal fee, reinstate the license without the necessity of passing a written examination. However, a penalty in the amount of twice the unpaid renewal fee must be paid by the individual for any renewal fee received after the due date. Subd. 4. Waivers. A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures. The producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures. Subd. 5. Contents. The license must contain the licensee's name, address, producer license number, and the date of issuance, the lines of authority, the expiration date, and any other information the commissioner considers necessary. Subd. 6. Name or address changes. Licensees shall inform the commissioner, by any means acceptable to the commissioner, of a change of name or address within ten days of the change. Subd. 7. Administrative assistance to commissioner. In order to assist in the performance of the commissioner's duties, the commissioner may contract with nongovernmental entities, including the National Association of Insurance Commissioners (NAIC) or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees, related to producer licensing that the commissioner and the nongovernmental entity consider appropriate. History:  2001 c 117 art 1 s 9; 2005 c 100 s 5; 2010 c 347 art 6 s 2; 2012 c 157 s 2
60K.381 SALE OF PORTABLE ELECTRONICS INSURANCE. Subdivision 1. Definitions. For purposes of this section, the following terms have the following meanings: (a) "Customer" means a person who purchases portable electronics or services. (b) "Covered customer" means a customer who elects coverage under a portable electronics insurance policy issued to a vendor of portable electronics. (c) "Portable electronics" means electronic devices that are portable in nature, their accessories, and services related to the use of the device. (d)(1) "Portable electronics insurance" means insurance providing coverage for the repair or replacement of portable electronics, which may cover portable electronics against any one or more of the following causes of loss: loss, theft, mechanical failure, malfunction, damage, or other applicable perils. (2) "Portable electronics insurance" does not include: (i) a service contract governed by chapter 59B; (ii) a policy of insurance covering a seller's or a manufacturer's obligations under a warranty; or (iii) a homeowner's, renter's, private passenger automobile, commercial multiperil, or similar policy that covers loss or theft of portable electronics. (e) "Portable electronics transaction" means: (1) the sale or lease of portable electronics by a vendor to a customer; or (2) the sale of a service related to the use of portable electronics by a vendor to a customer. (f) "Supervising entity" means a business entity that is a licensed insurer or insurance producer that is appointed by an insurer to supervise the administration of a portable electronics insurance program. (g) "Vendor" means a business entity in the business of engaging in portable electronics transactions, directly or indirectly. Subd. 2. Licensure of vendors. (a) A vendor is required to hold a limited lines license issued under this section to sell or offer coverage under a policy of portable electronics insurance in connection with, and incidental to, a portable electronics transaction with a customer. (b) A limited lines license issued under this section shall authorize any employee or authorized representative of the vendor to sell or offer coverage under a policy of portable electronics insurance to a customer in connection with, and incidental to, a portable electronics transaction at each location at which the vendor engages in portable electronics transactions. The application for such a limited lines license shall: (1) provide the name, residence address, and other information required by the commissioner for an employee or officer of the vendor that is designated by the applicant as the person responsible for the vendor's compliance with the requirements of this chapter. However, if the vendor derives more than 50 percent of its revenue from the sale of portable electronics insurance, the information noted above must be provided for all officers, directors, and shareholders of record having beneficial ownership of ten percent or more of any class of securities of the vendor registered under the federal securities law; and (2) contain a statement by the applicant indicating whether it intends to offer portable electronics from more than ten locations in this state. For purposes of this section, a vendor offering coverage to customers through a website is deemed to be offering portable electronics insurance coverage from more than ten locations. (c) A vendor, or the supervising entity that is appointed to oversee the vendor's portable electronics insurance program, shall maintain a registry of locations which are authorized to sell or solicit portable electronics insurance coverage in this state. Upon request by the commissioner and within ten days' notice to the vendor or supervising entity, the registry must be made available for inspection by the commissioner. (d) Notwithstanding any other provision of law, a license issued pursuant to this section shall authorize the licensee and its employees or authorized representatives to engage only in those activities that are expressly permitted in this section. Subd. 3. Requirements for sale of portable electronics insurance. (a) At every location where portable electronics insurance is offered to customers, brochures or other written materials must be made available to a prospective customer which: (1) disclose that portable electronics insurance may provide a duplication of coverage already provided by a customer's homeowner's insurance policy, renter's insurance policy, or other source of coverage; (2) state that the enrollment by the customer in a portable electronics insurance program is not required in order to purchase or lease portable electronics or services; (3) summarize the material terms of the insurance coverage, including: (i) the identity of the insurer; (ii) the identity of the supervising entity; (iii) the amount of any applicable deductible and how it is to be paid; (iv) benefits of the coverage; (v) the terms for terminating or modifying coverage as set forth in the policy of portable electronics insurance; and (vi) any material exclusions, conditions, or other limitations of coverage including whether portable electronics may be repaired or replaced with similar make and model reconditioned or nonoriginal manufacturer parts or equipment; (4) describe the process for filing a claim, including a description of any requirements: (i) to return portable electronics and the maximum fee applicable in the event the customer fails to comply with any equipment return requirements; and (ii) any proof of loss requirements; and (5) state that the customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and any unearned premium will be refunded or credited on a pro rata basis to the customer paying the premium. (b) Portable electronics insurance may be offered on a month-to-month or other periodic basis as a group or master commercial inland marine policy issued to a vendor of portable electronics under which individual customers may elect to enroll for coverage. (c) Notwithstanding any other provision of Minnesota law regarding the termination or modification of coverage under a policy of insurance, the terms for the termination or modification of coverage under a policy of portable electronics insurance issued in compliance with this chapter shall be as set forth in the policy. (d) Eligibility and underwriting standards for customers electing to enroll in coverage shall be established for each portable electronics insurance program. Subd. 4. Authority of vendors of portable electronics. (a) The employees and authorized representatives of vendors may sell or offer portable electronics insurance to customers and shall not be subject to licensure as an insurance producer under this chapter provided that: (1) the vendor obtains a limited lines license to authorize its employees or authorized representatives to sell or offer portable electronics insurance pursuant to this section; (2) the insurer issuing the portable electronics insurance either directly supervises or appoints a supervising entity to supervise the administration of the program including development of a training program for employees and authorized representatives of the vendors. The training required by this subdivision shall comply with the following: (i) the training shall be delivered to all employees and authorized representatives of the vendors who sell or offer portable electronics insurance; (ii) the training may be provided in electronic form. However, if conducted in an electronic form, the supervising entity shall implement a supplemental education program regarding the portable electronics insurance product that is conducted by licensed employees of the supervising entity; and (iii) each employee and authorized representative shall receive basic instruction about the portable electronics insurance offered to customers and the disclosures required under subdivision 3; and (3) no employee or authorized representative of a vendor of portable electronics shall advertise, represent, or otherwise hold himself or herself out as a nonlimited lines licensed insurance producer. (b) The charges for portable electronics insurance coverage may be billed and collected by the vendor of portable electronics. Any charge to the covered customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics or services shall be separately itemized from the charges for the purchase or lease of portable electronics or services. Vendors billing and collecting such charges shall not be required to maintain such funds in a segregated account provided that the vendor is authorized by the insurer to hold such funds in an alternative manner and remits such amounts to the supervising entity within 60 days of receipt. All funds received by a vendor from a customer for the sale of portable electronics insurance shall be considered funds held by the vendor in a fiduciary capacity for the benefit of the insurer. Vendors may receive compensation for billing and collection services. (c)(1) Whenever notice or correspondence with respect to a policy of portable electronics insurance is required pursuant to the policy or is otherwise required by law, the notice or correspondence may be sent either by mail or by electronic means in accordance with chapter 325L. If the notice or correspondence is mailed, it must be sent to the vendor at the vendor's mailing address specified for this purpose and to affected covered customers at their last known mailing addresses on file with the insurer. If the notice or correspondence is sent by electronic means, it must be sent to the vendor at the vendor's electronic mail address specified for such purpose and to affected covered customers at their last known electronic mail addresses as provided to the insurer or vendor, as the case may be. (2) Notice or correspondence required by a policy of portable electronics insurance or otherwise required by law may be sent on behalf of an insurer or vendor, as the case may be, by the supervising entity appointed by the insurer. History:  2010 c 347 art 6 s 3; 2012 c 259 s 1
60K.383 TRAVEL INSURANCE. Subdivision 1. Definitions. (a) As used in this section, the terms in paragraphs (b) to (d) have the meanings given. (b) "Travel insurance" means insurance coverage for personal risks incident to planned travel, including, but not limited to: (1) interruption or cancellation of trip or event; (2) loss of baggage or personal effects; (3) damages to accommodations or rental vehicles; or (4) sickness, accident, disability, or death occurring during travel. Travel insurance does not include major medical plans, which provide comprehensive medical protection for travelers with trips lasting six months or longer, including those working overseas as an expatriate or military personnel being deployed. (c) "Travel insurance producer" means an insurer designee, such as a managing general underwriter, managing general agent, or licensed limited lines producer of travel insurance. (d) "Travel retailer" means a business entity that offers and disseminates travel insurance on behalf of and under the direction of a travel insurance producer. Subd. 2. Travel retailer license. A travel retailer may offer and disseminate travel insurance on behalf of and under a travel insurance producer business entity license only if the travel insurance producer holds a business entity license, and: (1) the licensed business entity is clearly identified as the licensed producer on marketing materials and fulfillment packages distributed by travel retailers to customers; identification shall include the entity's name and contact information; (2) the licensed business entity keeps a register of each travel retailer that offers travel insurance on the licensed business entity's behalf. The register must include the name and contact information of the travel retailer and an officer or person who directs or controls the travel retailer's operations, and the travel retailer's federal Employer Identification Number. The licensed business entity shall also certify that the travel retailer registered complies with United States Code, title 18, section 1033. The licensed business entity shall submit the register within 30 days upon request by the commissioner; (3) the licensed business entity has designated one of its employees as a licensed individual producer, a "designated responsible producer" or "DRP," responsible for the business entity's compliance with Minnesota insurance laws and rules; (4) the DRP, president, secretary, treasurer, and any other officer or person who directs or controls the licensed business entity's insurance operations comply with the fingerprinting requirements applicable to insurance producers in the resident state of the business entity; (5) the licensed business entity has paid all applicable insurance producer licensing fees as set forth in Minnesota state law; and (6) the licensed business entity requires each employee of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training, which may be subject to review by the commissioner. Subd. 3. Offer and dissemination of travel insurance; compensation. A travel retailer whose activities, and those of its employees, are limited to offering and disseminating travel insurance on behalf of and under the direction of a licensed business entity meeting the conditions stated in this section, is authorized to do so and receive related compensation, upon registration by the licensed business entity. For purposes of this section, "offering and disseminating" means providing general information, including a description of the coverage and price, as well as processing the application, collecting premiums, and performing other nonlicensable activities permitted by the state. Subd. 4. Insurer designee. As the insurer designee, the travel insurance producer is responsible for the acts of the travel retailer. History:   2012 c 157 s 3 
60K.39 NONRESIDENT LICENSING. Subdivision 1. Issuance. Unless denied a license under section 60K.43, a nonresident person shall receive a nonresident producer license if: (1) the person is currently licensed as a resident and in good standing in the person's home state; (2) the person has submitted the proper request for licensure and has paid the fees required by section 60K.55; (3) the person has submitted or transmitted to the commissioner the application for licensure that the person submitted to the person's home state, or in lieu of the same, a completed Uniform Application; and (4) the person's home state awards nonresident producer licenses to residents of this state on the same basis. Subd. 2. Verification of licensing status. The commissioner may verify the producer's licensing status through the producer database maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries. Subd. 3. Change of address. A nonresident producer who moves from one state to another state shall file a change of address and provide certification from the new resident state within ten days of the change of legal residence. No fee or license application is required. Subd. 4. Termination; resident license. A nonresident producer license terminates automatically when the person's resident license is terminated for any reason. Subd. 5. Surplus lines producers. (a) Notwithstanding any other provision of sections 60K.30 to 60K.56, a person licensed as a surplus lines producer in the person's home state shall receive a nonresident surplus lines producer license under subdivision 1. Except as to subdivision 1, nothing in this section otherwise amends or supersedes any provision of sections 60A.195 to 60A.209. (b) No surplus lines agent or broker licensed under sections 60A.195 to 60A.209 may do business in this state unless the agent or broker has complied with the requirements set forth in section 60A.198, subdivision 3, paragraphs (b) to (d). Subd. 6. Limited lines producer. Notwithstanding any other provision of sections 60K.30 to 60K.56, a person licensed as a limited line credit insurance or other type of limited lines producer in the person's home state shall receive a nonresident limited lines producer license, under subdivision 1, granting the same scope of authority as granted under the license issued by the producer's home state. For the purposes of this subdivision, limited line insurance is any authority granted by the home state that restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to section 60K.38, subdivision 1, clauses (1) to (6). History:  2001 c 117 art 1 s 10; 2002 c 379 art 1 s 22,23; 2003 c 2 art 1 s 6; 2005 c 100 s 6
60K.40 INDIVIDUALS LICENSED IN ANOTHER STATE; EXEMPTION FROM EXAMINATION. Subdivision 1. Availability. An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state is not required to complete any prelicensing education or examination. This exemption is only available if the person is currently licensed in that state or if the application is received within 90 days of the cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's Producer Database records, maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries, indicate that the producer is or was licensed in good standing for the line of authority requested. Subd. 2. Required application. If a person licensed as an insurance producer in another state who moves to this state makes application within 90 days of establishing legal residence to become a resident licensee under section 60K.37, no prelicensing education or examination is required of that person to obtain any line of authority previously held in the prior state. History:   2001 c 117 art 1 s 11 
60K.41 ASSUMED NAMES. An insurance producer doing business under any name other than the producer's legal name shall provide the commissioner with documentation that the assumed name has been properly filed with the secretary of state before using the assumed name. History:   2001 c 117 art 1 s 12 
60K.42 TEMPORARY LICENSING. Subdivision 1. Commissioner's authority to grant. The commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination if the commissioner considers the temporary license necessary for the servicing of an insurance business in the following cases: (1) to the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business; (2) to a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license; (3) to the designee of a licensed insurance producer entering active service in the armed forces of the United States of America; or (4) in any other circumstance where the commissioner considers that the public interest will best be served by the issuance of this license. Subd. 2. Limitations. The commissioner may by order limit the authority of any temporary licensee in any way considered necessary to protect insureds and the public. The commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The commissioner may by order revoke a temporary license if the interests of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business. History:   2001 c 117 art 1 s 13 
60K.43 LICENSE DENIAL, NONRENEWAL, OR REVOCATION. Subdivision 1. Causes. The commissioner may, by order, restrict, censure, suspend, revoke, or refuse to issue or renew an insurance producer's license or may levy a civil penalty under section 45.027 or any combination of actions, for any one or more of the following causes: (1) providing incorrect, misleading, incomplete, or materially untrue information in the licensing application; (2) violating any insurance laws, including chapter 45 or chapters 60A to 72A, or violating any regulation, subpoena, or order of the commissioner or of another state's insurance commissioner; (3) obtaining or attempting to obtain a license through misrepresentation or fraud; (4) improperly withholding, misappropriating, or converting any money or properties received in the course of doing insurance business; (5) misrepresenting the terms of an actual or proposed insurance contract or application for insurance; (6) having pled guilty, with or without explicitly admitting guilt, pled nolo contendere, or been convicted of a felony, gross misdemeanor, or misdemeanor involving moral turpitude, including, but not limited to, assault or similar conduct; (7) having admitted or been found to have committed any insurance unfair trade practice or fraud; (8) using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility whether or not involving the business of insurance in this state or elsewhere; (9) having an insurance producer license, or its equivalent, denied, suspended, or revoked, or having been the subject of a fine or any other discipline in any other state, province, district, or territory; (10) forging another's name to an application for insurance or to any document, whether or not related to an insurance transaction; (11) improperly using notes or any other reference material to complete an examination for an insurance license; (12) knowingly accepting insurance business from an individual who is not licensed; (13) failing to comply with an administrative or court order imposing a child support obligation; (14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; (15) being permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the insurance business; (16) making any communication to a potential buyer that gives the impression that the producer is acting on behalf of a government agency; or (17) while performing residential mortgage activity regulated under chapter 58, violating any notification, disclosure, or record-keeping requirement, or any standard of conduct imposed by chapter 58. Subd. 2. Hearing rights. (a) If the commissioner determines that the producer is in violation of this section, the commissioner may issue an order requiring a licensee to show cause why any or all of the following should not occur: (1) the revocation or suspension of the license; (2) the censuring of the licensee; or (3) the imposition of a civil penalty. The order must be calculated to give reasonable notice of the time and place for hearing on the matter and must state the reasons for the entry of the order. The commissioner may, by order, summarily suspend a license pending final determination of any order to show cause. If a license is suspended pending final determination of an order to show cause, a hearing on the merits must be held within 30 days of the issuance of the order of suspension. All hearings must be conducted in accordance with the provisions of chapter 14. After the hearing, the commissioner shall enter an order disposing of the matter as the facts require. If the licensee fails to appear at a hearing after having been duly notified of it, the licensee shall be considered in default, and the proceeding may be determined against the licensee upon consideration of the order to show cause, the allegations of which may be considered to be true. (b) In the event that the action by the commissioner is to nonrenew or to deny an application for a license, the commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license. The applicant or licensee may make written demand upon the commissioner within 30 days for a hearing to determine the reasonableness of the commissioner's action. The hearing must be held within 30 days and must be held pursuant to the contested case provisions of chapter 14. If no hearing is requested within 30 days of service of the notice of nonrenewal or denial, the nonrenewal or denial becomes final. Subd. 3. Actions against business entity. The license of a business entity may be suspended, revoked, or refused if the commissioner finds, after hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers, or managers acting on behalf of the partnership or corporation and the violation was not reported to the commissioner in a timely manner. Subd. 4. Fine. In addition to or in lieu of any applicable denial, suspension, or revocation of a license, a person may, after hearing, be subject to a civil fine according to section 45.027, subdivision 6. Subd. 5. Other authority of the commissioner. If a license lapses, is surrendered, withdrawn, terminated, or otherwise becomes ineffective, the commissioner may institute a proceeding under this subdivision within two years after the license was last effective and enter a revocation or suspension order as of the last date on which the license was in effect, or impose a civil penalty as provided for in section 45.027, subdivision 6. Subd. 6. Conditions for relicensure. A revocation of a license prohibits the licensee from making a new application for a license for at least two years from the effective date of the revocation. Further, the commissioner shall, as a condition of reapplication, require the applicant to obtain a performance bond issued by an insurer authorized to transact business in this state in the amount of $20,000 or a greater amount the commissioner considers appropriate for the protection of citizens of this state in the event the commissioner grants the application. The bond must be filed with the commissioner, with the state of Minnesota as obligee, conditioned for the prompt payment to any aggrieved person entitled to payment of any amounts received by the licensee or to protect any aggrieved person from loss resulting from fraudulent, deceptive, dishonest, or other prohibited practices arising out of any transaction when the licensee was licensed or performed acts for which a license is required under this chapter. The bond remains operative for as long as that licensee is licensed. The bond required by this subdivision must provide coverage for all matters arising during the period of licensure. History:   2001 c 117 art 1 s 14 
60K.44 TAX CLEARANCE CERTIFICATE. Subdivision 1. Requirement for issuance or renewal of license. In addition to the provisions of section 60K.43, the commissioner may not issue or renew a license if the commissioner of revenue notifies the commissioner and the licensee or applicant for a license that the licensee or applicant owes the state delinquent taxes in the amount of $500 or more. The commissioner may issue or renew the license only if: (1) the commissioner of revenue issues a tax clearance certificate; and (2) the commissioner of revenue or the licensee or applicant forwards a copy of the clearance certificate to the commissioner. The commissioner of revenue may issue a clearance certificate only if the licensee or applicant does not owe the state any uncontested delinquent taxes. Subd. 2. Definitions. For purposes of this section, the following terms have the meanings given them: (1) "taxes" are all taxes payable to the commissioner of revenue, including penalties and interest due on those taxes; and (2) "delinquent taxes" do not include a tax liability if (i) an administrative or court action that contests the amount or validity of the liability has been filed or served, (ii) the appeal period to contest the tax liability has not expired, or (iii) the licensee or applicant has entered into a payment agreement to pay the liability and is current with the payments. Subd. 3. Contested case hearing. In lieu of the notice and hearing requirements of section 60K.43, when a licensee or applicant is required to obtain a clearance certificate under this section, a contested case hearing must be held if the licensee or applicant requests a hearing in writing to the commissioner of revenue within 30 days of the date of the notice provided in subdivision 1. The hearing must be held within 45 days of the date the commissioner of revenue refers the case to the Office of Administrative Hearings. Notwithstanding any law to the contrary, the licensee or applicant must be served with 20 days' notice in writing specifying the time and place of the hearing and the allegations against the licensee or applicant. The notice may be served personally or by mail. Subd. 4. Identification required. The commissioner shall require all licensees or applicants to provide their Social Security number and Minnesota business identification number on all license applications. Upon request of the commissioner of revenue, the commissioner must provide to the commissioner of revenue a list of all licensees and applicants, including the name and address, Social Security number, and business identification number. The commissioner of revenue may request a list of the licensees and applicants no more than once each calendar year. History:   2001 c 117 art 1 s 15 
60K.45 SURRENDER OF LICENSE. The commissioner shall promptly notify the licensee and all appointing insurers, where applicable, of any suspension, revocation, or termination of the licensee's producer license by the commissioner. Upon receipt of the notice of suspension or revocation of a license, the licensee shall immediately deliver it to the commissioner. History:   2001 c 117 art 1 s 16 
60K.46 REQUIRED AND PROHIBITED ACTS. Subdivision 1. Personal solicitation of insurance sales. (a) For the purpose of this section, "personal solicitation" means any contact by a producer, or any person acting on behalf of a producer, made for the purpose of selling or attempting to sell insurance, when either the producer or the person acting for the producer contacts the buyer in person, by telephone, or by electronic means, except: (1) an attempted sale in which the buyer personally knows the identity of the producer, the name of the general agency, if any, which the producer represents, and the fact that the producer is an insurance producer; (2) an attempted sale in which the prospective purchaser of insurance initiated the contact; or (3) a personal contact which takes place at the producer's place of business. (b) Before a personal solicitation, the producer or person acting for a producer shall, at the time of initial personal contact with the potential buyer, clearly and expressly disclose in writing: (1) the name of the person making the contact; (2) the name of the producer, general agency, or insurer that the person represents; and (3) the fact that the producer, agency, or insurer is in the business of selling insurance. If the initial personal contact is made by telephone, the disclosures required by this subdivision need not be made in writing. Subd. 2. Fees for services. No person shall charge a fee for any services rendered in connection with the solicitation, negotiation, or servicing of any insurance contract unless: (1) before rendering the services, a written statement is provided disclosing: (i) the services for which fees are charged; (ii) the amount of the fees; (iii) that the fees are charged in addition to premiums; and (iv) that premiums include a commission; and (2) all fees charged are reasonable in relation to the services rendered. Subd. 3. Commissions or compensation. A duly licensed producer may pay commissions or assign or direct that commissions be paid to a partnership of which the producer is a member, employee, or agent, or to a corporation of which the producer is an officer, employee, or agent. Subd. 4. Suitability of insurance. In recommending the purchase of any life, endowment, individual accident and sickness, long-term care, annuity, life-endowment, or Medicare supplement insurance to a customer, a producer must have reasonable grounds for believing that the recommendation is suitable for the customer and must make reasonable inquiries to determine suitability. The suitability of a recommended purchase of insurance will be determined by reference to the totality of the particular customer's circumstances, including, but not limited to, the customer's income, the customer's need for insurance, and the values, benefits, and costs of the customer's existing insurance program, if any, when compared to the values, benefits, and costs of the recommended policy or policies. This subdivision does not apply to limited lines insurance under section 60K.38, subdivision 1, paragraph (c). Subd. 5. Premiums. All premiums or other money received by a producer from an insured or applicant for insurance must be promptly deposited directly in a business checking, savings, or other similar account maintained by the producer or agency, unless the money is forwarded directly to the designated insurer. Subd. 6. Privacy of insured. Except as otherwise provided by law, no insurance producer may disclose or cause to be disclosed to any other person the identity of a person insured through the producer without the consent of the insured. Subd. 7. Altering existing policies; written binders required. An insurance producer having express authority to bind coverage, who orally agrees on behalf of an insurer to provide insurance coverage, or to alter an existing insurance agreement, shall execute and forward a memorandum or binder containing the terms of the oral agreement to the insured within five business days from the time the oral agreement is entered, unless the insurer forwards the information. The memorandum of coverage or binder may be forwarded by mail, facsimile, or electronically. The memorandum of coverage or binder must be forwarded by mail, unless the insured authorizes facsimile or electronic transmission of it. A memorandum of coverage or binder must be provided by the insurer to the policyholder upon request. Subd. 8. Certificates of insurance. An insurance producer shall not issue a certificate of insurance, or other evidence of insurance coverage that either affirmatively or negatively amends, extends, or alters the coverage as provided by the policy, or provides notice of cancellation to a third party that exceeds the statutory notice requirement to a policyholder. History:  2001 c 117 art 1 s 17; 2005 c 74 s 8; 2009 c 178 art 1 s 19
60K.47 LIABILITY FOR PLACING INSURANCE IN UNAUTHORIZED COMPANY. Any person, whether or not licensed as an insurance producer, who participates in any manner in the sale of any insurance policy or certificate, or any other contract providing benefits, for or on behalf of any company that is required to be, but that is not authorized to engage in the business of insurance in this state, other than pursuant to sections 60A.195 to 60A.209, is personally liable for all premiums, whether earned or unearned, paid by the insured, and the premiums may be recovered by the insured. In addition, that person is personally liable for any loss the insured has sustained or may sustain if the loss is one resulting from a risk or hazard covered in the issued policy, certificate, or contract, or which would have been covered if the policy, certificate, or contract had been issued to the purchaser of the insurance. History:   2001 c 117 art 1 s 18 
60K.48 COMMISSIONS. Subdivision 1. Payment prohibited. An insurance company or insurance producer shall not pay a commission, service fee, brokerage, or other valuable consideration to a person for selling, soliciting, or negotiating insurance in this state if that person is required to be licensed under sections 60K.30 to 60K.56 and is not so licensed. Subd. 2. Acceptance prohibited. A person shall not accept a commission, service fee, brokerage, or other valuable consideration for selling, soliciting, or negotiating insurance in this state if that person is required to be licensed under sections 60K.30 to 60K.56 and is not so licensed. Subd. 3. Exceptions. (a) Renewal or other deferred commissions may be paid to a person for selling, soliciting, or negotiating insurance in this state if the person was required to be licensed under sections 60K.30 to 60K.56 at the time of the sale, solicitation, or negotiation and was so licensed at that time. (b) An insurer or insurance producer may pay or assign commissions, service fees, brokerages, or other valuable consideration to an insurance agency or to persons who do not sell, solicit, or negotiate insurance in this state, unless the payment would constitute an illegal rebate or otherwise violate section 72A.20, subdivision 10. A duly licensed producer may pay commissions or assign or direct that commissions be paid to a partnership of which the producer is a member, employee, or agent, or to a corporation of which the agent is an officer, employee, or agent. Subd. 4. Individual health plans. (a) If a health carrier pays commissions or service fees to licensed producers who are appointed by the health carrier for sale of an individual health plan, then, within 30 days of receipt of the agent of record agreement, the health carrier must accommodate a policyholder or applicant for coverage by allowing a policyholder or applicant to select or change the agent of record, effective upon the next premium cycle. (b) The health carrier's standard commission and service fees must be paid to the policyholder's agent of record or the agent's assignee if any premium rate for an individual health plan has been approved by the commissioner with costs associated with producer commissions included in the filed rate. (c) A health carrier is prohibited from offering, renewing, or failing to renew individual health plans based solely on the commission-paying status of the health plan. (d) Nothing in this subdivision requires a health carrier to pay any commission or service fee with respect to the sale of an individual health plan, unless the rate for the individual health plan has been approved by the commissioner with costs associated with producer commissions included in the filed rate. History:  2001 c 117 art 1 s 19; 2002 c 379 art 1 s 24; 2015 c 58 s 3; 2017 c 23 s 2
60K.49 APPOINTMENTS. Subdivision 1. Agent of insurer. A person performing acts requiring a producer license under this chapter is at all times the agent of the insurer and not the insured. Subd. 2. Requirements. Except as described in subdivision 3, a licensed insurance producer shall not engage in the business of insurance with an insurer unless the producer either: (1) has been appointed by that insurer; or (2) has the permission of the insurer to transact business on its behalf and obtains an appointment from the insurer within 15 days after the first application is submitted to the insurer. Subd. 3. Exception. A licensed insurance producer may, in response to the needs of a customer, procure insurance in a class of insurance for which the producer is licensed from an insurer by which the producer is not appointed, if the transaction is consummated through an appointed agent of the insurer. Subd. 4. Procedure. To appoint a producer as its agent, the appointing insurer shall file, in a format approved by the commissioner, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted. An insurer may also elect to appoint a producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request. No insurer shall appoint a producer until the producer obtains a license under this chapter. Subd. 5. Eligibility. Upon receipt of the notice of appointment, the commissioner shall verify within a reasonable time not to exceed 30 days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the commissioner shall notify the insurer within five days of its determination. Subd. 6. Fees. An insurer shall pay an appointment fee, in the amount and method of payment set forth in section 60A.14, subdivision 1, for each insurance producer appointed by the insurer. Subd. 7. Period of effectiveness. Appointments shall remain in force until voluntarily terminated by the insurer or the producer, or until the license of the producer has been terminated for any reason. An insurer may terminate the appointment at any time by notifying the commissioner and the producer under section 60K.51. If the insurer does not specify an effective date, the termination is effective on the date the notice is received by the commissioner. Within 30 days after the insurer gives notice to the commissioner, the insurer shall furnish the producer with a current statement of the producer's commission account. History:   2001 c 117 art 1 s 20 
60K.50 LIMITATION ON APPOINTMENTS. No insurer or representative of an insurer shall knowingly appoint a producer who is known to the insurer or representative to have engaged in any of the activities in section 60K.43 or to be otherwise unqualified or unfit. Upon discovery by the insurer or a representative of the insurer that an appointed producer has engaged in any of the activities in section 60K.43 or is otherwise unqualified or unfit, the insurer shall immediately terminate the appointment and notify the commissioner as set forth in section 60K.51. No insurer shall employ a producer whose license has been revoked. History:   2001 c 117 art 1 s 21 
60K.51 NOTIFICATION TO COMMISSIONER OF TERMINATION. Subdivision 1. Termination for cause. An insurer or authorized representative of the insurer that terminates the appointment, employment, contract, or other insurance business relationship with a producer shall notify the commissioner within 30 days following the effective date of the termination, using a format acceptable to the commissioner, if the reason for termination is one of the reasons set forth in section 60K.43 or the insurer has knowledge that the producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities in section 60K.43. Upon the written request of the commissioner, the insurer shall provide additional information, documents, records, or other data pertaining to the termination or activity of the producer. Subd. 2. Termination without cause. An insurer or authorized representative of the insurer that terminates the appointment, employment, or contract with a producer for any reason not set forth in section 60K.43 shall notify the commissioner within 30 days following the effective date of the termination, using a format acceptable to the commissioner. Upon written request of the commissioner, the insurer shall provide additional information, documents, records, or other data pertaining to the termination. Subd. 3. Ongoing notification requirement. The insurer or the authorized representative of the insurer shall promptly notify the commissioner in a format acceptable to the commissioner if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the commissioner under subdivision 1 had the insurer then known of its existence. Subd. 4. Copy of notification to be provided to producer. (a) Within 15 days after making the notification required by subdivisions 1 to 3, the insurer shall mail a copy of the notification to the producer at the producer's last known address. If the producer is terminated for cause for any of the reasons listed in section 60K.43, the insurer shall provide a copy of the notification to the producer at the producer's last known address by certified mail, return receipt requested, postage prepaid, or by overnight delivery using a nationally recognized carrier. (b) Within 30 days after the producer has received the original or additional notification, the producer may file written comments concerning the substance of the notification with the commissioner. The producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer. The comments become a part of the commissioner's file and must accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subdivision 6. Subd. 5. Immunities. (a) In the absence of actual malice, an insurer, the authorized representative of the insurer, a producer, the commissioner, or an organization of which the commissioner is a member and that compiles the information and makes it available to other insurance commissioners or regulatory or law enforcement agencies is not subject to civil liability, and no civil cause of action arises against these entities or their respective agents or employees, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the commissioner, from an insurer or producer. The immunity granted in this subdivision extends to a statement by a terminating insurer or producer to an insurer or producer limited solely and exclusively to whether a termination for cause under subdivision 1 was reported to the commissioner, provided that the propriety of any termination for cause under subdivision 1 is certified in writing by an officer or authorized representative of the insurer or producer terminating the relationship. (b) In any action brought against a person that may have immunity under paragraph (a) for making any statement required by this section or providing any information relating to any statement that may be requested by the commissioner, the party bringing the action shall plead specifically in any allegation that paragraph (a) does not apply because the person making the statement or providing the information did so with actual malice. (c) Paragraph (a) or (b) does not abrogate or modify any existing statutory or common law privileges or immunities. Subd. 6. Classification of investigative data. Any documents, materials, or other information in the control or possession of the Department of Commerce that is furnished by an insurer, producer, or an employee or agent of an insurer or producer acting on behalf of the insurer or producer, or obtained by the commissioner in an investigation pursuant to this section is classified as confidential data pursuant to section 13.41, subdivision 4, or private data pursuant to section 13.41, subdivision 2. History:  2001 c 117 art 1 s 22; 2002 c 379 art 1 s 25
60K.52 USE AND SHARING OF LICENSING AND INVESTIGATIVE DATA. Subdivision 1. Commissioner's authority. In order to assist in the performance of the commissioner's duties under sections 60K.30 to 60K.56, the commissioner: (1) may share licensing data or any active or inactive investigative data with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities if the recipient agrees to maintain the data in a manner consistent with its data classification; (2) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (3) may enter into agreements governing sharing and use of information consistent with this subdivision. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information occurs as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in this subdivision. Nothing in sections 60K.30 to 60K.56 prohibits the commissioner from releasing information concerning final, adjudicated actions, including for-cause terminations, to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries of the National Association of Insurance Commissioners. Subd. 2. Penalties for failing to report. An insurer, the authorized representative of the insurer, or a producer that fails to report as required under this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with section 45.027. History:  2001 c 117 art 1 s 23; 2002 c 379 art 1 s 26
60K.53 RECIPROCITY. Subdivision 1. Nonresident license waiver. The commissioner shall waive any requirements for a nonresident license applicant with a valid license from the applicant's home state, except the requirements imposed by section 60K.39, if the applicant's home state awards nonresident licenses to residents of this state on the same basis. Subd. 2. Continuing education requirements. A nonresident producer's satisfaction of that person's home state's continuing education requirements for licensed insurance producers constitutes satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis. History:   2001 c 117 art 1 s 24 
60K.54 REPORTING OF ACTIONS. Subdivision 1. Administrative actions. A producer shall report to the commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report must include a copy of the order, consent to order, or other relevant legal documents. Subd. 2. Criminal prosecutions. Within 30 days of the date criminal prosecution begins, a producer shall report to the commissioner any criminal prosecution of the producer taken in any jurisdiction. The report must include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents. In addition, a producer shall report to the commissioner within ten days any conviction, guilty plea, or plea of nolo contendere to any felony or gross misdemeanor. For purposes of this subdivision, the date the criminal prosecution begins is the date the indictment is returned or the date the criminal complaint is filed. History:  2001 c 117 art 1 s 25; 2014 c 198 art 4 s 5
60K.55 FEES. Subdivision 1. Renewal fees. Each producer licensed under this chapter shall pay a renewal fee as prescribed by subdivision 2. Subd. 2. Licensing fees. (a) In addition to fees provided for examinations and the technology surcharge required under paragraph (d), each insurance producer licensed under this chapter shall pay to the commissioner a fee of: (1) $50 for an initial life, accident and health, property, or casualty license issued to an individual insurance producer, and a fee of $50 for each renewal; (2) $50 for an initial variable life and variable annuity license issued to an individual insurance producer, and a fee of $50 for each renewal; (3) $50 for an initial personal lines license issued to an individual insurance producer, and a fee of $50 for each renewal; (4) $50 for an initial limited lines license issued to an individual insurance producer, and a fee of $50 for each renewal; (5) $200 for an initial license issued to a business entity, and a fee of $200 for each renewal; (6) $500 for an initial surplus lines license, and a fee of $500 for each renewal; (7) $100 per location for the initial and renewal of a portable electronics insurance limited lines license issued to a vendor, as defined in section 60K.381, subdivision 1, paragraph (g), engaged in portable electronics transactions at ten or fewer locations in this state as set forth in its application and any subsequent notice under section 60K.381, subdivision 2, paragraph (b); and (8) $6,500 for the initial and renewal of a portable electronics insurance limited lines license issued to a vendor, as defined in section 60K.381, subdivision 1, paragraph (g), engaged in portable electronics transactions at more than ten locations in this state as set forth in its application and any subsequent notice under section 60K.381, subdivision 2, paragraph (b). (b) Initial licenses issued to a business entity under this chapter and section 60K.381 are valid for a period not to exceed 24 months and expire on October 31 of the renewal year assigned by the commissioner. Initial licenses issued to an individual insurance producer under this chapter before August 1, 2010, are valid for a period not to exceed 24 months and expire on October 31 of the renewal year assigned by the commissioner. Each individual license initially issued or renewed on or after August 1, 2010, expires on the last day of the birth month of the producer in the year that will result in the term of the license being at least 12 months, but no more than 24 months. Beginning with the first license expiration on the last day of the birth month of an individual producer as set forth in this paragraph, all such licenses must after this date expire biennially on the last day of the birth month of the individual producer that is two years subsequent to the preceding expiration date. Each renewal insurance producer license is valid for a period of 24 months. (c) All fees are nonreturnable, except that an overpayment of any fee may be refunded upon proper application. (d) In addition to the fees required under paragraph (a), individual insurance producers shall pay, for each initial license and renewal, a technology surcharge of up to $40 under section 45.24, unless the commissioner has adjusted the surcharge as permitted under that section. History:  2001 c 117 art 1 s 26; 1Sp2005 c 1 art 4 s 5; 2007 c 57 art 3 s 33; 2009 c 63 s 30,78; 2010 c 347 art 6 s 4
60K.56 CONTINUING INSURANCE EDUCATION. Subdivision 1. Definition. For the purposes of this section, "course" means a course, program of instruction, or seminar of continuing insurance education. A "professional designation examination" means a written, proctored, and graded examination the passage of which leads to a bona fide insurance or financial planning professional designation used by insurance producers. Subd. 2. Applicability. This section applies to all natural persons licensed by this state to sell lines of insurance for which licensing examinations are required. Subd. 3. Exemptions. This section does not apply to persons soliciting or selling solely on behalf of companies organized and operating according to chapter 67A. Subd. 4. Commissioner; powers. (a) The commissioner shall make the final determination as to accreditation and assignment of credit hours for courses. (b) The commissioner shall adopt procedures for reporting compliance with the minimum education requirement. (c) The commissioner may adopt rules according to chapter 14 to carry out the purposes of this section. Subd. 5. Criteria for course accreditation. (a) The commissioner may accredit a course only to the extent it is designed to impart substantive and procedural knowledge of the insurance field. The burden of demonstrating that the course satisfies this requirement is on the individual or organization seeking accreditation. The commissioner is authorized to establish a procedure for renewal of course accreditation. (b) The commissioner shall approve or disapprove professional designation examinations that are recommended for approval by the advisory task force. In order for an insurance producer to receive full continuing education credit for a professional designation examination, the producer must pass the examination. A producer may not receive credit for classroom instruction preparing for the professional designation examination and also receive continuing education credit for passing the professional designation examination. Subd. 6. Minimum education requirement. Each person subject to this section shall complete a minimum of 24 credit hours of courses accredited by the commissioner during each licensing period. No more than one-half of the credit hours per licensing period required under this section may be credited to a person for attending courses either sponsored by, offered by, or affiliated with an insurance company or its agents. For the purposes of this subdivision, a course provided by a bona fide insurance trade association is not considered to be sponsored by, offered by, or affiliated with an insurance company or its agents regardless of the location of the course offering. A licensee must obtain three hours of the credit hours per licensing period from a class or classes in the area of ethics. Courses sponsored by, offered by, or affiliated with an insurance company or agent may restrict its students to agents of the company or agency. Courses not sponsored by an insurance company must be open to all unless an exception listed in section 45.30 applies. Subd. 7. Waiver of requirements. The commissioner may grant a waiver or an extension of time up to 90 days to complete the minimum education requirement to an individual upon a showing of good cause. It is the licensed person's responsibility to request a waiver or extension on a form prescribed by the commissioner. As of the day the licensed person properly files a request for a waiver or extension, the license remains in effect until the commissioner notifies the licensed person of the commissioner's decision. The commissioner may approve a waiver or extension subject to any reasonable conditions. The person's license remains in effect during the compliance period determined by the commissioner. If the licensed person fails to comply with any reasonable conditions imposed by the commissioner, the commissioner shall terminate the license. If the request for a waiver or extension is denied by the commissioner, the licensed person shall have 30 days within which to satisfy the minimum education requirement involved in the request for a waiver or extension. If the minimum education requirement is not satisfied within the compliance period, the commissioner shall terminate the person's license. Subd. 8. Reporting. (a) After completing the minimum education requirement, each person subject to this section shall file or cause to be filed a compliance report in accordance with the procedures adopted by the commissioner. A producer must not claim credit for continuing education not actually completed at the date of filing the report. (b) An institution offering an accredited course shall comply with the procedure for reporting compliance adopted by the commissioner. Subd. 9. Enforcement. If a person subject to this section fails to complete the minimum education or reporting requirement or to pay the prescribed fees for any licensing period, no license may be renewed or continued in force for that person for any class of insurance beginning the day after the renewal was due and that person may not act as an insurance producer until the person has demonstrated to the satisfaction of the commissioner that all requirements of this section have been complied with or that a waiver or extension has been obtained. History:  2001 c 117 art 1 s 27; 2002 c 330 s 4-6; 2006 c 204 s 7,8; 2009 c 63 s 31,78; 2010 c 275 art 1 s 5; 2011 c 108 s 31
60K.60 SALE OF SELF-STORAGE INSURANCE. Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given. (b) "Occupant" means a person or the person's sublessee, successor, or assignee who is entitled to the use of a leased space or spaces at a self-service storage facility, to the exclusion of others. (c) "Owner" means the owner or the owner's managing agent of a self-service storage facility. (d) "Personal property" means movable property that is not affixed to land and includes: (1) goods, wares, merchandise, household items, and furnishings; (2) vehicles, motor vehicles, trailers, and semitrailers; and (3) watercraft and motorized watercraft. (e) "Self-service storage facility" means any real property that is used for renting or leasing storage space in which the occupants themselves customarily store and remove personal property on a self-service basis. Subd. 2. Requirements. (a) An owner or the owner's employees and agents may offer or sell the kinds of insurance described in this section in connection with and incidental to the rental of space at a self-service storage facility. An owner and the owner's employees and agents are exempt from sections 60K.30 to 60K.56, with respect to the sale of this insurance. (b) An owner shall file a written notice in a form prescribed by the commissioner that the owner plans to conduct insurance sales as authorized by this section. The notice must specify all locations in this state at which the owner plans to conduct insurance sales. The owner shall notify the commissioner within 30 days after commencing insurance sales at any additional locations in this state. (c) An owner shall file the following with the commissioner: (1) an agreement that the owner assumes all responsibility for the authorized actions of all unlicensed employees and agents who sell on behalf of the owner the insurance coverage described in this section; and (2) an agreement that the owner and the owner's employees and agents are subject to the sections in chapter 72A and in Minnesota Rules, chapter 2790, regarding the marketing of the insurance coverage described in this section and the conduct of persons involved in the sale of the insurance coverage in the same manner as if they were licensed. (d) An owner may offer or sell insurance only in connection with and incidental to the rental of space at a self-service storage facility as an individual policy issued to an individual or as a group policy and only with respect to personal property insurance that provides coverage to occupants at the self-service storage facility at which the insurance is transacted, for the loss of or damage to stored personal property that occurs at that facility. (e) An owner shall not offer or sell insurance under this section unless: (1) the owner provides to the occupant written notice that: (i) summarizes the material terms of insurance coverage offered to occupants, including the identity of the insurer, premium amount, benefits, exclusions, and conditions; (ii) discloses that the policies offered by the owner may provide a duplication of coverage already provided by an occupant's homeowner's insurance policy, renter's insurance policy, vehicle insurance policy, watercraft insurance policy, or other source of property insurance coverage and that no liability coverage is provided by the insurance coverage. This disclosure must be displayed prominently in 12-point type or capital letters and shall read as follows: [Your renters' or homeowners' policy may provide the insurance you need. Check with your insurance agent to determine if your personal property stored at a location other than your home or business is covered.]; (iii) states that if insurance is required as a condition of rental, the requirement may be satisfied by the occupant purchasing the insurance described in this section or by presenting evidence of other applicable insurance coverage; and (iv) describes the process for filing a claim; (2) all costs related to the insurance are stated in writing; (3) evidence of coverage in a form approved by the insurer is provided to every occupant who purchases the coverage; and (4) the insurance is provided by an insurer authorized to transact the applicable kinds of insurance in this state. (f) An employee or agent of an owner may act on behalf of and under the supervision of the owner in matters relating to the sale of insurance under this section. The conduct of an employee or agent of an owner acting within the scope of employment or agency is deemed the conduct of the owner for purposes of this section. (g) Each owner shall provide a training program, which must be submitted to the commissioner for approval, that gives employees and agents of the owner basic instruction about the provisions of this section, including the kinds of insurance coverage described in this section. (h) An owner shall not: (1) offer or sell insurance except in connection with and incidental to the rental of space at a self-service storage facility; or (2) advertise, represent, or otherwise portray itself or any of its employees or agents as licensed insurers or insurance producers. (i) Nothing in this section prohibits: (1) an insurer from paying and an owner from receiving a commission, service fee, or other valuable consideration dependent upon the sale of insurance; or (2) an owner from paying and its employees or agents from receiving production payments or incentive payments if the payments are not dependent on the sale of insurance. Subd. 3. Fees for services. (a) No person shall charge a fee for any services rendered in connection with the solicitation, negotiation, or servicing of any self-service storage insurance unless the requirements of paragraphs (b) and (c) are met. (b) Before rendering the services, a written statement shall be provided to the prospective occupant disclosing: (1) the services for which fees are charged; (2) the amount of the fees; (3) that the fees are charged in addition to premiums; and (4) that premiums include a commission. (c) The fees charged must be reasonable in relation to the services rendered. History:   2015 c 34 s 1 
60L.01 DEFINITIONS. Subdivision 1. Application. For purposes of sections 60L.01 to 60L.15, the definitions in subdivisions 2 to 15 have the meanings given them. Subd. 2. Admitted assets. "Admitted assets" means the assets as shown by an insurer's financial statement most recently required to be filed with the commissioner, or such other financial statement required to be filed with the commissioner as the context may require, but excluding assets allocated to separate accounts. For these purposes, assets must be valued according to valuation regulations prescribed by the National Association of Insurance Commissioners and procedures adopted by the National Association of Insurance Commissioners' Financial Condition Ex.4 Subcommittee if not addressed in another section, unless the commissioner requires or finds another method of valuation reasonable under the circumstances. For purposes of any other investment limitation based on the amount of the admitted assets of a life insurer governed by sections 60L.01 to 60L.15, "admitted assets" has the meaning given under this subdivision. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 4. Derivative instrument. "Derivative instrument" means an item appropriately reported in schedule DB, derivative instruments, or schedule DC, insurance futures and insurance futures options, of an insurer's statutory financial statement, or successor schedules, as provided under applicable annual statement instructions or statutory accounting guidelines. Subd. 5. Derivative transaction. "Derivative transaction" means a transaction involving the use of one or more derivative instruments. Subd. 6. Government sponsored enterprise. "Government sponsored enterprise" means a governmental agency, a corporation, limited liability company, association, partnership, joint stock company, joint venture, trust, or other entity or instrumentality organized under the laws of the United States to accomplish a public policy or other governmental purpose. Subd. 7. Income generation. "Income generation" means a derivative transaction involving the writing of covered options, caps, or floors that is intended to generate income or enhance return. Subd. 8. Insurer. "Insurer" means a domestic insurance company, including a fraternal benefit society. Subd. 9. Lower grade investment. "Lower grade investment" means a rated credit instrument or debt-like preferred stock rated 4, 5, or 6 by the Securities Valuation Office of the National Association of Insurance Commissioners or any successor office. Subd. 10. Medium grade investment. "Medium grade investment" means a rated credit instrument or debt-like preferred stock rated 3 by the Securities Valuation Office of the National Association of Insurance Commissioners or any successor office. Subd. 11. Minimum asset requirement. "Minimum asset requirement" means: (1) in the case of an insurer other than a life insurer, the sum of an insurer's liabilities and its minimum financial security benchmark; and (2) in the case of a life insurer, the sum of the insurer's liabilities, other than the asset valuation reserve, voluntary investment reserves and liabilities on separate accounts, and its minimum financial security benchmark. Subd. 12. Minimum financial security benchmark. "Minimum financial security benchmark" means the amount an insurer is required to have under section 60L.03. Subd. 13. Nationally recognized statistical rating organization. "Nationally recognized statistical rating organization" means a rating organization so designated by the Securities and Exchange Commission of the United States and that has applied to, and whose status as a nationally recognized statistical rating organization has been confirmed by, the Securities Valuation Office of the National Association of Insurance Commissioners, or any other rating organization approved by the commissioner as a nationally recognized statistical rating organization for purposes of sections 60L.01 to 60L.15. Subd. 13a. Replicated investment position. "Replicated investment position" means the statement value of the position reported under the heading "Replicated (Synthetic) Asset" on Schedule DB, Part F, of the annual statement of the insurer, or any successor provision. Subd. 14. Replication transaction. "Replication transaction" means a derivative transaction that is intended to replicate the performance of one or more assets that an insurer is authorized to acquire under sections 60L.01 to 60L.15. A derivative transaction that is entered into as a hedging transaction is not considered a replication transaction. Subd. 15. SVO listed mutual fund. "SVO listed mutual fund" means a money market mutual fund or short-term bond fund that is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940, and that has been determined by the Securities Valuation Office of the National Association of Insurance Commissioners to be eligible for special reserve and reporting treatment other than as common stock. History:  1998 c 319 s 1; 2001 c 131 s 7,8
60L.02 REQUIREMENTS. Subdivision 1. Life insurers. In order to be eligible to be governed by sections 60L.01 to 60L.15, a life insurer must meet the following requirements: (a) For each calendar year during which sections 60L.01 to 60L.15 apply to the insurer, the insurer shall have had, as of the end of the immediately preceding calendar year: (1) total admitted assets of at least $2,000,000,000; (2) a total amount of capital plus surplus of at least $200,000,000; and (3) a total amount of capital plus surplus plus asset valuation reserve of at least $250,000,000. (b) For each calendar year during which sections 60L.01 to 60L.15 apply to the insurer, the insurer shall have had, as of the end of the immediately preceding calendar year, total adjusted capital equal to or greater than 200 percent of company action level risk-based capital, as defined in section 60A.60, subdivision 11. For purposes of this subdivision, "total adjusted capital" means total adjusted capital as defined in section 60A.60, subdivision 14, adjusted to deduct the value of capital notes and surplus notes as provided in the risk-based instructions as defined in section 60A.60, subdivision 10. (c) For each calendar year during which sections 60L.01 to 60L.15 apply to the insurer, the mean of the ratio, calculated as of the end of each of the five immediately preceding calendar years, of total adjusted capital to company action level risk-based capital, as defined in section 60A.60, subdivision 11, must equal at least 2.0. Subd. 2. Other insurers. In order to be eligible to be governed by sections 60L.01 to 60L.15, an insurer other than a life insurer must meet the following requirements: (a) For each calendar year during which sections 60L.01 to 60L.15 apply to the insurer, the insurer shall have had, as of the end of the immediately preceding calendar year: (1) total admitted assets of at least $2,000,000,000; and (2) a total amount of capital plus surplus of at least $200,000,000. (b) For each calendar year during which sections 60L.01 to 60L.15 apply to the insurer, the insurer shall have had, as of the end of the immediately preceding calendar year, total adjusted capital equal to or greater than company action level risk-based capital, as defined in section 60A.60, subdivision 11. For purposes of this subdivision, "total adjusted capital" means total adjusted capital as defined in section 60A.60, subdivision 14, adjusted to deduct the value of capital notes and surplus notes as provided in the risk-based instructions as defined in section 60A.60, subdivision 10. (c) For each calendar year during which sections 60L.01 to 60L.15 apply to the insurer, the mean of the ratio, calculated as of the end of each of the five immediately preceding calendar years, of total adjusted capital to company action level risk-based capital, as defined in section 60A.60, subdivision 11, must equal at least 1.0. (d) An insurer is considered to have met the requirements of this subdivision and subdivision 3 if the insurer participates in a 100 percent reinsurance pooling agreement which substantially affects the solvency and integrity of its reserves and cedes all of its direct and assumed business to the pool, and where the insurer with the largest share of pooled business subject to the agreement meets the requirements of this subdivision and subdivision 3. Subd. 3. Additional requirements. (a) In order to be eligible to be governed by sections 60L.01 to 60L.15, the insurer must meet the requirements specified under this subdivision. (b) The insurer shall: (1) have been in continuous operation for a minimum of five years; and (2) maintain a minimum claims-paying, financial strength, or equivalent rating from at least one nationally recognized statistical rating organization in one of the organization's three highest rating categories for the time period during which sections 60L.01 to 60L.15 apply to the insurer. For purposes of this subdivision, the rating must be based on a review of the insurer by the nationally recognized statistical rating organization with the cooperation of the insurer; must not depend on a guarantee or other credit enhancement from another entity; and must not be modified or otherwise qualified to show dependence of the rating on the performance or a contractual obligation of, or the insurer's affiliation with, another insurer. (c) The insurer or an affiliate, as defined in section 60D.15, subdivision 2, of the insurer shall employ at least one individual as a professional investment manager for the insurer's investments whom the board of directors or trustees of the insurer finds is qualified on the basis of experience, education or training, competence, personal integrity, and who conducts professional investment management activities in accordance with the Code of Ethics and Standards of Professional Conduct of the Association for Investment Management and Research. For purposes of complying with this paragraph, an employee of an affiliate may only be used if they are responsible for managing the insurer's investments. (d) The board of directors of the insurer must annually adopt a resolution finding that the insurer or an affiliate, as defined in section 60D.15, subdivision 2, of the insurer has employed a professional investment manager for the insurer's investments with sufficient expertise and has sufficient other resources to implement and monitor the insurer's investment policies and strategies. (e) In the report required under section 60A.1291, subdivision 12, the insurer's independent auditor shall not have identified any significant deficiencies in the insurer's internal control structure related to investments during any of the five years immediately preceding the date on which sections 60L.01 to 60L.15 begin to apply to the insurer, and as long as sections 60L.01 to 60L.15 apply to the insurer. Subd. 4. Resolutions. Before sections 60L.01 to 60L.15 apply to an insurer, the board of directors of the insurer must adopt the following resolutions: (1) a resolution finding that the insurer or an affiliate, as defined in section 60D.15, subdivision 2, of the insurer has employed a professional investment manager for the insurer's investments with sufficient expertise and has sufficient other resources to implement and monitor the insurer's investment policies and strategies; and (2) a resolution electing that sections 60L.01 to 60L.15 apply to the insurer. Subd. 5. Commissioner review. Sections 60L.01 to 60L.15 do not govern an insurer unless the insurer has notified the commissioner in writing of its intention that sections 60L.01 to 60L.15 will govern the insurer at least 30 days before applying sections 60L.01 to 60L.15 to its investment policies, or a shorter period of time as the commissioner permits, and the commissioner has not disapproved the governing of the insurer by sections 60L.01 to 60L.15 within this period. Subd. 6. Substitution of law. When sections 60L.01 to 60L.15 begin to govern an insurer, then, in the case of a life insurer, sections 61A.28; 61A.282, subdivision 2; 61A.283; 61A.29; 61A.31; and 61A.315; and, in the case of an insurer other than a life insurer, section 60A.11, do not apply to an insurer. Subd. 7. Termination. (a) After sections 60L.01 to 60L.15 begin to govern an insurer, sections 60L.01 to 60L.15 apply to the insurer unless: (1) the insurer has ceased to comply with the requirements of: (i) subdivision 1, if the insurer is a life insurer; (ii) subdivision 2, if the insurer is other than a life insurer; or (iii) subdivision 3 and the insurer has failed to bring itself back into compliance with the requirements of the applicable subdivisions within 30 days of ceasing to comply; or (2) the commissioner has issued an order under section 60L.14, subdivision 2, that sections 60L.01 to 60L.15 no longer govern the insurer, regardless of whether the insurer is contesting the order; or (3) all of the following conditions have been met: (i) the insurer's board of directors has adopted a resolution electing that sections 60L.01 to 60L.15 no longer apply to its investments and investment practices; (ii) the insurer has notified the commissioner in writing of its intention that sections 60L.01 to 60L.15 no longer apply to the insurer's investments and investment practices; and (iii) during the period ending 30 days after the receipt by the commissioner of the written notice, the commissioner has not issued an order under section 60L.14 prohibiting the insurer from ceasing to comply with sections 60L.01 to 60L.15. (b) An insurer may not elect more than once in a 12-month period that sections 60L.01 to 60L.15 do not apply to the insurer's investments and investment practices. (c) An investment which is held as an admitted asset by an insurer on the date on which sections 60L.01 to 60L.15 cease to govern the insurer and which qualified as an admitted asset immediately before the date remains qualified as an admitted asset of the insurer. (d) If sufficient voting securities of the insurer or an affiliate are acquired to require a filing under section 60D.17, sections 60L.01 to 60L.15 cease to apply to the insurer 30 days following the completion of the acquisition of voting securities. If the board of directors of the insurer desires the insurer to continue to be governed by sections 60L.01 to 60L.15, it shall comply with the requirements of subdivision 4 and shall notify the commissioner as required under and subject to subdivision 5. If the notification is received within 30 days of the completion of the acquisition, the insurer is governed by sections 60L.01 to 60L.15 during the time period allowed for the commissioner's disapproval. (e) When sections 60L.01 to 60L.15 cease to govern an insurer, then, in the case of a life insurer, sections 61A.28; 61A.282, subdivision 2; 61A.283; 61A.29; 61A.31; and 61A.315, and, in the case of an insurer other than a life insurer, section 60A.11, apply to the insurer. Subd. 8. Conflict of laws. Sections 60L.01 to 60L.15 prevail over any other law, except section 60D.16, that authorizes an insurer to make a particular investment if the other law was enacted before August 1, 1998. History:  1998 c 319 s 2; 1998 c 408 s 4,5; 2009 c 37 art 3 s 13
60L.03 MINIMUM FINANCIAL SECURITY BENCHMARK. Subdivision 1. Amount. Except as otherwise provided in subdivisions 2 and 3, the amount of the minimum financial security benchmark for an insurer is the greater of: (1) the authorized control level risk-based capital applicable to the insurer as defined under section 60A.60, subdivision 11, clause (3); or (2) the minimum capital or minimum surplus required for maintenance of an insurer's certificate of authority. Subd. 2. Authorization by order. The commissioner may, according to the controlling factors specified in subdivision 6, establish by order a minimum financial security benchmark to apply to a specific insurer provided it is not less than the amount determined under subdivision 1. Subd. 3. Additional authorization. The commissioner may establish a minimum financial security benchmark that is a multiple of authorized control level risk-based capital to apply to any class of insurers provided the amount established is not less than the amount specified under subdivision 1. Subd. 4. Surplus. The commissioner shall determine the amount of surplus that constitutes an insurer's minimum financial security benchmark as an amount that will provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or by reinsurance. Subd. 5. Types of contingencies. The commissioner shall consider the risks of: (1) increases in the frequency or severity of losses beyond the levels contemplated by the rates charged; (2) increases in expenses beyond those contemplated by the rates charged; (3) decreases in the value of or the return on invested assets below those planned on; (4) changes in economic conditions that would make liquidity more important than contemplated and would force untimely sale of assets or prevent timely investments; (5) currency devaluation to which the insurer may be subject; and (6) any other contingencies the commissioner can identify that may affect the insurer's operations. Subd. 6. Controlling factors. In making the determination under subdivision 4, the commissioner shall take into account the following factors: (1) the most reliable information available as to the magnitude of the various risks under subdivision 5; (2) the extent to which the risks specified under subdivision 5 are independent of each other or are related, and whether any dependency is direct or inverse; (3) the insurer's recent history of profits or losses; (4) the extent to which the insurer has provided protection against the contingencies in other ways than the establishment of surplus, including redundancy of premiums, adjustability of contracts under their terms, investment valuation reserves whether voluntary or mandatory, appropriate reinsurance, the use of conservative actuarial assumptions to provide a margin of security, reserve adjustments in recognition of previous rate inadequacies, contingency or catastrophe reserves, diversification of assets, and underwriting risks; (5) independent judgments of the soundness of the insurer's operations, as evidenced by the ratings of reliable professional financial reporting services; and (6) any other relevant factors. History:   1998 c 319 s 3 
60L.04 AUTHORIZED INVESTMENTS. Subdivision 1. Authorization. Subject to the provisions of sections 60L.01 to 60L.15, an insurer may loan or invest its funds, and may buy, sell, hold title to, possess, occupy, pledge, convey, manage, protect, insure, and deal with its investments, property, and other assets to the same extent as any other corporation or other person under the laws of this state or the United States. Subd. 2. Board of directors; duties. With respect to all of the insurer's investments, the board of directors of an insurer shall exercise the judgment and care, under the circumstances then prevailing, that persons of reasonable prudence, discretion, and intelligence exercise in the management of a like enterprise, not in regard to speculating but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. Investments must be of sufficient value, liquidity, and diversity to ensure the insurer's ability to meet its outstanding obligations based on reasonable assumptions as to new business production for current lines of business. As part of its exercise of judgment and care, the board of directors shall take into account the prudence evaluation criteria specified under section 60L.05. Subd. 3. Internal controls. The insurer shall establish and implement internal controls and procedures to ensure compliance with investment policies and procedures to ensure that: (1) the insurer's investment staff and any consultants used are reputable and capable; (2) a periodic evaluation and monitoring process occurs for assessing the effectiveness of investment policy and strategies; (3) management's performance is assessed in meeting the stated objectives within the investment policy; and (4) appropriate analyses are undertaken of the degree to which asset cash flows are adequate to meet liability cash flows under different economic environments. The analyses must be conducted at least annually and make specific reference to economic conditions. Subd. 4. Compliance. Compliance with sections 60L.01 to 60L.15 is determined in light of the facts and circumstances existing at the time of the insurer's decision or action and not by hindsight. History:   1998 c 319 s 4 
60L.05 PRUDENCE EVALUATION CRITERIA. The factors in clauses (1) to (12) shall be evaluated by the insurer and considered along with its business in determining whether an investment portfolio or investment policy is prudent. The commissioner shall consider the factors in clauses (1) to (12) before making a determination that an insurer's investment portfolio or investment policy is not prudent: (1) general economic conditions; (2) the possible effect of inflation or deflation; (3) the expected tax consequences of investment decisions or strategies; (4) the fairness and reasonableness of the terms of an investment considering its probable risk and reward characteristics and relationship to the investment portfolio as a whole; (5) the extent of the diversification of the insurer's investments among individual investments, classes of investments, industry concentrations, dates of maturity, and geographic areas; (6) the quality and liquidity of investments in affiliates; (7) the investment exposure to the following risks, quantified in a manner consistent with the insurer's acceptable risk level identified in section 60L.06, clause (8): liquidity; credit and default; systemic (market); interest rate; call, prepayment and extension; currency; and foreign sovereign; (8) the amount of the insurer's assets, capital and surplus, premium writings, insurance in force, and other appropriate characteristics; (9) the amount and adequacy of the insurer's reported liabilities; (10) the relationship of the expected cash flows of the insurer's assets and liabilities, and the risk of adverse changes in the insurer's assets and liabilities; (11) the adequacy of the insurer's capital and surplus to secure the risks and liabilities of the insurer; and (12) any other factors relevant to whether an investment is prudent. History:   1998 c 319 s 5 
60L.06 INSURER INVESTMENT POLICY. In acquiring, investing, exchanging, holding, selling, and managing investments, an insurer shall establish and follow a written investment policy that must be reviewed and approved by the insurer's board of directors at least annually. The content and format of an insurer's investment policy are at the insurer's discretion, but must include written guidelines appropriate to the insurer's business as to the following: (1) the general investment policy of the insurer containing policies, procedures, and controls covering all aspects of the investing function; (2) quantified goals and objectives regarding the composition of classes of investments, including maximum internal limits; (3) periodic evaluation of the investment portfolio as to its risk and reward characteristics. This clause does not preclude an insurer from the use of modern portfolio theory to manage its investments. For purposes of this section, "modern portfolio theory" means the collection of models and applications that prescribe the maximization of expected returns for a given level of aggregate risk as the primary objective of investment portfolio management; (4) professional standards for the individuals making day-to-day investment decisions to ensure that investments are managed in an ethical and capable manner; (5) the types of investments to be made and those to be avoided, based on their risk and reward characteristics and the insurer's level of experience with the investments; (6) the relationship of classes of investments to the insurer's insurance products and liabilities; (7) the manner in which the insurer intends to implement section 60L.05; and (8) the level of risk, based on quantitative measures, appropriate for the insurer given the level of capitalization and expertise available to the insurer. History:   1998 c 319 s 6 
60L.07 AUTHORIZED CLASSES OF INVESTMENTS. The following classes of investments may be counted for the purposes specified in section 60L.11, whether they are made directly or as a participant in a partnership, joint venture, or limited liability company: (1) cash in the direct possession of the insurer or on deposit with a financial institution regulated by any federal or state agency of the United States; (2) bonds, debt-like preferred stock, and other evidences of indebtedness of governmental units in the United States or Canada, or the instrumentalities of the governmental units, or private business entities domiciled in the United States or Canada, including asset-backed securities and SVO listed mutual funds; (3) loans secured by mortgages, trust deeds, or other security interests in real property located in the United States or Canada or secured by insurance against default issued by a government insurance corporation of the United States or Canada or by an insurer authorized to do business in this state; (4) common stock or equity-like preferred stock or equity interests in any United States or Canadian business entity, or shares of mutual funds registered with the Securities and Exchange Commission of the United States under the Investment Company Act of 1940, other than SVO listed mutual funds; (5) real property necessary for the convenient transaction of the insurer's business; (6) real property and its fixtures, furniture, furnishings, and equipment in the United States or Canada, which produces or after suitable improvement can reasonably be expected to produce substantial income; (7) loans, securities, or other investments of the types described in clauses (1) to (6) in countries other than the United States and Canada; (8) bonds or other evidences of indebtedness of international development organizations of which the United States is a member; (9) loans upon the security of the insurer's own policies in amounts that are adequately secured by the policies and that in no case exceed the surrender values of the policies; (10) tangible personal property under contract of sale or lease under which contractual payments may reasonably be expected to return the principal of and provide earnings on the investment within its anticipated useful life; (11) other investments authorized by the commissioner; and (12) investments not otherwise permitted by this section, and not specifically prohibited by other law, to the extent of not more than five percent of the first $500,000,000 of the insurer's admitted assets plus ten percent of the insurer's admitted assets exceeding $500,000,000. History:   1998 c 319 s 7 
60L.08 LIMITATIONS GENERALLY APPLICABLE. Subdivision 1. Class limitations. For the purposes of section 60L.11, the following limitations on classes of investments apply: (a) For investments authorized under section 60L.07, clause (2), and investments authorized under section 60L.07, clause (7), that are of the types described in section 60L.07, clause (2), the following restrictions apply: (1) the aggregate amount of medium and lower grade investments may not exceed 20 percent of the insurer's admitted assets; (2) the aggregate amount of lower grade investments may not exceed ten percent of the insurer's admitted assets; (3) the aggregate amount of investments rated 5 or 6 by the SVO may not exceed five percent of the insurer's admitted assets; (4) the aggregate amount of investments rated 6 by the SVO may not exceed one percent of the insurer's admitted assets; or (5) the aggregate amount of medium and lower grade investments that receive as cash income less than the equivalent yield for United States Treasury issues with a comparative average life, may not exceed one percent of the insurer's admitted assets. (b) Investments authorized under section 60L.07, clause (3), may not exceed 45 percent of admitted assets in the case of life insurers and 25 percent of admitted assets in the case of insurers other than life insurers. (c) Investments authorized under section 60L.07, clause (4), other than subsidiaries of the types authorized under section 60A.11, subdivision 18, paragraph (a), clause (4); 60D.16; or 61A.281, may not exceed 20 percent of admitted assets in the case of life insurers and 25 percent of admitted assets in the case of insurers other than life insurers. (d) Investments authorized under section 60L.07, clause (5), may not exceed ten percent of admitted assets. (e) Investments authorized under section 60L.07, clause (6), may not exceed 20 percent of admitted assets in the case of life insurers, and ten percent of admitted assets in the case of insurers other than life insurers. (f) Investments authorized under section 60L.07, clause (7), may not exceed 20 percent of admitted assets. (g) Investments authorized under section 60L.07, clause (8), may not exceed two percent of admitted assets. (h) Investments authorized under section 60L.07, clause (10), may not exceed two percent of admitted assets. Subd. 2. Individual limitations. For purposes of determining compliance with section 60L.11, securities of a single issuer and its affiliates, other than the government of the United States and subsidiaries authorized under section 60A.11, subdivision 18, paragraph (a), clause (4); 60D.16; or 61A.281, may not exceed three percent of admitted assets in the case of life insurers, and five percent in the case of insurers other than life insurers. For purposes of this subdivision, in the case of asset-backed securities issued, assumed, insured, or guaranteed by a government-sponsored enterprise and secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity, the issuer is considered to be the asset or pool of assets. Subd. 3. Investment subsidiaries. For purposes of determining compliance with this section, the admitted portion of assets of subsidiaries under section 60A.11, subdivision 18, paragraph (a), clause (4); 60D.16, subdivision 2, paragraph (b); or 61A.281, subdivision 5, are considered to be owned directly by the insurer and any other investors in proportion to the market value, or if there is no market, the reasonable value, of their interest in the subsidiaries. Subd. 4. Effect of quantity limitations. To the extent that investments exceed the limitations specified under subdivisions 1 and 2, the excess may be assigned to the investment class authorized in section 60L.07, clause (12), until that limit is exhausted. Subd. 5. Mutual funds, pooled investment vehicles, and other investment companies. If the commissioner considers it desirable in order to get a proper evaluation of the investment portfolio of an insurer, the commissioner may require that investments in mutual funds, pooled investment vehicles, or other investment companies be treated for purposes of sections 60L.01 to 60L.15, as if the investor owned directly its proportional share of the assets owned by the mutual fund, pooled investment vehicle, or investment company. Subd. 6. Investment limitation computation. Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus must relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed with the commissioner. Subd. 7. Replication transactions. (a) An insurer engaging in replication transactions shall include all replicated investment positions in calculating compliance with the limitations on investments contained in this section. So long as the insurer so complies with the limitations on investments contained in this section, then the insurer may count a replication transaction and any related investment of the insurer for the purposes specified in section 60L.11, to the extent the insurer has appropriately assigned the transaction or other investment to an investment class authorized in section 60L.07. An insurer shall not otherwise count replicated investment positions for the purposes specified in section 60L.11. (b) If an investment position of the insurer includes a replicated investment position and exceeds an applicable limitation contained in this section, then the insurer may allocate part or all of the replicated investment position as follows for the purposes of calculating compliance with the limitations on investments and other requirements contained in sections 60L.01 to 60L.15: to the extent an insurer owns assets in excess of its minimum asset requirement, the insurer may deem a replicated investment position to be among such excess assets, but only to the extent that the replicated investment position does not cause the total positions represented by such excess assets to be greater than the total positions represented by such excess assets as would be permitted in the absence of the replicated investment position. History:  1998 c 319 s 8; 1999 c 86 art 1 s 15; 2001 c 131 s 9
60L.09 PROTECTION AGAINST CURRENCY FLUCTUATIONS. An insurer doing business that requires it to make payments in different currencies shall have investments in securities in each of these currencies in an amount that independently of all other investments meets the requirements of sections 60L.01 to 60L.15 as applied separately to the insurer's obligations in each currency. The commissioner may by order exempt an insurer, or a class of insurers, from this requirement if the obligations in other currencies are small enough that no significant problem for financial solidity would be created by substantial fluctuations in relative currency values. History:   1998 c 319 s 9 
60L.10 PROHIBITED INVESTMENTS. Subdivision 1. Prohibitions. An insurer may not invest in investments that are prohibited for an insurer by law. The use of a derivative instrument for any purposes other than hedging, income generation, or replication is prohibited. Subd. 2. Disposal of prohibited asset. A reasonable time, not to exceed five years, must be allowed for disposal of a prohibited investment in hardship cases if the investment is demonstrated by the insurer to have been legal when made, or the result of a mistake made in good faith, or if the commissioner determines that the sale of the asset would be contrary to the interests of insureds, creditors, or the general public. History:  1998 c 319 s 10; 2001 c 131 s 10
60L.11 EFFECT OF INVESTMENT RESTRICTIONS. Subdivision 1. Invested assets. Invested assets may be counted toward satisfaction of the minimum asset requirement only so far as they are invested in compliance with sections 60L.01 to 60L.15 and orders issued by the commissioner. Assets other than invested assets may be counted toward satisfaction of the minimum asset requirement at admitted annual statement value. Subd. 2. Admitted asset. An investment which is held as an admitted asset by an insurer on the date on which sections 60L.01 to 60L.15 begin to govern the insurer and which qualified as an admitted asset immediately before this date remain qualified as an admitted asset under sections 60L.01 to 60L.15. Subd. 3. Acquired assets. Assets acquired in the bona fide enforcement of creditors' rights or in bona fide workouts or settlements of disputed claims may be counted for the purposes of subdivision 1 for five years after acquisition if real property and three years if not real property, even if they could not otherwise be counted under sections 60L.01 to 60L.15. The commissioner may allow reasonable extensions of these periods if replacement of the assets within the periods would not be possible without substantial loss. Subd. 4. Liquidation and rehabilitation. If an insurer does not own, or is unable to apply toward compliance with sections 60L.01 to 60L.15, an amount of assets equal to its minimum asset requirement, the commissioner may consider it to be financially hazardous under section 60B.15; 60B.20; or 60G.20. History:   1998 c 319 s 11 
60L.12 REPORTS AND REPLIES. Subdivision 1. Requirements. The commissioner may require any of the following from a person subject to regulation under sections 60L.01 to 60L.15: (1) statements, reports, answers to questionnaires and other information, and evidence in whatever reasonable form the commissioner designates, and at reasonable intervals as the commissioner chooses; (2) full explanation of the programming of any data storage or communication system in use; or (3) that information from any books, records, electronic data processing systems, computers, or any other information storage system be made available to the commissioner at a reasonable time and in a reasonable manner. Subd. 2. Forms. The commissioner may prescribe forms for the reports required under subdivision 1 and specify who shall execute or certify the reports. The forms for the reports required under subdivision 1 must be consistent, so far as practicable, with those prescribed by other jurisdictions. Subd. 3. Accounting. The commissioner may prescribe reasonable minimum standards and techniques of accounting and data handling to ensure that timely and reliable information will exist and will be available to the commissioner. Subd. 4. Prompt reply. Any officer, manager, or general agent of an insurer subject to sections 60L.01 to 60L.15, any person controlling or having a contract under which the person has a right to control the insurer, whether exclusively or otherwise, or a person with executive authority over or in charge of any segment of the insurer's affairs, shall reply promptly in writing or in other reasonably designated form, to a written inquiry from the commissioner requesting a reply. Subd. 5. Verified communication. The commissioner may require that any communication made to the commissioner under this section be verified. Subd. 6. No action for damages. A communication to the commissioner, or to an expert or consultant retained by the commissioner, required under sections 60L.01 to 60L.15, shall not subject the person making it to an action for damages for the communication in the absence of actual malice. Subd. 7. Information. Notwithstanding subdivision 6, the commissioner may bring suit against any person providing information required under sections 60L.01 to 60L.15 that is not truthful and accurate. History:   1998 c 319 s 12 
60L.13 RETENTION OF EXPERTS. The commissioner may retain at the insurer's expense attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as may be reasonably necessary to assist in reviewing the insurer's investments. Persons so retained are under the direction and control of the commissioner and shall act in a purely advisory capacity. History:   1998 c 319 s 13 
60L.14 COMMISSIONER'S ORDERS. Subdivision 1. Necessary changes. If the commissioner determines that an insurer's investment practices do not meet the requirements of sections 60L.01 to 60L.15, the commissioner may, after notification to the insurer of the commissioner's findings, order the insurer to make changes necessary to comply with the requirements of sections 60L.01 to 60L.15. Subd. 2. Additional restrictions. If the commissioner determines that by reason of the financial condition, current investment practice, or current investment plan of an insurer, the interests of insureds, creditors, or the general public are or may be endangered, the commissioner may impose reasonable additional restrictions upon the admissibility or valuation of investments or may impose restrictions on the investment practices of an insurer, including prohibition, divestment, or requiring investments by insurers to be governed by section 60A.11 in the case of insurers other than life insurers, and sections 61A.28; 61A.282, subdivision 2; 61A.283; 61A.29; 61A.31; and 61A.315 in the case of life insurers. Subd. 3. Additional assets. The commissioner may count toward satisfaction of the minimum asset requirement any assets in which an insurer is required to invest under the laws of a country other than the United States as a condition for doing business in that country if the commissioner finds that counting them does not endanger the interests of insureds, creditors, or the general public. Subd. 4. Adjustments. If the commissioner is satisfied by evidence of the solidity of an insurer and the competence of management and its investment advisors, the commissioner, after a hearing, may by order adjust the class limitations under section 60L.08, for that insurer, to the extent that the commissioner is satisfied that the interests of insureds, creditors, and the public are sufficiently protected in other ways. Adjustments to the class limitations granted under section 60L.08, in aggregate, are limited to an amount equal to ten percent of the insurer's liabilities. History:   1998 c 319 s 14 
60L.15 ADMINISTRATIVE HEARINGS. Subdivision 1. Authorization. An insurer aggrieved by an order or any other act or failure to act of the commissioner regarding compliance with sections 60L.01 to 60L.15, may request a hearing by following the procedures of chapter 14. Subd. 2. Private hearing. The commissioner shall hold hearings under this section privately unless the insurer requests a public hearing, in which case the hearing is public. History:   1998 c 319 s 15 
61A.01 LIFE INSURANCE COMPANY DEFINED. Every corporation or association, domestic or foreign, operating upon any plan involving payment of money or other thing of value to policy or certificate holders, or members, or families, or representatives of either, conditioned upon the continuance or cessation of human life, or for the payment of endowments or annuities (except benevolent, fraternal, cooperative or secret societies of orders for the sole purpose of mutual welfare, protection and relief of their members and the payment of stipulated amounts, or the proceeds of assessments, to the families of deceased members), shall be deemed a life insurance company, and wherever used in this chapter, the terms "company," "life company," "corporation" or "association" shall be construed to mean life insurance company unless the context clearly indicates otherwise. History:   1967 c 395 art 2 s 1 
61A.011 INTEREST ON UNPAID BENEFITS. Subdivision 1. General requirement. 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 policyholders for loans under the insurer's policies. Subd. 2. Requirement for certain insurers. Notwithstanding the provisions of subdivision 1, if an insurer admitted to transact life insurance in this state does not pay within 60 days after receipt of due proof of death of the insured, the proceeds or payments under any policy of life insurance, individual or group, such insurer shall pay interest at an annual rate that is two percent more than the rate of interest provided for in subdivision 1. Such interest shall be computed from the date of 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. Interest payments under this subdivision shall be in lieu of interest payments required under subdivision 1. Subd. 3. Notice. In any case in which interest on the proceeds of, or payments under, any policy of life insurance becomes payable pursuant to this section, the insurer shall enclose with the payment a notice stating that interest is being paid and specifying the rate of interest and the amount paid. Subd. 4. Payment not required. This section shall not require the payment of interest in any case in which: (a) the beneficiary or policy owner elects in writing delivered to the insurer to receive the proceeds of, or payments under, the policy by any means other than a lump-sum payment thereof, provided that the effective date of the policy settlement option shall not be later than 60 days after the date of the insured's death; (b) the terms of the policy insure an indebtedness owed by the insured and the proceeds include postdeath interest on the indebtedness; or (c) the beneficiary resides in a jurisdiction which has a law requiring the payment of interest to beneficiaries residing in that jurisdiction. Nothing in this subdivision shall be construed to preclude the payment of interest required under subdivisions 1 or 2 on any proceeds remaining after extinguishment of the insured's indebtedness. Subd. 5. Application. This section shall apply only to deaths of insureds which occur on or after August 1, 1977. Subd. 6. Definition. For the purposes of this section "to pay" means to issue a check for payment and "date of payment" means the date on which the insurer issues a check to transfer the amount in question to the beneficiaries or to deposit that amount: (a) with the district court of this state in accordance with rule 67, Minnesota Rules of Civil Procedure for the district courts; (b) with the courts of any foreign jurisdiction as authorized by the laws of that jurisdiction; or (c) in a trust account in any bank or trust company operating under the laws of this state or in any foreign bank, provided that the insurer keeps records of the account and makes these records open to inspection by the commissioner of commerce. Subd. 7. Accidental death benefits. Payments of accidental death benefits under an individual or group policy, whether payable in connection with a separate policy issued solely to provide that type of coverage or otherwise, are subject to this section. If the applicable rate of interest cannot be determined as provided in this section, the rate of interest for purposes of subdivision 1 is the rate provided in section 549.09, subdivision 1, paragraph (c). Subd. 8.  [Repealed, 1993 c 13 art 1 s 17] History:  1977 c 353 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1989 c 330 s 4; 1992 c 520 s 1; 1992 c 564 art 1 s 29
61A.02 FORMS OF POLICY. Subdivision 1. Prohibited. So-called coupon policies shall not be issued or delivered by any company to any residents of this state. Subd. 2. Approval required. Except as otherwise authorized pursuant to subdivision 2a, no policy or certificate of life insurance or annuity contract, issued to an individual, group, or multiple employer trust, nor any rider of any kind or description which is made a part thereof shall be issued or delivered in this state, or be issued by a life insurance company organized under the laws of this state, until the form of the same has been approved by the commissioner. In making a determination under this section, the commissioner may require the insurer to provide rates and advertising materials related to policies or contracts, certificates, or similar evidence of coverage issued or delivered in this state. Subdivisions 1 to 5 apply to a policy, certificate of insurance, or similar evidence of coverage issued to a Minnesota resident or issued to provide coverage to a Minnesota resident. Subdivisions 1 to 5 do not apply to a certificate of insurance or similar evidence of coverage that meets the conditions of section 61A.093, subdivision 2. Subd. 2a. Expedited procedure for life or annuity contracts; form and rate filing reviews. (a) An insurer may file a life or annuity contract, rates, or forms and all related riders of any kind or description with the commissioner for a review under this subdivision. Any review must be completed within 60 days of receipt of a completed filing. The cost of any actuarial review must be paid by the insurer submitting the filing under this subdivision. (b) If a filing has been disapproved and is resubmitted, the cover letter must note the disapproval and any changes made since the earlier filing, with an explanation of why the new filing should be approved. Resubmission of disapproved forms should, where possible, be made within 90 days of disapproval. (c) The filer may request a hearing within ten days of receiving a final disapproval. Within 20 days of the receipt of the request, the commissioner shall schedule a date for the hearing, which must occur within 30 days of the scheduling. At least ten days' written notice of the hearing must be given to all interested parties. All hearings must be conducted in accordance with chapter 14. (d) The hearing officer may order a prehearing conference for the resolution or simplification of issues, to be held no less than three days before the scheduled date of a hearing. (e) All actuaries used by the commissioner to review filings submitted by insurers pursuant to this subdivision, whether employed by the department or secured by contract, must be members of the American Academy of Actuaries. The commissioner may contract with actuaries to review filings submitted by insurers under this subdivision, and shall assess the applicant for the costs of this review. Payments received by the commissioner under this subdivision shall be deposited in the revolving fund established under section 60A.03. (f) Except for the change in timing for the review of completed filings found in paragraph (a) and the expedited hearing procedures found in paragraph (c), nothing in this subdivision shall be construed as changing the statutory and regulatory standards for approval or disapproval of filings. Subd. 3. Disapproval. (a) The commissioner shall, within 60 days after the filing of any form, disapprove the form: (1) if the benefits provided are unreasonable in relation to the premium charged; (2) if the safety and soundness of the company would be threatened by the offering of an excess rate of interest on the policy or contract; (3) if it contains a provision or provisions which are unlawful, unfair, inequitable, misleading, or encourages misrepresentation of the policy; or (4) if the form, or its provisions, is otherwise not in the public interest. It shall be unlawful for the company to issue any policy in the form so disapproved. If the commissioner does not within 60 days after the filing of any form, disapprove or otherwise object, the form shall be deemed approved. (b) When an insurer or the Minnesota Comprehensive Health Association fails to respond to an objection or inquiry within 60 days, the filing is automatically disapproved. A resubmission is required if action by the Department of Commerce is subsequently requested. An additional filing fee is required for the resubmission. (c) For purposes of paragraph (a), clause (2), an excess rate of interest is a rate of interest exceeding the rate of interest determined by subtracting three percentage points from Moody's corporate bond yield average as most recently available. Subd. 4. Withdrawal of approval. The commissioner may at any time withdraw approval of any policy or form upon the grounds stated in subdivision 3. It is unlawful for the insurer to issue the form or use it in connection with any policy after the effective date of the withdrawal of approval. Subd. 5. Hearing. Notification of disapproval or withdrawal of approval must be made to the insurer in writing, specifying the grounds for the disapproval. Upon written request made by the insurer, the commissioner shall grant a hearing within 30 days after receipt of the request. All hearings must be conducted in accordance with chapter 14. Following the hearing, the commissioner may affirm, reverse, or modify the previous determination made with respect to the subject policy or form. Subd. 6. Filing by domestic insurers for purposes of complying with another state's filing requirements. A domestic insurer may file with the commissioner for informational purposes only a policy, certificate of insurance, or annuity contract that is not intended to be offered or sold within this state. This subdivision only applies to the filing in Minnesota of a policy, certificate of insurance, or annuity contract issued to an insured, certificate holder, or annuitant located outside of this state when the filing is for the express purpose of complying with the law of the state in which the insured, certificate holder, or annuitant resides. In no event may a policy, certificate of insurance, or annuity contract filed under this subdivision for out-of-state use be issued or delivered in Minnesota unless and until the policy, certificate of insurance, or annuity contract is approved under subdivision 2. Subd. 7. Regulatory flexibility. (a) Notwithstanding any provision of this section, the commissioner may authorize certain long-term care coverage to be sold as part of or in conjunction with a life insurance product, where that type of product: (1) is not already permitted; (2) represents an innovative and reasonable approach to provide both life insurance and long-term care protection; (3) provides reasonable coverage; and (4) is in the best interest of insureds. (b) The insurer filing the product must demonstrate that the proposed new policy satisfies the criteria in paragraph (a), clauses (1) to (4). History:  1967 c 395 art 2 s 2; 1984 c 592 s 44; 1993 c 319 s 1,2; 1994 c 485 s 16; 1996 c 446 art 1 s 9,10; 2005 c 74 s 9,10; 2006 c 255 s 5; 2022 c 79 s 1
61A.021 SALE OF LIFE INSURANCE AND ANNUITY AS SINGLE POLICY PROHIBITED. Subdivision 1. Sale as single policy prohibited. The sale of a life insurance product and an annuity as a single policy, whether in the form of a life insurance policy with an annuity rider or otherwise, is prohibited in this state. This subdivision does not prohibit the simultaneous sale of these products, but the sale must involve two separate and distinct policies. Subd. 2. Tying prohibited. The tying of the sale of a life insurance product and an annuity is expressly prohibited. The sale of one policy cannot be conditioned upon the sale of a second policy. A violation of subdivision 1 is an unfair and deceptive trade practice under chapter 72A. Subd. 3. Exemption. The commissioner may exempt by order such a product from this section if it is in the public interest. Subd. 4. Implementation. This section applies to all sales where applications are completed on or after July 1, 1985. History:   1Sp1985 c 10 s 56 
61A.03 REQUIRED PROVISIONS; LIFE INSURANCE POLICIES. Subdivision 1. Generally. No policy of life insurance may be issued in this state or by a life insurance company organized under the laws of this state unless it contains the following provisions: (a) Premium. A provision that all premiums are payable in advance either at the home office of the company, or to an agent of the company, upon delivery of a receipt signed by one or more officers named in the policy and countersigned by the agent, but a policy may contain a provision that the policy itself is a receipt for the first premium; (b) Grace period. A provision for a one month grace period for the payment of every premium after the first, during which the insurance will continue in force. The provision may subject the late payment to a finance charge and contain a stipulation that if the insured dies during the grace period, the overdue premium will be deducted in any settlement under the policy; (c) Entire contract. A provision that the policy constitutes the entire contract between the parties and is incontestable after it has been in force during the lifetime of the insured for two years from its date, except for nonpayment of premiums and except for violations of the conditions of the policy relating to naval and military services in time of war; that at the option of the company, provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident, may be excepted; and that a special form of policy may be issued on the life of a person employed in an occupation classified by the company as extra hazardous or as leading to hazardous employment, which provides that service in certain designated occupations may reduce the company's liability under the policy to a certain designated amount not less than the full policy reserve; (d) Representations and warranties. A provision that, in the absence of fraud, all statements made by the insured are representations and not warranties, and that no statement voids the policy unless it is contained in a written application and a copy of the application is endorsed upon or attached to the policy when issued; (e) Misstatement of age. A provision that if the age of the insured is understated the amount payable under the policy will be the amount the premium would have purchased at the correct age; (f) Dividends on participating policies. A provision that the policy will participate in the surplus of the company and that, beginning not later than the end of the third policy year, the company will annually determine and account for the portion of the divisible surplus accruing on the policy, and that the owner of the policy has the right, each year after the fifth, to have the current dividend arising from the participation paid in cash. If the policy provides other dividend options, it must specify which option is effective if the owner of the policy does not elect an option. The provision may condition any dividends payable during the first five years of the policy upon the payment of the next ensuing annual premium. This provision is not required in nonparticipating policies, in policies issued on under-average lives, or in insurance in exchange for lapsed or surrendered policies; (g) Policy loans. A provision (1) that after three full years' premiums have been paid, the company at any time while the policy is in force, will advance, on proper assignment of the policy, and on the sole security thereof, at a specified rate of interest, not to exceed eight percent per annum, or at an adjustable rate of interest as otherwise provided for in this section, a sum equal to, or, at the option of the owner of the policy, less than the loan value thereof; (2) that the loan value is the cash surrender value thereof at the end of the current policy year; (3) that the loan, unless made to pay premiums, may be deferred for not more than six months after the application for it is made; (4) that the company will deduct from the loan value any existing indebtedness on the policy and any unpaid balance of the premium for current policy year, and may collect interest in advance on the loan to the end of the current policy year; (5) that the failure to repay an advance or to pay interest does not void the policy unless the total indebtedness thereon to the company equals or exceeds the loan value at the time of the failure, nor until one month after notice has been mailed by the company to the last known address of the insured and of the assignee of record at the home office of the company; and (6) that no condition other than those provided in this section will be exacted as a prerequisite to an advance. This provision is not required in term insurance; (h) Reinstatement. A provision that if, in event of default in premium payments, the nonforfeiture value of the policy is applied to the purchase of other insurance, and if that insurance is in force and the original policy has not been surrendered to the company and canceled, the policy may be reinstated within three years after the default upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest; (i) Payment of claims. A provision that, when a policy becomes a claim by the death of the insured, settlement will be made within two months after receipt of due proof of death; (j) Settlement option. A table showing the amount of installments in which the policy may provide its proceeds may be payable; (k) Description of policy. A title on the face and on the back of the policy briefly and correctly describing the policy in bold letters stating its general character, dividend periods, and other particulars, so that the holder will not be able to mistake the nature and scope of the contract; (l) Form number. A form number in the lower left-hand corner of the first page of each form, including riders and endorsements. Any of the foregoing provisions or portions thereof relating to premiums not applicable to single premium policies must not be incorporated therein. Subd. 2. Interest rates on policy loans. (a) A life insurance policy which provides for policy loans must contain a provision concerning maximum policy loan interest rates as follows: (1) a provision permitting a maximum interest rate of not more than eight percent per annum; or (2) a provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by this subdivision. (b) No life insurer may issue policies with a policy loan provision providing for an adjustable maximum interest rate under paragraph (a), clause (2), unless the insurer also makes available policies with a policy loan provision providing for a fixed rate of interest under paragraph (a), clause (1). (c) The rate of interest charged on a policy loan made under paragraph (a), clause (2), may not exceed the higher of the following: (1) the rate used to compute the cash surrender values under the policy during the applicable period plus one percent per annum; or (2) the monthly average of the composite yield on seasoned corporate bonds as published by Moody's Investors Service, Incorporated, or any successor thereto, for the calendar month ending two months before the date on which the rate is determined. If the monthly average is no longer published, the commissioner shall substitute a substantially similar average by rule. (d) If the maximum rate of interest is determined pursuant to paragraph (a), clause (2), the policy must contain a provision setting forth the frequency at which the rate is to be determined for that policy. (e) The maximum rate referred to in paragraph (d) must be determined at regular intervals at least once every 12 months, but not more frequently than once in any three-month period. At the intervals specified in the policy: (1) the rate being charged may be increased whenever the increase as determined under paragraph (c) would increase that rate by one-half percent or more per annum; and (2) the rate being charged must be reduced whenever the reduction as determined under paragraph (c) would decrease that rate by one-half percent or more per annum. (f) The life insurer shall: (1) notify the policyholder at the time a policy loan, other than a premium loan, is made, of the initial rate of interest on the loan, that the interest rate on the loan is adjustable and that the policyholder will be notified of any increase in the interest rate; (2) notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in clause (3); (3) send reasonable advance notice of any increase in the rate to the policyholder with loans; and (4) include in the notices required by this paragraph the substance of the pertinent provisions of paragraphs (a) and (d), a summary of the plan required by paragraph (h), and the effect of the policy loan on the policyholder's net cost of insurance per $1,000 of coverage based on that plan. (g) The loan value of the policy must be determined in a manner consistent with section 61A.24 or 61A.245, but no policy may terminate as the sole result of a change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year. (h) Prior to offering insurance policies with an adjustable policy loan interest rate or offering to add a provision for an adjustable policy loan interest rate to existing policyholders, the insurer shall file a written plan setting forth the manner in which policyholders will receive a reasonable benefit in the form of price reductions, increased amounts of insurance, or increased dividends from the increased earnings of the insurer resulting from the use of the adjustable rate and, if applicable, the effect of a policy loan on dividends and dividend rates. A summary of this plan must be made available upon request to each policyholder and must be provided to each applicant for a policy before the initial premium is received. (i) The pertinent provisions of paragraphs (a) and (e) must be set forth in substance in the policies to which they apply. (j) For the purposes of this subdivision: (1) The rate of interest on policy loans permitted under this subdivision includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy. (2) The term "policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due. (3) The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer. (4) The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans. Subd. 2a. Satisfaction of filing requirement. No life insurer subject to this section is required to file more than one policy with a policy loan provision providing for a fixed rate of interest. Subd. 3. Applicability to policies. The provisions of subdivision 2 do not apply to any insurance policy issued before January 1, 1984, unless the insurer provides the policyholder with a summary of the plan required by subdivision 2, paragraph (h), and thereafter the policyholder agrees in writing to the applicability of those provisions. Upon election of policies providing adjustable policy loan interest rates, the cash surrender values of any policies subject to the provisions of this section shall be determined in accordance with section 61A.24 or 61A.245 at the time of the election. The provisions of subdivision 2 shall not apply to any insurance policy that the commissioner determines provides insufficient benefits to the policyholder to justify loan interest rates in excess of those provided in subdivision 1. Subd. 4. Nonapplication of usury. Neither section 334.01 nor any other law of this state which regulates rates of interest applies to policy loans governed by this section. Subd. 5. Rules. The commissioner may adopt rules pursuant to chapter 14 to further implement and administer the provisions of this section. History:  1967 c 395 art 2 s 3; 1983 c 292 s 1; 1984 c 592 s 45; 1995 c 258 s 15
61A.031 SUICIDE PROVISIONS. The sanity or insanity of a person shall not be a factor in determining whether a person committed suicide within the terms of an individual or group life insurance policy regulating the payment of benefits in the event of the insured's suicide. This section shall not be construed to alter present law but is intended to clarify present law. History:   1981 c 286 s 1 
61A.04 SPENDTHRIFT PROVISIONS. In addition to the provisions now required by law to be in the standard form of life insurance policies issued or delivered in this state, there shall be, when such policy provides for the payment to the beneficiary the proceeds thereof, in either monthly, quarterly, semiannual or annual installments, to continue during the lifetime of the beneficiary, or for a stipulated number of years, whenever requested by the insured under the policy, the following provisions: All rights of the beneficiary to commute, change time of payment or amount of installments, surrender for cash, borrow against or assign for any purpose, are hereby withdrawn and those parts of this policy giving the beneficiary such rights are hereby declared inoperative and void; it being the intent hereof that the beneficiary shall have no right under this contract except to receive the installments at such times and in such amounts as stated in this policy, and all the provisions of this policy in conflict herewith are hereby declared to be inoperative. This provision may be attached to any policy in the form of a rider thereon, and, when so attached, shall become a part of and form a part of the contract of insurance, evidenced by the policy to all intents and purposes as if set forth at length therein. History:   1967 c 395 art 2 s 4 
61A.05 LIFE POLICIES TO CONTAIN ENTIRE CONTRACT. Every policy of insurance issued or delivered within this state on or after the first day of January, 1908, by any life insurance corporation doing business within the state, shall contain the entire contract between the parties. Every policy which contains a reference to the application, either as a part of the policy or as having any bearing thereon, shall have a copy of such application attached thereto or set out therein. History:   1967 c 395 art 2 s 5 
61A.06 AVIATION AND WAR RISK EXCLUSION PERMITTED. Policies of life insurance may be delivered or issued for delivery in this state which limit the amount to be paid in the event of death occurring as a result of travel or flight in, or descent from or with, any kind of aircraft if the insured (1) is a pilot, officer or member of the crew of such aircraft, or is participating in aeronautic or aviation training during such flight, or (2) is in the military, naval or air forces of any country and is being transported in a military, naval or air force aircraft. Such amount shall not be less than the reserve on the policy plus any dividends standing to the credit of the policy and the reserve for any paid-up additions, less any indebtedness to the company on the policy. Such limitation may be made by a provision in the policy or by a rider made a part thereof provided, that no such limitation shall be effective unless and until the insured or applicant shall agree in writing thereto; and provided, further, that except in case of policies issued on the lives of persons who have received aeronautic or aviation training or whose occupation entails duty aboard aircraft in flight, such limitation shall apply only in event death occurs within five years after date of issue of the policy. This section shall not affect the validity of provisions which limit the amount to be paid in the event of death of the insured while in the military, naval or air forces of any country at war, or of provisions relative to benefits in the event of total and permanent disability, or of provisions which grant additional insurance specifically against death by accident. Policies issued by life insurance companies organized under the laws of this state for delivery in any other state, territory, district, or country may contain any provisions limiting the amount to be paid in the event of death which are permitted by the laws of such other state, territory, district, or country. History:   1967 c 395 art 2 s 6 
61A.07 PROHIBITED PROVISIONS. No policy of life insurance shall be issued or delivered in this state, or be issued by a life insurance company organized under the laws of this state, if it contains a provision: (1) for forfeiture of the policy for failure to repay any loan on the policy or to pay interest on such loan while the total indebtedness on the policy is less than the loan value thereof; or for forfeiture for failure to repay any such loan or to pay interest thereon, unless such provision contain a stipulation that no such forfeiture shall occur until at least one month after notice shall have been mailed by the company to the last known address of the insured and of the assignee, if any, notice of whose address and contract of the assignment has been filed with the company, at its home office; or (2) in a life policy or annuity contract, limiting the time within which any action at law or in equity may be commenced to less than five years after the cause of action shall accrue; or (3) by which the policy shall purport to be issued or to take effect more than six months before the original application for the insurance was made; or (4) for any mode of settlement at maturity of less value than the amount insured on the face of the policy plus any dividend additions, less any indebtedness to the company on the policy, and less any premium that may be deducted by the terms of the policy. History:  1967 c 395 art 2 s 7; 1994 c 485 s 17
61A.071 APPLICATIONS. No individual life insurance policy shall be issued or delivered in this state to a person age 65 or older unless a signed and completed copy of the application for insurance is left with the applicant at the time application is made. This requirement will not apply to life insurers who mail a copy of the signed, completed application to the applicant within 24 hours of receiving the application. However, where an individual life policy is marketed on a direct response basis, a copy of any application signed by the applicant shall be delivered to the insured along with, or as part of, the policy. History:  1983 c 263 s 7; 1994 c 485 s 18; 1995 c 258 s 16
61A.072 ACCELERATED BENEFITS. Subdivision 1. Definitions. (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 the anticipation of death or 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; (3) a condition that usually 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; (4) a medical condition that would, in the absence of extensive or extraordinary medical treatment, result in a drastically limited life span. Such conditions may include, but are not limited to, one or more of the following: (i) coronary artery disease resulting in an acute infarction or requiring surgery; (ii) permanent neurological deficit resulting from cerebral vascular accident; (iii) end stage renal failure; (iv) Acquired Immune Deficiency Syndrome; or (v) other medical conditions that the commissioner shall approve for any particular filing; or (5) other qualifying events that the commissioner approves for a particular filing. Subd. 2.  MS 2004 [Repealed, 2005 c 132 s 38] Subd. 2. Type of product. Accelerated benefit riders and life insurance policies with accelerated benefit provisions are primarily mortality risks rather than morbidity risks. They are life insurance benefits subject to this chapter. Subd. 3.  MS 1994 [Repealed, 1995 c 258 s 67] Subd. 3. Assignee or beneficiary. Before paying the accelerated benefit, the insurer is required to obtain from an assignee or irrevocable beneficiary a signed acknowledgment of concurrence for payout. If the insurer making the accelerated benefit is itself the assignee under the policy, no acknowledgment is required. Subd. 4. Criteria for payment. (a) Contract payment options shall include the option to take the benefit as a lump sum. The benefit shall not be made available as an annuity contingent upon the life of the insured. (b) No restrictions are permitted on the use of the proceeds. (c) If any death benefit remains after payment of an accelerated benefit, the accidental death benefit provision, if any, in the policy or rider shall not be affected by the payment of the accelerated benefit. Subd. 5. Disclosures. (a) The terminology "accelerated benefit" shall be included in the descriptive title. Products regulated under this section shall not be described or marketed as long-term care insurance or as providing long-term care benefits. (b) A disclosure statement is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. (c)(1) A written disclosure including, but not necessarily limited to, a brief description of the accelerated benefit and definitions of the conditions or occurrences triggering payment of the benefits shall be given to the applicant. The description shall include an explanation of any effect of the payment of a benefit on the policy's cash value, accumulation account, death benefit, premium, policy loans, and policy liens. (i) In the case of agent-solicited insurance, the agent shall provide the disclosure form to the applicant prior to or concurrently with the application. Acknowledgment of the disclosure shall be signed by the applicant and writing agent. (ii) In the case of a solicitation by direct response methods, the insurer shall provide the disclosure form to the applicant at the time the policy is delivered, with a notice that a full premium refund shall be received if the policy is returned to the company within the free look period. (iii) In the case of group insurance policies, the disclosure form shall be contained as part of the certificate of coverage or any related document furnished by the insurer for the certificate holder. (2) If there is a premium or cost of insurance charge, the insurer shall give the applicant a generic illustration numerically demonstrating any effect of the payment of a benefit on the policy's cash value, accumulation account, death benefit, premium, policy loans, and policy liens. (i) In the case of agent-solicited insurance, the agent shall provide the illustration to the applicant prior to or concurrently with the application. (ii) In the case of a solicitation by direct response methods, the insurer shall provide the illustration to the applicant at the time the policy is delivered. (iii) In the case of group insurance policies, the disclosure form shall be contained as part of the certificate of coverage or any related document furnished by the insurer for the certificate holder. (3) Disclosure of premium charge. (i) An insurer with financing options other than as described in subdivision 9, paragraph (a), clauses (2) and (3), shall disclose to the policy owner any premium or cost of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort to assure that the certificate holder is aware of any additional premium or cost of insurance charge if the certificate holder is required to pay a charge. (ii) An insurer shall furnish an actuarial demonstration to the state insurance department when filing the product disclosing the method of arriving at its cost for the accelerated benefit. (4) The insurer shall disclose to the policy owner any administrative expense charge. The insurer shall make a reasonable effort to assure that the certificate holder is aware of any administrative expense charge if the certificate holder is required to pay the charge. (d) When a policy owner or certificate holder requests an acceleration, the insurer shall send a statement to the policy owner or certificate holder and irrevocable beneficiary showing any effect that the payment of the accelerated benefit will have on the policy's cash value, accumulation account, death benefit, premium, policy loans, and policy liens. The statement shall disclose that receipt of accelerated benefit payments may adversely affect the recipient's eligibility for Medicaid or other government benefits or entitlements. In addition, receipt of an accelerated benefit payment may be taxable and assistance should be sought from a personal tax advisor. When a previous disclosure statement becomes invalid as a result of an acceleration of the death benefit, the insurer shall send a revised disclosure statement to the policy owner or certificate holder and irrevocable beneficiary. When the insurer agrees to accelerate death benefits, the insurer shall issue an amended schedule page to the policyholder or notify the certificate holder under a group policy to reflect any new reduced in-force face amount of the contract. Subd. 6. Effective date of accelerated benefits. The accelerated benefit provision shall be effective for accidents on the effective date of the policy or rider. The accelerated benefit provision shall be effective for illness no more than 30 days following the effective date of the policy or rider. Subd. 7. Waiver of premiums. The insurer may offer a waiver of premium for the accelerated benefit provision in the absence of a regular waiver of premium provision being in effect. At the time the benefit is claimed, the insurer shall explain any continuing premium requirement to keep the policy in force. Subd. 8. Discrimination. An insurer shall not unfairly discriminate among insureds with differing qualifying events covered under the policy or among insureds with similar qualifying events covered under the policy. An insurer shall not apply further conditions on the payment of the accelerated benefits other than those conditions specified in the policy or rider. Subd. 9. Actuarial standards. (a) The issuer may use the following financing options: (1) requiring a premium charge or cost of insurance charge for the accelerated benefit. This charge shall be based on sound actuarial principles. In the case of group insurance, the additional cost may also be reflected in the experience rating; (2) paying a present value of the face amount. The calculation shall be based on any applicable actuarial discount appropriate to the policy design. The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles and disclosed in the contract or actuarial memorandum. The maximum interest rate used shall be no greater than the greater of: (i) current yield on 90-day treasury bills; or (ii) current maximum statutory adjustable policy loan interest rate; (3) accruing an interest charge on the amount of the accelerated benefits. The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles and disclosed in the contract or actuarial memorandum. The maximum interest rate shall be no greater than the greater of: (i) current yield on 90-day treasury bills; or (ii) current maximum statutory adjustable policy loan interest rate. The interest rate accrued on the portion of the lien that is equal in amount to the cash value of the contract at the time of the benefit acceleration shall be no more than the policy loan interest rate stated in the contract. (b)(1) Except as provided in clause (2), when an accelerated benefit is payable, there shall be no more than a pro rata reduction in the cash value based on the percentage of death benefits accelerated to produce the accelerated benefit payment. (2) Alternatively, the payment of accelerated benefits, any administrative expense charges, any future premiums, and any accrued interest can be considered a lien against the death benefit of the policy or rider and the access to the cash value may be restricted to any excess of the cash value over the sum of any other outstanding loans and the lien. Future access to additional policy loans could also be limited to any excess of the cash value over the sum of the lien and any other outstanding policy loans. (c) When payment of an accelerated benefit results in a pro rata reduction in the cash value, the payment may not be applied toward repaying an amount greater than a pro rata portion of any outstanding policy loans. Subd. 10. Actuarial disclosure and reserves. (a) A qualified actuary should describe the accelerated benefits, the risks, the expected costs, and the calculation of statutory reserves in an actuarial memorandum accompanying each state filing. The insurer shall maintain in its files descriptions of the bases and procedures used to calculate benefits payable under these provisions. These descriptions shall be made available for examination by the commissioner upon request. (b)(1) When benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves shall be determined in accordance with the Standard Valuation Law. All valuation assumptions used in constructing the reserves shall be determined as appropriate for statutory valuation purposes by a member in good standing of the American Academy of Actuaries. Mortality tables and interest currently recognized for life insurance reserves by the National Association of Insurance Commissioners (NAIC) may be used as well as appropriate assumptions for the other provisions incorporated in the policy form. The actuary shall follow both actuarial standards and certification for good and sufficient reserves. Reserves in the aggregate should be sufficient to cover: (i) policies upon which no claim has yet arisen; and (ii) policies upon which an accelerated claim has arisen. (2) For policies and certificates that provide actuarially equivalent benefits, no additional reserves need to be established. (3) Policy liens and policy loans, including accrued interest, represent assets of the company for statutory reporting purposes. For a policy on which the policy lien exceeds the policy's statutory reserve liability, the excess shall be held as a nonadmitted asset. Subd. 11. Filing requirement. The filing and prior approval of forms containing an accelerated benefit is required. History:  1989 c 125 s 3; 1990 c 507 s 1,2; 1996 c 446 art 1 s 11; 1997 c 71 art 2 s 1,2; 2001 c 215 s 8; 1Sp2003 c 14 art 2 s 1; 2007 c 104 s 2
61A.08 EXCEPTIONS. Sections 61A.02, 61A.03, 61A.07, 61A.23, and 61A.25 shall not, except as expressly provided in this chapter, apply to industrial or group term policies, or to corporations or associations operating on the assessment or fraternal plan, but every contract issued prior to the operative date specified in section 61A.245 containing a provision for a deferred annuity on the life of the insured only, unless paid for by a single premium, shall provide that, in event of the nonpayment of any premium after three full years' premium shall have been paid, the annuity shall automatically become converted into a paid-up annuity for that proportion of the original annuity as the number of completed years' premiums paid bears to the total number of premiums required under the contract. History:  1967 c 395 art 2 s 8; 1978 c 662 s 1; 1994 c 485 s 20
61A.09 GROUP LIFE INSURANCE. Subdivision 1. Filing requirement. No group life insurance policy or group annuity shall be issued for delivery in this state until the form thereof and the form of any certificates issued thereunder have been filed in accordance with and subject to the provisions of section 61A.02. Each person insured under such a group life insurance policy (excepting policies which insure the lives of debtors of a creditor or vendor to secure payment of indebtedness) shall be furnished a certificate of insurance issued by the insurer and containing the following: (a) name and location of the insurance company; (b) a statement as to the insurance protection to which the certificate holder is entitled, including any changes in such protection depending on the age of the person whose life is insured; (c) any and all provisions regarding the termination or reduction of the certificate holder's insurance protection; (d) a statement that the master group policy may be examined at a reasonably accessible place; (e) the maximum rate of contribution to be paid by the certificate holder; (f) beneficiary and method required to change such beneficiary; (g) a statement that alternative methods for the payment of group life policy proceeds of $15,000 or more must be offered to beneficiaries in lieu of a lump-sum distribution, at their request. Alternative payment methods which must be offered at the request of the beneficiaries must include, but are not limited to, a life income option, an income option for fixed amounts or fixed time periods, and the option to select an interest-bearing account with the company with the right to select another option at a later date; (h) in the case of a group term insurance policy if the policy provides that insurance of the certificate holder will terminate, in case of a policy issued to an employer, by reason of termination of the certificate holder's employment, or in case of a policy issued to an organization of which the certificate holder is a member, by reason of termination of membership, a provision to the effect that in case of termination of employment or membership, or in case of termination of the group policy, the certificate holder shall be entitled to have issued by the insurer, without evidence of insurability, upon application made to the insurer within 31 days after the termination, and upon payment of the premium applicable to the class of risk to which that person belongs and to the form and amount of the policy at that person's then attained age, a policy of life insurance only, in any one of the forms customarily issued by the insurer except term insurance, in an amount equal to the amount of the life insurance protection under such group insurance policy at the time of such termination; and shall contain a further provision to the effect that upon the death of the certificate holder during such 31-day period and before any such individual policy has become effective, the amount of insurance for which the certificate holder was entitled to make application shall be payable as a death benefit by the insurer. This section applies to a policy, certificate of insurance, or similar evidence of coverage issued to a Minnesota resident or issued to provide coverage to a Minnesota resident. This section does not apply to a certificate of insurance or similar evidence of coverage that meets the conditions of section 61A.093, subdivision 2. Subd. 2. Assignment of interests. Any or all of the interests of a certificate holder under any group life insurance policy (excepting policies which insure the lives of debtors of a creditor or vendor to secure payment of indebtedness) may be assigned by an assignment executed by the owner of such interest and delivered to the insurer if the provisions of the policy so permit or if both the insurer and the master policyholder agree to such assignment. An assignment of interests of a certificate holder valid hereunder may transfer to the assignee any or all the rights, privileges, and incidents of ownership of the certificate holder in the group life insurance policy and group certificate thereunder, including, but not limited to the rights to designate beneficiaries and to have an individual policy issued in accordance with subdivision 1, clause (g). Any assignment in accordance with this subdivision shall entitle the insurer to deal with the assignee in accordance with the terms of the assignment until the insurer has received at its home office written notice of a subsequent assignment made by such assignee; provided, however, that the insurer shall not be prejudiced by any payment made or action taken inconsistent with the terms of any assignment before the insurer has received and had reasonable time to act on written notice of such assignment. This subdivision declares and codifies without modifying the existing right of assignment of interests of certificate holders under group life insurance policies by the persons owning such interests. An assignment otherwise valid shall not be invalid because it was made prior to the enactment of this subdivision. Subd. 3. Mortgage loans; certain debtor groups. (a) 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 amount of their indebtedness plus an amount equal to two monthly payments or scheduled amount of their indebtedness, plus an amount equal to two monthly payments, whichever is greater. If the mortgage loan provides for a variable rate of finance charge or interest, the initial rate or the scheduled rates based on the initial index must be used in determining the scheduled amount of 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. (b) The commissioner may waive all or part of the requirements of this subdivision if: (1) all the premiums under the group policy are paid by the group policyholder; (2) the loans insured are first real estate residential mortgage loans owned or guaranteed by the group policyholder; and (3) the group policy is in the best interests of insured debtors. Subd. 4. Limits of group life insurance. Group life insurance offered to a resident of this state under a group life insurance policy issued to a group other than one described in section 60A.02, subdivision 28, shall be subject to the following requirements: (1) no such group life insurance policy shall be delivered in this state unless the commissioner finds that: (i) the issuance of the group policy is not contrary to the best interest of the public; (ii) the issuance of the group policy would result in economies of acquisition or administration; and (iii) the benefits are reasonable in relation to the premiums charged; (2) no such group life insurance coverage may be offered in this state by an insurer under a policy issued in another state unless this state or another state having requirements substantially similar to those contained in clause (1) has made a determination that the requirements have been met; (3) the premium for the policy must be paid either from the policyholder's funds or from funds contributed by the covered persons, or from both; and (4) an insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer. Subd. 5. Limitation on payment due to furtherance of terrorism. (a) For purposes of this subdivision, "further terrorism" has the meaning given in section 609.714. (b) Notwithstanding section 61A.03, subdivision 1, paragraph (c), a policy of group life insurance issued for delivery in this state may limit payment to a beneficiary to the amount of premiums that have been paid to the insurer under the policy if the insured's death occurs directly or indirectly as a result of the insured's furtherance of terrorism. (c) Conviction of a crime in violation of section 609.714 is not necessary for any court of competent jurisdiction to determine by a preponderance of evidence whether a terrorist act has occurred for the purpose of this section. History:  1967 c 395 art 2 s 9; 1973 c 439 s 1; 1986 c 444; 1989 c 330 s 5; 1994 c 485 s 21; 1995 c 116 s 1; 1995 c 171 s 65; 1996 c 446 art 1 s 12; 1997 c 222 s 6; 2010 c 275 art 1 s 6; 2017 c 22 s 1
61A.091 EMPLOYEE GROUP LIFE INSURANCE PLANS. Subdivision 1. Mandatory participation. No employer who makes available or otherwise sponsors a group life insurance plan that provides life insurance benefits to more than five employees of that employer, whether through insurance policies, self-insurance, or any combination of these arrangements, may require an employee to participate in the life insurance plan as a condition of employment, unless the employer pays the full cost of the plan. No employer may discharge any employee who pursuant to this section refuses to contribute to an employee group life insurance plan, nor shall the employer discriminate or otherwise retaliate against the employee who pursuant to this section refuses to contribute to an employee group life insurance plan. An employee may bring an action against an employer for recovery of any wages withheld in violation of this section. This remedy shall be in addition to any other remedy provided by law. For the purposes of this section, "employer" means any natural person, company, corporation, partnership, association or firm which employs any employee. "Employee" is an individual as defined by section 62E.02, subdivision 8. This section does not apply where a collectively bargained contract provides for mandatory participation in a group life insurance plan. This section does not apply to any insurance purchased or carried for the purpose of buying or selling any part of employer, its shares, its assets or its business. This section does not apply to any insurance purchased or carried by any pension, profit sharing or other retirement plan or trust. Subd. 2. Continuation of waiver of premiums for those otherwise eligible following termination of insurance. All group life insurance policies covering employees of an employer containing a waiver of premium benefits upon total disability of the employee shall provide that termination of the master policy, for any reason whatsoever, will be without prejudice to the claim of any covered employee who is suffering from a disability, as defined in the group life policy waiver of premium section at the time of the termination. This subdivision may be superseded by a rule promulgated by the commissioner of commerce. History:  1977 c 192 s 1; 1980 c 376 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444
61A.092 CONTINUATION OF COVERAGE FOR LIFE INSURANCE. Subdivision 1. Continuation of coverage. Every group insurance policy issued or renewed within this state after August 1, 1987, providing coverage for life insurance benefits shall contain a provision that permits covered employees who are voluntarily or involuntarily terminated or laid off from their employment, if the policy remains in force for any active employee of the employer, to elect to continue the coverage for themselves and their dependents. An employee is considered to be laid off from employment if there is a reduction in hours to the point where the employee is no longer eligible for coverage under the group life insurance policy. Termination does not include discharge for gross misconduct. Subd. 2. Responsibility of employee. Every covered employee electing to continue coverage shall pay the employee's former employer, on a monthly basis, the cost of the continued coverage. 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 employees with respect to whom neither termination nor layoff has occurred, without respect to whether such cost is paid by the employer or employee. The employee is eligible to continue the coverage until the employee obtains coverage under another group policy, or for a period of 18 months after the termination or layoff from employment, whichever is shorter. Subd. 3. Notice of options. Upon termination of or layoff from employment of a covered employee, the employer shall inform the employee within 14 days after termination or layoff 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. If the covered employee or covered dependent dies during the 60-day election period and before the covered employee makes an election to continue or reject continuation, then the covered employee will be considered to have elected continuation of coverage. The beneficiary previously selected by the former employee or covered dependent would then be entitled to a death benefit equal to the amount of insurance that could have been continued less any unpaid premium owing as of the date of death. Notice must be in writing and sent by first class 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, in an amount equal to the amount of insurance in effect on the date you terminated or were laid off from employment, 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." Subd. 4. Responsibility of employer and insurer. If the employer fails to notify a covered employee of the options set forth in subdivision 3, or if after timely receipt of the monthly payment from a covered employee the employer fails to make the payment to the insurer, with the result that the employee's coverage is terminated, the employer is still liable for the employee's coverage to the same extent as the insurer would be if the coverage were still in effect. Subd. 5. Conversion to individual policy. A group insurance policy that provides posttermination or layoff coverage as required by this section must also include a provision allowing a covered employee, surviving spouse, or dependent at the expiration of the posttermination or layoff coverage provided by subdivision 2 to obtain from the insurer offering the group policy, at the employee's, spouse's, or dependent's option and expense, without further evidence of insurability and without interruption of coverage, an individual policy of insurance contract providing the same or substantially similar benefits. A policy providing reduced benefits at a reduced premium rate may be accepted by the employee, the spouse, or a dependent in lieu of the coverage otherwise required by this subdivision. Subd. 6. Application. This section applies to a policy, certificate of insurance, or similar evidence of coverage issued to a Minnesota resident or issued to provide coverage to a Minnesota resident. This section does not apply to: (1) a certificate of insurance or similar evidence of coverage that meets the conditions of section 61A.093, subdivision 2; or (2) a group life insurance policy that contains a provision permitting the certificate holder, upon termination or layoff from employment, to retain the coverage provided under the employer's group policy or another group policy offered by the insurer by paying premiums directly to the insurer, provided that the employer shall give the employee notice of the employee's and each related certificate holder's right to continue the insurance by paying premiums directly to the insurer. The insurer may reserve the right to increase premium rates after the first 18 months of continued coverage provided for under clause (2). A related certificate holder is an insured spouse or dependent child of the employee. Upon termination of this group policy or at the option of the insured who has continued coverage under clause (2), each covered employee, spouse, and dependent child is entitled to have issued to them a life conversion policy as prescribed in section 61A.09, subdivision 1, paragraph (h). History:  1987 c 337 s 42; 1989 c 330 s 6; 1994 c 485 s 22; 1995 c 258 s 17,18; 2000 c 483 s 10; 2002 c 307 art 2 s 1; 2002 c 330 s 7; 2006 c 255 s 6; 2007 c 104 s 3; 2010 c 384 s 14
61A.093 CERTIFICATE OF INSURANCE. Subdivision 1. Coverage. 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 this chapter. This subdivision supersedes any inconsistent provision of this chapter. A policy of life 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 this chapter. 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. 2. Nonapplication. Subdivision 1 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 persons who are residents of Minnesota and the Minnesota residents represent less than 25 percent of all covered persons; 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. Subd. 3. Relation to other law. 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 2 to comply with this chapter. History:   1994 c 485 s 23 
61A.10 EXTENSION OF TIME FOR PAYMENT OF PREMIUMS. Parties to any policy of life insurance now or hereafter issued shall have the right at any time to mutually agree, in writing, for an extension of time in which to pay a second or subsequent premium on the policy, upon condition that the failure to pay the amount agreed upon at the time agreed, shall lapse the policy as of the date mutually agreed upon in the writing; provided, no such agreement shall impair any right to extended or paid-up insurance which the insured may have under the policy, nor any right to have the premiums, any part thereof, or the amount payable for the extension charged against the policy under the terms of the policy. No such agreement need be attached to or made a part of the insurance policy so affected. History:   1967 c 395 art 2 s 10 
61A.11 MISSTATEMENT, WHEN NOT TO INVALIDATE POLICY. In any claim upon a policy issued in this state without previous medical examination, or without the knowledge or consent of the insured, or, in case of a minor, without the consent of a parent, guardian, or other person having legal custody, the statements made in the application as to the age, physical condition, and family history of the insured shall be valid and binding upon the company, unless willfully false or intentionally misleading. History:  1967 c 395 art 2 s 11; 1986 c 444
61A.12 BENEFICIARIES. Subdivision 1. Proceeds of life policy or annuity, who entitled to. When any insurance is effected in favor of another, the beneficiary shall be entitled to its proceeds against the creditors and representatives of the person effecting the same. All premiums paid for insurance in fraud of creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy, if the company be specifically notified thereof, in writing, before payment. Subd. 2. Exemption in favor of family. Every policy made payable to, or for the benefit of, the spouse of the insured, or after its issue assigned to or in trust for a spouse, shall inure to that person's separate use and that of the children of the insured or the insured's spouse, subject to the provisions of this section. Subd. 3.  [Repealed, 1973 c 725 s 91] Subd. 4. Change of beneficiary. The person applying for and procuring a policy may change the beneficiary or beneficiaries, if the consent of the beneficiary or beneficiaries named in the policy is obtained, or if a power so to do is reserved in the contract of insurance or in case of the death of the beneficiary, or in the case of the dissolution of a marriage between the insured and the beneficiary subject to any limitations on the power to change beneficiaries imposed as a condition of the dissolution. Subd. 5. Substitution. When a creditor requires credit life insurance, credit accident and health insurance, or both, as additional security for an indebtedness, the debtor shall be given the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor or procuring and furnishing the required coverage through any insurer authorized to transact insurance business in this state. If this subdivision is applicable, the debtor shall be informed by the creditor of the right to provide alternative coverage before the transaction is completed. History:  1967 c 395 art 2 s 12; 1976 c 121 s 1,2; 1977 c 382 s 5; 1986 c 444; 1994 c 485 s 24
61A.13 DEFINITIONS. Subdivision 1. Contract on a variable basis. When used in sections 61A.13 to 61A.21, "contract on a variable basis" means any contract on either a group or an individual basis issued by a life insurance company providing for the dollar amount of benefits or other contractual payments or values thereunder to vary so as to reflect investment results of a separate account in which amounts have been placed in connection with any such contracts. Such contracts may also provide benefits or values incidental thereto payable in fixed or variable dollar amounts, or both. Subd. 2.  [Repealed, 1969 c 752 s 18] History:  1967 c 395 art 2 s 13; 1969 c 752 s 1; 1973 c 480 s 1
61A.14 COMPANIES ENTITLED TO ISSUE CONTRACTS; ACCOUNTS; INVESTMENTS. Subdivision 1. Separate accounts. Any domestic life insurance company may, by or pursuant to resolution of its governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of sections 61A.13 to 61A.21. Subd. 2. Allocations to account. Except as may be otherwise specifically provided by the contract concerned, all amounts received by a life insurance company in connection with any contract on a variable basis shall be allocated to the appropriate separate account. The income, if any, and gains or losses, realized or unrealized on each such account may be credited to or charged against the amount allocated to such account in accordance with such contract, without regard to the other income, gains, or losses of the company. Subd. 3. Investments. Except as hereinafter provided, amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies; provided, that to the extent that the company's reserve liability with regard to (a) benefits guaranteed as to amount and duration, and (b) funds guaranteed as to principal amount or stated rate of interest is maintained in any separate account, a portion of the assets of such separate account at least equal to such reserve liability shall be, except as the commissioner may otherwise approve, invested in accordance with the laws of this state governing the investments of life insurance companies and shall be segregated from the other assets in the separate account. Subd. 4. Other investments. For purposes of determining whether the capital, surplus and other funds of a domestic life insurance company, other than assets held in a separate account pursuant to this section, are invested in accordance with sections 61A.28 to 61A.31, and 60L.01 to 60L.15, assets held by the company in a separate account in accordance with this section shall be disregarded. Subd. 5. Account ownership. The assets held in a separate account pursuant to this section shall be owned by the company, and the company shall not be, nor hold itself out to be, a trustee with respect to such amounts. If and to the extent so provided under the applicable contracts or as required pursuant to the Federal Investment Company Act of 1940 that portion of the assets of any such separate account equal to reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct, but shall be held and applied exclusively for the benefit of the holders of those contracts on a variable basis for which the separate account has been established, provided, however, that the assets shall always be at least equal to the reserves and other contract liabilities with respect to such account. Subd. 6. Compliance with laws. To the extent such company deems it necessary to comply with any applicable federal or state laws, such company, with respect to any separate account, including without limitation any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of such account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business of such account. Subd. 7. Valuation of assets. Unless otherwise approved by the commissioner, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such separate account; provided, that unless otherwise approved by the commissioner, a portion of the assets of such separate account equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in clauses (a) and (b) of subdivision 3, if any, shall be valued in accordance with the rules otherwise applicable to the company's assets. Subd. 8. Transfer of assets. No sale, exchange or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, (a) in case of a transfer into a separate account, such transfer is made solely to establish the account or to support the contractual obligations of the company with respect to the separate account to which the transfer is made, or (b) in case of a transfer from a separate account, such transfer would not cause the remaining assets of the account to become less than the reserves and other contract liabilities with respect to such separate account. Such transfer, whether into or from a separate account, shall be made by a transfer of cash, or by a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the commissioner. The commissioner may approve other transfers among such accounts if, in the commissioner's opinion, such transfers would not be inequitable. Where a company transfers assets into a separate account for the purpose of establishing such account, such transfer shall be in the form of cash and, except as the commissioner may otherwise approve, shall be made only from its surplus, provided that not more than five percent of its surplus may be so invested in such accounts. Subd. 9. Life insurance companies. A domestic life insurance company having a separate account or accounts pursuant to this section in connection with variable contracts or other separate account products may indemnify a person who is serving or has served as a member of the managing committee of that separate account, and may purchase and maintain insurance for that purpose, in accordance with section 302A.521. History:  1967 c 395 art 2 s 14; 1969 c 7 s 21-23; 1969 c 752 s 2-8; 1973 c 480 s 2; 1986 c 444; 1998 c 319 s 16; 2005 c 69 art 2 s 10
61A.15 CONTRACT PROVISIONS. Subdivision 1. Variable annuity. All annuity contracts on a variable basis issued in this state shall stipulate the expense, mortality, and investment-increment factors to be used in computing (1) in the case of individual contracts, the dollar amount of variable benefits or other contractual payments or values, and (2) in the case of group contracts, the dollar amount payable with respect to a unit of variable benefits purchased thereunder. All such contracts shall guarantee that expenses shall not affect such dollar amounts adversely. In computing the dollar amount of variable benefits or other contractual payments or values under an individual contract on a variable basis, (a) the annual net investment increment assumption shall not exceed five percent, except with the approval of the commissioner, and (b) to the extent that the level of benefits may be affected by mortality results, the mortality factor shall be determined from the Annuity Mortality Table for 1949, Ultimate, or any modification of that table not having a higher mortality rate at any age, or, if approved by the commissioner, from another table. The term "expense," as used in this section, may exclude some or all taxes as stipulated in the contracts and may also exclude any investment management fee which is subject to change with the approval by vote of the holders of such contracts. Subd. 2. Variable life insurance. Any life insurance contract on a variable basis delivered or issued for delivery in this state shall stipulate the investment increment factor to be used in computing the dollar amount of variable benefits or other variable contractual payments or values thereunder and shall guarantee that expense and mortality results shall not adversely affect such dollar amounts. History:  1967 c 395 art 2 s 15; 1969 c 752 s 9; 1973 c 480 s 3
61A.16 CONTRACT PROVISIONS. Any contract on a variable basis providing benefits payable in variable amounts delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such variable benefits. Any such contract, including a group contract and any certificate in evidence of variable benefits issued thereunder, shall state the manner in which such dollar amounts will vary and shall contain on its first page a statement to the effect that the benefits thereunder are on a variable basis. History:  1967 c 395 art 2 s 16; 1969 c 752 s 10
61A.17 FILING OF CONTRACTS. No contract on a variable basis shall be issued in this state until a copy of the form thereof (and, in the case of a group contract, the form of any certificate evidencing variable benefits issued pursuant thereto) and any form of application for such contract shall have been filed with the commissioner. No life insurance contract on a variable basis shall be filed for issuance in Minnesota or issued in Minnesota before the commissioner has promulgated rules under section 61A.20 regarding life insurance contracts on a variable basis. History:  1967 c 395 art 2 s 17; 1969 c 752 s 11; 1973 c 480 s 7; 1974 c 203 s 1; 1985 c 248 s 70
61A.18 DISAPPROVAL OF CONTRACTS. The commissioner shall have the power at any time to disapprove any contract form, application, or certificate (1) if it does not comply with the provisions of sections 61A.13 to 61A.21; or (2) if it contains provisions which are unjust, unfair, inequitable, ambiguous, or misleading. After the commissioner shall have notified a company of disapproval, it shall be unlawful for that company to issue or use the contract, application or certificate in the form so disapproved. History:  1967 c 395 art 2 s 18; 1969 c 752 s 12; 1986 c 444
61A.19 COMPANY REQUIREMENTS. No company shall deliver or issue for delivery within this state contracts on a variable basis unless it is licensed or organized to do a life insurance or annuity business in this state, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the commissioner shall consider among other things: (a) the history and financial condition of the company; (b) the character, responsibility and fitness of the officers and directors of the company; and (c) the law and regulation under which the company is authorized in the state of domicile to issue such contracts. The state of entry of an alien company shall be deemed to be state of domicile for this purpose. History:  1967 c 395 art 2 s 19; 1969 c 752 s 13; 1973 c 480 s 4; 1995 c 214 s 14
61A.20 RULES. Notwithstanding any other provision of law, the commissioner shall have sole and exclusive authority to regulate the issuance and sale of contracts on a variable basis and to provide for licensing of persons selling such contracts, and to issue such reasonable rules as may be appropriate to carry out the purposes and provisions of sections 61A.13 to 61A.21. History:  1967 c 395 art 2 s 20; 1969 c 7 s 24; 1969 c 752 s 14; 1985 c 248 s 70
61A.21 APPLICATION OF OTHER LAWS. Sections 61A.07, clause (4), and 61A.245 shall not apply to contracts on a variable basis. All other appropriate provisions of this chapter shall apply to separate accounts and contracts on a variable basis except those which are inconsistent with the provisions contained in sections 61A.13 to 61A.20. Any contract on a variable basis, delivered or issued for delivery in this state, shall contain in substance provisions for grace, settlement option, loan or withdrawal and nonforfeiture appropriate to such a contract and a life insurance contract on a variable basis should also contain in substance a provision for reinstatement appropriate to such a contract. The reserve liability for contracts on a variable basis shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees. History:  1967 c 395 art 2 s 21; 1969 c 752 s 15; 1973 c 480 s 5; 1978 c 662 s 2
61A.22 CONTRACTS TO SPECIFY BENEFITS AND CONSIDERATION. No life insurance company shall make any insurance, guaranty, contract, or pledge in this state, or to or with any citizen or resident thereof, which does not distinctly specify the amount and manner of payment of benefits and the consideration therefor, except that contracts on a variable basis need not specify the amount of benefits thereunder or consideration after the initial premium. History:  1967 c 395 art 2 s 22; 1973 c 480 s 6
61A.23 PROVISIONS IN POLICIES; LAWS OF OTHER STATES. The policies of a life insurance company, not organized under the laws of this state, may contain any provision which the laws of the state, territory, district, or country under which the company is organized, prescribe shall be in such policies, and the policies of a life insurance company organized under the laws of this state may, when issued or delivered in any other state, territory, district, or country, contain any provision required by the laws of the state, territory, district, or country in which the same are issued, anything in this section and sections 61A.02, 61A.03, 61A.07, 61A.08, and 61A.25 to the contrary notwithstanding. History:   1967 c 395 art 2 s 23 
61A.24 STANDARD NONFORFEITURE LAW FOR LIFE INSURANCE. Subdivision 1. Citation. This section shall be known as the "Standard Nonforfeiture Law for Life Insurance." Subd. 1a. Definition. "Operative date of the valuation manual" means January 1 of the first calendar year that the valuation manual, as defined in section 61A.25, subdivision 1a, is effective. Subd. 2. Policy provisions. No policy of life insurance, except as stated in subdivision 14, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements specified below and are essentially in compliance with subdivision 15: (1) That, in the event of default in a premium payment, the company will grant, upon proper request not later than 60 days after the date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of the due date, of the amount as may be hereinafter specified. In lieu of the stipulated paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits. (2) That, upon surrender of the policy within 60 days after the due date of a premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the company will pay, in lieu of a paid-up nonforfeiture benefit, a cash surrender value of an amount as may be hereinafter specified. (3) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make the election elects another available option not later than 60 days after the due date of the premium in default. (4) That, if the policy becomes paid-up by completion of all premium payments or if it is continued under a paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the company will pay, upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value of an amount as may be hereinafter specified. (5) In the case of a policy which causes, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provides an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of any other policy, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, and a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter, the values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy. (6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance laws of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that the method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which the values and benefits are consecutively shown in the policy. Subd. 3. Exception; deferred payment. Any provision or portion of subdivision 2 not applicable by reason of the plan of insurance may be omitted from the policy. The company shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand therefor with surrender of the policy. Subd. 4. Cash surrender value. (a) Except as otherwise provided by paragraphs (b) and (c), the cash surrender value available under the policy in the event of default in a premium payment due on a policy anniversary, whether or not required by subdivisions 2 and 3, shall be an amount not less than the excess of the present value on the anniversary of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of (1) the then present value of the adjusted premiums as prescribed in subdivisions 6 to 12, corresponding to premiums which would have fallen due on and after the anniversary, and (2) the amount of any indebtedness to the company on the policy. (b) For a policy issued on or after the operative date of subdivision 12 which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in paragraph (a) shall be an amount not less than the sum of the cash surrender value as defined in that paragraph for an otherwise similar policy issued at the same age without the rider or supplemental policy provision and the cash surrender value as defined in that paragraph for a policy which provides only the benefits otherwise provided by the rider or supplemental policy provision. (c) For a family policy issued on or after the operative date of subdivision 12 which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse becomes 71 years old, the cash surrender value referred to in paragraph (a) shall be an amount not less than the sum of the cash surrender value as defined in that paragraph for an otherwise similar policy issued at the same age without the term insurance on the life of the spouse and the cash surrender value as defined in that paragraph for a policy which provides only the benefits otherwise provided by the term insurance on the life of the spouse. The cash surrender value available within 30 days after a policy anniversary under a policy paid-up by completion of all premium payments or a policy continued under a paid-up nonforfeiture benefit, whether or not required by subdivisions 2 and 3, shall be an amount not less than the present value on the anniversary of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy. Subd. 5. Paid-up nonforfeiture benefit. Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for at least a specified period. Subd. 6. Calculation of adjusted premiums; general. Except as provided in subdivision 8, the adjusted premiums for a policy shall be calculated on an annual basis and shall be the uniform percentage of the respective premiums specified in the policy for each policy year, excluding extra premiums on a substandard policy. The present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of (1) the then present value of the future guaranteed benefits provided for by the policy; (2) two percent of the amount of insurance, if the insurance is uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy; (3) 40 percent of the adjusted premium for the first policy year; (4) 25 percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. In applying the percentages specified in clauses (3) and (4), no adjusted premiums shall be deemed to exceed four percent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this section is the date as of which the rated age of the insured is determined. This subdivision does not apply to policies issued on or after the operative date of subdivision 12. Subd. 7. Adjusted premiums; varying amount of insurance. In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of subdivisions 6 to 11 is the uniform amount of insurance provided by an otherwise similar policy containing the same endowment benefit or benefits issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy; provided, however, that in the case of a policy providing a varying amount of insurance issued on the life of a child under age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by such policy at age ten. Subd. 8. Adjusted premiums; supplemental term insurance. The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (a) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in subdivisions 6 and 7 except that, for the purposes of (2), (3) and (4) of subdivision 6, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a). Subd. 9. Adjusted premiums; ordinary insurance. In the case of ordinary policies hereafter issued all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. The rate of interest shall not exceed 3-1/2 percent per annum for policies issued prior to April 11, 1974. A rate of interest not exceeding 4 percent per annum may be used for policies issued on or after April 11, 1974 and prior to August 1, 1978. A rate of interest not exceeding 5-1/2 percent per annum may be used for policies issued on or after August 1, 1978, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding 6-1/2 percent per annum may be used. For any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured. However, in calculating the present value of any paid-up term insurance with the accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table. Provided, further, that for insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on any other table of mortality specified by the company and approved by the commissioner. This subdivision does not apply to ordinary policies issued on or after the operative date of subdivision 12. Subd. 10. Adjusted premiums; industrial insurance. Except as otherwise provided in subdivisions 11 and 11a, all adjusted premiums and present values referred to in this section shall for all policies of industrial insurance be calculated on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest, not exceeding 3-1/2 percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. In calculating the present value of paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than 130 percent of the rates of mortality according to the applicable table. For insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on any table of mortality specified by the company and approved by the commissioner. Subd. 11. Adjusted premiums; industrial insurance. In the case of industrial policies issued on or after the operative date of this subdivision as defined in subdivision 11a, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. The rate of interest shall not exceed 3-1/2 percent per annum for policies issued prior to April 11, 1974. A rate of interest not exceeding four percent per annum may be used for policies issued on or after April 11, 1974 and prior to August 1, 1978. A rate of interest not exceeding 5-1/2 percent per annum may be used for policies issued on or after August 1, 1978, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding 6-1/2 percent per annum may be used. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table. For insurance issued on a substandard basis, the calculations of adjusted premiums and present values may be based on any other table of mortality specified by the company and approved by the commissioner. This subdivision shall not apply to industrial policies issued on or after the operative date of subdivision 12. Subd. 11a. Operative date of subdivision 11. After April 9, 1963, a company may file with the commissioner a written notice of its election to comply with the provisions of subdivision 11 after a specified date before January 1, 1968. After the filing of the notice, then upon the specified date, which shall be the operative date of subdivision 11 for the company, subdivision 11 shall become operative with respect to the industrial policies thereafter issued by the company. If a company makes no election, the operative date of subdivision 11 for the company shall be January 1, 1968. Subd. 12. Calculation of adjusted premiums by the nonforfeiture net level premium method. (a) This subdivision applies to all policies issued on or after its operative date. Except as provided in paragraph (g), the adjusted premiums for a policy shall be calculated on an annual basis and shall be the uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of (1) the then present value of the future guaranteed benefits provided for by the policy; (2) one percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and (3) 125 percent of the nonforfeiture net level premium as hereinafter defined. In applying the percentage specified in clause (3), no nonforfeiture net level premium shall be deemed to exceed four percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years. The date of issue of a policy for the purpose of this section is the date as of which the rated age of the insured is determined. (b) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of the policy on which a premium falls due. (c) In the case of a policy which causes, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provides an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of the change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums, and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change. (d) Except as otherwise provided in paragraph (g), the recalculated future adjusted premiums for a policy shall be the uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all future adjusted premiums shall be equal to the excess of: (1) the sum of the then present value of the then future guaranteed benefits provided for by the policy, and the additional expense allowance, if any, over; (2) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy. (e) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of: (1) one percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (2) 125 percent of the increase, if positive, in the nonforfeiture net level premium. (f) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing clause (1) by clause (2) where clause (1) equals the sum of the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and the present value of the increase in future guaranteed benefits provided for by the policy; and clause (2) equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due. (g) Notwithstanding any other provisions of this subdivision to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for the substandard policy may be calculated as if it were issued to provide the higher uniform amounts of insurance on the standard basis. (h) All adjusted premiums and present values referred to in this subdivision shall: for all policies of ordinary insurance be calculated on the basis of the Commissioners 1980 Standard Ordinary Mortality Table, or at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table; and for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this section for policies issued in that calendar year. However: (1) at the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subdivision, for policies issued in the immediately preceding calendar year; (2) under a paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by subdivision 2, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of the paid-up nonforfeiture benefit and paid-up dividend additions, if any; (3) a company may calculate the amount of a guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values; (4) in calculating the present value of paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners 1980 Extended Term Insurance Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table for policies of industrial insurance; (5) for insurance issued on a substandard basis, the calculation of any adjusted premiums and present values may be based on appropriate modifications of these tables; (6)(i) for policies issued prior to the operative date of the valuation manual, any commissioner's standard ordinary mortality tables, including any adopted after 1980 by the National Association of Insurance Commissioners, that are approved by rule adopted by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table; and (ii) for policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the commissioner's standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the commissioner approves by rule any commissioner's standard ordinary mortality table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual; (7)(i) for policies issued prior to the operative date of the valuation manual, any commissioner's standard industrial mortality tables, including any adopted after 1980 by the National Association of Insurance Commissioners, that are approved by rule adopted by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table; and (ii) for policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the commissioner's standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If the commissioner approves by rule any commissioner's standard industrial mortality table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual. (i) The nonforfeiture interest rate is defined in clauses (1) and (2): (1) for policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate per annum for a policy issued in a particular calendar year shall be equal to 125 percent of the calendar year statutory valuation interest rate for the policy as defined in section 61A.25, rounded to the nearer one-quarter of one percent provided, however, that the nonforfeiture interest rate shall not be less than four percent; and (2) for policies issued on and after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the valuation manual. (j) Notwithstanding any other provision in this chapter to the contrary, a refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form. (k) After August 1, 1982, a company may file with the commissioner a written notice of its election to comply with the provision of this section after a specified date before January 1, 1989, which shall be the operative date of this subdivision for the company. If a company makes no election, the operative date of this subdivision for the company shall be January 1, 1989. Subd. 12a. Nonforfeiture benefits; plans not covered by other subdivisions. In the case of a plan of life insurance which is of a nature that minimum values cannot be determined by the methods described in subdivisions 2 to 12: (a) the commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by subdivisions 2 to 12; (b) the commissioner must be satisfied that the benefits and the pattern of premiums of that plan are not likely to mislead prospective policyholders or insureds; and (c) the cash surrender values and paid-up nonforfeiture benefits provided by the plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this section, as determined by rules adopted by the commissioner. Subd. 12b. Mortality table; exception. Notwithstanding subdivisions 12, 12a, or any other law to the contrary, a company may use the Commissioners 2017 Standard Ordinary Mortality Table in determining the minimum nonforfeiture standard for policies issued on or after January 1, 2017. Subd. 13. Default in premium payment. A cash surrender value and a paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at a time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in subdivisions 4 to 12 may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide the additions. Notwithstanding the provisions of subdivision 4, additional benefits payable (1) in the event of death or dismemberment by accident or accidental means, (2) in the event of total and permanent disability, (3) as reversionary annuity or deferred reversionary annuity benefits, (4) as term insurance benefits provided by a rider or supplemental policy provisions to which, if issued as a separate policy, this section would not apply, (5) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if the term insurance expires before the child's age is 26, is uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent of the child, and (6) as other policy benefits additional to life insurance and endowment benefits, and premiums for all additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no additional benefits shall be required to be included in paid-up nonforfeiture benefits. Subd. 14. Application. Subdivisions 1 to 13 do not apply to any of the following: (a) reinsurance; (b) group insurance; (c) a pure endowment; (d) an annuity or reversionary annuity contract; (e) a term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy; (f) a term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in subdivisions 6 to 12, is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy; (g) a policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in subdivisions 4 to 12, exceeds 2-1/2 percent of the amount of insurance at the beginning of the same policy year; or (h) a policy delivered outside this state through an agent or other representative of the company issuing the policy. For purposes of determining the applicability of this section, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life. Subd. 15. Consistency of progression of cash surrender values with increasing policy duration. (a) This subdivision, in addition to all other applicable subdivisions of this section, applies to all policies issued on or after January 1, 1985. Any cash surrender value available under the policy in the event of default in a premium payment due on a policy anniversary shall be in an amount which does not differ by more than two-tenths of one percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years, from the sum of (1) the greater of zero and the basic cash value hereinafter specified, and (2) the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy. (b) The basic cash value shall be equal to the present value, on the anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after the anniversary; provided, however, that the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subdivision 4 or 6, whichever is applicable, shall be the same as are the effects specified in subdivision 4 or 6, whichever is applicable, on the cash surrender values defined in those subdivisions. (c) The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subdivision 6 or 12, whichever is applicable. Except as is required by paragraph (d), the percentage: (1) must be the same percentage for each policy year between the second policy anniversary and the later of the fifth policy anniversary or the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths of one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and (2) must be such that no percentage after the later of the two policy anniversaries specified in clause (1) may apply to fewer than five consecutive policy years. (d) No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subdivision 6 or 12, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value. (e) All adjusted premiums and present values referred to in this subdivision shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other subdivisions of this section. The cash surrender values referred to in this subdivision shall include any endowment benefits provided for by the policy. (f) The cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of a paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subdivisions 2, 3, 4, 5, 12 and 13. The amounts of cash surrender values and of paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed in subdivision 13, clauses (1) to (6), shall conform with the principles of this subdivision. History:  1967 c 395 art 2 s 24; 1974 c 433 s 1,2; 1978 c 662 s 3-5; 1982 c 589 s 3-14; 2016 c 178 s 1,2; 2016 c 189 art 7 s 12
61A.245 STANDARD NONFORFEITURE LAW FOR INDIVIDUAL DEFERRED ANNUITIES. Subdivision 1. Title. This section shall be known as the "Standard Nonforfeiture Law for Individual Deferred Annuities." Subd. 2. Nonapplication. This section shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including but not limited to a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the company issuing the contract. Subd. 3. Required contract provisions. (a) In the case of contracts issued on or after the operative date specified in subdivision 12, no contract of annuity, except as stated in subdivision 2, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract: (1) that upon cessation of payment of considerations under a contract, or upon the written request of the contract owner, the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of the value specified in subdivisions 5, 6, 7, 8 and 10; (2) if a contract provides for a lump-sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of the amount specified in subdivisions 5, 6, 8 and 10. The company may reserve the right to defer the payment of the cash surrender benefit for a period not to exceed six months after demand therefor with surrender of the contract after making a written request and receiving written approval of the commissioner. The request must address the necessity and equitability to all contract holders of the deferral; (3) a statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of the benefits; and (4) a statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract. (b) Notwithstanding the requirements of this subdivision, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to that period would be less than $20 monthly, the company may at its option terminate the contract by payment in cash of the then present value of the portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by the payment shall be relieved of any further obligation under the contract. (c) If a death benefit becomes payable as specified in the contract, the contract may not treat the payment of the death benefit as a surrender of the annuity contract or otherwise impose a surrender penalty. Subd. 4. Minimum values. The minimum values as specified in subdivisions 5, 6, 7, 8, and 10 of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this subdivision. (a) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time at rates of interest as indicated in paragraph (b) of the net considerations, as defined in this subdivision, paid prior to that time, decreased by the sum of clauses (1) through (4): (1) any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in paragraph (b); (2) an annual contract charge of $50, accumulated at rates of interest as indicated in paragraph (b); (3) any premium tax paid by the company for the contract and not subsequently credited back to the company, such as upon early termination of the contract, in which case this decrease must not be taken, accumulated at rates of interest as indicated in paragraph (b); and (4) the amount of any indebtedness to the company on the contract, including interest due and accrued. The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to 87.5 percent of the gross considerations credited to the contract during that contract year. (b) The interest rate used in determining minimum nonforfeiture amounts must be an annual rate of interest determined as the lesser of three percent per annum and the following, which must be specified in the contract if the interest rate will be reset: (1) the five-year constant maturity treasury rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20 of one percent, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under clause (4); (2) reduced by 125 basis points; (3) where the resulting interest rate is not less than 0.15 percent; and (4) the interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis, and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year constant maturity treasury rate to be used at each redetermination date. (c) During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in clause (2) by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction must not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction. Subd. 5. Computation of paid-up annuity benefit. Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. The present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract. Subd. 6. Contracts with cash surrender benefits; present value of benefit available. For contracts which provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, the present value being calculated on the basis of an interest rate not more than one percent higher than the interest rate specified in the contract for accumulating the considerations to determine the maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under the contracts shall be at least equal to the cash surrender benefit. Subd. 7. Contracts with no cash surrender benefits; present value of benefit available. For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, the present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine the maturity value, and increased by any existing additional amounts credited by the company to the contract. For contracts which do not provide any death benefits prior to the commencement of any annuity payments, the present values shall be calculated on the basis of the interest rate referred to in this subdivision and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time. Subd. 8. Optional maturity date contracts. For the purpose of determining the benefits calculated under subdivisions 6 and 7, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later. Subd. 9. Contracts providing benefits less than nonforfeiture amount before annuity payments; statement. Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that the benefits are not provided. Subd. 10. Fixed scheduled considerations; benefit calculations. Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs. Subd. 11. Minimum nonforfeiture benefits of contracts providing excess annuity benefits and life insurance benefits. For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subdivisions 5, 6, 7, 8 and 10, additional benefits payable (a) in the event of total and permanent disability, (b) as reversionary annuity or deferred reversionary annuity benefits, or (c) as other policy benefits additional to life insurance, endowment, and annuity benefits, and considerations for all the additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of the additional benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits. Subd. 12. Notice of election to comply; effective date. After August 1, 2003, a company may elect to apply its provisions to annuity contracts on a contract form-by-contract form basis before August 1, 2005. In this instance, the operative date of Laws 2003, chapter 51, sections 10 to 14, is the date elected for the contract form. In all other instances, Laws 2003, chapter 51, sections 10 to 14, apply to annuity contracts issued by the company after August 1, 2005, which then becomes the operative date of Laws 2003, chapter 51, sections 10 to 14. History:  1978 c 662 s 6; 1979 c 50 s 8-10; 2003 c 51 s 10-14; 2010 c 275 art 1 s 7; 1Sp2021 c 4 art 3 s 14
61A.25 STANDARD VALUATION LAW. Subdivision 1. Citation. This section shall be known as the "Standard Valuation Law." Subd. 1a. Definitions. (a) For the purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Accident and health insurance" means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual. (c) "Appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subdivision 2d. (d) "Company" means an entity that (1) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and has at least one such policy in force or on claim, or (2) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state. (e) "Deposit-type contract" means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual. (f) "Life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual. (g) "NAIC" means the National Association of Insurance Commissioners. (h) "Operative date of the valuation manual" means January 1 of the first calendar year that the valuation manual is effective. (i) "Policyholder behavior" means an action a policyholder, contract holder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract. (j) "Principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with subdivision 11, as specified in the valuation manual. (k) "Qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual. (l) "Tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of significant size or magnitude. (m) "Valuation manual" means the manual of valuation instructions adopted by the NAIC as specified in this section or as subsequently amended. Subd. 2. Valuation of reserves; policies and contracts issued prior to the operative date of the valuation manual. (a) The commissioner shall cause to be valued annually the reserve liabilities, hereinafter called reserves, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state, except that in the case of a foreign or alien insurer such valuation shall be limited to its insurance transactions in the United States, issued on or after the operative date of Laws 1947, chapter 182, and prior to the operative date of the valuation manual. In calculating such reserves, the commissioner may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien company, the commissioner may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard provided in this section. In the case of insurance issued by a domestic insurer upon the lives of residents of a foreign country, the commissioner may vary the mortality standard to a standard applicable to that country. (b) The provisions in subdivisions 3, 3a, 3b, 4, 4a, 5, 6, 7, 8, and 9 shall apply to all policies and contracts, as appropriate, subject to this section issued on or after the operative date of Laws 1947, chapter 182, and, prior to the operative date of the valuation manual and the provisions in subdivisions 10 and 11, shall not apply to any such policies and contracts. (c) The minimum standard for the valuation of policies and contracts issued prior to the operative date of Laws 1947, chapter 182, shall be that provided by the laws in effect immediately prior to that date. Subd. 2a. Actuarial opinion of reserves prior to the operative date of the valuation manual; general. (a) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by rule are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The commissioner may by rule define the specifics of this opinion and add any other items considered to be necessary to its scope. The opinion must be included in the company's annual statement. (b) The requirement to annually submit the opinion of a qualified actuary applies to service plan corporations licensed under chapter 62C, to legal service plans licensed under chapter 62G, and to all fraternal benefit societies except those societies paying only sick benefits not exceeding $250 in any one year, or paying funeral benefits of not more than $350, or aiding those dependent on a member not more than $350, nor any subordinate lodge or council which is, or whose members are, assessed for benefits which are payable by a grand body. (c) The opinion applies to all business in force, including individual and group health insurance plans, and must be based on standards adopted by the Actuarial Standards Board. The opinion must be acceptable to the commissioner in both form and substance. (d) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state. (e) For the purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements specified in the regulations. (f) The board of directors of every insurer subject to this section shall appoint a qualified actuary to sign its actuarial opinion. The appointment of the qualified actuary shall be approved by the commissioner. The qualified actuary so appointed may be an employee of the insurer. Notice of the appointment, including a copy of the board of directors' resolution, and the date of appointment shall be filed with the commissioner. The notice may be filed before or at the time the actuarial opinion is submitted. The notice shall state the qualifications of the actuary. If the board appoints a new actuary to sign actuarial opinions during the year, the commissioner shall be notified of the new appointment and the reason for change. (g) Except in cases of fraud or willful misconduct, the qualified actuary is not liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision, or conduct with respect to the actuary's opinion. (h) A memorandum, in form and substance acceptable to the commissioner based on standards adopted by the Actuarial Standards Board and on additional standards as the commissioner may by rule prescribe, must be prepared to support each actuarial opinion. (i) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by the commissioner, or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards based on standards adopted by the Actuarial Standards Board and on additional standards as the commissioner may by rule prescribe or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the required supporting memorandum. The commissioner may only seek reimbursement from a company for the actual expenses incurred by an actuary in reviewing or preparing a supporting memorandum for that company. (j) Any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, must be kept confidential by the commissioner and must not be made public and is not subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by rules promulgated under this section. The memorandum or other material may otherwise be released by the commissioner (1) with the written consent of the company or (2) to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum are no longer confidential. Subd. 2b. Actuarial analysis prior to the operative date of the valuation manual. (a) Every life insurance company, except as exempted by or pursuant to regulation, shall also annually include in the opinion required under subdivision 2a, paragraph (a), an opinion of the same qualified actuary as to whether the reserves and related actuarial items, including page 3, line 10, of the annual statement, held in support of the policies and contracts specified by the commissioner, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts. (b) The commissioner may provide by rule for a transition period for establishing any higher reserves which the qualified actuary may consider necessary in order to give the opinion required under subdivision 2a. Subd. 2c. Valuation of reserves; policies and contracts issued on or after the operative date of the valuation manual. (a) The commissioner shall annually value, or cause to be valued, the reserve liabilities referred to in this section as reserves for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the commissioner may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this section. (b) The provisions in subdivisions 10 and 11 shall apply to all policies and contracts issued on or after the operative date of the valuation manual. Subd. 2d. Actuarial opinion of reserves after the operative date of the valuation manual; general and actuarial analysis. (a) Every company with outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and subject to regulation by the commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion, including any items deemed to be necessary to its scope. (b) Every company with outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and subject to regulation by the commissioner, except as exempted in the valuation manual, shall annually include in the opinion required by paragraph (a) an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts. (c) Each opinion required by paragraph (b) shall be governed by the following provisions: (1) a memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion; and (2) if the company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner. The commissioner may only seek reimbursement from a company for the actual expenses incurred by an actuary in reviewing or preparing a supporting memorandum for that company. (d) Every opinion subject to this subdivision shall be governed by the following provisions: (1) the opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner; (2) the opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual; (3) the opinion shall apply to all policies and contracts subject to paragraph (b), plus other actuarial liabilities as may be specified in the valuation manual; (4) the opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor and on such additional standards as may be prescribed in the valuation manual; (5) in the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (6) except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the company and the commissioner for any act, error, omission, decision, or conduct with respect to the appointed actuary's opinion; and (7) the commissioner may take disciplinary action against a company or an appointed actuary for failure to satisfy the requirements of this subdivision. Subd. 3. Minimum standards of valuation generally. Except as otherwise provided in subdivisions 3a and 3b, the minimum standard for the valuation of the policies and contracts issued prior to the operative date of Laws 1947, chapter 182, shall be that provided by the laws in effect immediately prior to that date. Except as provided in subdivisions 3a and 3b, the minimum standard for the valuation of the policies and contracts issued on or after the operative date of Laws 1947, chapter 182, shall be the commissioners reserve valuation methods described in subdivisions 4, 4a and 7, 3-1/2 percent interest, or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after April 11, 1974, four percent interest for policies issued prior to August 1, 1978, 5-1/2 percent interest for single premium life insurance policies and 4-1/2 percent interest for other policies issued on or after August 1, 1978, and the following tables: (a) For ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in the policies, the Commissioners 1941 Standard Ordinary Mortality Table for the policies issued prior to the operative date of section 61A.24, subdivision 9 and the Commissioners 1958 Standard Ordinary Mortality Table for the policies issued on or after the operative date of section 61A.24, subdivision 9, and prior to the operative date of section 61A.24, subdivision 12; provided, that for any category of the policies issued on female risks all modified net premiums and present values referred to in Laws 1959, chapter 26, may be calculated according to an age not more than six years younger than the actual age of the insured; and for policies issued on or after the operative date of section 61A.24, subdivision 12: (1) the Commissioners 1980 Standard Ordinary Mortality Table; (2) at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; or (3) any ordinary mortality table, including any adopted after 1980 by the National Association of Insurance Commissioners, which is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the policies. (b) For industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in the policies, the 1941 Standard Industrial Mortality Table for the policies issued prior to the operative date of section 61A.24, subdivision 11, and for the policies issued on or after the operative date, the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table, including any adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the policies. (c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies, the 1937 Standard Annuity Mortality Table or, at the option of the company, the Annuity Mortality Table for 1949, ultimate, or any modification of either of these tables approved by the commissioner. (d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies, the Group Annuity Mortality Table for 1951, any modification of the table approved by the commissioner, or at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts. (e) For total and permanent disability benefits in or supplemental to ordinary policies or contracts, for policies or contracts issued on or after January 1, 1966, the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and termination rates, including any adopted after 1980 by the National Association of Insurance Commissioners, that are approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the policies; for policies or contracts issued on or after January 1, 1963, and prior to January 1, 1966, either the tables or, at the option of the company, the class (3) disability table (1926); and for policies issued prior to January 1, 1963, the class (3) disability table (1926). The table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies. (f) For accidental death benefits in or supplementary to policies, for policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table, including any adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the policies; for policies issued on or after January 1, 1963, and prior to January 1, 1966, either table or, at the option of the company, the Intercompany Double Indemnity Mortality Table; and for policies issued prior to January 1, 1963, the Intercompany Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies. (g) For group life insurance, life insurance issued on the substandard basis and other special benefits, any tables as may be approved by the commissioner. Subd. 3a. Minimum standard of valuation for annuities and pure endowment contracts. Except as provided in subdivision 3b, the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after the operative date of this subdivision and for annuities and pure endowments purchased on or after this operative date under group annuity and pure endowment contracts, shall be the commissioner's reserve valuation methods defined in subdivisions 4 and 4a, and the following tables and interest rates: (a) For individual annuity and pure endowment contracts issued prior to August 1, 1978, excluding any disability and accidental death benefits in the contracts, the 1971 individual annuity mortality table, or any modification of this table approved by the commissioner, and six percent interest for single premium immediate annuity contracts, and four percent interest for all other individual annuity and pure endowment contracts. (b) For individual single premium immediate annuity contracts issued on or after August 1, 1978, excluding any disability and accidental death benefits in the contracts, the 1971 individual annuity mortality table, any individual annuity mortality table, including any adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the contracts, or any modification of these tables approved by the commissioner, and 7-1/2 percent interest. (c) For individual annuity and pure endowment contracts issued on or after August 1, 1978, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in the contracts, the 1971 individual annuity mortality table, any individual annuity mortality table, including any adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the contracts, or any modification of these tables approved by the commissioner, and 5-1/2 percent interest for single premium deferred annuity and pure endowment contracts and 4-1/2 percent interest for all other individual annuity and pure endowment contracts. (d) For annuities and pure endowments purchased prior to August 1, 1978, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under the contracts, the 1971 group annuity mortality table, or any modification of this table approved by the commissioner, and six percent interest. (e) For annuities and pure endowments purchased on or after August 1, 1978, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under the contracts, the 1971 group annuity mortality table, any group annuity mortality table, including any adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for the annuities and pure endowments, or any modification of these tables approved by the commissioner, and 7-1/2 percent interest. After April 11, 1974, a company may file with the commissioner a written notice of its election to comply with the provisions of this subdivision after a specified date before January 1, 1979, which shall be the operative date of this subdivision for the company. A company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no election, the operative date of this subdivision for the company shall be January 1, 1979. Subd. 3b. Computation of minimum standard by calendar year of issue. (a) The interest rates used in determining the minimum standard for the valuation of the following shall be the calendar year statutory valuation interest rates as defined in this subdivision: (1) life insurance policies issued in a particular calendar year, on or after the operative date of section 61A.24, subdivision 12; (2) individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982; (3) annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts; and (4) the net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts. (b) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer one-quarter of one percent: (1) for life insurance, I = .03 + W (R1 - .03) + (W/2) (R2 - .09); (2) for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options, I = .03 + W (R - .03) where R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate defined in this subdivision, and W is the weighting factor defined in this subdivision; (3) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in clause (2), the formula for life insurance stated in clause (1) shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten years and the formula for single premium immediate annuities stated in clause (2) shall apply to annuities and guaranteed interest contracts with guarantee duration of ten years or less; (4) for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in clause (2) shall apply; (5) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in clause (2) shall apply. However, if the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent, the calendar year statutory valuation interest rate for the life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 using the reference interest rate defined for 1979 and shall be determined for each subsequent calendar year regardless of when section 61A.24, subdivision 12, becomes operative. (c) The weighting factors referred to in the formulas stated above are as follows: (1) The weighting factors for life insurance are:       Guarantee Duration (Years)  Weighting Factors  ten or less   .50  more than ten, but not more than 20   .45  more than 20   .35   For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy; (2) The weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options is .80; and (3) The weighting factors for other annuities and for guaranteed interest contracts, except as stated in clause (2), shall be as specified in tables (i), (ii), and (iii), according to the rules and definitions in (iv), (v), and (vi):         (i) For annuities and guaranteed interest contracts valued on an issue year basis:   Guarantee Duration (Years)  Weighting Factor for Plan Type     A B C   five or less:  .80 .60 .50   more than five, but not more than ten:  .75 .60 .50   more than ten, but not more than 20:  .65 .50 .45   more than 20:  .45 .35 .35  (ii)   Plan Type     A B C   For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in (i) increased by:  .15 .25 .05  (iii)   Plan Type     A B C   For annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors shown in (i) or derived in (ii) increased by:  .05 .05 .05   (iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence. (v) Plan type as used in the above tables is defined as follows: Plan Type A: At any time policyholders may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, (2) without the adjustment but in installments over five years or more, or (3) as an immediate life annuity. Plan Type B: Before expiration of the interest rate guarantee, policyholders may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without the adjustment but in installments over five years or more. At the end of interest rate guarantee, funds may be withdrawn without the adjustment in a single sum or installments over less than five years. Plan Type C: Policyholders may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund. (vi) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this subdivision, an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund. (d) The reference interest rate referred to in paragraph (b) shall be defined as follows: (1) for all life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; (2) for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; (3) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in clause (2), with guarantee duration in excess of ten years, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; (4) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in clause (2), with guarantee duration of ten years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; (5) for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; and (6) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in clause (2), the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc. (e) In the event that Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published by Moody's Investors Service, Inc., or in the event that the commissioner determines that Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which has been approved by rule adopted by the commissioner, may be substituted. Subd. 4. Reserve valuation of life insurance and endowment benefits; modified premiums. (a) Except as otherwise provided in paragraph (b) and subdivisions 4a and 7, reserves according to the commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value at the date of valuation of future guaranteed benefits provided for by the policies over the then present value of any future modified net premiums therefor. The modified net premiums for a policy shall be the uniform percentage of the respective contract premiums for the benefits such that the present value, at the date of issue of the policy, of all the modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy and the excess of clause (1) over clause (2) as follows: (1) a net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value at the date of issue of an annuity of one per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due; but the net level annual premium shall not exceed the net level annual premium on the 19 year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy; (2) a net one year term premium for the benefits provided for in the first policy year. (b) For a life insurance policy issued on or after January 1, 1985, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than the excess premium, the reserve according to the commissioners reserve valuation method as of a policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium shall, except as otherwise provided in subdivision 7, be the greater of the reserve as of the policy anniversary calculated as described in paragraph (a) and the reserve as of the policy anniversary calculated as described in that paragraph, but with the value defined in clause (1) of that paragraph being reduced by 15 percent of the amount of the excess first year premium; all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date; the policy being assumed to mature on that date as an endowment; and the cash surrender value provided on that date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in subdivisions 3 and 3b shall be used. (c) Reserves according to the commissioners reserve valuation method for (1) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, (2) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including but not limited to a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as amended, (3) disability and accidental death benefits in all policies and contracts, and (4) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of paragraphs (a) and (b), except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums. (d) For a universal life insurance policy that guarantees coverage to remain in force as long as the accumulation of premiums paid satisfies a secondary guarantee requirement, reserves according to the commissioners reserve valuation method may be calculated using a lapse assumption only in accordance with and in the circumstances described in the National Association of Insurance Commissioners' accounting practices and procedures manual. Subd. 4a. Annuity and pure endowment contracts. This subdivision shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including but not limited to a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as amended. Reserves according to the commissioner's annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in the contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of the contract, that become payable prior to the end of the respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in the contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of the contracts to determine nonforfeiture values. Subd. 5. Minimum aggregate reserves. A company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the operative date of Laws 1947, chapter 182, shall not be less than the aggregate reserves calculated in accordance with the methods set forth in subdivisions 4, 4a, 7, and 8, and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for the policies. In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required under subdivisions 2a and 2b. Subd. 6. Calculation of reserves. (a) Reserves for policies and contracts issued prior to the operative date of Laws 1947, chapter 182, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to such date. (b) Reserves for any category of policies, contracts or benefits as established by the commissioner, issued on or after the operative date of Laws 1947, chapter 182, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be greater than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for in the policies or contracts. (c) Any such company which adopts at any time any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this section may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum herein provided. For purposes of this section, the holding of additional reserves previously determined by the appointed actuary to be necessary to give the opinion required under subdivisions 2a and 2d shall not be considered the adoption of a higher standard of valuation. Subd. 7. Reserve calculation; valuation net premium exceeding the gross premium charged. If in a contract year the gross premium charged by a company on a policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon, but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this subdivision are those standards stated in subdivisions 3 and 3b. However, for a life insurance policy issued on or after January 1, 1985, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than the excess premium, the foregoing provisions of this subdivision shall be applied as if the method actually used in calculating the reserve for the policy was the method described in subdivision 4, ignoring subdivision 4, paragraph (b). The minimum reserve at each policy anniversary of the policy shall be the greater of the minimum reserve calculated in accordance with subdivision 4, including subdivision 4, paragraph (b), and the minimum reserve calculated in accordance with this subdivision. Subd. 8. Reserve calculation; plans not covered by other subdivisions. In the case of a plan of life insurance or annuity for which the minimum reserves cannot be determined by the methods described in subdivisions 4, 4a, and 7, the reserves which are held under any plan must: (a) be appropriate in relation to the benefits and the pattern of premiums for that plan, and (b) be computed by a method which is consistent with the principles of this section as determined by rules adopted by the commissioner. Subd. 9. Minimum standards for accident and health insurance contracts. For health, disability, accident, and sickness plans issued on or after the operative date of Laws 1947, chapter 182, and prior to the operative date of the valuation manual, the minimum standard of valuation is the standard adopted by the commissioner by rule. For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subdivision 2c. Subd. 10. Valuation manual for policies issued on or after the operative date of the valuation manual. (a) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subdivision 2c, except as provided under paragraph (e) or (g). (b) The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred: (1) the valuation manual has been adopted by the National Association of Insurance Commissioners by an affirmative vote of at least 42 members, or three-fourths of the members voting, whichever is greater; (2) the Standard Valuation Law, as amended by the National Association of Insurance Commissioners in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than 75 percent of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements; and (3) the Standard Valuation Law, as amended by the National Association of Insurance Commissioners in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least 42 of the following 55 jurisdictions: the 50 states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico. (c) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January 1 following the date when the change to the valuation manual has been adopted by the National Association of Insurance Commissioners by an affirmative vote representing: (1) at least three-fourths of the members of the National Association of Insurance Commissioners voting, but not less than a majority of the total membership; and (2) members of the National Association of Insurance Commissioners representing jurisdictions totaling greater than 75 percent of the direct premiums written as reported in the following annual statements most recently available prior to the vote in clause (1): life, accident and health annual statements, health annual statements, or fraternal annual statements. (d) The valuation manual must specify all of the following: (1) minimum valuation standards for and definitions of the policies or contracts subject to subdivision 2c. Such minimum valuation standards shall be: (i) the commissioner's reserve valuation method for life insurance contracts, other than annuity contracts, subject to subdivision 2c; (ii) the commissioner's annuity reserve valuation method for annuity contracts subject to subdivision 2c; and (iii) minimum reserves for all other policies or contracts subject to subdivision 2c; (2) the policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in subdivision 11, paragraph (a), and the minimum valuation standards consistent with those requirements; (3) for policies and contracts subject to a principle-based valuation under subdivision 11: (i) requirements for the format of reports to the commissioner under subdivision 11, paragraph (b), clause (3), which shall include information necessary to determine if the valuation is appropriate and in compliance with this section; (ii) assumptions shall be prescribed for risks over which the company does not have significant control or influence; and (iii) procedures for corporate governance and oversight of the actuarial function and a process for appropriate waiver or modification of such procedures; (4) for policies not subject to a principle-based valuation under subdivision 11 the minimum valuation standard shall either: (i) be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or (ii) develop reserves that quantify the benefits and guarantees and the funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring; (5) other requirements, including but not limited to those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, and transition rules and internal controls; and (6) the data and form of the data required under subdivision 12, with whom the data must be submitted, and may specify other requirements including data analyses and reporting of analyses. (e) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the commissioner, in compliance with this section, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the commissioner by rule. (f) The commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company's compliance with any requirement in this section. The commissioner may rely upon the opinion, regarding provisions contained within this section, of a qualified actuary engaged by the commissioner of another state, district, or territory of the United States. The commissioner may only seek reimbursement from a company for the actual expenses incurred by an actuary in performing the actuarial examination and opining on the reserves of that company. (g) The commissioner may require a company to change an assumption or method that in the opinion of the commissioner is necessary in order to comply with the requirements of the valuation manual or this section, and the company shall adjust the reserves as required by the commissioner. The commissioner may take other disciplinary action to enforce this section. Subd. 11. Requirements of a principle-based valuation. (a) A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual: (1) quantify the benefits and guarantees and the funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For polices or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk; (2) incorporate assumptions, risk analysis methods, and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods; (3) incorporate assumptions that are derived in one of the following manners: (i) the assumption is prescribed in the valuation manual; or (ii) for assumptions that are not prescribed, the assumptions shall: (A) be established utilizing the company's available experience, to the extent it is relevant and statistically credible; or (B) to the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience; and (4) provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve. (b) A company using a principle-based valuation for one or more policies or contracts subject to this subdivision as specified in the valuation manual shall: (1) establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual; (2) provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to ensure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year; and (3) develop and file with the commissioner upon request a principle-based valuation report that complies with standards prescribed in the valuation manual. (c) A principle-based valuation may include a prescribed formulaic reserve component. Subd. 12. Experience reporting for policies in force on or after the operative date of the valuation manual. A company shall submit mortality, morbidity, policyholder behavior, or expense experience, and other data as prescribed in the valuation manual. Subd. 13. Data practices. (a) The following data are confidential or protected nonpublic data, as defined in section 13.02, subdivision 3 or 13: (1) a memorandum in support of an opinion submitted under subdivision 2a or 2d and any other documents, materials, and other information, including but not limited to all working papers, and copies thereof, created, produced, or obtained by or disclosed to the commissioner or any other person in connection with such memorandum; (2) all documents, materials, and other information, including but not limited to all working papers, and copies thereof, created, produced, or obtained by or disclosed to the commissioner or any other person in the course of an examination made under subdivision 10, paragraph (f), provided that if an examination report or other material prepared in connection with an examination under section 60A.031, subdivision 4, paragraph (f), is not given confidential treatment under that provision, an examination report or other material prepared in connection with an examination under subdivision 10, paragraph (f), is not given confidential treatment to the same extent as if the examination report or other material had been prepared under section 60A.031, subdivision 4, paragraph (f); (3) any reports, documents, materials, and other information developed by a company in support of, or in connection with, an annual certification by the company under subdivision 11, paragraph (b), clause (2), evaluating the effectiveness of the company's internal controls with respect to a principle-based valuation and any other documents, materials, and other information, including but not limited to all working papers, and copies thereof, created, produced, or obtained by or disclosed to the commissioner or any other person in connection with such reports, documents, materials, and other information; (4) any principle-based valuation report developed under subdivision 11, paragraph (b), clause (3), and any other documents, materials, and other information, including but not limited to all working papers, and copies thereof, created, produced, or obtained by or disclosed to the commissioner or any other person in connection with such report; and (5) any documents, materials, data, and other information submitted by a company under subdivision 12 (collectively, "experience data") and any other documents, materials, data, and other information, including but not limited to all working papers, and copies thereof, created or produced in connection with such experience data, in each case that includes any potentially company-identifying or personally identifiable information that is provided to or obtained by the commissioner together with any experience data, the experience materials, and any other documents, materials, data, and other information, including but not limited to all working papers, and copies thereof, created, produced, or obtained by or disclosed to the commissioner or any other person in connection with such experience materials. (b) Except as provided in this subdivision, the documents, materials, or other information described in paragraph (a) are not subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action, provided that the commissioner is authorized to use the documents, materials, or other information described in paragraph (a) in the furtherance of any regulatory or legal action brought against the company as a part of the commissioner's official duties. (c) Neither the commissioner nor any person who received the documents, materials, or other information described in paragraph (a) while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning documents, materials, or other information classified by this subdivision. (d) In order to assist in the performance of the commissioner's duties, the commissioner may share documents, materials, data, and other information, including information that is confidential and privileged (i) with other state, federal, and international regulatory agencies and with the National Association of Insurance Commissioners and its affiliates and subsidiaries and (ii) in the case of the documents, materials, or other information specified in paragraph (a), clauses (1) and (4), only, with the Actuarial Board for Counseling and Discipline or its successor upon request stating that the documents, materials, or other information is required for the purpose of professional disciplinary proceedings and with state, federal, and international law enforcement officials; provided that the recipient agrees, and has the legal authority to agree, to maintain the confidential and privileged status of the documents, materials, data, and other information in the same manner and to the same extent as required for the commissioner. (e) The commissioner may receive documents, materials, data, and other information, including otherwise confidential and privileged documents, materials, data, or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions and from the Actuarial Board for Counseling and Discipline or its successor and shall maintain the confidential and privileged status of any document, material, data, or other information received with notice or the understanding that it is confidential and privileged under the laws of the jurisdiction that is the source of the document, material, or other information. (f) The commissioner may enter into agreements governing sharing and use of information consistent with this subdivision. (g) No waiver of any applicable privilege or claim of confidentiality in documents, materials, or other information described in paragraph (a) shall occur as a result of disclosure to the commissioner under this subdivision or as a result of sharing as authorized in paragraph (d). (h) A privilege established under the law of a state or jurisdiction that is substantially similar to the privilege established under this subdivision shall be available and enforced in any proceeding in, and in any court of, this state. (i) Notwithstanding this subdivision, any documents, materials, or information specified in paragraph (a), clauses (1) and (4): (1) may be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under subdivision 2a or 2d or principle-based valuation report developed under subdivision 11, paragraph (b), clause (3), by reason of an action required by this section or by rules adopted hereunder; (2) may otherwise be released by the commissioner with the written consent of the company; and (3) once any portion of a memorandum in support of an opinion submitted under subdivision 2a or 2d or a principle-based valuation report developed under subdivision 11, paragraph (b), clause (3), is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of such memorandum or report shall no longer be classified under this subdivision. Subd. 14. Single state exemption. (a) The commissioner may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in Minnesota from the requirements of subdivision 10 provided: (1) the commissioner has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and (2) the company computes reserves using assumptions and methods used prior to the operative date of the valuation manual in addition to any requirements established by the commissioner and adopted by rules. (b) For any company granted an exemption under this subdivision, subdivisions 2a, 2b, 2d, 3, 3a, 3b, 4, 4a, 5, 6, 7, 8, and 9 shall be applicable. With respect to any company applying this exemption, any reference to subdivision 10 found in subdivisions 2a, 2b, 2d, 3, 3a, 3b, 4, 4a, 5, 6, 7, 8, and 9 shall not be applicable. Subd. 15. Mortality table; exception. Notwithstanding anything in this section, or any other law to the contrary, a company may use the Commissioners 2017 Standard Ordinary Mortality Table in determining the minimum valuation standard for policies issued on or after January 1, 2017. History:  1967 c 395 art 2 s 25; 1974 c 433 s 3,4; 1978 c 662 s 7-13; 1982 c 589 s 15-21; 1986 c 444; 1991 c 325 art 7 s 1-5; 2007 c 104 s 4; 2011 c 61 s 4; 2016 c 178 s 3; 2016 c 189 art 7 s 13
61A.255 SMOKER AND NONSMOKER MORTALITY TABLES. For the purposes of sections 61A.24 and 61A.25, insurers may utilize the 1958 Commissioners Standard Ordinary and the 1958 Commissioners Extended Term smoker and nonsmoker mortality tables and the 1980 Commissioners Standard Ordinary and the 1980 Commissioners Extended Term smoker and nonsmoker mortality tables in addition to the tables specified in sections 61A.24 and 61A.25. The tables may be utilized as provided in the model rule permitting smoker and nonsmoker mortality tables for use in determining minimum reserve liabilities and nonforfeiture benefits adopted by the National Association of Insurance Commissioners. This section applies to policies issued on or after January 1, 1984, and before January 1, 1989. History:  1984 c 538 s 1; 1984 c 592 s 46
61A.257 PREFERRED MORTALITY TABLES FOR USE IN DETERMINING MINIMUM RESERVE LIABILITIES. Subdivision 1. Definitions. (a) For the purposes of this section only, the following terms have the meanings given them. (b) "2001 CSO Mortality Table" means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO Preferred Class Structure Mortality Table defined in paragraph (c). Unless the context indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables in the 2001 CSO Mortality Table include the following: (1) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table; (2) "2001 CSO Mortality Table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table; (3) "composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers; and (4) "smoker and nonsmoker mortality tables" means mortality tables with separate rates of mortality for smokers and nonsmokers. (c) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables with separate rates of mortality for the super preferred nonsmoker, preferred nonsmoker, residual standard nonsmoker, preferred smoker, and residual standard smoker splits of the 2001 CSO Nonsmoker and Smoker Mortality Tables as adopted by the NAIC at the September 2006 national meeting and published in the NAIC Proceedings (3rd Quarter 2006). Unless the context indicates otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes both the ultimate form of that table and the select and ultimate form of that table, the smoker and nonsmoker mortality tables, both the male and female mortality tables and the gender composite mortality tables, and both the age-nearest-birthday and age-last-birthday bases of the mortality table. (d) "Statistical agent" means an entity with proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner. Subd. 2. 2001 CSO Preferred Class Structure Mortality Table. At the election of the insurer, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this section, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard under section 61A.25 for policies issued on or after January 1, 2007. For policies issued on or after January 1, 2004, and prior to January 1, 2007, these tables may be substituted with the written consent of the commissioner and subject to the conditions in subdivision 3. In determining such consent, the commissioner may rely on the consent of the commissioner of the company's state of domicile. No such election must be made until the insurer demonstrates at least 20 percent of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this section, will be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to section 61A.25 and Minnesota Rules, chapter 2748. Subd. 3. Conditions. (a) For each plan of insurance with separate rates for preferred and standard nonsmoker lives, an insurer may use the super preferred nonsmoker, preferred nonsmoker, and residual standard nonsmoker tables to substitute for the nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the residual standard nonsmoker table, the appointed actuary shall certify that: (1) the present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class; and (2) the present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class. (b) For each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the preferred smoker and residual standard smoker tables to substitute for the smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the preferred smoker table, the appointed actuary shall certify that: (1) the present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class; and (2) the present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class. (c) Unless exempted by the commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Mortality Table shall annually file with the commissioner, the NAIC, or a statistical agent designated by the NAIC and acceptable to the commissioner, statistical reports showing mortality and such other information as the commissioner may deem necessary or expedient for the administration of the provisions of this section. The form of the reports shall be established by the commissioner or the commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC and acceptable to the commissioner. (d) The use of the 2001 CSO Preferred Class Structure Mortality Table for the valuation of policies issued prior to January 1, 2007, shall not be permitted in any statutory financial statement in which a company reports, with respect to any policy or portion of a policy coinsured, either of the following: (1) in cases where the mode of payment of the reinsurance premium is less frequent than the mode of payment of the policy premium, a reserve credit that exceeds, by more than the amount specified in this paragraph as Y, the gross reserve calculated before reinsurance. Y is the amount of the gross reinsurance premium that (i) provides coverage for the period from the next policy premium due date to the earlier of the end of the policy year and the next reinsurance premium due date, and (ii) would be refunded to the ceding entity upon the termination of the policy; or (2) in cases where the mode of payment of the reinsurance premium is more frequent than the mode of payment of the policy premium, a reserve credit that is less than the gross reserve, calculated before reinsurance, by an amount that is less than the amount specified in this paragraph as Z. Z is the amount of the gross reinsurance premium that the ceding entity would need to pay the assuming company to provide reinsurance coverage from the period of the next reinsurance premium due date to the next policy premium due date minus any liability established for the proportionate amount not remitted to the reinsurer. (e) For purposes of paragraph (d), the reserve (1) for the mean reserve method shall be defined as the mean reserve minus the deferred premium asset, and (2) for the midterminal reserve method shall include the unearned premium reserve. A company may estimate and adjust its accounting on an aggregate basis in order to meet the conditions to use the 2001 CSO Preferred Class Structure Mortality Table. History:  2007 c 104 s 5; 2008 c 344 s 7; 2010 c 275 art 1 s 8,9
61A.258 PRENEED INSURANCE PRODUCTS; MINIMUM MORTALITY STANDARDS FOR RESERVES AND NONFORFEITURE VALUES. Subdivision 1. Definitions. For the purposes of this section, the following terms have the meanings given them: (1) "2001 CSO Mortality Table (2001 CSO)" means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the National Association of Insurance Commissioners (NAIC) in December 2002. The 2001 CSO Mortality Table (2001 CSO) is included in the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise, the "2001 CSO Mortality Table (2001 CSO)" includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables; (2) "Ultimate 1980 CSO" means the Commissioners' 1980 Standard Ordinary Life Valuation Mortality Tables (1980 CSO) without ten-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law approved in December 1983; and (3) "preneed insurance" is any life insurance policy or certificate that is issued in combination with, in support of, with an assignment to, or as a guarantee for a prearrangement agreement for goods and services to be provided at the time of and immediately following the death of the insured. Goods and services may include but are not limited to embalming, cremation, body preparation, viewing or visitation, coffin or urn, memorial stone, and transportation of the deceased. The status of the policy or contract as preneed insurance is determined at the time of issue in accordance with the policy form filing. Subd. 2. Minimum valuation mortality standards. For preneed insurance contracts, the minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds shall be the Ultimate 1980 CSO. Subd. 3. Minimum valuation interest rate standards. (a) The interest rates used in determining the minimum standard for valuation of preneed insurance shall be the calendar year statutory valuation interest rates as defined in section 61A.25. (b) The interest rates used in determining the minimum standard for nonforfeiture values for preneed insurance shall be the calendar year statutory nonforfeiture interest rates as defined in section 61A.24. Subd. 4. Minimum valuation method standards. (a) The method used in determining the standard for the minimum valuation of reserves of preneed insurance shall be the method defined in section 61A.25. (b) The method used in determining the standard for the minimum nonforfeiture values for preneed insurance shall be the method defined in section 61A.24. Subd. 5. Exception. A policy providing preneed insurance or designed to cover, in whole or in part, the goods and services described in subdivision 1, clause (3), is not subject to section 72A.207. History:  2009 c 37 art 3 s 14; 2013 c 53 s 1
61A.27 CONTINGENCY RESERVE; LIMITATIONS. Any life insurance company doing business in this state may accumulate and maintain, in addition to the capital and surplus contributed by its stockholders, and in addition to an amount equal to the net values of its policies, computed according to the laws of the jurisdiction under which it is organized, a contingency reserve not exceeding the following respective percentages of these net values: When the net values are less than $100,000, 20 percent thereof, or the sum of $10,000, whichever is the greater; when the net values are greater than $100,000, the percentage thereof measuring the contingency reserve shall decrease one-half of one percent for each $100,000 of the net values up to $1,000,000; when the net values are greater than $1,000,000, but do not exceed $25,000,000, the contingency reserve shall not exceed 15 percent thereof; when the net values are greater than $25,000,000, but do not exceed $150,000,000, the contingency reserve shall not exceed 12-1/2 percent thereof; when the net values are greater than $150,000,000, the contingency reserve shall not exceed ten percent thereof; provided, that as the net values of these policies increase and the maximum percentage measuring the contingency reserve decreases, the corporation may maintain the contingency reserve already accumulated hereunder, although for the time being it may exceed the maximum percentage herein prescribed, but may not add to the contingency reserve when the addition will bring it beyond the maximum percentage. For cause shown, the commissioner may, at any time and from time to time, permit any corporation to accumulate and maintain a contingency reserve in excess of the limit above mentioned for a prescribed period, not exceeding one year under any one permission, by filing in the commissioner's office a decision stating the reasons therefor and causing the same to be published in the next annual report. This section shall not apply to any company doing exclusively a nonparticipating business. History:  1967 c 395 art 2 s 27; 1986 c 444
61A.276 FUNDING AGREEMENTS. Subdivision 1. Authorization. An insurer authorized to deliver or issue for delivery annuity contracts in this state may deliver or issue for delivery one or more funding agreements. The issuance or delivery of these funding agreements shall not be deemed to be doing a kind of business specifically authorized by section 60A.06. Notwithstanding the definition of contracts of life and endowment insurance or of annuities under section 60A.06, subdivision 1, clause (4) or the definition of life insurance company under section 61A.01, the issuance or delivery of a funding agreement by an insurer in this state constitutes doing an insurance business in the state. Subd. 2. Issuance. The funding agreements may be issued to: (1) individuals; or (2) persons authorized by a state or foreign country to engage in an insurance business or subsidiaries or affiliates of these persons; or (3) entities other than individuals and other than persons authorized to engage in an insurance business, and subsidiaries and affiliates of these persons, for the following purposes: (i) to fund benefits under any employee benefit plan as defined in the Employee Retirement Income Security Act of 1974, as now or hereafter amended, maintained in the United States or in a foreign country; (ii) to fund the activities of any organization exempt from taxation under section 501(c) of the Internal Revenue Code of 1986, as amended through December 31, 1992, or of any similar organization in any foreign country; (iii) to fund any program of any state, foreign country or political subdivision thereof, or any agency or instrumentality thereof; (iv) to fund any agreement providing for periodic payments in satisfaction of a claim; or (v) to fund a program of an institution that has assets in excess of $25,000,000. No funding agreement shall be issued in an amount less than $1,000,000. Subd. 3. General operation. No amounts shall be guaranteed or credited under a funding agreement except upon reasonable assumptions as to investment income and expenses and on a basis equitable to all holders of funding agreements of a given class. The funding agreements shall not provide for payments to or by the insurer based on mortality or morbidity contingencies. Subd. 4.  [Repealed, 2011 c 61 s 9] Subd. 5. Rules. The commissioner may adopt rules relating to (1) the standards to be followed in the approval of forms of the funding agreements, (2) the reserves to be maintained by insurers issuing the funding agreements, (3) the accounting and reporting of funds credited under the funding agreements, (4) the disclosure of information to be given to holders and prospective holders of the funding agreements, and (5) the qualification and compensation of persons selling the funding agreements on behalf of insurers. Notwithstanding any other provision of law, the commissioner has sole authority to regulate the issuance and sale of the funding agreements, including the persons selling the funding agreements on behalf of insurers. History:  1985 c 43 s 1; 1993 c 375 art 8 s 14; 1998 c 319 s 17; 1999 c 177 s 34; 2001 c 131 s 11
61A.28 DOMESTIC COMPANIES, INVESTMENTS. Subdivision 1. Investment guidelines and procedures. Each domestic life insurance company must comply with section 60A.112. No investment or loan, except policy loans, shall be made by a domestic life insurance company unless authorized or approved by the board of directors or by a committee of directors, officers, or employees of the company designated by the board and charged with the duty of supervising the investment or loan. Accurate records of all authorizations and approvals must be maintained. The capital, surplus and other funds of every domestic life insurance company, whether incorporated by special act or under the general law (in addition to investments in real estate as otherwise permitted by law) may be invested only in one or more of the following kinds of securities or property. An investment may not be made under this section if the required interest obligation is in default. Investments must be valued in accordance with the valuation procedures established by the National Association of Insurance Commissioners, unless the commissioner requires or finds another method of valuation reasonable under the circumstances. Other invested assets must be valued according to the procedures promulgated by the National Association of Insurance Commissioners, if not addressed in another section, unless the commissioner requires or finds another method of valuation reasonable under the circumstances. Subd. 2. Government obligations. Bonds or other obligations of, or bonds or other obligations insured or guaranteed by: (a) the United States or any state thereof; (b) the Dominion of Canada or any province thereof; (c) any county, city, town, statutory city formerly a village, organized school district, municipality, or other civil or political subdivision of this state, or of any state of the United States or of any province of the Dominion of Canada; (d) any agency or instrumentality of the foregoing, including but not limited to, debentures issued by the federal housing administrator, obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association; and (e) obligations payable in United States dollars issued or fully guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the Export-Import Bank, or any other United States government sponsored organization of which the United States is a member. The life insurance company may not invest in the obligations of these banks or organizations if the investment causes the company's aggregate investments in the obligations of any one of these banks or organizations to exceed five percent of its admitted assets or if the investment causes the company's aggregate investments in the obligations of all banks or organizations described in clause (e) to exceed 15 percent of its admitted assets. Subd. 3. Loans or obligations secured by mortgage. Loans or obligations (hereinafter loans) secured by a first mortgage, or deed of trust (hereinafter mortgage), on improved real estate in the United States, if the amount of the loan secured thereby is not in excess of 66-2/3 percent of the market value of the real estate at the time of the loan, or, when the loan is to be fully amortized by installment payments of principal, which may begin up to five years from the date of the loan if the real estate is to be used for commercial purposes, and interest at least annually over a period of not to exceed 40 years, the amount of the loan does not exceed (a) 80 percent of the market value of the real estate at the time of the loan; (b) 90 percent of the market value of the real estate at the time of the loan if the loan is secured by a purchase money mortgage made in connection with the disposition of real estate acquired pursuant to section 61A.31, subdivision 1, or, if (1) the real estate is used for commercial purposes, and (2) the loan is additionally secured by an assignment of lease or leases, and (3) the lessee or lessees under the lease or leases, or a guarantor or guarantors of the lessee's obligations, is a corporation whose obligations would qualify as an investment under subdivision 6, paragraph (e), and (4) the rents payable during the primary term of the lease or leases are sufficient to amortize at least 60 percent of the loan. In calculating the ratio of the amount of the loan to the value of the property, no part of the amount of any loan is to be included which the United States or any agency or instrumentality thereof or other mortgage insurer as may be approved by the commissioner has insured or guaranteed or made a commitment to insure or guarantee; provided, in no event may the loan exceed the market value of the property. No improvement may be included in estimating the market value of the real estate unless it is insured against fire by policies payable to the security holder or a trustee for its benefit. This requirement may be met by a program of self-insurance established and maintained by a corporation whose debt obligations would qualify for purchase under subdivision 6, paragraph (g), clause (4). Also loans secured by mortgage, upon leasehold estates in improved real property where at the date of investment the lease has an unexpired term of at least five years longer than the term of the loan secured thereby, and where the leasehold estate is unencumbered except by the lien reserved in the lease for the payment of rentals and the observance of the other covenants, terms and conditions of the lease and where the mortgagee, upon default, is entitled to be subrogated to, or to exercise, all the rights and to perform all the covenants of the lessee, provided that no loan on the leasehold estate may exceed (a) 66-2/3 percent of the market value thereof at the time of the loan, or (b) 80 percent of the market value thereof at the time of the loan if the loan is to be fully amortized by installment payments of principal which begin within five years from the date of the loan if the leasehold estate is to be used for commercial purposes, interest is payable at least annually over the period of the loan which may not exceed 40 years and the market value of the leasehold estate is shown by the sworn certificate of a competent appraiser, or (c) 90 percent of the market value of the leasehold estate at the time of the loan if the loan is secured by a purchase money mortgage made in connection with the disposition of real estate acquired pursuant to section 61A.31, subdivision 1. In calculating the ratio of the amount of the loan to the value of the leasehold estate, no part of the amount of any loan is to be included which the United States or any agency or instrumentality thereof or other mortgage insurer approved by the commissioner has insured or guaranteed or made a commitment to insure or guarantee; provided, in no event may the loan exceed the market value of the leasehold estate. Also loans secured by mortgage, which the United States or any agency or instrumentality thereof or other mortgage insurer approved by the commissioner has insured or guaranteed or made a commitment to insure or guarantee. Also loans secured by mortgage, on improved real estate in the Dominion of Canada if the amount of the loan is not in excess of 66-2/3 percent of the market value of the real estate at the time of the loan, or, when the loan is to be fully amortized by installment payments of principal, which may begin up to five years from the date of the loan if the real estate is used for commercial purposes, and interest at least annually over a period of not to exceed 40 years, the amount of the loan does not exceed (a) 80 percent of the market value of the real estate at the time of the loan, or (b) 90 percent of the market value of the real estate at the time of the loan if the loan is secured by a purchase money mortgage made in connection with the disposition of real estate acquired pursuant to section 61A.31, subdivision 1. In calculating the ratio of the amount of the loan to the value of the property, no part of the amount of any loan is to be included which the Dominion of Canada or any agency or instrumentality thereof has insured or guaranteed or made a commitment to insure or guarantee; provided in no event may the loan exceed the market value of the property. Also loans secured by mortgage, on real estate in the United States which may be unimproved provided there exists a definite plan for commencement of development for commercial purposes within not more than five years where the amount of the loan does not exceed 80 percent of the market value of the unimproved real estate at the time of the loan and the loan is to be fully amortized by installment payments of principal, which may begin up to five years from the date of the loan, and interest at least annually over a period of not to exceed 40 years. Also loans secured by second mortgage on improved or unimproved real estate used, or to be used, for commercial purposes; provided, that if unimproved real estate there exists a definite plan for commencement of development within not more than five years, in the United States or the Dominion of Canada under the following conditions: (a) the amount of the loan secured by the second mortgage is equal to the sum of the amount disbursed by the company and the then outstanding indebtedness under the first mortgage loan; and (b) the company has control over the payments under the first mortgage indebtedness; and (c) the total amount of the loan does not exceed 66-2/3 percent of the market value of the real estate at the date of the loan or, when the note or bond is to be fully amortized by installment payments of principal, beginning not more than five years from the date of the loan, and interest at least annually over a period of not to exceed 40 years, the amount of the loan does not exceed 80 percent of the market value of the real estate at the date of the loan. A company may not invest in a mortgage loan authorized under this subdivision, if the investment causes the company's aggregate investments in mortgages secured by a single property to exceed one percent of its admitted assets. For purposes of this subdivision, improved real estate includes real estate improved with permanent buildings, used for agriculture or pasture, or income producing real estate, including but not limited to, parking lots and leases, royalty or other mineral interests in properties producing oil, gas, or other minerals and interests in properties for the harvesting of forest products. A loan or obligation otherwise permitted under this subdivision must be permitted notwithstanding the fact that it provides for a payment of the principal balance prior to the end of the period of amortization of the loan. The vendor's equity in a contract for deed qualifies as a loan secured by mortgage for the purposes of this subdivision. Subd. 4.  [Repealed, 1991 c 325 art 9 s 13] Subd. 5.  [Repealed, 1991 c 325 art 9 s 13] Subd. 6. Stocks, obligations, and other investments. (a) Common stocks, common stock equivalents, or securities convertible into common stock or common stock equivalents of a business entity organized under the laws of the United States or any state thereof, or the Dominion of Canada or any province thereof. (b) Preferred stock of, or common or preferred stock guaranteed as to dividends by a business entity organized under the laws of the United States or any state thereof, or the Dominion of Canada or any province thereof, under the following conditions: (1) no investment may be made under this paragraph in a stock upon which any dividend, current or cumulative, is in arrears; (2) the company may not invest in stocks under this paragraph and in common stocks under paragraph (a) if the investment causes the company's aggregate investments in the common or preferred stocks to exceed 25 percent of the company's total admitted assets, provided that no more than 20 percent of the company's admitted assets may be invested in common stocks under paragraph (a); and (3) the company may not invest in any preferred stock or common stock guaranteed as to dividends, which is rated in the four lowest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners, if the investment causes the company's aggregate investment in the lower rated preferred or common stock guaranteed as to dividends to exceed five percent of its total admitted assets. (c) Warrants, options, and rights to purchase stock if the stock, at the time of the acquisition of the warrant, option, or right to purchase, would qualify as an investment under paragraph (a) or (b), whichever is applicable. A company shall not invest in a warrant, option, or right to purchase stock if, upon purchase and immediate exercise thereof, the acquisition of the stock violates any of the concentration limitations contained in paragraphs (a) and (b). (d) In addition to amounts that may be invested under subdivision 8 and without regard to the percentage limitation applicable to stocks, warrants, options, and rights to purchase, the securities of any face amount certificate company, unit investment trust, or management type investment company, registered or in the process of registration under the Investment Company Act of 1940 as from time to time amended. In addition, the company may transfer assets into one or more of its separate accounts for the purpose of establishing, or supporting its contractual obligations under, the accounts in accordance with the provisions of sections 61A.13 to 61A.21. A company may not invest in a security authorized under this paragraph if the investment causes the company's aggregate investments in the securities to exceed ten percent of its total admitted assets, except that for a health service plan corporation operating under chapter 62C, and for a health maintenance organization operating under chapter 62D, the company's aggregate investments may not exceed 20 percent of its total admitted assets. No more than five percent of the allowed investment by health service plan corporations or health maintenance organizations may be invested in funds that invest in assets not backed by the federal government. When investing in money market mutual funds, nonprofit health service plans regulated under chapter 62C, and health maintenance organizations regulated under chapter 62D, shall establish a trustee custodial account for the transfer of cash into the money market mutual fund. (e) Investment grade obligations that are: (1) bonds, obligations, notes, debentures, repurchase agreements, or other evidences of indebtedness of a business entity, organized under the laws of the United States or any state thereof, or the Dominion of Canada or any province thereof; and (2) rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization, or are rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners. (f) Noninvestment grade obligations: A company may acquire noninvestment grade obligations as defined in item (i) (hereinafter noninvestment grade obligations) which meet the earnings test set forth in item (ii). A company may not acquire a noninvestment grade obligation if the acquisition will cause the company to exceed the limitations set forth in item (iii). (i) A noninvestment grade obligation is an obligation of a business entity, organized under the laws of the United States or any state thereof, or the Dominion of Canada or any province thereof, that is not rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization, or is not rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners. (ii) Noninvestment grade obligations authorized by this subdivision may be acquired by a company if the business entity issuing or assuming the obligation, or the business entity securing or guaranteeing the obligation, has had net earnings after the 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 of less than five years, has averaged not less than 1-1/4 times its average annual fixed charges applicable to the period; provided, however, that if a business entity issuing or assuming the obligation, or the business entity securing or guaranteeing the obligation, has undergone an acquisition, recapitalization, or reorganization within the immediately preceding 12 months, or will use the proceeds of the obligation for an acquisition, recapitalization, or reorganization, then such business entity shall also have, on a pro forma basis, for the next succeeding 12 months, net earnings averaging 1-1/4 times its average annual fixed charges applicable to such period after elimination of extraordinary nonrecurring items of income and expense and before taxes and fixed charges; no investment may be made under this section upon which any interest obligation is in default. (iii) Limitation on aggregate interest in noninvestment grade obligations. A company may not invest in a noninvestment grade obligation if the investment will cause the company's aggregate investments in noninvestment grade obligations to exceed the applicable percentage of admitted assets set forth in the following table:      Effective Date Percentage ofAdmitted Assets  January 1, 1992  20  January 1, 1993  17.5  January 1, 1994  15   Nothing in this paragraph limits the ability of a company to invest in noninvestment grade obligations as provided under subdivision 12. (g) Obligations for the payment of money under the following conditions: (1) The obligation must be secured, either solely or in conjunction with other security, by an assignment of a lease or leases on property, real or personal; (2) the lease or leases must be nonterminable by the lessee or lessees upon foreclosure of any lien upon the leased property; (3) the rents payable under the lease or leases must be sufficient to amortize at least 90 percent of the obligation during the primary term of the lease; and (4) the lessee or lessees under the lease or leases, or a governmental entity or business entity, organized under the laws of the United States or any state thereof, or the Dominion of Canada, or any province thereof, that has assumed or guaranteed any lessee's performance thereunder, must be a governmental entity or business entity whose obligations would qualify as an investment under subdivision 2 or paragraph (e) or (f). A company may acquire leases assumed or guaranteed by a noninvestment grade lessee unless the value of the lease, when added to the other noninvestment grade obligations owned by the company, exceeds 15 percent of the company's admitted assets. (h) A company may sell call options against stocks or other securities owned by the company and may purchase call options in a closing transaction against a call option previously written by the company. In addition to the authority granted by paragraph (c), to the extent and on the terms and conditions the commissioner determines to be consistent with the purposes of this chapter, a company may purchase or sell other exchange-traded call options, and may sell or purchase exchange-traded put options. (i) A company may not invest in a security or other obligation authorized under this subdivision if the investment, valued at cost at the date of purchase, causes the company's aggregate investment in any one business entity to exceed two percent of the company's admitted assets. (j) For nonprofit health service plan corporations regulated under chapter 62C, and for health maintenance organizations regulated under chapter 62D, a company may invest in commercial paper rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization, or rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners, if the investment, valued at cost at the date of purchase, does not cause the company's aggregate investment in any one business entity to exceed six percent of the company's admitted assets. Subd. 7. Transportation equipment obligations. Equipment trust obligations or certificates which are adequately secured or other adequately secured instruments evidencing an interest in transportation equipment purchased, leased, or under contract for purchase or lease by a corporation incorporated in the United States or in Canada or by a receiver or trustee of such corporation and a right to receive determined portions of rental, purchase or other fixed obligatory payments for the use or purchase of such transportation equipment. Subd. 8. Asset backed arrangements. Investments in asset backed arrangements that meet the definitions and credit criteria provided in this subdivision. For purposes of this subdivision, "asset backed arrangement" means a loan participation or loan to or equity investment in a business entity that has as its primary business activity the acquisition and holding of financial assets for the benefit of its debt and equity holders. In order to qualify for investment under this subdivision: (a) the investment in the asset backed arrangement must be secured by or represent an undivided interest in a single financial asset or a pool of financial assets; and (b) either (1) at least 90 percent of the dollar value of the financial assets held under the asset backed arrangement qualifies for direct investment under this section; (2) the investment in the asset backed arrangement is rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization; or (3) the investment in the asset backed arrangement is rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners. Examples of asset backed arrangements authorized by this subdivision include, but are not limited to: general and limited partnership interests; participations under unit investment trusts such as collateralized mortgage obligations and collateralized bond obligations; shares in, or obligations of, corporations formed for holding investment assets, and contractual participation interests in a loan or group of loans. A company may not invest in an asset backed arrangement if the investment causes the company's aggregate investment in the financial assets held under the asset backed arrangement to exceed any of the concentration limits contained in this section. Subd. 9. Obligations of trustees and receivers. Certificates, notes, or other obligations issued by trustees or receivers of any institution created or existing under the laws of the United States or of any state, district, or territory thereof, which, or the assets of which, are being administered under the direction of any court having jurisdiction if such obligation is adequately secured as to principal and interest; the amount invested in the securities mentioned in this subdivision shall not, at any time, exceed 25 percent of the unassigned surplus and capital of the company. Subd. 9a. Hedging. A domestic life insurance company may enter into financial transactions solely for the purpose of reducing the risk associated with assets and liabilities that the company has acquired or incurred or has legally contracted to acquire or incur, and not for speculative or other purposes. For purposes of this subdivision, "financial transactions" include, but are not limited to, futures, options to buy or sell fixed income securities, repurchase and reverse repurchase agreements, and interest rate swaps, caps, and floors. This authority is in addition to any other authority of the insurer. Subd. 10. Real estate sales contracts. Real estate sales contracts to which the company is not an original party, involving unencumbered real property situated in the United States, having a value of at least 50 percent more than the amount of the unpaid balance of the contract, same to be assigned or otherwise transferred to the company or to a trustee or nominee of its choosing. No improvement shall be included in estimating the value unless the same shall be insured against fire by policies payable to and held by the company or a trustee or nominee for its benefit. The foregoing provisions of this subdivision shall not apply to real estate sales contracts to which the company is an original party and shall not prohibit the company from holding such contracts as an investment. Subd. 11. Policy loans. Loans on the security of insurance policies issued by itself to an amount not exceeding the loan value thereof; and loans on the pledge of any of the securities eligible for investment under the provisions of subdivisions 2 to 10, with the exception of noninvestment grade obligations as defined in subdivision 6, paragraph (f), but not exceeding 95 percent of the value of securities enumerated in subdivisions 2, 3, and 4 and 80 percent of the value of stocks and other securities; in case of securities enumerated in subdivisions 3, 5, and 10 "value" means principal amount unpaid thereon and in case of other securities market value thereof; in case of securities enumerated in subdivisions 3 and 10 the pledge agreement shall require principal payments by the pledgor at least equal to and concurrent with principal payments on the pledged security; in loans authorized by this subdivision, except as otherwise provided by law in regard to policy loans, the company shall reserve the right at any time to declare the indebtedness due and payable when in excess of such proportions of value or, in case of pledge of securities other than those enumerated in subdivisions 3 and 10, upon depreciation of security. In the case of securities enumerated in subdivision 8, the provision of this subdivision must be applied in accordance with the type of security subject to the asset backed arrangement. Subd. 12. Additional investments. Investments of any kind, without regard to the categories, conditions, standards, or other limitations set forth in the foregoing subdivisions and section 61A.31, subdivision 3, except that the prohibitions in clause (d) of subdivision 3 remains applicable, may be made by a domestic life insurance company in an amount not to exceed the lesser of the following: (1) five percent of the company's total admitted assets as of the end of the preceding calendar year; or (2) fifty percent of the amount by which its capital and surplus as of the end of the preceding calendar year exceeds $675,000. Except as provided in section 61A.281, a company's total investment under this section in the common stock of any corporation, other than the stock of the types of corporations specified in section 61A.284, may not exceed ten percent of the common stock of the corporation. No investment may be made under the authority of this clause or clause (1) by a company that has not completed five years of actual operation since the date of its first certificate of authority. If, subsequent to being made under the provisions of this subdivision, an investment is determined to have become qualified or eligible under any of the other provisions of this chapter, the company may consider the investment as being held under the other provision and the investment need no longer be considered as having been made under the provisions of this subdivision. In addition to the investments authorized by this subdivision, with the written order of the commissioner, a domestic life insurance company may make qualified investments in any other type of investment or exceed any limitations of quality, quantity, or percentage of admitted assets contained in this section, section 61A.29 or 61A.31, or other provision governing the investments of a domestic life insurance company. This approval is at the discretion of the commissioner, provided that the additional investments allowed by the commissioner's written order may not exceed five percent of the company's admitted assets. Subd. 13. Additional limitations. Under the standards and procedures in sections 60G.20 to 60G.22 for individual insurers, the commissioner may impose additional limitations on all insurers on the types and percentages of investments as the commissioner determines necessary to protect and ensure the safety of the general public. Subd. 14. Replication transactions. An insurer engaging in replication transactions shall include all replicated investment positions in calculating compliance with the limitations on investments applicable to the insurer. Replication transactions are permitted only under the authority of subdivision 12. For these purposes, "replication transaction" means a derivative transaction that is intended to replicate the performance of one or more assets that an insurer is authorized to acquire under applicable law. A derivative transaction that either is authorized by subdivision 6, 8, or 9a or section 61A.29, subdivision 2, paragraph (d), or is entered into as a hedging transaction shall not be considered a replication transaction. "Replicated investment position" means the statement value of the position reported under the heading "Replicated (Synthetic) Asset" on Schedule DB, Part F, of the annual statement of the insurer, or any successor provision. History:  1967 c 395 art 2 s 28; 1969 c 494 s 12-16; 1971 c 816 s 1,2; 1973 c 123 art 5 s 7; 1974 c 64 s 6; 1975 c 141 s 1; 1981 c 211 s 32-34; 1983 c 340 s 12-14; 1984 c 382 s 4; 1985 c 147 s 1; 1987 c 337 s 43; 1991 c 325 art 9 s 1-9; 1992 c 540 art 2 s 13; 1994 c 425 s 9,10; 1998 c 328 s 1-3; 2001 c 131 s 12,13
61A.281 INVESTMENTS; SUBSIDIARIES. Subdivision 1. Special purpose corporations. A domestic life insurance company may organize and hold, or acquire and hold, more than 50 percent of the capital stock of any corporation organized under the laws of the United States or any state thereof, or the Dominion of Canada or any province thereof, or if approved by the commissioner, elsewhere, which is one or more of the following: (1) a corporation providing investment advisory, management or sales services to an investment company or to an insurance company; or (2) a data processing or computer service corporation; or (3) a real property holding, developing, managing or leasing corporation; or (4) a mortgage loan corporation engaged in the business of making, originating, purchasing, or otherwise acquiring or investing in, and servicing or selling or otherwise disposing of loans secured by mortgages on real property; or (5) a corporation whose business is owning and managing or leasing personal property; or (6) a corporation other than a bank or an insurance company, whose business has been approved by the commissioner as complementary or supplementary to the business of a domestic life insurance company. Provided, however, that such percentage of stock may, with the approval of the commissioner, be 50 percent or less. The limits contained in the other investment sections of the insurance code shall not apply to such holdings, provided that the aggregate cost of the investments made under this subdivision shall not exceed five percent of the domestic life insurance company's admitted assets. Subd. 2. General purpose corporations. A domestic life insurance company may organize and hold, or acquire and hold, more than 50 percent of the capital stock of any corporation organized under the laws of the United States or any state thereof, or the Dominion of Canada or any province thereof, or if approved by the commissioner, elsewhere, whether or not of the type of corporation enumerated in subdivision 1 or approved by the commissioner under subdivision 1. The limits contained in the other investment sections of Minnesota Statutes relating to insurance shall not apply to such holdings, provided that the aggregate cost of the investments made under authority of this subdivision shall not exceed ten percent of the capital and surplus of the domestic life insurance company. Subd. 3. Rules. The commissioner may issue such reasonable rules as may be appropriate to carry out the purposes of this section. Subd. 4. Other corporations acquired or organized, activities. A domestic life insurance company may organize or acquire a corporation domiciled in the United States and hold the capital stock thereof, provided that it shall continuously own more than 50 percent of such capital stock. The corporation so organized or acquired shall limit its activities to the investing of its assets in the same corporations, subject to the same ownership requirements, in which the insurance company may directly invest under subdivisions 1 and 2; provided that the sum of the total cost of the investments made by both it and the insurance company in corporations authorized under said subdivision 1 or said subdivision 2 shall not exceed the dollar amount which would have been applicable had the insurance company directly made such investments. The limits contained in the other investment sections of the insurance code shall not apply to any investment made by the insurance company under this subdivision, provided that the aggregate cost of the investments made by the insurance company hereunder and under said subdivisions 1 and 2 shall not exceed the sum of five percent of the insurance company's admitted assets and ten percent of the insurance company's capital and surplus. Subd. 5. Corporations organized to hold investments. A domestic life insurance company may organize one or more corporations domiciled in the United States and hold the capital stock of them, provided that it shall continuously own all of the capital stock and that the corporations so organized shall limit their activities to acquiring and holding investments, other than under subdivisions 1 to 4, that a domestic life insurance company may acquire and hold. The investments of these corporations are subject to the same restrictions and requirements as apply to domestic life insurance companies, including the applicable percentage limitations for investments in individual properties and entities and limitations on the aggregate amount to be invested in any investment category. For the purposes of calculating the amount of an investment held by the life insurance company, investments in the same property, entity, or investment category that are owned by the company and all corporations qualifying under this subdivision must be aggregated. History:  1969 c 494 s 17; 1971 c 816 s 3-5; 1985 c 248 s 70; 1991 c 325 art 9 s 10
61A.282 INVESTMENTS IN NAME OF COMPANY OR NOMINEE AND PROHIBITIONS. Subdivision 1. Requirements. A company's investments shall be held in its corporate name or its nominee name, except that: (a) Investments may be held in the name of a clearing corporation or of a custodian bank or in the name of the nominee of either under the following conditions: (1) The clearing corporation, custodian bank, or nominee must be legally authorized to hold the particular investment for the account of others; (2) Where the investment is evidenced by a certificate and held in the name of a custodian bank or the nominee of a custodian bank, a written agreement shall provide that certificates so deposited shall at all times be kept separate and apart from other deposits with the depository, so that at all times they may be identified as belonging solely to the company making the deposit; or (3) Where a clearing corporation is to act as depository, the investment may be merged or held in bulk in the clearing corporation's name, or in the name of its nominee, together with any other investments deposited with the clearing corporation by any other person, if a written agreement provides that adequate evidence of the deposit will be obtained and retained by the company or a custodian bank. As used in this subdivision, the term "custodian bank" means a bank or trust company licensed by the United States or any state thereof. (b) A company may participate, through a bank or trust company which is a member of the Federal Reserve System, in the Federal Reserve's book-entry system, if the records of the member bank or trust company at all times show that the investments are held for the company and/or for specific accounts of the company. (c) If an investment consists of an individual interest in a pool of obligations, or of a fractional interest in a single obligation, the certificate of participation or interest, or the confirmation of participation or interest in the investment, shall be held in the manner set forth in paragraph (a) or held in the name of the company. (d) Where an investment is not evidenced by a certificate, except as provided in paragraph (b), adequate evidence of the company's investment shall be obtained from the issuer or its transfer or recording agent and retained by the company, a custodian bank, or clearing corporation. Adequate evidence, for purposes of this section, shall mean a written receipt or other verification issued by the depository or issuer or a custodian bank which shows that the investment is held for the company. Transfers of ownership of investments held as described in paragraphs (a)(3), (b), and (c) may be evidenced by bookkeeping entry on the books of the issuer of the investment or its transfer or recording agent or the clearing corporation without physical delivery of certificates, if any, evidencing the company's investment. (e) Investments or cash posted as collateral or variation margin (other than initial margin amounts) in connection with qualified financial contracts, as defined in section 60B.03, subdivision 22, are not subject to this subdivision. Subd. 2. Lending of securities. A company may loan securities held by it under this chapter to a broker-dealer registered under the Securities and Exchange Act of 1934 or to a bank which is a member of the Federal Reserve System, under the following conditions: (a) The market value of loaned securities outstanding at any one time, excluding securities held in a separate account established pursuant to section 61A.14, subdivision 1, shall not exceed 40 percent of the company's admitted assets as of the December 31 immediately preceding. (b) The company is limited to no more than two percent of its admitted assets as of the December 31 immediately preceding being subject to lending of securities with any one borrower. (c) Each loan must be evidenced by a written agreement which provides: (1) that the loan will be fully collateralized by cash or obligations issued or guaranteed by the United States or an agency or an instrumentality thereof, and that the collateral will be adjusted each business day during the term of the loan to maintain the required collateral in the event of market value changes in the loaned securities or collateral; (2) that the loan may be terminated by the company at any time, and that the borrower must return the loaned securities or their equivalent within five business days after termination; (3) that the company has the right to retain the collateral or to use the collateral to purchase securities equivalent to the loaned securities if the borrower defaults under the terms of the agreement; and (4) that the borrower remains liable for any losses and expenses, not covered by the collateral, which are incurred by the company due to default. Subd. 3. Conflicts of interest. No officer, director, or member of any committee passing on investments shall borrow any of the funds, or become, directly or indirectly, liable as a surety or endorser for or on account of loans thereof to others, or receive for personal use any fee, brokerage, commission, gift or other consideration for, or on account of, any loan made by or on behalf of the company. History:  1969 c 494 s 18; 1981 c 211 s 35; 1982 c 555 s 4; 1986 c 313 s 3; 1986 c 444; 1994 c 485 s 25; 2011 c 61 s 5; 2014 c 198 art 4 s 6
61A.283 ADMITTED ASSETS. For the purpose of applying any investment limitation based on the amount of a domestic life insurance company's admitted assets, the term "admitted assets" has the meaning given in section 60A.02, subdivision 27, with an adjustment in the admitted asset figure to exclude amounts which on the December 31 immediately preceding the date the company acquires an investment are allocated to separate accounts. History:  1969 c 494 s 19; 1991 c 325 art 10 s 9
61A.284 INVESTMENTS; CAPITAL STOCK OF OTHER INSURANCE COMPANIES. Subdivision 1. Purchase of insurance company. A domestic life insurance company may acquire and hold all or part of the capital stock of another insurance company whether or not in the same line of insurance for cash or through the issuance of its own stock in payment of all or part of the purchase price. The limits contained in the other investment provisions shall not apply to these holdings providing the acquiring company secures the prior approval of the purchase agreement by the commissioner. Subd. 2. Organization of subsidiary insurance company. A domestic life insurance company may organize and hold all or part of the capital stock of another insurance company whether or not in the same line of insurance. The limits contained in the other investment provisions shall not apply to these holdings providing the organizing company secures the prior approval of the commissioner. Subd. 3. Investments in health maintenance organizations. An investment in a health maintenance organization may be deemed by a domestic life insurance company to be an investment under this section. History:  1981 c 211 s 36; 1990 c 538 s 11
61A.29 FOREIGN INVESTMENTS. Subdivision 1. Authorization. In addition to the Canadian investments permitted by this chapter, a domestic life insurance company may make foreign investments authorized by subdivision 2, subject to the limitations contained in subdivision 3. Investments authorized by this section are restricted to countries where the obligations of the sovereign government are rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization in the United States. All investments must be made as provided under foreign investment guidelines established and maintained by the company under section 60A.112. Subd. 2. Authorized investments. A company may invest in (i) foreign assets denominated in United States dollars; (ii) foreign assets denominated in foreign currency; and (iii) United States assets denominated in foreign currency. The investments may be made in any combination of the following: (a) Obligations of sovereign governments and political subdivisions thereof and obligations issued or fully guaranteed by a supranational bank or organization, other than those described in section 61A.28, subdivision 2, paragraph (e), provided that the obligations are rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization in the United States. For purposes of this section, "supranational bank" means a bank owned by a number of sovereign nations and engaging in international borrowing and lending. (b) Obligations of a foreign business entity, provided that the obligation (i) is rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization in the United States or by a similarly recognized statistical rating organization, as approved by the commissioner, in the country where the investment is made; or (ii) is rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners. (c) Stock or stock equivalents issued by a foreign entity if the stock or stock equivalents are regularly traded and subject to oversight by the government of the country in which the regular trading occurs. (d) Financial transactions for the sole purpose of managing the foreign currency risk of investments made under this subdivision, provided that the financial transactions are entered into under a detailed plan maintained by the company. For purposes of this paragraph, "financial transactions" include, but are not limited to, the purchase or sale of currency swaps, forward agreements, and currency futures. Subd. 3. Investment limitations. Investments authorized by subdivision 2 are subject to the following limitations: (a) A company shall not make an investment under this section if the investment causes the company's aggregate investments authorized under this section to exceed ten percent of its total admitted assets. (b) Investments made under subdivision 2 must be aggregated with United States investments in determining compliance with percentage concentration limitations, if any, contained in this chapter. (c) A company shall not invest in the obligations of one issuer under subdivision 2 in an amount greater than authorized for investments of the same class under this chapter. A company shall not invest more than two percent of its total admitted assets in the direct or guaranteed obligations of a sovereign government or political subdivision thereof, or of a supranational bank. History:  1967 c 395 art 2 s 29; 1969 c 494 s 20; 1981 c 211 s 37; 1983 c 340 s 15; 1991 c 325 art 9 s 11; 2001 c 131 s 14
61A.30 JOINT INVESTMENTS. No domestic life insurance company shall subscribe to or participate in any underwriting of the purchase or sale of securities or other property, enter into any transactions for the purchase or sale on account of the company jointly with any other person, firm, or corporation, nor enter into any agreement to withhold from sale any of its property, unless the disposition of the property shall be, at all times, within the control of its board of directors. Nothing contained herein shall be construed to invalidate or prohibit an agreement by two or more investors to join and share in the purchase of investments for bona fide investment purposes. In the investments secured by mortgage or deed of trust, provisions shall be made for a method of resolving any matters relating thereto as to which the investors are not in agreement. History:  1967 c 395 art 2 s 30; 1981 c 211 s 38
61A.31 REAL ESTATE HOLDINGS. Subdivision 1. Purposes. Except as provided in subdivisions 2, 3, and 4, every domestic life insurance company may acquire, hold and convey real property only for the following purposes and in the following manner: (1) such as shall have been mortgaged to it in good faith by way of security for loans previously contracted, or for moneys due; (2) such as shall have been conveyed to it in satisfaction of debts previously contracted in the course of its dealings; (3) such as shall have been purchased at sales on judgments, decrees or mortgages obtained or made for such debts; (4) such as shall have been subject to a contract for deed under which the company held the vendor's interest to secure the payment by the vendee. Subd. 2. Building projects. In order to promote and supplement public and private efforts to provide an adequate supply of decent, safe, and sanitary dwelling accommodations for persons of low and moderate income; to relieve unemployment; to alleviate the shortage of rental residences; and to assist in relieving the emergency in the housing situation in this country through investment of funds, any life insurance company may purchase or lease from any owner or owners (including states and political subdivisions thereof), real property in any state in which such company is licensed to transact the business of life insurance; and on any real property so acquired or on real property so located and acquired otherwise in the conduct of its business, such company may erect apartment, or other dwelling houses, not including hotels, but including accommodations for retail stores, shops, offices, and other community services reasonably incident to such projects; or, to provide such housing or accommodations, may construct, reconstruct, improve, or remove any buildings or other improvements thereon. Such company may thereafter own, improve, maintain, manage, collect or receive income from, sell, lease, or convey any such real property and the improvements thereon. A company may not invest in the building projects if the investment causes the company's aggregate investments under this subdivision to exceed ten percent of its total admitted assets. Subd. 3. Acquisition of property. Any domestic life insurance company may: (a) acquire real property or any interest in real property, including oil and gas and other mineral interests, in the United States or any state thereof, or in the Dominion of Canada or any province thereof, as an investment for the production of income, and hold, improve or otherwise develop, and lease, sell, and convey the same either directly or as a joint venturer or through a limited, limited liability, or general partnership in which the company is a partner or through a limited liability company in which the company is a member. A company may not invest in any real property asset other than property held for the convenience and accommodation of its business if the investment causes: (1) the company's aggregate investments in the real property assets to exceed ten percent of its admitted assets; or (2) the company's investment in any single parcel of real property to exceed one-half of one percent of its admitted assets; (b) acquire personal property in the United States or any state thereof, or in the Dominion of Canada or any province thereof, under lease or leases or commitment for lease or leases if: (1) either the fair value of the property exceeds the company's investment in it or the lessee, or at least one of the lessees, or a guarantor, or at least one of the guarantors, of the lease is a corporation with a net worth of $1,000,000 or more; and (2) the lease provides for rent sufficient to amortize the investment with interest over the primary term of the lease or the useful life of the property, whichever is less. A company may not invest in the personal property if the investment causes the company's aggregate investments in the personal property to exceed three percent of its admitted assets; (c) acquire and hold real estate (1) if the purpose of the acquisition is to enhance the sale value of real estate previously acquired and held by the company under this section and (2) if the company expects the real estate so acquired to qualify and be held by the company under paragraph (a) within five years after acquisition; and (d) not acquire real property under paragraphs (a) to (c) if the property is to be used primarily for agricultural, horticultural, ranch, mining, or church purposes. All real property acquired or held under this subdivision must be carried at a value equal to the lesser of (1) cost plus the cost of capitalized improvements, less normal depreciation, or (2) market value. Subd. 4. Convenience and accommodation of business. A company may acquire and hold real estate for the convenience and accommodation of its business. Without the prior approval of the Department of Commerce, a company may not invest in real estate authorized under this subdivision if the investment causes the company's aggregate investments under this subdivision to exceed five percent of its total admitted assets, except that a health service plan corporation operating under chapter 62C may not invest in real estate authorized under this subdivision if the investment causes the company's aggregate investments under this subdivision to exceed 25 percent of its total admitted assets. History:  1967 c 395 art 2 s 31; 1969 c 494 s 21-24; 1981 c 211 s 39,40; 1983 c 289 s 114 subd 1; 1983 c 340 s 16; 1984 c 655 art 1 s 92; 1991 c 325 art 9 s 12; 1995 c 214 s 15
61A.315 INVESTMENTS AND HOLDINGS; LIMITATIONS. The sum of the value of assets permitted to be acquired pursuant to sections 61A.31, subdivision 3 and 61A.28, subdivision 6, paragraphs (a) and (b) shall not exceed 30 percent of admitted assets as of the end of the preceding calendar year. History:   1981 c 211 s 41 
61A.39 COOPERATIVE LIFE AND CASUALTY COMPANIES. Subdivision 1. Cooperative plan. Every corporation, society, or association which issues a certificate or policy or makes an agreement with its members by which, upon the decease of a member, any money is to be paid to, or benefit conferred upon, the legal representatives or designated beneficiaries of such member, or reaching a certain age, to pay any money or benefit to the member, such money or benefit to be derived from voluntary donations, admission fees, dues, or assessments to be collected from its members or any class thereof, and which reserves the right to make any additional assessments, or without the consent of the certificate or policyholder to increase the premium named therein, shall be deemed to be engaged in the business of life insurance upon the cooperative or assessment plan. Every corporation which likewise agrees, in case of accident, sickness, or other physical disability, or reaching a certain age, to pay money or confer benefits likewise derived and issuing certificates or policies with similar conditions with reference to the payment of dues or assessments, shall be deemed to be engaged in the business of casualty insurance upon the cooperative or assessment plan, and shall, except as herein otherwise specified, be subject to the provisions of sections 61A.39 to 61A.42 and 61A.44 to 61A.50. Subd. 2. Continued corporate existence. Notwithstanding the repeal of sections 63.01, 63.011, and 63.02 to 63.35 pursuant to Laws 1983, chapter 104, section 1, any corporation, society or association formed or having existed under Laws 1933, chapter 241, whether or not it amended its articles of incorporation in accordance with Laws 1945, chapter 178, as amended by Laws 1951, chapter 257, and which has transformed itself into a cooperative life insurance company to engage in business under the cooperative plan, shall be and continue to exist as a corporation by virtue of the provisions hereof and may exercise and shall continue to have and to hold all the rights, privileges and powers which it had, prior to the repeal of such sections, including those derived under Laws 1945, chapter 178, section 1, as amended by Laws 1951, chapter 257, section 2. History:  1967 c 395 art 2 s 39; 1984 c 602 s 1; 1986 c 444
61A.40 QUALIFICATIONS FOR LICENSE; NUMBER OF MEMBERS. No corporation not now authorized to transact business in this state shall be licensed to transact the business of life or casualty insurance, or both, upon the cooperative or assessment plan, until at least 300 persons eligible to membership have made individual applications, in writing, containing warranties of age, health, and other required conditions of membership, and the corporation has on deposit with the commissioner, as security for all its policyholders, stocks or bonds of this state or of the United States, or bonds of any of the municipalities of this state, or personal obligations secured by first mortgage on real estate within this state, worth, exclusive of buildings, the amount of the lien, and bearing interest of not less than three percent per annum, to an amount the actual market value of which, exclusive of interest, shall never be less than $100,000; provided, that any corporation which has heretofore procured and filed with the commissioner a part of the total number of applications required by law shall only be required to deposit securities of the market value of $5,000; and provided, that a corporation that confines its membership exclusively to the members of volunteer fire departments shall be required to have not less than 100 individual applications, in writing, from persons eligible to membership and the sum of at least $1,000, which amount shall be liable only for death or indemnity claims made under its policy or membership certificate contracts. History:  1967 c 395 art 2 s 40; 1978 c 465 s 10
61A.41 RESERVE FUND; RECIPROCAL PROVISIONS. Every domestic cooperative life or casualty corporation, society or association, except a fraternal benefit society, which issues a certificate or policy, or makes an agreement with its members, by which, upon the decease of a member, more than $200 is to be paid to, or benefit conferred upon, the legal representatives or designated beneficiary of such member, shall set aside ten percent of its gross premium receipts or assessments each year, as a reserve, until the same, together with any reserve already accumulated, shall amount to the sum of $25,000. Every domestic cooperative or assessment company transacting the business of life and health and accident insurance, which does not issue health and accident policies providing indemnity for disability from accident or disease in excess of $750 on account of any one accident or illness, nor issues policies providing indemnity for disability from accident or illness in excess of $750 on account of any one accident or illness and death indemnity of more than $200, shall set aside as a reserve ten percent of its gross premium receipts or assessments each year until the same, together with any reserve already accumulated, shall amount to $2,000, and shall thereafter set aside as a reserve five percent of its gross premium receipts or assessments each year until the same, together with any reserve already accumulated, shall amount to $25,000. Every domestic cooperative or assessment life insurance corporation, society or association, which issues a certificate or policy, or makes an agreement with its members, by which, upon the decease of a member, a funeral benefit is to be paid or funeral service is to be furnished, not exceeding $200 in amount or value, shall set aside ten percent of its gross premium receipts or assessments each year as a reserve, until the same, together with any reserve already accumulated, shall amount to the sum of $5,000, which reserve fund, accumulated as herein provided, shall be deposited with the commissioner in accordance with section 60A.10, subdivision 4, for the benefit of all its policyholders. This deposit may consist of securities of the class in which insurance companies are authorized to invest under the laws of this state, and the company depositing the same shall be entitled to the income derived from the securities. No foreign insurance company upon the cooperative or assessment plan shall be permitted to transact business in this state unless it makes the deposit hereinbefore required of domestic companies, except that where, by the laws of the state under which the foreign company is organized, it is permitted to, and actually does, maintain for the benefit of all its policyholders a deposit with some proper officer of that state of an amount equal to the deposit required by sections 61A.39 to 61A.42 and 61A.44 to 61A.50; the deposit with the other state shall be a sufficient compliance with the provisions of this section. No deposit of securities, other than that herein provided for, shall be required of any such cooperative or assessment company. Any company transacting the business of life insurance upon the cooperative or assessment plan, and creating and maintaining a greater reserve than herein provided for, may elect, by written stipulation, filed with the commissioner, to keep on deposit with the commissioner in accordance with section 60A.10, subdivision 4, its entire reserve and special benefit funds, other than mortuary funds; and thereafter the entire reserve and special benefit funds shall be deposited with the commissioner in accordance with section 60A.10, subdivision 4, in securities of like character and upon the same terms as provided herein for the deposit of the reserve required by this section. History:  1967 c 395 art 2 s 41; 1974 c 425 s 5; 1992 c 564 art 1 s 54
61A.42 PAYMENTS; LIENS; ASSESSMENTS; POLICIES TO BE LABELED. No cooperative or assessment life insurance company shall hereafter issue any policy in this state which does not provide for the payment of a fixed minimum sum, which may be increased each year the insurance remains in force, in the amounts to be provided in the policy. Any agreement or bylaw providing for the placing of a lien upon such policy, except for nonpayment of premium or assessment, and any agreement or bylaw providing for the payment of a less sum than the minimum sum specified in the contract, because of the failure of the corporation to receive or collect the amount in the contract by assessment upon the surviving members, shall be void. Nothing in this section contained shall be so construed as to render any member liable for more than one assessment for each death occurring during the period of membership, unless otherwise specified in the policy. All policies issued by the company shall contain a title including the word "assessment" on the face and on the back of the policy correctly describing the same. This section shall not apply to any existing domestic company until it has been in existence for four years. History:  1967 c 395 art 2 s 42; 1986 c 444
61A.43 ACCUMULATIONS; AMENDMENT TO ARTICLES OR BYLAWS. Any insurance company transacting the business of life or casualty insurance upon the cooperative or assessment plan under any law of this state may, upon so providing in its articles or bylaws, elect to ascertain and apportion to its outstanding policies or certificates the respective accumulations upon each such policy or certificate, and to carry to the credit of each such policy or certificate the future net premiums or assessments and the accretions thereto, less its equitable contribution to the death claims and other benefits, and that the premiums or assessments upon any such policy or certificate may, upon such credit becoming exhausted, be increased as may be necessary to meet its share of death claims and other benefits, and that the holder of any such policy or certificate may be granted extended or paid-up insurance or the right to convert into any other form of policy or insurance then being issued by such company and to have the credit on such former policy or certificate applied to such new policy or insurance. When making the ascertainment and apportionment, account shall be taken of the premiums or assessments theretofore paid and of the death claims and other benefits which should be borne by the policy or certificate, of the interest earnings and other accretions to the accumulated funds, and of other matters which should equitably be taken into consideration for the purposes of the apportionment. Subject to such adjustment as shall be equitable, the experience of the company, or any table of mortality recognized for the purpose of insurance and any law of this state, may be used as a basis for the ascertainment and apportionment herein authorized; provided, that any company availing itself of the provisions of this section shall, in its articles or bylaws, specify the table of mortality and rate of interest which are to be the basis for the charges thereafter to be made to the policies or certificates aforesaid; and, provided, further, that when any table of mortality is specified in any policy that table shall be followed. History:   1967 c 395 art 2 s 43 
61A.44 LIMITATION ON EXPENSES; LIFE INSURANCE. Every corporation, as described in section 61A.39, now or hereafter organized or admitted to transact the business of life insurance in this state, shall set aside and appropriate exclusively to its mortuary or benefit funds, including reserve or special benefit funds, not less than 65 percent of all premium receipts and all interest earnings thereon upon such life insurance policies that shall have been in force one year or more, and the entire amount of receipts upon postmortem assessment certificates, except the expense dues and charges therein provided. No such funds heretofore or hereafter so appropriated to such mortuary or benefit fund, including reserve or special benefit funds, shall ever be used for the expense of conducting such business; provided, that every such corporation which issues a certificate or policy or makes an agreement with its members, by which, upon the decease of a member, a funeral benefit is to be paid, or funeral service is to be furnished, not exceeding $200 in amount or value, and which pays no accident, disability, or other benefits, shall set aside and appropriate exclusively to its mortuary or benefit funds, including reserve or special benefit funds, not less than 60 percent of all premium receipts upon such insurance policies that shall have been in force one year or more, and the entire amount of receipts upon postmortem assessment certificates, except the expense dues and charges therein provided. No such funds heretofore or hereafter so appropriated to such mortuary or benefit funds, including reserve or special benefit funds, shall ever be used for the expense of conducting such business. The net accretions to the funds enumerated in this section derived from interest, rents, or other sources shall also be set aside and appropriated exclusively to the fund producing the net accretions. History:   1967 c 395 art 2 s 44 
61A.45 LIMITATION ON EXPENSES; COMPANIES WITH RESERVE DEPOSITS. No company, as described in section 61A.39, transacting the business of casualty or health insurance in this state shall incur, lay out, or expend, in any one calendar year, as and for the expenses of conducting such business, more than its application or membership fees and 40 percent of its total premiums or assessments. When any such company shall have on deposit with the commissioner a reserve of $25,000, as provided by law, then and thereafter the company may expend, in addition to the 40 percent, the interest earnings on the reserve fund and the interest on any additional surplus funds it may accumulate. Any officer of any corporation violating, or consenting to the violation of, this section or section 61A.44 shall be guilty of a gross misdemeanor. History:   1967 c 395 art 2 s 45 
61A.46 NET RATES; RESERVE FUND; LIMITATION OF EXPENSES. No corporation organized to transact the business of life insurance upon the cooperative or assessment plan, and no such corporation not already admitted to transact business in this state, shall be licensed to transact such life insurance business in this state unless it shall, by its charter, bylaws and policy or certificate contracts, provide for and actually charge and collect from its members, for and on account of the insurance furnished to them, net rates which are at least equal to the rates known as the national fraternal congress rates, with four percent interest. When any such corporation has adopted the use of a net rate not less than the national fraternal congress table of mortality and interest at the rate of four percent, on the full preliminary term plan, and shall set aside the net premium to its mortuary or benefit funds, including reserve or special benefits, for the use and benefit of its members, such corporation shall, on all premiums or assessments collected from and after January 1, 1927, be exempt from the provisions of sections 61A.41 and 61A.44; but it shall keep on deposit, for the use and benefit of all its policyholders, an amount equal to the value of its individual policies, as shown by its annual statement each year, with the commissioner, until the same shall amount to the sum of $25,000. The accretions to the various funds derived from interest, rents, or other sources, less expense incidental to investment supervision, shall also be set aside and appropriated to the fund producing the accretions. Gain from lapses, savings in mortality, surrenders, and changes shall revert to the expense fund. Policies issued by such corporation may contain a provision that in the event of default in premium payments, after premiums shall have been paid for three years, shall secure to the owner of the policy a stipulated form of insurance, the net value of which shall be at least equal to the reserve at the date of default on the policy and on any dividend additions thereto, specifying the mortality table and the rate of interest adopted for computing such reserve, less a sum not more than 2-1/2 percent of the amount insured by the policy, and of any existing dividend additions thereto, and less any existing indebtedness to the company on the policy; and that the policy may be surrendered to the company, at its home office, within one month from date of default for a specified cash value at least equal to the sum which would otherwise be available for the purchase of insurance, and shall stipulate that the company may defer payment for not more than six months after the application therefor is made. This provision shall not be required in term insurance of 20 years or less. Such corporation shall value its policies at the end of each calendar year and show in its annual statement as a reserve liability the amount of such valuation. If infantile insurance is written, it may be valued on the table known as Craig's extension below age ten. If any corporation, society or association operating the business of life or casualty insurance on the assessment plan under any law of this state shall reincorporate under section 61A.39 and in connection with such reincorporation shall provide in its articles or bylaws that this section shall not apply to any class or group of assessment policies in force at the time that such reincorporation becomes effective, then this section shall not apply to such policies; provided that such corporation, society or association shall, in all other operations and as to all other policies, be subject to the provisions of sections 61A.39 to 61A.42 and sections 61A.44 to 61A.50. History:   1967 c 395 art 2 s 46 
61A.47 REINSURANCE OR CONSOLIDATION. Any corporation, association, or society organized or authorized to transact business under the provisions of sections 61A.39 to 61A.42 and 61A.44 to 61A.50 may, by contract of reinsurance, assume the risks of any other similar corporation, association, or society engaged in the business of life or casualty insurance, or both, only on the following conditions: (1) that both the corporations, associations, or societies which propose to enter into the reinsurance contract, shall be, upon the date of reinsurance, duly authorized under the provisions of sections 61A.39 to 61A.42 and 61A.44 to 61A.50 to transact business in this state; (2) that the contract of reinsurance shall have previously been submitted to the commissioner and the attorney general and received the approval of the commissioner duly endorsed thereon; (3) that the corporation, association, or society, which proposes to reinsure and retire, shall have been thoroughly examined by the commissioner within six months of the date of the proposed consolidation or reinsurance; provided, that, in the judgment of the commissioner, the consolidation or reinsurance can in no way impair the solvency of the corporation, association, or society which proposes to reinsure and assume the business and affairs of the corporation, association, or society contemplating reinsurance and retirement; (4) that the contract of reinsurance shall have been approved by a majority vote of all the members of the corporation, association, or society, which proposes to reinsure and retire, present in person or by proxy, at any regular meeting thereof, or at any special meeting thereof called to consider the same; and, that a written or printed notice of the purpose of the corporation, association, or society to reinsure shall have been mailed to each of its members at least 30 days prior to the date fixed for the meeting. When the members of any such corporation, association, or society shall have so voted to reinsure and retire, its officers and the officers of the corporation, association, or society which proposes to assume the risks and other obligations are hereby authorized to enter into and consummate the contract of reinsurance as submitted and approved and to do and perform all other acts necessary to the final and complete consolidation or reinsurance. The retiring corporation, association, or society shall turn over all its property, securities, moneys, and other assets to the corporation, association, or society reinsuring and assuming its obligations, to become the sole and absolute property thereof. The actual and reasonable expenses and costs incident to proceedings under the provisions of this section may be paid by the companies so consolidating or reinsuring, and an itemized and verified statement of these expenses, together with proper vouchers for each of the same, shall be filed with the commissioner. No officer of any such company, nor any employee of the state, shall receive any compensation, gratuity, employment, or other promise or thing of value, directly or indirectly, for in any matter aiding, promoting, or assisting in the consolidation or reinsurance. Any officer or director of any company which is a party to the agreement of reinsurance herein provided for, who shall receive any compensation or gratuity for aiding or promoting or consenting to the contract, shall be guilty of theft; and any other person guilty of willfully violating, or consenting to the willful violation of, the provisions of sections 61A.39 to 61A.42 and 61A.44 to 61A.50, shall be guilty of a gross misdemeanor. History:   1967 c 395 art 2 s 47 
61A.48 CHANGE TO LEGAL RESERVE OR LEVEL PREMIUM COMPANIES. Any corporation, association, or society, as described in section 61A.39, may, with the written consent of the commissioner, upon a majority vote of its governing body, amend its articles of incorporation and bylaws in such manner as to transform itself into a legal reserve or level premium insurance company and, upon so doing and upon procuring from the commissioner a certificate of authority, as provided by law, to transact business in this state as a legal reserve or level premium company, shall incur the obligations and enjoy the benefits thereof, the same as though originally thus incorporated, and this corporation, under its charter, as amended, shall be a continuation of the original corporation, and the officers thereof shall serve through their respective terms, as provided in the original charter, but their successors shall be elected and serve as in the amended articles provided; but the amendment or reincorporation shall not affect existing suits, rights, or contracts. Any corporation, association, or society so reincorporated to transact the business of life insurance, shall, unless a higher method of valuation be provided for in its policy, or certificates of membership previously written, value its assessment policies or certificates of membership previously written as yearly renewable term policies, according to the standard of valuation of life insurance policies prescribed by the laws of this state. History:   1967 c 395 art 2 s 48 
61A.50 APPLICATION. Section 60A.16, and all other laws and parts of laws, in so far as they may be inconsistent with sections 61A.39 to 61A.42 and 61A.44 to 61A.50, shall not apply to corporations transacting the business of life or casualty insurance solely upon the cooperative or assessment plan, as defined in sections 61A.39 to 61A.42 and 61A.44 to 61A.50. History:   1967 c 395 art 2 s 50 
61A.51 INSOLVENCY. In case any cooperative or assessment life, endowment, or casualty insurance association or society is adjudged insolvent, the balance of its reserve fund, if any, after payment of claims and other indebtedness, shall be paid to the commissioner who shall pay it into the state treasury. History:  1967 c 395 art 2 s 51; 1986 c 444
61A.52 RESERVE REQUIRED. No casualty company or association organized under the cooperative or assessment laws of this state not having a reserve of at least $25,000 on deposit with the commissioner shall issue policies or contracts providing for the payment of endowments of any kind. History:   1967 c 395 art 2 s 52 
61A.53 DEFINITIONS. Subdivision 1. Applicability. For purposes of sections 61A.53 to 61A.60, the terms defined in this section have the meanings given. Subd. 2. Replacement. "Replacement" means any transaction in which new life insurance or a new annuity is to be purchased, and it is known or should be known to the proposing agent or broker or to the proposing insurer if there is no agent, that by reason of the transaction, existing life insurance or annuity has been or is to be: (1) lapsed, forfeited, surrendered, or otherwise terminated; (2) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; (3) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; (4) reissued with any reduction in cash value; or (5) pledged as collateral or subjected to borrowing, whether in a single loan or under a schedule of borrowing over a period of time for amounts in the aggregate exceeding 25 percent of the loan value set forth in the policy. Subd. 3. Conservation. "Conservation" means any attempt by the existing insurer or its agent or broker to dissuade a policy owner or contract holder from the replacement of existing life insurance or annuity. Conservation does not include routine administrative procedures such as late payment reminders, late payment offers, or reinstatement offers. Subd. 4. Direct-response sale. "Direct-response sale" means any sale of life insurance or annuity where the insurer does not use an agent in the sale or delivery of the policy or contract. Subd. 5. Existing insurer. "Existing insurer" means the insurance company whose policy or contract is or will be changed or terminated in such a manner as described within the definition of "replacement." Subd. 6. Existing life insurance or annuity. "Existing life insurance or annuity" means any life insurance or annuity in force, including life insurance under a binding or conditional receipt or a life insurance policy or annuity contract that is within an unconditional refund period. Subd. 7. Replacing insurer. "Replacing insurer" means the insurance company that issues or proposes to issue a new policy or contract which is a replacement of existing life insurance or annuity. History:   1996 c 446 art 1 s 13 
61A.54 EXEMPTIONS. Unless otherwise specifically included, sections 61A.53 to 61A.60 do not apply to transactions involving: (1) credit life insurance; (2) group life insurance or group annuities; (3) an application to the existing insurer that issued the existing life insurance or annuity, where a contractual change or a conversion privilege is being exercised; (4) proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company; or (5) transactions where the replacing insurer and the existing insurer are the same, or are subsidiaries or affiliates under common ownership or control; provided, however, that agents or brokers proposing replacement shall comply with section 61A.55, subdivision 1. History:   1996 c 446 art 1 s 14 
61A.55 DUTIES OF AGENTS AND BROKERS. Subdivision 1. Submission to insurer. Each agent or broker who initiates the application shall submit to the insurer to which an application for life insurance or annuity is presented, with or as part of each application: (1) a statement signed by the applicant as to whether replacement of existing life insurance or annuity is involved in the transaction; and (2) a signed statement as to whether the agent or broker knows replacement is or may be involved in the transaction. Subd. 2. Replacement information. Where a replacement is involved, the agent or broker shall: (1) present to the applicant, not later than at the time of taking the application, a "notice regarding replacement" in the form as described in section 61A.60, subdivision 1, or other substantially similar form approved by the commissioner. The notice shall be fully completed and signed by both the applicant and the agent or broker and left with the applicant. The completed notice must list all existing life insurance and annuity to be replaced, properly identified by name of insurer, the insured, and contract number. If a contract number has not been assigned by the existing insurer, alternative identification, such as an application or receipt number, shall be listed; (2) leave with the applicant the original or a copy of any written or printed communications used for presentation to the applicant; and (3) submit to the replacing insurer with the application a copy of the fully completed and signed replacement notice provided under this subdivision. Subd. 3. Materials used to dissuade replacement. Each agent or broker who uses written or printed communications in a conservation shall leave with the applicant the original or a copy of the communications. History:   1996 c 446 art 1 s 15 
61A.56 DUTIES OF ALL INSURERS. Each insurer shall: (1) inform its field representatives or other personnel responsible for compliance with sections 61A.53 to 61A.60 of the requirements of those sections; and (2) require with or as a part of each completed application for life insurance or annuity a statement signed by the applicant as to whether the proposed insurance or annuity will replace existing life insurance or annuity. History:   1996 c 446 art 1 s 16 
61A.57 DUTIES OF INSURERS THAT USE AGENTS OR BROKERS. Each insurer that uses an agent or broker in a life insurance or annuity sale shall: (a) Require with or as part of each completed application for life insurance or annuity, a statement signed by the agent or broker as to whether the agent or broker knows replacement is or may be involved in the transaction. (b) Where a replacement is involved: (1) require from the agent or broker with the application for life insurance or annuity, a copy of the fully completed and signed replacement notice provided the applicant under section 61A.55. The existing life insurance or annuity must be identified by name of insurer, insured, and contract number. If a number has not been assigned by the existing insurer, alternative identification, such as an application or receipt number, must be listed; and (2) send to each existing insurer a written communication advising of the replacement or proposed replacement and the identification information obtained under this section. This written communication must be made within five working days of the date that the application is received in the replacing insurer's home or regional office, or the date the proposed policy or contract is issued, whichever is sooner. (c) The replacing insurer shall maintain evidence of the "notice regarding replacement" and a replacement register, cross-indexed, by replacing agent and existing insurer to be replaced. Evidence that all requirements were met shall be maintained for at least six years. (d) The replacing insurer shall provide in its policy or contract, or in a separate written notice that is delivered with the policy or contract, that the applicant has a right to an unconditional refund of all premiums paid, which right may be exercised within a period of 30 days beginning from the date of delivery of the policy. History:  1996 c 446 art 1 s 17; 2008 c 344 s 8
61A.58 DUTIES OF INSURERS WITH RESPECT TO DIRECT RESPONSE SALES. (a) If in the solicitation of a direct response sale, the insurer did not propose the replacement, and a replacement is involved, the insurer shall send to the applicant with the policy or contract a replacement notice as described in section 61A.60, subdivision 2, or other substantially similar form approved by the commissioner. (b) If the insurer proposed the replacement, it shall: (1) provide to applicants or prospective applicants with or as a part of the application a replacement notice as described in section 61A.60, subdivision 2, or other substantially similar form approved by the commissioner; (2) request from the applicant with or as part of the application, a list of all existing life insurance policies or annuity contracts to be replaced and properly identified by name of insurer and insured; and (3) comply with the requirements of section 61A.57, paragraph (b), clause (2), if the applicant furnishes the names of the existing insurers, and the requirements of section 61A.57, paragraphs (c) and (d), except that it need not index the replacement register by replacing agent. History:   1996 c 446 art 1 s 18 
61A.59 ENFORCEMENT; EFFECT OF COMPLIANCE. (a) An agent, broker, or insurer shall not recommend the replacement or conservation of an existing policy or contract by use of a substantially inaccurate presentation or comparison of an existing policy's or contract's premiums and benefits or dividends and values, if any. An insurer, agent, representative, officer, or employee of the insurer failing to comply with the requirements of sections 61A.53 to 61A.60 is subject to such penalties as may be appropriate under this chapter. (b) Patterns of action by policyholders or contract holders who purchase replacing policies or contracts from the same agent or broker, after indicating on applications that replacement is not involved, are prima facie evidence of the agent's or broker's knowledge that replacement was intended in connection with the sale of those policies, and the patterns of action are prima facie evidence of the agent's or broker's intent to violate sections 61A.53 to 61A.60. (c) Sections 61A.53 to 61A.60 do not prohibit the use of additional material other than that which is required that does not violate those sections or any other statute or rule. (d) Compliance by an insurer, agent, or broker with sections 61A.53 to 61A.60 does not limit any cause of action or other remedies that the insured may otherwise have against an insurer, agent, or broker. In a proceeding in which the insured's knowledge or understanding is an issue, compliance with those sections may be admitted as evidence on that issue, but shall not be conclusive. History:   1996 c 446 art 1 s 19 
61A.60 REQUIRED REPLACEMENT NOTICE AND FORM. Subdivision 1. Notice form; agent sales. The notice required where sections 61A.53 to 61A.60 refer to this subdivision is as follows:     REPLACEMENT is any transaction where, in connection with the purchase of New Insurance or a New Annuity, you LAPSE, SURRENDER, CONVERT to Paid-up Insurance, Place on Extended Term, or BORROW all or part of the policy loan values on an existing insurance policy or an annuity. (See reverse side for DEFINITIONS.)  In connection with the purchase of this insurance or annuity, if you have REPLACED or intend to REPLACE your present life insurance coverage or annuity(ies), you should be certain that you understand all the relevant factors involved.   You should BE AWARE that you may be required to provide EVIDENCE OF INSURABILITY and    (1) If your HEALTH condition has CHANGED since the application was taken on your present policies, you may be required to pay ADDITIONAL PREMIUMS under the NEW POLICY, or be DENIED coverage.   (2) Your present occupation or activities may not be covered or could require additional premiums.    (3) The INCONTESTABLE and SUICIDE CLAUSE will begin anew in a new policy. This could RESULT in a CLAIM under the new policy BEING DENIED that would otherwise have been paid.    (4) Current law MAY NOT REQUIRE your present insurer(s) to REFUND any premiums.   (5) It is to your advantage to OBTAIN INFORMATION regarding your existing policies or annuity contracts from the insurer or agent from whom you purchased the policy or annuity contract.   (If you are purchasing an annuity, clauses (1), (2), and (3) above would not apply to the new annuity contract.)   THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM ......................... INSURANCE CO. MAY REPLACE OR ALTER EXISTING LIFE INSURANCE POLICY(IES) OR ANNUITY CONTRACT(S).   The following policy(ies) or annuity contract(s) may be replaced as a result of this transaction:        Insuredas it appears on the policyor contract    .    .    .    .    Insured birthdate    .    .    .    .         The proposed policy or contract is:    .    $ .   type of policy- or contract-generic name  face amount   .   signature of applicant  date   .   address of applicant city state  I certify that this form was given to and completed by   .   (applicant-please print or type)  prior to taking an application and that I am leaving a signed copy for the applicant.   .   agent's signature  date   .    address   .    city state    Note important statement on reverse side  Subd. 2. Notice form; direct response sales. The notice required where sections 61A.53 to 61A.60 refer to this subdivision is as follows: IMPORTANT NOTICE REQUIRED BY MINNESOTA INSURANCE LAW     REPLACEMENT is any transaction where, in connection with the purchase of New Insurance or a New Annuity, you LAPSE, SURRENDER, CONVERT to Paid-up Insurance, Place on Extended Term, or BORROW all or part of the policy loan values on an existing insurance policy or an annuity. (See reverse side for DEFINITIONS.)  In connection with the purchase of this insurance or annuity, if you have REPLACED or intend to REPLACE your present life insurance coverage or annuity(ies), you should be certain that you understand all the relevant factors involved.   You should BE AWARE that you may be required to provide Evidence of insurability and    (1) If your HEALTH condition has CHANGED since the application was taken on your present policies, you may be required to pay ADDITIONAL PREMIUMS under the NEW POLICY, or be DENIED coverage.   (2) Your present occupation or activities may not be covered or could require additional premiums.    (3) The INCONTESTABLE and SUICIDE CLAUSE will begin anew in a new policy. This could RESULT in a CLAIM under the new policy BEING DENIED that would otherwise have been paid.    (4) Current law DOES NOT REQUIRE your present insurer(s) to REFUND any premiums.   (5) It may be to your advantage to OBTAIN INFORMATION regarding your existing policies or annuity contracts from the insurer or agent from whom you purchased the policy or annuity contract.    (If an annuity is being purchased, Items (1), (2) and (3) above would not apply to the new contract.)  If after studying the information made available to you, you decide to replace your existing life insurance or annuity with our policy or annuity contract, you are urged not to take action to terminate or alter your existing coverage or annuity(ies) until after you have been issued the new policy or annuity contract, examined it and found it to be acceptable to you. If you should terminate or otherwise materially alter your existing coverage or annuity(ies) and fail to qualify for the life insurance for which you have applied, you may find yourself unable to purchase other life insurance or be able to purchase it only at substantially higher rates.    INSURER'S MAILING DATE: .    Subd. 3.Definitions. The following definitions must appear on the back of the notice forms provided in subdivisions 1 and 2: DEFINITIONS PREMIUMS: Premiums are the payments you make in exchange for an insurance policy or annuity contract. They are unlike deposits in a savings or investment program, because if you drop the policy or contract, you might get back less than you paid in. CASH SURRENDER VALUE: This is the amount of money you can get in cash if you surrender your life insurance policy or annuity. If there is a policy loan, the cash surrender value is the difference between the cash value printed in the policy and the loan value. Not all policies have cash surrender values. LAPSE: A life insurance policy may lapse when you do not pay the premiums within the grace period. If you had a cash surrender value, the insurer might change your policy to as much extended term insurance or paid-up insurance as the cash surrender value will buy. Sometimes the policy lets the insurer borrow from the cash surrender value to pay the premiums. SURRENDER: You surrender a life insurance policy when you either let it lapse or tell the company you want to drop it. Whenever a policy has a cash surrender value, you can get it in cash if you return the policy to the company with a written request. Most insurers will also let you exchange the cash value of the policy for paid-up or extended term insurance. CONVERT TO PAID-UP INSURANCE: This means you use your cash surrender value to change your insurance to a paid-up policy with the same insurer. The death benefit generally will be lower than under the old policy, but you will not have to pay any more premiums. PLACE ON EXTENDED TERM: This means you use your cash surrender value to change your insurance to term insurance with the same insurer. In this case, the net death benefit will be the same as before. However, you will only be covered for a specified period of time stated in the policy. BORROW POLICY LOAN VALUES: If your life insurance policy has a cash surrender value, you can almost always borrow all or part of it from the insurer. Interest will be charged according to the terms of the policy, and if the loan with unpaid interest ever exceeds the cash surrender value, your policy will be surrendered. If you die, the amount of the loan and any unpaid interest due will be subtracted from the death benefits. EVIDENCE OF INSURABILITY: This means proof that you are an acceptable risk. You have to meet the insurer's standards regarding age, health, occupation, etc., to be eligible for coverage. INCONTESTABLE CLAUSE: This says that after two years, depending on the policy or insurer, the life insurer will not resist a claim because you made a false or incomplete statement when you applied for the policy. For the early years, though, if there are wrong answers on the application and the insurer finds out about them, the insurer can deny a claim as if the policy had never existed. SUICIDE CLAUSE: This says that if you commit suicide after being insured for less than two years, depending on the policy and insurer, your beneficiaries will receive only a refund of the premiums that were paid. Subd. 4. Printing of notices. The notices in subdivisions 1 and 2 must be reproduced in their entirety on one side of an 8-1/2 by 11 inch sheet of plain paper. The definitions contained in subdivision 3 must be printed on the reverse side. The insurer may print its legal name in the space provided. History:  1996 c 446 art 1 s 20; 1999 c 177 s 35
61A.70 APPLICABILITY AND SCOPE. Sections 61A.70 to 61A.745 apply to all group and individual life insurance policies and certificates except: (1) variable life insurance; (2) individual and group annuity contracts; (3) credit life insurance; or (4) life insurance policies with no illustrated death benefits on any individual exceeding $10,000. History:   2007 c 104 s 6 
61A.705 DEFINITIONS. For the purposes of sections 61A.70 to 61A.745: (a) "Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. (b) "Contract premium" means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration. (c) "Currently payable scale" means a scale of nonguaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days. (d) "Disciplined current scale" means a scale of nonguaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards: (1) are consistent with all provisions of sections 61A.70 to 61A.745; (2) limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred; (3) do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and (4) do not permit assumed expenses to be less than minimum assumed expenses. (e) "Generic name" means a short title descriptive of the policy being illustrated such as "whole life," "term life," or "flexible premium adjustable life." (f) "Guaranteed elements" and "nonguaranteed elements" are defined as follows: (1) "guaranteed elements" means the premiums, benefits, values, credits, or charges under a policy of life insurance that are guaranteed and determined at issue; and (2) "nonguaranteed elements" means the premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed or not determined at issue. (g) "Illustrated scale" means a scale of nonguaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of: (1) the disciplined current scale; or (2) the currently payable scale. (h) "Illustration" means a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined in clauses (1) to (3): (1) "basic illustration" means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements; (2) "supplemental illustration" means an illustration furnished in addition to a basic illustration that meets the applicable requirements of sections 61A.70 to 61A.745, and that may be presented in a format differing from the basic illustration, but may only depict a scale of nonguaranteed elements that is permitted in a basic illustration; and (3) "in-force illustration" means an illustration furnished at any time after the policy that it depicts has been in force for one year or more. (i) "Illustration actuary" means an actuary meeting the requirements of section 61A.74 who certifies to illustrations based on the standard of practice adopted by the Actuarial Standards Board. (j) "Lapse-supported illustration" means an illustration of a policy form failing the test of self-supporting as defined in sections 61A.70 to 61A.745, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100 percent policy persistency thereafter. (k)(1) "Minimum assumed expenses" means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following: (i) fully allocated expenses; (ii) marginal expenses; and (iii) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the National Association of Insurance Commissioners or by the commissioner. (2) Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used. (l) "Nonterm group life" means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where: (1) every plan of coverage was selected by the employer or other group representative; (2) some portion of the premium is paid by the group or through payroll deduction; and (3) group underwriting or simplified underwriting is used. (m) "Policy owner" means the owner named in the policy or the certificate holder in the case of a group policy. (n) "Premium outlay" means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket. (o) "Self-supporting illustration" means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election. History:   2007 c 104 s 7 
61A.71 POLICIES TO BE ILLUSTRATED. (a) Each insurer marketing policies to which sections 61A.70 to 61A.745 are applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on January 1, 2008, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after January 1, 2008, the identification must be made at the time of filing. Any previous identification may be changed by notice to the commissioner. (b) If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited. (c) If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with sections 61A.70 to 61A.745 is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered. (d) Potential enrollees of nonterm group life subject to sections 61A.70 to 61A.745 shall be furnished a quotation with the enrollment materials. The quotation must show potential policy values for sample ages and policy years on a guaranteed and nonguaranteed basis appropriate to the group and the coverage. This quotation must not be considered an illustration for purposes of sections 61A.70 to 61A.745, but all information provided shall be consistent with the illustrated scale. A basic illustration must be provided at delivery of the certificate to enrollees for nonterm group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any nonterm group life enrollee who requests it. History:   2007 c 104 s 8 
61A.715 GENERAL RULES AND PROHIBITIONS. (a) An illustration used in the sale of a life insurance policy must satisfy the applicable requirements of sections 61A.70 to 61A.745, be clearly labeled "life insurance illustration," and contain the following basic information: (1) name of insurer; (2) name and business address of producer or insurer's authorized representative, if any; (3) name, age, and sex of proposed insured, except where a composite illustration is permitted under sections 61A.70 to 61A.745; (4) underwriting or rating classification upon which the illustration is based; (5) generic name of policy, the company product name, if different, and form number; (6) initial death benefit; and (7) dividend option election or application of nonguaranteed elements, if applicable. (b) When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not: (1) represent the policy as anything other than a life insurance policy; (2) use or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead; (3) state or imply that the payment or amount of nonguaranteed elements is guaranteed; (4) use an illustration that does not comply with the requirements of sections 61A.70 to 61A.745; (5) use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated; (6) provide an applicant with an incomplete illustration; (7) represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact; (8) use the term "vanish" or "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a portion of future premiums; (9) except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported"; or (10) use an illustration that is not "self-supporting." (c) If an interest rate used to determine the illustrated nonguaranteed elements is shown, it must not be greater than the earned interest rate underlying the disciplined current scale. History:   2007 c 104 s 9 
61A.72 STANDARDS FOR BASIC ILLUSTRATIONS. Subdivision 1. Format. A basic illustration must conform with the following requirements: (1) the illustration must be labeled with the date on which it was prepared; (2) each page, including any explanatory notes or pages, must be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration must be labeled "page 4 of 7 pages"); (3) the assumed dates of payment receipt and benefit payout within a policy year must be clearly identified; (4) if the age of the proposed insured is shown as a component of the tabular detail, it must be issue age plus the number of years the policy is assumed to have been in force; (5) the assumed payments on which the illustrated benefits and values are based must be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments must be identified as premium outlay; (6) guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium must be shown and clearly labeled guaranteed; (7) if the illustration shows any nonguaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements must be clearly labeled nonguaranteed; (8) the guaranteed elements, if any, must be shown before corresponding nonguaranteed elements and must be specifically referred to on any page of an illustration that shows or describes only the nonguaranteed elements (e.g., "see page one for guaranteed elements"); (9) the account or accumulation value of a policy, if shown, must be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender; (10) the value available upon surrender must be identified by the name this value is given in the policy being illustrated and must be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans, and policy loan interest, as applicable; (11) illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form; (12) any illustration of nonguaranteed elements shall be accompanied by a statement indicating that: (i) the benefits and values are not guaranteed; (ii) the assumptions on which they are based are subject to change by the insurer; and (iii) actual results may be more or less favorable; (13) if the illustration shows that the premium payer may have the option to allow policy charges to be paid using nonguaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure must be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display must not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up; and (14) if the applicant plans to use dividends or policy values, guaranteed or nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values. Subd. 2. Narrative summary. A basic illustration must include the following: (1) a brief description of the policy being illustrated, including a statement that it is a life insurance policy; (2) a brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code; (3) a brief description of any policy features, riders, or options, guaranteed or nonguaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy; (4) identification and a brief definition of column headings and key terms used in the illustration; and (5) a statement containing in substance the following: "This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown." Subd. 3. Numeric summary. (a) Following the narrative summary, a basic illustration must include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values must be based on the contract premium. This summary must be shown for at least policy years five, ten, and 20 and at age 70, if applicable, on the three bases shown in clauses (1) to (3). For multiple life policies the summary must show policy years five, ten, 20, and 30: (1) policy guarantees; (2) insurer's illustrated scale; and (3) insurer's illustrated scale used but with the nonguaranteed elements reduced as follows: (i) dividends at 50 percent of the dividends contained in the illustrated scale used; (ii) nonguaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and (iii) all nonguaranteed charges, including but not limited to term insurance charges, mortality, and expense charges at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used. (b) In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases must be identified for each of the three bases. Subd. 4. Statements. (a) Statements substantially similar to paragraphs (b) and (c) must be included on the same page as the numeric summary and signed by the applicant or the policy owner in the case of an illustration provided at time of delivery, as required in sections 61A.70 to 61A.745. (b) A statement to be signed and dated by the applicant or policy owner reading as follows: "I have received a copy of this illustration and understand that any nonguaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed." (c) A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: "I certify that this illustration has been presented to the applicant and that I have explained that any nonguaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration." Subd. 5. Tabular detail. (a) A basic illustration must include the following for at least each policy year from one to ten and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is subject to change: (1) the premium outlay and mode the applicant plans to pay and the contract premium, as applicable; (2) the corresponding guaranteed death benefit, as provided in the policy; and (3) the corresponding guaranteed value available upon surrender, as provided in the policy. (b) For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender must correspond to the contract premium. (c) Nonguaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any nonguaranteed elements are shown, they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a nonguaranteed benefit or value is shown, a zero must be displayed in the guaranteed column. History:   2007 c 104 s 10 
61A.725 STANDARDS FOR SUPPLEMENTAL ILLUSTRATIONS. (a) A supplemental illustration may be provided so long as: (1) it is appended to, accompanied by, or preceded by a basic illustration that complies with sections 61A.70 to 61A.745; (2) the nonguaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration; (3) it contains the same statement required of a basic illustration that nonguaranteed elements are not guaranteed; and (4) for a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration must be equal to the premium outlay shown in the basic illustration. (b) The supplemental illustration must include a notice referring to the basic illustration for guaranteed elements and other important information. History:   2007 c 104 s 11 
61A.73 DELIVERY OF ILLUSTRATION AND RECORD RETENTION. (a)(1) If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with sections 61A.70 to 61A.745, must be submitted to the insurer at the time of policy application. A copy also must be provided to the applicant. (2) If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued must be sent with the policy. The revised illustration must conform to the requirements of sections 61A.70 to 61A.745, must be labeled "Revised Illustration," and must be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy must be provided to the insurer and the policy owner. (b)(1) If no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application. (2) If the policy is issued, a basic illustration conforming to the policy as issued must be sent with the policy and signed no later than the time the policy is delivered. A copy must be provided to the insurer and the policy owner. (c) If the basic illustration or revised illustration is sent to the applicant or policy owner by mail from the insurer, it must include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer's obligation under this paragraph must be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort must be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page. (d) A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, must be retained by the insurer until three years after the policy is no longer in force. A copy need not be retained if no policy is issued. History:   2007 c 104 s 12 
61A.735 ANNUAL REPORT; NOTICE TO POLICY OWNERS. (a) In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that must contain at least the information in this section. (b) For universal life policies, the report must include the following: (1) the beginning and end date of the current report period; (2) the policy value at the end of the previous report period and at the end of the current report period; (3) the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense, and riders); (4) the current death benefit at the end of the current report period on each life covered by the policy; (5) the net cash surrender value of the policy as of the end of the current report period; (6) the amount of outstanding loans, if any, as of the end of the current report period; and (7) for fixed premium policies, assuming guaranteed interest, mortality, and expense loads and continued scheduled premium payments, if the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect must be included in the report; or (8) for flexible premium policies, assuming guaranteed interest, mortality, and expense loads, if the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect must be included in the report. (c) For all other policies, the report must include where applicable: (1) current death benefit; (2) annual contract premium; (3) current cash surrender value; (4) current dividend; (5) application of current dividend; and (6) amount of outstanding loan. (d) Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to nonguaranteed policy elements by the insurer. (e) If the annual report does not include an in-force illustration, it must contain the following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling (insurer's phone number), writing to (insurer's name) at (insurer's address), or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department." The insurer may vary the sequential order of the methods for obtaining an in-force illustration. (f) Upon request of the policy owner, the insurer shall furnish an in-force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration must comply with the requirements of sections 61A.715, paragraphs (a) and (b), and 61A.72, subdivisions 1 and 5. No signature or other acknowledgment of receipt of this illustration must be required. (g) If an adverse change in nonguaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report must contain a notice of that fact and the nature of the change prominently displayed. History:   2007 c 104 s 13 
61A.74 ANNUAL CERTIFICATIONS. (a) The board of directors of each insurer shall appoint one or more illustration actuaries. (b) The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of sections 61A.70 to 61A.745. (c) The illustration actuary shall: (1) be a member in good standing of the American Academy of Actuaries; (2) be familiar with the standard of practice regarding life insurance policy illustrations; (3) not have been found by the commissioner, following appropriate notice and hearing to have: (i) violated any provision of, or any obligation imposed by, the insurance law or other law in the course of the actuary's dealings as an illustration actuary; (ii) been found guilty of fraudulent or dishonest practices; (iii) demonstrated the actuary's incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or (iv) resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards; (4) not fail to notify the commissioner of any action taken by a commissioner of another state similar to that under clause (3); (5) disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in-force policies, this must be disclosed in the annual certification. If nonguaranteed elements illustrated for both new and in-force policies are not consistent with the nonguaranteed elements actually being paid, charged, or credited to the same or similar forms, this must be disclosed in the annual certification; and (6) disclose in the annual certification the method used to allocate overhead expenses for all illustrations: (i) fully allocated expenses; (ii) marginal expenses; or (iii) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the National Association of Insurance Commissioners or by the commissioner. (d)(1) The illustration actuary shall file a certification with the board and with the commissioner: (i) annually for all policy forms for which illustrations are used; and (ii) before a new policy form is illustrated. (2) If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly. (e) If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of the actuary's inability to certify. (f) A responsible officer of the insurer, other than the illustration actuary, shall certify annually: (1) that the illustration formats meet the requirements of sections 61A.70 to 61A.745 and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and (2) that the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in paragraph (c), clause (6). (g) The annual certifications must be provided to the commissioner each year by a date determined by the insurer. (h) If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change. History:   2007 c 104 s 14 
61A.745 PENALTIES. In addition to any other penalties provided by the laws of this state, an insurer or producer that violates a requirement of sections 61A.70 to 61A.745 is guilty of a violation of section 72A.20. History:   2007 c 104 s 15 
61B.18 CITATION. Sections 61B.18 to 61B.32 may be cited as the "Minnesota Life and Health Insurance Guaranty Association Act." History:   1993 c 319 s 3 
61B.19 PURPOSE; SCOPE; LIMITATION OF COVERAGE; LIMITATION OF BENEFITS; CONSTRUCTION. Subdivision 1. Purpose. (a) The purpose of sections 61B.18 to 61B.32 is to protect, subject to certain limitations, the persons specified in subdivision 2 against failure in the performance of contractual obligations under life, health, and annuity policies or contracts, and the supplemental contracts specified in subdivision 2, because of the impairment or insolvency of the member insurer that issued the policies or contracts. (b) To provide this protection, an association of member insurers has been created and exists to pay benefits and to continue coverages, as limited in sections 61B.18 to 61B.32. Members of the association are subject to assessment to provide funds to carry out the purpose of sections 61B.18 to 61B.32. Subd. 2. Scope. (a) Sections 61B.18 to 61B.32 provide coverage for the policies and contracts specified in paragraph (b) to: (1) persons who are owners, certificate holders, or enrollees under these policies or contracts, or, (i) in the case of unallocated annuity contracts, to the persons who are participants in a covered retirement plan, or (ii) in the case of structured settlement annuities, to persons who are payees in respect of their liability claims (or beneficiaries of such payees who are deceased) and who: (A) are residents; or (B) are not residents, but only under all of the following conditions: the member insurers that issued the policies or contracts are domiciled in the state of Minnesota; those insurers never held a license or certificate of authority in the states in which those persons reside; those states have associations similar to the association created by sections 61B.18 to 61B.32; and those persons are not eligible for coverage by those associations; and (2) persons who, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees, or payees of the persons covered under clause (1). This includes health care providers rendering services covered by a health insurance policy or contract. (b) Sections 61B.18 to 61B.32 provide coverage to the persons specified in paragraph (a) for direct, nongroup life insurance, health insurance, annuity, and supplemental policies or contracts, for subscriber contracts issued by a nonprofit health service plan corporation operating under chapter 62C, for health maintenance contracts issued by a health maintenance organization under chapter 62D, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by sections 61B.18 to 61B.32. Except as expressly excluded under subdivision 3, annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts. Covered unallocated annuity contracts include those that fund a qualified defined contribution retirement plan under sections 401, 403(b), and 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992. Subd. 3. Limitation of coverage. Sections 61B.18 to 61B.32 do not provide coverage for: (1) a portion of a policy or contract not guaranteed by the member insurer, or under which the investment risk is borne by the policy or contract holder; (2) a policy or contract of reinsurance, unless assumption certificates have been issued and the insured has consented to the assumption as provided under section 60A.09, subdivision 4a; (3) a policy or contract issued by an assessment benefit association operating under section 61A.39, or a fraternal benefit society operating under chapter 64B; (4) any obligation to nonresident participants of a covered retirement plan or to the plan sponsor, employer, trustee, or other party who owns the contract; in these cases, the association is obligated under this chapter only to participants in a covered plan who are residents of the state of Minnesota on the date of impairment or insolvency; (5) a structured settlement annuity in situations where a liability insurer remains liable to the payee; (6) a portion of an unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a governmental lottery, including but not limited to, a contract issued to, or purchased at the direction of, any governmental bonding authority, such as a municipal guaranteed investment contract; (7) a portion of a policy or contract issued to a plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that the plan or program is self-funded or uninsured, including benefits payable by an employer, association, or similar entity under: (i) a multiple employer welfare arrangement as defined in the Employee Retirement Income Security Act of 1974, United States Code, title 29, section 1002(40)(A), as amended; (ii) a minimum premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract; (8) any policy or contract issued by an insurer at a time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this state; (9) an unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan; (10) a portion of a policy or contract to the extent that it provides for (i) dividends or experience rating credits except to the extent the dividends or experience rating credits have actually become due and payable or have been credited to the policy or contract before the date of impairment or insolvency, (ii) voting rights, or (iii) payment of any fees or allowances to any person, including the policy or contract holder, in connection with the service to, or administration of, the policy or contract; (11) a contractual agreement that establishes the member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer; (12) a portion of a policy or contract to the extent that the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract, employed in calculating returns or changes in value: (i) averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever is earlier, exceeds the rate of interest determined by subtracting two percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period or for the lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever is earlier; and (ii) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody's Corporate Bond Yield Average as most recently available; (iii) however, this paragraph shall not apply to a contract, policy, or rider for long-term care or health insurance; (13) a portion of a policy or contract to the extent it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever is earlier. If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and not subject to forfeiture under this clause, the interest or changes in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture; (14) a portion of a policy or contract to the extent that the assessments required by section 61B.24 with respect to the policy or contract are preempted by federal or state law; (15) a policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to United States Code, title 42, chapter 7, subchapter XVIII, Part C or Part D, commonly known as Medicare Part C & D, or United States Code, title 42, chapter 7, subchapter XIX, commonly known as Medicaid, or any regulations issued under those provisions; and (16) structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction, as defined in United States Code, title 26, section 5891, regardless of whether the transaction occurred before or after the effective date of section 5891. Subd. 4. Limitation of benefits. The benefits for which the association may become liable shall in no event exceed the lesser of: (1) the contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (2) subject to the limitation in clause (5), with respect to any one life, regardless of the number of policies or contracts: (i) $500,000 in life insurance death benefits, but not more than $130,000 in net cash surrender and net cash withdrawal values for life insurance; (ii) $500,000 in health insurance, long-term care, and disability income insurance benefits, including any net cash surrender and net cash withdrawal values; (iii) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (iv) $410,000 in present value of annuity benefits for structured settlement annuities or for annuities in regard to which periodic annuity benefits, for a period of not less than the annuitant's lifetime or for a period certain of not less than ten years, have begun to be paid, on or before the date of impairment or insolvency; or (3) subject to the limitations in clauses (5) and (6), with respect to each individual resident participating in a retirement plan, except a defined benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992, covered by an unallocated annuity contract, or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in net cash surrender and net cash withdrawal values; (4) where no coverage limit has been specified for a covered policy or benefit, the coverage limit shall be $500,000 in present value; (5) in no event shall the association be liable to cover more than $500,000 in benefits in the aggregate with respect to any one life under clause (2), items (i), (ii), (iii), (iv), and clause (4), and any one individual under clause (3); (6) in no event shall the association be liable to cover more than $10,000,000 in benefits with respect to all unallocated annuities of a retirement plan, except a defined benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992. If total claims from a plan exceed $10,000,000, the $10,000,000 shall be prorated among the claimants; (7) for purposes of applying clause (2)(ii) and clause (5), with respect only to health insurance benefits, the term "any one life" applies to each individual covered by a health insurance policy or contract; (8) where covered contractual obligations are equal to or less than the limits stated in this subdivision, the association will pay the difference between the covered contractual obligations and the amount credited by the estate of the insolvent or impaired insurer, if that amount has been determined or, if it has not, the covered contractual limit, subject to the association's right of subrogation; (9) where covered contractual obligations exceed the limits stated in this subdivision, the amount payable by the association will be determined as though the covered contractual obligations were equal to those limits. In making the determination, the estate shall be deemed to have credited the covered person the same amount as the estate would credit a covered person with contractual obligations equal to those limits; or (10) the following illustrates how the principles stated in clauses (8) and (9) apply. The example illustrated concerns hypothetical claims subject to the limit stated in clause (2)(iii). The principles stated in clauses (8) and (9), and illustrated in this clause, apply to claims subject to any limits stated in this subdivision. CONTRACTUAL OBLIGATIONS OF:          $100,000      Estate  Guaranty Association    0% recovery from estate $ 0  $100,000    25% recovery from estate $25,000  $75,000    50% recovery from estate $50,000  $50,000    75% recovery from estate $75,000  $25,000      $250,000      Estate  Guaranty Association    0% recovery from estate $ 0  $250,000    25% recovery from estate $62,500  $187,500    50% recovery from estate $125,000  $125,000    75% recovery from estate $187,500  $62,500      $300,000      Estate  Guaranty Association    0% recovery from estate $ 0  $250,000    25% recovery from estate $75,000  $187,500    50% recovery from estate $150,000  $125,000    75% recovery from estate $225,000  $62,500    Subd. 5.Limited liability. The liability of the association is strictly limited by the express terms of the covered policies and contracts and by the provisions of sections 61B.18 to 61B.32 and is not affected by the contents of any brochures, illustrations, advertisements, or oral statements by agents, brokers, or others used or made in connection with their sale. This limitation on liability does not prevent an insured from proving liability that is greater than the express terms of the covered policy or contract. The insured must bring an action to claim the greater liability no later than one year after entry of an order of rehabilitation, conservation, or liquidation. The association is not liable for any extra-contractual claims, such as claims relating to bad faith in payment of claims and claims relating to marketing practices, exemplary, or punitive damages. The association is not liable for attorney fees or interest other than as provided for by the terms of the policies or contracts, subject to the other limits of sections 61B.18 to 61B.32. Subd. 6.  [Repealed, 2009 c 37 art 3 s 25] Subd. 7. Construction. (a) Sections 61B.18 to 61B.32 shall be liberally construed to effect the purpose of sections 61B.18 to 61B.32. Subdivision 1 is an aid and guide to interpretation. (b) Participants in an employer-sponsored plan, which is funded in whole or in part by a covered policy, as specified in subdivision 4, clause (3), shall only be required to verify their status as residents and the amount of money in the unallocated annuity that represents their funds. Both these matters may be verified by the employer sponsoring the plan from plan records. Payments made to a plan shall be deemed to be made on behalf of the resident participant and are not the funds of the plan, the plan trustee, or any nonresident plan participant, and to the extent of such payments, discharge the association's obligation. History:  1993 c 319 s 4; 1994 c 426 s 11; 1999 c 177 s 36; 2001 c 142 s 1-4; 2009 c 37 art 3 s 15; 2010 c 275 art 1 s 10,11; 2020 c 80 art 2 s 2-5
61B.20 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to sections 61B.18 to 61B.32. Subd. 2. Account. "Account" means either of the two accounts created under section 61B.21, subdivision 1. Subd. 3. Annuity contracts. "Annuity contracts" means annuity contracts as described in section 60A.06, subdivision 1, clause (4). Subd. 4. Association. "Association" means the Minnesota Life and Health Insurance Guaranty Association. Subd. 5. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 6. Contractual obligation. "Contractual obligation" means an obligation under a policy or contract or certificate under a group policy or contract, or portion of the policy or contract or certificate, for which coverage is provided under section 61B.19, subdivision 2. Subd. 7. Covered policy. "Covered policy" means a policy or contract to which sections 61B.18 to 61B.32 apply, as provided in section 61B.19, subdivision 2. Subd. 8. Current contractual obligation. "Current contractual obligation" means a contractual obligation which has become due and owing for: (1) death benefits; (2) health insurance benefits; (3) periodic annuity benefit or supplemental contract payments, provided the annuitant or payee elected the commencement of the periodic annuity benefit or supplemental contract payments before the date of impairment or insolvency, or if the annuitant or payee elected the commencement of the periodic annuity benefit or supplemental contract payments after the date of impairment or insolvency, (i) the election was made pursuant to a written plan, such as a retirement plan, which existed before the impairment or insolvency, or (ii) commencement of the periodic annuity benefit or supplemental contract payments was elected at or after the annuitant's attainment of age 65 and, in either case, was for a payment period of not less than the annuitant's lifetime or a period certain of not less than ten years; or (4) cash surrender or loan values or endowment proceeds or any portion thereof, but only if, and to the extent that, an emergency or hardship such as, but not limited to, the funds being reasonably necessary to pay education, medical, home purchase, or essential living expenses, is established in accordance with standards proposed by the association and approved by the commissioner. The hardship standards must also provide for an individual appeal to the board of directors in those circumstances which, while not meeting the standards approved by the commissioner, may truly be a hardship. Subd. 9. Direct life insurance. "Direct life insurance" means life insurance as described in section 60A.06, subdivision 1, clause (4), and does not include credit life insurance regulated under chapter 62B. Subd. 10. Health insurance. "Health insurance" means accident and health insurance as described in section 60A.06, subdivision 1, clause (5)(a), long-term care insurance as described in section 62A.46, subdivision 2, and chapter 62S, credit accident and health insurance regulated under chapter 62B, subscriber contracts issued by a nonprofit health service plan corporation operating under chapter 62C, and health maintenance contracts issued by a health maintenance organization operating under chapter 62D. Subd. 11. Impaired insurer. "Impaired insurer" means a member insurer that is not an insolvent insurer, and: (1) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. The order of rehabilitation or conservation referred to in this subdivision is the initial order granting a petition, application, or other request to begin a rehabilitation or conservatorship; or (2) is determined by the commissioner to be potentially unable to fulfill its contractual obligations and the commissioner has notified the association of the determination. Subd. 12. Insolvent insurer. "Insolvent insurer" means a member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. The order of liquidation referred to in this subdivision is the initial order granting a petition, application, or other request to begin a liquidation. Subd. 13. Member insurer. "Member insurer" means an insurer or health maintenance organization licensed or holding a certificate of authority to transact in this state any kind of insurance or health maintenance organization business for which coverage is provided under section 61B.19, subdivision 2, and includes an insurer or health maintenance organization whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn. The term does not include: (1) a nonprofit hospital or medical service organization, other than a nonprofit health service plan corporation that operates under chapter 62C; (2) a fraternal benefit society; (3) a mandatory state pooling plan; (4) a mutual assessment company or an entity that operates on an assessment basis; (5) an insurance exchange; (6) a community integrated service network; or (7) an entity similar to those listed in clauses (1) to (6). Subd. 13a. Moody's Corporate Bond Yield Average. "Moody's Corporate Bond Yield Average" means the Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto. Subd. 14. Person. "Person" means an individual, corporation, partnership, unincorporated association, limited liability company, governmental body or entity, or voluntary organization. Subd. 15. Premiums. "Premiums" means amounts or considerations by whatever name called received on covered policies or contracts less premiums, considerations, and deposits returned, and less dividends and experience credits on those covered policies or contracts to the extent not guaranteed in advance. The term does not include amounts received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 61B.19, subdivision 3, except that assessable premium shall not be reduced on account of section 61B.19, subdivision 4, relating to limitations with respect to any one life, any one individual, and any one contract holder. Premiums subject to assessment under section 61B.24, include all amounts received on any unallocated annuity contract issued to a contract holder resident in this state if the contract is not otherwise excluded from coverage under section 61B.19, subdivision 3; provided that "premiums" shall not include any premiums in excess of the liability limit on any unallocated annuity contract specified in section 61B.19, subdivision 4. Subd. 16. Resident. "Resident" means a person whose principal place of residence is Minnesota at the time a member insurer is initially determined by the commissioner or a court to be an impaired or insolvent insurer and to whom a contractual obligation is owed, whichever occurs first. A person may be a resident of only one state, which for a natural person is the person's principal place of residence, for a person other than a natural person is its principal place of business, and for a trust, is the principal place of business of the settlor or entity which established the trust. Citizens of the United States who are either (i) residents of foreign countries, or (ii) residents of United States possessions, territories, or protectorates that do not have an association similar to the association created by sections 61B.19 to 61B.32, are considered residents of this state if the insurer that issued the covered policies or contracts was domiciled in this state. Subd. 16a. State. "State" means a state, the District of Columbia, Puerto Rico, and a United States possession, territory, or protectorate. Subd. 16b. Structured settlement annuity. "Structured settlement annuity" means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant. Subd. 17. Supplemental contract. "Supplemental contract" means a written agreement entered into for the distribution of policy or contract proceeds. Subd. 18. Unallocated annuity contract. "Unallocated annuity contract" means an annuity contract, funding agreement, or group annuity certificate that is not issued to and owned by an individual, except to the extent of annuity benefits guaranteed to an individual by an insurer under the contract or certificate. History:  1993 c 319 s 5; 1994 c 625 art 8 s 3; 1996 c 446 art 2 s 10; 1997 c 225 art 2 s 62; 2001 c 142 s 5-13; 2003 c 19 s 1; 2020 c 80 art 2 s 6-8
61B.21 MINNESOTA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION. Subdivision 1. Functions. The Minnesota Life and Health Insurance Guaranty Association shall perform its functions under the plan of operation established and approved under section 61B.25, and shall exercise its powers through a board of directors. The association is not a state agency for purposes of chapter 16A, 16B, 16C, or 43A. For purposes of administration and assessment, the association shall establish and maintain two accounts: (1) the life insurance and annuity account which includes the following subaccounts: (i) the life insurance account; (ii) the annuity account; and (iii) the unallocated annuity account; and (2) the health account. Subd. 2. Supervision by commissioner of commerce. The association is under the immediate supervision of the commissioner and is subject to the applicable provisions of the insurance laws of this state. History:  1993 c 319 s 6; 1997 c 187 art 3 s 15; 1998 c 386 art 2 s 23; 2020 c 80 art 2 s 9
61B.22 BOARD OF DIRECTORS. Subdivision 1. Members. The board of directors of the association consists of nine member insurers serving terms as established in the plan of operation under section 61B.25. The insurer board members must be elected by member insurers, subject to the approval of the commissioner, for the terms of office specified in their nominations. Each elected insurer board member shall designate its representative and may designate an alternate. Vacancies on the board shall be filled for the remaining period of the term by a majority vote of the remaining board members, subject to approval of the commissioner. In approving selections or in appointing insurer board members, the commissioner shall consider whether all member insurers are fairly represented. Subd. 2. Expenses. Members of the board may be reimbursed from the assets of the association for reasonable and necessary expenses incurred by them as members of the board, but shall not otherwise be compensated by the association for their services. Subd. 3. Committees and meetings. Except as otherwise required under the plan of operation: (a) The board of directors may designate three or more directors as an executive committee, which, to the extent determined by unanimous affirmative action of the entire board, has and shall exercise the authority of the board in the management of the business of the association. This executive committee shall act only in the interval between meetings of the board, and is subject at all times to the control and direction of the board. (b) The board of directors may create additional committees, which have and shall exercise the specific authority and responsibility as determined by the unanimous affirmative action of the entire board. (c) Any action that may be taken at a meeting of the board of directors or of a lawfully constituted executive committee may be taken without a meeting if authorized by a writing or writings signed by all the directors or by all of the members of the committee, as the case may be. This action is effective on the date on which the last signature is placed on the writing or writings, or on an earlier effective date established in the writing or writings. (d) Members of the board of directors or of a lawfully constituted executive committee may participate in a meeting of the board or committee by means of conference telephone or similar communications equipment through which all persons participating in the meeting can hear each other. Participation in a meeting as provided in this paragraph constitutes presence in person at the meeting. Subd. 4. Open meetings. Board meetings are not subject to chapter 13D. History:  1993 c 319 s 7; 2001 c 142 s 14; 2020 c 80 art 2 s 10
61B.23 POWERS AND DUTIES OF ASSOCIATION. Subdivision 1. Impaired domestic insurer. If a member insurer is an impaired domestic insurer, the association may, in its discretion, and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer and that are approved by the commissioner, and that are, except in cases of court ordered conservation or rehabilitation, also approved by the impaired insurer: (1) guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; (2) provide money, pledges, notes, guarantees, or other means as are proper to exercise the power granted in clause (1) and assure payment of the contractual obligations of the impaired insurer pending action under clause (1); or (3) loan money to the impaired insurer. Subd. 2. Impaired insurer not paying claims. (a) If a member insurer is an impaired insurer, whether domestic, foreign, or alien, and the insurer is not paying claims in a timely manner as required under section 72A.201, based in whole or in part on the insurer's financial inability to pay claims then subject to the preconditions specified in paragraph (b), the association shall, in its discretion, either: (1) take any of the actions specified in subdivision 1, subject to the conditions in that subdivision; or (2) provide for prompt payment of current contractual obligations. (b) The association is subject to the requirements of paragraph (a) only if the commissioner has begun a formal administrative or judicial proceeding which seeks to suspend the authority of the impaired insurer to write new business in this state and to require the impaired insurer to cooperate with the association in the administration of claims. The suspension of the impaired insurer's authority to write new business in this state shall continue until all payments of or on account of the impaired insurer's contractual obligations paid by the association, along with all expenses thereof and interest on these payments and expenses, shall have been repaid to the association or a plan of repayment of the payments, expenses, and interest by the impaired insurer shall have been approved by the association. If the commissioner ceases to seek an administrative or judicial order suspending the impaired insurer's authority to write new business in this state within 90 days, or is denied the order, the association shall not be required to proceed under this subdivision unless: (1) the impaired insurer has been placed under an order of rehabilitation or conservation by a court of competent jurisdiction; and (2) the court has approved and entered an order providing that the rehabilitation or conservation proceedings shall not be dismissed, and neither the impaired insurer nor its assets shall be returned to the control of its shareholders or private management, and the impaired insurer is prohibited from soliciting or accepting new business or having a suspended or revoked license restored until at least one of the following events has occurred: (i) all payments of or on account of the impaired insurer's contractual obligations paid by all the affected guaranty associations, along with expenses thereof and interest on all of those payments and expenses incurred by those guaranty associations, have been repaid to them; or (ii) a plan of repayment by the impaired insurer has been approved by all the affected guaranty associations. (c) The association shall endeavor to obtain access to those records of the impaired insured as are needed for the association to discharge its obligations and, if requested by the association, the commissioner will assist the association in obtaining access to those records. If the association is not given access to the necessary records, the association shall be relieved of its responsibility to make benefit payments until the time it is given access to those records. (d) If the impaired insurer is subsequently determined to be insolvent by a court of competent jurisdiction in its state of domicile and is placed in liquidation, the association shall then proceed as provided in subdivision 3. Subd. 3. Insolvent insurer. If a member insurer is an insolvent insurer then, subject to any conditions imposed by the association and approved by the commissioner, the association shall, in its discretion: (1) guaranty, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; (2) assure payment of the contractual obligations of the insolvent insurer which are due and owing; (3) provide money, pledges, guarantees, or other means as are reasonably necessary to discharge its duties; or (4) provide benefits and coverages in accordance with subdivision 4. Subd. 4. Payments; alternative policies. When proceeding under subdivision 2, paragraph (a), clause (2), or subdivision 3, clause (4), the association shall, with respect to policies and contracts: (a) Assure payment of benefits that would have been payable under the policies of the impaired or insolvent insurer, for claims incurred: (1) with respect to group policies, not later than the earlier of the next renewal date under those policies or contracts or 45 days, but in no event less than 30 days, after the date on which the association becomes obligated with respect to those policies; or (2) with respect to individual policies, contracts, and annuities not later than the earlier of the next renewal date, if any, under those policies or one year, but in no event less than 30 days, from the date on which the association becomes obligated with respect to those policies. (b) Make diligent efforts to provide all known insureds, enrollees, or annuitants for individual policies or group policy or contract owners with respect to group policies 30 days' notice of the termination pursuant to paragraph (a) of the benefits provided. (c) With respect to individual policies and contracts, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with paragraph (d), if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class. (d)(1) In providing the substitute coverage required under paragraph (c), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates subject to prior approval of the commissioner. (2) Alternative or reissued policies or contracts must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract. (3) The association may reinsure any alternative or reissued policy or contract. (e)(1) Alternative policies or contracts adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency. (2) Alternative policies or contracts must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates which it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy or contract was last underwritten. (3) Any alternative policy or contract issued by the association must provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association. (f) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium must be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the commissioner. (g) The association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract ceases on the date the coverage, or on the date the policy or contract is replaced by another similar policy or contract by the policy or contract holder, the insured, the enrollee, or the association and the preexisting condition limitations have been satisfied. (h) When proceeding under this subdivision with respect to any policy carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with section 61B.19, subdivision 3, clause (12). Subd. 4a. Board discretion. The board of directors of the association has discretion and may exercise reasonable business judgment to determine the means by which the association is to provide the benefits of sections 61B.18 to 61B.32 in an economical and efficient manner. Subd. 4b. Benefits provided under a plan. Where the association has arranged or offered to provide the benefits of sections 61B.18 to 61B.32 to a covered person under a plan or arrangement that fulfills the association's obligations under sections 61B.18 to 61B.32, the person is not entitled to benefits from the association in addition to or other than those provided under the plan or arrangement. Subd. 4c. Coverage of policies with indexed interest or similar provisions. In carrying out its duties in connection with guaranteeing, assuming, or reinsuring policies or contracts under sections 61B.18 to 61B.32, the association may, subject to approval of the receivership court, issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index, or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions: (1) in lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate or (ii) payment of dividends with minimum guarantees or (iii) a different method for calculating interest or changes in value; (2) there is no requirement for evidence of insurability, waiting period or other exclusion that would not have applied under the replaced policy or contract; and (3) the alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms. Subd. 5. Obligations terminated. Nonpayment of all unpaid premiums within 31 days after the date required under the terms of a guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage terminates the association's obligations under the policy, contract, or coverage under sections 61B.18 to 61B.32 with respect to the policy, contract, or coverage, except with respect to claims incurred or net cash surrender value that may be due in accordance with sections 61B.18 to 61B.32. The association will not terminate the policy or contract for nonpayment of premium until 31 days after the association sends a written cancellation notice by first class mail to the insured's last known address. Subd. 6. Postliquidation premiums. Premiums due for coverage after entry of any order of liquidation of an insolvent insurer belong to and are payable at the direction of the association, and the association is liable for unearned premiums due policy or contract owners arising after the entry of the order. Subd. 7. Coverage by another state. The association has no liability under this section for a covered policy of a foreign or alien insurer whose domiciliary jurisdiction or state of entry provides protection, by statutes or rule, for residents of this state, which protection is substantially similar to that provided by sections 61B.18 to 61B.32, for residents of other states. Recovery provided for under sections 61B.18 to 61B.32 is reduced by the amount of recovery under the coverage provided by another state or jurisdiction. If another state or jurisdiction providing substantially similar coverage as provided by sections 61B.18 to 61B.32 denies coverage, the association shall provide coverage if the policyholder or contract holder is otherwise eligible, and the association is then subrogated to the rights of the person receiving benefits with respect to the other state or jurisdiction. If a person receiving benefits from the association has a claim remaining against another state or jurisdiction, whether or not such state or jurisdiction provides substantially similar protection within the meaning of this section, then such person's remaining claim has priority over any subrogation rights of the association with respect to that other state or jurisdiction. Subd. 8. Liens and moratoriums. (a) In carrying out its duties under subdivision 2 or 3, the association may request that there be imposed policy liens, contract liens, moratoriums on payments, or other similar means. The liens, moratoriums, or similar means may be imposed if the commissioner: (1) finds: (i) that the amounts that can be assessed under sections 61B.18 to 61B.32 are less than the amounts necessary to assure full and prompt performance of the impaired insurer's contractual obligations; (ii) that economic or financial conditions as they affect member insurers are sufficiently adverse to cause the imposition of policy or contract liens, moratoriums, or similar means to be in the public interest; (iii) that there is a reasonable likelihood that a plan of rehabilitation will be developed or other appropriate arrangements made for the orderly provision for covered contractual obligations of the impaired or insolvent insurer, and that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate to support the development of the plan of rehabilitation or other appropriate arrangements; (iv) that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate to ensure the equitable treatment of all policyholders of impaired or insolvent insurers protected by the guaranty association; (v) that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate to encourage recovery of the maximum possible amount from the remaining assets of the impaired or insolvent insurer's estate; or (vi) that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate in order for the association to participate in any multistate plan of rehabilitation, conservation, or liquidation of the impaired or insolvent insurer, and the commissioner considers the plan to be in the best interests of the impaired or insolvent insurer's policyholders or the association's member insurers; (2) finds, in the case of a moratorium, that current contractual obligations are being, and will continue to be, promptly paid; and (3) approves the specific policy liens, contract liens, moratoriums, or similar means to be used. (b) Before being obligated under subdivision 2 or 3, the association may request that there be imposed temporary moratoriums or liens on payments of cash values and policy loans. The temporary moratoriums and liens may be imposed if approved by the commissioner. (c) A moratorium, lien, or other means imposed pursuant to this subdivision may be for: (i) a specific term; or (ii) an indefinite term which shall continue in effect until the commissioner, at the request of the association or, on the commissioner's own motion after notice to the association, finds that the reason or reasons for the moratorium, lien, or other means no longer exists. Subd. 8a. Deposits in this state for insolvent or impaired insurer. A deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policy or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in this state or in a reciprocal state, pursuant to section 60B.54, shall be promptly paid to the association. The association is entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy or contract owners' claims related to that insolvency for which the association has provided statutory benefits by the aggregate amount of all policy or contract owners' claims in this state related to that insolvency. The association shall remit to the domiciliary receiver the amount so paid to the association and not retained pursuant to this subdivision. Any amount retained by the association shall be treated as a distribution of estate assets pursuant to section 60B.46 or similar provision of the state of domicile of the impaired or insolvent insurer. Subd. 9. Failure to act. If the association fails to act within a reasonable period of time as provided in subdivision 2, paragraph (a), clause (2); 3; or 4, the commissioner has the powers and duties of the association with respect to impaired or insolvent insurers including, but not limited to, the power to make assessments. Subd. 10. Assistance to commissioner. The association may give assistance and advice to the commissioner, upon request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer. Subd. 11. Standing in court. The association has standing to appear or intervene before any court or agency in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under sections 61B.18 to 61B.32 or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise. This standing extends to all matters germane to the powers and duties of the association, including proposals for reinsuring, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The association may appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise, provided, however, in the case of any such appearance or intervention, the association shall not submit for adjudication its obligations to provide coverage under the Minnesota Life and Health Insurance Guaranty Association Act without the prior approval of the commissioner. Subd. 12. Assignments; subrogation rights. (a) A person receiving benefits under sections 61B.18 to 61B.32 shall be considered to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from or otherwise relating to, the covered policy or contract to the association to the extent of the benefits received because of sections 61B.18 to 61B.32, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The association may require an assignment to it of those rights and causes of action by an enrollee, payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of rights or benefits conferred by sections 61B.18 to 61B.32 upon that person. The assignment and subrogation rights of the association include any rights that a person may have as a beneficiary of a plan covered under the Employee Retirement Income Security Act of 1974, United States Code, title 29, section 1003, as amended. (b) The subrogation rights of the association under this subdivision against the assets of the impaired or insolvent insurer have the same priority as those of a person entitled to receive benefits under sections 61B.18 to 61B.32. (c) In addition to paragraphs (a) and (b), the association has all common law rights of subrogation and other equitable or legal remedies that would have been available to the impaired or insolvent insurer or person receiving benefits under sections 61B.18 to 61B.32 including without limitation, in the case of a structured settlement annuity, any rights of the owner, enrollee, beneficiary, or payee of the annuity, to the extent of benefits received pursuant to sections 61B.18 to 61B.32, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment thereof, excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under section 130 of the Internal Revenue Code of 1986, as amended. (d) If the preceding provisions of this subdivision are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts or portion thereof covered by the association. (e) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in the preceding paragraphs of this subdivision, the person shall pay to the association the portion of the recovery attributable to the policies or contracts or portion thereof covered by the association. Subd. 13. Permissive powers. The association may: (1) enter into contracts as are necessary or proper to carry out the provisions and purposes of sections 61B.18 to 61B.32; (2) sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under section 61B.26 to settle claims or potential claims against it; (3) borrow money to effect the purposes of sections 61B.18 to 61B.32 and any notes or other evidence of indebtedness of the association not in default are legal investments for domestic member insurers and may be carried as admitted assets; (4) employ or retain persons as are necessary or appropriate to handle the financial transactions of the association, and to perform other functions as the association considers necessary or proper under sections 61B.18 to 61B.32; (5) enter into arbitration or take legal action as may be necessary or appropriate to avoid or recover payment of improper claims; (6) exercise, for the purposes of sections 61B.18 to 61B.32 and to the extent approved by the commissioner, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the association issue policies or contracts other than those issued to perform its obligations under sections 61B.18 to 61B.32; (7) join an organization of one or more other state associations of similar purposes, to further the purposes and administer the powers and duties of the association; (8) negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the association; (9) participate in the organization of and/or own stock in an entity which exists or was formed for the purpose of assuming liability for contracts or policies issued by impaired or insolvent insurers; (10) request information from a person seeking coverage from the association in order to aid the association in determining its obligations under sections 61B.18 to 61B.32 with respect to the person, and the person shall promptly comply with the request; (11) in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under sections 61B.18 to 61B.32; and (12) take other necessary or appropriate action to discharge its duties and obligations under sections 61B.18 to 61B.32, or to exercise its powers under sections 61B.18 to 61B.32. Subd. 14. Association election to succeed to rights of insolvent or impaired insurer under indemnity reinsurance contracts. (a) At any time within one year after the date on which the association becomes responsible for the obligations of a member insurer the coverage date, the association may elect to succeed to the rights and obligations of the member insurer, that accrue on or after the coverage date and that relate to policies, contracts, or annuities covered in whole or in part by the association, under any one or more indemnity reinsurance agreements entered into by the member insurer as a ceding insurer and selected by the association. However, the association may not exercise an election with respect to a reinsurance agreement if the receiver, rehabilitator, or liquidator of the member insurer has previously and expressly disaffirmed the reinsurance agreement. The election shall be effected by a notice to the receiver, rehabilitator, or liquidator, and to the affected reinsurers. If the association makes an election, clauses (1) through (4) apply with respect to the agreements selected by the association: (1) the association is responsible for all unpaid premiums due under the agreements for periods both before and after the coverage date, and is responsible for the performance of all other obligations to be performed after the coverage date, in each case that relates to contracts covered in whole or in part by the association and the association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association; (2) the association is entitled to any amounts payable by the reinsurer under the agreements with respect to losses or events that occur in periods after the coverage date and that relate to policies, contracts, or annuities covered by the association in whole or in part, provided that, upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contract, or annuity on account of which the amounts were paid a portion of the amount equal to the excess of: (i) the amount received by the association, over (ii) the benefits paid by the association on account of the policy or contract less the retention of the impaired or insolvent member insurer applicable to the loss or event; (3) within 30 days following the association's election, the association and each indemnity reinsurer shall calculate the net balance due to or from the association under each reinsurance agreement as of the date of the association's election, giving full credit to all items paid by either the member insurer or its receiver, rehabilitator, or liquidator or the indemnity reinsurer during the period between the coverage date and the date of the association's election and (i) either the association or indemnity reinsurer shall pay the net balance due the other within five days of the completion of the aforementioned calculation and (ii) if the receiver, rehabilitator, or liquidator has received any amounts due the association pursuant to paragraph (a), the receiver, rehabilitator, or liquidator shall remit the same to the association as promptly as practicable; and (4) if the association, within 60 days of the election, pays the premiums due for periods both before and after the coverage date that relate to contracts covered by the association in whole or in part, the reinsurer shall not be entitled to terminate the reinsurance agreements insofar as the agreements relate to contracts covered by the association in whole or in part and shall not be entitled to set off any unpaid premium due for periods prior to the coverage date against amounts due the association. (b) In the event the association transfers its obligations to another insurer, and if the association and the other insurer agree, the other insurer shall succeed to the rights and obligations of the association under paragraph (a) effective as of the date agreed upon by the association and the other insurer and regardless of whether the association has made the election referred to in paragraph (a) provided that: (1) the indemnity reinsurance agreements shall automatically terminate for new reinsurance unless the indemnity reinsurer and the other insurer agree to the contrary; (2) the obligations described in the proviso to paragraph (a), clause (2), shall no longer apply on and after the date the indemnity reinsurance agreement is transferred to the third-party insurer; and (3) paragraph (b) does not apply if the association has previously expressly determined in writing that it will not exercise the election referred to in paragraph (a). (c) The provisions of this subdivision shall supersede the provisions of any law of this state or of any affected reinsurance agreement that provides for or requires any payment of reinsurance proceeds, on account of losses or events that occur in periods after the coverage date, to the receiver, liquidator, or rehabilitator of the insolvent member insurer. The receiver, rehabilitator, or liquidator shall remain entitled to any amounts payable by the reinsurer under the reinsurance agreement with respect to losses or events that occur in periods prior to the coverage date subject to applicable setoff provisions. (d) Except as otherwise expressly provided in this subdivision, nothing in this subdivision alters or modifies the terms and conditions of the indemnity reinsurance agreements of the insolvent member insurer. Nothing in this subdivision abrogates or limits any rights of any reinsurer to claim that it is entitled to rescind a reinsurance agreement. Nothing in this subdivision gives a policy owner, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against an indemnity reinsurer that is not otherwise set forth in the indemnity reinsurance agreement. Subd. 15. Venue; appeal bond. Except as otherwise provided in section 61B.24, subdivision 10, or 61B.26, paragraph (c), venue in a suit against the association arising under sections 61B.18 to 61B.32 shall be in Ramsey County. The association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under sections 61B.18 to 61B.32. History:  1993 c 319 s 8; 2001 c 142 s 15-25; 2002 c 379 art 1 s 27; 2020 c 80 art 2 s 11-17
61B.24 ASSESSMENTS. Subdivision 1. Purpose. For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account or subaccount, at the times and for the amounts as the board finds necessary. Assessments are due not less than 30 days after prior written notice to the member insurers and accrue interest on and after the due date at the then applicable rate determined under section 549.09, subdivision 1, paragraph (c). Subd. 2. Classes of assessments. There are two classes of assessments, as follows: (1) class A assessments must be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of section 61B.27. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer; and (2) class B assessments must be made to the extent necessary to carry out the powers and duties of the association under section 61B.23 with regard to an impaired or an insolvent insurer. Subd. 3. Formula for determination. (a) The amount of a class A assessment shall be determined by the board and may be made on a pro rata or nonpro rata basis. If pro rata, the board may provide that it be credited against future class B assessments. (b) The amount of any class B assessment, except for assessments related to long-term care insurance, must be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity account pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard considered by the board in its sole discretion as being fair and reasonable under the circumstances. (c) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology shall provide for 50 percent of the assessment to be allocated to health insurance member insurers and 50 percent to be allocated to life and annuity member insurers. (d) Class B assessments against member insurers for each subaccount or account must be in the proportion that the average annual premiums received on business in this state by each assessed member insurer on policies or contracts covered by each subaccount or account for the three most recent calendar years for which information is available preceding the calendar year in which the member insurer became impaired or insolvent, as the case may be, bears to the average annual premiums received on business in this state by all assessed member insurers on policies or contracts covered by that subaccount or account for those same calendar years. If the impaired insurer becomes insolvent, the date of insolvency must be used to determine the assessment. Premiums for purposes of calculating average annual premium for calendar years prior to 1993 shall be determined in accordance with Minnesota Statutes 1992, sections 61B.01 to 61B.16. (e) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer must not be made until necessary to implement the purposes of sections 61B.18 to 61B.32. Classification of assessments under subdivision 2 and computation of assessments under this subdivision must be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible. Subd. 4. Abatement or deferment. The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated, or deferred in whole or in part, the amount by which the assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments as provided in this section. Once the conditions which caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the association. Subd. 5. Maximum assessment. (a) The total of all assessments upon a member insurer for each subaccount of the life and annuity account and for the health account shall not in any one calendar year exceed two percent of that member insurer's average annual premiums as calculated in subdivision 3, paragraph (d), on policies or contracts covered by that account or subaccount. If two or more assessments are made with respect to member insurers that become impaired or insolvent in different calendar years, average annual premiums for purposes of the assessment percentage limitation are based upon the higher of the three-year averages calculated under subdivision 3, paragraph (d). If an impaired insurer becomes insolvent, the date of impairment must be used to determine the assessment. If the maximum assessment for any subaccount of the life and annuity account in any one calendar year will not provide an amount sufficient to carry out the responsibilities of the association, then pursuant to subdivision 3, the board of directors shall assess based on the other subaccounts of the life and annuity account for the necessary additional amount, subject to the maximum of two percent stated above for each subaccount. (b) If the maximum assessment for an account, together with the other assets of the association in that account, does not provide in any one calendar year in that account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds must be assessed as soon as permitted by sections 61B.18 to 61B.32. (c) The board may adopt general principles in the plan of operation for allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims. (d) If assessments under this section are inadequate to pay all obligations of the impaired insurer that are or become due and owing, then the association shall prepare a plan approved by the commissioner for prioritization of payments. If the association adopts general principles in the plan of operations, the association shall use the general principles in preparing the plan required under this paragraph. No formerly impaired or insolvent insurer may be reinstated until all payments of or on account of the insurer's or health maintenance organization's contractual obligations by the guaranty association, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty association or a plan of repayment by the insurer or health maintenance organization shall have been approved by the commissioner. Subd. 6. Refund. The board may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each member insurer to that account or subaccount, the amount by which the assets of the account or subaccount exceed the amount the board finds is necessary to carry out during the coming year the obligations of the association with regard to that account or subaccount, including assets accruing from assignment, subrogation, net realized gains, and income from investments. A reasonable amount may be retained in any account or subaccount to provide funds for the continuing expenses of the association and for future losses. Subd. 7. Premium rates and dividends. A member insurer may, in determining its premium rates and policy owner dividends as to any kind of insurance or health maintenance organization business within the scope of sections 61B.18 to 61B.32, consider the amount reasonably necessary to meet its assessment obligations under sections 61B.18 to 61B.32. Subd. 8. Certificate of contribution. The association shall issue to each member insurer paying an assessment under sections 61B.18 to 61B.32, other than a class A assessment, a certificate of contribution, in a form prescribed by the commissioner, for the amount of the assessment so paid. All outstanding certificates must be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the member insurer in its financial statement as an asset in the form and for the amount, if any, and period of time as the commissioner may approve. Subd. 9. Survival of obligation. In the event a member insurer engages in any reorganization, including any merger, consolidation, restructuring, incorporation, or reincorporation, the member's obligations under this chapter shall survive the reorganization with respect to assessments for impairments or insolvencies occurring before the date of the reorganization. Subd. 10. Procedure for protests regarding assessments. (a) A member insurer that wishes to protest all or part of an assessment shall pay when due the full amount of the assessment as set forth in the notice provided by the association. The payment is available to meet association obligations during the pendency of the protest or any subsequent appeal. Payment must be accompanied by a statement in writing that the payment is made under protest and setting forth a brief statement of the grounds for the protest. (b) Within 60 days following the payment of an assessment under protest by a member insurer, the association shall notify the member insurer in writing of its determination with respect to the protest unless the association notifies the member insurer that additional time is required to resolve the issues raised by the protest. (c) Within 30 days after a final decision has been made, the association shall notify the protesting member insurer in writing of that final decision. Within 60 days of receipt of notice of the final decision, the protesting member insurer may appeal that final action to the commissioner. (d) In the alternative to rendering a final decision with respect to a protest based on a question regarding the assessment base, the association may refer the protest to the commissioner for a final decision, with or without a recommendation from the association. (e) If the protest or appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member insurer. Interest on a refund due a protesting member insurer shall be paid at the rate actually earned by the association. Subd. 11. Member insurers' duty to provide information to association. The association may request information of member insurers in order to aid in the exercise of its power under this section and member insurers shall promptly comply with a request. History:  1993 c 319 s 9; 2001 c 142 s 26-29; 2020 c 80 art 2 s 18-23
61B.25 PLAN OF OPERATION. Subdivision 1. Adoption and amendment. The purpose of the plan of operation is to assure the fair, reasonable, and equitable administration of the association under sections 61B.18 to 61B.32. Amendments to the plan of operation must be submitted to the commissioner and become effective upon the commissioner's written approval or 30 days after submission if the commissioner has not disapproved. If the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt reasonable rules necessary or advisable to implement sections 61B.18 to 61B.32. The rules shall continue in force until modified by the commissioner or superseded by amendments submitted by the association and approved by the commissioner. Subd. 2. Compliance. All member insurers shall comply with the plan of operation. Subd. 3. Contents. The plan of operation must, in addition to requirements specified in sections 61B.18 to 61B.32: (1) establish procedures for handling the assets of the association; (2) establish the amount and method of reimbursing members of the board of directors under section 61B.22; (3) establish regular places and times for meetings including telephone conference calls of the board of directors or of the executive committee; (4) establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors; (5) establish procedures for selecting the board of directors; (6) establish any additional procedures for assessments under section 61B.24; and (7) contain additional provisions necessary or proper for the execution of the powers and duties of the association. Subd. 4. Delegation of powers and duties. The plan of operation may provide that any or all powers and duties of the association, except those under sections 61B.23, subdivision 13, clause (3), and 61B.24, are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. The corporation, association, or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subdivision shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by sections 61B.18 to 61B.32. History:   1993 c 319 s 10 
61B.26 DUTIES AND POWERS OF COMMISSIONER. (a) In addition to other duties and powers in sections 61B.18 to 61B.32, the commissioner shall: (1) notify the board of directors of the existence of an impaired or insolvent insurer within three days after a determination of impairment or insolvency is made or the commissioner receives notice of impairment or insolvency; (2) upon request of the board of directors, provide the association with a statement of the premiums in this and any other appropriate states for each member insurer; (3) when an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time; notice to the impaired insurer shall constitute notice to its shareholders, if any; the failure of the impaired insurer to promptly comply with the commissioner's demand shall not excuse the association from the performance of its powers and duties under sections 61B.18 to 61B.32; and (4) in a liquidation, conservation, or rehabilitation proceeding involving a domestic insurer, be appointed as the liquidator, conservator, or rehabilitator. (b) The commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact business in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a forfeiture on any member insurer which fails to pay an assessment when due. A forfeiture shall not exceed five percent of the unpaid assessment per month, but no forfeiture shall be less than $100 per month. (c) A final action of the board of directors or the association may be appealed to the commissioner if the appeal is taken within 60 days of the aggrieved party's receipt of notice of the final action being appealed. Any final action or order of the commissioner is subject to judicial review in a court of competent jurisdiction, in the manner provided by chapter 14. A determination or decision by the commissioner under sections 61B.18 to 61B.32 is not subject to the contested case or rulemaking provisions of chapter 14. (d) The liquidator, rehabilitator, or conservator of an impaired insurer may notify all interested persons of the effect of sections 61B.18 to 61B.32. (e) For the purposes of sections 61B.18 to 61B.32, the commissioner may delegate any of the powers conferred by law. (f) Nonperformance of any of the acts specified in this section or failure to meet the specific time limits does not affect the association, its members, or any other person as to the person's duties and obligations. History:  1993 c 319 s 11; 2001 c 142 s 30; 2020 c 80 art 2 s 24
61B.27 PREVENTION OF INSOLVENCIES. (a) To aid in the detection and prevention of member insurer insolvencies or impairments the commissioner shall notify the commissioners of insurance of all the other states, territories of the United States, and the District of Columbia when the commissioner takes one of the following actions against a member insurer: (i) revocation of license; or (ii) suspension of license. The notice must be mailed to all commissioners within 30 days following the action. (b) If the commissioner deems it appropriate, the commissioner may: (1) Report to the board of directors when the commissioner has taken any of the actions specified in paragraph (a) or has received a report from another commissioner indicating that an action specified in paragraph (a) has been taken in another state. The report to the board of directors must contain all significant details of the action taken or the report received from another commissioner. (2) Report to the board of directors when the commissioner has reasonable cause to believe from an examination, whether completed or in process, of a member company that the company may be an impaired or insolvent insurer. (3) Furnish to the board of directors the National Association of Insurance Commissioners insurance regulatory information system ratios and listings of companies not included in the ratios developed by the National Association of Insurance Commissioners, and the board may use the information in carrying out its duties and responsibilities under this section. The report and the information contained in it must be kept confidential by the board of directors until it has been made public by the commissioner or other lawful authority. Nothing in this provision supersedes other requirements of law. (4) Notify the board if the commissioner makes a formal order requiring the member insurer to restrict its premium writing, obtain additional contributions to surplus, withdraw from this state, reinsure all or any part of its business, or increase capital, surplus, or any other account for the security of policyholders, contract holders, certificate holders, or creditors. (c) The commissioner may seek the advice and recommendations of the board of directors concerning any matter affecting the commissioner's duties and responsibilities regarding the financial condition of member insurers and of insurers or health maintenance organizations seeking admission to transact business in this state. (d) The board of directors may, upon majority vote, make reports and recommendations to the commissioner upon matters germane to the solvency, liquidation, rehabilitation, or conservation of any member insurer or germane to the solvency of an insurer or health maintenance organization seeking to do business in this state. Those reports and recommendations shall not be considered public documents. (e) The board of directors, upon majority vote, may notify the commissioner of information indicating that a member insurer may be an impaired or insolvent insurer. (f) The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of member insurer insolvencies. (g) The board of directors may, at the conclusion of an insurer insolvency in which the association was obligated to pay covered claims, prepare a report to the commissioner containing the information it may have in its possession bearing on the history and causes of the insolvency. The board shall cooperate with the boards of directors of guaranty associations in other states in preparing a report on the history and causes of insolvency of a particular insurer or health maintenance organization, and may adopt by reference any report prepared by those other associations. (h) Nonperformance by the commissioner of any of the acts specified in this section or failure to meet the specified time limits does not affect the association, its members, or any other person as to the person's duties and obligations. Nothing in this section supersedes other requirements of law. History:  1993 c 319 s 12; 2001 c 142 s 31; 2020 c 80 art 2 s 25
61B.28 MISCELLANEOUS PROVISIONS. Subdivision 1. Records. Records must be kept of all negotiations and meetings of the board of directors to discuss the activities of the association in carrying out its powers and duties under section 61B.23. Records of the association with respect to an impaired or insolvent insurer shall be made public only upon the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer, upon the termination of the impairment or insolvency of the insurer, or upon the order of a court of competent jurisdiction. Nothing in this subdivision limits the duty of the association to report its activities under section 61B.27. Subd. 2. Reports. (a) A report, recommendation, or notification by the association, its board of directors, or officers to the commissioner concerning a member insurer, together with statements or documents furnished to the commissioner with, or subsequent to, a report, recommendation, or notification, is confidential and a privileged communication. Reports, recommendations, notifications, statements, and documents furnished to the commissioner are not admissible in whole or in part for any purpose in an action or proceeding against: (1) the association or its member insurers, officers, employees, or representatives submitting or providing the report, recommendation, notification, statement, or document; or (2) a person, firm, or entity who in good faith furnishes to the association the information or document upon which the association has relied in making its report, recommendation, or notification to the commissioner. (b) Notwithstanding the provisions of sections 13.711, 13.715, and 13.719, the commissioner may release to the association's board of directors any or all nonpublic data collected and maintained by the commissioner on a member insurer or a potential member insurer. Information furnished to the board of directors is private. Subd. 3. Association as creditor. For the purpose of carrying out its obligations under sections 61B.18 to 61B.32, the association is considered to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies, reduced by amounts which the association recovers from the assets of the impaired or insolvent insurer as subrogee under section 61B.23, subdivision 12. Recoveries by the association as subrogee under section 61B.23, subdivision 12, from assets other than from assets of the impaired or insolvent insurer shall not reduce or act as an offset to the association's claim as creditor of the impaired or insolvent insurer. Assets of the impaired or insolvent insurer attributable to covered policies or contracts must be used to continue all covered policies or contracts and pay all contractual obligations of the impaired or insolvent insurer as required by sections 61B.18 to 61B.32. Assets attributable to covered policies or contracts, as used in this subdivision, are that proportion of the assets which the reserves that should have been established for those policies bear to the reserves that should have been established for all policies of insurance written by the impaired or insolvent insurer. Subd. 3a. Association access to insolvent insurer's assets. As a creditor of the impaired or insolvent insurer as established in subdivision 3 of this section and consistent with section 60B.46, the association and other similar associations is entitled to receive a disbursement of assets out of the marshalled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under sections 61B.18 to 61B.32. If the liquidator has not, within 120 days of a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshalled assets to guaranty associations having obligations because of the insolvency, then the association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets. Subd. 4. Prohibited sales practice. No person, including a member insurer, agent, or affiliate of a member insurer, shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, an advertisement, announcement, or statement, written or oral, which uses the existence of the Minnesota Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by sections 61B.18 to 61B.32. The notice required by subdivision 8 is not a violation of this subdivision nor is it a violation of this subdivision to explain verbally to an applicant or potential applicant the coverage provided by the Minnesota Life and Health Insurance Guaranty Association at any time during the application process or thereafter. This subdivision does not apply to the Minnesota Life and Health Insurance Guaranty Association or an entity that does not sell or solicit insurance or coverage by a health maintenance organization. Subd. 5. Distribution to stockholders. No distribution to stockholders of an impaired domiciliary insurer shall be made until the total amount of assessments levied by the association with respect to the insurer have been fully recovered by the association. Subd. 6. Reinstatement. No member insurer may be reinstated to do business in this state until all payments of or on account of the impaired insurer's contractual obligations by the guaranty association, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty association or a plan of repayment by the impaired insurer shall have been approved by the association. Subd. 7. Notice concerning limitations and exclusions. (a) No person, including a member insurer, agent, or affiliate of a member insurer or agent, shall offer for sale in this state a covered life insurance, annuity, or health insurance policy or contract without delivering, either at the time of application for that policy or contract or at the time of delivery of the policy or contract, a notice in the form specified in subdivision 8, or in a form approved by the commissioner under paragraph (b), relating to coverage provided by the Minnesota Life and Health Insurance Guaranty Association. The notice may be part of the application. A copy of the notice must be given to the applicant or the policy owner, contract owner, certificate holder, or enrollee. The person offering the policy or contract shall document the fact that the notice was given at the time of application or the fact that the notice was delivered at the time the policy or contract was delivered. This does not require that the receipt of the notice be acknowledged by the applicant. (b) The association may prepare, and file with the commissioner for approval, a form of notice as an alternative to the form of notice specified in subdivision 8 describing the general purposes and limitations of this chapter. The form of notice shall: (1) state the name, address, and telephone number of the Minnesota Life and Health Insurance Guaranty Association; (2) prominently warn the policy owner, contract owner, certificate holder, or enrollee that the Minnesota Life and Health Insurance Guaranty Association may not cover the policy or, if coverage is available, it will be subject to substantial limitations and exclusions and conditioned on continued residence in the state; (3) state that the member insurer and its agents are prohibited by law from using the existence of the Minnesota Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or health maintenance organization coverage; (4) emphasize that the policy owner, contract owner, certificate holder, or enrollee should not rely on coverage under the Minnesota Life and Health Insurance Guaranty Association when selecting an insurer or health maintenance organization; (5) provide other information as directed by the commissioner. The commissioner may approve any form of notice proposed by the association and, as to the approved form of notice, the association may notify all member insurers by mail or other electronic means that the form of notice is available as an alternative to the notice specified in subdivision 8. (c) A policy or contract not covered by the Minnesota Life and Health Insurance Guaranty Association or the Minnesota Insurance Guaranty Association must contain the following notice in ten-point type, stamped in red ink or contrasting type on the policy or contract and the application: "THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE MINNESOTA INSURANCE GUARANTY ASSOCIATION. IN THE CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED. ONLY THE ASSETS OF THIS INSURER OR HEALTH MAINTENANCE ORGANIZATION WILL BE AVAILABLE TO PAY YOUR CLAIM." This section does not apply to fraternal benefit societies regulated under chapter 64B. Subd. 8. Form. The form of notice referred to in subdivision 7, paragraph (a), is as follows: "........................................ ......................................... ......................................... (insert name, current address, and telephone number of member insurer) NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN INSOLVENCY UNDER THE MINNESOTA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION LAW If the insurer or health maintenance organization that issued your life, annuity, or health insurance policy becomes impaired or insolvent, you are entitled to compensation for your policy or contract from the assets of that insurer. The amount you recover will depend on the financial condition of the insurer or health maintenance organization. In addition, residents of Minnesota who purchase life insurance, annuities, health insurance, or health maintenance organization coverage from insurance companies authorized to do business in Minnesota are protected, SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer or health maintenance organization becomes financially impaired or insolvent. This protection is provided by the Minnesota Life and Health Insurance Guaranty Association. For purposes of this notice, the terms "insurance company" and "insurer" include health maintenance organizations. Minnesota Life and Health Insurance Guaranty Association (insert current address and telephone number) The maximum amount the guaranty association will pay for all policies or contracts issued on one life by the same insurer or health maintenance organization is limited to $500,000. Subject to this $500,000 limit, the guaranty association will pay up to $500,000 in life insurance death benefits, $130,000 in net cash surrender and net cash withdrawal values for life insurance, $500,000 in health insurance, health maintenance organization, and long-term care benefits, including any net cash surrender and net cash withdrawal values, $500,000 in disability income insurance, $250,000 in annuity net cash surrender and net cash withdrawal values, $410,000 in present value of annuity benefits for annuities which are part of a structured settlement or for annuities in regard to which periodic annuity benefits, for a period of not less than the annuitant's lifetime or for a period certain of not less than ten years, have begun to be paid on or before the date of impairment or insolvency, or if no coverage limit has been specified for a covered policy or benefit, the coverage limit shall be $500,000 in present value. Unallocated annuity contracts issued to retirement plans, other than defined benefit plans, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992, are covered up to $250,000 in net cash surrender and net cash withdrawal values, for Minnesota residents covered by the plan provided, however, that the association shall not be responsible for more than $10,000,000 in claims from all Minnesota residents covered by the plan. If total claims exceed $10,000,000, the $10,000,000 shall be prorated among all claimants. These are the maximum claim amounts. Coverage by the guaranty association is also subject to other substantial limitations and exclusions and requires continued residency in Minnesota. If your claim exceeds the guaranty association's limits, you may still recover a part or all of that amount from the proceeds of the liquidation of the insolvent insurer, if any exist. Funds to pay claims may not be immediately available. The guaranty association assesses insurers and health maintenance organizations licensed to sell life and health insurance in Minnesota after the insolvency occurs. Claims are paid from this assessment. Benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates. THE COVERAGE PROVIDED BY THE GUARANTY ASSOCIATION IS NOT A SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES THAT ARE WELL MANAGED AND FINANCIALLY STABLE. IN SELECTING AN INSURANCE COMPANY, CONTRACT, OR POLICY, YOU SHOULD NOT RELY ON COVERAGE BY THE GUARANTY ASSOCIATION. THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE POLICYHOLDERS OF LIFE, ANNUITY, HEALTH INSURANCE, OR HEALTH MAINTENANCE ORGANIZATION POLICIES AND CONTRACTS OF THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES FINANCIALLY IMPAIRED OR INSOLVENT. THIS NOTICE IN NO WAY IMPLIES THAT THE COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS. ALL LIFE, ANNUITY, HEALTH INSURANCE, AND HEALTH MAINTENANCE ORGANIZATION POLICIES AND CONTRACTS ARE REQUIRED TO PROVIDE THIS NOTICE." Additional language may be added to the notice if approved by the commissioner prior to its use in the form. This section does not apply to fraternal benefit societies regulated under chapter 64B. Subd. 9. Combination fixed-variable policy. The notice required in subdivision 8 must clearly describe what portions of a combination fixed-variable policy are not covered by the Minnesota Life and Health Insurance Guaranty Association. The notice requirements specified in subdivision 7, paragraph (c), do not apply to a combination fixed-variable policy. Subd. 10. Effect of notices. The distribution, delivery, contents, or interpretation of the notices described in subdivision 7, 8, or 9 shall not mean that either the policy or contract, or the owner or holder thereof, would be covered in the event of the impairment or insolvency of a member insurer if coverage is not otherwise provided by sections 61B.18 to 61B.32. Failure to receive the notice does not give the policyholder, contract holder, certificate holder, insured, owner, beneficiaries, assignees, or payees any greater rights than those provided by sections 61B.18 to 61B.32. History:  1993 c 319 s 13; 1995 c 258 s 19,20; 1996 c 446 art 1 s 21; 1999 c 227 s 22; 2001 c 142 s 32-34; 2009 c 37 art 3 s 16,17; 2010 c 275 art 1 s 12; 2020 c 80 art 2 s 26-31
61B.29 EXAMINATION; ANNUAL REPORT. The association is subject to examination and regulation by the commissioner. The board of directors shall submit to the commissioner before May 1 each year, a financial report in a form approved by the commissioner and a report of its activities during the association's preceding fiscal year. Upon request of a member insurer, the association must provide the member insurer with a copy of the report. History:  1993 c 319 s 14; 2001 c 142 s 35
61B.30 TAX EXEMPTIONS. Subdivision 1. State fees and taxes. The association is exempt from payment of all taxes imposed under chapter 297I and all fees and all other taxes levied by this state or its subdivisions, except taxes levied on real property. Subd. 2. Federal and foreign state taxes. The association may seek exemption from payment of all fees and taxes levied by the federal or any other state government or its subdivision. History:  1993 c 319 s 15; 2000 c 394 art 2 s 12
61B.31 INDEMNIFICATION. The association has authority to indemnify certain persons against certain expenses and liabilities as provided in section 302A.521, including the power to purchase and maintain insurance on behalf of these persons as provided by section 302A.521, subdivision 7. In applying section 302A.521 for this purpose, the term "member insurers" shall be substituted for the terms "shareholders" and "stockholders" and the term "association" shall be substituted for the term "corporation." History:  1993 c 319 s 16; 2005 c 69 art 3 s 13
61B.32 STAY OF PROCEEDINGS; REOPENING DEFAULT JUDGMENTS. All proceedings in which the insolvent insurer is a party in a court in this state must be stayed 60 days from the date an order of liquidation, rehabilitation, or conservation is final to permit proper legal action by the association on matters germane to its powers or duties. As to judgment under a decision, order, verdict, or finding based on default, the association may apply to have the judgment set aside by the same court that made the judgment and may defend against the suit on the merits. History:   1993 c 319 s 17 
61B.33 RIGHTS AND OBLIGATIONS OF ASSOCIATION. Notwithstanding any other provision of law, the provisions of the Minnesota Life and Health Insurance Guaranty Association Act in effect on the date the association first becomes obligated for the policies or contracts of an insolvent or impaired member insurer govern the association's rights or obligations to the policy owners, contract owners, or enrollees of the insolvent or impaired member insurer. History:   2020 c 80 art 2 s 32 
62A.01 REQUIREMENTS; CERTIFICATES OF COVERAGE UNDER POLICY OF ACCIDENT AND SICKNESS INSURANCE. 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 this chapter and chapter 62E. This subdivision supersedes any inconsistent provision of this chapter and chapter 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 this chapter and chapter 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 this chapter or chapter 62E. History:  1967 c 395 art 3 s 1; 1989 c 330 s 8
62A.011 DEFINITIONS. Subdivision 1. Applicability. For purposes of this chapter, the terms defined in this section have the meanings given. Subd. 1a. Affordable Care Act. "Affordable Care Act" means the federal Patient Protection and Affordable Care Act, Public Law 111-148, as amended, including the federal Health Care and Education Reconciliation Act of 2010, Public Law 111-152, and any amendments to, and any federal guidance or regulations issued under, these acts. Subd. 1b. Grandfathered plan. "Grandfathered plan" means a health plan in which an individual was enrolled on March 23, 2010, for as long as it maintains that status in accordance with the Affordable Care Act. Unless otherwise specified, grandfathered plans include both individual and group health plans. Subd. 1c. Group health plan. "Group health plan" means a policy or certificate issued to an employer or an employee organization that is both: (1) a health plan as defined in subdivision 3; and (2) an employee welfare benefit plan as defined in the Employee Retirement Income Security Act of 1974, United States Code, title 29, section 1002, if the plan provides payment for medical care to employees, including both current and former employees, or their dependents, directly or through insurance, reimbursement, or otherwise, including employee welfare benefit plans specifically exempt from the provisions of the Employee Retirement Income Security Act of 1974 under United States Code, title 29, section 1003. Subd. 2. Health carrier. "Health carrier" means an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a nonprofit health service plan corporation operating under chapter 62C; a health maintenance organization operating under chapter 62D; a fraternal benefit society operating under chapter 64B; or a joint self-insurance employee health plan operating under chapter 62H. Subd. 3. Health plan. "Health plan" means a policy or certificate of accident and sickness insurance as defined in section 62A.01 offered by an insurance company licensed under chapter 60A; a subscriber contract or certificate offered by a nonprofit health service plan corporation operating under chapter 62C; a health maintenance contract or certificate offered by a health maintenance organization operating under chapter 62D; a health benefit certificate offered by a fraternal benefit society operating under chapter 64B; or health coverage offered by a joint self-insurance employee health plan operating under chapter 62H. Health plan means individual and group coverage, unless otherwise specified. Health plan does not include coverage that is: (1) limited to disability or income protection coverage; (2) automobile medical payment coverage; (3) liability insurance, including general liability insurance and automobile liability insurance, or coverage issued as a supplement to liability insurance; (4) designed solely to provide payments on a per diem, fixed indemnity, or non-expense-incurred basis, including coverage only for a specified disease or illness or hospital indemnity or other fixed indemnity insurance, if the benefits are provided under a separate policy, certificate, or contract for insurance; there is no coordination between the provision of benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor; and the benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor; (5) credit accident and health insurance as defined in section 62B.02; (6) designed solely to provide hearing, dental, or vision care; (7) blanket accident and sickness insurance as defined in section 62A.11; (8) accident-only coverage; (9) a long-term care policy as defined in section 62A.46 or 62S.01; (10) issued as a supplement to Medicare, as defined in sections 62A.3099 to 62A.44, or policies, contracts, or certificates that supplement Medicare issued by health maintenance organizations or those policies, contracts, or certificates governed by section 1833 or 1876, section 1851, et seq.; or section 1860D-1, et seq., of title XVIII of the federal Social Security Act, et seq., as amended; (11) workers' compensation insurance; (12) issued solely as a companion to a health maintenance contract as described in section 62D.12, subdivision 1a, so long as the health maintenance contract meets the definition of a health plan; (13) coverage for on-site medical clinics; or (14) coverage supplemental to the coverage provided under United States Code, title 10, chapter 55, Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). Subd. 4. Individual health plan. "Individual health plan" means a health plan as defined in subdivision 3 that is offered to individuals in the individual market as defined in subdivision 5, but does not mean short-term coverage as defined in section 62A.65, subdivision 7. For purposes of this chapter, a health carrier shall not be deemed to be offering individual health plan coverage solely because the carrier maintains a conversion policy in connection with a group health plan. Subd. 5. Individual market. "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan. Subd. 6. MNsure. "MNsure" means MNsure as defined in section 62V.02. Subd. 7. Qualified health plan. "Qualified health plan" means a health plan that meets the definition in section 1301(a) of the Affordable Care Act and has been certified by the board of MNsure in accordance with chapter 62V to be offered through MNsure. History:  1992 c 549 art 3 s 2; 1993 c 247 art 3 s 4; 1994 c 625 art 10 s 3; 1997 c 71 art 2 s 3; 2005 c 17 art 1 s 14; 2009 c 178 art 1 s 20; 2013 c 84 art 1 s 4-11; 2013 c 108 art 1 s 67
62A.02 POLICY FORMS. Subdivision 1. Filing. For purposes of this section, "health plan" means a health plan as defined in section 62A.011 or a policy of accident and sickness insurance as defined in section 62A.01. No health plan shall be issued or delivered to any person in this state, nor shall any application, rider, or endorsement be used in connection with the health plan, until a copy of its form and of the classification of risks and the premium rates pertaining to the form have been filed with the commissioner. The filing for nongroup health plan forms shall include a statement of actuarial reasons and data to support the rate. For health benefit plans as defined in section 62L.02, and for health plans to be issued to individuals, the health carrier shall file with the commissioner the information required in section 62L.08, subdivision 8. For group health plans for which approval is sought for sales only outside of the small employer market as defined in section 62L.02, this section applies only to policies or contracts of accident and sickness insurance. All forms intended for issuance in the individual or small employer market must be accompanied by a statement as to the expected loss ratio for the form. Premium rates and forms relating to specific insureds or proposed insureds, whether individuals or groups, need not be filed, unless requested by the commissioner. Subd. 2. Approval. (a) The health plan form shall not be issued, nor shall any application, rider, endorsement, or rate be used in connection with it, until the expiration of 60 days after it has been filed unless the commissioner approves it before that time. (b) Notwithstanding paragraph (a), a rate filed with respect to a policy of accident and sickness insurance as defined in section 62A.01 by an insurer licensed under chapter 60A, may be used on or after the date of filing with the commissioner. Rates that are not approved or disapproved within the 60-day time period are deemed approved. This paragraph does not apply to Medicare-related coverage as defined in section 62A.3099, subdivision 17. (c) For coverage to begin on or after January 1, 2016, and each January 1 thereafter, health plans in the individual and small group markets that are not grandfathered plans to be offered outside MNsure and qualified health plans to be offered inside MNsure must receive rate approval from the commissioner no later than 30 days prior to the beginning of the annual open enrollment period for MNsure. Premium rates for all carriers in the applicable market for the next calendar year must be made available to the public by the commissioner only after all rates for the applicable market are final and approved. Final and approved rates must be publicly released at a uniform time for all individual and small group health plans that are not grandfathered plans to be offered outside MNsure and qualified health plans to be offered inside MNsure, and no later than 30 days prior to the beginning of the annual open enrollment period for MNsure. Subd. 3. Standards for disapproval. (a) The commissioner shall, within 60 days after the filing of any form or rate, disapprove the form or rate: (1) if the benefits provided are not reasonable in relation to the premium charged; (2) if it contains a provision or provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the health plan form, or otherwise does not comply with this chapter, chapter 62L, or chapter 72A; (3) if the proposed premium rate is excessive or not adequate; or (4) the actuarial reasons and data submitted do not justify the rate. The party proposing a rate has the burden of proving by a preponderance of the evidence that it does not violate this subdivision. In determining the reasonableness of a rate, the commissioner shall also review all administrative contracts, service contracts, and other agreements to determine the reasonableness of the cost of the contracts or agreement and effect of the contracts on the rate. If the commissioner determines that a contract or agreement is not reasonable, the commissioner shall disapprove any rate that reflects any unreasonable cost arising out of the contract or agreement. The commissioner may require any information that the commissioner deems necessary to determine the reasonableness of the cost. For the purposes of this subdivision, the commissioner shall establish by rule a schedule of minimum anticipated loss ratios which shall be based on (i) the type or types of coverage provided, (ii) whether the policy is for group or individual coverage, and (iii) the size of the group for group policies. Except for individual policies of disability or income protection insurance, the minimum anticipated loss ratio shall not be less than 50 percent after the first year that a policy is in force. All applicants for a policy shall be informed in writing at the time of application of the anticipated loss ratio of the policy. "Anticipated loss ratio" means the ratio at the time of filing, at the time of notice of withdrawal under subdivision 4a, or at the time of subsequent rate revision of the present value of all expected future benefits, excluding dividends, to the present value of all expected future premiums. If the commissioner notifies a health carrier that has filed any form or rate that it does not comply with this chapter, chapter 62L, or chapter 72A, it shall be unlawful for the health carrier to issue or use the form or rate. In the notice the commissioner shall specify the reasons for disapproval and state that a hearing will be granted within 20 days after request in writing by the health carrier. The 60-day period within which the commissioner is to approve or disapprove the form or rate does not begin to run until a complete filing of all data and materials required by statute or requested by the commissioner has been submitted. However, if the supporting data is not filed within 30 days after a request by the commissioner, the rate is not effective and is presumed to be an excessive rate. (b) When an insurer or the Minnesota Comprehensive Health Association fails to respond to an objection or inquiry within 60 days, the filing is automatically disapproved. A resubmission is required if action by the Department of Commerce is subsequently requested. An additional filing fee is required for the resubmission. Subd. 3a. Individual policy rates; file and use; minimum lifetime loss ratio guarantee. (a) Notwithstanding subdivisions 2, 3, 4a, 5a, and 6, individual premium rates may be used upon filing with the department of an individual policy form if the filing is accompanied by the individual policy form filing and a minimum lifetime loss ratio guarantee. Insurers may use the filing procedure specified in this subdivision only if the affected individual policy forms disclose the benefit of a minimum lifetime loss ratio guarantee. Insurers may amend individual policy forms to provide for a minimum lifetime loss ratio guarantee. If an insurer elects to use the filing procedure in this subdivision for an individual policy rate, the insurer shall not use a filing of premium rates that does not provide a minimum lifetime loss ratio guarantee for that individual policy rate. (b) The minimum lifetime loss ratio guarantee must be in writing and must contain at least the following: (1) an actuarial memorandum specifying the expected loss ratio that complies with the standards as set forth in this subdivision; (2) a statement certifying that all rates, fees, dues, and other charges are not excessive, inadequate, or unfairly discriminatory; (3) detailed experience information concerning the policy forms; (4) a step-by-step description of the process used to develop the minimum lifetime loss ratio, including demonstration with supporting data; (5) guarantee of specific minimum lifetime loss ratio that must be greater than or equal to 65 percent for policies issued to individuals or for certificates issued to members of an association that does not offer coverage to small employers, taking into consideration adjustments for duration; (6) a guarantee that the actual Minnesota loss ratio for the calendar year in which the new rates take effect, and for each year thereafter until new rates are filed, will meet or exceed the minimum lifetime loss ratio standards referred to in clause (5), adjusted for duration; (7) a guarantee that the actual Minnesota lifetime loss ratio shall meet or exceed the minimum lifetime loss ratio standards referred to in clause (5); and (8) if the annual earned premium volume in Minnesota under the particular policy form is less than $2,500,000, the minimum lifetime loss ratio guarantee must be based partially on the Minnesota earned premium and other credible factors as specified by the commissioner. (c) The actual Minnesota minimum loss ratio results for each year at issue must be independently audited at the insurer's expense, and the audit report must be filed with the commissioner not later than 120 days after the end of the year at issue. (d) The insurer shall refund premiums in the amount necessary to bring the actual loss ratio up to the guaranteed minimum lifetime loss ratio. For the purpose of this paragraph, loss ratio and guaranteed minimum lifetime loss ratio are the expected aggregate loss ratio of all approved individual policy forms that provide for a minimum lifetime loss ratio guarantee. (e) A Minnesota policyholder affected by the guaranteed minimum lifetime loss ratio shall receive a portion of the premium refund relative to the premium paid by the policyholder. The refund must be made to all Minnesota policyholders insured under the applicable policy form during the year at issue if the refund would equal $10 or more per policy. The refund must include statutory interest from July 1 of the year at issue until the date of payment. Payment must be made not later than 180 days after the end of the year at issue. (f) Premium refunds of less than $10 per insured must be credited to the policyholder's account. (g) Subdivisions 2 and 3 do not apply if premium rates are filed with the department and accompanied by a minimum lifetime loss ratio guarantee that meets the requirements of this subdivision. Such filings are deemed approved. When determining a loss ratio for the purposes of a minimum lifetime loss ratio guarantee, the insurer shall divide the total of the claims incurred, plus preferred provider organization expenses, case management, and utilization review expenses, plus reinsurance premiums less reinsurance recoveries by the premiums earned less state and local taxes less other assessments. The insurer shall identify any assessment allocated. (h) The policy form filing of an insurer using the filing procedure with a minimum lifetime loss ratio guarantee must disclose to the enrollee, member, or subscriber an explanation of the minimum lifetime loss ratio guarantee, and the actual loss ratio, and any adjustments for duration. (i) The insurer who elects to use the filing procedure with a minimum lifetime loss ratio guarantee shall notify all policyholders of the refund calculation, the result of the refund calculation, the percentage of premium on an aggregate basis to be refunded, if any, any amount of the refund attributed to the payment of interests, and an explanation of amounts less than $10. Subd. 4.  [Repealed, 1992 c 549 art 3 s 23] Subd. 4a. Withdrawal of approval. The commissioner may, at any time after a 20-day written notice has been given to the insurer, withdraw approval of any form or rate that has previously been approved on any of the grounds stated in this section. It is unlawful for the health carrier to issue a form or rate or use it in connection with any health plan after the effective date of the withdrawal of approval. The notice of withdrawal of approval must advise the health carrier of the right to a hearing under the contested case procedures of chapter 14, and must specify the matters to be considered at the hearing. The commissioner may request a health carrier to provide actuarial reasons and data, as well as other information, needed to determine if a previously approved rate continues to satisfy the requirements of this section. If the requested information is not provided within 30 days after request by the commissioner, the rate is presumed to be an excessive rate. Subd. 5.  [Repealed, 1992 c 549 art 3 s 23; 1994 c 625 art 10 s 49] Subd. 5a. Hearing. The health carrier must request a hearing before the 20-day notice period has ended, or the commissioner's order is final. A request for hearing stays the commissioner's order until the commissioner notifies the health carrier of the result of the hearing. The commissioner's order may require the modification of any rate or form and may require continued coverage to persons covered under a health plan to which the disapproved form or rate applies. Subd. 6. Appeal. Any order or decision of the commissioner under this section shall be subject to appeal in accordance with chapter 14. Subd. 7. Filing by domestic insurers for purposes of complying with another state's filing requirements. A domestic insurer may file with the commissioner for informational purposes only a policy or certificate of insurance that is not intended to be offered or sold within this state. This subdivision only applies to the filing in Minnesota of a policy or certificate of insurance issued to an insured or certificate holder located outside of this state when the filing is for the express purpose of complying with the law of the state in which the insured or certificate holder resides. In no event may a policy or certificate of insurance filed under this subdivision for out-of-state use be issued or delivered in Minnesota unless and until the policy or certificate of insurance is approved under subdivision 2. Subd. 8. Filing by health carriers for purposes of complying with the certification requirements of MNsure. No qualified health plan shall be offered through MNsure until its form and the premium rates pertaining to the form have been approved by the commissioner of commerce or health, as appropriate, and the health plan has been determined to comply with the certification requirements of MNsure in accordance with an agreement between the commissioners of commerce and health and MNsure. History:  1967 c 395 art 3 s 2; 1976 c 296 art 2 s 10,11; 1977 c 409 s 1; 1979 c 207 s 1; 1980 c 509 s 18; 1982 c 424 s 130; 1983 c 247 s 31; 1986 c 444; 1986 c 455 s 9,10; 1992 c 549 art 3 s 3-7; 1993 c 247 art 3 s 5; 1996 c 446 art 1 s 22; 2002 c 330 s 8; 2002 c 387 s 1; 2005 c 17 art 1 s 14; 2006 c 255 s 7,8; 2013 c 84 art 1 s 12; 2013 c 108 art 1 s 67; 2015 c 71 art 12 s 1
62A.021 HEALTH CARE POLICY RATES. Subdivision 1. Loss ratio standards. (a) Notwithstanding section 62A.02, subdivision 3, relating to loss ratios, and except as otherwise authorized by section 62A.02, subdivision 3a, for individual policies or certificates, health care policies or certificates shall not be delivered or issued for delivery to an individual or to a small employer as defined in section 62L.02, unless the policies or certificates can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to Minnesota policyholders and certificate holders in the form of aggregate benefits not including anticipated refunds or credits, provided under the policies or certificates, (1) at least 75 percent of the aggregate amount of premiums earned in the case of policies issued in the small employer market, as defined in section 62L.02, subdivision 27, calculated on an aggregate basis; and (2) at least 65 percent of the aggregate amount of premiums earned in the case of each policy form or certificate form issued in the individual market; calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for the period and according to accepted actuarial principles and practices. Assessments by the reinsurance association created in chapter 62L and all types of taxes, surcharges, or assessments created by Laws 1992, chapter 549, or created on or after April 23, 1992, are included in the calculation of incurred claims experience or incurred health care expenses. The applicable percentage for policies and certificates issued in the small employer market, as defined in section 62L.02, increases by one percentage point on July 1 of each year, beginning on July 1, 1994, until an 82 percent loss ratio is reached on July 1, 2000. The applicable percentage for policy forms and certificate forms issued in the individual market increases by one percentage point on July 1 of each year, beginning on July 1, 1994, until a 72 percent loss ratio is reached on July 1, 2000. A health carrier that enters a market after July 1, 1993, does not start at the beginning of the phase-in schedule and must instead comply with the loss ratio requirements applicable to other health carriers in that market for each time period. Premiums earned and claims incurred in markets other than the small employer and individual markets are not relevant for purposes of this section. (b) All filings of rates and rating schedules shall demonstrate that actual expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards, and aggregate loss ratio from inception of the policy form or certificate form shall equal or exceed the appropriate loss ratio standards. (c) A health carrier that issues health care policies and certificates to individuals or to small employers, as defined in section 62L.02, in this state shall file annually its rates, rating schedule, and supporting documentation including ratios of incurred losses to earned premiums by policy form or certificate form duration for approval by the commissioner according to the filing requirements and procedures prescribed by the commissioner. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. If the data submitted does not confirm that the health carrier has satisfied the loss ratio requirements of this section, the commissioner shall notify the health carrier in writing of the deficiency. The health carrier shall have 30 days from the date of the commissioner's notice to file amended rates that comply with this section. If the health carrier fails to file amended rates within the prescribed time, the commissioner shall order that the health carrier's filed rates for the nonconforming policy form or certificate form be reduced to an amount that would have resulted in a loss ratio that complied with this section had it been in effect for the reporting period of the supplement. The health carrier's failure to file amended rates within the specified time or the issuance of the commissioner's order amending the rates does not preclude the health carrier from filing an amendment of its rates at a later time. The commissioner shall annually make the submitted data available to the public at a cost not to exceed the cost of copying. The data must be compiled in a form useful for consumers who wish to compare premium charges and loss ratios. (d) Each sale of a policy or certificate that does not comply with the loss ratio requirements of this section is an unfair or deceptive act or practice in the business of insurance and is subject to the penalties in sections 72A.17 to 72A.32. (e)(1) For purposes of this section, health care policies issued as a result of solicitations of individuals through the mail or mass media advertising, including both print and broadcast advertising, shall be treated as individual policies. (2) For purposes of this section, (i) "health care policy" or "health care certificate" is a health plan as defined in section 62A.011; and (ii) "health carrier" has the meaning given in section 62A.011 and includes all health carriers delivering or issuing for delivery health care policies or certificates in this state or offering these policies or certificates to residents of this state. (f) The loss ratio phase-in as described in paragraph (a) does not apply to individual policies and small employer policies issued by a health plan company that is assessed less than three percent of the total annual amount assessed by the Minnesota Comprehensive Health Association. These policies must meet a 68 percent loss ratio for individual policies, a 71 percent loss ratio for small employer policies with fewer than ten employees, and a 75 percent loss ratio for all other small employer policies. (g) Notwithstanding paragraphs (a) and (f), the loss ratio shall be 60 percent for a health plan as defined in section 62A.011, offered by an insurance company licensed under chapter 60A that is assessed less than ten percent of the total annual amount assessed by the Minnesota Comprehensive Health Association. For purposes of the percentage calculation of the association's assessments, an insurance company's assessments include those of its affiliates. (h) The commissioners of commerce and health shall each annually issue a public report listing, by health plan company, the actual loss ratios experienced in the individual and small employer markets in this state by the health plan companies that the commissioners respectively regulate. The commissioners shall coordinate release of these reports so as to release them as a joint report or as separate reports issued the same day. The report or reports shall be released no later than June 1 for loss ratios experienced for the preceding calendar year. Health plan companies shall provide to the commissioners any information requested by the commissioners for purposes of this paragraph. Subd. 2. Compliance audit. The commissioner has the authority to audit any health carrier to assure compliance with this section. Health carriers shall retain at their principal place of business information necessary for the commissioner to perform compliance audits. Subd. 3. Loss ratio disclosure. (a) Each health care policy form or health care certificate form for which subdivision 1 requires compliance with a loss ratio requirement shall prominently display the disclosure provided in paragraph (b) on its declarations sheet if it has one and, if not, on its front page. The disclosure must also be prominently displayed in any marketing materials used in connection with it. (b) The disclosure must be in the following format: Notice: This disclosure is required by Minnesota law. This policy or certificate is expected to return on average (fill in anticipated loss ratio approved by the commissioner) percent of your premium dollar for health care. The lowest percentage permitted by state law for this policy or certificate is (fill in applicable minimum loss ratio). (c) This subdivision applies to policies and certificates issued on or after January 1, 1998. History:  1992 c 549 art 3 s 8; 1993 c 345 art 8 s 2; 1997 c 225 art 2 s 2,3; 2002 c 330 s 9; 2003 c 109 s 1; 2006 c 255 s 9
62A.023 NOTICE OF RATE CHANGE. A health insurer or service plan corporation must send written notice to its policyholders and contract holders at their last known address at least 30 days in advance of the effective date of a proposed rate change. This notice requirement does not apply to individual certificate holders covered by group insurance policies or group subscriber contracts. History:   1995 c 258 s 21 
62A.024 EXPLANATIONS OF RATE INCREASES; ATTRIBUTION TO STATUTORY CHANGES. If any health carrier, as defined in section 62A.011, informs a policyholder or contract holder that a rate increase is due to a statutory change, the health carrier must disclose the specific amount of the rate increase directly due to the statutory change and must identify the specific statutory change. This disclosure must also separate any rate increase due to medical inflation or other reasons from the rate increase directly due to statutory changes in this chapter, chapter 62C, 62D, 62E, 62H, 62J, 62L, or 64B. History:   1993 c 345 art 5 s 4 
62A.03 GENERAL PROVISIONS OF POLICY. Subdivision 1. Conditions. No policy of individual accident and sickness insurance may be delivered or issued for delivery to a person in this state unless: (1) Premium. The entire money and other considerations therefor are expressed therein. (2) Time effective. The time at which the insurance takes effect and terminates is expressed therein. (3) One person. It purports to insure only one person, except that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family deemed the policyholder, any two or more eligible members of that family, including: (a) husband, (b) wife, (c) dependent children as described in sections 62A.302 and 62A.3021, or (d) any other person dependent upon the policyholder. (4) Appearance. The style, arrangement, and overall appearance of the policy give no undue prominence to any portion of the text and every printed portion of the text of the policy and of any endorsements or attached papers is plainly printed in light-face type of a style in general use. The type size must be uniform and not less than ten point with a lowercase unspaced alphabet length not less than 120 point. The "text" includes all printed matter except the name and address of the insurer, name or title of the policy, the brief description, if any, the reference to renewal or cancellation by a separate statement, if any, and the captions and subcaptions. (5) Description of policy. The policy, on the first page, indicates or refers to its provisions for renewal or cancellation either in the brief description, if any, or by a separate statement printed in type not smaller than the type used for captions or a separate provision bearing a caption which accurately describes the renewability or cancelability of the policy. (6) Exceptions in policy. The exceptions and reductions of indemnity are set forth in the policy and, except those which are set forth in section 62A.04, printed, at the insurer's option, either with the benefit provision to which they apply, or under an appropriate caption such as "EXCEPTIONS" or "EXCEPTIONS AND REDUCTIONS." However, if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of the exception or reduction must be included with the benefit provision to which it applies. (7) Form number. Each form, including riders and endorsements, is identified by a form number in the lower left hand corner of the first page thereof. (8) No incorporation by reference. It contains no provision purporting to make any portion of the charter, rules, constitution, or bylaws of the insurer a part of the policy unless the portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates, classification of risks, or short rate table filed with the commissioner. (9) Medical benefits. If the policy contains a provision for medical expense benefits, the term "medical benefits" or similar terms as used therein includes treatments by all licensed practitioners of the healing arts unless, subject to the qualifications contained in clause (10), the policy specifically states the practitioners whose services are covered. (10) Osteopathic physician, optometrist, chiropractor, or registered nurse services. With respect to any policy of individual accident and sickness insurance issued or entered into subsequent to August 1, 1974, notwithstanding the provisions of the policy, if it contains a provision providing for reimbursement for any service which is in the lawful scope of practice of a duly licensed osteopathic physician, optometrist, chiropractor, or registered nurse meeting the requirements of section 62A.15, subdivision 3a, the person entitled to benefits or person performing services under the policy is entitled to reimbursement on an equal basis for the service, whether the service is performed by a physician, osteopathic physician, optometrist, chiropractor, or registered nurse meeting the requirements of section 62A.15, subdivision 3a, licensed under the laws of this state. Subd. 2. Delivery of policy to nonresident. If any policy is issued by an insurer domiciled in this state for delivery to a person residing in another state, and if the official having responsibility for the administration of the insurance laws of such other state shall have advised the commissioner that any such policy is not subject to approval or disapproval by such official, the commissioner may by ruling require that such policy meet the standards set forth in subdivision 1 and in section 62A.04. History:  1967 c 395 art 3 s 3; 1969 c 985 s 1; 1974 c 30 s 1; 1983 c 221 s 1; 2013 c 84 art 1 s 13; 2016 c 119 s 7
62A.04 STANDARD PROVISIONS. Subdivision 1. Reference. (a) Any reference to "standard provisions" which may appear in other sections and which refer to accident and sickness or accident and health insurance shall hereinafter be construed as referring to accident and sickness policy provisions. (b) Notwithstanding paragraph (a), the following do not apply to health plans: (1) subdivision 2, clauses (5) to (10) and (12); (2) subdivision 3, clauses (1) and (3) to (7); and (3) subdivisions 6 and 10. Subd. 2. Required provisions. Except as provided in subdivision 4 each such policy delivered or issued for delivery to any person in this state shall contain the provisions specified in this subdivision in the words in which the same appear in this section. The insurer may, at its option, substitute for one or more of such provisions corresponding provisions of different wording approved by the commissioner which are in each instance not less favorable in any respect to the insured or the beneficiary. Such provisions shall be preceded individually by the caption appearing in this subdivision or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner may approve. (1) A provision as follows: ENTIRE CONTRACT; CHANGES: This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions. (2) A provision as follows: TIME LIMIT ON CERTAIN DEFENSES: (a) After two years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such two year period. The foregoing policy provision shall not be so construed as to affect any legal requirement for avoidance of a policy or denial of a claim during such initial two year period, nor to limit the application of clauses (1), (2), (3), (4) and (5), in the event of misstatement with respect to age or occupation or other insurance. A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium (1) until at least age 50 or, (2) in the case of a policy issued after age 44, for at least five years from its date of issue, may contain in lieu of the foregoing the following provisions (from which the clause in parentheses may be omitted at the insurer's option) under the caption "INCONTESTABLE": After this policy has been in force for a period of two years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application. (b) No claim for loss incurred or disability (as defined in the policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy. (3)(a) Except as required for qualified health plans sold through MNsure to individuals receiving advance payments of the premium tax credit, a provision as follows: GRACE PERIOD: A grace period of ..... (insert a number not less than "7" for weekly premium policies, "10" for monthly premium policies and "31" for all other policies) days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force. A policy which contains a cancellation provision may add, at the end of the above provision, subject to the right of the insurer to cancel in accordance with the cancellation provision hereof. A policy in which the insurer reserves the right to refuse any renewal shall have, at the beginning of the above provision, Unless not less than five days prior to the premium due date the insurer has delivered to the insured or has mailed to the insured's last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted. (b) For qualified health plans sold through MNsure to individuals receiving advance payments of the premium tax credit, a grace period provision must be included that complies with the Affordable Care Act and is no less restrictive than the grace period required by the Affordable Care Act. (4) A provision as follows: REINSTATEMENT: If any renewal premium be not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy. If the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the forty-fifth day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. For health plans described in section 62A.011, subdivision 3, clause (10), an insurer must accept payment of a renewal premium and reinstate the policy, if the insured applies for reinstatement no later than 60 days after the due date for the premium payment, unless: (1) the insured has in the interim left the state or the insurer's service area; or (2) the insured has applied for reinstatement on two or more prior occasions. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than ten days after such date. In all other respects the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than 60 days prior to the date of reinstatement. The last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums (1) until at least age 50, or, (2) in the case of a policy issued after age 44, for at least five years from its date of issue. (5) A provision as follows: NOTICE OF CLAIM: Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at ..... (insert the location of such office as the insurer may designate for the purpose), or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer. In a policy providing a loss-of-time benefit which may be payable for at least two years, an insurer may at its option insert the following between the first and second sentences of the above provision: Subject to the qualifications set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two years, the insured shall, at least once in every six months after having given notice of claim, give to the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of six months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insured's right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which such notice is actually given. (6) A provision as follows: CLAIM FORMS: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within 15 days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made. (7) A provision as follows: PROOFS OF LOSS: Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required. (8) A provision as follows: TIME OF PAYMENT OF CLAIMS: Indemnities payable under this policy for any loss other than loss for which this policy provides periodic payment will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid ..... (insert period for payment which must not be less frequently than monthly) and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof. (9) A provision as follows: PAYMENT OF CLAIMS: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured. The following provisions, or either of them, may be included with the foregoing provision at the option of the insurer: If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $..... (insert an amount which shall not exceed $1,000), to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment. Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services may, at the insurer's option and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person. (10) A provision as follows: PHYSICAL EXAMINATIONS AND AUTOPSY: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law. (11) A provision as follows: LEGAL ACTIONS: No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished. (12) A provision as follows: CHANGE OF BENEFICIARY: Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy. The first clause of this provision, relating to the irrevocable designation of beneficiary, may be omitted at the insurer's option. Subd. 3. Optional provisions. Except as provided in subdivision 4, no such policy delivered or issued for delivery to any person in this state shall contain provisions respecting the matters set forth below unless such provisions are in the words in which the same appear in this section. The insurer may, at its option, use in lieu of any such provision a corresponding provision of different wording approved by the commissioner which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption appearing in this subdivision or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner may approve. (1) A provision as follows: CHANGE OF OCCUPATION: If the insured be injured or contract sickness after having changed occupations to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premiums paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes occupations to one classified by the insurer as less hazardous than that stated in this policy, the insurer, upon receipt of proof of such change of occupation will reduce the premium rate accordingly, and will return the excess pro rata unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such proof, whichever is the more recent. In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the classification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change of occupation. (2) A provision as follows: MISSTATEMENT OF AGE: If the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age. (3) A provision as follows: OTHER INSURANCE IN THIS INSURER: If an accident or sickness or accident and sickness policy or policies previously issued by the insurer to the insured be in force concurrently herewith, making the aggregate indemnity for ..... (insert type of coverage or coverages) in excess of $..... (insert maximum limit of indemnity or indemnities) the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured or to the insured's estate, or, in lieu thereof: Insurance effective at any one time on the insured under a like policy or policies in this insurer is limited to the one such policy elected by the insured, or the insured's beneficiary or estate, as the case may be, and the insurer will return all premiums paid for all other such policies. (4) A provision as follows: INSURANCE WITH OTHER INSURERS: If there be other valid coverage, not with this insurer, providing benefits for the same loss on a provision of service basis or on an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus the total of the like amounts under all such other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for such loss, and for the return of such portion of the premiums paid as shall exceed the pro rata portion for the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the "like amount" of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage. If the foregoing policy provision is included in a policy which also contains the next following policy provision there shall be added to the caption of the foregoing provision the phrase "EXPENSE INCURRED BENEFITS." The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and by hospital or medical service organizations, and to any other coverage the inclusion of which may be approved by the commissioner. In the absence of such definition such term shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workers' compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third-party liability coverage shall be included as "other valid coverage." (5) A provision as follows: INSURANCE WITH OTHER INSURERS: If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and for the return of such portion of the premium paid as shall exceed the pro rata portion for the indemnities thus determined. If the foregoing policy provision is included in a policy which also contains the next preceding policy provision there shall be added to the caption of the foregoing provision the phrase -- "OTHER BENEFITS." The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the commissioner. In the absence of such definition such term shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workers' compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third-party liability coverage shall be included as "other valid coverage." (6) A provision as follows: RELATION OF EARNINGS TO INSURANCE: If the total monthly amount of loss of time benefits promised for the same loss under all valid loss of time coverage upon the insured, whether payable on a weekly or monthly basis, shall exceed the monthly earnings of the insured at the time disability commenced or the insured's average monthly earnings for the period of two years immediately preceding a disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such benefits under this policy as the amount of such monthly earnings or such average monthly earnings of the insured bears to the total amount of monthly benefits for the same loss under all such coverage upon the insured at the time such disability commences and for the return of such part of the premiums paid during such two years as shall exceed the pro rata amount of the premiums for the benefits actually paid hereunder; but this shall not operate to reduce the total monthly amount of benefits payable under all such coverage upon the insured below the sum of $200 or the sum of the monthly benefits specified in such coverages, whichever is the lesser, nor shall it operate to reduce benefits other than those payable for loss of time. The foregoing policy provision may be inserted only in a policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums (1) until at least age 50, or, (2) in the case of a policy issued after age 44, for at least five years from its date of issue. The insurer may, at its option, include in this provision a definition of "valid loss of time coverage," approved as to form by the commissioner, which definition shall be limited in subject matter to coverage provided by governmental agencies or by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, or to any other coverage the inclusion of which may be approved by the commissioner or any combination of such coverages. In the absence of such definition such term shall not include any coverage provided for such insured pursuant to any compulsory benefit statute (including any workers' compensation or employer's liability statute), or benefits provided by union welfare plans or by employer or employee benefit organizations. (7) A provision as follows: UNPAID PREMIUM: Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom. (8) A provision as follows: CANCELLATION: The insurer may cancel this policy at any time by written notice delivered to the insured or mailed to the insured's last address as shown by the records of the insurer, stating when, not less than five days thereafter, such cancellation shall be effective; and after the policy has been continued beyond its original term the insured may cancel this policy at any time by written notice delivered or mailed to the insurer, effective upon receipt or on such later date as may be specified in such notice. In the event of cancellation, the insurer will return promptly the unearned portion of any premium paid. Regardless of whether it is the insurer or the insured who cancels, the earned premium shall be computed pro rata, unless the mode of payment is monthly or less, or if the unearned amount is for less than one month. Cancellation shall be without prejudice to any claim originating prior to the effective date of cancellation. (9) A provision as follows: CONFORMITY WITH STATE STATUTES: Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to the minimum requirements of such statutes. (10) A provision as follows: ILLEGAL OCCUPATION: The insurer shall not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation. (11) A provision as follows: NARCOTICS: The insurer shall not be liable for any loss sustained or contracted in consequence of the insured's being under the influence of any narcotic unless administered on the advice of a physician. Subd. 4. Coverage inconsistent. If any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy the insurer, with the approval of the commissioner, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of the provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy. Subd. 5. Order of provisions. The provisions which are the subject of subdivisions 2 and 3, or any corresponding provisions which are used in lieu thereof in accordance with subdivisions 2 and 3, shall be printed in the consecutive order of the provisions in subdivisions 2 and 3 or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued. Subd. 6. Applicant other than insured. The word "insured," as used in sections 62A.01 to 62A.09, shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits and rights provided therein. Subd. 7. Reciprocal provisions; foreign insurer. Any policy of a foreign or alien insurer, when delivered or issued for delivery to any person in this state, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of sections 62A.01 to 62A.09 hereof, and which is prescribed or required by the law of the state under which the insurer is organized. Subd. 8. Reciprocal provisions; domestic insurer. Any policy of a domestic insurer may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country. Subd. 9. Rules. The commissioner may make such reasonable rules concerning the procedure for the filing or submission of policies subject to sections 62A.01 to 62A.09, as are necessary, proper or advisable to the administration of sections 62A.01 to 62A.09. This provision shall not abridge any other authority granted the commissioner by law. Subd. 10. Return of premium. A policy of accident and sickness insurance as defined in section 62A.01 may contain or may be amended by rider to provide for a return of premium benefit so long as: (1) the return of premium benefit is not applicable until the policy has been in force for five years; (2) the return of premium benefit is not reduced by an amount greater than the aggregate of any claims paid under the policy; (3) the return of premium benefit is not included in or used with a policy with benefits that are reduced based on an insured's age; (4) the return of premium benefit is not payable in lieu of benefits at the option of the insurer; (5) the insurer demonstrates that the reserve basis for such benefit is adequate; and (6) the cost of the benefit is disclosed to the insured and the insured is given the option of the coverage. History:  1967 c 395 art 3 s 4; 1975 c 359 s 23; 1985 c 248 s 70; 1986 c 444; 1988 c 642 s 1; 1995 c 75 s 1; 1999 c 177 s 37; 2013 c 84 art 1 s 14; 2013 c 108 art 1 s 67; 1Sp2017 c 6 art 5 s 1
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. History:  1971 c 680 s 1; 1973 c 651 s 1; 1976 c 121 s 3; 1980 c 589 s 25; 1984 c 464 s 2; 1986 c 397 s 1; 1987 c 337 s 45; 1989 c 330 s 9
62A.0411 MATERNITY CARE. Every health plan as defined in section 62Q.01, subdivision 3, that provides maternity benefits must, consistent with other coinsurance, co-payment, deductible, and related contract terms, provide coverage of a minimum of 48 hours of inpatient care following a vaginal delivery and a minimum of 96 hours of inpatient care following a caesarean section for a mother and her newborn. The health plan shall not provide any compensation or other nonmedical remuneration to encourage a mother and newborn to leave inpatient care before the duration minimums specified in this section. The health plan must also provide coverage for postdelivery care to a mother and her newborn if the duration of inpatient care is less than the minimums provided in this section. Postdelivery care consists of a minimum of one home visit by a registered nurse. Services provided by the registered nurse include, but are not limited to, parent education, assistance and training in breast and bottle feeding, and conducting any necessary and appropriate clinical tests. The home visit must be conducted within four days following the discharge of the mother and her child. History:   1996 c 335 s 1 
62A.042 FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS. Subdivision 1. Individual family policies. (a) No policy of individual accident and sickness insurance which provides for insurance for more than one person under section 62A.03, subdivision 1, clause (3), and no individual health maintenance contract which provides for coverage for more than one person under chapter 62D, shall be renewed to insure or cover any person in this state or be delivered or issued for delivery to any person in this state unless the policy or contract includes as insured or covered members of the family any newborn infants immediately from the moment of birth and thereafter which insurance or contract shall provide coverage for illness, injury, congenital malformation, or premature birth. For purposes of this paragraph, "newborn infants" includes grandchildren who are financially dependent upon a covered grandparent and who reside with that covered grandparent continuously from birth. No policy or contract covered by this section may require notification to a health carrier as a condition for this dependent coverage. However, if the policy or contract mandates an additional premium for each dependent, the health carrier shall be entitled to all premiums that would have been collected had the health carrier been aware of the additional dependent. The health carrier may withhold payment of any health benefits for the new dependent until it has been compensated with the applicable premium which would have been owed if the health carrier had been informed of the additional dependent immediately. (b) The coverage under paragraph (a) includes benefits for inpatient or outpatient expenses arising from medical and dental treatment up to the limiting age for coverage of the dependent, including orthodontic and oral surgery treatment, involved in the management of birth defects known as cleft lip and cleft palate. Benefits for individuals age 19 up to the limiting age for coverage of the dependent are limited to inpatient or outpatient expenses arising from medical and dental treatment that was scheduled or initiated prior to the dependent turning age 19. If orthodontic services are eligible for coverage under a dental insurance plan and another policy or contract, the dental plan shall be primary and the other policy or contract shall be secondary in regard to the coverage required under paragraph (a). Payment for dental or orthodontic treatment not related to the management of the congenital condition of cleft lip and cleft palate shall not be covered under this provision. Subd. 2. Group policies. (a) No group accident and sickness insurance policy and no group health maintenance contract which provide for coverage of family members or other dependents of an employee or other member of the covered group shall be renewed to cover members of a group located in this state or delivered or issued for delivery to any person in this state unless the policy or contract includes as insured or covered family members or dependents any newborn infants immediately from the moment of birth and thereafter which insurance or contract shall provide coverage for illness, injury, congenital malformation, or premature birth. For purposes of this paragraph, "newborn infants" includes grandchildren who are financially dependent upon a covered grandparent and who reside with that covered grandparent continuously from birth. No policy or contract covered by this section may require notification to a health carrier as a condition for this dependent coverage. However, if the policy or contract mandates an additional premium for each dependent, the health carrier shall be entitled to all premiums that would have been collected had the health carrier been aware of the additional dependent. The health carrier may reduce the health benefits owed to the insured, certificate holder, member, or subscriber by the amount of past due premiums applicable to the additional dependent. (b) The coverage under paragraph (a) includes benefits for inpatient or outpatient expenses arising from medical and dental treatment up to the limiting age for coverage of the dependent, including orthodontic and oral surgery treatment, involved in the management of birth defects known as cleft lip and cleft palate. Benefits for individuals age 19 up to the limiting age for coverage of the dependent are limited to inpatient or outpatient expenses arising from medical and dental treatment that was scheduled or initiated prior to the dependent turning age 19. If orthodontic services are eligible for coverage under a dental insurance plan and another policy or contract, the dental plan shall be primary and the other policy or contract shall be secondary in regard to the coverage required under paragraph (a). Payment for dental or orthodontic treatment not related to the management of the congenital condition of cleft lip and cleft palate shall not be covered under this provision. History:  1973 c 303 s 1; 1984 c 464 s 3; 1988 c 656 s 1; 1995 c 258 s 22; 1996 c 446 art 1 s 23; 2004 c 288 art 3 s 3
62A.043 DENTAL AND PODIATRIC COVERAGE. Subdivision 1. Policies and contracts covered. The provisions of this section shall apply to all individual or group policies or subscriber contracts providing payment for care in this state, which policies or contracts are issued or renewed after August 1, 1976 by an accident and health insurance company regulated under this chapter, or a nonprofit health service plan corporation regulated under chapter 62C. Subd. 2. Services covered. Any policy or contract referred to in subdivision 1 which provides coverage for services which can be lawfully performed within the scope of the license of a duly licensed dentist or podiatrist, shall provide benefits for such services whether performed by a duly licensed physician, dentist or podiatrist. Subd. 3. Disorders covered. Except for policies which only provide coverage for specified diseases, no policy or certificate of health, medical, hospitalization, or accident and sickness insurance regulated under this chapter, or subscriber contract provided by a nonprofit health service plan corporation regulated under chapter 62C, or health maintenance organization regulated under chapter 62D, shall be issued, renewed, continued, delivered, issued for delivery, or executed in this state after August 1, 1987, unless the policy, plan, or contract specifically provides coverage for surgical and nonsurgical treatment of temporomandibular joint disorder and craniomandibular disorder. Coverage shall be the same as that for treatment to any other joint in the body, and shall apply if the treatment is administered or prescribed by a physician or dentist. History:  1973 c 430 s 1; 1976 c 207 s 1; 1987 c 337 s 46
62A.044 PAYMENTS TO GOVERNMENTAL INSTITUTIONS. No group or individual policy of accident and sickness insurance issued or renewed after May 22, 1973, pursuant to this chapter, no group or individual service plan or subscriber contract issued or renewed after May 22, 1973, pursuant to chapter 62C, and no group or individual health maintenance contract issued or renewed after August 1, 1984, pursuant to chapter 62D, shall contain any provision excluding, denying, or prohibiting payments for covered and authorized services rendered or paid by a hospital or medical institution owned or operated by the federal, state, or local government, including correctional facilities, or practitioners therein in any instance wherein charges for such services are imposed against the policyholder, subscriber, or enrollee. The unit of government operating the institution may maintain an action for recovery of such charges. History:  1973 c 471 s 1; 1984 c 464 s 4; 1988 c 656 s 2
62A.045 PAYMENTS ON BEHALF OF ENROLLEES IN GOVERNMENT HEALTH PROGRAMS. (a) As a condition of doing business in Minnesota or providing coverage to residents of Minnesota covered by this section, each health insurer shall comply with the requirements of the federal Deficit Reduction Act of 2005, Public Law 109-171, including any federal regulations adopted under that act, to the extent that it imposes a requirement that applies in this state and that is not also required by the laws of this state. This section does not require compliance with any provision of the federal act prior to the effective date provided for that provision in the federal act. The commissioner shall enforce this section. For the purpose of this section, "health insurer" includes self-insured plans, group health plans (as defined in section 607(1) of the Employee Retirement Income Security Act of 1974), service benefit plans, managed care organizations, pharmacy benefit managers, or other parties that are by contract legally responsible to pay a claim for a health-care item or service for an individual receiving benefits under paragraph (b). (b) No plan offered by a health insurer issued or renewed to provide coverage to a Minnesota resident shall contain any provision denying or reducing benefits because services are rendered to a person who is eligible for or receiving medical benefits pursuant to title XIX of the Social Security Act (Medicaid) in this or any other state; chapter 256 or 256B; or services pursuant to section 252.27; 256L.01 to 256L.10; 260B.331, subdivision 2; 260C.331, subdivision 2; or 393.07, subdivision 1 or 2. No health insurer providing benefits under plans covered by this section shall use eligibility for medical programs named in this section as an underwriting guideline or reason for nonacceptance of the risk. (c) If payment for covered expenses has been made under state medical programs for health care items or services provided to an individual, and a third party has a legal liability to make payments, the rights of payment and appeal of an adverse coverage decision for the individual, or in the case of a child their responsible relative or caretaker, will be subrogated to the state agency. The state agency may assert its rights under this section within three years of the date the service was rendered. For purposes of this section, "state agency" includes prepaid health plans under contract with the commissioner according to sections 256B.69 and 256L.12; children's mental health collaboratives under section 245.493; demonstration projects for persons with disabilities under section 256B.77; nursing homes under the alternative payment demonstration project under section 256B.434; and county-based purchasing entities under section 256B.692. (d) Notwithstanding any law to the contrary, when a person covered by a plan offered by a health insurer receives medical benefits according to any statute listed in this section, payment for covered services or notice of denial for services billed by the provider must be issued directly to the provider. If a person was receiving medical benefits through the Department of Human Services at the time a service was provided, the provider must indicate this benefit coverage on any claim forms submitted by the provider to the health insurer for those services. If the commissioner of human services notifies the health insurer that the commissioner has made payments to the provider, payment for benefits or notices of denials issued by the health insurer must be issued directly to the commissioner. Submission by the department to the health insurer of the claim on a Department of Human Services claim form is proper notice and shall be considered proof of payment of the claim to the provider and supersedes any contract requirements of the health insurer relating to the form of submission. Liability to the insured for coverage is satisfied to the extent that payments for those benefits are made by the health insurer to the provider or the commissioner as required by this section. (e) When a state agency has acquired the rights of an individual eligible for medical programs named in this section and has health benefits coverage through a health insurer, the health insurer shall not impose requirements that are different from requirements applicable to an agent or assignee of any other individual covered. (f) A health insurer must process a clean claim made by a state agency for covered expenses paid under state medical programs within 90 business days of the claim's submission. A health insurer must process all other claims made by a state agency for covered expenses paid under a state medical program within the timeline set forth in Code of Federal Regulations, title 42, section 447.45(d)(4). (g) A health insurer may request a refund of a claim paid in error to the Department of Human Services within two years of the date the payment was made to the department. A request for a refund shall not be honored by the department if the health insurer makes the request after the time period has lapsed. History:  1975 c 247 s 1; 1979 c 174 s 1; 1989 c 282 art 3 s 1; 1990 c 426 art 2 s 2; 1992 c 549 art 4 s 19; 1Sp1993 c 1 art 5 s 1; 1995 c 207 art 10 s 1; 1997 c 225 art 2 s 62; 1999 c 139 art 4 s 2; 1999 c 245 art 4 s 1; 2004 c 228 art 1 s 75; 2006 c 282 art 17 s 1; 2010 c 310 art 13 s 1; 2015 c 71 art 11 s 1; 2016 c 158 art 2 s 7
62A.046 COORDINATION OF BENEFITS. Subdivision 1. Limitation on denial of coverage; payment. No group contract providing coverage for hospital and medical treatment or expenses issued or renewed after August 1, 1984, which is responsible for secondary coverage for services provided, may deny coverage or payment of the amount it owes as a secondary payor solely on the basis of the failure of another group contract, which is responsible for primary coverage, to pay for those services. Subd. 2. Dependent coverage. A group contract which provides coverage of a claimant as a dependent of a parent who has legal responsibility for the dependent's medical care pursuant to a court order under section 518A.41 must make payments directly to the provider of care, the custodial parent, or the Department of Human Services pursuant to section 62A.045. In such cases, liability to the insured is satisfied to the extent of benefit payments made under this section. Subd. 3. Application. This section applies to an insurer, a vendor of risk management services regulated under section 60A.23, a nonprofit health service plan corporation regulated under chapter 62C and a health maintenance organization regulated under chapter 62D. Nothing in this section shall require a secondary payor to pay the obligations of the primary payor nor shall it prevent the secondary payor from recovering from the primary payor the amount of any obligation of the primary payor that the secondary payor elects to pay. Subd. 4. Deductible provision. Payments made by an enrollee or by the commissioner on behalf of an enrollee in the MinnesotaCare program under sections 256L.01 to 256L.10, or a person receiving benefits under chapter 256B, for services that are covered by the policy or plan of health insurance shall, for purposes of the deductible, be treated as if made by the insured. Subd. 5. Payment recovery. The commissioner of human services shall recover payments made by the MinnesotaCare program from the responsible insurer, for services provided by the MinnesotaCare program and covered by the policy or plan of health insurance. Subd. 6. Coordination of benefits. Insurers, vendors of risk management services, nonprofit health service plan corporations, fraternals, and health maintenance organizations may coordinate benefits to prohibit greater than 100 percent coverage when an insured, subscriber, or enrollee is covered by both an individual and a group contract providing coverage for hospital and medical treatment or expenses. Benefits coordinated under this paragraph must provide for 100 percent coverage of an insured, subscriber, or enrollee. To the extent appropriate, all coordination of benefits provisions currently applicable by law or rule to insurers, vendors of risk management services, nonprofit health service plan corporations, fraternals, and health maintenance organizations, shall apply to coordination of benefits between individual and group contracts. Notwithstanding the definition of "plan" in Minnesota Rules, parts 2742.0200, subpart 2, and 4685.0910, subpart 7, an individual contract must coordinate benefits with a group contract under this subdivision consistent with applicable coordination of benefit rules. When a covered person's other coverage is Medicare or TRICARE, a health plan company must determine primacy and coordinate benefits in accordance with the Medicare Secondary Payor or TRICARE provisions of federal law. This subdivision does not apply to specified accident, hospital indemnity, specified disease, or other limited benefit insurance policies. Subd. 7. High-deductible health plans. If a health carrier is advised by a covered person that all health plans covering the person are high-deductible health plans and the person intends to contribute to a health savings account established in accordance with section 223 of the Internal Revenue Code of 1986, the primary high-deductible health plan's deductible is not an allowable expense, except for any health care expense incurred that may not be subject to the deductible as described in section 223(c)(2)(C) of the Internal Revenue Code of 1986. History:  1984 c 538 s 2; 1984 c 655 art 2 s 6 subd 1; 1987 c 370 art 2 s 1; 1989 c 282 art 3 s 2; 1990 c 404 s 1; 1992 c 549 art 4 s 19; 1995 c 207 art 10 s 2; 1995 c 234 art 8 s 56; 2005 c 164 s 29; 1Sp2005 c 7 s 28; 2006 c 280 s 46; 2010 c 384 s 15,16; 2016 c 158 art 2 s 8
62A.047 CHILDREN'S HEALTH SUPERVISION SERVICES AND PRENATAL CARE SERVICES. A policy of individual or group health and accident insurance regulated under this chapter, or individual or group subscriber contract regulated under chapter 62C, health maintenance contract regulated under chapter 62D, or health benefit certificate regulated under chapter 64B, issued, renewed, or continued to provide coverage to a Minnesota resident, must provide coverage for child health supervision services and prenatal care services. The policy, contract, or certificate must specifically exempt reasonable and customary charges for child health supervision services and prenatal care services from a deductible, co-payment, or other coinsurance or dollar limitation requirement. This section does not prohibit the use of policy waiting periods for these services. Minimum benefits may be limited to one visit payable to one provider for all of the services provided at each visit cited in this section subject to the schedule set forth in this section. Nothing in this section applies to a commercial health insurance policy issued as a companion to a health maintenance organization contract, a policy designed primarily to provide coverage payable on a per diem, fixed indemnity, or nonexpense incurred basis, or a policy that provides only accident coverage. A policy, contract, or certificate described under this section may not apply to preexisting condition limitations to individuals under 19 years of age. This section does not apply to individual coverage under a grandfathered plan. "Child health supervision services" means pediatric preventive services, appropriate immunizations, developmental assessments, and laboratory services appropriate to the age of a child from birth to age six, and appropriate immunizations from ages six to 18, as defined by Standards of Child Health Care issued by the American Academy of Pediatrics. Reimbursement must be made for at least five child health supervision visits from birth to 12 months, three child health supervision visits from 12 months to 24 months, once a year from 24 months to 72 months. "Prenatal care services" means the comprehensive package of medical and psychosocial support provided throughout the pregnancy, including risk assessment, serial surveillance, prenatal education, and use of specialized skills and technology, when needed, as defined by Standards for Obstetric-Gynecologic Services issued by the American College of Obstetricians and Gynecologists. History:  1988 c 571 s 1; 1989 c 69 s 1; 1994 c 485 s 26; 1996 c 465 art 5 s 1; 2012 c 247 art 5 s 1; 2013 c 84 art 1 s 15
62A.048 DEPENDENT COVERAGE. (a) A health plan that covers a Minnesota resident must, if it provides dependent coverage, allow dependent children who do not reside with the participant to be covered on the same basis as if they reside with the participant. Every health plan must provide coverage in accordance with section 518A.41 to dependents covered by a qualified court or administrative order meeting the requirements of section 518A.41, and enrollment of a child cannot be denied on the basis that the child was born out of wedlock, the child is not claimed as a dependent on a parent's federal income tax return, or the child does not reside with the parent or in the health carrier's service area. (b) For the purpose of this section, health plan includes coverage offered by community integrated service networks, coverage designed solely to provide dental or vision care, and any plan governed under the federal Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, sections 1001 to 1461. History:  1988 c 689 art 2 s 6; 1995 c 207 art 10 s 3; 1997 c 225 art 2 s 62; 2005 c 164 s 29; 1Sp2005 c 7 s 28; 2006 c 280 s 46
62A.049 LIMITATION ON PREAUTHORIZATIONS; EMERGENCIES. 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. History:  1989 c 330 s 10; 2013 c 84 art 1 s 16
62A.05 CONSTRUCTION OF PROVISIONS. (a) No policy provision which is not subject to section 62A.04 shall make a policy, or any portion thereof, less favorable in any respect to the insured or the beneficiary than the provisions thereof which are subject to sections 62A.01 to 62A.09 hereof. (b) A policy delivered or issued for delivery to any person in this state in violation of sections 62A.01 to 62A.09 hereof, shall be held valid but shall be construed as provided in sections 62A.01 to 62A.09 hereof. When any provision in a policy subject to sections 62A.01 to 62A.09 hereof, is in conflict with any provision of sections 62A.01 to 62A.09 hereof, the rights, duties and obligations of the insurer, the insured and the beneficiary shall be governed by the provisions of sections 62A.01 to 62A.09 hereof. History:   1967 c 395 art 3 s 5 
62A.06 STATEMENTS IN APPLICATION. Subdivision 1. Inclusion in policy. The insured shall not be bound by any statement made in an application for a policy unless a copy of such application is attached to or endorsed on the policy when issued as a part thereof. If any such policy delivered or issued for delivery to any person in this state shall be reinstated or renewed, and the insured or the beneficiary or assignee of such policy shall make written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall within 15 days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request, a copy of such application. If such copy shall not be so delivered or mailed, the insurer shall be precluded from introducing such application as evidence in any action or proceeding based upon or involving such policy or its reinstatement or renewal. Subd. 2. Alterations. No alteration of any written application for any such policy shall be made by any person other than the applicant without written consent, except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant. Subd. 3. Effect of applicant's statement. The falsity of any statement in the application for any policy covered by sections 62A.01 to 62A.09 hereof, may not bar the right to recovery thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer. History:  1967 c 395 art 3 s 6; 1986 c 444
62A.07 RIGHTS OF INSURER, WHEN NOT WAIVED. The acknowledgment by an insurer of the receipt of notice given under any policy covered by sections 62A.01 to 62A.09 hereof, or the furnishing of forms for filing proofs of loss, or the acceptance of such proofs, or the investigation of any claim thereunder shall not operate as a waiver of any of the rights of the insurer in defense of any claim arising under such policy. History:   1967 c 395 art 3 s 7 
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 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. History:  1967 c 395 art 3 s 8; 1989 c 330 s 11
62A.081 PAYMENTS TO FACILITIES OPERATED BY STATE OR LOCAL GOVERNMENT. Every group or individual policy of accident and sickness insurance issued or renewed after July 1, 1973 regulated by this chapter, and every group or individual service plan or subscriber contract issued or renewed after July 1, 1973 regulated by chapter 62C, providing care or payment for care in this state, shall provide payments for services rendered by a hospital or medical facility owned or operated by, or on behalf of, the state or any unit of local government, or practitioners therein, on the same basis as are made for like care in other facilities. The unit of government concerned may maintain an action for recovery of such payments. History:   1973 c 765 s 24 
62A.082 NONDISCRIMINATION IN ACCESS TO TRANSPLANTS. Subdivision 1. Definitions. (a) For the purposes of this section, the following terms have the meanings given unless the context clearly requires otherwise. (b) "Disability" has the meaning given in section 363A.03, subdivision 12. (c) "Enrollee" means a natural person covered by a health plan or group health plan and includes an insured, policy holder, subscriber, covered person, member, contract holder, or certificate holder. (d) "Organ transplant" means the transplantation or transfusion of a part of a human body into the body of another for the purpose of treating or curing a medical condition. Subd. 2. Transplant discrimination prohibited. A health plan or group health plan that provides coverage for anatomical gifts, organ transplants, or related treatment and services shall not: (1) deny coverage to an enrollee based on the enrollee's disability; (2) deny eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the health plan or group health plan solely for the purpose of avoiding the requirements of this section; (3) penalize or otherwise reduce or limit the reimbursement of a health care provider, or provide monetary or nonmonetary incentives to a health care provider, to induce the provider to provide care to a patient in a manner inconsistent with this section; or (4) reduce or limit an enrollee's coverage benefits because of the enrollee's disability for medical services and other services related to organ transplantation performed pursuant to this section as determined in consultation with the enrollee's treating health care provider and the enrollee. Subd. 3. Collective bargaining. In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers, any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement imposed pursuant to this section shall not be treated as a termination of the collective bargaining agreement. Subd. 4. Coverage limitation.  Nothing in this section shall be deemed to require a health plan or group health plan to provide coverage for a medically inappropriate organ transplant. History:   2021 c 30 art 14 s 1 
62A.09 LIMITATION. Nothing in sections 62A.01, 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 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. History:  1967 c 395 art 3 s 9; 1975 c 359 s 23; 1989 c 330 s 12
62A.095 SUBROGATION CLAUSES REGULATED. Subdivision 1. Applicability. (a) A health plan may not be offered, sold, or issued to a resident of this state, or to cover a resident of this state, unless the health plan complies with subdivision 2. (b) Health plans providing benefits under health care programs administered by the commissioner of human services are not subject to the limits described in subdivision 2 but are subject to the right of subrogation provisions under section 256B.37 and the lien provisions under section 256.015; 256B.042; Minnesota Statutes 2010, section 256D.03, subdivision 8; or 256L.03, subdivision 6. For purposes of this section, "health plan" includes coverage that is excluded under section 62A.011, subdivision 3, clauses (4), (6), (7), (8), (9), and (10). Subd. 2. Subrogation clause; limits. No health plan described in subdivision 1 shall contain a subrogation, reimbursement, or similar clause that provides subrogation, reimbursement, or similar rights to the health carrier issuing the health plan, unless: (1) the clause provides that it applies only after the covered person has received a full recovery from another source; and (2) the clause provides that the health carrier's subrogation right is subject to subtraction for actual monies paid to account for the pro rata share of the covered person's costs, disbursements, and reasonable attorney fees, and other expenses incurred in obtaining the recovery from another source unless the health carrier is separately represented by an attorney. If the health carrier is separately represented by an attorney, the health carrier and the covered person, by their attorneys, may enter into an agreement regarding allocation of the covered person's costs, disbursements, and reasonable attorney fees and other expenses. If the health carrier and covered person cannot reach agreement on allocation, the health carrier and covered person shall submit the matter to binding arbitration. Nothing in this section shall limit a health carrier's right to recovery from another source which may otherwise exist at law. For the purposes of this section, full recovery does not include payments made by a health plan to or for the benefit of a covered person. Subd. 3. Retroactive amendments regulated. No addition of, or amendment of, a subrogation, reimbursement, or similar clause in a health plan shall be applied to the disadvantage of a covered person with respect to benefits provided by the health carrier in connection with an injury, illness, condition, or other covered situation that originated prior to the addition of or amendment to the clause. History:  1995 c 219 s 1; 1Sp2001 c 9 art 2 s 1; 2002 c 379 art 1 s 113; 2006 c 255 s 10; 2011 c 108 s 32; 2016 c 158 art 2 s 9
62A.096 NOTICE TO INSURER OF SUBROGATION CLAIM REQUIRED. A person covered by a health carrier who makes a claim against a collateral source for damages that include repayment for medical and medically related expenses incurred for the covered person's benefit shall provide timely notice, in writing, to the health carrier of the pending or potential claim. Notwithstanding any other law to the contrary, the statute of limitations applicable to the rights with respect to reimbursement or subrogation by the health carrier against the covered person does not commence to run until the notice has been given. History:   1995 c 219 s 2 
62A.10 GROUP INSURANCE. Subdivision 1. Requirements. Group accident and health insurance may be issued to cover groups of not less than two employees nor less than ten members, and which may include the employee's or member's dependents, consisting of husband, wife, children, and actual dependents residing in the household. The master policy may be issued to any governmental corporation, unit, agency, or department thereof, or to any corporation, copartnership, individual, employer, to a purchasing pool as described in section 62Q.17, to any association as defined by section 60A.02, subdivision 1a, or to a multiple employer trust, or to the trustee of a fund, established or adopted by two or more employers or maintained for the benefit of members of an association, where officers, members, employees, or classes or divisions thereof, may be insured for their individual benefit. Subd. 2. Group accidental death and group disability income policies. Group accidental death insurance and group disability income insurance policies may be issued in connection with first real estate mortgage loans 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 first real estate mortgage loans, in amounts not to exceed the actual or scheduled amount of their indebtedness. No other accident and health coverages may be issued in connection with first real estate mortgage loans on a group basis to a debtor-creditor group. Subd. 3. Authority to issue. Any insurer authorized to write accident and health insurance in this state shall have power to issue group accident and health policies. Subd. 4. Policy forms. No policy or certificate of group accident and health insurance may be issued or delivered in this state unless the same has been approved by the commissioner in accordance with section 62A.02, subdivisions 1 to 6. These forms shall contain the standard provisions relating and applicable to health and accident insurance and shall conform with the other requirements of law relating to the contents and terms of policies of accident and sickness insurance insofar as they may be applicable to group accident and health insurance, and also the following provisions: (1) Entire contract. A provision that the policy and the application of the creditor, employer, trustee, or executive officer or trustee of any association, and the individual applications, if any, of the debtors, employees, or members, insured, shall constitute the entire contract between the parties, and that all statements made by the creditor, employer, trustee, or any executive officer or trustee on behalf of the group to be insured, shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall be used in defense to a claim under the policy, unless it is contained in the written application; (2) Master policy-certificates. A provision that the insurer will issue a master policy to the creditor, employer, trustee, or to the executive officer or trustee of the association; and the insurer shall also issue to the creditor, the employer, trustee, or to the executive officer or trustee of the association, for delivery to the debtor, employee, or member, who is insured under the policy, an individual certificate setting forth a statement as to the insurance protection to which the debtor, employee, or member is entitled and to whom payable, together with a statement as to when and where the master policy, or a copy thereof, may be seen for inspection by the individual insured. The individual certificate may contain the names of, and insure the dependents of, the employee, or member, as provided for herein; (3) New insureds. A provision that to the group or class thereof originally insured may be added, from time to time, all new employees of the employer, members of the association, or debtors of the creditor eligible to and applying for insurance in that group or class and covered or to be covered by the master policy. (4) Conversion privilege. In the case of accidental death insurance and disability income insurance issued to debtors of a creditor, the policy must contain a conversion privilege permitting an insured debtor to convert, without evidence of insurability, to an individual policy within 30 days of the date the insured debtor's group coverage is terminated, and not replaced with other group coverage, for any reason other than nonpayment of premiums. The individual policy must provide the same amount of insurance and be subject to the same terms and conditions as the group policy and the initial premium for the individual policy must be the same premium the insured debtor was paying under the group policy. This provision does not apply to a group policy which provides that the certificate holder may, upon termination of coverage under the group policy for any reason other than nonpayment of premium, retain coverage provided under the group policy by paying premiums directly to the insurer. History:  1967 c 395 art 3 s 10; 1973 c 303 s 2; 1986 c 444; 1992 c 564 art 1 s 30; 1995 c 234 art 7 s 2,3; 1995 c 258 s 23
62A.105 COVERAGES; TRANSFERS TO SUBSTANTIALLY SIMILAR PRODUCTS. Subdivision 1. Scope. No individual policy of accident and sickness regulated under this chapter or subscriber contract regulated under chapter 62C shall be issued, renewed, or continued to provide coverage to a Minnesota resident unless it satisfies the requirements of subdivision 2. Subd. 2. Requirement. If an issuer of policies or plans referred to in subdivision 1 ceases to offer a particular policy or subscriber contract to the general public or otherwise stops adding new insureds to the group of covered persons, the issuer shall allow any covered person to transfer to another substantially similar policy or contract currently being sold by the issuer. The issuer shall permit the transfer without any preexisting condition limitation, waiting period, or other restriction of any type other than those which applied to the insured under the prior policy or contract. This section does not apply to persons who were covered under an individual policy or contract prior to July 1, 1994. History:   1994 c 485 s 27 
62A.11 BLANKET ACCIDENT AND SICKNESS INSURANCE. Subdivision 1. Requirements. Blanket accident and sickness insurance is hereby declared to be that form of accident and sickness insurance covering special groups of persons as enumerated in one of the following paragraphs: (1) Under a policy issued to any common carrier, which shall be deemed the policyholder, covering a group defined as all or any class of persons who may become passengers on such common carrier. (2) Under a policy issued to an employer, who shall be deemed the policyholder, covering all employees or any group of employees defined by reference to exceptional hazards incident to such employment. (3) Under a policy issued to a college, school, or other institution of learning or to the head or principal thereof, who or which shall be deemed the policyholder, covering students or teachers. (4) Under a policy issued in the name of any volunteer fire department, first aid, or other such volunteer group, which shall be deemed the policyholder, covering all of the members of such department or group. (5) Under a policy issued to a sports team or to a camp, which team or camp or sponsor thereof shall be deemed the policyholder, covering members or campers. (6) Under a policy issued to any other substantially similar group which, in the discretion of the commissioner, may be subject to the issuance of a blanket accident and sickness policy. Subd. 2. Authority. Any insurer authorized to write accident and sickness insurance in this state shall have the power to issue blanket accident and sickness policies. Subd. 3. Policy forms. No policy of blanket accident and sickness insurance may be issued or delivered in this state unless a copy of the form thereof has been approved by the commissioner and it contains in substance such of the provisions required for individual policies as may be applicable to blanket accident and sickness insurance and the following provisions: (1) A provision that the policy and the application of the policyholder shall constitute the entire contract between the parties, and that, in the absence of fraud, all statements made by the policyholder shall be deemed representations and not warranties, and that no statement made for the purpose of affecting insurance shall avoid such insurance or reduce benefits unless contained in a written instrument signed by the policyholder, a copy of which has been furnished to such policyholder. (2) A provision that to the group or class originally insured shall be added from time to time all new persons eligible for coverage. Subd. 4. Application; certificate. An individual application shall not be required from a person covered under a blanket accident and sickness policy, nor shall it be necessary for the insurer to furnish each person a certificate. Subd. 5. Benefits. All benefits under any blanket accident and sickness policy shall be payable to the person insured, or to a designated beneficiary, or beneficiaries, or to the insured's estate, except that if the person insured be a minor, such benefits may be made payable to the insured's parent, guardian, or other person actually supporting the insured. Provided further, however, that the policy may provide that all or any portion of any indemnities provided by any such policy on account of hospital, nursing, medical or surgical services may, at the insurer's option, be paid directly to the hospital or person rendering such services; but the policy may not require that the services be rendered by a particular hospital or person. Payment so made shall discharge the insurer's obligation with respect to the amount of insurance so paid. Subd. 6. Legal liability. Nothing contained in this section shall be deemed to affect the legal liability of policyholders for the death of, or injury to, any such member of such group. History:  1967 c 395 art 3 s 11; 1986 c 444
62A.13 COMMERCIAL TRAVELER INSURANCE COMPANIES. Any domestic assessment, health or accident association now licensed to do business in this state, which confines its membership to commercial travelers, professionals, and others whose occupation is of such character as to be ordinarily classified as no more hazardous than commercial travelers, and which does not pay any other commissions or compensations, other than prizes to members of nominal value in proportion to the membership fees charged for securing new members, may issue certificates of membership, which, with the application of the member and the bylaws of the association, shall constitute the contract between the association and the member. A printed copy of the bylaws and a copy of the application shall be attached to the membership certificate when issued, and a copy of any amendment to the bylaws shall be mailed to the members following their adoption. Certified copies of certificate, bylaws and amendments shall be filed with the commissioner of commerce and subject to the commissioner's approval. The bylaws shall conform to the requirements of this chapter, so far as applicable, and wherever the word "policy" appears in this chapter, it shall, for the purpose of this section, be construed to mean the contract as herein defined. History:  1967 c 395 art 3 s 13; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444
62A.135 FIXED INDEMNITY POLICIES; MINIMUM LOSS RATIOS. Subdivision 1. Definitions. For purposes of this section, the following terms have the meanings given them: (a) "fixed indemnity policy" is a policy form, other than an accidental death and dismemberment policy, a disability income policy, or a long-term care policy as defined in section 62A.46, subdivision 2, that pays a predetermined, specified, fixed benefit for services provided. Claim costs under these forms are generally not subject to inflation, although they may be subject to changes in the utilization of health care services. For policy forms providing both expense-incurred and fixed benefits, the policy form is a fixed indemnity policy if 50 percent or more of the total claims are for predetermined, specified, fixed benefits; (b) "guaranteed renewable" means that, during the renewal period (to a specified age) renewal cannot be declined nor coverage changed by the insurer for any reason other than nonpayment of premiums, fraud, or misrepresentation, but the insurer can revise rates on a class basis upon approval by the commissioner; (c) "noncancelable" means that, during the renewal period (to a specified age) renewal cannot be declined nor coverage changed by the insurer for any reason other than nonpayment of premiums, fraud, or misrepresentation and that rates cannot be revised by the insurer. This includes policies that are guaranteed renewable to a specified age, such as 60 or 65, at guaranteed rates; and (d) "average annualized premium" means the average of the estimated annualized premium per covered person based on the anticipated distribution of business using all significant criteria having a price difference, such as age, sex, amount, dependent status, mode of payment, and rider frequency. For filing of rate revisions, the amount is the anticipated average assuming the revised rates have fully taken effect. Subd. 2. Applicability. This section applies to individual or group policies, certificates, or other evidence of coverage meeting the definition of a fixed indemnity policy, offered, issued, or renewed, to provide coverage to a Minnesota resident. Subd. 3. Minimum loss ratio standards. Notwithstanding section 62A.02, subdivision 3, relating to loss ratios, the minimum loss ratios for fixed indemnity policies are: (1) as shown in the following table:     Guaranteed Renewable Noncancelable   Group 75% 70%   Individual 65% 60%   or (2) for policies or certificates where the average annualized premium is less than $1,000, the average annualized premium less $30, multiplied by the required loss ratio in clause (1), divided by the average annualized premium. However, in no event may the minimum loss ratio be less than the required loss ratio from clause (1) minus ten percent. The commissioner of commerce may adjust the constant dollar amounts provided in clause (2) on January 1 of any year, based upon changes in the CPI-U, the Consumer Price Index for all urban consumers, published by the United States Department of Labor, Bureau of Labor Statistics. Adjustments must be in increments of $5 and must not be made unless at least that amount of adjustment is required to each amount. All rate filings must include a demonstration that the rates are not excessive. Rates are not excessive if the anticipated loss ratio and the lifetime anticipated loss ratio meet or exceed the minimum loss ratio standard in this subdivision. Subd. 4. Renewal provision. An insurer may only issue or renew an individual policy on a guaranteed renewable or noncancelable basis. Subd. 5. Supplemental filings. Each insurer that has fixed indemnity policies in force in this state shall, upon request by the commissioner, submit, in a form prescribed by the commissioner, experience data showing its incurred claims, earned premiums, incurred to earned loss ratio, and the ratio of the actual loss ratio to the expected loss ratio for each fixed indemnity policy form in force in Minnesota. The experience data must be provided on both a Minnesota only and a national basis. If in the opinion of the company's actuary, the deviation of the actual loss ratio from the expected loss ratio for a policy form is due to unusual reserve fluctuations, economic conditions, or other nonrecurring conditions, the insurer should also file that opinion with appropriate justification. If the data submitted does not confirm that the insurer has satisfied the loss ratio requirements of this section, the commissioner shall notify the insurer in writing of the deficiency. The insurer shall have 30 days from the date of receipt of the commissioner's notice to file amended rates that comply with this section or a request for an exemption with appropriate justification. If the insurer fails to file amended rates within the prescribed time and the commissioner does not exempt the policy form from the need for a rate revision, the commissioner shall order that the insurer's filed rates for the nonconforming policy be reduced to an amount that would have resulted in a loss ratio that complied with this section had it been in effect for the reporting period of the supplement. The insurer's failure to file amended rates within the specified time of the issuance of the commissioner's order amending the rates does not preclude the insurer from filing an amendment of its rates at a later time. Subd. 6. Penalties. Each sale of a policy that does not comply with the loss ratio requirements of this section is subject to the penalties in sections 72A.17 to 72A.32. Subd. 7. Solicitations by mail or media advertisement. For purposes of this section, fixed indemnity policies issued without the use of an agent as a result of solicitations of individuals through the mail or mass media advertising, including both print and broadcast advertising, must be treated as group policies. History:  1991 c 325 art 21 s 5; 1995 c 258 s 24; 1996 c 446 art 1 s 26; 1999 c 177 s 38
62A.136 HEARING, DENTAL, AND VISION PLAN COVERAGE. The following provisions do not apply to health plans as defined in section 62A.011, subdivision 3, clause (6), providing hearing, dental, or vision coverage only: sections 62A.041; 62A.0411; 62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 62A.17, subdivision 6; 62A.21, subdivision 2b; 62A.26; 62A.28; 62A.285; 62A.30; 62A.304; and 62A.3093. History:  1994 c 485 s 28; 1995 c 258 s 25; 2000 c 483 s 11; 2005 c 132 s 9; 2009 c 178 art 1 s 21; 2013 c 84 art 1 s 17
62A.14 DISABLED CHILDREN. Subdivision 1. Individual family policies. An individual hospital or medical expense insurance policy delivered or issued for delivery in this state more than 120 days after May 16, 1969, or an individual health maintenance contract delivered or issued for delivery in this state after August 1, 1984, which provides that coverage of a dependent child shall terminate upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of such limiting age shall not operate to terminate the coverage of such child while the child is and continues to be both (a) incapable of self-sustaining employment by reason of developmental disability, mental illness or disorder, or physical disability and (b) chiefly dependent upon the policyholder for support and maintenance, provided proof of such incapacity and dependency is furnished to the insurer or health maintenance organization by the policyholder or enrollee within 31 days of the child's attainment of the limiting age and subsequently as may be required by the insurer or organization but not more frequently than annually after the two-year period following the child's attainment of the limiting age. Any notice regarding termination of coverage due to attainment of the limiting age must include all the information in this section. Subd. 2. Group policies. A group hospital or medical expense insurance policy delivered or issued for delivery in this state more than 120 days after May 16, 1969, or a group health maintenance contract delivered or issued for delivery in this state after August 1, 1984, which provides that coverage of a dependent child of an employee or other member of the covered group shall terminate upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of such limiting age shall not operate to terminate the coverage of such child while the child is and continues to be both (a) incapable of self-sustaining employment by reason of developmental disability, mental illness or disorder, or physical disability and (b) chiefly dependent upon the employee or member for support and maintenance, provided proof of such incapacity and dependency is furnished to the insurer or organization by the employee or member within 31 days of the child's attainment of the limiting age and subsequently as may be required by the insurer or organization but not more frequently than annually after the two-year period following the child's attainment of the limiting age. Any notice regarding termination of coverage due to attainment of the limiting age must include information about this provision. History:  1969 c 436 s 1; 1984 c 464 s 5; 1995 c 258 s 26; 2003 c 40 s 1; 2005 c 56 s 1
62A.141 COVERAGE FOR DISABLED DEPENDENTS. No group policy or group plan of health and accident insurance regulated under this chapter, chapter 62C, or 62D, which provides for dependent coverage may be issued or renewed in this state after August 1, 1983, unless it covers the disabled dependents of the insured, subscriber, or enrollee of the policy or plan. For purposes of this section, a disabled dependent is a person that is and continues to be both: (1) incapable of self-sustaining employment by reason of developmental disability, mental illness or disorder, or physical disability; and (2) chiefly dependent upon the policyholder for support and maintenance. Consequently, the policy or plan shall not contain any provision concerning preexisting condition limitations, insurability, eligibility, or health underwriting approval concerning disabled dependents. If ordered by the commissioner of commerce, the insurer of a Minnesota-domiciled nonprofit association which is composed solely of agricultural members may restrict coverage under this section to apply only to Minnesota residents. History:  1983 c 263 s 8; 1Sp1985 c 10 s 58; 1987 c 337 s 47; 1995 c 258 s 27; 2005 c 56 s 1
62A.145 SURVIVOR; DEFINITION. For the purposes of section 62A.146, "survivor" means a person who would be entitled to and be dependent upon economic support by an insured, subscriber or enrollee if that person were alive; including a spouse, child or children as defined by the policy or plan of accident and health protection. History:  1973 c 339 s 1; 1982 c 555 s 5; 1986 c 444
62A.146 CONTINUATION OF BENEFITS TO SURVIVORS. No policy, contract, or plan of accident and health protection issued by an insurer, nonprofit health service plan corporation, or health maintenance organization, providing coverage of hospital or medical expense on either an expense incurred basis or other than an expense incurred basis which in addition to coverage of the insured, subscriber, or enrollee, also provides coverage to dependents, shall, except upon the written consent of the survivor or survivors of the deceased insured, subscriber, or enrollee, terminate, suspend, or otherwise restrict the participation in or the receipt of benefits otherwise payable under the policy, contract, or plan to the survivor or survivors until the earlier of the following dates: (a) the date the surviving spouse becomes covered under another group health plan; or (b) the date coverage would have terminated under the policy, contract, or plan had the insured, subscriber, or enrollee lived. The survivor or survivors, in order to have the coverage and benefits extended, may be required to pay the entire cost of the protection on a monthly basis. The policy, contract, or plan must require the group policyholder or contract holder to, upon request, provide the insured, subscriber, or enrollee 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 or fee contributions charged exceed 102 percent of the cost to the plan for such period of coverage for other similarly situated spouses and dependent children who are not the survivors of a deceased insured, without regard to whether such cost is paid by the employer or employee. Failure of the survivor to make premium or fee payments within 90 days after notice of the requirement to pay the premiums or fees shall be a basis for the termination of the coverage without written consent. In event of termination by reason of the survivor's failure to make required premium or fee contributions, written notice of cancellation must be mailed to the survivor's last known address at least 30 days before the cancellation. If the coverage is provided under a group policy, contract, or plan, any required premium or fee contributions for the coverage shall be paid by the survivor to the group policyholder or contract holder for remittance to the insurer, nonprofit health service plan corporation, or health maintenance organization. History:  1973 c 339 s 2; 1982 c 555 s 6; 1Sp1985 c 10 s 59; 1986 c 444; 1987 c 337 s 48; 1992 c 564 art 4 s 5
62A.147 DISABLED EMPLOYEES' BENEFITS; DEFINITIONS. Subdivision 1. Scope. For the purposes of this section and section 62A.148, the terms defined in this section shall have the meanings here given them. Subd. 2. Covered employee. "Covered employee" means any person who, at the time that person suffered an injury resulting in total disability or became totally disabled by reason of illness, was employed by and receiving a salary, commission, hourly wage, or other remuneration for services by any employer providing, offering or contributing to group insurance coverage or group coverage through a health maintenance contract, for that employee who was so enrolled for the coverage. Subd. 3. Total disability. "Total disability" means (a) the inability of an injured or ill employee to engage in or perform the duties of the employee's regular occupation or employment within the first two years of such disability and (b) after the first two years of such disability, the inability of the employee to engage in any paid employment or work for which the employee may, by education and training, including rehabilitative training, be or reasonably become qualified. Subd. 4. Group insurance. "Group insurance" means any policy or contract of accident and health protection, including health maintenance contracts, regardless of by whom underwritten, which provides benefits, including cash payments for reimbursement of expenses or the provision of usual needed health care and medical services as the result of any injury, sickness, disability or disease suffered by a group of employees, or any one of them, and which protection is paid for or otherwise provided in full or in part by an employer. Subd. 5. Employer. "Employer" means any natural person, company, corporation, partnership, association, firm, or franchise which employs any employee. Subd. 6. Insurer. "Insurer" means any person, company, corporation including a nonprofit corporation and a health maintenance organization, partnership, association, firm or franchise which underwrites or is by contract or other agreement obligated to provide accident and health protection benefits to any group of employees of any employer. History:  1973 c 340 s 1; 1984 c 464 s 6; 1986 c 444
62A.148 GROUP INSURANCE; PROVISION OF BENEFITS FOR DISABLED EMPLOYEES. No employer or insurer of that employer shall terminate, suspend or otherwise restrict the participation in or the receipt of benefits otherwise payable under any program or policy of group insurance to any covered employee who becomes totally disabled while employed by the employer solely on account of absence caused by such total disability. This includes coverage of dependents of the employee. If the employee is required to pay all or any part of the premium for the extension of coverage, payment shall be made to the employer, by the employee. History:  1973 c 340 s 2; 1994 c 485 s 29
62A.149 BENEFITS FOR ALCOHOLICS AND DRUG DEPENDENTS. Subdivision 1. Application. The provisions of this section apply to all group policies of accident and health insurance and group subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C, and to a plan or policy that is individually underwritten or provided for a specific individual and family members as a nongroup policy, when the policies or subscriber contracts are issued or delivered in Minnesota or provide benefits to Minnesota residents enrolled thereunder. This section does not apply to policies designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis or policies that provide accident only coverage. Every insurance policy or subscriber contract included within the provisions of this subdivision, upon issuance or renewal, shall provide coverage that complies with the requirements of section 62Q.47, paragraphs (b) and (c), for the treatment of alcoholism, chemical dependency, or drug addiction to any Minnesota resident entitled to coverage. Subd. 2.  [Repealed, 2008 c 344 s 56] History:  1973 c 585 s 1,2; 1976 c 262 s 1; 1978 c 793 s 60; 1980 c 496 s 2; 1986 c 444; 2008 c 344 s 9; 2013 c 84 art 1 s 18; 2022 c 98 art 4 s 51
62A.15 COVERAGE OF CERTAIN LICENSED HEALTH PROFESSIONAL SERVICES. Subdivision 1. Applicability. The provisions of this section apply to all group policies or subscriber contracts providing payment for care in this state, which are issued by accident and health insurance companies regulated under this chapter and nonprofit health service plan corporations regulated under chapter 62C. Subd. 2. Chiropractic services. All benefits provided by any policy or contract referred to in subdivision 1, relating to expenses incurred for medical treatment or services of a physician must also include chiropractic treatment and services of a chiropractor to the extent that the chiropractic services and treatment are within the scope of chiropractic licensure. This subdivision is intended to provide equal access to benefits for insureds and subscribers who choose to obtain treatment for illness or injury from a doctor of chiropractic, as long as the treatment falls within the chiropractor's scope of practice. This subdivision is not intended to change or add to the benefits provided for in these policies or contracts. Subd. 3. Optometric services. All benefits provided by any policy or contract referred to in subdivision 1, relating to expenses incurred for medical treatment or services of a physician must also include optometric treatment and services of an optometrist to the extent that the optometric services and treatment are within the scope of optometric licensure. This subdivision is intended to provide equal payment of benefits for optometric treatment and services and is not intended to change or add to the benefits provided for in those policies or contracts. 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 as an advanced practice registered nurse. "Advanced practice registered nurse" has the meaning given in section 148.171, subdivision 3. The advanced practice registered nurse must meet the requirements of sections 148.171 to 148.285. This subdivision is intended to provide payment of benefits for treatment and services by an advanced practice registered nurse as defined in this subdivision and is not intended to add to the benefits provided for in these policies or contracts. Subd. 3b. Acupuncture services. (a) This subdivision, subdivision 4, and section 62D.107 may be cited as the "Equal Access to Acupuncture Act" and as a memorial to Edith R. Davis, Minnesota's pioneer acupuncturist. (b) All benefits provided by a policy or contract referred to in subdivision 1 relating to expenses for acupuncture services that are provided by a physician must also include acupuncture treatment and services of a licensed acupuncture practitioner to the extent that the acupuncture services and treatment are within the scope of acupuncture practitioner licensure. This subdivision is intended to provide equal access to benefits for insureds and subscribers who choose to directly obtain treatment for illness or injury from a licensed acupuncture practitioner, as long as the treatment falls within the scope of practice of the licensed acupuncture practitioner. This subdivision is not intended to change or add to the benefits provided for in these policies or contracts. Subd. 3c. Physician assistant 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 licensed physician, must include services provided by a physician assistant licensed under chapter 147A. This subdivision is intended to provide payment of benefits for treatment and services by a physician assistant and is not intended to add to the benefits provided for in these policies or contracts. 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, a licensed optometrist, a registered nurse meeting the requirements of subdivision 3a, a licensed physician assistant, or a licensed acupuncture practitioner. (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. (c) When a carrier referred to in subdivision 1 makes a denial of payment claim determination concerning the appropriateness, quality, or utilization of acupuncture services for individuals in this state performed by a licensed acupuncture practitioner, a denial of payment claim determination that is made by a health professional must be made by, under the direction of, or subject to the review of a licensed acupuncture practitioner. History:  1973 c 252 s 1; 1976 c 192 s 1,2; 1976 c 242 s 1; 1983 c 221 s 2; 1988 c 441 s 1; 1988 c 642 s 2-4; 1989 c 330 s 13,14; 1999 c 172 s 1,18; 2009 c 45 s 1,2; 2022 c 58 s 2,3
62A.151 HEALTH INSURANCE BENEFITS FOR EMOTIONALLY DISABLED CHILDREN. No policy or plan of health, medical, hospitalization, or accident and sickness insurance regulated under this chapter, or nonprofit health service plan corporation regulated under chapter 62C, or health maintenance organization regulated under chapter 62D which provides coverage of or reimbursement for inpatient hospital and medical expenses shall be delivered, issued, executed or renewed in this state, or approved for issuance or renewal in this state by the commissioner of commerce, after July 1, 1975 unless the policy or plan includes and provides health service benefits to any subscriber or other person covered thereunder, on the same basis as other benefits, for the treatment of emotionally disabled children in a residential treatment facility licensed by the commissioner of human services. For purposes of this section "emotionally disabled child" shall have the meaning set forth by the commissioner of human services in the rules relating to residential treatment facilities. The restrictions and requirements of this section shall not apply to any plan or policy which is individually underwritten or provided for a specific individual and family members as a nongroup policy. The mandatory coverage under this section shall be on the same basis as inpatient hospital medical coverage provided under the policy or plan. History:  1975 c 40 s 1; 1983 c 289 s 114 subd 1; 1984 c 654 art 5 s 58; 1984 c 655 art 1 s 92; 1985 c 248 s 70; 1986 c 444; 2005 c 56 s 1
62A.152 BENEFITS FOR AMBULATORY MENTAL HEALTH SERVICES. Subdivision 1. Scope. The provisions of this section apply (a) to all group policies or subscriber contracts which provide benefits for at least 100 certificate holders who are residents of this state or groups of which more than 90 percent are residents of this state and are issued, delivered, or renewed by accident and health insurance companies regulated under this chapter, or by nonprofit health service plan corporations regulated under chapter 62C and (b), unless waived by the commissioner to the extent applicable to holders who are both nonresidents and employed outside this state, to all group policies or subscriber contracts which are issued, delivered, or renewed within this state by accident and health insurance companies regulated under this chapter, or by nonprofit health service plan corporations regulated under chapter 62C. Subd. 2. Minimum benefits. All group policies and all group subscriber contracts providing benefits for mental or nervous disorder treatments in a hospital shall also provide coverage that complies with the requirements of section 62Q.47, paragraphs (b) and (c). 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 mental health professional qualified according to section 245I.04, subdivision 2, to the extent that the services and treatment are within the scope of mental health professional licensure. This subdivision is intended to provide payment of benefits for mental or nervous disorder treatments performed by a licensed mental health professional 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. [See Note.] History: 1975 c 89 s 1; 1981 c 265 s 1; 1Sp1981 c 4 art 1 s 49; 1983 c 354 s 1; 1984 c 654 art 5 s 58; 1987 c 337 s 49; 1987 c 384 art 2 s 1; 1988 c 689 art 2 s 7; 1989 c 330 s 15,16; 1991 c 255 s 1,2; 1993 c 81 s 1,2; 2008 c 344 s 10; 2021 c 30 art 17 s 1 NOTE: The amendment to subdivision 3 by Laws 2021, chapter 30, article 17, section 1, is effective upon federal approval. The commissioner of human services shall notify the revisor of statutes when federal approval is obtained. Laws 2021, chapter 30, article 17, section 114.
62A.153 OUTPATIENT MEDICAL AND SURGICAL SERVICES. No policy or plan of health, medical, hospitalization, or accident and sickness insurance regulated under this chapter, or subscriber contract provided by a nonprofit health service plan corporation regulated under chapter 62C that provides coverage for services in a hospital shall be issued, renewed, continued, delivered, issued for delivery or executed in this state, or approved for issuance or renewal in this state by the commissioner of commerce unless the policy, plan or contract specifically provides coverage for a health care treatment or surgery on an outpatient basis at a facility equipped to perform these services, whether or not the facility is part of a hospital. Coverage shall be on the same basis as coverage provided for the same health care treatment or service in a hospital. History:  1976 c 45 s 1; 1977 c 305 s 45; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1994 c 485 s 30
62A.154 BENEFITS FOR DES RELATED CONDITIONS. Subdivision 1. Definitions. For the purposes of this section, the terms defined in this section have the meanings given them. (a) "Covered person" means a natural person who is covered under a policy. (b) "Insurer" means an insurer providing health, medical, hospitalization, or accident and sickness insurance regulated under this chapter, a nonprofit health services plan corporation regulated under chapter 62C, a health maintenance organization regulated under chapter 62D or a fraternal benefit society regulated under chapter 64B. (c) "Policy" means a policy or plan of health, medical, hospitalization or accident and sickness insurance, a health maintenance contract, or a health benefit certificate provided by an insurer which provides coverage of, or reimbursement for, hospital, medical, or surgical expenses on a group or individual basis, but does not include a policy designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis, or a policy that provides only accident coverage. Subd. 2. Required coverage. No policy shall be issued or renewed in this state after August 1, 1981 if it provides an exclusion, reduction, or other limitation as to coverage, deductible, coinsurance or co-payment applicable solely to conditions attributable to diethylstilbestrol or exposure to diethylstilbestrol, unless the covered person has been diagnosed as having diethylstilbestrol-related cancer prior to the date on which coverage for that person begins. In the absence of credible evidence of a higher morbidity rate due to exposure to diethylstilbestrol, no insurer shall surcharge or in any other manner increase the premium. If there is credible evidence of a higher morbidity rate due to exposure to diethylstilbestrol, no insurer shall surcharge or in any other manner increase the premium without the prior approval of the commissioner. Subd. 3. Refusal to issue or renew. No insurer shall refuse to issue or renew a policy, or to provide coverage under a policy, in this state after August 1, 1981 solely because of conditions attributable to diethylstilbestrol or exposure to diethylstilbestrol, unless the covered person has been diagnosed as having diethylstilbestrol-related cancer prior to the date on which an initial premium payment is received by the insurer. History:  1981 c 350 s 1; 1985 c 49 s 41; 1992 c 564 art 1 s 54
62A.155 COVERAGE FOR SERVICES PROVIDED TO VENTILATOR-DEPENDENT PERSONS. Subdivision 1. Scope of coverage. This section applies to all policies of accident and health insurance, group subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C, health maintenance contracts regulated under chapter 62D, and health benefit certificates offered through a fraternal benefit society regulated under chapter 64B. This section does not apply to policies designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis, or policies that provide only accident coverage. Subd. 2. Required coverage. If a policy, plan, certificate, or contract referred to in subdivision 1 issued or renewed after August 1, 1988, provides coverage for services provided by a home care nurse or personal care assistant to a ventilator-dependent person in the person's home, it must provide coverage for up to 120 hours of services provided by a home care nurse or personal care assistant to the ventilator-dependent person during the time the ventilator-dependent person is in a hospital licensed under chapter 144. The personal care assistant or home care nurse shall perform only the services of communicator or interpreter for the ventilator-dependent patient during a transition period of up to 120 hours to assure adequate training of the hospital staff to communicate with the patient and to understand the unique comfort, safety, and personal care needs of the patient. History:  1988 c 656 s 3; 1992 c 564 art 1 s 54; 2014 c 291 art 9 s 5
62A.16 SCOPE OF CERTAIN CONTINUATION AND CONVERSION REQUIREMENTS. The provisions of this section and section 62A.17 shall apply to all group insurance policies or group subscriber contracts providing coverage for hospital or medical expenses incurred by a Minnesota resident employed within this state. This section and section 62A.17 shall also apply to health care plans established by employers in this state through health maintenance organizations certified under chapter 62D. History:  1974 c 101 s 1; 1976 c 142 s 1
62A.17 TERMINATION OF OR LAYOFF FROM EMPLOYMENT; CONTINUATION AND CONVERSION RIGHTS. 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. 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. The policy, contract, or plan must require the group policyholder or contract holder to, upon request, provide the employee 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. 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. For an individual age 19 or older, 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. Subd. 3.  [Repealed by amendment, 1987 c 337 s 50] Subd. 4. Responsibility of employer. After timely receipt of the monthly payment from a covered employee, if the employer, or the trustee, if the policy, contract, or health care plan is administered by a trust, fails to make the payment to the insurer, nonprofit health service plan corporation, or health maintenance organization, with the result that the employee's coverage is terminated, the employer or trust shall become liable for the employee's coverage to the same extent as the insurer, nonprofit health service plan corporation, or health maintenance organization would be if the coverage were still in effect. In the case of a policy, contract or plan administered by a trust, the employer must notify the trustee within 30 days of the termination or layoff of a covered employee of the name and last known address of the employee. If the employer or trust fails to notify a covered employee, the employer or trust shall continue to remain liable for the employee's coverage to the same extent as the insurer would be if the coverage were still in effect. Subd. 5. Notice of options. Upon the termination of or lay off from employment of an eligible employee, the employer shall inform the employee within 14 days after termination or lay off of: (1) the 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. If the policy, contract, or health care plan is administered by a trust, the employer is relieved of the obligation imposed by clauses (1) to (4). The trust shall inform the employee of the information required by clauses (1) to (4). The employee shall have 60 days within which to elect coverage. The 60-day period shall begin to run on the date plan 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 mail to the employee's last known address which the employee has provided the employer or trust. A notice in substantially the following form shall be sufficient: "As a terminated or laid off employee, the law authorizes you to maintain your group medical insurance 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 $.......... to ........... at .......... by the ............... of each month." Subd. 5a.  MS 2008 [Expired, 2009 c 33 s 1] Subd. 5b. Notices required by the American Recovery and Reinvestment Act of 2009 (ARRA). (a) An employer that maintains a group health plan that is not described in Internal Revenue Code, section 6432(b)(1) or (2), as added by section 3001(a)(12)(A) of the American Recovery and Reinvestment Act of 2009 (ARRA), must notify the health carrier of the termination of, or the layoff from, employment of a covered employee, and the name and last known address of the employee, within the later of ten days after the termination or layoff event, or June 8, 2009. (b) The health carrier for a group health plan that is not described in Internal Revenue Code, section 6432(b)(1) or (2), as added by section 3001(a)(12)(A) of the ARRA, must provide the notice of extended election rights which is required by subdivision 5a, paragraph (a), as well as any other notice that is required by the ARRA regarding the availability of premium reduction rights, to the individual within 30 days after the employer notifies the health carrier as required by paragraph (a). (c) The notice responsibilities set forth in this subdivision end when the premium reduction provisions under ARRA expire. Subd. 6. Conversion to individual policy. (a) An individual policy or contract issued as a conversion policy prior to January 1, 2014, shall be renewable at the option of the individual as long as the individual is not covered under another qualified plan as defined in section 62E.02, subdivision 4. Any revisions in the table of rate for the individual policy shall apply to the covered person's original age at entry and shall apply equally to all similar conversion policies issued by the insurer. (b) Notwithstanding paragraph (a), an issuer with five or fewer covered individuals that are not part of the single risk pool, as defined in section 62A.65, subdivision 3b, may nonrenew those conversion policies in accordance with this paragraph. An issuer nonrenewing coverage under this paragraph must notify the commissioner 180 days before the effective date of the nonrenewal, and must provide the commissioner with a complete list of affected policyholders and a copy of the proposed policyholder notice described in this paragraph. The issuer must provide written notice to each policyholder covered under the conversion policy at least 120 days before the effective date of the nonrenewal. This notice must include information on how to obtain individual or family health coverage and contact information for the state agencies regulating health insurance. History:  1974 c 101 s 2; 1975 c 100 s 1-3; 1976 c 142 s 2,3; 1977 c 409 s 2; 1983 c 44 s 1,2; 1983 c 263 s 9; 1984 c 464 s 7; 1Sp1985 c 10 s 60; 1986 c 444; 1987 c 337 s 50; 1988 c 434 s 2; 1989 c 330 s 17; 1990 c 403 s 1; 1992 c 564 art 4 s 6; 2001 c 215 s 9; 2009 c 33 s 1; 2009 c 178 art 1 s 22; 2010 c 384 s 17; 2013 c 84 art 1 s 19,20; 2016 c 155 s 1
62A.18 PROHIBITION AGAINST DISABILITY OFFSETS. No individual or group policy of accident and health insurance issued, amended, renewed, or delivered in this state on or after January 1, 1976 shall contain any provision offsetting, or in any other manner reducing, any benefit under the policy by the amount of, or in proportion to, any increase in disability benefits received or receivable under the federal Social Security Act, the Railroad Retirement Act, any Veteran's Disability Compensation and Survivor Benefits Act, Workers' Compensation, or any similar federal or state law, as amended subsequent to the date of commencement of such benefit. History:   1975 c 323 s 1 
62A.19 PROHIBITION AGAINST NONDIAGNOSTIC X-RAYS. No individual or group policy of dental insurance offered for sale to a Minnesota resident by an insurer regulated under this chapter, individual or group service plan or subscriber contract regulated under chapter 62C, health maintenance contract regulated under chapter 62D, or fraternal contract benefit regulated under chapter 64B, shall subject any policyholder, subscriber, or enrollee to undue exposure to radiation by requiring a health care provider to take or obtain x-rays that are not directly related to patient care. Any health care provider receiving such a request may refuse to provide x-rays not necessary to the diagnosis and treatment of the patient. An insurer, nonprofit health service plan corporation, health maintenance organization, fraternal benefit society, or dental plan may not deny or withhold benefits based solely upon the refusal to provide x-rays. Nothing in this section prohibits requests for x-rays or other diagnostic aids routinely taken in conjunction with the diagnosis and treatment of injury or disease, or routinely required by the insurer for preapproval or predetermination of treatment. An insurer may not retroactively request new x-rays not taken in conjunction with the diagnosis or treatment of injury or disease. History:   1991 c 101 s 1 
62A.20 CONTINUATION COVERAGE OF CURRENT SPOUSE AND CHILDREN. 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 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 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. Subd. 2. Continuation privilege. The coverage described in subdivision 1 may be continued until the earlier of the following dates: (1) the date coverage would otherwise terminate under the policy; (2) 36 months after continuation by the spouse or dependent was elected; or (3) the spouse or dependent children become covered under another group health plan. If 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. 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 spouse and dependent children to whom subdivision 1 is not applicable, without regard to whether such cost is paid by the employer or employee. History:  1987 c 337 s 51; 2001 c 215 s 10
62A.21 CONTINUATION AND CONVERSION PRIVILEGES FOR INSURED FORMER SPOUSES AND CHILDREN. Subdivision 1. Break in marital relationship, termination of coverage prohibited. No 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 of the insured shall contain a provision for termination of coverage for a spouse covered under the policy solely as a result of a break in the marital relationship. Subd. 2.  [Repealed, 1981 c 329 s 4] 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 dependent children, which is defined as required by section 62A.302, and former spouse, who was covered on the day before the 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, who was covered on the day before the entry of a valid decree of dissolution, or dependent child, a health carrier must provide the instructions necessary to enable the child or former spouse to elect continuation of coverage. Subd. 2b. Conversion privilege. An individual policy or contract issued as a conversion policy prior to January 1, 2014, shall be renewable at the option of the covered person as long as the covered person is not covered under another qualified plan as defined in section 62E.02, subdivision 4. Any revisions in the table of rate for the individual policy shall apply to the covered person's original age at entry and shall apply equally to all similar conversion policies issued by the insurer. Subd. 3. Application. Subdivision 1 applies to every policy of accident and health insurance which is delivered, issued for delivery, renewed or amended on or after July 19, 1977. Subdivisions 2a and 2b apply to every policy of accident and health insurance which is delivered, issued for delivery, renewed, or amended on or after August 1, 1981. History:  1977 c 186 s 1; 1981 c 329 s 1-3; 1982 c 555 s 7,8; 1987 c 337 s 52; 1990 c 403 s 2; 1992 c 564 art 1 s 31; art 4 s 7; 2001 c 215 s 11; 2013 c 84 art 1 s 21; 1Sp2017 c 6 art 5 s 2
62A.22 REFUSAL TO PROVIDE COVERAGE BECAUSE OF OPTION UNDER WORKERS' COMPENSATION. No insurer offering an individual or group policy of accident or health coverage in this state shall refuse to provide or renew accident or health coverage because the insured has an option to elect workers' compensation coverage pursuant to section 176.041, subdivision 1a. History:  1979 c 92 s 1; 1989 c 209 art 2 s 1
62A.23 GROUP DISABILITY INCOME COVERAGE; TERMINATION WITHOUT PREJUDICE; DEFINITIONS. Subdivision 1. Scope. For the purposes of this section and section 62A.24, the terms defined in this section have the meanings given them in this section. Subd. 2. Employer. "Employer" means any natural person, company, corporation, partnership, association, firm or franchise which employs any employee. Subd. 3. Insurer. "Insurer" means any person, company, corporation, including a nonprofit corporation, partnership, association, firm or franchise which underwrites or is by contract or other agreement obligated to provide group disability income insurance benefits to any group of employees of any employer. History:   1980 c 377 s 1 
62A.24 CONTINUATION OF BENEFITS. No employer or insurer of that employer may offer or provide a policy of group disability income insurance unless the master policy provides that the termination of the policy shall be without prejudice to any claims originating prior to the time of the termination. Section 62A.23 and this section may be superseded by a rule promulgated by the commissioner of commerce. History:  1980 c 377 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92
62A.25 RECONSTRUCTIVE SURGERY. Subdivision 1. Scope of coverage. This section applies to all policies of accident and health insurance, health maintenance contracts regulated under chapter 62D, health benefit certificates offered through a fraternal benefit society regulated under chapter 64B, and group subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C but does not apply to policies designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis, or policies that provide only accident coverage. Subd. 2. Required coverage. (a) Every policy, plan, certificate or contract to which this section applies shall provide benefits 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. (b) The coverage limitations on reconstructive surgery in paragraph (a) do not apply to reconstructive breast surgery following mastectomies. In these cases, coverage for reconstructive surgery must be provided if the mastectomy is medically necessary as determined by the attending physician. (c) Reconstructive surgery benefits include all stages of reconstruction of the breast on which the mastectomy has been performed, surgery and reconstruction of the other breast to produce a symmetrical appearance, and prosthesis and physical complications at all stages of a mastectomy, including lymphedemas, in a manner determined in consultation with the attending physician and patient. Coverage may be subject to annual deductible, co-payment, and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the plan or coverage. Coverage may not: (1) deny to a patient eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the plan, solely for the purpose of avoiding the requirements of this section; and (2) penalize or otherwise reduce or limit the reimbursement of an attending provider, or provide monetary or other incentives to an attending provider to induce the provider to provide care to an individual participant or beneficiary in a manner inconsistent with this section. Written notice of the availability of the coverage must be delivered to the participant upon enrollment and annually thereafter. History:  1980 c 496 s 1; 1985 c 49 s 41; 1992 c 564 art 1 s 54; 2002 c 330 s 10
62A.26 COVERAGE FOR PHENYLKETONURIA TREATMENT. Subdivision 1. Scope of coverage. This section applies to all policies of accident and health insurance, health maintenance contracts regulated under chapter 62D, health benefit certificates offered through a fraternal benefit society regulated under chapter 64B, and group subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C, but does not apply to policies designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis, or policies that provide only accident coverage. Subd. 2. Required coverage. Every policy, plan, certificate, or contract referred to in subdivision 1 issued or renewed after August 1, 1985, must provide coverage for special dietary treatment for phenylketonuria when recommended by a physician. History:  1985 c 49 s 41; 1Sp1985 c 9 art 2 s 1; 1992 c 564 art 1 s 54
62A.265 COVERAGE FOR LYME DISEASE. Subdivision 1. Required coverage. Every health plan, including a plan providing the coverage specified in section 62A.011, subdivision 3, clause (10), must cover treatment for diagnosed Lyme disease. Subd. 2. Special restrictions prohibited. No health plan included in subdivision 1 may impose a special deductible, co-payment, waiting period, or other special restriction on treatment for Lyme disease that the health plan does not apply to nonpreventive treatment in general. History:   1996 c 465 art 5 s 2 
62A.27 COVERAGE OF ADOPTED CHILDREN. (a) A health plan that provides coverage to a Minnesota resident must cover adopted children of the insured, subscriber, participant, or enrollee on the same basis as other dependents. Consequently, the plan shall not contain any provision concerning preexisting condition limitations, insurability, eligibility, or health underwriting approval concerning children placed for adoption with the participant. (b) The coverage required by this section is effective from the date of placement for adoption. For purposes of this section, placement for adoption means the assumption and retention by a person of a legal obligation for total or partial support of a child in anticipation of adoption of the child. The child's placement with a person terminates upon the termination of the legal obligation for total or partial support. (c) For the purpose of this section, health plan includes: (1) coverage offered by community integrated service networks; (2) coverage that is designed solely to provide dental or vision care; and (3) any plan under the federal Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, sections 1001 to 1461. (d) No policy or contract covered by this section may require notification to a health carrier as a condition for this dependent coverage. However, if the policy or contract mandates an additional premium for each dependent, the health carrier is entitled to all premiums that would have been collected had the health carrier been aware of the additional dependent. The health carrier may withhold payment of any health benefits for the new dependent until it has been compensated with the applicable premium which would have been owed if the health carrier had been informed of the additional dependent immediately. History:  1983 c 56 s 1; 1985 c 49 s 41; 1987 c 337 s 53; 1988 c 656 s 4; 1995 c 207 art 10 s 4; 1997 c 225 art 2 s 62; 2003 c 2 art 1 s 7; 2006 c 255 s 11
62A.28 COVERAGE FOR SCALP HAIR PROSTHESES. Subdivision 1. Scope of coverage. This section applies to all policies of accident and health insurance, health maintenance contracts regulated under chapter 62D, health benefit certificates offered through a fraternal benefit society regulated under chapter 64B, and group subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C. This section does not apply to policies designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis, or policies that provide only accident coverage. Subd. 2. Required coverage. Every policy, plan, certificate, or contract referred to in subdivision 1 issued or renewed after August 1, 1987, must provide coverage for scalp hair prostheses worn for hair loss suffered as a result of alopecia areata. The coverage required by this section is subject to the co-payment, coinsurance, deductible, and other enrollee cost-sharing requirements that apply to similar types of items under the policy, plan, certificate, or contract and may be limited to one prosthesis per benefit year. History:  1987 c 202 s 1; 1992 c 564 art 1 s 54; 2004 c 288 art 7 s 1; 2013 c 84 art 1 s 22
62A.285 PROHIBITED UNDERWRITING; BREAST IMPLANTS. Subdivision 1. Scope of coverage. This section applies to all policies of accident and health insurance regulated under this chapter, subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C, health maintenance contracts regulated under chapter 62D, and health benefit certificates offered through a fraternal benefit society regulated under chapter 64B. This section does not apply to policies, plans, certificates, or contracts payable on a fixed indemnity or non-expense-incurred basis, or policies, plans, certificates, or contracts that provide only accident coverage. Subd. 2. Required coverage. No policy, plan, certificate, or contract referred to in subdivision 1 shall be issued or renewed to provide coverage to a Minnesota resident if it provides an exclusion, reduction, or other limitation as to coverage, deductible, coinsurance, or co-payment applicable solely to conditions caused by breast implants. Subd. 3. Refusal to issue or renew. No issuer of a policy, plan, certificate, or contract referred to in subdivision 1 shall refuse to issue or renew at standard premium rates a policy, plan, certificate, or contract referred to in subdivision 1 solely because the prospective insured or enrollee has breast implants. Subd. 4.  [Repealed, 2000 c 483 s 55] History:   1992 c 564 art 4 s 8 
62A.29 SURETY BOND OR SECURITY FOR CERTAIN HEALTH BENEFIT PLANS. Subdivision 1. Surety bond or security requirement. Any employer, except the state and its political subdivisions as defined in section 65B.43, subdivision 20, who provides a health benefit plan to its Minnesota employees, which is to some extent self-insured by the employer, and who purchases stop-loss insurance coverage, or any other insurance coverage, in connection with the health benefit plan, shall annually file with the commissioner, within 60 days of the end of the employer's fiscal year, security acceptable to the commissioner in an amount specified under subdivision 2, or a surety bond in the form and amount prescribed by subdivisions 2 and 3. An acceptable surety bond is one issued by a corporate surety authorized by the commissioner to transact this business in the state of Minnesota for the purposes of this section. The term "Minnesota employees" includes any Minnesota resident who is employed by the employer. Subd. 2. Amount of surety bond or security. The amount of surety bond or acceptable security required by subdivision 1 shall be equal to one-fourth of the projected annual medical and hospital expenses to be incurred by the employer or $1,000, whichever is greater, with respect to its Minnesota employees by reason of the portion of the employer's health benefit plan which is self-insured by the employer. Subd. 3. Form of the surety bond. The surety bond shall provide as follows: SURETY BOND KNOW ALL PERSONS BY THESE PRESENTS: That (entity to be bonded), of (location), (hereinafter called the "principal"), as principal, and (bonding company name), a (name of state) corporation, of (location) (hereinafter called the "surety"), as surety are held and firmly bound unto the commissioner of commerce of the state of Minnesota for the use and benefit of Minnesota residents entitled to health benefits from the principal in the sum of ($.........), for the payment of which well and truly to be made, the principal binds itself, its successor and assigns, and the surety binds itself and its successors and assigns, jointly and severally, firmly by these presents. WHEREAS, in accordance with section (......) of the Minnesota Statute, principal is required to file a surety bond with the commissioner of commerce of the state of Minnesota. NOW, THEREFORE, the condition of this obligation is such that if the said principal shall, according to the terms, provisions, and limitations of principals' health benefit program for its Minnesota employees, pay all of its liabilities and obligations, including all benefits as provided in the attached plan, then, this obligation shall be null and void, otherwise to remain in full force and effect, subject, however, to the following terms and conditions: 1. The liability of the surety is limited to the payment of the benefits of the employee benefit plan which are payable by the principal and within the amount of the bond. The surety shall be bound to payments owed by the principal for obligations arising from a default of the principal or any loss incurred during the period to which the bond applies. 2. In the event of any default on the part of the principal to abide by the terms and provision of the attached plan, the commissioner of commerce may, upon ten-days notice to the surety and opportunity to be heard, require the surety to pay all of the principal's past and future obligations under the attached plan with respect to the principal's Minnesota employees. 3. Service on the surety shall be deemed to be service on the principals. 4. This bond shall be in effect from ............... to ................, and may not be canceled by either the surety or the principal. 5. Any Minnesota employee of principal aggrieved by a default of principal under the attached plan, and/or the commissioner of commerce on behalf of any such employee, may enforce the provisions of this bond. 6. This bond shall become effective at (time of day, month, day, year). IN TESTIMONY WHEREOF, said principals and said surety have caused this instrument to be signed by their respective, duly authorized officers and their corporate seals to be hereunto affixed this (day, month, year).      Signed, sealed and delivered in the presence of:  Corporation Name    .    .     .    .     .   Bonding Company Name    .    By: .    Subd. 4.Penalty for failure to comply. The commissioner of revenue shall deny any business tax deduction to an employer for the employer's contribution to a health plan for the period which the employer fails to comply with this section. This section does not apply to trusts established under chapter 62H which have been approved by the commissioner. Subd. 5. Petition to reduce bond or security amount. An employer subject to this section may petition the commissioner to, and the commissioner may, allow the use of a surety bond not in the form specified in subdivision 3, or grant a reduction in the amount of the surety bond or security required. In reviewing a petition submitted under this subdivision, the commissioner must consider, in addition to any other factors, information provided by the petitioner in regard to the following: (1) the size of the petitioner's business; (2) the number of employees; (3) the cost of providing the bond or security and the effect the cost will have on the petitioner's financial condition; (4) whether the cost of the bond or security will impair the petitioner's ability to self-insure; and (5) the petitioner's likelihood of being able to meet the petitioner's future obligations in regard to the health plan. History:   1987 c 337 s 54 
62A.30 COVERAGE FOR DIAGNOSTIC PROCEDURES FOR CANCER. Subdivision 1. Scope of coverage. This section applies to all policies of accident and health insurance, health maintenance contracts regulated under chapter 62D, health benefit certificates offered through a fraternal benefit society regulated under chapter 64B, and subscriber contracts offered by nonprofit health service plan corporations regulated under chapter 62C, but does not apply to policies designed primarily to provide coverage payable on a per diem, fixed indemnity or nonexpense incurred basis, or policies that provide only accident coverage. Subd. 2. Required coverage. Every policy, plan, certificate, or contract referred to in subdivision 1 that provides coverage to a Minnesota resident must provide coverage for routine screening procedures for cancer and the office or facility visit, including mammograms, surveillance tests for ovarian cancer for women who are at risk for ovarian cancer as defined in subdivision 3, pap smears, and colorectal screening tests for men and women, when ordered or provided by a physician in accordance with the standard practice of medicine. Subd. 3. Ovarian cancer surveillance tests. For purposes of subdivision 2: (a) "At risk for ovarian cancer" means: (1) having a family history: (i) with one or more first- or second-degree relatives with ovarian cancer; (ii) of clusters of women relatives with breast cancer; or (iii) of nonpolyposis colorectal cancer; or (2) testing positive for BRCA1 or BRCA2 mutations. (b) "Surveillance tests for ovarian cancer" means annual screening using: (1) CA-125 serum tumor marker testing; (2) transvaginal ultrasound; (3) pelvic examination; or (4) other proven ovarian cancer screening tests currently being evaluated by the federal Food and Drug Administration or by the National Cancer Institute. Subd. 4. Mammograms. (a) For purposes of subdivision 2, coverage for a preventive mammogram screening (1) includes digital breast tomosynthesis for enrollees at risk for breast cancer, and (2) is covered as a preventive item or service, as described under section 62Q.46. (b) For purposes of this subdivision, "digital breast tomosynthesis" means a radiologic procedure that involves the acquisition of projection images over the stationary breast to produce cross-sectional digital three-dimensional images of the breast. "At risk for breast cancer" means: (1) having a family history with one or more first- or second-degree relatives with breast cancer; (2) testing positive for BRCA1 or BRCA2 mutations; (3) having heterogeneously dense breasts or extremely dense breasts based on the Breast Imaging Reporting and Data System established by the American College of Radiology; or (4) having a previous diagnosis of breast cancer. (c) This subdivision does not apply to coverage provided through a public health care program under chapter 256B or 256L. (d) Nothing in this subdivision limits the coverage of digital breast tomosynthesis in a policy, plan, certificate, or contract referred to in subdivision 1 that is in effect prior to January 1, 2020. (e) Nothing in this subdivision prohibits a policy, plan, certificate, or contract referred to in subdivision 1 from covering digital breast tomosynthesis for an enrollee who is not at risk for breast cancer. History:  1988 c 441 s 2; 1988 c 642 s 5; 1992 c 564 art 1 s 32,54; 1994 c 465 art 3 s 11; 2004 c 288 art 6 s 2,3; 2007 c 66 s 1; 2008 c 344 s 11; 1Sp2019 c 9 art 8 s 1
62A.302 COVERAGE OF DEPENDENTS. Subdivision 1. Scope of coverage. This section applies to: (1) a health plan as defined in section 62A.011; and (2) 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, subdivision 11. Subd. 3. No additional restrictions permitted. Any health plan included in subdivision 1 that provides dependent coverage of children shall make that coverage available to children until the child attains 26 years of age. A health carrier must not place restrictions on this coverage and must comply with the following requirements: (1) with respect to a child who has not attained 26 years of age, a health carrier shall not define dependent for purposes of eligibility for dependent coverage of children other than the terms of a relationship between a child and the enrollee or spouse of the enrollee; (2) a health carrier must not deny or restrict coverage for a child who has not attained 26 years of age based on (i) the presence or absence of the child's financial dependency upon the participant, primary subscriber, or any other person; (ii) residency with the participant and in the individual market the primary subscriber, or with any other person; (iii) marital status; (iv) student status; (v) employment; or (vi) any combination of those factors; and (3) a health carrier must not deny or restrict coverage of a child based on eligibility for other coverage, except as provided in subdivision 5. Subd. 4. Grandchildren. Nothing in this section requires a health carrier to make coverage available for a grandchild, unless the grandparent becomes the legal guardian or adoptive parent of that grandchild or unless the grandchild meets the requirements of section 62A.042. For grandchildren included under a grandparent's policy pursuant to section 62A.042, coverage for the grandchild may terminate if the grandchild does not continue to reside with the covered grandparent continuously from birth, if the grandchild does not remain financially dependent upon the covered grandparent, or when the grandchild reaches age 25, except as provided in section 62A.14 or if coverage is continued under section 62A.20. Subd. 5. Terms of coverage of dependents. The terms of coverage in a health plan offered by a health carrier providing dependent coverage of children cannot vary based on age except for children who are 26 years of age or older. Subd. 6. Opportunity to enroll. A health carrier must comply with all provisions of the Affordable Care Act in regards to providing an opportunity to enroll in coverage to any child whose coverage ended, or was not eligible for coverage under a group health plan or individual health plan because, under the terms of the coverage, the availability of dependent coverage of a child ended before age 26. Subd. 7. Grandfathered plan coverage. (a) For plan years beginning before January 1, 2014, a group health plan that is a grandfathered plan and makes available dependent coverage of children may exclude an adult child who has not attained 26 years of age from coverage only if the adult child is eligible to enroll in an eligible employer-sponsored health benefit plan, as defined in section 5000A(f)(2) of the Internal Revenue Code, other than the group health plan of a parent. (b) For plan years beginning on or after January 1, 2014, a group health plan that is a grandfathered plan must comply with all requirements of this section. Subd. 8. Compliance. This section does not require compliance with any provision of the Affordable Care Act before the effective date provided for that provision in the Affordable Care Act. Subd. 9. Enforcement. The commissioner shall enforce this section. History:  1992 c 549 art 3 s 9; 2001 c 215 s 12; 2013 c 84 art 1 s 23
62A.3021 COVERAGE OF DEPENDENTS BY PLANS OTHER THAN HEALTH PLANS. Subdivision 1. Scope of coverage. This section applies to coverage described in section 62A.011, subdivision 3, clauses (4), (6), (7), (8), (9), and (10). Subd. 2. Dependent. "Dependent" means an eligible employee's spouse, unmarried child who is under the age of 25, dependent child of any age who is disabled and who meets the eligibility criteria in section 62A.14, subdivision 2, or any other person whom state or federal law requires to be treated as a dependent for purposes of health plans. For the purpose of this definition, a child includes a child for whom the employee or the employee's spouse has been appointed legal guardian and an adoptive child as provided in section 62A.27. A child also includes grandchildren as provided in section 62A.042 with continued eligibility of grandchildren as provided in section 62A.302, subdivision 4. History:   2013 c 84 art 1 s 24 
62A.303 PROHIBITION; SEVERING OF GROUPS. Section 62L.12, subdivisions 3 and 4, apply to all employer group health plans, as defined in section 62A.011, regardless of the size of the group. History:  1992 c 549 art 3 s 10; 1994 c 625 art 10 s 4
62A.304 COVERAGE FOR PORT-WINE STAIN ELIMINATION. Subdivision 1. Scope of coverage. This section applies to all health plans as defined in section 62A.011 that provide coverage to a Minnesota resident. Subd. 2. Required coverage. Every health plan included in subdivision 1 must cover elimination or maximum feasible treatment of port-wine stains for any covered person who is a Minnesota resident. No health carrier may reduce or eliminate coverage due to this requirement. Subd. 3. Rate increases prohibited. The commissioner of commerce shall not approve any rate increases due to coverage required under subdivision 2. No health maintenance organization, as defined in chapter 62D, shall increase rates due to coverage required under subdivision 2. History:   1993 c 116 s 1 
62A.305 FIBROCYSTIC CONDITION; TERMINATION OR REDUCTION OF COVERAGE. No health plan shall be terminated, canceled, nonrenewed, or contain any increased premium rate, or exclusion, reduction, or limitation on benefits, nor shall coverage be denied, solely because the covered person has been diagnosed as having a fibrocystic breast condition. History:   1994 c 442 s 1 
62A.306 USE OF GENDER PROHIBITED. Subdivision 1. Applicability. This section applies to all health plans as defined in section 62A.011 offered, sold, issued, or renewed, by a health carrier on or after January 1, 1995. Subd. 2. Prohibition on use of gender. No health plan described in subdivision 1 shall determine the premium rate or any other underwriting decision, including initial issuance, through a method that is in any way based upon the gender of any person covered or to be covered under the health plan. This subdivision prohibits use of marital status or generalized differences in expected costs between employees and spouses or between principal insureds and their spouses. History:   1994 c 625 art 10 s 5 
62A.307 PRESCRIPTION DRUGS; EQUAL TREATMENT OF PRESCRIBERS. Subdivision 1. Scope of requirement. This section applies to any of the following if issued or renewed to a Minnesota resident or to cover a Minnesota resident: (1) a health plan, as defined in section 62A.011; (2) coverage described in section 62A.011, subdivision 3, clause (2), (3), or (6) to (12); and (3) a policy, contract, or certificate issued by a community integrated service network licensed under chapter 62N. Subd. 2. Requirement. Coverage described in subdivision 1 that covers prescription drugs must provide the same coverage for a prescription written by a health care provider authorized to prescribe the particular drug covered by the health coverage described in subdivision 1, regardless of the type of health care provider that wrote the prescription. This section is intended to prohibit denial of coverage based on the prescription having been written by an advanced practice nurse under section 148.235, a physician assistant under section 147A.185, or any other nonphysician health care provider authorized to prescribe the particular drug. History:  1995 c 69 s 1; 1996 c 305 art 1 s 17; 1997 c 225 art 2 s 62; 2020 c 115 art 2 s 1
62A.3075 CANCER CHEMOTHERAPY TREATMENT COVERAGE. (a) A health plan company that provides coverage under a health plan for cancer chemotherapy treatment shall not require a higher co-payment, deductible, or coinsurance amount for a prescribed, orally administered anticancer medication that is used to kill or slow the growth of cancerous cells than what the health plan requires for an intravenously administered or injected cancer medication that is provided, regardless of formulation or benefit category determination by the health plan company. (b) A health plan company must not achieve compliance with this section by imposing an increase in co-payment, deductible, or coinsurance amount for an intravenously administered or injected cancer chemotherapy agent covered under the health plan. (c) Nothing in this section shall be interpreted to prohibit a health plan company from requiring prior authorization or imposing other appropriate utilization controls in approving coverage for any chemotherapy. (d) A plan offered by the commissioner of management and budget under section 43A.23 is deemed to be at parity and in compliance with this section. (e) A health plan company is in compliance with this section if it does not include orally administered anticancer medication in the fourth tier of its pharmacy benefit. (f) A health plan company that provides coverage under a health plan for cancer chemotherapy treatment must indicate the level of coverage for orally administered anticancer medication within its pharmacy benefit filing with the commissioner. History:  2010 c 326 s 1; 1Sp2017 c 6 art 5 s 3
62A.308 HOSPITALIZATION AND ANESTHESIA FOR DENTAL PROCEDURES. Subdivision 1. Scope of coverage. This section applies to a health plan as defined in section 62A.011 that provides coverage to a Minnesota resident. Subd. 2. Required coverages. (a) A health plan included in subdivision 1 must cover anesthesia and hospital charges for dental care provided to a covered person who: (1) is a child under age five; or (2) is severely disabled; or (3) has a medical condition and who requires hospitalization or general anesthesia for dental care treatment. A health carrier may require prior authorization of hospitalization for dental care procedures in the same manner that prior authorization is required for hospitalization for other covered diseases or conditions. (b) A health plan included in subdivision 1 must also provide coverage for general anesthesia and treatment rendered by a dentist for a medical condition covered by the health plan, regardless of whether the services are provided in a hospital or a dental office. History:   1995 c 91 s 1 
62A.3091 NONDISCRIMINATE COVERAGE OF TESTS. Subdivision 1. Scope of requirement. This section applies to any of the following if issued or renewed to a Minnesota resident or to cover a Minnesota resident: (1) a health plan, as defined in section 62A.011; (2) coverage described in section 62A.011, subdivision 3, clauses (2), (3), or (6) to (12); and (3) a policy, contract, or certificate issued by a community integrated service network licensed under chapter 62N. Subd. 2. Requirement. Coverage described in subdivision 1 that covers laboratory tests, diagnostic tests, and x-rays must provide the same coverage, without requiring additional signatures, for all such tests ordered by an advanced practice nurse operating pursuant to chapter 148 or a physician assistant practicing pursuant to chapter 147A. Nothing in this section shall be construed to interfere with any written agreement between a physician and an advanced practice nurse or between a physician and a physician assistant. History:  1996 c 446 art 1 s 24; 1997 c 225 art 2 s 62; 2022 c 58 s 4
62A.3092 EQUAL TREATMENT OF SURGICAL FIRST ASSISTING SERVICES. Subdivision 1. Scope of requirement. This section applies to any of the following if issued or renewed to a Minnesota resident or to cover a Minnesota resident: (1) a health plan, as defined in section 62A.011; (2) coverage described in section 62A.011, subdivision 3, clauses (2), (3), or (6) to (12); and (3) a policy, contract, or certificate issued by a community integrated service network licensed under chapter 62N. Subd. 2. Requirement. Coverage described in subdivision 1 that provides for payment for surgical first assisting benefits or services shall be construed as providing for payment for a registered nurse who performs first assistant functions and services that are within the scope of practice of a registered nurse. History:  1996 c 446 art 1 s 25; 1997 c 225 art 2 s 62
62A.3093 COVERAGE FOR DIABETES. Subdivision 1. Required coverage. A health plan, including a plan providing the coverage specified in section 62A.011, subdivision 3, clause (10), must provide coverage for: (1) all physician prescribed medically appropriate and necessary equipment and supplies used in the management and treatment of diabetes; and (2) diabetes outpatient self-management training and education, including medical nutrition therapy, that is provided by a certified, registered, or licensed health care professional working in a program consistent with the national standards of diabetes self-management education as established by the American Diabetes Association. Coverage must include persons with gestational, type I or type II diabetes. Coverage required under this section is subject to the same deductible or coinsurance provisions applicable to the plan's hospital, medical expense, medical equipment, or prescription drug benefits. A health carrier may not reduce or eliminate coverage due to this requirement. Subd. 2. Medicare Part D exception. A health plan providing the coverage specified in section 62A.011, subdivision 3, clause (10), is not subject to the requirements of subdivision 1, clause (1), with respect to equipment and supplies covered under the Medicare Part D Prescription Drug program, whether or not the covered person is enrolled in a Medicare Part D plan. This subdivision does not apply to a health plan providing the coverage specified in section 62A.011, subdivision 3, clause (10), that was in effect on December 31, 2005, if the covered person remains enrolled in the plan and does not enroll in a Medicare Part D plan. History:  1994 c 538 s 1; 1995 c 52 s 1; 1997 c 57 s 1; 2006 c 255 s 12
62A.3094 COVERAGE FOR AUTISM SPECTRUM DISORDERS. Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in paragraphs (b) to (d) have the meanings given. (b) "Autism spectrum disorders" means the conditions as determined by criteria set forth in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders of the American Psychiatric Association. (c) "Medically necessary care" means health care services appropriate, in terms of type, frequency, level, setting, and duration, to the enrollee's condition, and diagnostic testing and preventative services. Medically necessary care must be consistent with generally accepted practice parameters as determined by physicians and licensed psychologists who typically manage patients who have autism spectrum disorders. (d) "Mental health professional" means a mental health professional who is qualified according to section 245I.04, subdivision 2, clause (1), (2), (3), (4), or (6), who has training and expertise in autism spectrum disorder and child development. [See Note.] Subd. 2. Coverage required. (a) A health plan issued to a large employer, as defined in section 62Q.18, subdivision 1, must provide coverage for the diagnosis, evaluation, multidisciplinary assessment, and medically necessary care of children under 18 with autism spectrum disorders, including but not limited to the following: (1) early intensive behavioral and developmental therapy based in behavioral and developmental science, including, but not limited to, all types of applied behavior analysis, intensive early intervention behavior therapy, and intensive behavior intervention; (2) neurodevelopmental and behavioral health treatments and management; (3) speech therapy; (4) occupational therapy; (5) physical therapy; and (6) medications. (b) The diagnosis, evaluation, and assessment must include an assessment of the child's developmental skills, functional behavior, needs, and capacities. (c) The coverage required under this subdivision must include treatment that is in accordance with an individualized treatment plan prescribed by the enrollee's treating physician or mental health professional. (d) A health carrier may not refuse to renew or reissue, or otherwise terminate or restrict, coverage of an individual solely because the individual is diagnosed with an autism spectrum disorder. (e) A health carrier may request an updated treatment plan only once every six months, unless the health carrier and the treating physician or mental health professional agree that a more frequent review is necessary due to emerging circumstances. (f) An independent progress evaluation conducted by a mental health professional with expertise and training in autism spectrum disorder and child development must be completed to determine if progress toward function and generalizable gains, as determined in the treatment plan, is being made. Subd. 3. No effect on other law. Nothing in this section limits the coverage required under section 62Q.47. Subd. 4. State health care programs. This section does not affect benefits available under the medical assistance and MinnesotaCare programs and does not limit, restrict, or otherwise reduce coverage under these programs. History: 2013 c 108 art 12 s 3; 2021 c 30 art 17 s 2 NOTE: The amendment to subdivision 1 by Laws 2021, chapter 30, article 17, section 2, is effective upon federal approval. The commissioner of human services shall notify the revisor of statutes when federal approval is obtained. Laws 2021, chapter 30, article 17, section 114.
62A.3095 PRESCRIPTION EYE DROPS COVERAGE. Subdivision 1. Scope of coverage. This section applies to all health plans, as defined in section 62A.011, subdivision 3, that provide coverage to Minnesota residents. Subd. 2. Required coverage. (a) Every health plan included in subdivision 1 that provides coverage for prescription eye drops shall not deny coverage for a refill of the prescription eye drops if the refill is requested by the person insured by the health plan, pursuant to paragraph (b), and if the prescribing practitioner indicated on the original prescription that additional quantities are needed and the refill requested by the insured does not exceed the number of additional quantities needed. (b) Coverage shall only be provided pursuant to paragraph (a) if the insured makes a refill request for: (1) a 30-day refill supply and the request is made between 21 and 30 days from the later of: (i) the original date that the prescription was distributed to the insured; or (ii) the date the most recent refill was distributed to the insured; or (2) a 90-day refill supply and the request is made between 75 and 90 days from the later of: (i) the original date that the prescription was distributed to the insured; or (ii) the date the most recent refill was distributed to the insured. History:   2017 c 47 s 1 
62A.3097 PEDIATRIC AUTOIMMUNE NEUROPSYCHIATRIC DISORDERS ASSOCIATED WITH STREPTOCOCCAL INFECTIONS (PANDAS) AND PEDIATRIC ACUTE-ONSET NEUROPSYCHIATRIC SYNDROME (PANS) TREATMENT; COVERAGE. Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this section. (b) "Pediatric acute-onset neuropsychiatric syndrome" means a class of acute-onset obsessive compulsive or tic disorders or other behavioral changes presenting in children and adolescents that are not otherwise explained by another known neurologic or medical disorder. (c) "Pediatric autoimmune neuropsychiatric disorders associated with streptococcal infections" means a condition in which a streptococcal infection in a child or adolescent causes the abrupt onset of clinically significant obsessions, compulsions, tics, or other neuropsychiatric symptoms or behavioral changes, or a relapsing and remitting course of symptom severity. Subd. 2. Scope of coverage. This section applies to all health plans that provide coverage to Minnesota residents. Subd. 3. Required coverage. Every health plan included in subdivision 2 must provide coverage for treatment for pediatric autoimmune neuropsychiatric disorders associated with streptococcal infections (PANDAS) and for treatment for pediatric acute-onset neuropsychiatric syndrome (PANS). Treatments that must be covered under this section must be recommended by the insured's licensed health care professional and include but are not limited to antibiotics, medication and behavioral therapies to manage neuropsychiatric symptoms, plasma exchange, and immunoglobulin. Subd. 4. Reimbursement. The commissioner of commerce shall reimburse health carriers for coverage under this section. Reimbursement is available only for coverage that would not have been provided by the health carrier without the requirements of this section. Each fiscal year an amount necessary to make payments to health carriers to defray the cost of providing coverage under this section is appropriated to the commissioner of commerce. Health carriers shall report to the commissioner quantified costs attributable to the additional benefit under this section in a format developed by the commissioner. The commissioner shall evaluate submissions and make payments to health carriers as provided in Code of Federal Regulations, title 45, section 155.170. History:   1Sp2019 c 9 art 8 s 2 
62A.3099 DEFINITIONS. Subdivision 1. Scope. The definitions provided in this section apply to sections 62A.3099 to 62A.44. Subd. 2. Accident, accidental injury, accidental means. "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. Subd. 3. Applicant.  "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. Subd. 4. Bankruptcy.  "Bankruptcy" means a situation in which a Medicare Advantage 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. Subd. 5. Benefit period, Medicare benefit period.  "Benefit period" or "Medicare benefit period" shall not be defined more restrictively than as defined in the Medicare program. Subd. 6. Certificate.  "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. Subd. 7. Certificate form.  "Certificate form" means the form on which the certificate is delivered or issued for delivery by the issuer. Subd. 8. Convalescent nursing home, extended care facility, skilled nursing facility.  "Convalescent nursing home," "extended care facility," or "skilled nursing facility" shall not be defined more restrictively than as defined in the Medicare program. Subd. 9. Employee welfare benefit plan.  "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). Subd. 10. Health care expenses.  "Health care expenses" means, for purposes of section 62A.36, 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. Subd. 11. Hospital. "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. Subd. 12. Insolvency. "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. Subd. 13. Issuer. "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. Subd. 14. Medicare. "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 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. Subd. 15. Medicare Advantage plan. "Medicare Advantage 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 Advantage medical savings account; and (3) Medicare Advantage private fee-for-service plans. Subd. 16. Medicare eligible expenses. "Medicare eligible expenses" means health care expenses covered by Medicare Part A or B, to the extent recognized as reasonable and medically necessary by Medicare. Subd. 17. Medicare-related coverage. "Medicare-related coverage" means a policy, contract, or certificate issued as a supplement to Medicare, regulated under sections 62A.3099 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 "HCPP" contracts) or 1876 (known as "Cost" 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 Advantage program." Subd. 18. Medicare supplement policy or certificate. "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, other than those policies or certificates covered by section 1876 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 or as a supplement to Medicare Advantage plans established under Medicare Part C. "Medicare supplement policy" does not include Medicare Advantage plans established under Medicare Part C, outpatient prescription drug plans established under Medicare Part D, any health care prepayment plan that provides benefits under an agreement under section 1833(a)(1)(A) of the Social Security Act, or any policy issued to an employer or employers or to the trustee of a fund established by an employer where only employees or retirees, and dependents of employees or retirees, are eligible for coverage, or any policy issued to a labor union or similar employee organization. Subd. 18a. Newly eligible individual. "Newly eligible individual" means an individual who is eligible for Medicare on or after January 1, 2020, because the individual: (1) has attained age 65 on or after January 2020; or (2) although under age 65, is entitled to or deemed eligible for benefits under Medicare Part A by reason of disability or otherwise. Subd. 19. Outpatient prescription drug. "Outpatient prescription drug" means a prescription drug prescribed or administered under circumstances that qualify for coverage under Medicare Part D and not under Medicare Part A or Part B. Subd. 20. Physician. "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. Subd. 21. Policy form. "Policy form" means the form on which the policy is delivered or issued for delivery by the issuer. Subd. 22. Secretary. "Secretary" means the Secretary of the United States Department of Health and Human Services. Subd. 23. Sickness. "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. History:  1981 c 318 s 1; 1983 c 263 s 10; 1986 c 397 s 2; 1987 c 337 s 55; 1989 c 258 s 3,4; 1990 c 403 s 3; 1990 c 415 s 3; 1991 c 43 s 1; 1991 c 129 s 1; 1992 c 549 art 3 s 11; 1992 c 554 art 1 s 1-3; 1993 c 1 s 1; 1993 c 330 s 1-3,12; 1994 c 465 art 1 s 2; 1994 c 625 art 10 s 6; 1995 c 258 s 29,30; 1996 c 446 art 1 s 27-31; 1997 c 71 art 2 s 4; 1999 c 90 s 1-3; 2001 c 215 s 13-15; 2002 c 277 s 32; 2002 c 330 s 11; 1Sp2003 c 14 art 7 s 2-4; 2005 c 17 art 1 s 1-9,14; 2005 c 132 s 10; 2009 c 178 art 1 s 23; 2010 c 384 s 18,19; 2019 c 26 art 5 s 1,13
62A.31 MEDICARE SUPPLEMENT BENEFITS; MINIMUM STANDARDS. Subdivision 1. Policy requirements. No individual or group policy, certificate, subscriber contract issued by a health service plan corporation regulated under chapter 62C, or other evidence of accident and health insurance the effect or purpose of which is to supplement Medicare coverage, including to supplement coverage under Medicare Advantage plans established under Medicare Part C, issued or delivered in this state or offered to a resident of this state shall be sold or issued to an individual covered by Medicare unless the requirements in subdivisions 1a to 1v are met. 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. Subd. 1b. Preexisting condition coverage. The policy 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. Subd. 1c. Limitation on cancellation or nonrenewal. The policy must contain a provision that the plan will not be canceled or nonrenewed on the grounds of the deterioration of health of the insured. Subd. 1d. Mandatory offer. Before the policy is sold or issued, an offer of both categories of Medicare supplement insurance must be made to the individual, together with an explanation of both coverages. Subd. 1e. Delivery of outline of coverage. An outline of coverage as provided in section 62A.39 must be delivered at the time of application and prior to payment of any premium and, except for direct response policies, an acknowledgment of receipt of this outline must be obtained from the applicant. Subd. 1f. Suspension based on entitlement to medical assistance. (a) The policy or certificate must provide that benefits and premiums under the policy or certificate shall be suspended for any period that may be provided by federal regulation at the request of the policyholder or certificate holder for the period, not to exceed 24 months, in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within 90 days after the date the individual becomes entitled to this assistance. (b) If suspension occurs and if the policyholder or certificate holder loses entitlement to this medical assistance, the policy or certificate shall be automatically reinstated, effective as of the date of termination of this entitlement, if the policyholder or certificate holder provides notice of loss of the entitlement within 90 days after the date of the loss and pays the premium attributable to the period, effective as of the date of termination of entitlement. (c) The policy must provide that upon reinstatement (1) there is no additional waiting period with respect to treatment of preexisting conditions, (2) coverage is provided which is substantially equivalent to coverage in effect before the date of the suspension. If the suspended policy provided coverage for outpatient prescription drugs, reinstitution of the policy for Medicare Part D enrollees must be without coverage for outpatient prescription drugs and must otherwise provide coverage substantially equivalent to the coverage in effect before the date of suspension, and (3) premiums are classified on terms that are at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had coverage not been suspended. Subd. 1g. Notification of counseling services. The written statement required by an application for Medicare supplement insurance pursuant to section 62A.43, subdivision 1, shall be made on a form, approved by the commissioner, that states that counseling services may be available in the state to provide advice concerning the purchase of Medicare supplement policies and enrollment under the Medicaid program. Subd. 1h. Limitations on denials, conditions, and pricing of coverage. No health carrier issuing Medicare-related coverage in this state may impose preexisting condition limitations or otherwise deny or condition the issuance or effectiveness of any such coverage available for sale in this state, nor may it discriminate in the pricing of such coverage, because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant where an application for such coverage is submitted prior to or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B. This subdivision applies to each Medicare-related coverage offered by a health carrier regardless of whether the individual has attained the age of 65 years. If an individual who is enrolled in Medicare Part B due to disability status is involuntarily disenrolled due to loss of disability status, the individual is eligible for another six-month enrollment period provided under this subdivision beginning the first day of the month in which the individual later becomes eligible for and enrolls again in Medicare Part B. An individual who is or was previously enrolled in Medicare Part B due to disability status is eligible for another six-month enrollment period under this subdivision beginning the first day of the month in which the individual has attained the age of 65 years and either maintains enrollment in, or enrolls again in, Medicare Part B. If an individual enrolled in Medicare Part B voluntarily disenrolls from Medicare Part B because the individual becomes enrolled under an employee welfare benefit plan, the individual is eligible for another six-month enrollment period, as provided in this subdivision, beginning the first day of the month in which the individual later becomes eligible for and enrolls again in Medicare Part B. 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 3, clause (10). Subd. 1j. Filing and approval. The policy must have been filed with and approved by the department as meeting all the requirements of sections 62A.3099 to 62A.44. Subd. 1k. Guaranteed renewability. The policy must guarantee renewability. (a) Only the standards for renewability provided in this subdivision may be used in Medicare supplement insurance policy forms. (b) No issuer of Medicare supplement insurance policies may cancel or nonrenew a Medicare supplement policy or certificate for any reason other than nonpayment of premium or material misrepresentation. (c) If a group Medicare supplement insurance policy is terminated by the group policyholder and is not replaced as provided in this clause, the issuer shall offer certificate holders an individual Medicare supplement policy which, at the option of the certificate holder, provides for continuation of the benefits contained in the group policy; or provides for such benefits and benefit packages as otherwise meet the requirements of this clause. (d) If an individual is a certificate holder in a group Medicare supplement insurance policy and the individual terminates membership in the group, the issuer of the policy shall offer the certificate holder the conversion opportunities described in this clause; or offer the certificate holder continuation of coverage under the group policy. (e) If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the policy as modified for that purpose is deemed to satisfy the guaranteed renewal requirements of this subdivision. Subd. 1l. Treatment of sickness and accident losses. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. Subd. 1m. Medicare cost sharing coverage changes. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and co-payment percentage factors. Premiums may be modified to correspond with the changes. As soon as practicable, but no later than 30 days prior to the annual effective date of any Medicare benefit changes, an issuer shall notify its policyholders and certificate holders of modifications it has made to Medicare supplement insurance policies or certificates in a format acceptable to the commissioner. Such notice shall: (1) include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate; and (2) inform each policyholder or certificate holder as to when any premium adjustment is to be made, due to changes in Medicare. The notice of benefit modifications and any premium adjustments must be in outline form and in clear and simple terms so as to facilitate comprehension. The notices must not contain or be accompanied by any solicitation. Subd. 1n. Termination of coverage. (a) Termination by an issuer of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss that began while the policy or certificate was in force, but the extension of benefits beyond the period during which the policy or certificate was in force may be conditioned on the continuous total disability of the insured, limited to the duration of the policy or certificate benefit period, if any, or payment of the maximum benefits. The extension of benefits does not apply when the termination is based on fraud, misrepresentation, or nonpayment of premium. Receipt of Medicare Part D benefits is not considered in determining a continuous loss. (b) An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the commissioner in writing its decision at least 30 days before discontinuing the availability of the form of the policy or certificate. An issuer that discontinues the availability of a policy form or certificate form shall not file for approval a new policy form or certificate form of the same type for the same Medicare supplement benefit plan as the discontinued form for five years after the issuer provides notice to the commissioner of the discontinuance. This period of ineligibility to file a form for approval may be reduced if the commissioner determines that a shorter period is appropriate. The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this section and section 62A.3099. A change in the rating structure or methodology shall be considered a discontinuance under this section and section 62A.3099 unless the issuer complies with the following requirements: (1) the issuer provides an actuarial memorandum, in a form and manner prescribed by the commissioner, describing the manner in which the revised rating methodology and resulting rates differ from the existing rating methodology and resulting rates; and (2) the issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The commissioner may approve a change to the differential that is in the public interest. Subd. 1o. Refund or credit calculation. (a) Except as provided in paragraph (b), the Minnesota experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in section 62A.36. (b) Forms assumed under an assumption reinsurance agreement shall not be combined with the Minnesota experience of other forms for purposes of the refund or credit calculation. Subd. 1p. Renewal or continuation provisions. Medicare supplement policies and certificates shall include a renewal or continuation provision. The language or specifications of the provision shall be consistent with the type of contract issued. The provision shall be appropriately captioned and shall appear on the first page of the policy or certificate, and shall include any reservation by the issuer of the right to change premiums. Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured, exercises a specifically reserved right under a Medicare supplement policy or certificate, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy or certificate after the date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy or certificate shall require a signed acceptance by the insured. After the date of policy or certificate issue, a rider or endorsement that increases benefits or coverage with a concomitant increase in premium during the policy or certificate term shall be agreed to in writing and signed by the insured, unless the benefits are required by the minimum standards for Medicare supplement policies or if the increased benefits or coverage is required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy, declaration page, or certificate. If a Medicare supplement policy or certificate contains limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy or certificate and be labeled as "preexisting condition limitations." Issuers of accident and sickness policies or certificates that provide hospital or medical expense coverage on an expense incurred or indemnity basis to persons eligible for Medicare shall provide to those applicants a "Guide to Health Insurance for People with Medicare" in the form developed by the Centers for Medicare and Medicaid Services and in a type size no smaller than 12-point type. Delivery of the guide must be made whether or not such policies or certificates are advertised, solicited, or issued as Medicare supplement policies or certificates as defined in this section and section 62A.3099. Except in the case of direct response issuers, delivery of the guide must be made to the applicant at the time of application, and acknowledgment of receipt of the guide must be obtained by the issuer. Direct response issuers shall deliver the guide to the applicant upon request, but no later than the time at which the policy is delivered. Subd. 1q. Marketing procedures. (1) An issuer, directly or through its producers, shall: (i) establish marketing procedures to assure that a comparison of policies by its agents or other producers will be fair and accurate; (ii) establish marketing procedures to ensure that excessive insurance is not sold or issued; (iii) establish marketing procedures that set forth a mechanism or formula for determining whether a replacement policy or certificate contains benefits clearly and substantially greater than the benefits under the replaced policy or certificate; (iv) display prominently by type or other appropriate means, on the first page of the policy or certificate, the following: "Notice to buyer: This policy or certificate may not cover all of your medical expenses"; (v) inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of the insurance; (vi) establish auditable procedures for verifying compliance with this subdivision; (2) in addition to the practices prohibited in chapter 72A, the following acts and practices are prohibited: (i) knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or issuers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer; (ii) employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance; (iii) making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company; (3) the terms "Medicare supplement," "medigap," and words of similar import shall not be used unless the policy or certificate is issued in compliance with this subdivision. Subd. 1r. Community rate. Each health maintenance organization, health service plan corporation, insurer, or fraternal benefit society that sells Medicare-related coverage shall establish a separate community rate for that coverage. Beginning January 1, 1993, no Medicare-related coverage may be offered, issued, sold, or renewed to a Minnesota resident, except at the community rate required by this subdivision. The same community rate must apply to newly issued coverage and to renewal coverage. For coverage that supplements Medicare and for the Part A rate calculation for plans governed by section 1833 of the federal Social Security Act, United States Code, title 42, section 1395, et seq., the community rate may take into account only the following factors: (1) actuarially valid differences in benefit designs or provider networks; (2) geographic variations in rates if preapproved by the commissioner of commerce; and (3) premium reductions in recognition of healthy lifestyle behaviors, including but not limited to, refraining from the use of tobacco. Premium reductions must be actuarially valid and must relate only to those healthy lifestyle behaviors that have a proven positive impact on health. Factors used by the health carrier making this premium reduction must be filed with and approved by the commissioner of commerce. For insureds not residing in Anoka, Carver, Chisago, Dakota, Hennepin, Ramsey, Scott, or Washington County, a health plan may, at the option of the health carrier, phase in compliance under the following timetable: (i) a premium adjustment as of March 1, 1993, that consists of one-half of the difference between the community rate that would be applicable to the person as of March 1, 1993, and the premium rate that would be applicable to the person as of March 1, 1993, under the rate schedule permitted on December 31, 1992. A health plan may, at the option of the health carrier, implement the entire premium difference described in this clause for any person as of March 1, 1993, if the premium difference would be 15 percent or less of the premium rate that would be applicable to the person as of March 1, 1993, under the rate schedule permitted on December 31, 1992, if the health plan does so uniformly regardless of whether the premium difference causes premiums to rise or to fall. The premium difference described in this clause is in addition to any premium adjustment attributable to medical cost inflation or any other lawful factor and is intended to describe only the premium difference attributable to the transition to the community rate; and (ii) with respect to any person whose premium adjustment was constrained under clause (i), a premium adjustment as of January 1, 1994, that consists of the remaining one-half of the premium difference attributable to the transition to the community rate, as described in clause (i). A health plan that initially follows the phase-in timetable may at any subsequent time comply on a more rapid timetable. A health plan that is in full compliance as of January 1, 1993, may not use the phase-in timetable and must remain in full compliance. Health plans that follow the phase-in timetable must charge the same premium rate for newly issued coverage that they charge for renewal coverage. A health plan whose premiums are constrained by clause (i) may take the constraint into account in establishing its community rate. From January 1, 1993 to February 28, 1993, a health plan may, at the health carrier's option, charge the community rate under this paragraph or may instead charge premiums permitted as of December 31, 1992. Subd. 1s. Prescription drug coverage. (a) Subject to subdivisions 1k, 1m, 1n, and 1p, a Medicare supplement policy with benefits for outpatient prescription drugs, in existence prior to January 1, 2006, must be renewed, at the option of the policyholder, for current policyholders who do not enroll in Medicare Part D. (b) A Medicare supplement policy with benefits for outpatient prescription drugs must not be issued after December 31, 2005. (c) After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs must not be renewed after the policyholder enrolls in Medicare Part D unless: (1) the policy is modified to eliminate outpatient prescription drug coverage for expenses of outpatient prescription drugs incurred on or after the effective date of the individual's coverage under Medicare Part D; and (2) premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable. (d) An issuer of a Medicare supplement policy or certificate must comply with the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003, as amended, including any federal regulations, as amended, adopted under that act. This paragraph does not require compliance with any provision of that act until the date upon which that act requires compliance with that provision. The commissioner has authority to enforce this paragraph. Subd. 1t. Notice of lack of drug coverage. Each policy or contract issued without prescription drug coverage by any insurer, health service plan corporation, health maintenance organization, or fraternal benefit society must contain, displayed prominently by type or other appropriate means, on the first page of the contract, the following: "Notice to buyer: This contract does not cover prescription drugs. Prescription drugs can be a very high percentage of your medical expenses. Coverage for prescription drugs may be available to you by retaining existing coverage you may have or by enrolling in Medicare Part D. Please ask for further details." Subd. 1u. Guaranteed issue for eligible persons. (a)(1) Eligible persons are those individuals described in paragraph (b) who seek to enroll under the policy during the period specified in paragraph (c) and who submit evidence of the date of termination or disenrollment described in paragraph (b), or of the date of Medicare Part D enrollment, with the application for a Medicare supplement policy. (2) With respect to eligible persons, an issuer shall not: deny or condition the issuance or effectiveness of a Medicare supplement policy described in paragraph (c) that is offered and is available for issuance to new enrollees by the issuer; discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, medical condition, or age; or impose an exclusion of benefits based upon a preexisting condition under such a Medicare supplement policy. (b) An eligible person is an individual described in any of the following: (1) the individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare; and the plan terminates, or the plan ceases to provide all such supplemental health benefits to the individual; (2) the individual is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under Medicare Part C, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under section 1894 of the federal Social Security Act, and there are circumstances similar to those described in this clause that would permit discontinuance of the individual's enrollment with the provider if the individual were enrolled in a Medicare Advantage plan: (i) the organization's or plan's certification under Medicare Part C has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides; (ii) the individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the secretary, but not including termination of the individual's enrollment on the basis described in section 1851(g)(3)(B) of the federal Social Security Act, United States Code, title 42, section 1395w-21(g)(3)(b) (where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under section 1856 of the federal Social Security Act, United States Code, title 42, section 1395w-26), or the plan is terminated for all individuals within a residence area; (iii) the individual demonstrates, in accordance with guidelines established by the Secretary, that: (A) the organization offering the plan substantially violated a material provision of the organization's contract in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards; or (B) the organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual; or (iv) the individual meets such other exceptional conditions as the secretary may provide; (3)(i) the individual is enrolled with: (A) an eligible organization under a contract under section 1876 of the federal Social Security Act, United States Code, title 42, section 1395mm (Medicare cost); (B) a similar organization operating under demonstration project authority, effective for periods before April 1, 1999; (C) an organization under an agreement under section 1833(a)(1)(A) of the federal Social Security Act, United States Code, title 42, section 1395l(a)(1)(A) (health care prepayment plan); or (D) an organization under a Medicare Select policy under section 62A.318 or the similar law of another state; and (ii) the enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under clause (2); (4) the individual is enrolled under a Medicare supplement policy, and the enrollment ceases because: (i)(A) of the insolvency of the issuer or bankruptcy of the nonissuer organization; or (B) of other involuntary termination of coverage or enrollment under the policy; (ii) the issuer of the policy substantially violated a material provision of the policy; or (iii) the issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual; (5)(i) the individual was enrolled under a Medicare supplement policy and terminates that enrollment and subsequently enrolls, for the first time, with any Medicare Advantage organization under a Medicare Advantage plan under Medicare Part C; any eligible organization under a contract under section 1876 of the federal Social Security Act, United States Code, title 42, section 1395mm (Medicare cost); any similar organization operating under demonstration project authority; any PACE provider under section 1894 of the federal Social Security Act, or a Medicare Select policy under section 62A.318 or the similar law of another state; and (ii) the subsequent enrollment under item (i) is terminated by the enrollee during any period within the first 12 months of the subsequent enrollment during which the enrollee is permitted to terminate the subsequent enrollment under section 1851(e) of the federal Social Security Act; (6) the individual, upon first enrolling for benefits under Medicare Part B, enrolls in a Medicare Advantage plan under Medicare Part C, or with a PACE provider under section 1894 of the federal Social Security Act, and disenrolls from the plan by not later than 12 months after the effective date of enrollment; or (7) the individual enrolls in a Medicare Part D plan during the initial Part D enrollment period, as defined under United States Code, title 42, section 1395ss(v)(6)(D), and, at the time of enrollment in Part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare Part D along with the application for a policy described in paragraph (e), clause (4). (c)(1) In the case of an individual described in paragraph (b), clause (1), the guaranteed issue period begins on the later of: (i) the date the individual receives a notice of termination or cessation of all supplemental health benefits or, if a notice is not received, notice that a claim has been denied because of a termination or cessation; or (ii) the date that the applicable coverage terminates or ceases; and ends 63 days after the later of those two dates. (2) In the case of an individual described in paragraph (b), clause (2), (3), (5), or (6), whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date that the individual receives a notice of termination and ends 63 days after the date the applicable coverage is terminated. (3) In the case of an individual described in paragraph (b), clause (4), item (i), the guaranteed issue period begins on the earlier of: (i) the date that the individual receives a notice of termination, a notice of the issuer's bankruptcy or insolvency, or other such similar notice if any; and (ii) the date that the applicable coverage is terminated, and ends on the date that is 63 days after the date the coverage is terminated. (4) In the case of an individual described in paragraph (b), clause (2), (4), (5), or (6), who disenrolls voluntarily, the guaranteed issue period begins on the date that is 60 days before the effective date of the disenrollment and ends on the date that is 63 days after the effective date. (5) In the case of an individual described in paragraph (b), clause (7), the guaranteed issue period begins on the date the individual receives notice pursuant to section 1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the 60-day period immediately preceding the initial Part D enrollment period and ends on the date that is 63 days after the effective date of the individual's coverage under Medicare Part D. (6) In the case of an individual described in paragraph (b) but not described in this paragraph, the guaranteed issue period begins on the effective date of disenrollment and ends on the date that is 63 days after the effective date. (d)(1) In the case of an individual described in paragraph (b), clause (5), or deemed to be so described, pursuant to this paragraph, whose enrollment with an organization or provider described in paragraph (b), clause (5), item (i), is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, the subsequent enrollment is deemed to be an initial enrollment described in paragraph (b), clause (5). (2) In the case of an individual described in paragraph (b), clause (6), or deemed to be so described, pursuant to this paragraph, whose enrollment with a plan or in a program described in paragraph (b), clause (6), is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls in another such plan or program, the subsequent enrollment is deemed to be an initial enrollment described in paragraph (b), clause (6). (3) For purposes of paragraph (b), clauses (5) and (6), no enrollment of an individual with an organization or provider described in paragraph (b), clause (5), item (i), or with a plan or in a program described in paragraph (b), clause (6), may be deemed to be an initial enrollment under this paragraph after the two-year period beginning on the date on which the individual first enrolled with the organization, provider, plan, or program. (e) The Medicare supplement policy to which eligible persons are entitled under: (1) paragraph (b), clauses (1) to (4), is any Medicare supplement policy that has a benefit package consisting of the basic Medicare supplement plan described in section 62A.316, paragraph (a), plus any combination of the three optional riders described in section 62A.316, paragraph (b), clauses (1) to (3), offered by any issuer; (2) paragraph (b), clause (5), is the same Medicare supplement policy in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, any policy described in clause (1) offered by any issuer, except that after December 31, 2005, if the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, a Medicare supplement policy to which the individual is entitled under paragraph (b), clause (5), is: (i) the policy available from the same issuer but modified to remove outpatient prescription drug coverage; or (ii) at the election of the policyholder, a policy described in clause (4), except that the policy may be one that is offered and available for issuance to new enrollees that is offered by any issuer; (3) paragraph (b), clause (6), is any Medicare supplement policy offered by any issuer; (4) paragraph (b), clause (7), is a Medicare supplement policy that has a benefit package classified as a basic plan under section 62A.316 if the enrollee's existing Medicare supplement policy is a basic plan or, if the enrollee's existing Medicare supplement policy is an extended basic plan under section 62A.315, a basic or extended basic plan at the option of the enrollee, provided that the policy is offered and is available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage. The issuer must permit the enrollee to retain all optional benefits contained in the enrollee's existing coverage, other than outpatient prescription drugs, subject to the provision that the coverage be offered and available for issuance to new enrollees by the same issuer. (f)(1) At the time of an event described in paragraph (b), because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of the individual's rights under this subdivision, and of the obligations of issuers of Medicare supplement policies under paragraph (a). The notice must be communicated contemporaneously with the notification of termination. (2) At the time of an event described in paragraph (b), because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of the individual's rights under this subdivision, and of the obligations of issuers of Medicare supplement policies under paragraph (a). The notice must be communicated within ten working days of the issuer receiving notification of disenrollment. (g) Reference in this subdivision to a situation in which, or to a basis upon which, an individual's coverage has been terminated does not provide authority under the laws of this state for the termination in that situation or upon that basis. (h) An individual's rights under this subdivision are in addition to, and do not modify or limit, the individual's rights under subdivision 1h. Subd. 1v. Medicare Part B deductible. A Medicare supplemental policy or certificate must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. Subd. 2. General coverage. For a policy to meet the requirements of this section and section 62A.3099 it must contain (1) a designation specifying whether the policy is an extended basic Medicare supplement plan or a basic Medicare supplement plan, (2) a caption stating that the commissioner has established two categories of Medicare supplement insurance and minimum standards for each, with the extended basic Medicare supplement being the most comprehensive and the basic Medicare supplement being the least comprehensive, and (3) the policy must provide the coverage prescribed in sections 62A.315 and 62A.316. Subd. 3.  [Renumbered 62A.3099] Subd. 4. Prohibited policy provisions. (a) A Medicare supplement policy or certificate in force in the state shall not contain benefits that duplicate benefits provided by Medicare or contain exclusions on coverage that are more restrictive than those of Medicare. Duplication of benefits is permitted to the extent permitted under subdivision 1s, paragraph (a), for benefits provided by Medicare Part D. (b) No Medicare supplement policy or certificate may use waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions, except as permitted under subdivision 1b. Subd. 5. Advertising. An issuer shall provide a copy of any Medicare supplement advertisement intended for use in this state whether through printed or electronic medium to the commissioner for review or approval to the extent it may be required. Subd. 6. Application to certain policies. The requirements of sections 62A.3099 to 62A.44 shall not apply to disability income protection insurance policies, long-term care policies issued pursuant to sections 62A.46 to 62A.56 or chapter 62S, or group policies of accident and health insurance which do not purport to supplement Medicare issued to any of the following groups: (a) A policy issued to an employer or employers or to the trustee of a fund established by an employer where only employees or retirees, and dependents of employees or retirees, are eligible for coverage. (b) A policy issued to a labor union or similar employee organization. (c) A policy issued to an association, a trust or the trustee of a fund established, created or maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of 100 persons; shall have been organized and maintained in good faith for purposes other than that of obtaining insurance; shall have a constitution and bylaws which provide that (1) the association or associations hold regular meetings not less frequently than annually to further purposes of the members, (2) except for credit unions, the association or associations collect dues or solicit contributions from members, (3) the members have voting privileges and representation on the governing board and committees, and (4) the members are not, within the first 30 days of membership, directly solicited, offered, or sold a long-term care policy or Medicare supplement policy if the policy is available as an association benefit. This clause does not prohibit direct solicitations, offers, or sales made exclusively by mail. An association may apply to the commissioner for a waiver of the 30-day waiting period as to that association. The commissioner may grant the waiver upon a finding of all of the following: (1) that the association is in full compliance with this section; (2) that sanctions have not been imposed against the association as a result of significant disciplinary action by the Department of Commerce; and (3) that at least 90 percent of the association's income comes from dues, contributions, or sources other than income from the sale of insurance. Subd. 7. Medicare prescription drug benefit. If Congress enacts legislation creating a prescription drug benefit in the Medicare program, nothing in this section or any other section shall prohibit an issuer of a Medicare supplement policy from offering this prescription drug benefit consistent with the applicable federal law or regulations. Subd. 8. Prohibition against use of genetic information and requests for genetic information. This subdivision applies to all policies with policy years beginning on or after May 21, 2009. (a) An issuer of a Medicare supplement policy or certificate: (1) shall not deny or condition the issuance or effectiveness of the policy or certificate, including the imposition of any exclusion of benefits under the policy based on a preexisting condition, on the basis of the genetic information with respect to such individual; and (2) shall not discriminate in the pricing of the policy or certificate, including the adjustment of premium rates, of an individual on the basis of the genetic information with respect to such individual. (b) Nothing in paragraph (a) shall be construed to limit the ability of an issuer, to the extent otherwise permitted by law, from: (1) denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant; or (2) increasing the premium for any policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy. In such case, the manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members and to further increase the premium for the group. (c) An issuer of a Medicare supplement policy or certificate shall not request or require an individual or a family member of such individual to undergo a genetic test. (d) Paragraph (c) shall not be construed to preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment, as defined for the purposes of applying the regulations promulgated under Part C of title XI and section 264 of the Health Insurance Portability and Accountability Act of 1996 as they may be revised from time to time, and consistent with paragraph (a). (e) For purposes of carrying out paragraph (d), an issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose. (f) Notwithstanding paragraph (c), an issuer of a Medicare supplement policy may request, but not require, that an individual or a family member of such individual undergo a genetic test if each of the following conditions are met: (1) the request is made pursuant to research that complies with Code of Federal Regulations, title 45, part 46, or equivalent federal regulations, and any applicable state or local law or regulations for the protection of human subjects in research; (2) the issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of such child, to whom the request is made that: (i) compliance with the request is voluntary; and (ii) noncompliance will have no effect on enrollment status or premium or contribution amounts; (3) no genetic information collected or acquired under this paragraph shall be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rates, or the issuance, renewal, or replacement of a policy or certificate; (4) the issuer notifies the secretary in writing that the issuer is conducting activities pursuant to the exception provided for under this paragraph, including a description of the activities conducted; and (5) the issuer complies with such other conditions as the secretary may by regulation require for activities under this paragraph. (g) An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information for underwriting purposes. (h) An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information with respect to any individual prior to such individual's enrollment under the policy in connection with such enrollment. (i) An issuer of a Medicare supplement policy or certificate that obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning any individual, such request, requirement, or purchase shall not be considered a violation of paragraph (h) if such request, requirement, or purchase is not in violation of paragraph (g). (j) For purposes of this subdivision only: (1) "family member" means, with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of such individual; (2) "genetic information" means, with respect to any individual, information about such individual's genetic tests, the genetic test of family members of such individual, and the manifestation of a disease or disorder in family members of such individual. Such terms include, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by such individual or any family member of such individual. Any reference to genetic information concerning an individual or family member of an individual who is a pregnant woman, includes genetic information of any fetus carried by such pregnant woman, or with respect to an individual or family member utilizing reproductive technology, includes genetic information of any embryo legally held by an individual or family member. The term genetic information does not include information about the sex or age of any individual; (3) "genetic services" means a genetic test or genetic counseling, including obtaining, interpreting, or assessing genetic information or genetic education; (4) "genetic test" means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detect genotypes, mutations, or chromosomal changes. The term genetic test does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved; (5) "issuer of a Medicare supplement policy or certificate" includes a third-party administrator or other person acting for or on behalf of such issuer; and (6) "underwriting purposes" means: (i) rules for, or determination of, eligibility including enrollment and continued eligibility, for benefits under the policy; (ii) the computation of premium or contribution amounts under the policy; (iii) the application of any preexisting condition exclusion under the policy; and (iv) other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits. History:  1981 c 318 s 1; 1983 c 263 s 10; 1986 c 397 s 2; 1987 c 337 s 55; 1989 c 258 s 3,4; 1990 c 403 s 3; 1990 c 415 s 3; 1991 c 43 s 1; 1991 c 129 s 1; 1992 c 549 art 3 s 11; 1992 c 554 art 1 s 1-3; 1993 c 1 s 1; 1993 c 330 s 1-3,12; 1994 c 465 art 1 s 2; 1994 c 625 art 10 s 6; 1995 c 258 s 29,30; 1996 c 446 art 1 s 27-31; 1997 c 71 art 2 s 4; 1999 c 90 s 1-3; 2001 c 215 s 13-15; 2002 c 277 s 32; 2002 c 330 s 11; 1Sp2003 c 14 art 7 s 2-4; 2005 c 17 art 1 s 1-9,14; 2005 c 132 s 10; 2009 c 178 art 1 s 24,25; 2019 c 26 art 5 s 2,3,13
62A.315 EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE. (a) The extended basic Medicare supplement plan must have a level of coverage so that it will be certified as a qualified plan pursuant to section 62E.07, and will provide: (1) coverage for all of the Medicare Part A inpatient hospital deductible and coinsurance amounts, and 100 percent of all Medicare Part A eligible expenses for hospitalization not covered by Medicare; (2) coverage for the daily co-payment amount of Medicare Part A eligible expenses for the calendar year incurred for skilled nursing facility care; (3) coverage for the coinsurance amount or in the case of hospital outpatient department services paid under a prospective payment system, the co-payment amount, of Medicare eligible expenses under Medicare Part B regardless of hospital confinement, and the Medicare Part B deductible amount; (4) 80 percent of the usual and customary hospital and medical expenses and supplies described in section 62E.06, subdivision 1, not to exceed any charge limitation established by the Medicare program or state law, the usual and customary hospital and medical expenses and supplies, described in section 62E.06, subdivision 1, while in a foreign country; and prescription drug expenses, not covered by Medicare. An outpatient prescription drug benefit must not be included for sale or issuance in a Medicare supplement policy or certificate issued on or after January 1, 2006; (5) coverage for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells as defined under federal regulations under Medicare Parts A and B, unless replaced in accordance with federal regulations; (6) 100 percent of the cost of immunizations not otherwise covered under Part D of the Medicare program and routine screening procedures for cancer, including mammograms and pap smears; (7) preventive medical care benefit: coverage for the following preventive health services not covered by Medicare: (i) an annual clinical preventive medical history and physical examination that may include tests and services from clause (ii) and patient education to address preventive health care measures; (ii) preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician. Reimbursement shall be for the actual charges up to 100 percent of the Medicare-approved amount for each service as if Medicare were to cover the service as identified in American Medical Association current procedural terminology (AMA CPT) codes to a maximum of $120 annually under this benefit. This benefit shall not include payment for any procedure covered by Medicare; (8) coverage of cost sharing for all Medicare Part A eligible hospice care and respite care expenses; and (9) coverage for cost sharing for Medicare Part A or B home health care services and medical supplies. (b) An extended basic Medicare supplement plan must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  1989 c 258 s 5; 1990 c 403 s 4; 1992 c 554 art 1 s 4; 1993 c 330 s 4; 1996 c 446 art 1 s 32; 1Sp2003 c 14 art 2 s 2; art 7 s 5; 2005 c 17 art 1 s 10; 2005 c 132 s 11; 2009 c 178 art 1 s 26,70; 2019 c 26 art 5 s 4,13
62A.316 BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE. (a) The basic Medicare supplement plan must have a level of coverage that will provide: (1) coverage for all of the Medicare Part A inpatient hospital coinsurance amounts, and 100 percent of all Medicare part A eligible expenses for hospitalization not covered by Medicare, after satisfying the Medicare Part A deductible; (2) coverage for the daily co-payment amount of Medicare Part A eligible expenses for the calendar year incurred for skilled nursing facility care; (3) coverage for the coinsurance amount, or in the case of outpatient department services paid under a prospective payment system, the co-payment amount, of Medicare eligible expenses under Medicare Part B regardless of hospital confinement, subject to the Medicare Part B deductible amount; (4) 80 percent of the hospital and medical expenses and supplies incurred during travel outside the United States as a result of a medical emergency; (5) coverage for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells as defined under federal regulations under Medicare Parts A and B, unless replaced in accordance with federal regulations; (6) 100 percent of the cost of immunizations not otherwise covered under Part D of the Medicare program and routine screening procedures for cancer screening including mammograms and pap smears; (7) 80 percent of coverage for all physician prescribed medically appropriate and necessary equipment and supplies used in the management and treatment of diabetes not otherwise covered under Part D of the Medicare program. Coverage must include persons with gestational, type I, or type II diabetes. Coverage under this clause is subject to section 62A.3093, subdivision 2; (8) coverage of cost sharing for all Medicare Part A eligible hospice care and respite care expenses; and (9) coverage for cost sharing for Medicare Part A or B home health care services and medical supplies subject to the Medicare Part B deductible amount. (b) The following benefit riders must be offered with this plan: (1) coverage for all of the Medicare Part A inpatient hospital deductible amount; (2) 100 percent of the Medicare Part B excess charges coverage for all of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge; (3) coverage for all of the Medicare Part B annual deductible; and (4) preventive medical care benefit coverage for the following preventative health services not covered by Medicare: (i) an annual clinical preventive medical history and physical examination that may include tests and services from item (ii) and patient education to address preventive health care measures; (ii) preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician. Reimbursement shall be for the actual charges up to 100 percent of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association current procedural terminology (AMA CPT) codes, to a maximum of $120 annually under this benefit. This benefit shall not include payment for a procedure covered by Medicare. (c) A basic Medicare supplement plan must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  1989 c 258 s 6; 1990 c 403 s 5; 1990 c 612 s 5; 1991 c 129 s 2; 1992 c 554 art 1 s 5; 1993 c 330 s 5; 1997 c 225 art 2 s 4; 1998 c 293 s 1; 1Sp2003 c 14 art 7 s 6; 2005 c 17 art 1 s 11; 2005 c 132 s 12; 2006 c 255 s 13; 2009 c 178 art 1 s 27,70; 2019 c 26 art 5 s 5,13
62A.3161 MEDICARE SUPPLEMENT PLAN WITH 50 PERCENT COVERAGE. (a) The Medicare supplement plan with 50 percent coverage must have a level of coverage that will provide: (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365 days after Medicare benefits end; (2) coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in clause (8); (3) coverage for 50 percent of the coinsurance amount for each day used from the 21st through the 100th day in a Medicare benefit period for posthospital skilled nursing care eligible under Medicare Part A until the out-of-pocket limitation is met as described in clause (8); (4) coverage for 50 percent of cost sharing for all Medicare Part A eligible expenses and respite care until the out-of-pocket limitation is met as described in clause (8); (5) coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced according to federal regulations, until the out-of-pocket limitation is met as described in clause (8); (6) except for coverage provided in this clause, coverage for 50 percent of the cost sharing otherwise applicable under Medicare Part B, after the policyholder pays the Medicare Part B deductible, until the out-of-pocket limitation is met as described in clause (8); (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services and diagnostic procedures for cancer screening described in section 62A.30 after the policyholder pays the Medicare Part B deductible; and (8) coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4,000 in 2006, indexed each year by the appropriate inflation adjustment by the secretary of the United States Department of Health and Human Services. (b) A Medicare supplement plan with 50 percent coverage must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  2006 c 255 s 14; 2019 c 26 art 5 s 6,13
62A.3162 MEDICARE SUPPLEMENT PLAN WITH 75 PERCENT COVERAGE. (a) The basic Medicare supplement plan with 75 percent coverage must have a level of coverage that will provide: (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365 days after Medicare benefits end; (2) coverage for 75 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in clause (8); (3) coverage for 75 percent of the coinsurance amount for each day used from the 21st through the 100th day in a Medicare benefit period for posthospital skilled nursing care eligible under Medicare Part A until the out-of-pocket limitation is met as described in clause (8); (4) coverage for 75 percent of cost sharing for all Medicare Part A eligible expenses and respite care until the out-of-pocket limitation is met as described in clause (8); (5) coverage for 75 percent, under Medicare Part A or B, of the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced according to federal regulations until the out-of-pocket limitation is met as described in clause (8); (6) except for coverage provided in this clause, coverage for 75 percent of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Medicare Part B deductible until the out-of-pocket limitation is met as described in clause (8); (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services and diagnostic procedures for cancer screening described in section 62A.30 after the policyholder pays the Medicare Part B deductible; and (8) coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $2,000 in 2006, indexed each year by the appropriate inflation adjustment by the Secretary of the United States Department of Health and Human Services. (b) A Medicare supplement plan with 75 percent coverage must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  2006 c 255 s 15; 2019 c 26 art 5 s 7,13
62A.3163 MEDICARE SUPPLEMENT PLAN WITH 50 PERCENT PART A DEDUCTIBLE COVERAGE. (a) The Medicare supplement plan with 50 percent Medicare Part A deductible coverage must have a level of coverage that will provide: (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365 days after Medicare benefits end; (2) coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period; (3) coverage for the coinsurance amount for each day used from the 21st through the 100th day in a Medicare benefit period for posthospital skilled nursing care eligible under Medicare Part A; (4) coverage for cost sharing for all Medicare Part A eligible hospice and respite care expenses; (5) coverage under Medicare Part A or B for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations; (6) coverage for 100 percent of the cost sharing otherwise applicable under Medicare Part B, after the policyholder pays the Medicare Part B deductible; (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services and diagnostic procedures for cancer screening described in section 62A.30 after the policyholder pays the Medicare Part B deductible; (8) coverage of 80 percent of the hospital and medical expenses and supplies incurred during travel outside of the United States as a result of a medical emergency; and (9) coverage for 100 percent of the Medicare Part A or B home health care services and medical supplies after the policyholder pays the Medicare Part B deductible. (b) A Medicare supplement plan with 50 percent Part A deductible coverage must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  2009 c 178 art 1 s 28,70; 2019 c 26 art 5 s 8,13
62A.3164 MEDICARE SUPPLEMENT PLAN WITH $20 AND $50 CO-PAYMENT MEDICARE PART B COVERAGE. (a) The Medicare supplement plan with $20 and $50 co-payment Medicare Part B coverage must have a level of coverage that will provide: (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365 days after Medicare benefits end; (2) coverage for the Medicare Part A inpatient hospital deductible amount per benefit period; (3) coverage for the coinsurance amount for each day used from the 21st through the 100th day in a Medicare benefit period for posthospital skilled nursing care eligible under Medicare Part A; (4) coverage for the cost sharing for all Medicare Part A eligible hospice and respite care expenses; (5) coverage for Medicare Part A or B of the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced according to federal regulations; (6) coverage for 100 percent of the cost sharing otherwise applicable under Medicare Part B except for the lesser of $20 or the Medicare Part B coinsurance or co-payment for each covered health care provider office visit and the lesser of $50 or the Medicare Part B coinsurance or co-payment for each covered emergency room visit; however, this co-payment shall be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare Part A expense; (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services and diagnostic procedures for cancer screening described in section 62A.30 after the policyholder pays the Medicare Part B deductible; (8) coverage of 80 percent of the hospital and medical expenses and supplies incurred during travel outside of the United States as a result of a medical emergency; and (9) coverage for Medicare Part A or B home health care services and medical supplies after the policyholder pays the Medicare Part B deductible. (b) A Medicare supplement plan with $20 and $50 co-payment Medicare Part B coverage must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. No portion of the co-payment referenced in this paragraph may be applied to a Medicare Part B deductible. History:  2009 c 178 art 1 s 29,70; 2019 c 26 art 5 s 9,13
62A.3165 MEDICARE SUPPLEMENT PLAN WITH HIGH DEDUCTIBLE COVERAGE. (a) The Medicare supplement plan will pay 100 percent coverage upon payment of the annual high deductible. The annual deductible shall consist of out-of-pocket expenses, other than premiums, for services covered. This plan must have a level of coverage that will provide: (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365 days after Medicare benefits end; (2) coverage for 100 percent of the Medicare Part A inpatient hospital deductible amount per benefit period; (3) coverage for 100 percent of the coinsurance amount for each day used from the 21st through the 100th day in a Medicare benefit period for posthospital skilled nursing care eligible under Medicare Part A; (4) coverage for 100 percent of cost sharing for all Medicare Part A eligible expenses and respite care; (5) coverage for 100 percent, under Medicare Part A or B, of the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced according to federal regulations; (6) except for coverage provided in this clause, coverage for 100 percent of the cost sharing otherwise applicable under Medicare Part B; (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services and diagnostic procedures for cancer screening described in section 62A.30 after the policyholder pays the Medicare Part B deductible; (8) coverage of 100 percent of the hospital and medical expenses and supplies incurred during travel outside of the United States as a result of a medical emergency; (9) coverage for 100 percent of Medicare Part A and B home health care services and medical supplies; and (10) the basis for the deductible shall be $1,860 and shall be adjusted annually from 2010 by the secretary of the United States Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10. (b) A Medicare supplement plan with high deductible coverage must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  2009 c 178 art 1 s 30,70; 2019 c 26 art 5 s 10,13
62A.317 STANDARDS FOR CLAIMS PAYMENT. (a) An issuer shall comply with section 1882(c)(3) of the federal Social Security Act, as enacted by section 4081(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA), Public Law 100-203, by: (1) accepting a notice from a Medicare carrier on duly assigned claims submitted by Medicare participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice; (2) notifying the Medicare participating physician or supplier and the beneficiary of the payment determination; (3) paying the Medicare participating physician or supplier directly; (4) furnishing, at the time of enrollment, each enrollee with a card listing the policy or certificate name, number, and a central mailing address to which notices from a Medicare carrier may be sent; (5) paying user fees for claim notices that are transmitted electronically or otherwise; and (6) providing to the secretary of health and human services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers. (b) Compliance with the requirements in paragraph (a) shall be certified on the Medicare supplement insurance experience reporting form. History:   1992 c 554 art 1 s 6 
62A.318 MEDICARE SELECT POLICIES AND CERTIFICATES. Subdivision 1. Applicability and advertising limitation. (a) This section applies to Medicare select policies and certificates, as defined in this section, including those issued by health maintenance organizations. (b) No policy or certificate may be advertised as a Medicare select policy or certificate unless it meets the requirements of this section. Subd. 2. Definitions. For the purposes of this section: (1) "complaint" means any dissatisfaction expressed by an individual concerning a Medicare select issuer or its network providers; (2) "grievance" means dissatisfaction expressed in writing by an individual insured under a Medicare select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare select issuer or its network providers; (3) "Medicare select issuer" means an issuer offering, or seeking to offer, a Medicare select policy or certificate; (4) "Medicare select policy" or "Medicare select certificate" means a Medicare supplement policy or certificate that contains restricted network provisions; (5) "network provider" means a provider of health care, or a group of providers of health care, that has entered into a written agreement with the issuer to provide benefits insured under a Medicare select policy or certificate; (6) "restricted network provision" means a provision that conditions the payment of benefits, in whole or in part, on the use of network providers; and (7) "service area" means the geographic area approved by the commissioner within which an issuer is authorized to offer a Medicare select policy or certificate. Subd. 3. Review by commissioner. The commissioner may authorize an issuer to offer a Medicare select policy or certificate pursuant to this section and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) of 1990, Public Law 101-508, if the commissioner finds that the issuer has satisfied all of the requirements of Minnesota Statutes. Subd. 4. Approval; plan of operation. A Medicare select issuer shall not issue a Medicare select policy or certificate in this state until its plan of operation has been approved by the commissioner. Subd. 5. Contents of plan of operation. A Medicare select issuer shall file a proposed plan of operation with the commissioner, in a format prescribed by the commissioner. The plan of operation shall contain at least the following information: (1) evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration that: (i) the services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation, and after-hour care. The hours of operation and availability of after-hour care shall reflect usual practice in the local area. Geographic availability shall reflect the usual travel times within the community; (ii) the number of network providers in the service area is sufficient, with respect to current and expected policyholders, either: (A) to deliver adequately all services that are subject to a restricted network provision; or (B) to make appropriate referrals; (iii) there are written agreements with network providers describing specific responsibilities; (iv) emergency care is available 24 hours per day and seven days per week; and (v) in the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against an individual insured under a Medicare select policy or certificate. This section does not apply to supplemental charges or coinsurance amounts as stated in the Medicare select policy or certificate; (2) a statement or map providing a clear description of the service area; (3) a description of the grievance procedure to be used; (4) a description of the quality assurance program, including: (i) the formal organizational structure; (ii) the written criteria for selection, retention, and removal of network providers; and (iii) the procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action when warranted; (5) a list and description, by specialty, of the network providers; (6) copies of the written information proposed to be used by the issuer to comply with paragraph (i); and (7) any other information requested by the commissioner. Subd. 6. Filing of proposed changes; deemed approval. A Medicare select issuer shall file proposed changes to the plan of operation, except for changes to the list of network providers, with the commissioner before implementing the changes. The changes shall be considered approved by the commissioner after 30 days unless specifically disapproved. An updated list of network providers shall be filed with the commissioner at least quarterly. Subd. 7. Nonnetwork providers; limits on coverage restrictions. A Medicare select policy or certificate shall not restrict payment for covered services provided by nonnetwork providers if: (1) the services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury, or condition; and (2) it is not reasonable to obtain the services through a network provider. Subd. 8. Full payment; services not available in network. A Medicare select policy or certificate shall provide payment for full coverage under the policy or certificate for covered services that are not available through network providers. Subd. 9. Required disclosures. A Medicare select issuer shall make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare select policy or certificate to each applicant. This disclosure must include at least the following: (1) an outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare select policy or certificate with: (i) other Medicare supplement policies or certificates offered by the issuer; and (ii) other Medicare select policies or certificates; (2) a description, including address, phone number, and hours of operation, of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers; (3) a description of the restricted network provisions, including payments for coinsurance and deductibles when providers other than network providers are used; (4) a description of coverage for emergency and urgently needed care and other out-of-service area coverage; (5) a description of limitations on referrals to restricted network providers and to other providers; (6) a description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer; and (7) a description of the Medicare select issuer's quality assurance program and grievance procedure. Subd. 10. Proof of disclosure. Before the sale of a Medicare select policy or certificate, a Medicare select issuer shall obtain from the applicant a signed and dated form stating that the applicant has received the information provided pursuant to paragraph (i) and that the applicant understands the restrictions of the Medicare select policy or certificate. Subd. 11. Grievance procedures. A Medicare select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers. The procedures shall be aimed at mutual agreement for settlement and may include arbitration procedures. (1) The grievance procedure must be described in the policy and certificates and in the outline of coverage. (2) At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer. (3) Grievances must be considered in a timely manner and must be transmitted to appropriate decision makers who have authority to fully investigate the issue and take corrective action. (4) If a grievance is found to be valid, corrective action must be taken promptly. (5) All concerned parties must be notified about the results of a grievance. (6) The issuer shall report no later than March 31 of each year to the commissioner regarding the grievance procedure. The report shall be in a format prescribed by the commissioner and shall contain the number of grievances filed in the past year and a summary of the subject, nature, and resolution of the grievances. Subd. 12. Offer of alternative product required. At the time of initial purchase, a Medicare select issuer shall make available to each applicant for a Medicare select policy or certificate the opportunity to purchase a Medicare supplement policy or certificate otherwise offered by the issuer. Subd. 13. Right to replace with nonnetwork coverage. (a) At the request of an individual insured under a Medicare select policy or certificate, a Medicare select issuer shall make available to the individual insured the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer that has comparable or lesser benefits and that does not contain a restricted network provision. The issuer shall make the policies or certificates available without requiring evidence of insurability after the Medicare select policy or certificate has been in force for six months. If the issuer does not have available for sale a policy or certificate without restrictive network provisions, the issuer shall provide enrollment information for the Minnesota comprehensive health association Medicare supplement plans. (b) For the purposes of this subdivision, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for prescription drugs, coverage for at-home recovery services, or coverage for Part B excess charges. Coverage for outpatient prescription drugs is not permitted in Medicare supplement policies or certificates issued on or after January 1, 2006. Subd. 14. Continuation of coverage under certain circumstances. (a) Medicare select policies and certificates shall provide for continuation of coverage if the secretary of health and human services determines that Medicare select policies and certificates issued pursuant to this section should be discontinued due to either the failure of the Medicare select program to be reauthorized under law or its substantial amendment. (b) In the event of a determination under paragraph (a), each Medicare select issuer shall make available to each individual insured under a Medicare select policy or certificate the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer that has comparable or lesser benefits and that does not contain a restricted network provision. The issuer shall make the policies and certificates available without requiring evidence of insurability. (c) For the purposes of this subdivision, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare select policy or certificate being replaced. For the purposes of this subdivision, a significant benefit means coverage for the Medicare Part A deductible, coverage for prescription drugs, coverage for at-home recovery services, or coverage for Part B excess charges. Coverage for outpatient prescription drugs must not be included for sale or issuance of a Medicare supplement policy or certificate issued on or after January 1, 2006. Subd. 15. Provision of data required. A Medicare select issuer shall comply with reasonable requests for data made by state or federal agencies, including the United States Department of Health and Human Services, for the purpose of evaluating the Medicare select program. Subd. 16. Regulation by Commerce Department. Medicare select policies and certificates under this section shall be regulated and approved by the Department of Commerce. Subd. 17. Types of plans. (a) Medicare select policies and certificates offered by the issuer must provide the coverages specified in sections 62A.315 to 62A.3165. Before a Medicare select policy or certificate is sold or issued in this state, the applicant must be provided with an explanation of coverage for each of the coverages specified in sections 62A.315 to 62A.3165 and must be provided with the opportunity of purchasing such coverage if offered by the issuer. The basic plan may also include any of the optional benefit riders authorized by section 62A.316. Preventive care provided by Medicare select policies or certificates must be provided as set forth in section 62A.315 or 62A.316, except that the benefits are as defined in chapter 62D. (b) Medicare select policies and certificates must provide the benefits contained in this section, but must not provide coverage for 100 percent or any portion of the Medicare Part B deductible to a newly eligible individual. History:  1992 c 554 art 2 s 1; 1993 c 330 s 6; 1996 c 446 art 1 s 33; 2005 c 17 art 1 s 12; 2011 c 108 s 33; 2019 c 26 art 5 s 11,13
62A.36 LOSS RATIO STANDARDS. Subdivision 1. Loss ratio standards and refund provisions. (a) For purposes of this section, "Medicare supplement policy or certificate" has the meaning given in section 62A.3099 but also includes a policy, contract, or certificate issued under a contract under section 1833 or 1876 of the federal Social Security Act, United States Code, title 42, section 1395 et seq. A Medicare supplement policy form or certificate form shall not be delivered or issued for delivery unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregate benefits, not including anticipated refunds or credits, provided under the policy form or certificate form: (1) at least 75 percent of the aggregate amount of premiums earned in the case of group policies; and (2) at least 65 percent of the aggregate amount of premiums earned in the case of individual policies. These ratios must be calculated based upon incurred claims experience, or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis, and earned premiums for the period and according to accepted actuarial principles and practices. For purposes of this calculation, "health care expenses" has the meaning given in section 62A.3099, subdivision 10. An insurer shall demonstrate that the third year loss ratio is greater than or equal to the applicable percentage. All filings of rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards, and aggregate loss ratio from inception of the policy or certificate shall equal or exceed the appropriate loss ratio standards. An application form for a Medicare supplement policy or certificate, as defined in this section, must prominently disclose the anticipated loss ratio and explain what it means. (b) An issuer shall collect and file with the commissioner by May 31 of each year the data contained in the National Association of Insurance Commissioners Medicare Supplement Refund Calculating form, for each type of Medicare supplement benefit plan. If, on the basis of the experience as reported, the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation must be done on a statewide basis for each type in a standard Medicare supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded. A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the secretary of health and human services, but in no event shall it be less than the average rate of interest for 13-week treasury bills. A refund or credit against premiums due shall be made by September 30 following the experience year on which the refund or credit is based. (c) An issuer of Medicare supplement policies and certificates in this state shall file annually its rates, rating schedule, and supporting documentation including ratios of incurred losses to earned premiums by policy or certificate duration for approval by the commissioner according to the filing requirements and procedures prescribed by the commissioner. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three years. As soon as practicable, but before the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in this state shall file with the commissioner, in accordance with the applicable filing procedures of this state: (1) a premium adjustment that is necessary to produce an expected loss ratio under the policy or certificate that will conform with minimum loss ratio standards for Medicare supplement policies or certificates. No premium adjustment that would modify the loss ratio experience under the policy or certificate other than the adjustments described herein shall be made with respect to a policy or certificate at any time other than on its renewal date or anniversary date; (2) if an issuer fails to make premium adjustments acceptable to the commissioner, the commissioner may order premium adjustments, refunds, or premium credits considered necessary to achieve the loss ratio required by this section; (3) any appropriate riders, endorsements, or policy or certificate forms needed to accomplish the Medicare supplement insurance policy or certificate modifications necessary to eliminate benefit duplications with Medicare. The riders, endorsements, or policy or certificate forms shall provide a clear description of the Medicare supplement benefits provided by the policy or certificate. (d) The commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of a refund or credit for the reporting period. Public notice of the hearing shall be furnished in a manner considered appropriate by the commissioner. (e) An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule, and supporting documentation have been filed with, and approved by, the commissioner according to the filing requirements and procedures prescribed by the commissioner. (f) An issuer must file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only with the commissioner in the state in which the policy or certificate was issued. (g) Issuers are permitted to continue to issue currently approved policy and certificate forms as appropriate through December 31, 2005. (h) Issuers must comply with any requirements to notify enrollees under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Subd. 1a. Supplement to annual statements. Each insurer that has Medicare supplement policies in force in this state shall, as a supplement to the annual statement required by section 60A.13, submit, in a form prescribed by the commissioner, data showing its incurred claims experience, its earned premiums, and the aggregate amount of premiums collected and losses incurred for each Medicare policy form in force. If the data submitted does not confirm that the insurer has satisfied the loss ratio requirements of this section, the commissioner shall notify the insurer in writing of the deficiency. The insurer shall have 30 days from the date of the commissioner's notice to file amended rates that comply with this section. If the insurer fails to file amended rates within the prescribed time, the commissioner shall order that the insurer's filed rates for the nonconforming policy be reduced to an amount that would have resulted in a loss ratio that complied with this section had it been in effect for the reporting period of the supplement. The insurer's failure to file amended rates within the specified time or the issuance of the commissioner's order amending the rates does not preclude the insurer from filing an amendment of its rates at a later time. The commissioner shall annually make the submitted data as to premiums and loss ratios for the preceding three years available to the public at a cost not to exceed the cost of copying. The commissioner shall also provide the public with copies of the policies to which the loss ratios and premiums apply. The data must be compiled in a form useful for consumers who wish to compare premium charges and loss ratios. Subd. 1b. Penalties. Each sale of a policy that does not comply with the loss ratio requirements of this section is an unfair or deceptive act or practice in the business of insurance and is subject to the penalties in sections 72A.17 to 72A.32. Subd. 2. Solicitations by mail or media advertisement. For purposes of this section, Medicare supplement policies issued as a result of solicitations of individuals through the mail or mass media advertising, including both print and broadcast advertising, shall be treated as individual policies. History:  1981 c 318 s 6; 1990 c 403 s 6-8; 1991 c 129 s 3; 1992 c 554 art 1 s 8; 1993 c 330 s 7; 1994 c 625 art 10 s 7; 2005 c 17 art 1 s 13,14
62A.37 GOVERNMENT CERTIFICATIONS, APPROVALS, AND ENDORSEMENTS. Subdivision 1. Display of seal or emblem prohibited. No graphic seal or emblem shall be displayed on any policy or promotional literature to indicate or give the impression that there is any connection, certification, approval or endorsement from Medicare or any governmental body of this state or any agency thereof or of the United States of America or any agency thereof. Subd. 2. Display of false statement or representation prohibited. Any false statement or representation printed on the policy or on promotional literature that indicates the policy has a connection with, is certified by, or has the approval or endorsement of any agency of this state or of the United States of America shall be unlawful. History:   1981 c 318 s 7 
62A.38 NOTICE OF FREE EXAMINATION. Medicare supplement policies or certificates, other than those issued pursuant to direct response solicitation, shall have a notice prominently printed on the first page of the policy or attached thereto stating in substance that the policyholder or certificate holder shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded in full if, after examination of the policy or certificate, the insured person is not satisfied for any reason. Medicare supplement policies or certificates, issued pursuant to a direct response solicitation to persons eligible for Medicare by reason of age, shall have a notice prominently printed on the first page or attached thereto stating in substance that the policyholder or certificate holder shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded within ten days after receipt of the returned policy or certificate to the insurer if, after examination, the insured person is not satisfied for any reason. History:  1981 c 318 s 8; 1992 c 554 art 1 s 9
62A.39 DISCLOSURE. No individual Medicare supplement plan shall be delivered or issued in this state and no certificate shall be delivered under a group Medicare supplement plan delivered or issued in this state unless the plan is shown on the cover page and an outline containing at least the following information in no less than 12-point type is delivered to the applicant at the time the application is made: (a) A description of the principal benefits and coverage provided in the policy; (b) A statement of the exceptions, reductions, and limitations contained in the policy including the following language, as applicable, in bold print: "THIS POLICY DOES NOT COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE. THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING CARE. READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; (c) A statement of the renewal provisions including any reservations by the insurer of a right to change premiums. The premium and manner of payment shall be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant shall be illustrated; (d) Read your policy or certificate very carefully. A statement that the outline of coverage is a summary of the policy issued or applied for and that the policy should be consulted to determine governing contractual provisions. Additionally, it does not give all the details of Medicare coverage. Contact your local Social Security office or consult the Medicare handbook for more details; (e) A statement of the policy's loss ratio as follows: "This policy provides an anticipated loss ratio of (..%). This means that, on the average, policyholders may expect that ($....) of every $100.00 in premium will be returned as benefits to policyholders over the life of the contract."; (f) When the outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis that would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate shall accompany the policy or certificate when it is delivered and contain the following statement, in no less than 12-point type, immediately above the company name: "NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application, and the coverage originally applied for has not been issued."; (g) Right to return policy or certificate. "If you find that you are not satisfied with your policy or certificate for any reason, you may return it to (insert issuer's address). If you send the policy or certificate back to us within 30 days after you receive it, we will treat the policy or certificate as if it had never been issued and return all of your payments within ten days."; (h) Policy or certificate replacement. "If you are replacing another health insurance policy or certificate, do NOT cancel it until you have actually received your new policy or certificate and are sure you want to keep it."; (i) Notice. "This policy or certificate may not fully cover all of your medical costs." A. (for agents:) "Neither (insert company's name) nor its agents are connected with Medicare." B. (for direct response:) "(insert company's name) is not connected with Medicare." (j) Notice regarding policies or certificates which are not Medicare supplement policies. Any accident and sickness insurance policy or certificate, other than a Medicare supplement policy, or a policy or certificate issued pursuant to a contract under the federal Social Security Act, section 1833 or 1876 (United States Code, title 42, section 1395, et seq.), disability income policy; or other policy, issued for delivery in this state to persons eligible for Medicare shall notify insureds under the policy that the policy is not a Medicare supplement policy or certificate. The notice shall either be printed or attached to the first page of the outline of coverage delivered to insureds under the policy, or if no outline of coverage is delivered, to the first page of the policy or certificate delivered to insureds. The notice shall be in no less than 12-point type and shall contain the following language: "THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT (POLICY OR CONTRACT). If you are eligible for Medicare, review the "Guide to Health Insurance for People with Medicare" available from the company." (k) Complete answers are very important. "When you fill out the application for the new policy or certificate, be sure to answer truthfully and completely all questions about your medical and health history. The company may cancel your policy or certificate and refuse to pay any claims if you leave out or falsify important medical information." If the policy or certificate is guaranteed issue, this paragraph need not appear. "Review the application carefully before you sign it. Be certain that all information has been properly recorded." Include for each plan, prominently identified in the cover page, a chart showing the services, Medicare payments, plan payments, and insured payments for each plan, using the same language, in the same order, using uniform layout and format. The outline of coverage provided to applicants pursuant to this section consists of four parts: a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the insurer. History:  1981 c 318 s 9; 1983 c 263 s 11; 1992 c 554 art 1 s 10; 1993 c 330 s 8; 1996 c 446 art 1 s 34
62A.40 REPLACEMENT REGULATED. No insurer or agent shall replace a Medicare supplement plan with another Medicare supplement plan of the same category unless there is a substantial difference in cost favorable to the policyholder, or the insured has previously demonstrated a dissatisfaction with the service presently being received from the current insurer. An insurer or agent may replace a Medicare supplement plan with a less comprehensive plan only if the prospective insured signs an acknowledgment that it is understood that the prospective insured will receive less benefits under the new policy than under the policy presently in force. History:  1981 c 318 s 10; 1986 c 444
62A.41 PENALTIES. Subdivision 1. Generally. Any insurer, general agent, agent, or other person who knowingly or willfully, either directly or indirectly, makes or causes to be made or induces or seeks to induce the making of any false statement or representation of a material fact with respect to compliance of any policy with the standards and requirements set forth in this section; falsely assumes or pretends to be acting, or misrepresents in any way, including a violation of section 62A.37, that the person is acting, under the authority or in association with Medicare, or any federal agency, for the purpose of selling or attempting to sell insurance, or in such pretended character demands, or obtains money, paper, documents, or anything of value; or knowingly sells a health insurance policy to an individual entitled to benefits under part A or part B of Medicare with the knowledge that such policy substantially duplicates health benefits to which such individual is otherwise entitled under a requirement of state or federal law other than under Medicare shall be guilty of a felony and subject to a civil penalty of not more than $5,000 per violation, and the commissioner may revoke or suspend the license of any company, association, society, other insurer, or agent thereof. Subd. 2. Sales of replacement policies. An insurer or general agent, agent, manager's general agent, or other representative, who knowingly or willfully violates section 62A.40 is guilty of a felony and is subject to a civil penalty of not more than $5,000 per violation. Subd. 3. Sales of duplicate policies. An agent who knowingly or willfully violates section 62A.43, subdivision 1, is guilty of a felony and is subject to a civil penalty of not more than $5,000 per violation. Subd. 4. Unlicensed sales. Notwithstanding section 60K.32, a person who acts or assumes to act as an insurance producer without a valid license for the purpose of selling or attempting to sell Medicare supplement insurance, and the person who aids or abets the actor, is guilty of a felony and is subject to a civil penalty of not more than $5,000 per violation. History:  1981 c 318 s 11; 1986 c 444; 1989 c 258 s 7; 1992 c 564 art 3 s 21; 2001 c 117 art 2 s 7
62A.42 RULEMAKING AUTHORITY. To carry out the purposes of sections 62A.3099 to 62A.44, the commissioner may promulgate rules pursuant to chapter 14. These rules may: (a) prescribe additional disclosure requirements for Medicare supplement plans, designed to adequately inform the prospective insured of the need and extent of coverage offered; (b) prescribe uniform policy forms in order to give the insurance purchaser a reasonable opportunity to compare the cost of insuring with various insurers and may prescribe reasonable measures as necessary to conform Medicare supplement policies and certificates to the requirements of federal law and regulations; and (c) establish other reasonable standards to further the purpose of sections 62A.3099 to 62A.44. History:  1981 c 318 s 12; 1982 c 424 s 130; 1983 c 263 s 12; 1992 c 554 art 1 s 11; 2005 c 17 art 1 s 14
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. History:   2001 c 215 s 16 
62A.43 LIMITATIONS ON SALES. Subdivision 1. Duplicate coverage prohibited. No agent shall sell a Medicare supplement plan, as defined in section 62A.3099, to a person who currently has one plan in effect; however, an agent may sell a replacement plan in accordance with section 62A.40, provided that the second plan is not made effective any sooner than necessary to provide continuous benefits for preexisting conditions. Every application for Medicare supplement insurance shall require a written statement signed by the applicant listing all health and accident insurance maintained by the applicant as of the date the application is taken and stating whether the applicant is entitled to any medical assistance. The written statement must be accompanied by a written acknowledgment, signed by the seller of the policy, of the request for and receipt of the statement. Subd. 2. Refunds. Notwithstanding the provisions of section 62A.38, an insurer which issues a Medicare supplement plan to any person who has one plan then in effect, except as permitted in subdivision 1, shall, at the request of the insured, either refund the premiums or pay any claims on the policy, whichever is greater. Any refund of premium pursuant to this section or section 62A.38 shall be sent by the insurer directly to the insured within 15 days of the request by the insured. Subd. 3. Action by commissioner. If the commissioner determines after an investigation that an insurer has issued a Medicare supplement plan to a person who already has one plan, except as permitted in subdivision 1, the commissioner shall notify the insurer in writing of the determination. If the insurer thereafter fails to take reasonable action to prevent overselling, the commissioner may, in the manner prescribed in chapter 14, revoke or suspend the insurer's authority to sell accident and health insurance in this state or impose a civil penalty not to exceed $10,000, or both. Subd. 4. Other policies not prohibited. The prohibition in this section or the requirements of section 62A.31, subdivision 1, against the sale of duplicate Medicare supplement coverage do not preclude the sale of a health insurance policy or certificate if it will pay benefits without regard to other health coverage and if prospective purchasers are provided, on or together with the application for the policy or certificate, the appropriate disclosure statement for health insurance policies sold to Medicare beneficiaries that duplicate Medicare as prescribed by the National Association of Insurance Commissioners. Notwithstanding this provision, if the commissioner determines that the coverage being sold is in fact Medicare supplement insurance, the commissioner shall notify the insurer in writing of the determination. If the insurer does not thereafter comply with sections 62A.3099 to 62A.44, the commissioner may, pursuant to chapter 14, revoke or suspend the insurer's authority to sell accident and health insurance in this state or impose a civil penalty not to exceed $10,000, or both. History:  1983 c 263 s 13; 1986 c 444; 1987 c 337 s 56,57; 1991 c 129 s 4; 1994 c 485 s 31; 1999 c 90 s 4; 2005 c 17 art 1 s 14
62A.436 COMMISSIONS. The commission, sales allowance, service fee, or compensation to an agent for the sale of a Medicare supplement plan must be the same for each of the first four years of the policy. In no event may the rate of commission, sales allowance, service fee, or compensation for the sale of a basic Medicare supplement plan exceed that which applies to the sale of an extended basic Medicare supplement plan. For purposes of this section, "compensation" includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate, including but not limited to bonuses, gifts, prizes, awards, and finder's fees. This section also applies to sales of replacement policies. History:  1989 c 258 s 8; 1992 c 554 art 1 s 12; 1993 c 330 s 9
62A.44 APPLICATIONS. Subdivision 1. Applicant copy. No individual Medicare supplement plan shall be issued or delivered in this state unless a signed and completed copy of the application for insurance is left with the applicant at the time application is made. Subd. 2. Questions. (a) Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another Medicare supplement or other health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent containing the questions and statements may be used. "(1) You do not need more than one Medicare supplement policy or certificate. (2) If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages. (3) You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy or certificate. (4) The benefits and premiums under your Medicare supplement policy or certificate can be suspended, if requested, during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your policy or certificate will be reinstated if requested within 90 days of losing Medicaid eligibility. (5) Counseling services may be available in Minnesota to provide advice concerning medical assistance through state Medicaid, Qualified Medicare Beneficiaries (QMBs), and Specified Low-Income Medicare Beneficiaries (SLMBs). To the best of your knowledge: (1) Do you have another Medicare supplement policy or certificate in force? (a) If so, with which company? (b) If so, do you intend to replace your current Medicare supplement policy with this policy or certificate? (2) Do you have any other health insurance policies that provide benefits which this Medicare supplement policy or certificate would duplicate? (a) If so, please name the company. (b) What kind of policy? (3) Are you covered for medical assistance through the state Medicaid program? If so, which of the following programs provides coverage for you? (a) Specified Low-Income Medicare Beneficiary (SLMB), (b) Qualified Medicare Beneficiary (QMB), or (c) full Medicaid Beneficiary?" (b) Agents shall list any other health insurance policies they have sold to the applicant. (1) List policies sold that are still in force. (2) List policies sold in the past five years that are no longer in force. (c) In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer on delivery of the policy or certificate. (d) Upon determining that a sale will involve replacement of Medicare supplement coverage, any issuer, other than a direct response issuer, or its agent, shall furnish the applicant, before issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One copy of the notice signed by the applicant and the agent, except where the coverage is sold without an agent, shall be provided to the applicant and an additional signed copy shall be retained by the issuer. A direct response issuer shall deliver to the applicant at the time of the issuance of the policy or certificate the notice regarding replacement of Medicare supplement coverage. (e) The notice required by paragraph (d) for an issuer shall be provided in substantially the following form in no less than 12-point type: "NOTICE TO APPLICANT REGARDING REPLACEMENT OF MEDICARE SUPPLEMENT INSURANCE (Insurance company's name and address) SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE. According to (your application) (information you have furnished), you intend to terminate existing Medicare supplement insurance and replace it with a policy or certificate to be issued by (Company Name) Insurance Company. Your new policy or certificate will provide 30 days within which you may decide without cost whether you desire to keep the policy or certificate. You should review this new coverage carefully. Compare it with all accident and sickness coverage you now have. If, after due consideration, you find that purchase of this Medicare supplement coverage is a wise decision you should terminate your present Medicare supplement policy. You should evaluate the need for other accident and sickness coverage you have that may duplicate this policy. STATEMENT TO APPLICANT BY ISSUER, AGENT, (BROKER OR OTHER REPRESENTATIVE): I have reviewed your current medical or health insurance coverage. To the best of my knowledge this Medicare supplement policy will not duplicate your existing Medicare supplement policy because you intend to terminate the existing Medicare supplement policy. The replacement policy or certificate is being purchased for the following reason(s) (check one):      .  Additional benefits   .  No change in benefits, but lower premiums   .  Fewer benefits and lower premiums   .  Other (please specify)   .    .    .    (1) Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy or certificate. This could result in denial or delay of a claim for benefits under the new policy or certificate, whereas a similar claim might have been payable under your present policy or certificate. (2) State law provides that your replacement policy or certificate may not contain new preexisting conditions, waiting periods, elimination periods, or probationary periods. The insurer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods in the new policy (or coverage) for similar benefits to the extent the time was spent (depleted) under the original policy or certificate. (3) If you still wish to terminate your present policy or certificate and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy or certificate had never been in force. After the application has been completed and before you sign it, review it carefully to be certain that all information has been properly recorded. (If the policy or certificate is guaranteed issue, this paragraph need not appear.) Do not cancel your present policy or certificate until you have received your new policy or certificate and you are sure that you want to keep it.      .   (Signature of Agent, Broker, or Other Representative)*   .   (Typed Name and Address of Issuer, Agent, or Broker)   .   (Date)   .   (Applicant's Signature)   .   (Date)   *Signature not required for direct response sales." (f) Paragraph (e), clauses (1) and (2), of the replacement notice (applicable to preexisting conditions) may be deleted by an issuer if the replacement does not involve application of a new preexisting condition limitation. Subd. 3. Electronic enrollment. (a) For any Medicare supplement plan as defined in section 62A.3099, any requirement that a signature of an insured be obtained by an agent or insurer is satisfied if: (1) the consent is obtained by telephonic or electronic enrollment by the group policyholder or insured. A verification of the enrollment information must be provided to the applicant; (2) the telephonic or electronic enrollment provides necessary and reasonable safeguards to ensure the accuracy, retention, and prompt retrieval of records; and (3) the telephonic or electronic enrollment provides necessary and reasonable safeguards to ensure that the confidentiality of individual information and privileged information as defined in section 72A.491, subdivision 19, is maintained. (b) The insurer shall make available, upon request of the commissioner, records that will demonstrate the insurer's ability to confirm enrollment and coverage. History:  1983 c 263 s 14; 1992 c 554 art 1 s 13; 1993 c 13 art 1 s 18; 1993 c 330 s 10; 1996 c 446 art 1 s 35; 2008 c 344 s 12
62A.451 DEFINITIONS. Subdivision 1. Applicability. For purposes of sections 62A.451 to 62A.4528, the terms defined in this section have the meanings given. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 3. Enrollee. "Enrollee" means an individual who is entitled to limited health services under a contract with an entity authorized to provide or arrange for such services under sections 62A.451 to 62A.4528. Subd. 4. Evidence of coverage. "Evidence of coverage" means the certificate, agreement, or contract issued under section 62A.4516 setting forth the coverage to which an enrollee is entitled. Subd. 5. Limited health service. "Limited health service" means pharmaceutical services covered under Medicare Part D. Limited health service does not include hospital, medical, surgical, or emergency services. Subd. 6. Prepaid limited health service organization. "Prepaid limited health service organization" means any corporation, partnership, or other entity that, in return for a prepayment, undertakes to provide or arrange for the provision of limited health services to enrollees. Prepaid limited health service organization does not include: (1) an entity otherwise authorized under the laws of this state either to provide any limited health service on a prepayment or other basis or to indemnify for any limited health service; (2) an entity that meets the requirements of section 62A.4514; or (3) a provider or entity when providing or arranging for the provision of limited health services under a contract with a prepaid limited health service organization or with an entity described in clause (1) or (2). Subd. 7. Provider. "Provider" means a physician, pharmacist, health facility, or other person or institution that is licensed or otherwise authorized to deliver or furnish limited health services under sections 62A.451 to 62A.4528. Subd. 8. Subscriber. "Subscriber" means the person whose employment or other status, except for family dependency, is the basis for entitlement to limited health services under a contract with an entity authorized to provide or arrange for such services under sections 62A.451 to 62A.4528. History:   2005 c 17 art 2 s 1 
62A.4511 CERTIFICATE OF AUTHORITY REQUIRED. No person, corporation, partnership, or other entity may operate a prepaid limited health service organization in this state without obtaining and maintaining a certificate of authority from the commissioner under sections 62A.451 to 62A.4528. History:   2005 c 17 art 2 s 2 
62A.4512 APPLICATION FOR CERTIFICATE OF AUTHORITY. An application for a certificate of authority to operate a prepaid limited health service organization must be filed with the commissioner on a form prescribed by the commissioner. The application must be verified by an officer or authorized representative of the applicant and must set forth, or be accompanied by, the following: (1) a copy of the applicant's basic organizational document, such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents and all amendments to these documents; (2) a copy of all bylaws, rules and regulations, or similar documents, if any, regulating the conduct of the applicant's internal affairs; (3) a list of the names, addresses, official positions, and biographical information of the individuals who are responsible for conducting the applicant's affairs, including but not limited to, all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers, and any person or entity owning or having the right to acquire ten percent or more of the voting securities of the applicant, and the partners or members in the case of a partnership or association; (4) a statement generally describing the applicant, its facilities, personnel, and the limited health services to be offered; (5) a copy of the form of any contract made or to be made between the applicant and any providers regarding the provision of limited health services to enrollees; (6) a copy of the form of any contract made or to be made between the applicant and any person listed in clause (3); (7) a copy of the form of any contract made or to be made between the applicant and any person, corporation, partnership, or other entity for the performance on the applicant's behalf of any functions including, but not limited to, marketing, administration, enrollment, investment management, and subcontracting for the provision of limited health services to enrollees; (8) a copy of the form of any group contract that is to be issued to employers, unions, trustees, or other organizations and a copy of any form of evidence of coverage to be issued to subscribers; (9) a copy of the applicant's most recent financial statements audited by independent certified public accountants. If the financial affairs of the applicant's parent company are audited by independent certified public accountants but those of the applicant are not, then a copy of the most recent audited financial statement of the applicant's parent company, certified by an independent certified public accountant, attached to which shall be consolidating financial statements of the applicant, satisfies this requirement unless the commissioner determines that additional or more recent financial information is required for the proper administration of sections 62A.451 to 62A.4528; (10) a copy of the applicant's financial plan, including a three-year projection of anticipated operating results, a statement of the sources of working capital, and any other sources of funding and provisions for contingencies; (11) a statement acknowledging that all lawful process in any legal action or proceeding against the applicant on a cause of action arising in this state is valid if served in accordance with section 45.028; (12) a description of how the applicant will comply with section 62A.4523; and (13) such other information as the commissioner may reasonably require to make the determinations required by sections 62A.451 to 62A.4528. History:   2005 c 17 art 2 s 3 
62A.4513 ISSUANCE OF CERTIFICATE OF AUTHORITY; DENIAL. Subdivision 1. Issuance. Following receipt of an application filed under section 62A.4512, the commissioner shall review the application and notify the applicant of any deficiencies. The commissioner must approve or deny an application within 90 days after receipt of a substantially complete application, or the application is deemed approved. The commissioner shall issue a certificate of authority to an applicant provided that the following conditions are met: (1) the requirements of section 62A.4512 have been fulfilled; (2) the individuals responsible for conducting the applicant's affairs are competent, trustworthy, and possess good reputations, and have had appropriate experience, training, or education; (3) the applicant is financially responsible and may reasonably be expected to meet its obligations to enrollees and to prospective enrollees. In making this determination, the commissioner may consider: (i) the financial soundness of the applicant's arrangements for limited health services; (ii) the adequacy of working capital, other sources of funding, and provisions for contingencies; (iii) any agreement for paying the cost of the limited health services or for alternative coverage in the event of insolvency of the prepaid limited health service organization; and (iv) the manner in which the requirements of section 62A.4523 have been fulfilled; and (4) any deficiencies identified by the commissioner have been corrected. Subd. 2. Denials. If the certificate of authority is denied, the commissioner shall notify the applicant and shall specify the reasons for denial in the notice. The prepaid limited health service organization has 30 days from the date of receipt of the notice to request a hearing before the commissioner under chapter 14. History:   2005 c 17 art 2 s 4 
62A.4514 FILING REQUIREMENTS FOR AUTHORIZED ENTITIES. (a) An entity authorized under the laws of this state to operate a health maintenance organization, an accident and health insurance company, a nonprofit health service plan corporation, a fraternal benefit society, or a multiple employer welfare arrangement, and that is not otherwise authorized under the laws of this state to offer limited health services on a per capita or fixed prepayment basis, may do so by filing for approval with the commissioner the information requested by section 62A.4512, clauses (4), (5), (7), (8), and (10), and any subsequent material modification or addition to those provisions. (b) If the commissioner disapproves the filing, the procedures provided in section 62A.4513, subdivision 2, must be followed. History:   2005 c 17 art 2 s 5 
62A.4515 MATERIAL MODIFICATIONS. Subdivision 1. Material modifications. A prepaid limited health service organization shall file with the commissioner prior to use, a notice of any material modification of any matter or document furnished under section 62A.4512, together with supporting documents necessary to fully explain the modification. If the commissioner does not disapprove the filing within 60 days of its filing, the filing is deemed approved. Subd. 2. Procedure for disapproval. If a filing under this section is disapproved, the commissioner shall notify the prepaid limited health service organization and specify the reasons for disapproval in the notice. The prepaid limited health service organization has 30 days from the date of receipt of notice to request a hearing before the commissioner under chapter 14. History:   2005 c 17 art 2 s 6 
62A.4516 EVIDENCE OF COVERAGE. Every subscriber must be issued an evidence of coverage consistent with the requirements of Medicare Part D. History:   2005 c 17 art 2 s 7 
62A.4517 CONSTRUCTION WITH OTHER LAWS. Subdivision 1. Application of other insurance laws. (a) A prepaid limited health service organization organized under the laws of this state is deemed to be a domestic insurer for purposes of chapter 60D unless specifically exempted in writing from one or more of the provisions of that chapter by the commissioner, based upon a determination that the provision is not applicable to the organization or to providing coverage under Medicare Part D. (b) No other provision of chapters 60 to 72C applies to a prepaid limited health service organization unless such an organization is specifically mentioned in the provision. Subd. 2. Not a healing art. The provision of limited health services by a prepaid limited health service organization or other entity under sections 62A.451 to 62A.4528 must not be deemed to be the practice of medicine or other healing arts. Subd. 3. Solicitation and advertising. Solicitation to arrange for or provide limited health services in accordance with sections 62A.451 to 62A.4528 shall not be construed to violate any provision of law relating to solicitation or advertising by health professionals. History:   2005 c 17 art 2 s 8 
62A.4518 NONDUPLICATION OF COVERAGE. Notwithstanding any other law of this state, a prepaid limited health service organization, health maintenance organization, accident and health insurance company, nonprofit health service plan corporation, or fraternal benefit society may exclude, in any contract or policy issued to a group, any coverage that would duplicate the coverage for limited health services, whether in the form of services, supplies, or reimbursement, insofar as the coverage or service is provided in accordance with sections 62A.451 to 62A.4528 under a contract or policy issued to the same group or to a part of that group by a prepaid limited health service organization, a health maintenance organization, an accident and health insurance company, a nonprofit health service corporation, or a fraternal benefit society. History:   2005 c 17 art 2 s 9 
62A.4519 COMPLAINT SYSTEM. Every prepaid limited health service organization shall establish and maintain a complaint system providing reasonable procedures for resolving written complaints initiated by enrollees and providers, consistent with the requirements of Medicare Part D. History:   2005 c 17 art 2 s 10 
62A.4520 EXAMINATION OF ORGANIZATION. (a) The commissioner may examine the affairs of any prepaid limited health service organization as often as is reasonably necessary to protect the interests of the people of this state, but not less frequently than once every three years. (b) Every prepaid limited health service organization shall make its relevant books and records available for an examination and in every way cooperate with the commissioner to facilitate an examination. (c) In lieu of an examination, the commissioner may accept the report of an examination made by the commissioner of another state. History:   2005 c 17 art 2 s 11 
62A.4521 INVESTMENTS. The funds of a prepaid limited health service organization shall be invested only in accordance with the guidelines under chapter 62D for investments by health maintenance organizations. History:   2005 c 17 art 2 s 12 
62A.4522 AGENTS. No individual may apply, procure, negotiate, or place for others any policy or contract of a prepaid limited health service organization unless that individual holds a license or is otherwise authorized to sell accident and health insurance policies, nonprofit health service plan contracts, or health maintenance organization contracts. History:   2005 c 17 art 2 s 13 
62A.4523 PROTECTION AGAINST INSOLVENCY; DEPOSIT. Subdivision 1. Net equity. (a) Except as approved in accordance with subdivision 4, each prepaid limited health service organization shall at all times have and maintain tangible net equity equal to the greater of: (1) $100,000; or (2) two percent of the organization's annual gross premium income, up to a maximum of the required capital and surplus of an accident and health insurer. (b) A prepaid limited health service organization that has uncovered expenses in excess of $100,000, as reported on the most recent annual financial statement filed with the commissioner, shall maintain tangible net equity equal to 25 percent of the uncovered expense in excess of $100,000 in addition to the tangible net equity required by paragraph (a). Subd. 2. Definitions. For the purpose of this section: (1) "net equity" means the excess of total assets over total liabilities, excluding liabilities which have been subordinated in a manner acceptable to the commissioner; and (2) "tangible net equity" means net equity reduced by the value assigned to intangible assets including, but not limited to, goodwill; going concern value; organizational expense; start-up costs; long-term prepayments of deferred charges; nonreturnable deposits; and obligations of officers, directors, owners, or affiliates, except short-term obligations of affiliates for goods or services arising in the normal course of business that are payable on the same terms as equivalent transactions with nonaffiliates and that are not past due. Subd. 3. Deposit. (a) Each prepaid limited health service organization shall deposit with the commissioner or with any organization or trustee acceptable to the commissioner through which a custodial or controlled account is utilized, cash, securities, or any combination of these or other measures that is acceptable to the commissioner, in an amount equal to $50,000 plus 25 percent of the tangible net equity required in subdivision 1; provided, however, that the deposit must not be required to exceed $200,000. (b) The deposit is an admitted asset of the prepaid limited health service organization in the determination of tangible net equity. (c) All income from deposits is an asset of the prepaid limited health service organization. A prepaid limited health service organization may withdraw a deposit or any part of it after making a substitute deposit of equal amount and value. Any securities must be approved by the commissioner before being substituted. (d) The deposit must be used to protect the interests of the prepaid limited health service organization's enrollees and to ensure continuation of limited health care services to enrollees of a prepaid limited health service organization that is in rehabilitation or conservation. If a prepaid limited health service organization is placed in receivership or liquidation, the deposit is an asset subject to provisions of chapter 60B. (e) The commissioner may reduce or eliminate the deposit requirement if the prepaid limited health service organization has made an acceptable deposit with the state or jurisdiction of domicile for the protection of all enrollees, wherever located, and delivers to the commissioner a certificate to that effect, duly authenticated by the appropriate state official holding the deposit. Subd. 4. Waiver of net equity requirement. Upon application by a prepaid limited health service organization, the commissioner may waive some or all of the requirements of subdivision 1 for any period of time the commissioner deems proper upon a finding that either: (1) the prepaid limited health service organization has a net equity of at least $10,000,000; or (2) an entity having a net equity of at least $10,000,000 furnishes to the commissioner a written commitment, acceptable to the commissioner, to provide for the uncovered expenses of the prepaid limited health service organization. Subd. 5. Definition; uncovered expenses. For the purposes of this section, "uncovered expense" means the cost of health care services that are the obligation of a prepaid limited health organization (1) for which an enrollee may be liable in the event of the insolvency of the organization and (2) for which alternative arrangements acceptable to the commissioner have not been made to cover the costs. Costs incurred by a provider who has agreed in writing not to bill enrollees, except for permissible supplemental charges, must be considered a covered expense. History:   2005 c 17 art 2 s 14 
62A.4524 OFFICER'S AND EMPLOYEE'S FIDELITY BOND. (a) A prepaid limited health service organization shall maintain in force a fidelity bond in its own name on its officers and employees in an amount not less than $20,000,000 or in any other amount prescribed by the commissioner. Except as otherwise provided by this paragraph, the bond must be issued by an insurance company that is licensed to do business in this state or, if the fidelity bond required by this paragraph is not available from an insurance company that holds a certificate of authority in this state, a fidelity bond procured by a licensed surplus lines agent resident in this state in compliance with sections 60A.195 to 60A.2095 satisfies the requirements of this paragraph. (b) In lieu of the bond specified in paragraph (a), a prepaid limited health service organization may deposit with the commissioner cash or securities or other investments of the types set forth in section 62A.4521. Such a deposit must be maintained by the commissioner in the amount and subject to the same conditions required for a bond under this paragraph. History:   2005 c 17 art 2 s 15 
62A.4525 REPORTS. (a) Every prepaid limited health service organization shall file with the commissioner annually, on or before April 1, a report verified by at least two principal officers covering the preceding calendar year. (b) The report must be on forms prescribed by the commissioner and must include: (1) a financial statement of the organization, including its balance sheet, income statement, and statement of changes in financial position for the preceding year, certified by an independent public accountant, or a consolidated audited financial statement of its parent company certified by an independent public accountant, attached to which must be consolidating financial statements of the prepaid limited health service organization; (2) the number of subscribers at the beginning of the year, the number of subscribers at the end of the year, and the number of enrollments terminated during the year; and (3) such other information relating to the performance of the organization as is necessary to enable the commissioner to carry out the commissioner's duties under sections 62A.451 to 62A.4528. (c) The commissioner may require more frequent reports containing information necessary to enable the commissioner to carry out the commissioner's duties under sections 62A.451 to 62A.4528. (d) The commissioner may suspend the organization's certificate of authority pending the proper filing of the required report by the organization. History:   2005 c 17 art 2 s 16 
62A.4526 SUSPENSION OR REVOCATION OF CERTIFICATE OF AUTHORITY. Subdivision 1. Grounds for suspension or revocation. The commissioner may suspend or revoke the certificate of authority issued to a prepaid limited health service organization under sections 62A.451 to 62A.4528 upon determining that any of the following conditions exist: (1) the prepaid limited health service organization is operating significantly in contravention of its basic organizational document or in a manner contrary to that described in and reasonably inferred from any other information submitted under section 62A.4512, unless amendments to the submissions have been filed with and approved by the commissioner; (2) the prepaid limited health service organization issues an evidence of coverage that does not comply with the requirements of section 62A.4516; (3) the prepaid limited health service organization is unable to fulfill its obligations to furnish limited health services; (4) the prepaid limited health service organization is not financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees; (5) the tangible net equity of the prepaid limited health service organization is less than that required by section 62A.4523 or the prepaid limited health service organization has failed to correct any deficiency in its tangible net equity as required by the commissioner; (6) the prepaid limited health service organization has failed to implement in a reasonable manner the complaint system required by section 62A.4519; (7) the continued operation of the prepaid limited health service organization would be hazardous to its enrollees; or (8) the prepaid limited health service organization has otherwise failed to comply with sections 62A.451 to 62A.4528. Subd. 2. Procedure for suspension or revocation. If the commissioner has cause to believe that grounds for the suspension or revocation of a certificate of authority exist, the commissioner shall notify the prepaid limited health service organization in writing specifically stating the grounds for suspension or revocation and fixing a time not more than 60 days after the date of notification for a hearing on the matter in accordance with chapter 14. Subd. 3. Winding up after revocation. When the certificate of authority of a prepaid limited health service organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. It shall engage in no further advertising or solicitation whatsoever. The commissioner may, by written order, permit such further operation of the organization as the commissioner may find to be in the best interest of enrollees, to the end that enrollees will be afforded the greatest practical opportunity to obtain continuing limited health services. History:   2005 c 17 art 2 s 17 
62A.4527 PENALTIES. In lieu of any penalty specified elsewhere in sections 62A.451 to 62A.4528, or when no penalty is specifically provided, whenever a prepaid limited health service organization or other person, corporation, partnership, or entity subject to those sections has been found, pursuant to chapter 14, to have violated any provision of sections 62A.451 to 62A.4528, the commissioner may: (1) issue and cause to be served upon the organization, person, or entity charged with the violation a copy of the findings and an order requiring the organization, person, or entity to cease and desist from engaging in the act or practice that constitutes the violation; and (2) impose a monetary penalty of not more than $1,000 for each violation, but not to exceed an aggregate penalty of $10,000. History:   2005 c 17 art 2 s 18 
62A.4528 REHABILITATION, CONSERVATION, OR LIQUIDATION. (a) Any rehabilitation, conservation, or liquidation of a prepaid limited health service organization must be deemed to be the rehabilitation, conservation, or liquidation of an insurance company and must be conducted under chapter 60B. (b) A prepaid limited health service organization is not subject to the laws and rules governing insurance insolvency guaranty funds, nor shall any insurance insolvency guaranty fund provide protection to individuals entitled to receive limited health services from a prepaid limited health service organization. History:   2005 c 17 art 2 s 19 
62A.46 DEFINITIONS. Subdivision 1. Applicability. The definitions in this section apply to sections 62A.46 to 62A.56. Subd. 2. Long-term care policy. "Long-term care policy" means an individual or group policy, certificate, subscriber contract, or other evidence of coverage that provides benefits for prescribed long-term care, including nursing facility services or home care services, or both nursing facility services and home care services, pursuant to the requirements of sections 62A.46 to 62A.56. Sections 62A.46, 62A.48, and 62A.52 to 62A.56 do not apply to a long-term care policy issued to (a) an employer or employers or to the trustee of a fund established by an employer where only employees or retirees, and dependents of employees or retirees, are eligible for coverage or (b) to a labor union or similar employee organization. The associations exempted from the requirements of sections 62A.3099 to 62A.44 under 62A.31, subdivision 1, clause (c) shall not be subject to the provisions of sections 62A.46 to 62A.56 until July 1, 1988. Subd. 3. Nursing facility. "Nursing facility" means (1) a facility that is licensed as a nursing home under chapter 144A; (2) a facility that is both licensed as a boarding care home under sections 144.50 to 144.56 and certified as an intermediate care facility for purposes of the medical assistance program; and (3) in states other than Minnesota, a facility that meets licensing and certification standards comparable to those that apply to the facilities described in clauses (1) and (2). Subd. 4. Home care services. "Home care services" means one or more of the following prescribed services for the long-term care and treatment of an insured that are provided by a home health agency in a noninstitutional setting according to a written diagnosis or assessment and plan of care: (1) nursing and related personal care services under the direction of a registered nurse, including the services of a home health aide; (2) physical therapy; (3) speech therapy; (4) respiratory therapy; (5) occupational therapy; (6) nutritional services provided by a licensed dietitian; (7) homemaker services, meal preparation, and similar nonmedical services; (8) medical social services; and (9) other similar medical services and health-related support services. Subd. 5. Prescribed long-term care. "Prescribed long-term care" means a service, type of care, or procedure that could not be omitted without adversely affecting the patient's illness or condition and is specified in a plan of care prepared by either: (1) a physician and a registered nurse and is appropriate and consistent with the diagnosis; or (2) a registered nurse or licensed social worker based on an assessment of the insured's ability to perform the activities of daily living and to perform basic cognitive functions appropriately. Subd. 6. Qualified insurer. "Qualified insurer" means an entity licensed under chapter 62A or 62C. Subd. 7. Physician. "Physician" means a medical practitioner licensed or holding a temporary permit under sections 147.02, 147.03, 147.037, or holding a residency permit under section 147.0391. Subd. 8. Plan of care. "Plan of care" means a written document prepared and signed by either: (1) a physician and registered nurse that specifies medically prescribed long-term care services or treatment that are consistent with the diagnosis; or (2) by a registered nurse or licensed social worker that specifies prescribed long-term care services or treatment that are consistent with an assessment of the insured's ability to perform the activities of daily living and to perform basic cognitive functions appropriately. The plan of care must be prepared in accordance with accepted standards of practice and must contain services or treatment that could not be omitted without adversely affecting the patient's illness or condition. Subd. 9. Insured. "Insured" means a person covered under a long-term care policy. Subd. 10. Home health agency. "Home health agency" means an entity that provides home care services and is (1) certified for participation in the Medicare program; or (2) licensed as a home health agency where a state licensing statute exists, or is otherwise acceptable to the insurer if licensing is not required. Subd. 11. Benefit period. "Benefit period" means one or more separate or combined periods of confinement covered by a long-term care policy in a nursing facility or at home while receiving home care services. A benefit period begins on the first day the insured receives a benefit under the policy and ends when the insured has received no benefits for the same or related cause for an interval of 180 consecutive days. 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. Subd. 13. Benefit day. "Benefit day" means each day of confinement in a nursing facility or each visit for home care services. For purposes of section 62A.48, subdivision 1, if the policyholder receives more than one home care service visit within a 24-hour period, each visit constitutes one benefit day. History:  1986 c 397 s 3; 1987 c 337 s 58; 1989 c 330 s 18; 1990 c 551 s 1-4; 1993 c 21 s 1; 1995 c 258 s 31,32; 1996 c 446 art 1 s 36; 2005 c 17 art 1 s 14; 2017 c 40 art 1 s 7
62A.48 LONG-TERM CARE POLICIES. 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 prescribed long-term care in nursing facilities or the prescribed long-term home care services in section 62A.46, subdivision 4, clauses (1) to (5), provided by a home health agency. A long-term care policy may cover both prescribed long-term care in nursing facilities and the 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, other than one that covers only nursing facility services, must include: a minimum lifetime benefit limit of at least $25,000 for services. A long-term care policy that covers only nursing facility services must include a minimum lifetime benefit limit of not less than one year of nursing facility services. Nursing facility and home care coverages under a long-term care policy must not be subject to separate lifetime maximums for policies that cover both nursing facility and home health care. Prior hospitalization may not be required under a long-term care policy. The policy 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 the policy may include a waiting period of up to 180 days before benefits are paid, but there must be no more than one waiting period per benefit period; for purposes of this sentence, "days" can mean calendar or benefit days. If benefit days are used, an appropriate premium reduction and disclosure must be made. If benefit days are used in connection with coverage for home care services, the waiting period for home care services must not be longer than 90 benefit days. 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 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. No individual long-term care policy shall be offered or delivered in this state until the insurer has received from the insured a written designation of at least one person, in addition to the insured, who is to receive notice of cancellation of the policy for nonpayment of premium. The insured has the right to designate up to a total of three persons who are to receive the notice of cancellation, in addition to the insured. The form used for the written designation must inform the insured that designation of one person is required and that designation of up to two additional persons is optional and must provide space clearly designated for listing between one and three persons. The designation shall include each person's full name, home address, and telephone number. Each time an individual policy is renewed or continued, the insurer shall notify the insured of the right to change this written designation. The insurer may file a policy form that utilizes a plan of care prepared as provided under section 62A.46, subdivision 5, clause (1) or (2). Subd. 2. Per diem coverage. If benefits are provided on a per diem basis, the minimum daily benefit for care in a nursing facility must be the lesser of $40 or actual charges under a long-term care policy and the minimum benefit per visit for home care under a long-term care policy must be the lesser of $25 or actual charges. The home care services benefit must cover at least seven paid visits per week. Subd. 3. Expense-incurred coverage. If benefits are provided on an expense-incurred basis, a benefit of not less than 80 percent of covered charges for prescribed long-term care must be provided. Subd. 4. Loss ratio. The anticipated loss ratio for long-term care policies must not be less than 65 percent for policies issued on a group basis or 60 percent for policies issued on an individual or mass-market basis. This subdivision does not apply to policies issued on or after January 1, 2002, that comply with sections 62S.021 and 62S.081. Subd. 5. Solicitations by mail or media advertisement. For purposes of this section, long-term care policies issued as a result of solicitations of individuals through mail or mass media advertising, including both print and broadcast advertising, shall be treated as individual policies. Subd. 6. Coordination of benefits. A long-term care policy may be secondary coverage for services provided under sections 62A.46 to 62A.56. Nothing in sections 62A.46 to 62A.56 shall require the secondary payor to pay the obligations of the primary payor nor shall it prevent the secondary payor from recovering from the primary payor the amount of any obligation of the primary payor that the secondary payor elects to pay. There shall be no coordination of benefits between a long-term care policy and a policy designed primarily to provide coverage payable on a per diem, fixed indemnity or non-expense-incurred basis, or a policy that provides only accident coverage. Subd. 7. Existing policies. Nothing in sections 62A.46 to 62A.56 prohibits the renewal of the following long-term care policies: (1) policies sold outside the state of Minnesota to persons who at the time of sale were not residents of the state of Minnesota; (2) policies sold before August 1, 1986; and (3) policies sold before July 1, 1988, by associations exempted from sections 62A.3099 to 62A.44 under section 62A.31, subdivision 6. Subd. 8. Cancellation for nonpayment of premium. No individual long-term care policy shall be canceled for nonpayment of premium unless the insurer, at least 30 days before the effective date of the cancellation, has given notice to the insured and to those persons designated pursuant to section 62A.48, subdivision 1, at the address provided by the insured for purposes of receiving notice of cancellation. Subd. 9. Qualified long-term care. Sections 62A.46 to 62A.56 do not apply to policies marketed as qualified long-term care insurance policies under chapter 62S. Subd. 10. Regulation of premiums and premium increases. Policies issued under sections 62A.46 to 62A.56 on or after January 1, 2002, must comply with sections 62S.021, 62S.081, 62S.265, and 62S.266 to the same extent as policies issued under chapter 62S. Subd. 11. Nonforfeiture benefits. Policies issued under sections 62A.46 to 62A.56 on or after January 1, 2002, must comply with section 62S.02, subdivision 2, to the same extent as policies issued under chapter 62S. Subd. 12. Regulatory flexibility. The commissioner may upon written request issue an order to modify or suspend a specific provision or provisions of sections 62A.46 to 62A.56 with respect to a specific long-term care insurance policy or certificate upon a written finding that: (1) the modification or suspension is in the best interest of the insureds; (2) the purpose to be achieved could not be effectively or efficiently achieved without the modifications or suspension; and (3)(i) the modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; (ii) the policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or (iii) the modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product. History:  1986 c 397 s 4; 1987 c 337 s 59-62; 1988 c 689 art 2 s 8; 1989 c 209 art 2 s 1; 1989 c 330 s 19; 1990 c 551 s 5-7; 1993 c 330 s 12; 1994 c 625 art 8 s 4; 1995 c 258 s 33,34; 1996 c 389 s 1; 1996 c 446 art 1 s 37; 1997 c 71 art 2 s 5; 1Sp2001 c 9 art 8 s 1-3; 2002 c 379 art 1 s 113; 1Sp2003 c 14 art 2 s 3; 2005 c 17 art 1 s 14
62A.49 HOME CARE SERVICES COVERAGE. Subdivision 1. Generally. Section 62A.48 does not prohibit the sale of policies, certificates, subscriber contracts, or other evidences of coverage that provide home care services only. Home care services only policies may be sold, provided that they meet the requirements set forth in sections 62A.46 to 62A.56, except that they do not have to meet those conditions that relate to long-term care in nursing facilities. Disclosures and representations regarding these policies must be adjusted accordingly to remove references to coverage for nursing home care. Subd. 2. Provider networks and managed care. Home health care services issued pursuant to this section may be provided through a limited provider network and may employ managed care practices. If these methods are used, they must be adequately disclosed within the policy and any advertisements or representations regarding coverage. Policies may not be sold in areas where there are not sufficient providers to meet the needs of the policyholders located in that area. Subd. 3. Prohibited limitations. A long-term care insurance policy or certificate shall not, if it provides benefits for home health care or community care services, limit or exclude benefits by: (1) requiring that the insured would need care in a skilled nursing facility if home health care services were not provided; (2) requiring that the insured first or simultaneously receive nursing or therapeutic services in a home, community, or institutional setting before home health care services are covered; (3) limiting eligible services to services provided by a registered nurse or licensed practical nurse; (4) requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of licensure or certification; (5) excluding coverage for personal care services provided by a home health aide; (6) requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service; (7) requiring that the insured have an acute condition before home health care services are covered; (8) limiting benefits to services provided by Medicare-certified agencies or providers; (9) excluding coverage for adult day care services; or (10) excluding coverage based upon location or type of residence in which the home health care services would be provided. History:  1994 c 485 s 32; 1996 c 446 art 1 s 38; 1Sp2003 c 14 art 2 s 4
62A.50 DISCLOSURES AND REPRESENTATIONS. Subdivision 1. Seal or emblems. No graphic seal or emblem shall be displayed on any policy, or in connection with promotional materials on policy solicitations, that may reasonably be expected to convey to the purchaser that the policy form is approved, endorsed, or certified by a state or local unit of government or agency, the federal government, or a federal agency. Subd. 2. Cancellation notice. Long-term care policies issued on a nongroup basis must have a notice prominently printed on the first page of the policy stating that the policyholder may return the policy within 30 days of its delivery and have the premium refunded in full if the policyholder is not satisfied for any reason. A solicitation for a long-term care policy to be issued on a nongroup basis pursuant to a direct-response solicitation must state in substance that the policyholder may return the policy within 30 days of its delivery and have the premium refunded in full if the policyholder is not satisfied for any reason. Subd. 3. Disclosures. No long-term care policy shall be offered or delivered in this state, whether or not the policy is issued in this state, and no certificate of coverage under a group long-term care policy shall be offered or delivered in this state, unless a statement containing at least the following information is delivered to the applicant at the time the application is made: (1) a description of the benefits and coverage provided by the policy and the differences between this policy, a supplemental Medicare policy and the benefits to which an individual is entitled under parts A and B of Medicare; (2) a statement of the exceptions and limitations in the policy including the following language, as applicable, in bold print: "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES NOT COVER RESIDENTIAL CARE. READ YOUR POLICY CAREFULLY TO DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; (3) a statement of the renewal provisions including any reservation by the insurer of the right to change premiums; (4) a statement that the outline of coverage is a summary of the policy issued or applied for and that the policy should be consulted to determine governing contractual provisions; (5) an explanation of the policy's loss ratio including at least the following language: "This means that, on the average, policyholders may expect that $........ of every $100 in premium will be returned as benefits to policyholders over the life of the contract."; (6) a statement of the out-of-pocket expenses, including deductibles and co-payments for which the insured is responsible, and an explanation of the specific out-of-pocket expenses that may be accumulated toward any out-of-pocket maximum as specified in the policy; (7) the following language, in bold print: "YOUR PREMIUMS CAN BE INCREASED IN THE FUTURE. THE RATE SCHEDULE THAT LISTS YOUR PREMIUM NOW CAN CHANGE."; (8) the following language in bold print, with any provisions that are inapplicable to the particular policy omitted or crossed out: "THIS POLICY HAS A WAITING PERIOD OF ..... (CALENDAR OR BENEFIT) DAYS FOR NURSING CARE SERVICES AND A WAITING PERIOD OF ..... (CALENDAR OR BENEFIT) DAYS FOR HOME CARE SERVICES. THIS MEANS THAT THIS POLICY WILL NOT COVER YOUR CARE FOR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS AFTER YOU ENTER A NURSING HOME, OR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS AFTER YOU BEGIN TO USE HOME CARE SERVICES. YOU WOULD NEED TO PAY FOR YOUR CARE FROM OTHER SOURCES FOR THOSE WAITING PERIODS."; and (9) a signed and completed copy of the application for insurance is left with the applicant at the time the application is made. Subd. 4. Policies other than qualified long-term care insurance policies. A policy that is not intended to be a qualified long-term care insurance policy as defined under section 62S.01, subdivision 24, must include a disclosure statement in the policy and in the outline of coverage that the policy is not intended to be a qualified long-term care insurance policy. The disclosure must be prominently displayed and read as follows: This long-term care insurance policy (certificate) is not intended to be a qualified long-term care insurance contract as defined under section 7702 (B)(b) of the Internal Revenue Code of 1986. You should consult with your attorney, accountant, or tax advisor regarding the tax implications of purchasing long-term care insurance. History:  1986 c 397 s 5; 1987 c 337 s 63; 1988 c 689 art 2 s 9; 1995 c 258 s 35; 1996 c 389 s 2; 1997 c 71 art 2 s 6; 1999 c 177 s 39
62A.52 REVIEW OF PLAN OF CARE. The insurer may review an insured's plan of care at reasonable intervals, but not more frequently than once every 30 days. History:   1986 c 397 s 6 
62A.54 PROHIBITED PRACTICES. Unless otherwise provided for in sections 62A.46 to 62A.56, the solicitation or sale of long-term care policies is subject to the requirements and penalties applicable to the sale of Medicare supplement insurance policies as set forth in sections 62A.3099 to 62A.44. It is misconduct for any agent or company to make any misstatements concerning eligibility or coverage under the medical assistance program, or about how long-term care costs will or will not be financed if a person does not have long-term care insurance. Any agent or company providing information on the medical assistance program shall also provide information about how to contact the county human services department or the state Department of Human Services. History:  1986 c 397 s 7; 1988 c 689 art 2 s 10; 1992 c 564 art 1 s 33; 2005 c 17 art 1 s 14
62A.56 RULEMAKING. Subdivision 1. Permissive. The commissioner may adopt rules pursuant to chapter 14 to carry out the purposes of sections 62A.46 to 62A.56. The rules may: (1) establish additional disclosure requirements for long-term care policies designed to adequately inform the prospective insured of the need and extent of coverage offered; (2) prescribe uniform policy forms in order to give the purchaser of long-term care policies a reasonable opportunity to compare the cost of insuring with various insurers; and (3) establish other reasonable minimum standards as needed to further the purposes of sections 62A.46 to 62A.56. Subd. 2. Mandatory. The commissioner shall adopt rules under chapter 14 establishing general standards to ensure that assessments used in the prescribing of long-term care are reliable, valid, and clinically appropriate. History:  1986 c 397 s 8; 1990 c 551 s 8
62A.60 RETROACTIVE DENIAL OF EXPENSES. In cases where the subscriber or insured is liable for costs beyond applicable co-payments 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, and the preexisting condition limitation provision, the general exclusion provision and any other coinsurance, or other policy requirements have been met, the insurer may not deny payment for the authorized service or time period except in cases where fraud or substantive misrepresentation occurred. History:  1989 c 330 s 20; 1996 c 446 art 1 s 39
62A.61 DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO DETERMINE USUAL AND CUSTOMARY FEES. (a) A health carrier that bases reimbursement to health care providers upon a usual and customary fee must maintain in its office a copy of a description of the methodology used to calculate fees including at least the following: (1) the frequency of the determination of usual and customary fees; (2) a general description of the methodology used to determine usual and customary fees; and (3) the percentile of usual and customary fees that determines the maximum allowable reimbursement. (b) A health carrier must provide a copy of the information described in paragraph (a) to the commissioner of health or the commissioner of commerce, upon request. (c) The commissioner of health or the commissioner of commerce, as appropriate, may use to enforce this section any enforcement powers otherwise available to the commissioner with respect to the health carrier. The commissioner of health or commerce, as appropriate, may require health carriers to provide the information required under this section and may use any powers granted under other laws relating to the regulation of health carriers to enforce compliance. (d) For purposes of this section, "health carrier" has the meaning given in section 62A.011. (e) "Usual and customary" means the normal charge, in the absence of insurance, of the provider for a service or article, but not more than the prevailing charge in the area for like service or article. A "like service" is the same nature and duration, requires the same skill, and is performed by a provider of similar training and experience. A "like article" is one that is identically or substantially equivalent. "Area" means the municipality or, in the case of a large city, a subdivision of the city, in which the service or article is actually provided or a greater area as is necessary to obtain a representative cross-section of charges for like service or article. History:  1993 c 345 art 8 s 3; 1997 c 225 art 2 s 5; 1999 c 177 s 40
62A.616 COVERAGE FOR NURSING HOME CARE FOR TERMINALLY ILL AND OTHER SERVICES. An insurer may offer a health plan that covers nursing home care for the terminally ill, personal care attendants, and hospice care. For the purposes of this section, "terminally ill" means a diagnosis certified by a physician that a person has less than six months to live. History:   1995 c 258 s 36 
62A.62 DEMONSTRATION PROJECT. Subdivision 1. Establishment. The commissioner shall establish demonstration projects to allow health insurers regulated under this chapter and nonprofit health service plan corporations regulated under chapter 62C to extend coverage for health and services to individuals or groups currently unable to afford such coverage. For purposes of this section, the commissioner may recommend legislation granting an exemption from minimum benefits required under chapter 62A, and any applicable rules if there is reasonable evidence that the rules prohibit the operation of the demonstration project. The commissioner shall provide for public comment before recommending an exemption from any statute or rule. Subd. 2. Application and approval. An insurer or health service plan corporation 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 enrollee; (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. 3. Commissioner's review of application for demonstration project. The commissioner shall approve, deny, or refer back to the insurer or health service plan corporation for modification, the application for a demonstration project within 60 days of receipt from the insurer or health service plan corporation. If the commissioner approves a project that requires legislation exempting the project from minimum benefit requirements, the commissioner shall make the approval contingent on enactment of the required legislation. Subd. 4. Length of project. The commissioner may approve an application for a demonstration project for a maximum of six years, with an option to renew. Subd. 5. Report required. Each insurer or health service plan corporation 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. 6. Approval may be rescinded. The commissioner may rescind approval of a demonstration project if the commissioner finds that the project's operation is contrary to the information contained in the approved application. Subd. 7. Applicability. This section does not apply to the demonstration project established under section 256B.73. History:   1990 c 568 art 3 s 2 
62A.63 DEFINITIONS. Subdivision 1. Application. For purposes of section 62A.64, the terms defined in this section have the meanings given them. Subd. 2. Health care provider. "Health care provider" means a person, hospital, or health care facility, organization, or corporation that is licensed, certified, or otherwise authorized by the laws of this state to provide health care. Subd. 3. Insurer. "Insurer" means a health insurer regulated under this chapter, service plan corporation as defined under section 62C.02, subdivision 6, and health maintenance organization as defined under section 62D.02, subdivision 4. History:   1991 c 109 s 1 
62A.64 HEALTH INSURANCE; PROHIBITED AGREEMENTS. An agreement between an insurer and a health care provider may not: (1) prohibit, or grant the insurer an option to prohibit, the provider from contracting with other insurers or payors to provide services at a lower price than the payment specified in the contract; (2) require, or grant the insurer an option to require, the provider to accept a lower payment in the event the provider agrees to provide services to any other insurer or payor at a lower price; or (3) require, or grant the insurer an option of, termination or renegotiation of the existing contract in the event the provider agrees to provide services to any other insurer or payor at a lower price. History:   1991 c 109 s 2 
62A.65 INDIVIDUAL MARKET REGULATION. Subdivision 1. Applicability. No health carrier, as defined in section 62A.011, shall offer, sell, issue, or renew any individual health plan, as defined in section 62A.011, to a Minnesota resident except in compliance with this section. This section does not apply to the Comprehensive Health Association established in section 62E.10. Subd. 2. Guaranteed renewal. No individual health plan may be offered, sold, issued, or renewed to a Minnesota resident unless the health plan provides that the plan is guaranteed renewable at a premium rate that does not take into account the claims experience or any change in the health status of any covered person that occurred after the initial issuance of the health plan to the person. The premium rate upon renewal must also otherwise comply with this section. A health carrier must not refuse to renew an individual health plan, except for nonpayment of premiums, fraud, or misrepresentation. Subd. 3. Premium rate restrictions. No individual health plan may be offered, sold, issued, or renewed to a Minnesota resident unless the premium rate charged is determined in accordance with the following requirements: (a) Premium rates may vary based upon the ages of covered persons in accordance with the provisions of the Affordable Care Act. (b) Premium rates may vary based upon geographic rating area. The commissioner shall grant approval if the following conditions are met: (1) the areas are established in accordance with the Affordable Care Act; (2) each geographic region must be composed of no fewer than seven counties that create a contiguous region; and (3) the health carrier provides actuarial justification acceptable to the commissioner for the proposed geographic variations in premium rates for each area, establishing that the variations are based upon differences in the cost to the health carrier of providing coverage. (c) Premium rates may vary based upon tobacco use, in accordance with the provisions of the Affordable Care Act. (d) In developing its premiums for a health plan, a health carrier shall take into account only the following factors: (1) actuarially valid differences in rating factors permitted under paragraphs (a) and (c); and (2) actuarially valid geographic variations if approved by the commissioner as provided in paragraph (b). (e) The premium charged with respect to any particular individual health plan shall not be adjusted more frequently than annually or January 1 of the year following initial enrollment, except that the premium rates may be changed to reflect: (1) changes to the family composition of the policyholder; (2) changes in geographic rating area of the policyholder, as provided in paragraph (b); (3) changes in age, as provided in paragraph (a); (4) changes in tobacco use, as provided in paragraph (c); (5) transfer to a new health plan requested by the policyholder; or (6) other changes required by or otherwise expressly permitted by state or federal law or regulations. (f) All premium variations must be justified in initial rate filings and upon request of the commissioner in rate revision filings. All rate variations are subject to approval by the commissioner. (g) The loss ratio must comply with the section 62A.021 requirements for individual health plans. (h) The rates must not be approved, unless the commissioner has determined that the rates are reasonable. In determining reasonableness, the commissioner shall consider the growth rates applied under section 62J.04, subdivision 1, paragraph (b), to the calendar year or years that the proposed premium rate would be in effect and actuarially valid changes in risks associated with the enrollee populations. (i) A health carrier may, as part of a minimum lifetime loss ratio guarantee filing under section 62A.02, subdivision 3a, include a rating practices guarantee as provided in this paragraph. The rating practices guarantee must be in writing and must guarantee that the policy form will be offered, sold, issued, and renewed only with premium rates and premium rating practices that comply with subdivisions 2, 3, 4, and 5. The rating practices guarantee must be accompanied by an actuarial memorandum that demonstrates that the premium rates and premium rating system used in connection with the policy form will satisfy the guarantee. The guarantee must guarantee refunds of any excess premiums to policyholders charged premiums that exceed those permitted under subdivision 2, 3, 4, or 5. A health carrier that complies with this paragraph in connection with a policy form is exempt from the requirement of prior approval by the commissioner under paragraphs (b), (f), and (h). (j) The commissioner may establish regulations to implement the provisions of this subdivision. Subd. 3a. Disclosure. (a) In connection with the offering for sale of a health plan in the individual market, a health carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of all of the following: (1) the provisions of the coverage concerning the health carrier's right to change premium rates and the factors that may affect changes in premium rates; and (2) a listing of and descriptive information, including benefits and premiums, about all individual health plans actively marketed by the health carrier and the availability of the individual health plans for which the individual is qualified. (b) Paragraph (a), clause (2), may be satisfied by referring individuals to the Health and Human Services web portal, as defined under the Affordable Care Act. Subd. 3b. Single risk pool. A health carrier shall consider all enrollees in all health plans, other than short-term and grandfathered plan coverage, offered by the health carrier in the individual market, including those enrollees who enroll in qualified health plans offered through MNsure, to be members of a single risk pool. Subd. 4. Gender rating prohibited. (a) No individual health plan offered, sold, issued, or renewed to a Minnesota resident may determine the premium rate or any other underwriting decision, including initial issuance, through a method that is in any way based upon the gender of any person covered or to be covered under the health plan. This subdivision prohibits the use of marital status or generalized differences in expected costs between principal insureds and their spouses. (b) No health carrier may refuse to initially offer, sell, or issue an individual health plan to a Minnesota resident solely on the basis that the individual had a previous cesarean delivery. Subd. 5. Portability and conversion of coverage. (a) For plan years beginning on or after January 1, 2014, no individual health plan may be offered, sold, issued, or renewed, to a Minnesota resident that contains a preexisting condition limitation, preexisting condition exclusion, or exclusionary rider. An individual age 19 or older may be subjected to an 18-month preexisting condition limitation during plan years beginning prior to January 1, 2014, unless the individual has maintained continuous coverage as defined in section 62L.02. The individual must not be subjected to an exclusionary rider. During plan years beginning prior to January 1, 2014, an individual who is age 19 or older and who has maintained continuous coverage may be subjected to a onetime preexisting condition limitation of up to 12 months, with credit for time covered under qualifying coverage as defined in section 62L.02, at the time that the individual first is covered under an individual health plan by any health carrier. Credit must be given for all qualifying coverage with respect to all preexisting conditions, regardless of whether the conditions were preexisting with respect to any previous qualifying coverage. The individual must not be subjected to an exclusionary rider. Thereafter, the individual who is age 19 or older must not be subject to any preexisting condition limitation, preexisting condition exclusion, or exclusionary rider under an individual health plan by any health carrier, except an unexpired portion of a limitation under prior coverage, so long as the individual maintains continuous coverage as defined in section 62L.02. The prohibition on preexisting condition limitations for children age 18 or under does not apply to individual health plans that are grandfathered plans. The prohibition on preexisting condition limitations for adults age 19 and over beginning for plan years on or after January 1, 2014, does not apply to individual health plans that are grandfathered plans. (b) A health carrier must offer an individual health plan to any individual previously covered under a group health plan issued by that health carrier, regardless of the size of the group, so long as the individual maintained continuous coverage as defined in section 62L.02. If the individual has available any continuation coverage provided under sections 62A.146; 62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 62D.101; or 62D.105, or continuation coverage provided under federal law, the health carrier need not offer coverage under this paragraph until the individual has exhausted the continuation coverage. The offer must not be subject to underwriting, except as permitted under this paragraph. A health plan issued under this paragraph must be a qualified plan as defined in section 62E.02 and must not contain any preexisting condition limitation, preexisting condition exclusion, or exclusionary rider, except for any unexpired limitation or exclusion under the previous coverage. The individual health plan must cover pregnancy on the same basis as any other covered illness under the individual health plan. The offer of coverage by the health carrier must inform the individual that the coverage, including what is covered and the health care providers from whom covered care may be obtained, may not be the same as the individual's coverage under the group health plan. The offer of coverage by the health carrier must also inform the individual that the individual, if a Minnesota resident, may be eligible to obtain coverage from (i) other private sources of health coverage, or (ii) the Minnesota Comprehensive Health Association, without a preexisting condition limitation, and must provide the telephone number used by that association for enrollment purposes. The initial premium rate for the individual health plan must comply with subdivision 3. The premium rate upon renewal must comply with subdivision 2. In no event shall the premium rate exceed 100 percent of the premium charged for comparable individual coverage by the Minnesota Comprehensive Health Association, and the premium rate must be less than that amount if necessary to otherwise comply with this section. Coverage issued under this paragraph must provide that it cannot be canceled or nonrenewed as a result of the health carrier's subsequent decision to leave the individual, small employer, or other group market. Section 72A.20, subdivision 28, applies to this paragraph. Subd. 6.  [Repealed, 2013 c 84 art 1 s 94] Subd. 7. Short-term coverage. (a) For purposes of this section, "short-term coverage" means an individual health plan that: (1) is issued to provide coverage for a period of 185 days or less, except that the health plan may permit coverage to continue until the end of a period of hospitalization for a condition for which the covered person was hospitalized on the day that coverage would otherwise have ended; (2) is nonrenewable, provided that the health carrier may provide coverage for one or more subsequent periods that satisfy clause (1), if the total of the periods of coverage do not exceed a total of 365 days out of any 555-day period, plus any additional days covered as a result of hospitalization on the day that a period of coverage would otherwise have ended; (3) does not cover any preexisting conditions, including ones that originated during a previous identical policy or contract with the same health carrier where coverage was continuous between the previous and the current policy or contract; and (4) is available with an immediate effective date without underwriting upon receipt of a completed application indicating eligibility under the health carrier's eligibility requirements, provided that coverage that includes optional benefits may be offered on a basis that does not meet this requirement. (b) Short-term coverage is not subject to subdivisions 2 and 5. Short-term coverage may exclude as a preexisting condition any injury, illness, or condition for which the covered person had medical treatment, symptoms, or any manifestations before the effective date of the coverage, but dependent children born or placed for adoption during the policy period must not be subject to this provision. (c) Notwithstanding subdivision 3, and section 62A.021, a health carrier may combine short-term coverage with its most commonly sold individual qualified plan, as defined in section 62E.02, other than short-term coverage, for purposes of complying with the loss ratio requirement. (d) The 365-day coverage limitation provided in paragraph (a) applies to the total number of days of short-term coverage that covers a person, regardless of the number of policies, contracts, or health carriers that provide the coverage. A written application for short-term coverage must ask the applicant whether the applicant has been covered by short-term coverage by any health carrier within the 555 days immediately preceding the effective date of the coverage being applied for. Short-term coverage issued in violation of the 365-day limitation is valid until the end of its term and does not lose its status as short-term coverage, in spite of the violation. A health carrier that knowingly issues short-term coverage in violation of the 365-day limitation is subject to the administrative penalties otherwise available to the commissioner of commerce or the commissioner of health, as appropriate. Subd. 7a. Short-term coverage; applicability. Notwithstanding subdivision 3, paragraph (g), and subdivision 7, paragraph (c), short-term coverage is not subject to section 62A.021. 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. History:  1992 c 549 art 3 s 12; 1993 c 247 art 3 s 6; 1993 c 345 art 8 s 4; 1994 c 506 s 1; 1994 c 625 art 10 s 8-12; 1995 c 234 art 7 s 4,5; 1998 c 407 art 8 s 1; 1998 c 408 s 25; 1999 c 177 s 41; 2001 c 215 s 17; 2002 c 330 s 12; 1Sp2003 c 14 art 7 s 7; 2004 c 268 s 1,9; 2006 c 255 s 16; 2009 c 159 s 1; 2010 c 384 s 20; 2013 c 84 art 1 s 26-31; 2013 c 108 art 1 s 67; 2013 c 144 s 21; 2018 c 182 art 1 s 109
62A.673 COVERAGE OF SERVICES PROVIDED THROUGH TELEHEALTH. Subdivision 1. Citation. This section may be cited as the "Minnesota Telehealth Act." Subd. 2. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given. (b) "Distant site" means a site at which a health care provider is located while providing health care services or consultations by means of telehealth. (c) "Health care provider" means a health care professional who is licensed or registered by the state to perform health care services within the provider's scope of practice and in accordance with state law. A health care provider includes a mental health professional under section 245I.04, subdivision 2; a mental health practitioner under section 245I.04, subdivision 4; a clinical trainee under section 245I.04, subdivision 6; a treatment coordinator under section 245G.11, subdivision 7; an alcohol and drug counselor under section 245G.11, subdivision 5; and a recovery peer under section 245G.11, subdivision 8. (d) "Health carrier" has the meaning given in section 62A.011, subdivision 2. (e) "Health plan" has the meaning given in section 62A.011, subdivision 3. Health plan includes dental plans as defined in section 62Q.76, subdivision 3, but does not include dental plans that provide indemnity-based benefits, regardless of expenses incurred, and are designed to pay benefits directly to the policy holder. (f) "Originating site" means a site at which a patient is located at the time health care services are provided to the patient by means of telehealth. For purposes of store-and-forward technology, the originating site also means the location at which a health care provider transfers or transmits information to the distant site. (g) "Store-and-forward technology" means the asynchronous electronic transfer or transmission of a patient's medical information or data from an originating site to a distant site for the purposes of diagnostic and therapeutic assistance in the care of a patient. (h) "Telehealth" means the delivery of health care services or consultations through the use of real time two-way interactive audio and visual communications to provide or support health care delivery and facilitate the assessment, diagnosis, consultation, treatment, education, and care management of a patient's health care. Telehealth includes the application of secure video conferencing, store-and-forward technology, and synchronous interactions between a patient located at an originating site and a health care provider located at a distant site. Until July 1, 2023, telehealth also includes audio-only communication between a health care provider and a patient in accordance with subdivision 6, paragraph (b). Telehealth does not include communication between health care providers that consists solely of a telephone conversation, email, or facsimile transmission. Telehealth does not include communication between a health care provider and a patient that consists solely of an email or facsimile transmission. Telehealth does not include telemonitoring services as defined in paragraph (i). (i) "Telemonitoring services" means the remote monitoring of clinical data related to the enrollee's vital signs or biometric data by a monitoring device or equipment that transmits the data electronically to a health care provider for analysis. Telemonitoring is intended to collect an enrollee's health-related data for the purpose of assisting a health care provider in assessing and monitoring the enrollee's medical condition or status. [See Note.] Subd. 3. Coverage of telehealth. (a) A health plan sold, issued, or renewed by a health carrier in Minnesota must (1) cover benefits delivered through telehealth in the same manner as any other benefits covered under the health plan, and (2) comply with this section. (b) Coverage for services delivered through telehealth must not be limited on the basis of geography, location, or distance for travel subject to the health care provider network available to the enrollee through the enrollee's health plan. (c) A health carrier must not create a separate provider network to deliver services through telehealth that does not include network providers who provide in-person care to patients for the same service or require an enrollee to use a specific provider within the network to receive services through telehealth. (d) A health carrier may require a deductible, co-payment, or coinsurance payment for a health care service provided through telehealth, provided that the deductible, co-payment, or coinsurance payment is not in addition to, and does not exceed, the deductible, co-payment, or coinsurance applicable for the same service provided through in-person contact. (e) Nothing in this section: (1) requires a health carrier to provide coverage for services that are not medically necessary or are not covered under the enrollee's health plan; or (2) prohibits a health carrier from: (i) establishing criteria that a health care provider must meet to demonstrate the safety or efficacy of delivering a particular service through telehealth for which the health carrier does not already reimburse other health care providers for delivering the service through telehealth; (ii) establishing reasonable medical management techniques, provided the criteria or techniques are not unduly burdensome or unreasonable for the particular service; or (iii) requiring documentation or billing practices designed to protect the health carrier or patient from fraudulent claims, provided the practices are not unduly burdensome or unreasonable for the particular service. (f) Nothing in this section requires the use of telehealth when a health care provider determines that the delivery of a health care service through telehealth is not appropriate or when an enrollee chooses not to receive a health care service through telehealth. Subd. 4. Parity between telehealth and in-person services. (a) A health carrier must not restrict or deny coverage of a health care service that is covered under a health plan solely: (1) because the health care service provided by the health care provider through telehealth is not provided through in-person contact; or (2) based on the communication technology or application used to deliver the health care service through telehealth, provided the technology or application complies with this section and is appropriate for the particular service. (b) Prior authorization may be required for health care services delivered through telehealth only if prior authorization is required before the delivery of the same service through in-person contact. (c) A health carrier may require a utilization review for services delivered through telehealth, provided the utilization review is conducted in the same manner and uses the same clinical review criteria as a utilization review for the same services delivered through in-person contact. (d) A health carrier or health care provider shall not require an enrollee to pay a fee to download a specific communication technology or application. Subd. 5. Reimbursement for services delivered through telehealth. (a) A health carrier must reimburse the health care provider for services delivered through telehealth on the same basis and at the same rate as the health carrier would apply to those services if the services had been delivered by the health care provider through in-person contact. (b) A health carrier must not deny or limit reimbursement based solely on a health care provider delivering the service or consultation through telehealth instead of through in-person contact. (c) A health carrier must not deny or limit reimbursement based solely on the technology and equipment used by the health care provider to deliver the health care service or consultation through telehealth, provided the technology and equipment used by the provider meets the requirements of this section and is appropriate for the particular service. (d) Nothing in this subdivision prohibits a health carrier and health care provider from entering into a contract that includes a value-based reimbursement arrangement for the delivery of covered services that may include services delivered through telehealth, and such an arrangement shall not be considered a violation of this subdivision. Subd. 6. Telehealth equipment. (a) A health carrier must not require a health care provider to use specific telecommunications technology and equipment as a condition of coverage under this section, provided the health care provider uses telecommunications technology and equipment that complies with current industry interoperable standards and complies with standards required under the federal Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, and regulations promulgated under that Act, unless authorized under this section. (b) A health carrier must provide coverage for health care services delivered through telehealth by means of the use of audio-only communication if the communication is a scheduled appointment and the standard of care for that particular service can be met through the use of audio-only communication. Substance use disorder treatment services and mental health care services delivered through telehealth by means of audio-only communication may be covered without a scheduled appointment if the communication was initiated by the enrollee while in an emergency or crisis situation and a scheduled appointment was not possible due to the need of an immediate response. This paragraph expires July 1, 2023. Subd. 7. Telemonitoring services. A health carrier must provide coverage for telemonitoring services if: (1) the telemonitoring service is medically appropriate based on the enrollee's medical condition or status; (2) the enrollee is cognitively and physically capable of operating the monitoring device or equipment, or the enrollee has a caregiver who is willing and able to assist with the monitoring device or equipment; and (3) the enrollee resides in a setting that is suitable for telemonitoring and not in a setting that has health care staff on site. Subd. 8. Exception. This section does not apply to coverage provided to state public health care program enrollees under chapter 256B or 256L. History: 1Sp2021 c 7 art 6 s 1; 2022 c 98 art 4 s 1 NOTE: The amendment to subdivision 2 by Laws 2022, chapter 98, article 4, section 1, is effective upon federal approval. The commissioner of human services shall notify the revisor of statutes when federal approval is obtained. Laws 2022, chapter 98, article 4, section 1, the effective date.
62B.01 SCOPE. All life insurance, accident and health insurance, and involuntary unemployment insurance in connection with loan or other credit transactions are subject to sections 62B.01 to 62B.14, except life, accidental death, and disability insurance written in connection with first real estate mortgage loans. Insurance is not subject to 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, credit accident and health, and credit involuntary unemployment insurance provided at no additional cost to the borrower are not subject to sections 62B.01 to 62B.14. History:  Ex1967 c 2 s 1; 1989 c 330 s 21; 1993 c 343 s 8; 2002 c 307 art 2 s 2
62B.02 DEFINITIONS. Subdivision 1. Scope. For the purpose of sections 62B.01 to 62B.14 the following terms have the meanings given to them in this section. Subd. 2. Credit life insurance. "Credit life insurance" means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction. Subd. 3. Credit accident and health insurance. "Credit accident and health insurance" means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy. Subd. 3a. Credit involuntary unemployment insurance. "Credit involuntary unemployment insurance" means insurance on a debtor in connection with a specified loan or other credit transaction to provide payment to a creditor in the event of involuntary unemployment of the debtor for the installment payments or other periodic payments becoming due while the debtor is involuntarily unemployed. Subd. 4. Creditor. "Creditor" means the lender of money or vendor or lessor of goods, services, or property, rights or privileges, for which payment is arranged through a credit transaction, or successor to the right, title or interest of a lender, vendor, or lessor, and an affiliate, associate or subsidiary of them, director, officer or employee of them or any other person in any way associated with them. Subd. 5. Debtor. "Debtor" means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction. Subd. 6. Indebtedness. "Indebtedness" means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction. Subd. 7. Commissioner. "Commissioner" means the commissioner of commerce. History:  Ex1967 c 2 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1993 c 343 s 9
62B.03 FORMS OF CREDIT LIFE INSURANCE, CREDIT ACCIDENT AND HEALTH INSURANCE, AND CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE. Credit life insurance, credit accident and health insurance, and credit involuntary unemployment insurance shall be issued only in the following forms: (1) individual policies of life insurance issued to debtors on the term plan; (2) individual policies of accident and health insurance issued to debtors on a term plan or disability benefit provisions in individual policies of credit life insurance; (3) individual policies of involuntary unemployment insurance issued to debtors on the term plan; (4) group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan; (5) group policies of accident and health insurance issued to creditors on a term plan insuring debtors or disability benefit provisions in group credit life insurance policies to provide such coverage; (6) group policies of involuntary unemployment insurance issued to creditors on a term plan insuring debtors. History:  Ex1967 c 2 s 3; 1993 c 343 s 10
62B.04 AMOUNT OF CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE. Subdivision 1. Credit life insurance. (1) The initial amount of credit life insurance shall not exceed the amount of principal repayable under the contract of indebtedness plus an amount equal to one monthly payment. Thereafter, if the indebtedness is repayable in substantially equal installments according to a predetermined schedule, the amount of insurance shall not exceed the scheduled indebtedness plus one monthly payment or actual amount of indebtedness, whichever is greater. If the contract of indebtedness provides for a variable rate of finance charge or interest, the initial rate or the scheduled rates based on the initial index must be used in determining the scheduled amount of indebtedness and subsequent changes to the rate must be disregarded in determining whether the contract is repayable in substantially equal installments according to a predetermined schedule. (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 the greater of: (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. If the credit transaction provides for a variable rate of finance charge or interest, the initial rate or the scheduled rates based on the initial index must be used in determining the scheduled amount of unpaid indebtedness and subsequent changes in the rate must be disregarded in determining whether the contract is repayable in substantially equal installments according to a predetermined schedule. (3) Notwithstanding 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. (4) If the contract of indebtedness provides for a variable rate of finance charge or interest, the initial rate or the scheduled rates based on the initial index shall be used in determining the scheduled amount of indebtedness, and subsequent changes to the rate shall be disregarded in determining whether the contract is repayable in substantially equal installments according to a predetermined schedule. Subd. 2. Credit accident and health insurance. (a) The total amount of periodic indemnity payable by credit accident and health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness; and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments. If the credit transaction provides for a variable rate of finance charge or interest, the initial rate or the scheduled rates based on the initial index must be used in determining the aggregate of the periodic scheduled unpaid installments of the indebtedness. (b) If for any reason a policy of credit disability insurance will not or may not provide the policyholder or certificate holder with coverage for the total amount of indebtedness on the related loan or debt in the event of any one instance of disability, the applicant must be given a written disclosure on or accompanying the application. If the disclosure is on the application, it must be immediately above the signature line, within a box and the word "WARNING" must be in 14-point boldface capital letters. The rest of the text must be in capital letters and boldface 10-point print. If the disclosure is on a separate sheet, it must be on an 8-1/2 inch by 11 inch sheet of paper with the word "WARNING" in 14-point boldface capital letters with the remaining text in 10-point boldface capital letters. If a separate disclosure is used, it must be signed by the applicant with one copy provided to the applicant and one copy maintained by the insurer for at least the term of the policy or certificate, if coverage is issued. The disclosure must state: WARNING: IF YOU BECOME DISABLED AS DEFINED IN THE POLICY/CERTIFICATE, THIS DISABILITY INSURANCE POLICY/CERTIFICATE MAY NOT COVER YOUR ENTIRE INDEBTEDNESS. IF YOU BECOME DISABLED AT A POINT WHERE THE NUMBER OF MONTHLY INSTALLMENT PAYMENTS REMAINING EXCEEDS THE PERIOD OF COVERAGE BEING PROVIDED BY THIS POLICY/CERTIFICATE, THE BENEFITS AVAILABLE WILL BE LESS THAN THE AMOUNT NECESSARY TO PAY OFF YOUR LOAN. IF YOU WANT COVERAGE FOR THE FULL AMOUNT OF YOUR INDEBTEDNESS OR HAVE ANY QUESTIONS ABOUT THE EXTENT OR NATURE OF YOUR COVERAGE, YOU SHOULD DISCUSS THEM WITH YOUR AGENT AND/OR ENROLLER BEFORE SUBMITTING YOUR APPLICATION. (c) Any policy or certificate of credit disability insurance which contains a critical period must make available for any single instance of disability monthly indemnity benefit payments for the term of the loan, 24 months, or the term of the disability, whichever is less. For the purposes of this section, a critical period is when there is a limited number of monthly benefit payments that may be paid to the beneficiary or the policyholder or certificate holder as a result of any one instance of disability. (d) Unless the policy or certificate provides for such coverage, nothing in this section shall be interpreted as requiring an insurer to provide coverage for the final payment of a balloon loan or for a period that exceeds the age limitation in the policy or certificate or for amounts that exceed the insurer's maximum liability limits. Subd. 3. Credit involuntary unemployment insurance. The total amount of periodic indemnity payable by credit involuntary unemployment insurance in the event of involuntary unemployment shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness; and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments. History:  Ex1967 c 2 s 4; 1977 c 382 s 3; 1982 c 424 s 13; 1989 c 330 s 22; 1993 c 343 s 11; 1995 c 171 s 66,67; 1995 c 202 art 2 s 25; 1996 c 414 art 1 s 29; 1997 c 157 s 56; 1999 c 177 s 42
62B.05 TERM OF CREDIT INSURANCE. The term of any credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, except that, where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to the indebtedness shall commence on the effective date of the policy. Where evidence of insurability is required and the evidence is furnished more than 30 days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurance company determines the evidence to be satisfactory, and in that event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. The term of the insurance shall not extend more than 15 days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If an indebtedness is prepaid in full before its scheduled maturity, except by performance of the insurer's obligation under the policy, the insurance shall be deemed canceled and a refund shall be paid or credited as provided in section 62B.08. Upon prepayment in full, the creditor shall make the refund of unearned premium, unless the credit insurance was originated by a third party, in which case the creditor shall promptly notify the third party who shall make the refund. History:  Ex1967 c 2 s 5; 1977 c 382 s 4; 1978 c 641 s 1; 1Sp1985 c 10 s 61; 1986 c 455 s 87; 1993 c 343 s 12
62B.06 PROVISIONS OF POLICIES AND CERTIFICATES OF INSURANCE; DISCLOSURE TO DEBTORS. Subdivision 1. Policy, memorandum copy, or certificate required. All credit life insurance, credit accident and health insurance, and credit involuntary unemployment insurance shall be evidenced by an individual policy, memorandum copy, or in the case of group insurance by a certificate of insurance, which shall be delivered to the debtor. Subd. 2. Required provisions. Each individual policy or group certificate of credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance, shall, in addition to other requirements of law, set forth the name and home office address of the insurer, the name or names of the debtor or in the case of a certificate under a group policy, the identity by name or otherwise of the debtor, the rate or amount of payment, if any, by the debtor separately for credit life insurance, credit accident and health insurance, and credit involuntary unemployment insurance, a description of the amount, term and coverage including any exceptions, limitations and restrictions, and shall state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to the debtor, if living, otherwise to a beneficiary, other than the creditor, named by the debtor, otherwise to the debtor's estate. No individual or group policy of credit accident and health insurance or credit involuntary unemployment insurance issued, amended, renewed, or delivered in this state on or after January 1, 1976 shall contain any provision offsetting, or in any other manner reducing any benefit under the policy by the amount of, or in proportion to, any increase in disability or other benefits received or receivable under the federal Social Security Act, as amended subsequent to the date of commencement of such benefit. Subd. 3. Delivery to debtor at time of indebtedness. The individual policy or group certificate of insurance shall be delivered to the insured debtor at the time the indebtedness is incurred except as hereinafter provided. Subd. 4. Exception to delivery requirement. If the individual policy or group certificate of insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for the policy or a notice of proposed insurance, signed by the debtor and setting forth the name and home office address of the insurer, the name or names of the debtor, the premium or amount of payment by the debtor, if any, separately for credit life insurance, credit accident and health insurance, and credit involuntary unemployment insurance, the amount, term and a brief description of the coverage provided, shall be delivered to the debtor at the time the indebtedness is incurred. The copy of the application for, or notice of proposed insurance, shall also refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subdivision is prominently set forth therein. Upon acceptance of the insurance by the insurer and within 30 days of the date on which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. The application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective as provided in section 62B.05. If an application for a policy or a notice of proposed insurance is not delivered at the time the indebtedness is incurred as required by this subdivision, the creditor shall assume all of the liabilities under such insurance until an insurer accepts the risk. Subd. 5. Substituted insurer requirements. If the insurer named in either the application or notice of proposed insurance does not accept the risk, then the debtor shall receive a policy or certificate of insurance setting forth the name and home office address of the substituted insurer and the amount of the premium to be charged, and if the amount of premium is less than that set forth in the application or notice of proposed insurance an appropriate refund shall be made. History:  Ex1967 c 2 s 6; 1975 c 323 s 2; 1986 c 444; 1993 c 343 s 13-15
62B.07 REGULATION OF RATES AND FORMS. Subdivision 1. Filing. All policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders delivered or issued for delivery in this state and the schedules of premium rates pertaining thereto shall be filed with the commissioner. Subd. 2. Disapproval. The commissioner shall within 60 days after the filing of policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders, disapprove any such form if the premium rates charged or to be charged are excessive in relation to benefits, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the coverage, or are contrary to any provision of the insurance laws or of any rule promulgated thereunder. In order to determine whether the premium to be charged under a particular policy form submitted by an insurer is excessive in relation to benefits, and to facilitate the submission and approval of policy forms and premium rates to be used in connection therewith, the commissioner shall give full consideration to and make reasonable allowances for underwriting expenses including, but not limited to, claim adjustment expenses, general administrative expenses including costs for handling return premiums, compensation to agents, expense allowances to creditors, if any, branch and field expenses and other acquisition costs, the types of policies actually issued and authorized as defined in section 62B.03, clauses (1), (2), (3), (4), (5), and (6), and any and all other factors and trends demonstrated to be relevant. An insurer may support these factors by statistical information, experience, actuarial computations, and/or estimates certified by an executive officer of the insurer, and the commissioner shall give due consideration to such supporting data. Subd. 3. Consequences of disapproval. If the commissioner notifies the insurer that the form is disapproved, it is unlawful thereafter for the insurer to issue or use it. In the notice, the commissioner shall specify the reason for disapproval and state that a hearing will be granted within 20 days after a request in writing by the insurer. No policy, certificate of insurance, notice of proposed insurance, nor any application, endorsement or rider, shall be issued or used until the expiration of 60 days after it has been filed, unless the commissioner gives prior written approval thereto. Subd. 4. Withdrawal. The commissioner may, at any time after a hearing held not less than 20 days after written notice to the insurer, withdraw approval of a form on any ground set forth in subdivision 2 above. The written notice of the hearing shall state the reason for the proposed withdrawal. Subd. 5. Issuance after withdrawal. It is not lawful for the insurer to issue forms after the effective date of their withdrawal by the commissioner. Subd. 6. Exception for certain credit insurance. If a group policy of credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance (1) has been delivered in this state before May 28, 1967, or (2) has been or is delivered in another state before or after May 28, 1967, the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this state as specified in subdivisions 2 and 4 of section 62B.06 and the forms shall be approved by the commissioner if they conform to the requirements specified in those subdivisions and if the schedules of premium rates applicable to the insurance evidenced by the certificate or notice are not in excess of the insurer's schedules of premium rates filed with the commissioner; provided, however, the premium rate in effect on existing group policies may be continued until the first policy anniversary date following May 28, 1967, as provided in section 62B.12. Subd. 7. Judicial review. Any order or final determination of the commissioner under the provisions of this section shall be subject to judicial review. Subd. 8. Annual report. Each insurer that sold insurance regulated under this chapter in this state or to a Minnesota resident during the preceding calendar year shall file, as a supplement to its annual statement, a report covering that calendar year. The report must include the following data for coverage regulated by this chapter and sold in this state or to a Minnesota resident, all shown separately for each rate for each policy form or certificate form used for credit insurance regulated under this chapter: (1) claims incurred; (2) premiums earned; (3) expenses other than claims; (4) the data described in clauses (1), (2), and (3), shown separately for policies sold at each premium rate used by the insurer; (5) a statement as to whether the insurer applies or has applied underwriting criteria to coverage sold under this chapter, a description of any such criteria and the specific policies or certificates to which the criteria are applied; (6) information as to the compensation paid in regard to the sale of credit insurance regulated under this chapter as follows: (i) the name and address of each person or company to whom compensation was paid; (ii) the total compensation paid to each person or company; and (iii) the total premiums written by each person or company for which the compensation in clause (2) was paid; and (7) any other information requested by the commissioner. For purposes of this section, "compensation" includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate, including but not limited to bonuses, gifts, prizes, awards, dividends, experience refunds, retrospective commissions, finder's fees, and increased or decreased prices for other transactions with the insurer. History:  Ex1967 c 2 s 7; 1985 c 248 s 70; 1986 c 444; 1986 c 455 s 11,12; 1992 c 564 art 5 s 1; 1993 c 343 s 16,17
62B.08 PREMIUMS AND REFUNDS. Subdivision 1. Schedules and rates; revisions. An insurer may revise its schedules or premium rates from time to time, and shall file such revised schedules with the commissioner. No insurer shall issue any credit life insurance policy, credit accident and health insurance policy, or credit involuntary unemployment insurance policy for which the premium rate exceeds that determined by the schedules of the insurer then on file with the commissioner. Subd. 2. Termination before maturity date. Each individual policy or group certificate shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto; provided, however, that a premium refund or credit need not be made if the amount thereof is less than $5. The formula to be used in computing the refund shall be filed with and approved by the commissioner. Subd. 3. Required payments; credit to be made when policy or certificate not issued. If a creditor requires a debtor to make a payment for credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance and an individual policy or group certificate of insurance is not issued, the creditor shall immediately give written notice to the debtor and shall promptly make an appropriate credit to the account. Subd. 4. Limitation on insurance charges. The amount charged to a debtor for credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance shall not exceed the premiums charged by the insurer, as computed at the time the charge to the debtor is determined, and any premium charged or collected on a single premium basis shall be submitted to the insurer within 90 days of the month in which said premium is charged or collected. Subd. 5. Credit involuntary unemployment insurance; compensation to creditor limited. With respect to credit involuntary unemployment insurance only, an insurer, subsidiary, or parent of the insurer shall not pay compensation to a creditor or a group policyholder offering credit involuntary unemployment insurance in excess of 30 percent of the net written premiums. Subd. 6. Compensation defined. "Compensation" means any valuable consideration, direct or indirect, paid by or on behalf of the insurer, or by any subsidiary or parent, or subsidiary of the parent of the insurer, or by any other person to whom or on behalf of any group policyholder or creditor or withheld from an insurer by any group policyholder or creditor, including but not limited to: commissions, retrospective commissions, retrospective rate credits, experience refunds, dividends, service fees, expense allowances or reimbursements, gifts, equipment, facilities, goods or services, or any other form of remuneration resulting directly from the sale of credit involuntary unemployment insurance. History:  Ex1967 c 2 s 8; 1993 c 343 s 18-22; 1995 c 202 art 2 s 26
62B.09 ISSUANCE OF POLICIES. Subdivision 1. Regulation. Policies of credit life insurance and credit accident and health insurance shall be delivered or issued for delivery in this state only by an insurer authorized to do an insurance business in this state and shall be issued only through holders of licenses or authorizations issued by the commissioner. Subd. 2. Characterization of premiums. The premiums for individual policies of credit life or credit accident and health insurance issued to debtors or the cost to debtors under group policies of credit life or credit accident and health insurance issued to creditors, whether or not written by or through any lender or other creditor, its affiliate, associate or subsidiary or a director, officer or employee of any of them, shall not be deemed interest or charges nor consideration or any amount whatsoever for any examination, service, brokerage, commission, compensation for services, incidental expenses or other thing or otherwise, in addition to or in excess of permitted interest or charges in connection with the loan or credit transaction. Any gain, participation or advantage to any lender or other creditor, its affiliate, associates or subsidiary or to a director, officer or employee of any of them arising out of such premium or cost by way of commission, dividend or otherwise, shall not be deemed interest or charges nor consideration or any amount whatsoever for any examination, service, brokerage, commission, compensation for services, incidental expenses or other thing or otherwise, in addition to or in excess of permitted interest or charges in connection with the loan or credit transaction. Subd. 3. Creditor's authority. Any creditor doing business in the state of Minnesota may, in the same office or place of business where such creditor transacts business, take applications or enrollments for credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance upon a borrower or purchaser or one of them if there are two or more in connection with the making of a loan or sale. History:  Ex1967 c 2 s 9; 1993 c 343 s 23
62B.10 CLAIMS. Subdivision 1. Handling. All claims shall be promptly reported to the insurer or its designated claim representative, and the insurer shall maintain adequate claim files. Claims shall be settled as soon as possible and in accordance with the terms of the insurance contract. Subd. 2. Payment. All claims shall be paid either by draft drawn upon the insurer or by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of the claimant to one specified. Subd. 3. Settlement or adjustment. No plan or arrangement shall be used whereby any person, firm or corporation other than the insurer or its designated claim representative shall be authorized to settle or adjust claims. The creditors shall not be designated as claim representative for the insurer in adjusting claims; provided, that a group policyholder may, by arrangement with the group insurer, draw drafts or checks in payment of claims due to the group policyholder subject to audit and review by the insurer. History:   Ex1967 c 2 s 10 
62B.11 EXISTING INSURANCE; CHOICE OF INSURER. When credit life insurance, credit accident and health insurance, or credit involuntary unemployment insurance is required as additional security for any indebtedness, the debtor shall, upon request to the creditor, have the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor or of procuring and furnishing the required coverage through any insurer authorized to transact an insurance business within this state. History:  Ex1967 c 2 s 11; 1986 c 444; 1993 c 343 s 24
62B.12 RULEMAKING. The commissioner may, after notice and hearing, issue rules the commissioner deems appropriate for the supervision of sections 62B.01 to 62B.14. The commissioner shall promulgate rules to establish rates for credit involuntary unemployment insurance prior to its issuance, and to enact the other provisions of Laws 1993, chapter 343, and the commissioner shall report by February 15, 1994, to the house of representatives Committee on Financial Institutions and Insurance and to the senate Commerce and Consumer Protection Committee on the rules or status of the rulemaking, including the expected loss ratio. The commissioner is not obligated to promulgate a rule unless and until four or more insurers who plan to write credit involuntary unemployment insurance in Minnesota agree to pay for the cost of the promulgation of any rules authorized by this section. Companies selling credit involuntary unemployment insurance shall be assessed by the department to pay the costs of rulemaking. Moneys collected pursuant to this provision must be deposited in the state treasury and credited to a special account and are appropriated to the commissioner for the rulemaking purposes authorized by this section. For the purposes of this chapter, any insurer authorized to offer the coverage specified by section 60A.06, subdivision 1, clause (1) or (4), shall be authorized to sell credit involuntary unemployment insurance pursuant to this chapter. History:  Ex1967 c 2 s 12; 1985 c 248 s 70; 1986 c 444; 1993 c 343 s 25; 1994 c 425 s 11
62B.13 JUDICIAL REVIEW. Any party to the proceeding affected by an order of the commissioner shall be entitled to judicial review in accordance with chapter 14. History:  Ex1967 c 2 s 13; 1982 c 424 s 130
62B.14 PENALTIES. In addition to any other penalty provided by law, any person, firm or corporation which violates an order of the commissioner after it has become final, and while it is in effect, shall, upon proof thereof to the satisfaction of the court, forfeit and pay to the state a sum not to exceed $250 which may be recovered in a civil action, except that if the violation is found to be willful, the amount of the penalty shall be a sum not to exceed $1,000. The commissioner may revoke or suspend the license or certificate of authority of the person, firm or corporation guilty of such violation. Such order for suspension or revocation shall be upon notice and hearing, and shall be subject to judicial review as provided in section 62B.13. History:  Ex1967 c 2 s 14; 1986 c 444
62C.01 NONPROFIT HEALTH SERVICE PLAN CORPORATIONS ACT. Subdivision 1. Citation. Sections 62C.01 to 62C.23 may be cited as the "Nonprofit Health Service Plan Corporations Act." Subd. 2. Purpose. It is the purpose and intent of Laws 1971, chapter 568 to promote a wider, more economical and timely availability of hospital, medical-surgical, dental, and other health services for the people of Minnesota, through nonprofit, prepaid health service plans, and thereby advance public health and the art and science of medical and health care within the state, while reasonably regulating the formation, continuation, operation, and termination of such service plans by establishment and enforcement of reasonable and practical standards of administration, investments, surplus and reserves. Subd. 3. Scope. Every foreign or domestic nonprofit corporation organized for the purpose of establishing or operating a health service plan in Minnesota whereby health services are provided to subscribers to the plan under a contract with the corporation shall be subject to and governed by Laws 1971, chapter 568, and shall not be subject to the laws of this state relating to insurance, except the gross premiums tax provisions contained in chapter 297I and as otherwise specifically provided. Laws 1971, chapter 568 shall apply to all health service plan corporations incorporated after August 1, 1971, and to all existing health service plan corporations, except as otherwise provided. Nothing in sections 62C.01 to 62C.23 shall apply to prepaid group practice plans. A prepaid group practice plan is any plan or arrangement other than a service plan, whereby health services are rendered to certain patients by providers who devote their professional effort primarily to members or patients of the plan, and whereby the recipients of health services pay for the services on a regular, periodic basis, not on a fee for service basis. History:  1971 c 568 s 1; 1992 c 549 art 9 s 3; 2000 c 394 art 2 s 13
62C.02 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 62C.01 to 62C.23 the terms defined in this section have the meanings given them. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce or a person duly designated to act in the commissioner's place. Subd. 3. Health service. "Health service" means any service or class of services, supply, drug, or equipment provided to an individual for diagnosis, relief, or treatment of an injury, ailment, or bodily condition. Subd. 4. Subscriber. "Subscriber" means a person covered under a subscriber contract for health services to the extent therein described. Subd. 5. Provider. "Provider" means an institution, organization, or person that furnishes health services either directly or pursuant to a prescription or directive from a person licensed by the state to make such a prescription or directive. Subd. 6. Service plan corporation. "Service plan corporation" means a foreign or domestic nonprofit corporation which contracts for health service or payment therefor for subscribers pursuant to a service plan, in exchange for periodic prepayments by or on behalf of subscribers. An "existing corporation" means a service plan association or corporation legally in existence on August 1, 1971, and authorized to do business in this state on that date. Subd. 7. Service plan. "Service plan" means any program or other method whereby a service plan corporation, for a consideration, contracts for provision of health service to subscribers by providers who have entered service agreements with the service plan corporation or which provides for reimbursement to the subscriber for health service provided by providers who have not entered service agreements with the service plan corporation. Subd. 8. Service agreement. "Service agreement" means an agreement, contract or other arrangement between a service plan corporation and a provider under which the provider agrees that when health services are provided for a subscriber the provider shall not make a direct charge against the subscriber for those services or parts of services which are covered by the subscriber's contract, but shall look to the service plan corporation for the payment for covered services, to the extent they are covered. Subd. 9. Subscriber contract. "Subscriber contract" means a contract, agreement, or other arrangement between a service plan corporation and its subscriber under the terms and conditions of which health service or reimbursement therefor is provided to the subscriber. Subd. 10. Participating provider. "Participating provider" means a provider who is party to a service agreement with a service plan corporation. History:  1971 c 568 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444
62C.03 SERVICE PLAN CORPORATIONS AUTHORIZED. Subdivision 1. General authority. A service plan corporation may be organized to establish, maintain and operate a service plan providing health services in their entirety or in part, according to the subscriber contract. No subscriber's contract shall provide for payment of cash indemnification by the corporation to the subscriber or the subscriber's estate for death, illness, or other injury, except as provided by Laws 1971, chapter 568 as it relates to nonparticipating providers. In the event that the subscriber compensates the provider for services received the subscriber is subrogated to the provider's right against the service plan. Subd. 2. Contracting authority. A service plan corporation may enter other contracts, arrangements, or agreements as provided in Laws 1971, chapter 568, to carry out the intent and purpose of Laws 1971, chapter 568. Subd. 3. Health services by nonparticipating providers. A service plan corporation may provide for health services by nonparticipating providers in cases of emergency or expediency, or when selected in accordance with the subscriber's contract. When health service is provided out of state, the provider must be duly licensed, registered, and authorized to provide the service where provided. History:  1971 c 568 s 3; 1986 c 444
62C.04 ORGANIZATION. Subdivision 1. Incorporated as nonprofit. Except as otherwise expressly provided, a service plan corporation organized after August 1, 1971 shall be incorporated under and subject to chapter 317A, as it may be amended, and in addition shall have, to the extent provided in its articles of incorporation, all powers and duties provided by Laws 1971, chapter 568 for service plan corporations. A service plan corporation may be incorporated by not less than three legal residents of this state. Subd. 2. Existing corporations. An existing corporation shall be deemed a service plan corporation under Laws 1971, chapter 568, subject to all of its terms and conditions, shall receive a certificate of authority from the commissioner, and shall not be required to obtain new licenses for its agents and representatives. However, any existing service plan corporation shall, within 30 days after the first annual meeting of the corporation following August 1, 1971, amend its articles and bylaws to the extent necessary to conform to and be governed by Laws 1971, chapter 568 and chapter 317A and file said articles and bylaws for approval and filing in accordance with Laws 1971, chapter 568. If any service plan corporation fails to meet these requirements the commissioner may suspend without a hearing its certificate of authority until the requirements of Laws 1971, chapter 568 have been fully met. Subd. 3. Regulation of name. No service plan corporation shall include within its name the words "insurance," "casualty," "surety," "mutual," "indemnity," or any other words descriptive of the insurance, casualty, or surety business. No service plan corporation shall have a name, mark or symbol which is the same as, or deceptively similar to, the name of any other domestic corporation. Subd. 4. Combination of health services. A service plan corporation may be organized to provide for a combination of health services and an existing corporation may so provide by amendment of its articles of incorporation, or by merger, consolidation, or joint operating arrangements with another service plan corporation. All such actions taken shall be subject to the provisions of chapter 317A, and to the approval of the commissioner for protection of the public and subscribers. If the commissioner denies approval an appeal may be made to the Ramsey County District Court for review de novo of all matters relevant to the proposed combination. History:  1971 c 568 s 4; 1989 c 304 s 137
62C.05 ARTICLES OF INCORPORATION; BYLAWS. Subdivision 1. Required conformance. The articles of incorporation and bylaws of any service plan corporation and any amendments thereto shall conform to the requirements of Laws 1971, chapter 568 and chapter 317A. Subd. 2. Specified statements in articles. In addition to meeting the requirements of chapter 317A, the articles of incorporation of a service plan corporation shall clearly state its purposes in strict conformity with Laws 1971, chapter 568 and that subscribers' contracts shall not restrict the subscribers' freedom in selecting a provider in a particular class of providers. History:  1971 c 568 s 5; 1989 c 304 s 137
62C.06 APPROVAL OF ARTICLES AND BYLAWS. Subdivision 1. Commissioner's review and approval. Proposed articles, bylaws or amendments thereto must be approved by the commissioner. The proposed articles, bylaws or amendments shall be submitted to the commissioner in triplicate. One copy shall be promptly returned endorsed by the commissioner to show the date of receipt. Failure of the commissioner to approve or disapprove by an order transmitted to the corporation within 30 days of receipt and stating the reasons for any disapproval, shall be deemed approval. Subd. 2. Filing. Upon approval, the corporation shall file the articles or amendment with the secretary of state, together with a copy of the order or an affidavit of an officer of the corporation that no order has been issued and that more than 30 days have expired since submission of the proposed articles or amendment. When the filing fees and charges have been paid as required by law, and the secretary of state determines that the articles or amendments are in acceptable form, the secretary of state shall record them and take any other action provided for by chapter 317A. Subd. 3. Certificate of incorporation. The existence of a service plan corporation hereafter organized shall begin upon issuance of a certificate of incorporation by the secretary of state. Within 14 days after issuance of the certificate, the corporation shall cause to be published once in a qualified newspaper in the county in which it has its registered office, a notice stating the name of the corporation, the date of incorporation, the general nature of its business, the address of its registered office, and the names and addresses of the incorporators and directors. Proof of publication shall be filed with the secretary of state within ten days after publication. If a corporation fails to comply with this subdivision, it shall forfeit $50 to the state. Subd. 4.  [Repealed, 1984 c 618 s 61] History:  1971 c 568 s 6; 1976 c 181 s 2; 1986 c 444; 1989 c 304 s 137
62C.07 DIRECTORS; MANAGEMENT. Subdivision 1. Authority and composition. The articles of incorporation or the bylaws of a service plan corporation shall provide that the authority and responsibility for election of officers and proper and lawful operation of the corporation shall be in a board of not less than 12 directors with powers and authority as necessary for or instrumental to complete execution of the purposes of the corporation as provided by law, its articles and bylaws. The number of directors shall be fixed by the articles or bylaws. Subd. 2. Selection. The directors shall be selected in accordance with the bylaws and at least one-third shall be individuals who are not practicing or engaged in providing health services, and who before their retirement did not practice or engage in providing health services, are not spouses of such persons, and are not employed by or directors of a provider. History:   1971 c 568 s 7 
62C.08 CERTIFICATE OF AUTHORITY. Subdivision 1. Requirement. No service plan corporation shall enter into subscriber contracts or solicit applications therefor, until it has secured a certificate of authority from the commissioner. Application for a certificate of authority shall be made upon forms prescribed by the commissioner. Subd. 2. Granting. The commissioner may grant a certificate of authority after determining that the applicant is in compliance with Laws 1971, chapter 568 with regard to the applicant's stated purpose, its articles and bylaws and its financial condition, that it has met the filing requirements of Laws 1971, chapter 568 relating to subscribers' contracts and service agreements and that the service plan corporation has knowledgeable, responsible management. Subd. 3. Foreign service plan corporation. A foreign service plan corporation applying for a certificate of authority in this state shall be deemed to be a corporation which is organized under Laws 1971, chapter 568, and such foreign corporation shall be required to meet the same requirements as an existing domestic corporation provided that no foreign corporation shall be denied a certificate of authority because its corporate powers exceed those which are permitted by the laws of this state, although its activities in this state may not exceed the powers of a domestic service plan corporation. Subd. 4. Exception. No certificate of authority shall be required for a foreign service plan corporation whose activities in this state are limited to servicing members of covered groups whose contracts have been issued in another state, or for a foreign service plan corporation whose activities in this state are conducted pursuant to a contract or agreement with a licensed domestic service plan corporation if such contract or agreement is authorized by section 62C.13. History:  1971 c 568 s 8; 1986 c 444
62C.09 FINANCIAL REQUIREMENTS. Subdivision 1. Generally. The commissioner shall not issue a certificate of authority to any service plan corporation hereafter organized unless the corporation has met all legal requirements and, if organized on a capital stock basis unless the corporation has paid up capital stock of not less than $200,000 and an initial surplus of not less than $200,000, or, if organized on a membership basis, unless the corporation has an initial surplus of not less than $400,000. Subd. 2. Reserve requirements. A service plan corporation in existence on August 1, 1971, or hereafter formed shall establish and maintain reserves for claims in process, incomplete and unreported claims, retroactive cost adjustments to providers, allowances for subscription charges received from subscribers but not yet earned and all other accrued liabilities in accordance with section 60A.12 as it relates to accident and health insurance companies. Subd. 3.  [Repealed, 2004 c 285 art 3 s 11] Subd. 4.  [Repealed, 2004 c 285 art 3 s 11] Subd. 5. Risk-based capital requirement. A service plan corporation is subject to regulation of its financial solvency under sections 60A.50 to 60A.592. History:  1971 c 568 s 9; 1977 c 261 s 1; 1977 c 405 s 1; 2004 c 285 art 3 s 2
62C.10 INVESTMENT. Funds of a corporation subject to this chapter shall be invested only in securities and property designated by law for investment by domestic life insurance companies. Notwithstanding any limitations set forth in chapter 61A, an organization which has received a certificate of authority from the commissioner to operate under this chapter may invest up to 20 percent of its admitted assets in corporations whose business is the arrangement for, management of, or provision of health care services, including dental and related managed care and administrative services. Any amounts so invested shall, for purposes of section 62C.09, be added to the minimum and maximum reserve requirements as calculated for a service plan corporation. History:  1971 c 568 s 10; 1993 c 70 s 1; 1994 c 425 s 12
62C.11 FINANCIAL STATEMENTS AND EXAMINATIONS. Subdivision 1. Annual filing. A service plan corporation shall annually on or before the last day of March, file with the commissioner a financial statement, in such form as the commissioner shall prescribe, verified by not less than two of its principal officers, showing the financial condition of the corporation as of December 31 of the preceding year. Subd. 2. Periodic examinations. The commissioner shall examine a service plan corporation to ascertain its financial condition, its ability to fulfill its obligations, and its compliance with Laws 1971, chapter 568, as often as the commissioner deems expedient for protection of the public, but not less than once each three years. The commissioner shall have access at all reasonable times to all books and records of the corporation, and may summon the officers and employees and examine them under oath as to any matter pertinent to Laws 1971, chapter 568. Subd. 3. Initial examinations. The commissioner shall visit and examine any service plan corporation formed after August 1, 1971 within the first six months after it begins doing business, and thereafter once during each of the next three years. Thereafter the commissioner shall visit and examine the corporation at least once every three years. Subd. 4. Examination and audit expenses. Any examination or audit conducted by or at the request of the commissioner shall be at the expense of the service plan corporation. Subd. 5. Failure to examine; notification to governor. The commissioner shall notify the governor whenever examinations required by this section have not been made and inform the governor of the reasons therefor. History:  1971 c 568 s 11; 1986 c 444; 2000 c 483 s 12
62C.12 SUSPENSION. A service plan corporation shall be subject to section 60A.052, relating to the denial, suspension or revocation of a certificate of authority, and to chapter 60B. The commissioner also may suspend or revoke a certificate for any violation or noncompliance with Laws 1971, chapter 568 following a hearing under procedures established by rules of the commissioner. The commissioner may suspend or revoke the certificate of authority of a foreign service plan corporation for the same reasons for which a domestic corporation's certificate may be suspended or revoked, and further, may revoke or suspend the certificate of a foreign service plan corporation if its activities outside the state of Minnesota impair its solvency or its ability to meet its obligations in this state. History:  1971 c 568 s 12; 1985 c 248 s 70; 1986 c 444; 1993 c 13 art 2 s 1
62C.13 AUTHORIZED CONTRACTS AND AGREEMENTS. Subdivision 1. General powers. A service plan corporation may act for, or as agent of, a provider and may contract with subscribers and others to render or provide health services for the benefit of subscribers. It may enter into service agreements. A subscriber contract may provide for payment to, or reimbursement of, a subscriber for expenses incurred for health services when rendered or furnished by nonparticipating providers. Subd. 2. Government units or agencies. A service plan corporation may contract or make other arrangements with any agency, instrumentality or political subdivision of the United States, or this state, and may accept and administer funds, directly or indirectly, made available thereby provided such agency, instrumentality or political subdivision is authorized by law to make such contracts or arrangements. It may subcontract with any organization which has contracted with any such agency, instrumentality or political subdivision for the administration or furnishing of health services or any publicly supported health service plan. Subd. 3. Similar organizations. A service plan corporation may enter into contracts or other arrangements with similar organizations or corporations domiciled in this or any other state or country, for transfer of subscribers, reciprocal or joint benefits, or for other joint undertakings approved by its board and not inconsistent with the purposes of Laws 1971, chapter 568, provided, however, that in no event shall a service plan corporation enter into any such contract, arrangement or undertaking which would have the effect of relieving such corporation of its duties and obligations to any subscribers unless the corporation has received the prior written consent of the affected subscribers, or a qualified agent or representative of such subscribers. Subd. 4. Administrative services. A service plan corporation may enter into contracts or other arrangements with providers or with any agency, instrumentality or political subdivision of the United States or any state or country or any other organization for administrative, accounting, record keeping, data processing, or planning, facility or service related to rendering or furnishing health services. Subd. 5. Construction of section. Laws 1971, chapter 568 shall not be construed to require a service plan corporation to contract or arrange to remain under contract or arrangement with any provider, subscriber or group of subscribers. History:   1971 c 568 s 13 
62C.14 SUBSCRIBER CONTRACTS. Subdivision 1. Copy to subscriber. A service plan corporation shall deliver to every subscriber, except those covered as a spouse or dependent of another subscriber, a copy of the subscriber's contract or a certificate evidencing that the subscriber is covered by a group subscriber's contract. Subd. 2. General contents. The subscriber's contract shall state in a clear and understandable manner all health services to be provided, in whole or in part, to the subscriber and all terms, conditions, limitations and exceptions under which the services shall be provided or paid for, including any provisions for coordination of benefits or subrogation, and including any provisions or conditions under which services from participating providers are not covered. Subd. 3. Free choice preserved. Nothing in a subscriber's contract shall deny the subscriber free choice of the provider within a particular class of providers who is to treat the subscriber, and there shall be no interference with a provider-subscriber relationship. Subd. 4. Contents of group contracts. Except for group contracts or certificates, a subscriber's contract or other writing furnished with the contract, shall state the periodic subscription charge, the effective date, the expiration date or period of renewal, and the terms upon which the contract may be terminated, canceled, continued, or renewed. Subd. 5. Disabled dependents. A subscriber's individual contract or any group contract delivered or issued for delivery in this state and providing that coverage of a dependent child of the subscriber or a dependent child of a covered group member shall terminate upon attainment of a specified limiting age as defined in section 62Q.01, subdivision 2a, shall also provide in substance that attainment of that age shall not terminate coverage while the child is (a) incapable of self-sustaining employment by reason of developmental disability, mental illness or disorder, or physical disability, and (b) chiefly dependent upon the subscriber or employee for support and maintenance, provided proof of incapacity and dependency is furnished by the subscriber within 31 days of attainment of the limiting age as defined in section 62Q.01, subdivision 2a, and subsequently as required by the corporation, but not more frequently than annually after a two-year period following attainment of the age. Any notice regarding termination of coverage due to attainment of the limiting age must include information about this provision. Subd. 5a. Maternity benefits. Any group subscriber's contract delivered or issued for delivery or renewed in this state after August 1, 1973, shall provide the same coverage for maternity benefits to unmarried women and minor female dependents as that provided for married women. If an unmarried subscriber is a parent of a dependent child, each group subscriber's contract delivered or issued for delivery or renewed after July 1, 1976, shall, if the subscriber chooses family coverage, provide the same coverage for that child as that provided for the child of any other subscriber choosing dependent family coverage. Any group contracting for a group subscriber's contract may request that the coverage required by this section be omitted. An individual subscriber's contract delivered or issued for delivery in this state shall provide the same coverage for maternity benefits to unmarried women and minor female dependents as that provided for married women. If an unmarried subscriber is a parent of a dependent child, each subscriber's individual contract delivered or issued for delivery or renewed after July 1, 1975, shall, if the subscriber chooses dependent family coverage, provide the same coverage for that child as that provided for the child of any other subscriber choosing dependent family coverage. Subd. 5b. Application of maternity benefits provision. The provisions of subdivision 5a shall apply to all health maintenance organizations regulated under any health maintenance organization enabling act enacted in 1973. Subd. 6. Required statement. A subscriber's contract or certificate shall state that it and all riders and endorsements, together with any application if signed by the subscriber, identification issued, and the applicable benefit schedules on file at the home office of the corporation and with the commissioner, shall constitute the entire contract between the corporation and the subscriber. Subd. 7. Limitation on payment of death, illness, or injury benefits. No subscriber's contract shall provide for the payment of any cash or other material benefit to the subscriber or the subscriber's estate on account of death, illness or injury, provided that a subscriber's contract may provide for the payment for services rendered by a nonparticipating provider to the extent such services are covered by the contract. In the event that the subscriber compensates the provider for services received the subscriber is subrogated to the provider's right against the service plan. Subd. 8. Limitation on subscriber contract liability. Every subscriber's contract or certificate shall provide in substance that the subscriber has no personal liability to the participating provider rendering health services, except for those services or parts of service not covered by the subscriber's contract. Subd. 9. Required filing. No service plan corporation shall deliver or issue for delivery in this state any subscriber contract, endorsement, rider, amendment or application until a copy of the form thereof has been filed with the commissioner, subject to disapproval by the commissioner. Any such form issued or in use on August 1, 1971, if filed with the commissioner within 60 days after August 1, 1971, shall be deemed filed upon receipt by the commissioner. When an insurer, service plan corporation, or the Minnesota Comprehensive Health Association fails to respond to an objection or inquiry within 60 days, the filing is automatically disapproved. A resubmission is required if action by the Department of Commerce is subsequently requested. An additional filing fee is required for the resubmission. The commissioner also may by regulation exempt from filing those subscriber contracts issued to a group of not less than 300 subscribers, or to other groups upon such reasonable conditions and restrictions as the commissioner may require. Subd. 10. Filing or disapproval. Except as otherwise provided in subdivision 9, all forms received by the commissioner shall be deemed filed 60 days after received unless disapproved by order transmitted to the corporation stating that the form used in a specified respect is contrary to law, contains a provision or provisions which are unfair, inequitable, misleading, inconsistent or ambiguous, or is in part illegible. It shall be unlawful to issue or use a document disapproved by the commissioner. When an insurer, service plan corporation, or the Minnesota Comprehensive Health Association fails to respond to an objection or inquiry within 60 days, the filing is automatically disapproved. A resubmission is required if action by the Department of Commerce is subsequently requested. An additional filing fee is required for the resubmission. Subd. 11. Hearing. An order of disapproval shall state that a hearing will be granted within 20 days upon written request. The commissioner shall conduct the hearing within 20 days after receipt of the request and shall give not less than ten days' written notice of the time and place and matters to be considered. Within 15 days after the hearing, the commissioner shall affirm, reverse, or modify the previous action in writing, specifying the reasons therefor. Pending the hearing and decision thereon, the commissioner may postpone the effective date of previous action. Subd. 12. Appeal. An order or decision of the commissioner under this section shall be subject to appeal in accordance with chapter 14. Subd. 13. Construction. All subscriber's contracts covering subscribers in this state shall be deemed to have been made in this state and shall be construed pursuant to Minnesota law when the position or rights of a Minnesota subscriber or covered group member are at issue. It shall be unlawful for any service plan corporation to solicit or make any subscriber contract in violation of the provisions of Laws 1971, chapter 568. Subd. 14. Newborn infant coverage. No subscriber's individual contract or any group contract which provides for coverage of family members or other dependents of a subscriber or of an employee or other group member of a group subscriber, shall be renewed, delivered, or issued for delivery in this state unless such contract includes as covered family members or dependents any newborn infants immediately from the moment of birth and thereafter which insurance shall provide coverage for illness, injury, congenital malformation or premature birth. The coverage described in this subdivision includes coverage of cleft lip and cleft palate to the same extent provided in section 62A.042, subdivisions 1, paragraph (b); and 2, paragraph (b). For purposes of this paragraph, "newborn infants" includes grandchildren who are financially dependent upon a covered grandparent and who reside with that covered grandparent continuously from birth. No policy, contract, or agreement covered by this section may require notification to a health carrier as a condition for this dependent coverage. However, if the policy, contract, or agreement mandates an additional premium for each dependent, the health carrier shall be entitled to all premiums that would have been collected had the health carrier been aware of the additional dependent. The health carrier may withhold payment of any health benefits for the new dependent until it has been compensated with the applicable premium which would have been owed if the health carrier had been informed of the additional dependent immediately. Subd. 15. Certain disability benefits offset prohibited. No subscriber's individual contract or any group contract which provides for coverage of family members or dependents of a subscriber or of an employee or other group member of a group subscriber, entered into, issued, amended, renewed or delivered in this state on or after January 1, 1976 shall contain any provision offsetting, or in any other manner reducing, any benefit under the service plan by the amount of, or in proportion to, any increase in disability benefits received or receivable under the federal Social Security Act, as amended subsequent to the date of commencement of such benefit. History:  1971 c 568 s 14; 1973 c 303 s 3; 1973 c 494 s 5; 1973 c 651 s 2,3; 1975 c 323 s 3; 1976 c 121 s 4; 1980 c 589 s 26; 1983 c 247 s 32; 1986 c 444; 1986 c 455 s 13; 1995 c 258 s 37,38; 1996 c 446 art 1 s 40; 2003 c 40 s 3; 2004 c 288 art 3 s 4; 2005 c 56 s 1; 2006 c 255 s 17,18; 2013 c 84 art 1 s 32; 2017 c 99 s 1
62C.142 CONTINUATION AND CONVERSION PRIVILEGES FOR FORMER SPOUSES AND CHILDREN. Subdivision 1. Termination of coverage. No subscriber contract of a nonprofit health service plan corporation which, in addition to covering the subscriber, also covers the subscriber's spouse shall contain a provision for termination of coverage for a spouse covered under the subscriber contract solely as a result of a break in the marital relationship except by reason of an entry of a valid decree of dissolution of marriage between the parties. Subd. 2. Conversion privilege. An individual subscriber contract issued as conversion coverage shall be renewable at the option of the former spouse as long as the former spouse is not covered under another qualified plan as defined in section 62E.02, subdivision 4. Any revisions in the table of rate for the individual subscriber contract shall apply to the former spouse's original age at entry and shall apply equally to all similar contracts issued as conversion coverage by the corporation. Subd. 2a. Continuation privilege. Every subscriber contract, other than a contract whose continuance is contingent upon continued employment or membership, shall contain a provision which permits continuation of coverage under the contract for the subscriber's former spouse and children upon entry of a valid decree of dissolution of marriage. The coverage may be continued until the earlier of the following dates: (a) the subscriber's former spouse becomes covered under any other group health plan; or (b) the date coverage would otherwise terminate under the subscriber contract. The contract must require the group contract holder 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. Subd. 3. Application. Subdivision 1 applies to every subscriber contract which is delivered, issued for delivery, renewed or amended on or after July 19, 1977. Subdivisions 2 and 2a apply to every subscriber contract which is delivered, issued for delivery, renewed, or amended on or after March 1, 1983. History:  1977 c 186 s 2; 1982 c 555 s 9; 1982 c 642 s 15; 1990 c 403 s 9; 1992 c 564 art 4 s 9; 2000 c 483 s 13; 2013 c 84 art 1 s 33
62C.15 SUBSCRIPTION CHARGES. Subdivision 1. Establishment and adjustment. A service plan corporation shall establish and adjust from time to time subscription charges to be paid by or on behalf of its subscribers. The charges shall be reasonable, and not unfairly discriminatory, in relation to the benefits, considering actuarial projection of the cost of providing or paying for the health services, considering costs of administration, and in relation to reserves and surplus required by law. Subd. 2. Nongroup contracts; filing of schedule of charges. No service plan corporation shall deliver, issue for delivery, extend, continue, or renew any form of nongroup subscriber contract until schedules of charges applicable thereto, including any endorsement, rider, amendment or application which is a part thereof, have been filed with the commissioner; nor shall the corporation deliver, issue for delivery, extend, continue or renew any form of group subscriber contract until a schedule of the rating structures and formulae applicable thereto, including any endorsement, rider, amendment or application which is a part thereof, has been filed with the commissioner. The filing for a nongroup subscriber contract shall include the actuarial data needed to justify any increase in subscriber charges. The commissioner may disapprove the schedule of charges for any group or nongroup subscriber contract if: (a) the unencumbered reserve or surplus is less than the required minimum or more than the required maximum; or (b) the schedule charges meet the criteria specified in section 62A.02, subdivision 3. Subd. 3. Disapproval. If subscription charges become subject to disapproval, the commissioner shall within 30 days of filing render an order either disapproving the charges or extending time for review to a specified date, or the charges shall be deemed approved. An order disapproving a charge shall state the reasons therefor and shall be subject to the notice, hearing, and appeal provisions of section 62C.14. The burden of proving and actuarially demonstrating that the charges are not inadequate or excessive shall be on the corporation. Subd. 4. Issuance or delivery of disapproved contract. It shall be unlawful for a service plan corporation to deliver or issue a subscriber's contract with charges which have been disapproved by the commissioner. History:  1971 c 568 s 15; 1976 c 296 art 2 s 12
62C.16 SERVICE AGREEMENTS. Subdivision 1. Agreements with authorized providers. Service plan corporations, as agents for providers, may enter into service agreements only with providers authorized to practice their profession or conduct their business in this state or the state or foreign country in which the provider is located. Subd. 2. Enforcement. A service plan corporation shall enforce its service agreements, including agreements of providers to accept payment from the corporation as compensation for health service rendered or provided to subscribers who have prepaid for the health service. Provisions for review, by participating providers, of claims shall be a part of each service agreement. Subd. 3. Filing. Each type of service agreement shall be filed with the commissioner, prior to its use and those in effect on August 1, 1971, shall be filed within 60 days thereof. Subd. 4. Retaliatory action prohibited. No service plan corporation may take retaliatory action against a provider solely on the grounds that the provider disseminated accurate information regarding coverage of benefits or accurate benefit limitations of a subscriber's contract or accurate interpretations of the provider agreement that limit the prescribing, providing, or ordering of care. History:  1971 c 568 s 16; 1993 c 345 art 5 s 5
62C.17 LICENSE FOR SOLICITOR OR AGENT. Subdivision 1. Requirement. No person shall act as a solicitor or agent for solicitation of subscribers on behalf of a service plan corporation, except an officer of the corporation, until that person obtains a license from the commissioner. The license shall be granted to qualified persons only upon request of the service plan corporation. The commissioner may establish by rule reasonable standards of qualification. Subd. 2. Application. Applications for license shall be submitted to the commissioner on forms provided by the commissioner. Except as provided in subdivision 3, the applicant shall pass a written examination reasonably designed to determine whether the applicant is qualified to be licensed as an agent or solicitor. The examination shall be pertinent to the contracts and coverage furnished by the corporation and shall be comparable to the examination required for a health and accident insurance agent's license. Prior to examination or reexamination, and prior to issuance or renewal of a license, the applicant shall pay to the commissioner the fees required for examination or reexamination for, and issuance or renewal of, an insurance agent's license for one line of insurance. The license shall expire May 31 of each year unless renewed by written request with payment of the renewal fee. The license shall not authorize a person to act as an insurance agent or solicitor. Subd. 3. Examination exception; health and accident insurance agent. The commissioner shall issue and renew licenses without examination for a person who holds a valid health and accident insurance agent's license of this state or who as of October 1, 1971 has been employed as a solicitor or agent for solicitation of subscribers for not less than two years for the corporation to which the license would apply, is a full-time employee of the corporation, and has never had an insurance agent's license of this state denied, revoked, or suspended. Subd. 4. Revocation or suspension; reinstatement. The commissioner may at any time after a hearing pursuant to the contested case provisions of chapter 14, revoke or suspend a license if satisfied that the licensee is not qualified. An application for a new license or for reinstatement may be entertained one year after revocation or suspension, upon filing of a bond in the amount of $5,000 approved by the commissioner for protection of the public for a period of five years, or a lesser amount and period as the commissioner may prescribe. The commissioner shall revoke or suspend a license upon written request by the corporation or agent for which the licensee is licensed to act. Such a request shall include a statement of the specific facts constituting cause for termination. Any such information shall be deemed a confidential and privileged communication, and shall not be admissible, in whole or in part, in any action or proceeding without the corporation's or agent's written consent. Subd. 5. Nonqualification. A person shall not be qualified for a license if upon examination or reexamination it is determined that the person is incompetent to act as a producer, if the person has acted in any manner which would disqualify a person to hold a license as an insurance producer under sections 60K.30 to 60K.56, or if the person fails to produce documents subpoenaed by the commissioner, or fails to appear at a hearing to which the person is a party or has been subpoenaed, if the production of documents or appearance is lawfully required. History:  1971 c 568 s 17; 1982 c 424 s 130; 1986 c 444; 1992 c 564 art 3 s 22; 2001 c 117 art 2 s 8
62C.18 PERSONAL LIABILITY. Subdivision 1. Limitation. No participating provider shall have any right of action against a subscriber for compensation for health services which such provider has rendered, except to the extent that the subscriber's contract does not provide coverage for the services or part of the services rendered. Subd. 2. Rights of nonparticipating providers; notice. Nothing herein shall affect the rights of a nonparticipating provider who gives the subscriber written notice prior to rendering service that the provider will bill the subscriber directly for service, provided that such notice shall not be required if (1) the nonparticipating provider is not informed by the subscriber and does not otherwise have knowledge that such subscriber has a subscriber contract covering such services, or (2) under the existing circumstances it is impossible or impractical for the nonparticipating provider to give such notice, or (3) the services are not provided in this state. Subd. 3. Failure of nonparticipating provider to give notice. A nonparticipating provider who fails to give the notice required in subdivision 2 shall not be entitled to recover compensation from a subscriber for health services rendered to such subscriber in an amount in excess of the aggregate of (1) the amount actually received by the subscriber from the service plan corporation as reimbursement for the costs of such service, and (2) the amount by which such nonparticipating provider's fee or charges for such service exceeds the coverage provided for such service in the subscriber's contract. History:  1971 c 568 s 18; 1986 c 444
62C.19 UNFAIR TRADE PRACTICES. Service plan corporations are subject to sections 72A.17 to 72A.30, regarding regulation of trade practices, and to all rules promulgated by the commissioner regarding advertisements for and marketing of accident and health insurance. History:  1971 c 568 s 19; 1985 c 248 s 70
62C.20 PRACTICE NOT AUTHORIZED. Nothing in Laws 1971, chapter 568 shall authorize any person, association or corporation to engage, in any manner, in the practice of a profession required by this state to be licensed. History:   1971 c 568 s 20 
62C.21 PENALTIES. If a service plan corporation violates Laws 1971, chapter 568 or other applicable law, the commissioner may suspend or revoke its certificate of authority, and impose a penalty not to exceed $5,000 for each offense. Such action shall be by order and subject to the notice, hearing and appeal provided as to an order disapproving a subscriber's contract. History:   1971 c 568 s 21 
62C.22 VIOLATIONS. Any person who violates Laws 1971, chapter 568, or who makes a material false statement with respect to a written report or statement required by Laws 1971, chapter 568, shall be punishable, for the first offense, by payment of a fine of not more than $1,000 or imprisonment for not more than 90 days or both and for the second and each subsequent offense by payment of a fine of not more than $3,000 or imprisonment for not more than one year or both. History:  1971 c 568 s 22; 1984 c 628 art 3 s 11; 2004 c 228 art 1 s 72
62C.23 RULES. For the purpose of implementing and enforcing Laws 1971, chapter 568, the commissioner may adopt rules pursuant to chapter 14. History:  1971 c 568 s 23; 1982 c 424 s 130; 1985 c 248 s 70
62D.01 CITATION AND PURPOSE. Subdivision 1. Title. Sections 62D.01 to 62D.24 may be cited as the "Health Maintenance Act of 1973." Subd. 2. Legislative findings and intent; policy. (a) Faced with the continuation of mounting costs of health care coupled with its inaccessibility to large segments of the population, the legislature has determined that there is a need to explore alternative methods for the delivery of health care services, with a view toward achieving greater efficiency and economy in providing these services. (b) It is, therefore, the policy of the state to eliminate the barriers to the organization, promotion, and expansion of health maintenance organizations; to provide for their regulation by the state commissioner of health; and to exempt them from the operation of the insurance and nonprofit health service plan corporation laws of the state except as hereinafter provided. (c) It is further the intention of the legislature to closely monitor the development of health maintenance organizations in order to assess their impact on the costs of health care to consumers, the accessibility of health care to consumers, and the quality of health care provided to consumers. History:  1973 c 670 s 1; 1977 c 305 s 45; 1996 c 305 art 1 s 139
62D.02 DEFINITIONS. Subdivision 1. Applicability. For the purposes of sections 62D.01 to 62D.30, unless the context clearly indicates otherwise, the terms defined in this section shall have the meaning here given them. Subd. 2.  [Repealed, 1990 c 538 s 32] Subd. 3. Commissioner of health or commissioner. "Commissioner of health" or "commissioner" means the state commissioner of health or a designee. Subd. 4. Health maintenance organization. "Health maintenance organization" means a foreign or domestic corporation, or a local governmental unit as defined in subdivision 11, controlled and operated as provided in sections 62D.01 to 62D.30, which provides, either directly or through arrangements with providers or other persons, comprehensive health maintenance services, or arranges for the provision of these services, to enrollees on the basis of a fixed prepaid sum without regard to the frequency or extent of services furnished to any particular enrollee. Subd. 5. Evidence of coverage. "Evidence of coverage" means any certificate, agreement or contract, and amendments thereto, issued to an enrollee which sets out the coverage to which the enrollee is entitled under the health maintenance contract which covers the enrollee. Subd. 6. Enrollee. "Enrollee" means any person who has entered into, or is covered by, a health maintenance contract. Subd. 7. Comprehensive health maintenance services. "Comprehensive health maintenance services" means a set of comprehensive health services which the enrollees might reasonably require to be maintained in good health including as a minimum, but not limited to, emergency care, emergency ground ambulance transportation services, inpatient hospital and physician care, outpatient health services and preventive health services. Elective, induced abortion, except as medically necessary to prevent the death of the mother, whether performed in a hospital, other abortion facility or the office of a physician, shall not be mandatory for any health maintenance organization. Subd. 8. Health maintenance contract. "Health maintenance contract" means any contract whereby a health maintenance organization agrees to provide to enrollees comprehensive health maintenance services and any other health care service set forth in the contract. The contract may contain enrollee cost-sharing provisions if the provisions meet the requirements of section 62D.095. Subd. 9. Provider. "Provider" means any person who furnishes health services and is licensed or otherwise authorized to render such services in the state. Subd. 10. Consumer. "Consumer" means any person, including an enrollee, to whom a health maintenance organization directs marketing materials. Subd. 11. Local governmental unit. "Local governmental unit" means any statutory or home rule charter city or county. Subd. 12. Participating entity. "Participating entity" means any of the following persons, providers, companies, or other organizations with which the health maintenance organization has contracts or other agreements: (1) a health care facility licensed under sections 144.50 to 144.56, a nursing home licensed under sections 144A.02 to 144A.11, and any other health care facility otherwise licensed under the laws of this state or registered with the commissioner of health; (2) a health care professional licensed under health-related licensing boards, as defined in section 214.01, subdivision 2, and any other health care professional otherwise licensed under the laws of this state or registered with the commissioner of health; (3) a group, professional corporation, or other organization which provides the services of individuals or entities identified in clause (2), including but not limited to a medical clinic, a medical group, a home health care agency, an urgent care center, and an emergent care center; (4) any person or organization providing administrative, financial, or management services to the health maintenance organization if the total payment for all services exceeds three percent of the gross revenues of the health maintenance organization. "Participating entity" does not include (i) another health maintenance organization with which a health maintenance organization has made contractual arrangements or (ii) any entity with which a health maintenance organization has contracted primarily in order to purchase or lease equipment or space or (iii) employees of the health maintenance organization or (iv) employees of any participating entity identified in clause (3). Subd. 13. Major participating entity. "Major participating entity" shall include the following: (1) a participating entity that receives from the health maintenance organization as compensation for services a sum greater than 30 percent of the health maintenance organization's gross annual revenues; (2) a participating entity providing administrative, financial, or management services to the health maintenance organization, if the total payment for all services provided by the participating entity exceeds three percent of the gross revenue of the health maintenance organization; (3) a participating entity that nominates or appoints 30 percent or more of the board of directors of the health maintenance organization. Subd. 14. Separate health services contracts. "Separate health services contracts" means prepaid dental services contracts and other similar types of prepaid health services agreements in which services are provided by participating entities or employees of the health maintenance organization, but does not include contracts subject to chapter 62A or 62C. Subd. 15. Net worth. "Net worth" means admitted assets, as defined in section 62D.044, minus liabilities. Liabilities do not include those obligations that are subordinated in the same manner as preferred ownership claims under section 60B.44, subdivision 10. For purposes of this subdivision, preferred ownership claims under section 60B.44, subdivision 10, include promissory notes subordinated to all other liabilities of the health maintenance organization. Subd. 16. Affiliate. "Affiliate" means a person or entity controlling, controlled by, or under common control with the person or entity. History:  1973 c 670 s 2; 1974 c 284 s 1; 1977 c 305 s 45; 1981 c 122 s 1; 1983 c 205 s 1,2; 1983 c 289 s 114 subd 1; 1984 c 464 s 8-11; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 384 art 2 s 1; 1988 c 612 s 1,2; 1989 c 304 s 137; 1990 c 538 s 12,13; 1993 c 50 s 1; 1994 c 625 art 8 s 5; 1995 c 234 art 7 s 6; 1995 c 258 s 39; 1996 c 305 art 1 s 18; 1997 c 205 s 1; 1997 c 225 art 2 s 6; 2002 c 387 s 2; 2017 c 2 art 2 s 4; 2019 c 50 art 1 s 17
62D.03 ESTABLISHMENT OF HEALTH MAINTENANCE ORGANIZATIONS. Subdivision 1. Certificate of authority required. Notwithstanding any law of this state to the contrary, any foreign or domestic corporation organized to do so or a local governmental unit may apply to the commissioner of health for a certificate of authority to establish and operate a health maintenance organization in compliance with sections 62D.01 to 62D.30. No person shall establish or operate a health maintenance organization in this state, nor sell or offer to sell, or solicit offers to purchase or receive advance or periodic consideration in conjunction with a health maintenance organization or health maintenance contract unless the organization has a certificate of authority under sections 62D.01 to 62D.30. Subd. 2.  [Repealed, 1997 c 205 s 40] Subd. 3. Required application. The commissioner of health may require any person providing physician and hospital services with payments made in the manner set forth in section 62D.02, subdivision 4, to apply for a certificate of authority under sections 62D.01 to 62D.30. An applicant may continue to operate until the commissioner of health acts upon the application. In the event that an application is denied, the applicant shall henceforth be treated as a health maintenance organization whose certificate of authority has been revoked. Any person directed to apply for a certificate of authority shall be subject to the provisions of this subdivision. Subd. 4. Application requirements. Each application for a certificate of authority shall be verified by an officer or authorized representative of the applicant, and shall be in a form prescribed by the commissioner of health. Each application shall include the following: (a) a copy of the basic organizational document, if any, of the applicant and of each major participating entity; such as the articles of incorporation, or other applicable documents, and all amendments thereto; (b) a copy of the bylaws, rules and regulations, or similar document, if any, and all amendments thereto which regulate the conduct of the affairs of the applicant and of each major participating entity; (c) a list of the names, addresses, and official positions of the following: (1) all members of the board of directors, or governing body of the local government unit, and the principal officers and shareholders of the applicant organization; and (2) all members of the board of directors, or governing body of the local government unit, and the principal officers of the major participating entity and each shareholder beneficially owning more than ten percent of any voting stock of the major participating entity; The commissioner may by rule identify persons included in the term "principal officers"; (d) a full disclosure of the extent and nature of any contract or financial arrangements between the following: (1) the health maintenance organization and the persons listed in clause (c)(1); (2) the health maintenance organization and the persons listed in clause (c)(2); (3) each major participating entity and the persons listed in clause (c)(1) concerning any financial relationship with the health maintenance organization; and (4) each major participating entity and the persons listed in clause (c)(2) concerning any financial relationship with the health maintenance organization; (e) the name and address of each participating entity and the agreed-upon duration of each contract or agreement; (f) a copy of the form of each contract binding the participating entities and the health maintenance organization. Contractual provisions shall be consistent with the purposes of sections 62D.01 to 62D.30, in regard to the services to be performed under the contract, the manner in which payment for services is determined, the nature and extent of responsibilities to be retained by the health maintenance organization, the nature and extent of risk sharing permissible, and contractual termination provisions; (g) a copy of each contract binding major participating entities and the health maintenance organization. Contract information filed with the commissioner shall be confidential and subject to the provisions of section 13.37, subdivision 1, clause (b), upon the request of the health maintenance organization. Upon initial filing of each contract, the health maintenance organization shall file a separate document detailing the projected annual expenses to the major participating entity in performing the contract and the projected annual revenues received by the entity from the health maintenance organization for such performance. The commissioner shall disapprove any contract with a major participating entity if the contract will result in an unreasonable expense under section 62D.19. The commissioner shall approve or disapprove a contract within 30 days of filing. Within 120 days of the anniversary of the implementation of each contract, the health maintenance organization shall file a document detailing the actual expenses incurred and reported by the major participating entity in performing the contract in the preceding year and the actual revenues received from the health maintenance organization by the entity in payment for the performance; (h) a statement generally describing the health maintenance organization, its health maintenance contracts and separate health service contracts, facilities, and personnel, including a statement describing the manner in which the applicant proposes to provide enrollees with comprehensive health maintenance services and separate health services; (i) a copy of the form of each evidence of coverage to be issued to the enrollees; (j) a copy of the form of each individual or group health maintenance contract and each separate health service contract which is to be issued to enrollees or their representatives; (k) financial statements showing the applicant's assets, liabilities, and sources of financial support. If the applicant's financial affairs are audited by independent certified public accountants, a copy of the applicant's most recent certified financial statement may be deemed to satisfy this requirement; (l) a description of the proposed method of marketing the plan, a schedule of proposed charges, and a financial plan which includes a three-year projection of the expenses and income and other sources of future capital; (m) a statement reasonably describing the geographic area or areas to be served and the type or types of enrollees to be served; (n) a description of the complaint procedures to be utilized as required under section 62D.11; (o) a description of the procedures and programs to be implemented to meet the requirements of section 62D.04, subdivision 1, clauses (b) and (c) and to monitor the quality of health care provided to enrollees; (p) a description of the mechanism by which enrollees will be afforded an opportunity to participate in matters of policy and operation under section 62D.06; (q) a copy of any agreement between the health maintenance organization and an insurer, including any nonprofit health service corporation or another health maintenance organization, regarding reinsurance, stop-loss coverage, insolvency coverage, or any other type of coverage for potential costs of health services, as authorized in sections 62D.04, subdivision 1, clause (f), 62D.05, subdivision 3, and 62D.13; (r) a copy of the conflict of interest policy which applies to all members of the board of directors and the principal officers of the health maintenance organization, as described in section 62D.04, subdivision 1, paragraph (g). All currently licensed health maintenance organizations shall also file a conflict of interest policy with the commissioner within 60 days after August 1, 1990, or at a later date if approved by the commissioner; (s) a copy of the statement that describes the health maintenance organization's prior authorization administrative procedures; and (t) other information as the commissioner of health may reasonably require to be provided. History:  1973 c 670 s 3; 1977 c 305 s 45; 1983 c 205 s 3,4; 1984 c 464 s 12; 1984 c 641 s 2; 1985 c 248 s 21,22; 1987 c 384 art 2 s 1; 1988 c 612 s 3; 1990 c 538 s 14; 1997 c 205 s 2,3; 2006 c 212 art 3 s 2; 2009 c 79 art 5 s 2; 2017 c 2 art 2 s 5
62D.04 ISSUANCE OF CERTIFICATE AUTHORITY. Subdivision 1. Application review. Upon receipt of an application for a certificate of authority, the commissioner of health shall determine whether the applicant for a certificate of authority has: (a) demonstrated the willingness and potential ability to assure that health care services will be provided in such a manner as to enhance and assure both the availability and accessibility of adequate personnel and facilities; (b) arrangements for an ongoing evaluation of the quality of health care, including a peer review process; (c) a procedure to develop, compile, evaluate, and report statistics relating to the cost of its operations, the pattern of utilization of its services, the quality, availability and accessibility of its services, and such other matters as may be reasonably required by regulation of the commissioner of health; (d) reasonable provisions for emergency and out of area health care services; (e) demonstrated that it is financially responsible and may reasonably be expected to meet its obligations to enrollees and prospective enrollees. In making this determination, the commissioner of health shall require the amount of initial net worth required in section 62D.042, compliance with the risk-based capital standards under sections 60A.50 to 60A.592, the deposit required in section 62D.041, and in addition shall consider: (1) the financial soundness of its arrangements for health care services and the proposed schedule of charges used in connection therewith; (2) arrangements which will guarantee for a reasonable period of time the continued availability or payment of the cost of health care services in the event of discontinuance of the health maintenance organization; and (3) agreements with providers for the provision of health care services; (f) demonstrated that it will assume full financial risk on a prospective basis for the provision of comprehensive health maintenance services, including hospital care; provided, however, that the requirement in this paragraph shall not prohibit the following: (1) a health maintenance organization from obtaining insurance or making other arrangements (i) for the cost of providing to any enrollee comprehensive health maintenance services, the aggregate value of which exceeds $5,000 in any year, (ii) for the cost of providing comprehensive health care services to its members on a nonelective emergency basis, or while they are outside the area served by the organization, or (iii) for not more than 95 percent of the amount by which the health maintenance organization's costs for any of its fiscal years exceed 105 percent of its income for such fiscal years; and (2) a health maintenance organization from having a provision in a group health maintenance contract allowing an adjustment of premiums paid based upon the actual health services utilization of the enrollees covered under the contract, except that at no time during the life of the contract shall the contract holder fully self-insure the financial risk of health care services delivered under the contract. Risk sharing arrangements shall be subject to the requirements of sections 62D.01 to 62D.30; (g) demonstrated that it has made provisions for and adopted a conflict of interest policy applicable to all members of the board of directors and the principal officers of the health maintenance organization. The conflict of interest policy shall include the procedures described in section 317A.255, subdivisions 1 and 2. However, the commissioner is not precluded from finding that a particular transaction is an unreasonable expense as described in section 62D.19 even if the directors follow the required procedures; and (h) otherwise met the requirements of sections 62D.01 to 62D.30. Subd. 2. Issuance; notice. Within 90 days after the receipt of the application for a certificate of authority, the commissioner of health shall determine whether or not the applicant meets the requirements of this section. If the commissioner of health determines that the applicant meets the requirements of sections 62D.01 to 62D.30, the commissioner shall issue a certificate of authority to the applicant. If the commissioner of health determines that the applicant is not qualified, the commissioner shall so notify the applicant and shall specify the reason or reasons for such disqualification. Subd. 3. Use of terms. No person who has not been issued a certificate of authority shall use the words "health maintenance organization" or the initials "HMO" in its name, contracts or literature. Provided, however, that persons who are operating under a contract with, operating in association with, enrolling enrollees for, or otherwise authorized by a health maintenance organization licensed under sections 62D.01 to 62D.30 to act on its behalf may use the terms "health maintenance organization" or "HMO" for the limited purpose of denoting or explaining their association or relationship with the authorized health maintenance organization. No health maintenance organization which has a minority of enrollees and members elected according to section 62D.06, subdivision 1, as members of its board of directors shall use the words "consumer controlled" in its name or in any way represent to the public that it is controlled by consumers. Subd. 4. Continued compliance. Upon being granted a certificate of authority to operate as a health maintenance organization, the organization must continue to operate in compliance with the standards set forth in subdivision 1. Noncompliance may result in the imposition of a fine or the suspension or revocation of the certificate of authority, in accordance with sections 62D.15 to 62D.17. Subd. 5. Participation; government programs. Health maintenance organizations shall, as a condition of receiving and retaining a certificate of authority, participate in the medical assistance and MinnesotaCare programs. A health maintenance organization is required to submit proposals in good faith that meet the requirements of the request for proposal provided that the requirements can be reasonably met by a health maintenance organization to serve individuals eligible for the above programs in a geographic region of the state if, at the time of publication of a request for proposal, the percentage of recipients in the public programs in the region who are enrolled in the health maintenance organization is less than the health maintenance organization's percentage of the total number of individuals enrolled in health maintenance organizations in the same region. Geographic regions shall be defined by the commissioner of human services in the request for proposals. History:  1973 c 670 s 4; 1977 c 305 s 45; 1984 c 464 s 13; 1985 c 248 s 23; 1986 c 444; 1987 c 130 s 1; 1987 c 384 art 2 s 1; 1988 c 612 s 4; 1990 c 538 s 15; 1994 c 625 art 8 s 6; 1996 c 451 art 5 s 1; 1997 c 203 art 4 s 1; 1997 c 205 s 4; 2004 c 285 art 3 s 3; 2016 c 158 art 1 s 18; art 2 s 10; 2016 c 189 art 20 s 2
62D.041 PROTECTION IN THE EVENT OF INSOLVENCY. Subdivision 1. Definition. (a) For the purposes of this section, the term "uncovered expenditures" means the costs of health care services that are covered by a health maintenance organization for which an enrollee would also be liable in the event of the organization's insolvency, and that are not guaranteed, insured, or assumed by a person other than the health maintenance organization. (b) For purposes of this section, if a health maintenance organization offers supplemental benefits as described in section 62D.05, subdivision 6, "uncovered expenditures" excludes any expenditures attributable to the supplemental benefit. Subd. 2. Required deposit. Each health maintenance organization shall deposit with any organization or trustee acceptable to the commissioner through which a custodial or controlled account is utilized, bankable funds in the amount required in this section. The commissioner may allow a health maintenance organization's deposit requirement to be funded by an organization approved by the commissioner. Subd. 3. Amount for beginning organizations. (a) Organizations that obtain a certificate of authority after April 25, 1988, shall deposit, before receiving a certificate of authority, $500,000. The health maintenance organization shall provide the commissioner with evidence of the deposit before receiving a certificate of authority. (b) By April 1 of the year following the organization's first 12 months of operation under a certificate of authority, an organization shall deposit an amount equal to the difference between the initial deposit and 33 percent of its uncovered expenditures in its first 12 months of operation. (c) By April 1 of subsequent years, an organization shall deposit an amount equal to the difference between the amount on deposit and 33 percent of its uncovered expenditures in the preceding calendar year. Subd. 4. Amount for existing organizations. By December 31, 1989, an organization that has received a certificate of authority on or before April 25, 1988, shall have on deposit an amount equal to the larger of: (1) 33 percent of its uncovered expenditures in the preceding calendar year; or (2) $500,000. By April 1 of each subsequent year, an organization shall deposit an amount equal to the difference between the amount on deposit and 33 percent of its uncovered expenditures in the preceding calendar year. Subd. 5.  [Repealed, 1988 c 612 s 32] Subd. 5a. Waiver of additional deposit. In any year when the amount determined according to this section is zero or less than zero, the commissioner shall not require the organization to make any additional deposit. Subd. 6.  [Repealed, 1988 c 612 s 32] Subd. 6a. Withdrawal of deposit. If the amount previously deposited by the organization under this section exceeds the amount required under this section by more than $50,000 for a continuous 12-month period, the commissioner shall allow the organization to withdraw the portion of the deposit that exceeds by more than $50,000 the amount required to be on deposit for the organization, unless the commissioner determines that release of a portion of the deposit could be hazardous to enrollees, creditors, or the general public. An organization shall not apply for the withdrawal more than once in each calendar year. Subd. 6b. Evidence of deposit. An organization shall provide the commissioner with evidence of every deposit made on or before the date of the deposit. Subd. 7. Control of over deposits. All income from deposits shall belong to the depositing organizations and shall be paid to it as it becomes available. Subd. 8.  [Repealed, 1988 c 612 s 32] Subd. 9. Letter of credit. A health maintenance organization may satisfy one-half of its deposit requirement through use of a letter of credit issued by a bank authorized to do business in this state, provided that: (1) nothing more than a demand for payment is necessary for payment; (2) the letter of credit is irrevocable; (3) according to its terms, the letter of credit cannot expire without due notice from the issuer and the notice must occur at least 60 days before the expiration date and be in the form of a written notice to the commissioner; (4) the letter of credit is issued or confirmed by a bank which is a member of the Federal Reserve system; (5) the letter of credit is unconditional, is not contingent upon reimbursement to the bank or the bank's ability to perfect any lien or security interest, and does not contain references to any other agreements, documents, or entities; (6) the letter of credit designates the commissioner as beneficiary; and (7) the letter of credit may be drawn upon after insolvency of the health maintenance organization. Subd. 10. Supplemental deposit. A health maintenance organization offering supplemental benefits as described in section 62D.05, subdivision 6, must maintain an additional deposit in the first year such benefits are offered equal to $50,000. At the end of the second year such benefits are offered, the health maintenance organization must maintain an additional deposit equal to $150,000. At the end of the third year such benefits are offered and every year thereafter, the health maintenance organization must maintain an additional deposit of $250,000. History:  1984 c 464 s 14; 1985 c 248 s 24; 1988 c 612 s 5-13; 1989 c 282 art 2 s 3,4; 1990 c 538 s 16; 2004 c 285 art 3 s 4
62D.042 INITIAL NET WORTH REQUIREMENT. Subdivision 1. Definition. For purposes of this section, if a health maintenance organization offers supplemental benefits as described in section 62D.05, subdivision 6, "expenses" does not include any expenses attributable to the supplemental benefit. Subd. 2. Initial net worth requirement. Beginning organizations shall maintain net worth of at least 8-1/3 percent of the sum of all expenses expected to be incurred in the 12 months following the date the certificate of authority is granted, or $1,500,000, whichever is greater. Subd. 3.  [Repealed, 1998 c 407 art 8 s 14] Subd. 4. Reduction for reinsurance. In calculating expenses for purposes of the net worth requirement, a health maintenance organization may subtract 90 percent of the cost of premiums it pays for insurance coverage specified in section 62D.04, subdivision 1, clause (f). Subd. 5.  [Repealed, 2004 c 285 art 3 s 11] Subd. 6.  [Repealed, 2004 c 285 art 3 s 11] Subd. 7.  [Repealed, 2004 c 285 art 3 s 11] History:  1988 c 612 s 14; 1989 c 282 art 2 s 5; 1993 c 345 art 2 s 1; 1995 c 234 art 7 s 7; 1997 c 205 s 5; 1998 c 407 art 8 s 2; 2004 c 285 art 3 s 5,6,10
62D.044 ADMITTED ASSETS. "Admitted assets" includes the following: (1) petty cash and other cash funds in the organization's principal or official branch office that are under the organization's control; (2) immediately withdrawable funds on deposit in demand accounts, in a bank or trust company organized and regularly examined under the laws of the United States or any state, and insured by an agency of the United States government, or like funds actually in the principal or official branch office at statement date, and, in transit to a bank or trust company with authentic deposit credit given before the close of business on the fifth bank working day following the statement date; (3) the amount fairly estimated as recoverable on cash deposited in a closed bank or trust company, if the assets qualified under this section before the suspension of the bank or trust company; (4) bills and accounts receivable that are collateralized by securities in which the organization is authorized to invest; (5) premiums due from groups or individuals that are not more than 90 days past due; (6) amounts due under reinsurance arrangements from insurance companies authorized to do business in this state; (7) tax refunds due from the United States or this state; (8) principal and interest accrued on mortgage loans not exceeding in aggregate one year's total due and accrued principal and interest on an individual loan; (9) the rents due to the organization on real and personal property, directly or beneficially owned, not exceeding the amount of one year's total due and accrued rent on each individual property; (10) principal and interest or rents accrued on conditional sales agreements, security interests, chattel mortgages, and real or personal property under lease to other corporations that do not exceed the amount of one year's total due and accrued interest or rent on an individual investment; (11) the fixed required principal and interest due and accrued on bonds and other evidences of indebtedness that are not in default; (12) dividends receivable on shares of stock, provided that the market price for valuation purposes does not include the value of the dividend; (13) the interest on dividends due and payable, but not credited, on deposits in banks and trust companies or on accounts with savings associations; (14) principal and interest accrued on secured loans that do not exceed the amount of one year's interest on any loan; (15) interest accrued on tax anticipation warrants; (16) the amortized value of electronic computer or data processing machines or systems purchased for use in the business of the organization, including software purchased and developed specifically for the organization's use; (17) the cost of furniture, equipment, and medical equipment, less accumulated depreciation thereon, and medical and pharmaceutical supplies that are used to deliver health care and are under the organization's control, provided such assets do not exceed 30 percent of admitted assets; (18) amounts currently due from an affiliate that has liquid assets with which to pay the balance and maintain its accounts on a current basis. Any amount outstanding more than three months is not current; (19) amounts on deposit under section 62D.041; (20) accounts receivable from participating health care providers that are not more than 60 days past due; and (21) investments allowed by section 62D.045, except for investments in securities and properties described under section 61A.284. History:  1988 c 612 s 15; 1990 c 538 s 18; 1991 c 286 s 1; 1991 c 325 art 10 s 11; 1995 c 202 art 1 s 25
62D.045 INVESTMENT RESTRICTIONS. Subdivision 1. Restrictions. Funds of a health maintenance organization shall be invested only in securities and property designated by law for investment by domestic life insurance companies, except that money may be used to purchase real estate, including leasehold estates and leasehold improvements, for the convenient accommodation of the organization's business operations, including the home office, branch offices, medical facilities, and field office operations, on the following conditions: (1) a parcel of real estate acquired under this subdivision may include excess space for rent to others if it is reasonably anticipated that the excess will be required by the organization for expansion or if the excess is reasonably required in order to have one or more buildings that will function as an economic unit; (2) the real estate may be subject to a mortgage; and (3) the purchase price of the asset, including capitalized permanent improvements, less depreciation spread evenly over the life of the property or less depreciation computed on any basis permitted under the Internal Revenue Code and its regulations, or the organization's equity, plus all encumbrances on the real estate owned by a company under this subdivision, whichever is greater, does not exceed 20 percent of its admitted assets, except if, when calculated in combination with the assets described in section 62D.044, clause (17), the total of said assets and the real estate assets described hereunder do not exceed the total combined percent limitations allowable under this section and section 62D.044, clause (17), or, if permitted by the commissioner upon a finding that the percentage of the health maintenance organization's admitted assets is insufficient to provide convenient accommodation for the organization's business. However, a health maintenance organization that owns property used in the delivery of medical services for its enrollees may invest an additional 20 percent of its admitted assets in real estate, not requiring the permission of the commissioner. Subd. 2. Authorization and written investment policy required. A health maintenance organization shall not make or engage in a loan or investment unless the loan or investment has been authorized or ratified by the board of directors or by a committee supervising investments and loans. In addition, a health maintenance organization must comply with section 60A.112. Subd. 3. Limits on commissions. A health maintenance organization shall not pay a commission or brokerage for the purchase or sale of real or personal property that exceeds usual and customary commissions or brokerage at the time and place of the purchases or sales. Information regarding payments of commissions and brokerage must be maintained by the health maintenance organization. Subd. 4. Officer's conflict of interest. A health maintenance organization shall not knowingly, directly or indirectly, invest in or loan upon any real or personal property, in which any principal officer or director of the organization has a financial interest. An organization shall not make a loan to a principal officer or director of the organization. Subd. 5. Exemption. This section shall not apply to a health maintenance organization which has a city or county as a guaranteeing organization. History:  1988 c 612 s 16; 1991 c 286 s 2; 1991 c 325 art 10 s 12; art 18 s 2; 2000 c 260 s 97 para (g)
62D.05 POWERS OF HEALTH MAINTENANCE ORGANIZATIONS. Subdivision 1. Authority granted. Any corporation or local governmental unit may, upon obtaining a certificate of authority as required in sections 62D.01 to 62D.30, operate as a health maintenance organization. Subd. 2. Contracts; generally. A health maintenance organization may enter into health maintenance contracts in this state and engage in any other activities consistent with sections 62D.01 to 62D.30 which are necessary to the performance of its obligations under such contracts or authorize its representatives to do so. Subd. 3. Contracts; health services. A health maintenance organization may contract with providers of health care services to render the services the health maintenance organization has promised to provide under the terms of its health maintenance contracts, may, subject to section 62D.12, subdivision 11, enter into separate prepaid dental contracts, or other separate health service contracts, may, subject to the limitations of section 62D.04, subdivision 1, clause (f), contract with insurance companies, including nonprofit health service plan corporations or other health maintenance organizations, for insurance, indemnity or reimbursement of its cost of providing health care services for enrollees or against the risks incurred by the health maintenance organization, may contract with insurance companies and nonprofit health service plan corporations for insolvency insurance coverage, and may contract with insurance companies and nonprofit health service plan corporations to insure or cover the enrollees' costs and expenses in the health maintenance organization, including the customary prepayment amount and any co-payment obligations, and may contract to provide reinsurance or insolvency insurance coverage to health insurers or nonprofit health service plan corporations. Subd. 4. Contracts; administrative services. A health maintenance organization may contract with other persons for the provision of services, including, but not limited to, managerial and administration, marketing and enrolling, data processing, actuarial analysis, and billing services. If contracts are made with insurance companies or nonprofit health service plan corporations, such companies or corporations must be authorized to transact business in this state. Subd. 5. Payment acceptance. Each health maintenance organization authorized to operate under sections 62D.01 to 62D.30, or its representative, may accept from governmental agencies, private agencies, corporations, associations, groups, individuals, or other persons payments covering all or part of the cost of health care services provided to enrollees. Any recipient of medical assistance, pursuant to chapter 256B, may make application to join a health maintenance organization which has been approved for medical assistance by the commissioner of human services. Subd. 6. Supplemental benefits. (a) A health maintenance organization may, as a supplemental benefit, provide coverage to its enrollees for health care services and supplies received from providers who are not employed by, under contract with, or otherwise affiliated with the health maintenance organization. Supplemental benefits may be provided if the following conditions are met: (1) a health maintenance organization desiring to offer supplemental benefits must at all times comply with the requirements of sections 62D.041 and 62D.042; (2) a health maintenance organization offering supplemental benefits must maintain an additional surplus in the first year supplemental benefits are offered equal to the lesser of $500,000 or 33 percent of the supplemental benefit expenses. At the end of the second year supplemental benefits are offered, the health maintenance organization must maintain an additional surplus equal to the lesser of $1,000,000 or 33 percent of the supplemental benefit expenses. At the end of the third year benefits are offered and every year after that, the health maintenance organization must maintain an additional surplus equal to the greater of $1,000,000 or 33 percent of the supplemental benefit expenses. When in the judgment of the commissioner the health maintenance organization's surplus is inadequate, the commissioner may require the health maintenance organization to maintain additional surplus; (3) claims relating to supplemental benefits must be processed in accordance with the requirements of section 72A.201; and (4) in marketing supplemental benefits, the health maintenance organization shall fully disclose and describe to enrollees and potential enrollees the nature and extent of the supplemental coverage, and any claims filing and other administrative responsibilities in regard to supplemental benefits. (b) The commissioner may, pursuant to chapter 14, adopt, enforce, and administer rules relating to this subdivision, including: rules insuring that these benefits are supplementary and not substitutes for comprehensive health maintenance services by addressing percentage of out-of-plan coverage; rules relating to the establishment of necessary financial reserves; rules relating to marketing practices; and other rules necessary for the effective and efficient administration of this subdivision. The commissioner, in adopting rules, shall give consideration to existing laws and rules administered and enforced by the Department of Commerce relating to health insurance plans. History:  1973 c 670 s 5; 1983 c 205 s 5; 1984 c 464 s 15; 1984 c 654 art 5 s 58; 1987 c 337 s 64; 1987 c 384 art 2 s 1; 1988 c 612 s 17; 1989 c 282 art 2 s 6; 2009 c 79 art 5 s 3; 2017 c 2 art 2 s 6
62D.06 GOVERNING BODY. Subdivision 1. Governing body composition; enrollee advisory body. The governing body of any health maintenance organization which is a corporation may include enrollees, providers, or other individuals; provided, however, that after a health maintenance organization which is a corporation has been authorized under sections 62D.01 to 62D.30 for one year, at least 40 percent of the governing body shall be composed of enrollees and members elected by the enrollees and members from among the enrollees and members. For purposes of this section, "member" means a consumer who receives health care services through a self-insured contract that is administered by the health maintenance organization or its related third-party administrator. The number of members elected to the governing body shall not exceed the number of enrollees elected to the governing body. An enrollee or member elected to the governing board may not be a person: (1) whose occupation involves, or before retirement involved, the administration of health activities or the provision of health services; (2) who is or was employed by a health care facility as a licensed health professional; or (3) who has or had a direct substantial financial or managerial interest in the rendering of a health service, other than the payment of a reasonable expense reimbursement or compensation as a member of the board of a health maintenance organization. After a health maintenance organization which is a local governmental unit has been authorized under sections 62D.01 to 62D.30 for one year, an enrollee advisory body shall be established. The enrollees who make up this advisory body shall be elected by the enrollees from among the enrollees. Subd. 2. Enrollee input. The governing body shall establish a mechanism to afford the enrollees an opportunity to express their opinions in matters of policy and operation through the establishment of advisory panels, by the use of advisory referenda on major policy decisions, or through the use of other mechanisms as may be prescribed or permitted by the commissioner of health. History:  1973 c 670 s 6; 1974 c 284 s 10; 1977 c 305 s 45; 1983 c 205 s 6; 1987 c 384 art 2 s 1; 1988 c 592 s 1; 1997 c 205 s 6; 2017 c 2 art 2 s 7
62D.07 EVIDENCE OF COVERAGE; REQUIRED TERMS. Subdivision 1. Requirement. Every health maintenance organization enrollee residing in this state is entitled to evidence of coverage or contract. The health maintenance organization or its designated representative shall issue the evidence of coverage or contract. Subd. 2. Filing with commissioner. No evidence of coverage or contract, or amendment thereto shall be issued or delivered to any person in this state until a copy of the form of the evidence of coverage or contract or amendment thereto has been filed with the commissioner of health pursuant to section 62D.03 or 62D.08. Subd. 3. Required provisions. Contracts and evidences of coverage shall contain: (1) no provisions or statements which are unjust, unfair, inequitable, misleading, deceptive, or which are untrue, misleading, or deceptive as defined in section 62D.12, subdivision 1; (2) a clear, concise and complete statement of: (i) the health care services and the insurance or other benefits, if any, to which the enrollee is entitled under the health maintenance contract; (ii) any exclusions or limitations on the services, kind of services, benefits, or kind of benefits, to be provided, including any deductible or co-payment feature and requirements for referrals, prior authorizations, and second opinions; (iii) where and in what manner information is available as to how services, including emergency and out of area services, may be obtained; (iv) the total amount of payment and co-payment, if any, for health care services and the indemnity or service benefits, if any, which the enrollee is obligated to pay with respect to individual contracts, or an indication whether the plan is contributory or noncontributory with respect to group certificates; and (v) a description of the health maintenance organization's method for resolving enrollee complaints and a statement identifying the commissioner as an external source with whom complaints may be registered; and (3) on the cover page of the evidence of coverage and contract, a clear and complete statement of enrollees' rights. The statement must be in bold print and captioned "Important Enrollee Information and Enrollee Bill of Rights" and must include but not be limited to the following provisions in the following language or in substantially similar language approved in advance by the commissioner, except that paragraph (8) does not apply to prepaid health plans providing coverage for programs administered by the commissioner of human services: ENROLLEE INFORMATION (1) COVERED SERVICES: Services provided by (name of health maintenance organization) will be covered only if services are provided by participating (name of health maintenance organization) providers or authorized by (name of health maintenance organization). Your contract fully defines what services are covered and describes procedures you must follow to obtain coverage. (2) PROVIDERS: Enrolling in (name of health maintenance organization) does not guarantee services by a particular provider on the list of providers. When a provider is no longer part of (name of health maintenance organization), you must choose among remaining (name of the health maintenance organization) providers. (3) REFERRALS: Certain services are covered only upon referral. See section (section number) of your contract for referral requirements. All referrals to non-(name of health maintenance organization) providers and certain types of health care providers must be authorized by (name of health maintenance organization). (4) EMERGENCY SERVICES: Emergency services from providers who are not affiliated with (name of health maintenance organization) will be covered. Your contract explains the procedures and benefits associated with emergency care from (name of health maintenance organization) and non-(name of health maintenance organization) providers. (5) EXCLUSIONS: Certain services or medical supplies are not covered. You should read the contract for a detailed explanation of all exclusions. (6) CONTINUATION: You may convert to an individual health maintenance organization contract or continue coverage under certain circumstances. These continuation and conversion rights are explained fully in your contract. (7) CANCELLATION: Your coverage may be canceled by you or (name of health maintenance organization) only under certain conditions. Your contract describes all reasons for cancellation of coverage. (8) NEWBORN COVERAGE: If your health plan provides for dependent coverage, a newborn infant is covered from birth, but only if services are provided by participating (name of health maintenance organization) providers or authorized by (name of health maintenance organization). Certain services are covered only upon referral. (Name of health maintenance organization) will not automatically know of the infant's birth or that you would like coverage under your plan. You should notify (name of health maintenance organization) of the infant's birth and that you would like coverage. If your contract requires an additional premium for each dependent, (name of health maintenance organization) is entitled to all premiums due from the time of the infant's birth until the time you notify (name of health maintenance organization) of the birth. (Name of health maintenance organization) may withhold payment of any health benefits for the newborn infant until any premiums you owe are paid. (9) PRESCRIPTION DRUGS AND MEDICAL EQUIPMENT: Enrolling in (name of health maintenance organization) does not guarantee that any particular prescription drug will be available nor that any particular piece of medical equipment will be available, even if the drug or equipment is available at the start of the contract year. ENROLLEE BILL OF RIGHTS (1) Enrollees have the right to available and accessible services including emergency services, as defined in your contract, 24 hours a day and seven days a week. (2) Enrollees have the right to be informed of health problems, and to receive information regarding treatment alternatives and risks which is sufficient to assure informed choice. (3) Enrollees have the right to refuse treatment, and the right to privacy of medical and financial records maintained by the health maintenance organization and its health care providers, in accordance with existing law. (4) Enrollees have the right to file a complaint with the health maintenance organization and the commissioner of health and the right to initiate a legal proceeding when experiencing a problem with the health maintenance organization or its health care providers. (5) Enrollees have the right to a grace period of 31 days for the payment of each premium for an individual health maintenance contract falling due after the first premium during which period the contract shall continue in force. (6) Medicare enrollees have the right to voluntarily disenroll from the health maintenance organization and the right not to be requested or encouraged to disenroll except in circumstances specified in federal law. (7) Medicare enrollees have the right to a clear description of nursing home and home care benefits covered by the health maintenance organization. Subd. 4. Payment grace period. A grace period of 31 days shall be granted for payment of each premium for an individual health maintenance contract falling due after the first premium, during which period the contract shall continue in force. Individual health maintenance organization contracts shall clearly state the existence of the grace period. Subd. 5. Contract cancellation. Individual health maintenance contracts shall state that any person may cancel the contract within ten days of its receipt and have the premium paid refunded if, after examination of the contract, the individual is not satisfied with it for any reason. The individual is responsible for repaying the health maintenance organization for any services rendered or claims paid by the health maintenance organization during the ten days. Subd. 6. Coverage termination. The contract and evidence of coverage shall clearly explain the conditions upon which a health maintenance organization may terminate coverage. Subd. 7. Continuation and conversion. The contract and evidence of coverage shall clearly explain continuation and conversion rights afforded to enrollees. Subd. 8. Notice of changes. Individual and group contract holders shall be given 30 days' advance, written notice of any change in subscriber fees or benefits. Subd. 9. Delivery. Individual health maintenance organization contracts shall be delivered to enrollees no later than the date coverage is effective. For enrollees with group contracts, an evidence of coverage shall be delivered or issued for delivery not more than 15 days from the date the health maintenance organization is notified of the enrollment or the effective date of coverage, whichever is later. Subd. 10. Complaint telephone number. An individual health maintenance organization contract and an evidence of coverage must contain a Department of Health telephone number that the enrollee can call to register a complaint about a health maintenance organization. History:  1973 c 670 s 7; 1977 c 305 s 45; 1984 c 464 s 16-19; 1986 c 444; 1988 c 434 s 3; 1988 c 592 s 2; 1997 c 205 s 7; 2013 c 84 art 1 s 34
62D.08 ANNUAL REPORT. Subdivision 1. Notice of changes. A health maintenance organization shall, unless otherwise provided for by rules adopted by the commissioner of health, file notice with the commissioner of health prior to any modification of the operations or documents described in the information submitted under clauses (a), (b), (e), (f), (g), (i), (j), (l), (m), (n), (o), (p), (q), (r), (s), and (t) of section 62D.03, subdivision 4. If the commissioner of health does not disapprove of the filing within 60 days, it shall be deemed approved and may be implemented by the health maintenance organization. Subd. 2. Annual report required. Every health maintenance organization shall annually, on or before April 1, file a verified report with the commissioner of health covering the preceding calendar year. However, utilization data required under subdivision 3, clause (c), shall be filed on or before July 1. Subd. 3. Report requirements. Such report shall be on forms prescribed by the commissioner of health, and shall include: (a) a financial statement of the organization, including its balance sheet and receipts and disbursements for the preceding year certified by an independent certified public accountant, reflecting at least (1) all prepayment and other payments received for health care services rendered, (2) expenditures to all providers, by classes or groups of providers, and insurance companies or nonprofit health service plan corporations engaged to fulfill obligations arising out of the health maintenance contract, (3) expenditures for capital improvements, or additions thereto, including but not limited to construction, renovation or purchase of facilities and capital equipment, and (4) a supplementary statement of assets, liabilities, premium revenue, and expenditures for risk sharing business under section 62D.04, subdivision 1, on forms prescribed by the commissioner; (b) the number of new enrollees enrolled during the year, the number of group enrollees and the number of individual enrollees as of the end of the year and the number of enrollees terminated during the year; (c) a summary of information compiled pursuant to section 62D.04, subdivision 1, clause (c), in such form as may be required by the commissioner of health; (d) a report of the names and addresses of all persons set forth in section 62D.03, subdivision 4, clause (c), who were associated with the health maintenance organization or the major participating entity during the preceding year, and the amount of wages, expense reimbursements, or other payments to such individuals for services to the health maintenance organization or the major participating entity, as those services relate to the health maintenance organization, including a full disclosure of all financial arrangements during the preceding year required to be disclosed pursuant to section 62D.03, subdivision 4, clause (d); (e) a separate report addressing health maintenance contracts sold to individuals covered by Medicare, title XVIII of the Social Security Act, as amended, including the information required under section 62D.30, subdivision 6; (f) data on the number of complaints received and the category of each complaint as defined by the commissioner. The categories must include access, communication and behavior, health plan administration, facilities and environment, coordination of care, and technical competence and appropriateness. The commissioner, in consultation with interested stakeholders, shall define complaint categories to be used by each health maintenance organization by July 1, 2017, and the categories must be used by each health maintenance organization beginning calendar year 2018; and (g) such other information relating to the performance of the health maintenance organization as is reasonably necessary to enable the commissioner of health to carry out the duties under sections 62D.01 to 62D.30. Subd. 4. Penalty; extension for good cause. Any health maintenance organization which fails to file a verified report with the commissioner on or before April 1 of the year due shall be subject to the levy of a fine up to $500 for each day the report is past due. This failure will serve as a basis for other disciplinary action against the organization, including suspension or revocation, in accordance with sections 62D.15 to 62D.17. The commissioner may grant an extension of the reporting deadline upon good cause shown by the health maintenance organization. Any fine levied or disciplinary action taken against the organization under this subdivision is subject to the contested case and judicial review provisions of sections 14.57 to 14.69. Subd. 5. Changes in participating entities; penalty. Any cancellation or discontinuance of any contract or agreement listed in section 62D.03, subdivision 4, clause (e), or listed subsequently in accordance with this subdivision, shall be reported to the commissioner 120 days before the effective date. When the health maintenance organization terminates a provider for cause, death, disability, or loss of license, the health maintenance organization must notify the commissioner within ten working days of the date the health maintenance organization sends out or receives the notice of cancellation, discontinuance, or termination. Any health maintenance organization which fails to notify the commissioner within the time periods prescribed in this subdivision shall be subject to the levy of a fine up to $200 per contract for each day the notice is past due, accruing up to the date the organization notifies the commissioner of the cancellation or discontinuance. Any fine levied under this subdivision is subject to the contested case and judicial review provisions of chapter 14. The levy of a fine does not preclude the commissioner from using other penalties described in sections 62D.15 to 62D.17. Subd. 6. Financial statements. A health maintenance organization shall submit to the commissioner unaudited financial statements of the organization for the first three quarters of the year on forms prescribed by the commissioner. The statements are due 30 days after the end of the quarter and shall be maintained as nonpublic data, as defined by section 13.02, subdivision 9. Unaudited financial statements for the fourth quarter shall be submitted at the request of the commissioner. Subd. 7. Consistent administrative expenses and investment income reporting. (a) Every health maintenance organization must directly allocate administrative expenses to specific lines of business or products when such information is available. Remaining expenses that cannot be directly allocated must be allocated based on other methods, as recommended by the Advisory Group on Administrative Expenses. Health maintenance organizations must submit this information, including administrative expenses for dental services, using the reporting template provided by the commissioner of health. (b) Every health maintenance organization must allocate investment income based on cumulative net income over time by business line or product and must submit this information, including investment income for dental services, using the reporting template provided by the commissioner of health. History:  1973 c 670 s 8; 1974 c 284 s 2; 1977 c 305 s 45; 1983 c 289 s 114 subd 1; 1984 c 464 s 20-23; 1984 c 655 art 1 s 92; 1985 c 248 s 70; 1986 c 444; 1987 c 130 s 2; 1987 c 329 s 21; 1987 c 384 art 2 s 1; 1988 c 434 s 4,5; 1988 c 612 s 18; 1990 c 538 s 19-21; 2001 c 170 s 1; 1Sp2010 c 1 art 20 s 2; 2016 c 189 art 20 s 3
62D.09 INFORMATION TO ENROLLEES. Subdivision 1. Marketing requirements. (a) Any written marketing materials which may be directed toward potential enrollees and which include a detailed description of benefits provided by the health maintenance organization shall include a statement of enrollee information and rights as described in section 62D.07, subdivision 3, clauses (2) and (3). Prior to any oral marketing presentation, the agent marketing the plan must inform the potential enrollees that any complaints concerning the material presented should be directed to the health maintenance organization, the commissioner of health, or, if applicable, the employer. (b) Detailed marketing materials must affirmatively disclose all exclusions and limitations in the organization's services or kinds of services offered to the contracting party, including but not limited to the following types of exclusions and limitations: (1) health care services not provided; (2) health care services requiring co-payments or deductibles paid by enrollees; (3) the fact that access to health care services does not guarantee access to a particular provider type; and (4) health care services that are or may be provided only by referral of a physician, advanced practice registered nurse, or physician assistant. (c) No marketing materials may lead consumers to believe that all health care needs will be covered. All marketing materials must alert consumers to possible uncovered expenses with the following language in bold print: "THIS HEALTH CARE PLAN MAY NOT COVER ALL YOUR HEALTH CARE EXPENSES; READ YOUR CONTRACT CAREFULLY TO DETERMINE WHICH EXPENSES ARE COVERED." Immediately following the disclosure required under paragraph (b), clause (3), consumers must be given a telephone number to use to contact the health maintenance organization for specific information about access to provider types. (d) The disclosures required in paragraphs (b) and (c) are not required on billboards or image, and name identification advertisement. Subd. 2. Information upon application. The application for coverage by the health maintenance organization shall be accompanied by the statement of consumer information and rights as described in section 62D.07, subdivision 3, clause (3). Subd. 3. Annual report to enrollees. Every health maintenance organization or its representative shall annually, before June 1, provide to its enrollees the following: (1) a summary of its most recent annual financial statement including a balance sheet and statement of receipts and disbursements; (2) a description of the health maintenance organization, its health care plan or plans, its facilities and personnel, any material changes therein since the last report; (3) the current evidence of coverage, or amendments thereto; and (4) a statement of enrollee information and rights as described in section 62D.07, subdivision 3, clause (3). Under clause (3), a health maintenance organization may annually alternate between providing enrollees with amendments and providing current evidence of coverage. Subd. 4. Medicare information. Health maintenance organizations which issue contracts to persons who are covered by title XVIII of the Social Security Act (Medicare) must give the applicant, at the time of application, an outline containing at least the following information: (1) a description of the principal benefits and coverage provided in the contract, including a clear description of nursing home and home care benefits covered by the health maintenance organization; (2) a statement of the exceptions, reductions, and limitations contained in the contract; (3) the following language: "This contract does not cover all skilled nursing home care or home care services and does not cover custodial or residential nursing care. Read your contract carefully to determine which nursing home facilities and home care services are covered by your contract, and what procedures you must follow to receive these benefits."; (4) a statement of the renewal provisions including any reservation by the health maintenance organization of the right to change fees; (5) a statement that the outline of coverage is a summary of the contract issued or applied for and that the contract should be read to determine governing contractual provisions; and (6) a statement explaining that the enrollee's Medicare coverage is altered by enrollment with the health maintenance organization, if applicable. Subd. 5. Participating providers. Health maintenance organizations shall provide enrollees with a list of the names and locations of participating providers to whom enrollees have direct access without referral no later than the effective date of enrollment or date the evidence of coverage is issued and upon request. Health maintenance organizations need not provide the names of their employed providers. Subd. 6. List of providers; requirements. Any list of providers issued by the health maintenance organization shall include the date the list was published and contain a bold type notice in a prominent location on the list of providers with the following language, or substantially similar language approved in advance by the commissioner: "Enrolling in (name of health maintenance organization) does not guarantee services by a particular provider on this list. If you wish to be certain of receiving care from a specific provider listed, you should contact that provider to ask whether or not the provider is still a (name of health maintenance organization) provider and whether or not the provider is accepting additional patients." Subd. 7. Requests for information. Every health maintenance organization shall provide the information described in section 62D.07, subdivision 3, clauses (2) and (3), to enrollees or their representatives on request, within a reasonable time. Information on how to obtain referrals, prior authorization, or second opinion shall be given to the enrollee or an enrollee's representative in person or by telephone within one business day following the day the health maintenance organization or its representative receives the request for information. Subd. 8. Membership cards; summary of complaints. Each health maintenance organization shall issue a membership card to its enrollees. The membership card must: (1) identify the health maintenance organization; (2) include the name, address, and telephone number to call if the enrollee has a complaint; (3) include the telephone number to call or the instruction on how to receive authorization for emergency care; and (4) include one of the following: (i) the telephone number to call to appeal to or file a complaint with the commissioner of health; or (ii) for persons enrolled under section 256B.69, 256B.77, or 256L.12, the telephone number to call to file a complaint with the ombudsperson designated by the commissioner of human services under section 256B.69 or the Office of Ombudsman for Mental Health and Developmental Disabilities under section 256B.77 and the address to appeal to the commissioner of human services. The ombudsperson shall annually provide the commissioner of health with a summary of complaints and actions taken. History:  1973 c 670 s 9; 1984 c 464 s 24; 1985 c 248 s 25; 1986 c 444; 1988 c 434 s 6; 1988 c 592 s 3-5; 1997 c 205 s 8-10; 1997 c 225 art 2 s 7; 2000 c 474 s 1; 2005 c 56 s 1; 2016 c 158 art 2 s 11; 2020 c 115 art 4 s 1; 2022 c 58 s 5
62D.095 ENROLLEE COST SHARING. Subdivision 1. General application. A health maintenance contract may contain enrollee cost-sharing provisions as specified in this section. Co-payment and deductible provisions in a group contract must not discriminate on the basis of age, sex, race, disability, economic status, or length of enrollment in the health plan. During an open enrollment period in which all offered health plans fully participate without any underwriting restrictions, co-payment and deductible provisions must not discriminate on the basis of preexisting health status. Subd. 2. Co-payments. A health maintenance contract may impose a co-payment and coinsurance consistent with the provisions of the Affordable Care Act as defined under section 62A.011, subdivision 1a. Subd. 3. Deductibles. A health maintenance contract may impose a deductible consistent with the provisions of the Affordable Care Act as defined under section 62A.011, subdivision 1a. Subd. 4. Annual out-of-pocket maximums. A health maintenance contract may impose an annual out-of-pocket maximum consistent with the provisions of the Affordable Care Act as defined under section 62A.011, subdivision 1a. Subd. 5. Exceptions. No co-payments or deductibles may be imposed on preventive health care services consistent with the provisions of the Affordable Care Act as defined under section 62A.011, subdivision 1a. Subd. 6. Public programs. This section does not apply to the prepaid medical assistance program, the MinnesotaCare program, the federal Medicare program, or the health plans provided through any of those programs. History:  2002 c 387 s 3; 1Sp2003 c 14 art 7 s 8,9; 2013 c 84 art 1 s 35
62D.10 PROVISIONS APPLICABLE TO ALL HEALTH PLANS. Subdivision 1. Applicability. The provisions of this section shall be applicable to nonprofit prepaid health care plans regulated under chapter 317A, and health maintenance organizations regulated pursuant to sections 62D.01 to 62D.30, both of which for purposes of this section shall be known as "health plans." Subd. 2.  [Repealed, 1984 c 464 s 46] Subd. 3. Open enrollment. A health plan providing health maintenance services or reimbursement for health care costs to a specified group or groups may limit the open enrollment in each group plan to members of such group or groups, but after it has been in operation 24 months shall have an annual open enrollment period of at least 14 days during which it shall accept all otherwise eligible individuals in the order in which they apply for enrollment in a manner which does not discriminate on the basis of age, sex, race, health, or economic status. The health maintenance organization shall notify potential enrollees of any limitations on the number of new enrollees to be accepted. "Specified groups" may include, but shall not be limited to: (1) employees of one or more specified employers; (2) members of one or more specified labor unions; (3) members of one or more specified associations; (4) patients of physicians providing services through a health care plan who had previously provided services outside the health care plan; and (5) members of an existing group insurance policy. Subd. 4. Waivers. A health plan may apply to the commissioner of health for a waiver of the requirements of this section or for authorization to impose such underwriting restrictions upon open enrollment as are necessary (1) to preserve its financial stability, (2) to prevent excessive adverse selection by prospective enrollees, or (3) to avoid unreasonably high or unmarketable charges for enrollee coverage for health care services. The commissioner of health upon a showing of good cause, shall approve or upon failure to show good cause shall deny such application within 30 days of the receipt thereof from the health plan. The commissioner of health may, in accordance with chapter 14, promulgate rules to implement this section. Subd. 5. Application fee. Any fee charged by a health maintenance organization for the process of determining an applicant's eligibility, and any other application fee charged, shall be refunded with interest to the applicant if the applicant is not accepted for enrollment in the health maintenance organization, or credited with interest to the applicant's premiums due if the applicant is accepted for enrollment in the organization. Subd. 6. Statement of risk sharing. Health maintenance organization contracts under section 62D.04, subdivision 1, shall include a clear statement of the risk sharing arrangement. History:  1973 c 670 s 10; 1974 c 284 s 3,4; 1977 c 305 s 45; 1977 c 409 s 3; 1982 c 424 s 130; 1984 c 464 s 25,26; 1987 c 130 s 3; 1987 c 384 art 2 s 1; 1989 c 304 s 137
62D.101 CONTINUATION AND CONVERSION PRIVILEGES FOR FORMER SPOUSES AND CHILDREN. Subdivision 1. Termination of coverage. No health maintenance contract which, in addition to covering an enrollee, also covers the enrollee's spouse shall contain a provision for termination of coverage for a spouse covered under the health maintenance contract solely as a result of a break in the marital relationship. Subd. 2. Conversion privilege. Every health maintenance contract, as described in subdivision 1 shall contain a provision allowing a former spouse and dependent children of an enrollee, without providing evidence of insurability, to obtain from the health maintenance organization at the expiration of any continuation of coverage required under subdivision 2a or sections 62A.146 and 62D.105, an individual health maintenance contract providing at least the minimum benefits of a qualified plan as prescribed by section 62E.06 and the option of a number three qualified plan, a number two qualified plan, a number one qualified plan as provided by section 62E.06, subdivisions 1 to 3, provided application is made to the health maintenance organization within 30 days following notice of the expiration of the continued coverage and upon payment of the appropriate fee. A contract providing reduced benefits at a reduced fee may be accepted by the former spouse and dependent children in lieu of the optional coverage otherwise required by this subdivision. The individual health maintenance contract shall be renewable at the option of the former spouse as long as the former spouse is not covered under another qualified plan as defined in section 62E.02, subdivision 4. Any revisions in the table of rate for the individual contract shall apply to the former spouse's original age at entry and shall apply equally to all similar contracts issued by the health maintenance organization. Subd. 2a. Continuation privilege. Every health maintenance contract as described in subdivision 1 shall contain a provision which permits continuation of coverage under the contract for the enrollee's former spouse and children upon entry of a valid decree of dissolution of marriage. The coverage shall be continued until the earlier of the following dates: (1) the date the enrollee's former spouse becomes covered under another group plan or Medicare; or (2) the date coverage would otherwise terminate under the health maintenance contract. If coverage is provided under a group policy, any required premium contributions for the coverage shall be paid by the enrollee on a monthly basis to the group contract holder to be paid to the health maintenance organization. The contract must require the group contract holder to, upon request, provide the enrollee 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 fee charged exceed 102 percent of the cost to the plan for the period of coverage for other similarly situated spouses and dependent children when the marital relationship has not dissolved, regardless of whether the cost is paid by the employer or employee. Subd. 3. Application. Subdivision 1 applies to every health maintenance contract which is delivered, issued for delivery, renewed or amended on or after July 19, 1977. Subdivisions 2 and 2a apply to every health maintenance contract which is delivered, issued for delivery, renewed, or amended on or after March 1, 1983. History:  1977 c 186 s 3; 1982 c 555 s 10; 1982 c 642 s 16; 1984 c 464 s 27,28; 1988 c 434 s 7; 1990 c 403 s 10; 1992 c 564 art 4 s 10
62D.102 FAMILY THERAPY. Covered treatment for a minor includes treatment for the family if family therapy is recommended by a health maintenance organization provider. 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. For a health maintenance contract that is offered as a companion to a health insurance subscriber contract, the benefits for mental or nervous disorders must be calculated in aggregate for the health maintenance contract and the health insurance subscriber contract. History:  1984 c 641 s 3; 1987 c 337 s 65; 1988 c 689 art 2 s 12; 1997 c 205 s 11
62D.103 SECOND OPINION RELATED TO SUBSTANCE USE DISORDER AND MENTAL HEALTH. A health maintenance organization shall promptly evaluate the treatment needs of any enrollee who is seeking treatment for a problem related to substance use disorder or mental health conditions. In the event that the health maintenance organization or a participating provider determines that no type of structured treatment is necessary, the enrollee shall be immediately entitled to a second opinion paid for by the health maintenance organization, by a health care professional qualified in diagnosis and treatment of the problem and not affiliated with the health maintenance organization. The health maintenance organization or participating provider shall consider the second opinion but is not obligated to accept the conclusion of the second opinion. The health maintenance organization or participating provider shall document its consideration of the second opinion. History:  1984 c 641 s 4; 2022 c 98 art 4 s 51
62D.104 REQUIRED OUT-OF-AREA CONVERSION. Enrollees who have individual health maintenance organization contracts and who have become nonresidents of the health maintenance organization's service area but remain residents of the state of Minnesota shall be given the option, to be arranged by the health maintenance organization if an agreement with an insurer can reasonably be made, of a number three qualified plan, a number two qualified plan, or a number one qualified plan as provided by section 62E.06, subdivisions 1 to 3, or, if such enrollees are covered by title XVIII of the Social Security Act (Medicare), they shall be given the option of a Medicare supplement plan as provided by chapter 62A. This option shall be made available at the enrollee's expense, without further evidence of insurability and without interruption of coverage. If a health maintenance organization cannot make arrangements for conversion coverage, the health maintenance organization shall notify enrollees of health plans available in other service areas. History:  1988 c 434 s 8; 1989 c 258 s 9
62D.105 COVERAGE OF CURRENT SPOUSE, FORMER SPOUSE, AND CHILDREN. Subdivision 1. Requirement. Every health maintenance contract, which in addition to covering the enrollee also provides coverage to the spouse, dependent children, which is defined as required by section 62A.302, and former spouse who was covered on the day before the entry of a valid decree of dissolution of marriage, of the enrollee shall: (1) permit the spouse, former spouse, and dependent children to elect to continue coverage when the enrollee becomes enrolled for benefits under title XVIII of the Social Security Act (Medicare); and (2) permit the dependent children to continue coverage when they cease to be dependent children under the generally applicable requirement of the plan. Subd. 2. Continuation privilege. The coverage described in subdivision 1 may be continued until the earlier of the following dates: (1) the date coverage would otherwise terminate under the contract; (2) 36 months after continuation by the spouse, former spouse, or dependent was elected; or (3) the date the spouse, former spouse, or dependent children become covered under another group health plan or Medicare. If coverage is provided under a group policy, any required fees for the coverage shall be paid by the enrollee on a monthly basis to the group contract holder for remittance to the health maintenance organization. In no event shall the fee charged exceed 102 percent of the cost to the plan for such coverage for other similarly situated spouse and dependent children to whom subdivision 1 is not applicable, without regard to whether such cost is paid by the employer or employee. History:  1988 c 434 s 9; 1Sp2017 c 6 art 5 s 4
62D.107 EQUAL ACCESS TO ACUPUNCTURE SERVICES. Subdivision 1. Coverage. All benefits provided by a health maintenance contract relating to expenses incurred for acupuncture services that are provided by a physician must also include acupuncture treatment and services of a licensed acupuncture practitioner to the extent that the acupuncture services and treatment are within the scope of acupuncture practitioner licensure. This subdivision ensures equal access to benefits for enrollees who choose to directly obtain treatment for illness and injury from a licensed acupuncture practitioner, as long as the treatment falls within the scope of practice of the licensed acupuncture practitioner. This subdivision is not intended to change or add to the benefits provided for in these policies or contracts. Subd. 2. Denial of benefits. (a) In the payment of claims for enrollees in this state, no health maintenance organization may deny payment for acupuncture services covered by an enrollee's health maintenance contract if the services are lawfully performed by a licensed acupuncture practitioner. (b) When a health maintenance organization makes a denial of payment claim determination concerning the appropriateness, quality, or utilization of acupuncture services for enrollees in this state performed by a licensed acupuncture practitioner, the determination must be made by, under the direction of, or subject to the review of a licensed acupuncture practitioner. History:   2009 c 45 s 3 
62D.109 SERVICES ASSOCIATED WITH CLINICAL TRIALS. A health maintenance organization must inform an enrollee who is a participant in a clinical trial upon inquiry by the enrollee that coverage shall be provided as required under the enrollee's health maintenance contract or under state or federal rule or statute. History:  1Sp2001 c 9 art 16 s 2; 2002 c 379 art 1 s 113
62D.11 COMPLAINT SYSTEM. Subdivision 1. Enrollee complaint system. Every health maintenance organization shall establish and maintain a complaint system, as required under sections 62Q.68 to 62Q.72 to provide reasonable procedures for the resolution of written complaints initiated by or on behalf of enrollees concerning the provision of health care services. Subd. 1a. Service coverage. Where a complaint involves a dispute about a health maintenance organization's coverage of a service, the commissioner may review the complaint and any information and testimony necessary in order to make a determination and order the appropriate remedy pursuant to sections 62D.15 to 62D.17. Subd. 1b.  [Repealed, 1999 c 239 s 43 para (a)] Subd. 2.  [Repealed, 1999 c 239 s 43 para (a)] Subd. 3. Denial of coverage. Within a reasonable time after receiving an enrollee's written or oral communication to the health maintenance organization concerning a denial of coverage or inadequacy of services, the health maintenance organization shall provide the enrollee with a written statement of the reason for the denial of coverage, and a statement approved by the commissioner of health which explains the health maintenance organization complaint procedures, and in the case of Medicare enrollees, which also explains Medicare appeal procedures. Subd. 4.  [Repealed, 1997 c 205 s 40] History:  1973 c 670 s 11; 1974 c 284 s 5; 1977 c 305 s 45; 1986 c 444; 1988 c 434 s 10; 1988 c 592 s 6,7; 1990 c 538 s 22-24; 1995 c 234 art 2 s 1; 1997 c 205 s 12-14; 1998 c 407 art 2 s 2; 1999 c 239 s 1
62D.115 QUALITY OF CARE COMPLAINTS. Subdivision 1. Quality of care complaint. For purposes of this section, "quality of care complaint" means an expressed dissatisfaction regarding health care services resulting in potential or actual harm to an enrollee. Quality of care complaints may include the following, to the extent that they affect the clinical quality of health care services rendered: access; provider and staff competence; clinical appropriateness of care; communications; behavior; facility and environmental considerations; and other factors that could impact the quality of health care services. Subd. 2. Quality of care complaint investigation. (a) Each health maintenance organization shall develop and implement a quality of care complaint investigation process that meets the requirements of this section. The process must include a written policy and procedures for the receipt, investigation, and follow-up of quality of care complaints, that includes the requirements in paragraphs (b) to (h). (b) A health maintenance organization's definition for quality of care complaints must include the concerns identified in subdivision 1. (c) A health maintenance organization must include a description of each quality of care complaint level of severity, including: (1) classification of complaints that warrant peer protection confidentiality as defined by the commissioner in paragraph (h); and (2) investigation procedures for each level of severity. (d) Any complaint with an allegation regarding quality of care or service must be investigated by the health maintenance organization. Documentation must show that each allegation has been addressed. (e) Conclusions of each investigation must be supported with evidence that may include an associated corrective action plan implemented and documented and a formal response from a provider to the health maintenance organization if a formal response was submitted to the health maintenance organization. The record of investigation must include all related documents, correspondence, summaries, discussions, consultation, and conferences held. (f) A medical director review shall be conducted as part of the investigation process when there is potential for patient harm. (g) Each quality of care complaint received by a health maintenance organization must be tracked and trended for review by the health maintenance organization according to provider type and the following type of quality of care issue: behavior, facility, environmental, or technical competence. (h) The commissioner, in consultation with interested stakeholders, shall define complaints that are subject to peer protection confidentiality in accordance with state and federal law by January 1, 2018. Subd. 3. Complaint reporting. Each health maintenance organization shall submit to the commissioner, as part of the company's annual filing, data on the number of complaints and the category as defined by the commissioner as required under section 62D.08, subdivision 3, clause (f). Subd. 4. Records. Each health maintenance organization shall maintain records of all quality of care complaints and their resolution and retain those records for five years. Notwithstanding section 145.64, information provided to the commissioner according to this subdivision is classified as confidential data on individuals or protected nonpublic data as defined in section 13.02, subdivision 3 or 13. Subd. 5. Exception. This section does not apply to quality of care complaints received by a health maintenance organization from an enrollee who is covered under a public health care program administered by the commissioner of human services under chapter 256B or 256L. History:   2016 c 189 art 20 s 4 
62D.12 PROHIBITED PRACTICES. Subdivision 1. False representations. No health maintenance organization or representative thereof may cause or knowingly permit the use of advertising or solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive. Each health maintenance organization shall be subject to sections 72A.17 to 72A.32, relating to the regulation of trade practices, except (a) to the extent that the nature of a health maintenance organization renders such sections clearly inappropriate and (b) that enforcement shall be by the commissioner of health and not by the commissioner of commerce. Every health maintenance organization shall be subject to sections 8.31 and 325F.69. Subd. 1a. Swing-out products. Notwithstanding subdivision 1, nothing in sections 62A.049, 62A.60, and 72A.201, subdivision 4a, applies to a commercial health policy issued under this chapter as a companion to a health maintenance contract. Subd. 2. Coverage cancellation; nonrenewal. No health maintenance organization may cancel or fail to renew the coverage of an enrollee except for (1) failure to pay the charge for health care coverage; (2) termination of the health care plan; (3) termination of the group plan; (4) enrollee moving out of the area served, subject to section 62A.17, subdivisions 1 and 6, and section 62D.104; (5) enrollee moving out of an eligible group, subject to section 62A.17, subdivisions 1 and 6, and section 62D.104; (6) failure to make co-payments required by the health care plan; (7) fraud or misrepresentation by the enrollee with respect to eligibility for coverage or any other material fact; or (8) other reasons established in rules promulgated by the commissioner of health. Subd. 2a. Cancellation or nonrenewal notice. Enrollees shall be given 30 days' notice of any cancellation or nonrenewal, except that enrollees who are eligible to receive replacement coverage under section 62D.121, subdivision 1, shall receive 90 days' notice as provided under section 62D.121, subdivision 5. Subd. 3. Use of terms. No health maintenance organization may use in its name, contracts, or literature any of the words "insurance," "casualty," "surety," "mutual," or any other words which are descriptive of the insurance, casualty or surety business or deceptively similar to the name or description of any insurance or surety corporation doing business in this state; provided, however, that when a health maintenance organization has contracted with an insurance company for any coverage permitted by sections 62D.01 to 62D.30, it may so state. Subd. 4. Enrollee reimbursement. No health maintenance contract or evidence of coverage shall provide for the reimbursement of an enrollee other than through a policy of insurance, except as stated in this subdivision: (1) the health maintenance organization may refund payments made by or on behalf of an enrollee; (2) the health maintenance organization may make direct payments to enrollees or providers for obligations incurred for nonelective emergency or out-of-area services received. Subd. 5. Recourse limited. The providers under agreement with a health maintenance organization to provide health care services shall not have recourse against enrollees or persons acting on their behalf for amounts above those specified in the evidence of coverage as co-payments for health care services. The health maintenance organization shall not have recourse against enrollees or persons acting on their behalf for amounts above those specified in the evidence of coverage as the periodic prepayment, or co-payment, for health care services. This subdivision applies but is not limited to the following events: (1) nonpayment by the health maintenance organization; (2) insolvency of the health maintenance organization; and (3) breach of the agreement between the health maintenance organization and the provider. This subdivision does not limit a provider's ability to seek payment from any person other than the enrollee, the enrollee's guardian or conservator, the enrollee's immediate family members, or the enrollee's legal representative in the event of nonpayment by the health maintenance organization. Subd. 6. Nondiscriminatory rates. The rates charged by health maintenance organizations and their representatives shall not discriminate except in accordance with accepted actuarial principles. Subd. 7.  [Repealed, 1984 c 464 s 46] Subd. 8. Nondiscriminatory enrollment. No health maintenance organization shall discriminate in enrollment policy against any person solely by virtue of status as a recipient of medical assistance or Medicare. Subd. 8a. Net earnings. All net earnings of a nonprofit health maintenance organization must be devoted to the nonprofit purposes of the health maintenance organization in providing comprehensive health care. A nonprofit health maintenance organization must not provide for the payment, whether directly or indirectly, of any part of its net earnings to any person for a purpose other than providing comprehensive health care, except that the health maintenance organization may make payments to providers or other persons based on the efficient provision of services or as incentives to provide quality care. The commissioner of health shall, pursuant to this chapter, revoke the certificate of authority of any nonprofit health maintenance organization in violation of this subdivision. Subd. 9.  [Repealed, 2017 c 2 art 2 s 19] Subd. 9a. Authorized expenses. Authorized expenses of a health maintenance organization shall include: (1) cash rebates to enrollees, or to persons who have made payments on behalf of enrollees; (2) direct payments to enrollees or providers as provided in subdivision 4, clause (2); (3) free or reduced cost health service to enrollees; (4) payments to any organization or organizations selected by the health maintenance organization which are operated for charitable, educational, or religious or scientific purposes. Subd. 9b. Hospital risk agreement. A health maintenance organization shall not enter into an agreement with a hospital in which the hospital agrees to assume the financial risk for services provided by other facilities or providers not owned, operated, or otherwise subject to the control of the hospital assuming the financial risk. Subd. 10. Offsetting. No health maintenance contract or evidence of coverage entered into, issued, amended, renewed or delivered on or after January 1, 1976 shall contain any provision offsetting, or in any other manner reducing, any benefit to an enrollee or other beneficiary by the amount of, or in any proportion to, any increase in disability benefits received or receivable under the federal Social Security Act, as amended subsequent to the date of commencement of such benefit, the Railroad Retirement Act, any Veteran's Disability Compensation and Survivor Benefits Act, workers' compensation, or any similar federal or state law, as amended subsequent to the date of commencement of that benefit. Subd. 11. Dental service rates. Any health maintenance organization which includes coverage of comprehensive dental services in its comprehensive health maintenance services shall not include the charge for the dental services in the same rate as the charge for other comprehensive health maintenance services. The rates for dental services shall be computed, stated and bid separately. No employer shall be required to purchase dental services in combination with other comprehensive health services. An employer may purchase dental services separately. Subd. 12.  [Repealed, 1996 c 310 s 1] Subd. 13. Refusal based on workers' compensation. No health maintenance organization offering an individual or group health maintenance contract shall refuse to provide or renew the coverage because the applicant or enrollee has an option to elect workers' compensation coverage pursuant to section 176.041. Subd. 14. Telephone number. Each health maintenance organization shall establish a telephone number, which need not be toll free, that providers may call with questions about coverage, prior authorization, and approval of medical services. The telephone number must be staffed by an employee of the health maintenance organization during normal working hours during the normal work week. After normal working hours, the telephone number must be equipped with an answering machine and recorded message to allow the caller an opportunity to leave a message. The health maintenance organization must respond to questions within 24 hours after they are received, excluding weekends and holidays. At the request of a provider, the health maintenance organization shall provide a copy of the health maintenance contract for enrollees in the provider's service area. Subd. 15. Retaliatory action prohibited. No health maintenance organization may take retaliatory action against a provider solely on the grounds that the provider disseminated accurate information regarding coverage of benefits or accurate benefit limitations of an enrollee's contract or accurate interpreted provisions of the provider agreement that limit the prescribing, providing, or ordering of care. Subd. 16.  [Repealed, 1990 c 538 s 32] Subd. 17. Disclosure of commissions. Any person receiving commissions for the sale of coverage or enrollment in a health plan, as defined in section 62A.011, offered by a health maintenance organization shall, before selling coverage or enrollment, disclose in writing to the prospective purchaser the amount of any commission or other compensation the person will receive as a direct result of the sale. The disclosure may be expressed in dollars or as a percentage of the premium. The amount disclosed need not include any anticipated renewal commissions. Subd. 18. Special reinstatement privilege. No health maintenance organization shall fail to comply with the special reinstatement privilege provided under section 62A.04, subdivision 2, clause (4), for the Medicare-related coverage referred to in that clause. Subd. 19. Coverage of service. A health maintenance organization may not deny or limit coverage of a service which the enrollee has already received solely on the basis of lack of prior authorization or second opinion, to the extent that the service would otherwise have been covered under the member's contract by the health maintenance organization had prior authorization or second opinion been obtained. History:  1973 c 670 s 12; 1974 c 284 s 8,9; 1975 c 323 s 4; 1976 c 296 art 1 s 18; 1977 c 305 s 45; 1980 c 614 s 74; 1983 c 289 s 114 subd 1; 1984 c 464 s 30-36; 1984 c 641 s 5; 1984 c 655 art 1 s 92; 1985 c 248 s 70; 1987 c 384 art 2 s 1; 1988 c 434 s 11,12; 1988 c 592 s 8,9; 1988 c 612 s 19,20; 1989 c 330 s 23; 1993 c 345 art 5 s 6; 1994 c 485 s 65; 1994 c 625 art 10 s 13; 1995 c 75 s 2; 1996 c 305 art 1 s 20; 1997 c 205 s 15; 1999 c 177 s 43; 1Sp2019 c 9 art 8 s 3
62D.121 REQUIRED REPLACEMENT COVERAGE. Subdivision 1. Replacement coverage. When membership of an enrollee who has individual health coverage is terminated by the health maintenance organization for a reason other than (a) failure to pay the charge for health care coverage; (b) failure to make co-payments required by the health care plan; (c) enrollee moving out of the area served; or (d) a materially false statement or misrepresentation by the enrollee in the application for membership, the health maintenance organization must offer or arrange to offer replacement coverage, without evidence of insurability, without preexisting condition exclusions, and without interruption of coverage. Subd. 2. Health maintenance organization coverage required. If the health maintenance organization has terminated individuals from coverage in a service area, the replacement coverage shall be health maintenance organization coverage issued by the health maintenance organization terminating coverage unless the health maintenance organization can demonstrate to the commissioner that offering health maintenance organization replacement coverage would not be feasible. In making the determination, the commissioner shall consider (1) loss ratios and forecasts, (2) lack of agreements between health care providers and the health maintenance organization to offer that product, (3) evidence of anticipated premium needs compared with established rates, (4) the financial impact of the replacement coverage on the overall financial solvency of the plan, and (5) the cost to the enrollee of health maintenance organization replacement coverage as compared to cost to the enrollee of the replacement coverage required under subdivision 3. Subd. 2a. Other coverage permitted. The terminating health maintenance organization may also offer as replacement coverage health maintenance organization coverage issued by another health maintenance organization. Subd. 3. Required coverage. If health maintenance organization replacement coverage is not offered by the health maintenance organization, as explained under subdivisions 2 and 2a, the replacement coverage shall provide, for enrollees covered by title XVIII of the Social Security Act, coverage at least equivalent to a basic Medicare supplement plan as defined in section 62A.316, except that the replacement coverage shall also cover the liability for any Medicare Part A and Part B deductible as defined under title XVIII of the Social Security Act. After satisfaction of the Medicare Part B deductible, the replacement coverage shall be at least 80 percent of usual and customary eligible medical expenses and supplies not covered by Medicare Part B eligible expenses. This does not include outpatient prescription drugs. The fee or premium of the replacement coverage shall not exceed the premium charged by the state comprehensive health plan as established under section 62E.08, for a qualified Medicare supplement plan. All enrollees not covered by Medicare shall be given the option of a number three qualified plan or a number two qualified plan as defined in section 62E.06, subdivisions 1 and 2, for replacement coverage. The fee or premium for a number three qualified plan shall not exceed 125 percent of the average of rates charged by the five insurers with the largest number of individuals in a number three qualified plan of insurance in force in Minnesota. The fee or premium for a number two qualified plan shall not exceed 125 percent of the average of rates charged by the five insurers with the largest number of individuals in a number two qualified plan of insurance in force in Minnesota. Subd. 3a. Fee. If the replacement coverage is health maintenance organization coverage, as explained in subdivisions 2 and 2a, the fee shall not exceed 125 percent of the cost of the average fee charged by health maintenance organizations for a similar health plan. The commissioner of health will determine the average cost of the plan on the basis of information provided annually by the health maintenance organizations concerning the rates charged by the health maintenance organizations for the plans offered. Fees or premiums charged under this section must be actuarially justified. Subd. 4. Approval required. The commissioner will approve or disapprove the replacement coverage within 30 days. A health maintenance organization shall not give enrollees a notice of cancellation of coverage until a replacement policy has been filed with the commissioner and approved or disapproved. Subd. 5. Notice of cancellation. The health maintenance organization must provide the terminated enrollees with a notice of cancellation 90 days before the date the cancellation takes effect. If the replacement coverage is approved by the commissioner under subdivision 4, the notice shall clearly and completely describe the replacement coverage that the enrollees are eligible to receive and explain the procedure for enrolling. If the replacement coverage is not approved by the commissioner, the health maintenance organization shall provide a cancellation notice with information that the enrollee is entitled to enroll in the state comprehensive health insurance plan with a waiver of the waiting period for preexisting conditions under section 62E.14, subdivisions 1, paragraph (d), and 6. Subd. 6. Notice exception. The commissioner may waive the notice required in this section if the commissioner determines that the health maintenance organization has not received information regarding Medicare reimbursement rates from the Centers for Medicare and Medicaid Services before September 1 for contracts renewing on January 1 of the next year. In no event shall enrollees covered by title XVIII of the Social Security Act receive less than 60 days' notice of contract termination. Subd. 7. Geographic accessibility. If the commissioner determines that there are not enough providers to assure that enrollees have accessible health services available in a geographic service area, the commissioner shall institute a plan of corrective action that shall be followed by the health maintenance organization. Such a plan may include but not be limited to requiring the health maintenance organization to make payments to nonparticipating providers for health services for enrollees, requiring the health maintenance organization to discontinue accepting new enrollees in that service area, and requiring the health maintenance organization to reduce its geographic service area. If a nonparticipating provider has been a participating provider with the health maintenance organization within the last year, any payments made under this section must not exceed the payment level of the previous contract unless the commissioner determines that without adjusting payments the health maintenance organization will be unable to meet the health care needs of enrollees in the area. History:  1988 c 434 s 13; 1989 c 258 s 10; 1990 c 538 s 25,26; 2002 c 277 s 32
62D.123 PROVIDER CONTRACTS. Subdivision 1. Provider agreement. Except for an employment agreement between a provider and health maintenance organization, an agreement to provide health care services between a provider and a health maintenance organization entered into or renewed after April 25, 1988, must contain the following provision: PROVIDER AGREES NOT TO BILL, CHARGE, COLLECT A DEPOSIT FROM, SEEK REMUNERATION FROM, OR HAVE ANY RECOURSE AGAINST AN ENROLLEE OR PERSONS ACTING ON THEIR BEHALF FOR SERVICES PROVIDED UNDER THIS AGREEMENT. THIS PROVISION APPLIES TO BUT IS NOT LIMITED TO THE FOLLOWING EVENTS: (1) NONPAYMENT BY THE HEALTH MAINTENANCE ORGANIZATION OR (2) BREACH OF THIS AGREEMENT. THIS PROVISION DOES NOT PROHIBIT THE PROVIDER FROM COLLECTING CO-PAYMENTS OR FEES FOR UNCOVERED SERVICES. THIS PROVISION SURVIVES THE TERMINATION OF THIS AGREEMENT FOR AUTHORIZED SERVICES PROVIDED BEFORE THIS AGREEMENT TERMINATES, REGARDLESS OF THE REASON FOR TERMINATION. THIS PROVISION IS FOR THE BENEFIT OF THE HEALTH MAINTENANCE ORGANIZATION ENROLLEES. THIS PROVISION DOES NOT APPLY TO SERVICES PROVIDED AFTER THIS AGREEMENT TERMINATES. THIS PROVISION SUPERSEDES ANY CONTRARY ORAL OR WRITTEN AGREEMENT EXISTING NOW OR ENTERED INTO IN THE FUTURE BETWEEN THE PROVIDER AND THE ENROLLEE OR PERSONS ACTING ON THEIR BEHALF REGARDING LIABILITY FOR PAYMENT FOR SERVICES PROVIDED UNDER THIS AGREEMENT. Subd. 2. Cooperation required. An agreement to provide health care services between a provider and a health maintenance organization must require the provider to cooperate with and participate in the health maintenance organization's quality assurance program, dispute resolution procedure, and utilization review program. Subd. 3. Notice of termination. An agreement to provide health care services between a provider and a health maintenance organization must require that if the provider terminates the agreement, without cause, the provider shall give the organization 120 days' advance notice of termination. Subd. 4. Late payments. If a health maintenance organization's payments to a provider are delayed beyond the payment date in the contract, the provider may notify the commissioner who shall consider that information in assessing the financial solvency of the health maintenance organization. History:   1988 c 612 s 21 
62D.124 GEOGRAPHIC ACCESSIBILITY. Subdivision 1. Primary care; mental health services; general hospital services. Within the health maintenance organization's service area, the maximum travel distance or time shall be the lesser of 30 miles or 30 minutes to the nearest provider of each of the following services: primary care services, mental health services, and general hospital services. The health maintenance organization must designate which method is used. Subd. 2. Other health services. Within a health maintenance organization's service area, the maximum travel distance or time shall be the lesser of 60 miles or 60 minutes to the nearest provider of specialty physician services, ancillary services, specialized hospital services, and all other health services not listed in subdivision 1. The health maintenance organization must designate which method is used. Subd. 3. Waiver. (a) A health maintenance organization may apply to the commissioner of health for a waiver of the requirements in subdivision 1 or 2 if it is unable to meet those requirements. A waiver application must be submitted on a form provided by the commissioner, must be accompanied by an application fee of $500 per county per year, for each application to waive the requirements in subdivision 1 or 2 for one or more provider types in that county, and must: (1) demonstrate with specific data that the requirements of subdivision 1 or 2 are not feasible in a particular service area or part of a service area; and (2) include specific information as to the steps that were and will be taken to address network inadequacy, and, for steps that will be taken prospectively to address network inadequacy, the time frame within which those steps will be taken. (b) Using the guidelines and standards established under section 62K.10, subdivision 5, paragraph (b), the commissioner shall review each waiver request and shall approve a waiver only if: (1) the standards for approval established by the commissioner are satisfied; and (2) the steps that were and will be taken to address the network inadequacy and the time frame for implementing these steps satisfy the standards established by the commissioner. (c) If, in its waiver application, a health maintenance organization demonstrates to the commissioner that there are no providers of a specific type or specialty in a county, the commissioner may approve a waiver in which the health maintenance organization is allowed to address network inadequacy in that county by providing for patient access to providers of that type or specialty via telehealth, as defined in section 62A.673, subdivision 2. (d) A waiver shall automatically expire after three years. Upon or prior to expiration of a waiver, a health maintenance organization unable to meet the requirements in subdivision 1 or 2 must submit a new waiver application under paragraph (a) and must also submit evidence of steps the organization took to address the network inadequacy. When the commissioner reviews a waiver application for a network adequacy requirement which has been waived for the organization for the most recent three-year period, the commissioner shall also examine the steps the organization took during that three-year period to address network inadequacy, and shall only approve a subsequent waiver application if it satisfies the requirements in paragraph (b), demonstrates that the organization took the steps it proposed to address network inadequacy, and explains why the organization continues to be unable to satisfy the requirements in subdivision 1 or 2. (e) Application fees collected under this subdivision shall be deposited in the state government special revenue fund in the state treasury. Subd. 4. Application. (a) Subdivisions 1 and 2 do not apply if an enrollee is referred to a referral center for health care services. (b) Subdivision 1 does not apply: (1) if an enrollee has chosen a health plan with full knowledge that the health plan has no participating providers within 30 miles or 30 minutes of the enrollee's place of residence; or (2) to service areas approved before May 24, 1993. (c) Beginning for coverage effective on or after January 1, 2015, subdivisions 1 to 4 shall only apply to individual or small group health plans that are grandfathered plans, as defined under section 62A.011, subdivision 1c. Subd. 5. Provider networks. The commissioner of health, the commissioner of commerce, and the commissioner of human services shall merge reporting requirements for health maintenance organizations and county-based purchasing plans related to Minnesota Department of Health oversight of network adequacy under this section and the provider network list reported to the Department of Human Services under Minnesota Rules, part 4685.2100. The commissioners shall work with health maintenance organizations and county-based purchasing plans to ensure that the report merger is done in a manner that simplifies health maintenance organization and county-based purchasing plan reporting processes. Subd. 6. Provider network notifications. A health maintenance organization must provide on the organization's website the provider network for each product offered by the organization, and must update the organization's website at least once a month with any changes to the organization's provider network, including provider changes from in-network status to out-of-network status. A health maintenance organization must also provide on the organization's website, for each product offered by the organization, a list of the current waivers of the requirements in subdivision 1 or 2, in a format that is easily accessed and searchable by enrollees and prospective enrollees. History:  1999 c 239 s 2; 2012 c 247 art 1 s 27; 2013 c 84 art 2 s 1; 1Sp2019 c 9 art 8 s 4,5; 1Sp2021 c 7 art 6 s 28
62D.13 POWERS OF INSURERS AND NONPROFIT HEALTH SERVICE PLANS. Notwithstanding any law to the contrary, an insurer or a hospital or medical service plan corporation may contract with a health maintenance organization to provide insurance or similar protection against the cost of care provided through health maintenance organizations and to provide coverage in the event of the failure of the health maintenance organization to meet its obligations. The enrollees of a health maintenance organization constitute a permissible group for group coverage under the insurance laws and the Nonprofit Health Service Plan Corporations Act. Under such contracts, the insurer or nonprofit health service plan corporation may make benefit payments to health maintenance organizations for health care services rendered, or to be rendered, by providers pursuant to the health care plan. Any insurer, or nonprofit health service plan corporation, licensed to do business in this state, is authorized to provide the types of coverages described in section 62D.05, subdivision 3. History:   1973 c 670 s 13 
62D.14 EXAMINATIONS. Subdivision 1. Examination authority. The commissioner of health may make an examination of the affairs of any health maintenance organization and its contracts, agreements, or other arrangements with any participating entity as often as the commissioner of health deems necessary for the protection of the interests of the people of this state, but not less frequently than once every three years. Examinations of participating entities pursuant to this subdivision shall be limited to their dealings with the health maintenance organization and its enrollees, except that examinations of major participating entities may include inspection of the entity's financial statements kept in the ordinary course of business. The commissioner may require major participating entities to submit the financial statements directly to the commissioner. Financial statements of major participating entities are subject to the provisions of section 13.37, subdivision 1, clause (b), upon request of the major participating entity or the health maintenance organization with which it contracts. Subd. 2. Notice of examination. The commissioner will notify the organization and any involved participating entity in writing when an examination has been initiated. The commissioner will include in this notice a full statement of the pertinent facts and of the matters being examined, and may include a statement that the organization or participating entity must submit to the commissioner within 30 days from the date of the notice a complete written report concerning those matters. Subd. 3. Commissioner's authority. In order to accomplish the duties under this section with respect to the dealings of the participating entities with the health maintenance organization, the commissioner of health shall have the right to: (1) inspect or otherwise evaluate the quality, appropriateness, and timeliness of services performed; (2) audit and inspect any books and records of a health maintenance organization and a participating entity which pertain to services performed and determinations of amounts payable under such contract; (3) require persons or organizations under examination to be deposed and to answer interrogatories, regardless of whether an administrative hearing or other civil proceeding has been or will be initiated; and (4) employ site visits, public hearings, or any other procedures considered appropriate to obtain the information necessary to determine the issues. Subd. 4.  [Repealed, 2000 c 468 s 33] Subd. 4a. Classification of data. Any data or information obtained by the commissioner under this section or section 62D.145 shall be classified as private data on individuals as defined in chapter 13. Such data shall be protected and may be released consistent with the provisions of section 60A.03, subdivision 9. Subd. 5. Oaths; witnesses; subpoenas. The commissioner of health shall have the power to administer oaths to and examine witnesses, and to issue subpoenas. Subd. 6. Examination expenses. Reasonable expenses of examinations under this section shall be assessed by the commissioner of health against the organization being examined, and shall be remitted to the commissioner of health for deposit in the general fund of the state treasury. Subd. 7. Penalty. Failure to provide relevant information necessary for conducting examinations pursuant to this section shall be subject to the levy of a fine up to $200 for each day the information is not provided. A fine levied under this subdivision shall be subject to the contested case and judicial review provisions of chapter 14. In the event a timely request for review is made, accrual of a fine levied shall be stayed pending completion of the contested case and judicial review proceeding. History:  1973 c 670 s 14; 1977 c 305 s 45; 1984 c 464 s 37; 1986 c 444; 1987 c 384 art 2 s 1; 1988 c 612 s 22; 2000 c 468 s 18
62D.145 DISCLOSURE OF INFORMATION HELD BY HEALTH MAINTENANCE ORGANIZATIONS. Subdivision 1. Personal and privileged information. The ability of a health maintenance organization to disclose personal information, as defined in section 72A.491, subdivision 17, and privileged information, as defined in section 72A.491, subdivision 19, is governed by sections 72A.497, 72A.499, and 72A.502. Subd. 2. Health data or information. (a) A health maintenance organization is prohibited from disclosing to any person any individually identifiable data or information held by the health maintenance organization pertaining to the diagnosis, treatment, or health of any enrollee, or any application obtained from any person, except: (1) to the extent necessary to carry out the purposes of this chapter, the commissioner and a designee shall have access to the above data or information but the data removed from the health maintenance organization or participating entity shall not identify any particular patient or client by name or contain any other unique personal identifier; (2) upon the express consent of the enrollee or applicant; (3) pursuant to statute or court order for the production of evidence or the discovery thereof; (4) in the event of claim or litigation between the person and the provider or health maintenance organization wherein such data or information is pertinent; (5) to meet the requirements of contracts for prepaid medical services with the commissioner of human services authorized under chapter 256B, 256D, or 256L; (6) to meet the requirements of contracts for benefit plans with the commissioner of management and budget under chapter 43A; or (7) as otherwise authorized pursuant to statute. No provision in a contract for a benefit plan under chapter 43A shall authorize dissemination of individually identifiable health records, unless the dissemination of the health records is required to carry out the requirements of the contract and employees whose health records will be disseminated are fully informed of the dissemination by the Department of Management and Budget at the time the employees are enrolling for or changing insurance coverage. (b) In any case involving a suspected violation of a law applicable to health maintenance organizations in which access to health data maintained by the health maintenance organization or participating entity is necessary, the commissioner and agents, while maintaining the privacy rights of individuals and families, shall be permitted to obtain data that identifies any particular patient or client by name. A health maintenance organization shall be entitled to claim any statutory privileges against such disclosure which the provider who furnished the information to the health maintenance organization is entitled to claim. History:  2000 c 468 s 19; 2008 c 204 s 42; 2009 c 101 art 2 s 109
62D.15 SUSPENSION OR REVOCATION OF CERTIFICATE OF AUTHORITY. Subdivision 1. Grounds for suspension or revocation. The commissioner of health may suspend or revoke any certificate of authority issued to a health maintenance organization under sections 62D.01 to 62D.30 if the commissioner finds that: (1) the health maintenance organization is operating significantly in contravention of its basic organizational document, its health maintenance contract, or in a manner contrary to that described in and reasonably inferred from any other information submitted under section 62D.03, unless amendments to such submissions have been filed with and approved by the commissioner of health; (2) the health maintenance organization issues evidences of coverage which do not comply with the requirements of section 62D.07; (3) the health maintenance organization is unable to fulfill its obligations to furnish comprehensive health maintenance services as required under its health maintenance contract; (4) the health maintenance organization is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees; (5) the health maintenance organization has failed to implement a mechanism affording the enrollees an opportunity to participate in matters of policy and operation under section 62D.06; (6) the health maintenance organization has failed to implement the complaint system required by section 62D.11 in a manner designed to reasonably resolve valid complaints; (7) the health maintenance organization, or any person acting with its sanction, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner; (8) the continued operation of the health maintenance organization would be hazardous to its enrollees; or (9) the health maintenance organization has otherwise failed to substantially comply with sections 62D.01 to 62D.30 or with any other statute or administrative rule applicable to health maintenance organizations, or has submitted false information in any report required hereunder. Subd. 2. Procedure. A certificate of authority shall be suspended or revoked only after compliance with the requirements of section 62D.16. Subd. 3. Restrictions during suspension. When the certificate of authority of a health maintenance organization is suspended, the health maintenance organization shall not, during the period of such suspension, enroll any additional enrollees except newborn children or other newly acquired dependents of existing enrollees, and shall not engage in any advertising or solicitation whatsoever. Subd. 4. Restrictions upon revocation. When the certificate of authority of a health maintenance organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. It shall engage in no further advertising or solicitation whatsoever. The commissioner of health may, by written order, permit further operation of the organization as the commissioner may find to be in the best interest of enrollees, to the end that enrollees will be afforded the greatest practical opportunity to obtain continuing health care coverage. History:  1973 c 670 s 15; 1977 c 305 s 45; 1984 c 464 s 38; 1986 c 444; 1987 c 384 art 2 s 1
62D.16 DENIAL, SUSPENSION, AND REVOCATION; ADMINISTRATIVE PROCEDURES. Subdivision 1. Notice and hearing. When the commissioner of health has cause to believe that grounds for the denial, suspension or revocation of a certificate of authority exists, the commissioner shall notify the health maintenance organization in writing specifically stating the grounds for denial, suspension or revocation and fixing a time of at least 20 days thereafter for a hearing on the matter, except in summary proceedings as provided in section 62D.18. Subd. 2. Written findings. After such hearing, or upon the failure of the health maintenance organization to appear at the hearing, the commissioner of health shall take action as is deemed advisable and shall issue written findings which shall be mailed to the health maintenance organization. The action of the commissioner of health shall be subject to judicial review pursuant to chapter 14. History:  1973 c 670 s 16; 1977 c 305 s 45; 1982 c 424 s 130; 1986 c 444
62D.17 PENALTIES AND ENFORCEMENT. Subdivision 1. Administrative penalty. The commissioner of health may, for any violation of statute or rule applicable to a health maintenance organization, or in lieu of suspension or revocation of a certificate of authority under section 62D.15, levy an administrative penalty in an amount up to $25,000 for each violation. In the case of contracts or agreements made pursuant to section 62D.05, subdivisions 2 to 4, each contract or agreement entered into or implemented in a manner which violates sections 62D.01 to 62D.30 shall be considered a separate violation. In determining the level of an administrative penalty, the commissioner shall consider the following factors: (1) the number of enrollees affected by the violation; (2) the effect of the violation on enrollees' health and access to health services; (3) if only one enrollee is affected, the effect of the violation on that enrollee's health; (4) whether the violation is an isolated incident or part of a pattern of violations; and (5) the economic benefits derived by the health maintenance organization or a participating provider by virtue of the violation. Reasonable notice in writing to the health maintenance organization shall be given of the intent to levy the penalty and the reasons therefor, and the health maintenance organization may have 15 days within which to file a written request for an administrative hearing and review of the commissioner of health's determination. Such administrative hearing shall be subject to judicial review pursuant to chapter 14. If an administrative penalty is levied, the commissioner must divide 50 percent of the amount among any enrollees affected by the violation, unless the commissioner certifies in writing that the division and distribution to enrollees would be too administratively complex or that the number of enrollees affected by the penalty would result in a distribution of less than $50 per enrollee. Subd. 2. Criminal penalty. Any person who violates sections 62D.01 to 62D.30 or knowingly submits false information in any report required hereunder shall be guilty of a misdemeanor. Subd. 3. Alternative proceedings. (a) If the commissioner of health shall, for any reason, have cause to believe that any violation of sections 62D.01 to 62D.30 has occurred or is threatened, the commissioner of health may, before commencing action under sections 62D.15 and 62D.16, and subdivision 1, give notice to the health maintenance organization and to the representatives, or other persons who appear to be involved in such suspected violation, to arrange a voluntary conference with the alleged violators or their authorized representatives for the purpose of attempting to ascertain the facts relating to such suspected violation and, in the event it appears that any violation has occurred or is threatened, to arrive at an adequate and effective means of correcting or preventing such violation. (b) Proceedings under this subdivision shall not be governed by any formal procedural requirements, and may be conducted in such manner as the commissioner of health may deem appropriate under the circumstances. Subd. 4. Cease and desist order; hearing; stay. (a) The commissioner of health may issue an order directing a health maintenance organization or a representative of a health maintenance organization to cease and desist from engaging in any act or practice in violation of the provisions of sections 62D.01 to 62D.30. (1) The cease and desist order may direct a health maintenance organization to pay for or provide a service when that service is required by statute or rule to be provided. (2) The commissioner may issue a cease and desist order directing a health maintenance organization to pay for a service that is required by statute or rule to be provided, only if there is a demonstrable and irreparable harm to the public or an enrollee. (3) If the cease and desist order involves a dispute over the medical necessity of a procedure based on its experimental nature, the commissioner may issue a cease and desist order only if the following conditions are met: (i) the commissioner has consulted with appropriate and identified experts; (ii) the commissioner has reviewed relevant scientific and medical literature; and (iii) the commissioner has considered all other relevant factors including whether final approval of the technology or procedure has been granted by the appropriate government agency; the availability of scientific evidence concerning the effect of the technology or procedure on health outcomes; the availability of scientific evidence that the technology or procedure is as beneficial as established alternatives; and the availability of evidence of benefit or improvement without the technology or procedure. (b) Within 20 days after service of the order to cease and desist, the respondent may request a hearing on the question of whether acts or practices in violation of sections 62D.01 to 62D.30 have occurred. Such hearings shall be subject to judicial review as provided by chapter 14. If the acts or practices involve violation of the reporting requirements of section 62D.08, or if the commissioner has ordered the rehabilitation, liquidation, or conservation of the health maintenance organization in accordance with section 62D.18, the health maintenance organization may request an expedited hearing on the matter. The hearing shall be held within 15 days of the request. Within ten days thereafter, an administrative law judge shall issue a recommendation on the matter. The commissioner shall make a final determination on the matter within ten days of receipt of the administrative law judge's recommendation. When a request for a stay accompanies the hearing request, the matter shall be referred to the Office of Administrative Hearings within three working days of receipt of the request. Within ten days thereafter, an administrative law judge shall issue a recommendation to grant or deny the stay. The commissioner shall grant or deny the stay within five days of receipt of the administrative law judge's recommendation. To the extent the acts or practices alleged do not involve (1) violations of section 62D.08; (2) violations which may result in the financial insolvency of the health maintenance organization; (3) violations which threaten the life and health of enrollees; (4) violations which affect whole classes of enrollees; or (5) violations of benefits or service requirements mandated by law; if a timely request for a hearing is made, the cease and desist order shall be stayed for a period of 90 days from the date the hearing is requested or until a final determination is made on the order, whichever is earlier. During this stay, the respondent may show cause why the order should not become effective upon the expiration of the stay. Arguments on this issue shall be made through briefs filed with the administrative law judge no later than ten days prior to the expiration of the stay. Subd. 5. Injunctive relief. In the event of noncompliance with a cease and desist order issued pursuant to subdivision 4, the commissioner of health may institute a proceeding to obtain injunctive relief or other appropriate relief in Ramsey County District Court. History:  1973 c 670 s 17; 1977 c 305 s 45; 1982 c 424 s 130; 1984 c 464 s 39; 1984 c 640 s 32; 1984 c 641 s 6; 1987 c 384 art 2 s 1; 1988 c 434 s 15; 1990 c 538 s 27,28; 1Sp2001 c 9 art 16 s 3; 2002 c 379 art 1 s 113
62D.18 REHABILITATION OR LIQUIDATION OF HEALTH MAINTENANCE ORGANIZATION. Subdivision 1. Commissioner of health; order. The commissioner of health may apply by verified petition to the district court of Ramsey County or the county in which the principal office of the health maintenance organization is located for an order directing the commissioner of health to rehabilitate or liquidate a health maintenance organization. The rehabilitation or liquidation of a health maintenance organization shall be conducted under the supervision of the commissioner of health under the procedures, and with the powers granted to a rehabilitator or liquidator, in chapter 60B, except to the extent that the nature of health maintenance organizations renders the procedures or powers clearly inappropriate and as provided in this subdivision or in chapter 60B. A health maintenance organization shall be considered an insurance company for the purposes of rehabilitation or liquidation as provided in subdivisions 4, 6, and 7. For health maintenance organizations that will be liquidated on or after August 1, 2020, chapters 60B and 61B apply. Subd. 2.  [Repealed, 1990 c 538 s 32] Subd. 3.  [Repealed, 1990 c 538 s 32] Subd. 4. Powers of rehabilitator. The powers of the rehabilitator include, subject to the approval of the court the power to change premium rates, without the notice requirements of section 62D.07, and the power to amend the terms of provider contracts, and of contracts with participating entities for the provision of administrative, financial, or management services, relating to reimbursement and termination, considering the interests of providers and other contracting participating entities and the continued viability of the health plan. If the court approves a contract amendment that diminishes the compensation of a provider or of a participating entity providing administrative, financial, or management services to the health maintenance organization, the amendment may not be effective for more than 60 days and shall not be renewed or extended. Subd. 5.  [Repealed, 1990 c 538 s 32] Subd. 6. Special examiner. The commissioner as rehabilitator shall make every reasonable effort to employ a senior executive from a successful health maintenance organization to serve as special examiner to rehabilitate the health maintenance organization, provided that the individual does not have a conflict of interest. The special examiner shall have all the powers of the rehabilitator granted under this section and section 60B.17. Subd. 7. Examination account. The commissioner of health shall assess against a health maintenance organization not yet in rehabilitation or liquidation a fee sufficient to cover the costs of a special examination. The fee must be deposited in an examination account. Money in the account is appropriated to the commissioner of health to pay for the examinations. If the money in the account is insufficient to pay the initial costs of examinations, the commissioner may use other money appropriated to the commissioner, provided the other appropriation is reimbursed from the examination account when it contains sufficient money. Money from the examination account must be used to pay per diem salaries and expenses of special examiners, including meals, lodging, laundry, transportation, and mileage. The salary of regular employees of the Health Department must not be paid out of the account. History:  1973 c 670 s 18; 1977 c 305 s 45; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1988 c 612 s 23; 1990 c 538 s 29; 2020 c 80 art 2 s 33
62D.181 INSOLVENCY; MCHA ALTERNATIVE COVERAGE. Subdivision 1. Definition. "Association" means the Minnesota Comprehensive Health Association created in section 62E.10. Subd. 2. Eligible individuals. An individual is eligible for alternative coverage under this section if: (1) the individual had individual health coverage through a health maintenance organization or community integrated service network, the coverage is no longer available due to the insolvency of the health maintenance organization or community integrated service network, and the individual has not obtained alternative coverage; or (2) the individual had group health coverage through a health maintenance organization or community integrated service network, the coverage is no longer available due to the insolvency of the health maintenance organization or community integrated service network, and the individual has not obtained alternative coverage. Subd. 3. Application and issuance. If a health maintenance organization or community integrated service network will be liquidated, individuals eligible for alternative coverage under subdivision 2 may apply to the association to obtain alternative coverage. Upon receiving an application and evidence that the applicant was enrolled in the health maintenance organization or community integrated service network at the time of an order for liquidation, the association shall issue policies to eligible individuals, without the limitation on preexisting conditions described in section 62E.14, subdivision 3. Subd. 4. Coverage. Alternative coverage issued under this section must be at least a number two qualified plan, as described in section 62E.06, subdivision 2, or for individuals over age 65, a basic Medicare supplement plan, as described in section 62A.316. Subd. 5. Premium. The premium for alternative coverage issued under this section must not exceed 80 percent of the premium for the comparable coverage offered by the association. Subd. 6. Duration. The duration of alternative coverage issued under this section is: (1) for individuals eligible under subdivision 2, clause (1), 90 days; and (2) for individuals eligible under subdivision 2, clause (2), 90 days or the length of time remaining in the group contract with the insolvent health maintenance organization or community integrated service network, whichever is greater. Subd. 7. Replacement coverage; limitations. The association is not obligated to offer replacement coverage under this chapter at the end of the periods specified in subdivision 6. Any continuation obligation arising under this chapter or chapter 62A will cease at the end of the periods specified in subdivision 6. Subd. 8. Claims expenses exceeding premiums. Claims expenses resulting from the operation of this section which exceed premiums received shall be borne by contributing members of the association in accordance with section 62E.11, subdivision 5. Subd. 9. Coordination of policies. If an insolvent health maintenance organization or community integrated service network has insolvency insurance coverage at the time of an order for liquidation, the association may coordinate the benefits of the policy issued under this section with those of the insolvency insurance policy available to the enrollees. The premium level for the combined association policy and the insolvency insurance policy may not exceed those described in subdivision 5. History:  1988 c 612 s 24; 1989 c 258 s 11; 1995 c 234 art 1 s 6-9; 1997 c 225 art 2 s 62; 2013 c 84 art 1 s 36
62D.182 LIABILITIES. Every health maintenance organization shall maintain liabilities estimated in the aggregate to be sufficient to pay all reported or unreported claims incurred that are unpaid and for which the organization is liable. Liabilities are computed under rules adopted by the commissioner. History:   1988 c 612 s 25 
62D.19 UNREASONABLE EXPENSES. No health maintenance organization shall incur or pay for any expense of any nature which is unreasonably high in relation to the value of the service or goods provided. The commissioner of health shall implement and enforce this section by rules adopted under this section. In an effort to achieve the stated purposes of sections 62D.01 to 62D.30 and to ensure that the payment of health maintenance organization money to major participating entities results in a corresponding benefit to the health maintenance organization and its enrollees, when determining whether an organization has incurred an unreasonable expense in relation to a major participating entity, due consideration shall be given to, in addition to any other appropriate factors, whether the officers and trustees of the health maintenance organization have acted with good faith and in the best interests of the health maintenance organization in entering into, and performing under, a contract under which the health maintenance organization has incurred an expense. The commissioner has standing to sue, on behalf of a health maintenance organization, officers or trustees of the health maintenance organization who have breached their fiduciary duty in entering into and performing such contracts. History:  1973 c 670 s 19; 1983 c 289 s 114 subd 1; 1984 c 464 s 41; 1984 c 655 art 1 s 92; 1Sp1985 c 10 s 62; 1987 c 384 art 2 s 1; 1988 c 612 s 26; 2017 c 2 art 2 s 8
62D.20 RULES. Subdivision 1. Rulemaking. The commissioner of health may, pursuant to chapter 14, promulgate such reasonable rules as are necessary or proper to carry out the provisions of sections 62D.01 to 62D.30. Included among such rules shall be those which provide minimum requirements for the provision of comprehensive health maintenance services, as defined in section 62D.02, subdivision 7, and reasonable exclusions therefrom. Nothing in such rules shall force or require a health maintenance organization to provide elective, induced abortions, except as medically necessary to prevent the death of the mother, whether performed in a hospital, other abortion facility, or the office of a physician; the rules shall provide every health maintenance organization the option of excluding or including elective, induced abortions, except as medically necessary to prevent the death of the mother, as part of its comprehensive health maintenance services. Subd. 2. Prior authorization. The commissioner shall adopt rules that address the issue of appropriate prior authorization requirements, considering enrollee needs, administrative concerns, and the nature of the benefit. History:  1973 c 670 s 20; 1977 c 305 s 45; 1981 c 122 s 2; 1982 c 424 s 130; 1985 c 248 s 70; 1987 c 384 art 2 s 1; 1988 c 434 s 16; 1988 c 592 s 10; 1997 c 205 s 16
62D.21 FEES. Every health maintenance organization subject to sections 62D.01 to 62D.30 shall pay to the commissioner of health fees as prescribed by the commissioner of health pursuant to section 144.122 for the following: (1) filing an application for a certificate of authority; (2) filing an amendment to a certificate of authority; (3) filing each annual report; and (4) other filings, as specified by rule. History:  1973 c 670 s 21; 1975 c 310 s 1; 1977 c 305 s 45; 1985 c 248 s 70; 1987 c 384 art 2 s 1
62D.211 RENEWAL FEE. Each health maintenance organization subject to sections 62D.01 to 62D.30 shall submit to the commissioner of health each year before June 15 a certificate of authority renewal fee in the amount of $10,000 each plus 20 cents per person enrolled in the health maintenance organization on December 31 of the preceding year. The commissioner may adjust the renewal fee in rule under the provisions of chapter 14. History:  1987 c 384 art 2 s 1; 1987 c 403 art 2 s 2; 1990 c 538 s 30
62D.22 STATUTORY CONSTRUCTION AND RELATIONSHIP TO OTHER LAWS. Subdivision 1. Applicability. Except as otherwise provided herein, sections 62D.01 to 62D.30 do not apply to an insurer or nonprofit health service plan corporation licensed and regulated pursuant to the laws governing such corporations in this state. Subd. 2. Solicitation of enrollees. Solicitation of enrollees by a health maintenance organization granted a certificate of authority, or its representatives, shall not be construed to violate any provision of law relating to solicitation or advertising by health professionals. Subd. 3. Not practicing a healing art. Any health maintenance organization authorized under sections 62D.01 to 62D.30 shall not be deemed to be practicing a healing art. Subd. 4. Federal law. To the extent that it furthers the purposes of sections 62D.01 to 62D.30, the commissioner of health shall attempt to coordinate the operations of sections 62D.01 to 62D.30 relating to the quality of health care services with the operations of United States Code, title 42, sections 1320c to 1320c-20. Subd. 5. Other state law. Except as otherwise provided in sections 62A.01 to 62A.42 and 62D.01 to 62D.30, and except as they eliminate elective, induced abortions, wherever performed, from health or maternity benefits, provisions of the insurance laws and provisions of nonprofit health service plan corporation laws shall not be applicable to any health maintenance organization granted a certificate of authority under sections 62D.01 to 62D.30. Subd. 6.  [Repealed, 1982 c 614 s 12] Subd. 7. Prepaid group practice plan. A licensed health maintenance organization shall be deemed to be a prepaid group practice plan for the purposes of chapter 43A and may be allowed to participate as a carrier for state employees subject to any collective bargaining agreement entered into pursuant to chapter 179A and reasonable restrictions applied pursuant to section 43A.23. Subd. 8. Insurance agents. All agents, solicitors, and brokers engaged in soliciting or dealing with enrollees or prospective enrollees of a health maintenance organization, whether employees or under contract to the health maintenance organization, shall be subject to the provisions of sections 60K.30 to 60K.56, concerning the licensure of insurance producers and lawful rules thereunder. Medical doctors and others who merely explain the operation of health maintenance organizations shall be exempt from the provisions of sections 60K.30 to 60K.56. Section 60K.37, subdivision 1, shall not apply except as to provide for an examination of an applicant in the applicant's knowledge concerning the operations and benefits of health maintenance organizations and related insurance matters. Subd. 9.  [Repealed, 1984 c 464 s 46] Subd. 10. Access to data. Any person or committee conducting a review of a health maintenance organization or a participating entity, pursuant to sections 62D.01 to 62D.30, shall have access to any data or information necessary to conduct the review. All data or information is subject to admission into evidence in any civil action initiated by the commissioner of health against the health maintenance organization. The data and information are subject to chapter 13. History:  1973 c 670 s 22; 1974 c 284 s 6; 1977 c 305 s 45; 1979 c 332 art 1 s 57; 1980 c 617 s 18; 1981 c 122 s 3; 1981 c 210 s 54; 1Sp1981 c 4 art 1 s 50; 1984 c 464 s 42,43; 1985 c 248 s 70; 1Sp1985 c 17 s 10; 1986 c 444; 1Sp1986 c 3 art 1 s 8; 1987 c 384 art 2 s 1; 1992 c 564 art 3 s 23; 2001 c 117 art 2 s 9
62D.23 FILINGS AND REPORTS AS PUBLIC DOCUMENTS. All applications, filings, and reports required under sections 62D.01 to 62D.30 shall be treated as public documents. History:  1973 c 670 s 23; 1987 c 384 art 2 s 1
62D.24 COMMISSIONER OF HEALTH'S AUTHORITY TO CONTRACT. The commissioner of health, in carrying out the obligations under sections 62D.01 to 62D.30, may contract with the commissioner of commerce or other qualified persons to make recommendations concerning the determinations required to be made. Such recommendations may be accepted in full or in part by the commissioner of health. History:  1973 c 670 s 24; 1977 c 305 s 45; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 384 art 2 s 1
62D.30 DEMONSTRATION PROJECTS. Subdivision 1. Projects allowed. The commissioner of health may establish demonstration projects to allow health maintenance organizations to extend coverage to: (1) 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.; (2) groups of fewer than 50 employees where each group is covered by a single group health policy; (3) individuals who are not eligible for enrollment in any group health maintenance contracts; and (4) low income population groups. For purposes of this section, the commissioner of health may waive compliance with minimum benefits pursuant to sections 62A.151 and 62D.02, subdivision 7, full financial risk pursuant to section 62D.04, subdivision 1, clause (f), open enrollment pursuant to section 62D.10, and to applicable rules if there is reasonable evidence that the rules prohibit the operation of the demonstration project. The commissioner shall provide for public comment before any statute or rule is waived. Subd. 2. Minimum health benefits required. 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 health maintenance organization presents evidence satisfactory to the commissioner that the inclusion of the benefit would restrict the operation of the demonstration project. Subd. 3. Application. A health maintenance organization 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 enrollee; (3) reference to the sections of Minnesota Statutes and Department of Health rules for which waiver is requested; (4) evidence that application of the requirements of applicable Minnesota Statutes and Department of Health rules would, unless waived, prohibit the operation of the demonstration project; (5) evidence that another arrangement is available for assumption of full financial risk if full financial risk is waived under subdivision 1; (6) an estimate of the number of years needed to adequately demonstrate the project's effects; and (7) other information the commissioner may reasonably require. Subd. 4. Consideration of application. The commissioner shall approve, deny, or refer back to the health maintenance organization for modification, the application for a demonstration project within 60 days of receipt from the health maintenance organization. Subd. 5. Term of project. The commissioner may approve an application for a demonstration project for a maximum of six years, with an option to renew. Subd. 6. Annual report. Each health maintenance organization 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 required by section 62D.08. The report shall be on a form developed by the commissioner and shall be separate from the annual report required by section 62D.08. Subd. 7. Approval rescission. The commissioner may rescind approval of a demonstration project if the commissioner makes any of the findings listed in section 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. Subd. 8. Rural demonstration project. (a) The commissioner may permit demonstration projects to allow health maintenance organizations to extend coverage to a health improvement and purchasing coalition located in rural Minnesota, comprised of the health maintenance organization and members from a geographic area. For purposes of this subdivision, rural is defined as greater Minnesota excluding the seven-county metropolitan area of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. The coalition must be designed in such a way that members will: (1) become better informed about health care trends and cost increases; (2) be actively engaged in the design of health benefit options that will meet the needs of their community; (3) pool their insurance risk; (4) purchase these products from the health maintenance organization involved in the demonstration project; and (5) actively participate in health improvement decisions for their community. (b) The commissioner must consider the following when approving applications for rural demonstration projects: (1) the extent of consumer involvement in development of the project; (2) the degree to which the project is likely to reduce the number of uninsured or to maintain existing coverage; and (3) a plan to evaluate and report to the commissioner and legislature as prescribed by paragraph (e). (c) For purposes of this subdivision, the commissioner must waive compliance with the following statutes and rules: the cost-sharing restrictions under section 62D.095, subdivisions 2, 3, and 4, and Minnesota Rules, part 4685.0801, subparts 1 to 7; for a period of at least two years, participation in government programs under section 62D.04, subdivision 5, in the counties of the demonstration project if that compliance would have been required solely due to participation in the demonstration project and shall continue to waive this requirement beyond two years if the enrollment in the demonstration project is less than 10,000 enrollees; small employer marketing under section 62L.05, subdivisions 1 to 3; and small employer geographic premium variations under section 62L.08, subdivision 4. The commissioner shall approve enrollee cost-sharing features desired by the coalition that appropriately share costs between employers, individuals, and the health maintenance organization. (d) The health maintenance organization may make the starting date of the project contingent upon a minimum number of enrollees as cited in the application, provide for an initial term of contract with the purchasers of a minimum of three years, and impose a reasonable penalty for employers who withdraw early from the project. For purposes of this subdivision, loss ratios are to be determined as if the policies issued under this section are considered individual or small employer policies pursuant to section 62A.021, subdivision 1, paragraph (f). The health maintenance organization may consider businesses of one to be a small employer under section 62L.02, subdivision 26. The health maintenance organization may limit enrollment and establish enrollment criteria for businesses of one. Health improvement and purchasing coalitions under this subdivision are not associations under section 62L.045, subdivision 1, paragraph (a). (e) The health improvement and purchasing coalition must report to the commissioner and legislature annually on the progress of the demonstration project and, to the extent possible, any significant findings in the criteria listed in clauses (1), (2), and (3) for the final report. The coalition must submit a final report five years from the starting date of the project. The final report must detail significant findings from the project and must include, to the extent available, but should not be limited to, information on the following: (1) the extent to which the project had an impact on the number of uninsured in the project area; (2) the effect on health coverage premiums for groups in the project's geographic area, including those purchasing health coverage outside the health improvement and purchasing coalition; and (3) the degree to which health care consumers were involved in the development and implementation of the demonstration project. (f) The commissioner must limit the number of demonstration projects under this subdivision to five projects. (g) Approval of the application for the demonstration project is deemed to be in compliance with section 62E.06, subdivisions 1, paragraph (a), 2, and 3. (h) Subdivisions 2 to 7 apply to demonstration projects under this subdivision. Waivers permitted under subdivision 1 do not apply to demonstration projects under this subdivision. (i) If a demonstration project under this subdivision works in conjunction with a purchasing alliance formed under chapter 62T, that chapter will apply to the purchasing alliance except to the extent that chapter 62T is inconsistent with this subdivision. History:  1979 c 268 s 1; 2002 c 346 s 1; 2002 c 387 s 4; 2006 c 212 art 3 s 3
62E.01 CITATION. Sections 62E.01 to 62E.17 may be cited as the "Minnesota Comprehensive Health Insurance Act of 1976." History:   1976 c 296 art 1 s 1 
62E.02 DEFINITIONS. Subdivision 1. Application. For the purposes of sections 62E.01 to 62E.19, the terms and phrases defined in this section have the meanings given them. Subd. 2. Employer. "Employer" means any person, partnership, association, trust, estate or corporation, including the state of Minnesota or any agency, instrumentality or governmental subdivision thereof, which employs ten or more individuals who are residents of this state. Subd. 2a. Essential health benefits. "Essential health benefits" has the meaning given under section 62Q.81, subdivision 4. Subd. 3. Health maintenance organization. "Health maintenance organization" means a corporation licensed and operated as provided in chapter 62D. Subd. 4. Qualified plan. "Qualified plan" means those health benefit plans which have been certified by the commissioner as providing the minimum benefits required by section 62E.06 or the actuarial equivalent of those benefits. Subd. 5. Qualified Medicare supplement plan. "Qualified Medicare supplement plan" means those health benefit plans which have been certified by the commissioner as providing the minimum benefits required by section 62E.07. Subd. 6. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 7.  [Repealed, 2013 c 84 art 1 s 94] Subd. 8. Employee. "Employee" means any Minnesota resident who has entered into the employment of or works under contract or service or apprenticeship with any employer. "Employee" does not include a person who has been employed for less than 30 days by that person's present employer, nor one who is employed less than 30 hours per week by that person's present employer, nor an independent contractor. Subd. 9. Plan of health coverage. "Plan of health coverage" means any plan or combination of plans of coverage, including combinations of self insurance, individual accident and health insurance policies, group accident and health insurance policies, coverage under a nonprofit health service plan, or coverage under a health maintenance organization subscriber contract. Subd. 10. Insurer. "Insurer" means those companies operating pursuant to chapter 62A or 62C and offering, selling, issuing, or renewing policies or contracts of accident and health insurance. "Insurer" does not include health maintenance organizations or community integrated service networks. Subd. 11. Accident and health insurance policy or policy. "Accident and health insurance policy" or "policy" means insurance or nonprofit health service plan contracts providing benefits for hospital, surgical and medical care. "Policy" does not include coverage which is (1) limited to disability or income protection coverage, (2) automobile medical payment coverage, (3) supplemental to liability insurance, (4) designed solely to provide payments on a per diem, fixed indemnity or nonexpense incurred basis, (5) credit accident and health insurance issued pursuant to chapter 62B, (6) designed solely to provide dental or vision care, (7) blanket accident and sickness insurance as defined in section 62A.11, or (8) accident only coverage issued by licensed and tested insurance agents or solicitors which provides reasonable benefits in relation to the cost of covered services. The provisions of clause (4) shall not apply to hospital indemnity coverage which is sold by an insurer to an applicant who is not then currently covered by a qualified plan. Subd. 12. Health benefits. "Health benefits" means benefits offered to employees on an indemnity or prepaid basis which pay the costs of or provide medical, surgical or hospital care. Subd. 13. Eligible person. (a) "Eligible person" means an individual who: (1) is currently and has been a resident of Minnesota for the six months immediately preceding the date of receipt by the association or its writing carrier of a completed certificate of eligibility; (2) meets the enrollment requirements of section 62E.14; and (3) is not otherwise ineligible under this subdivision. For purposes of eligibility under section 62E.14, subdivision 4c, paragraph (b), this definition is modified as provided in that paragraph. (b) No individual is eligible for coverage under a qualified or a Medicare supplement plan issued by the association for whom a premium is paid or reimbursed by the medical assistance program as of the first day of any term for which a premium amount is paid or reimbursed. Subd. 14. Minnesota Comprehensive Health Association or association. "Minnesota Comprehensive Health Association" or "association" means the association created by section 62E.10. Subd. 15. Medicare. "Medicare" means the Health Insurance for the Aged Act, title XVIII of the Social Security Amendments of 1965, United States Code, title 42, sections 1395 to 1395hhh, as amended, or title I, part I, of Public Law 89-97, as amended. Subd. 16. Medicare supplement plan. "Medicare supplement plan" means any plan of insurance protection which provides benefits for the costs of medical, surgical or hospital care and which is marketed as providing benefits which complement or supplement the benefits provided by Medicare. Subd. 17. State plan premium. "State plan premium" means the premium determined pursuant to section 62E.08. Subd. 18. Writing carrier. "Writing carrier" means the insurer or insurers, health maintenance organization or organizations, community integrated service network or networks, or other entity selected by the association and approved by the commissioner to administer the comprehensive health insurance plan. Subd. 19. Fraternal benefit society or fraternal. "Fraternal benefit society" or "fraternal" means a corporation, society, order, or voluntary association without capital stock which sells health and accident insurance in accordance with chapter 64B. Subd. 20. Comprehensive health insurance plan or state plan. "Comprehensive health insurance plan" or "state plan" means policies of insurance and contracts of health maintenance organization or community integrated service network coverage offered by the association through the writing carrier. Subd. 21. Self-insurer. "Self-insurer" means an employer or an employee welfare benefit fund or plan which directly or indirectly provides a plan of health coverage to its employees and administers the plan of health coverage itself or through an insurer, trust or agent except to the extent of accident and health insurance premium, subscriber contract charges or health maintenance organization contract charges. "Self-insurer" does not include an employer engaged in the business of providing health care services to the public which provides health care services directly to its employees at no charge to them. Subd. 22. Self-insurance. "Self-insurance" means a plan of health coverage offered by a self-insurer. Subd. 23. Contributing member. "Contributing member" means those companies regulated under chapter 62A and offering, selling, issuing, or renewing policies or contracts of accident and health insurance; health maintenance organizations regulated under chapter 62D; nonprofit health service plan corporations regulated under chapter 62C; community integrated service networks regulated under chapter 62N; fraternal benefit societies regulated under chapter 64B; the Minnesota employees insurance program established in section 43A.317, effective July 1, 1993; and joint self-insurance plans regulated under chapter 62H. For the purposes of determining liability of contributing members pursuant to section 62E.11 payments received from or on behalf of Minnesota residents for coverage by a health maintenance organization or community integrated service network shall be considered to be accident and health insurance premiums. History:  1976 c 296 art 1 s 2; 1977 c 409 s 4-7; 1979 c 272 s 1,2; 1981 c 318 s 13; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c 49 s 41; 1986 c 444; 1987 c 268 art 2 s 17; 1987 c 384 art 2 s 1; art 3 s 47; 1988 c 612 s 27; 1992 c 549 art 3 s 13; 1992 c 564 art 1 s 34,54; 1994 c 625 art 8 s 7-10; art 10 s 50; 1995 c 258 s 40; 1997 c 175 art 1 s 1; 1997 c 225 art 2 s 62; art 6 s 1,2; 1999 c 177 s 44; 1999 c 245 art 10 s 10; 2007 c 147 art 12 s 2; 2010 c 384 s 21; 2013 c 84 art 1 s 37; 2016 c 158 art 2 s 12; 2017 c 2 art 2 s 9
62E.04 DUTIES OF INSURERS. Subdivision 1. Individual policies. For each type of qualified plan described in section 62E.06, an insurer or fraternal issuing individual policies of accident and health insurance in this state, other than group conversion policies, shall develop and file with the commissioner an individual policy which meets the minimum standards of that type of qualified plan. An insurer or fraternal issuing individual policies of accident and health insurance in this state shall offer each type of qualified plan to each person who applies and is eligible for accident and health insurance from that insurer or fraternal. Subd. 2. Medicare supplement plan. An insurer or fraternal issuing Medicare supplement plans in this state shall develop and file with the commissioner a Medicare supplement policy which meets the minimum standards of a qualified Medicare supplement plan. An insurer or fraternal issuing Medicare supplement plans in this state shall offer a qualified medicare supplement plan to each person who is eligible for coverage and who applies for a Medicare supplement plan. Subd. 3. Group policies. For each type of qualified plan described in section 62E.06, an insurer or fraternal issuing group policies of accident and health insurance in this state shall develop and file with the commissioner a group policy which provides for each member of the group the minimum benefits required by that type of qualified plan. An insurer or fraternal issuing group policies of accident and health insurance in this state shall offer each type of qualified plan to each eligible applicant for group accident and health insurance. 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 co-payment authorized by the commissioner, and shall not contain a lifetime maximum on essential health benefits. 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. Subd. 5. Effect of noncompliance. No policy of accident and health insurance may be issued or renewed in this state 180 days after July 1, 1976 by an insurer or a fraternal which has not complied with the requirements of this section. Subd. 6. Reinsurance allowed. An insurer or fraternal may fulfill its obligations under this section by issuing the required coverages in their own name and reinsuring the risk and administration of the coverages with the association in accordance with section 62E.10, subdivision 7, clauses (e) and (f). Subd. 7. Underwriting standards may apply. Nothing in this section shall require an insurer or fraternal to offer or issue a policy to any person who does not meet the underwriting or membership requirements of the insurer or fraternal. Subd. 8. Reduction of benefits because of other services. No policy of accident and health insurance shall contain any provision denying or reducing benefits because services are rendered to an insured or dependent who is eligible for or receiving benefits pursuant to chapters 256B and 256D, or sections 252.27; 260B.331, subdivision 2; 260C.331, subdivision 2; 393.07, subdivision 1 or 2. Subd. 9.  [Repealed, 1995 c 207 art 10 s 25] Subd. 10.  [Repealed, 1995 c 207 art 10 s 25] Subd. 11. Affordable Care Act compliant plans. For any policy of accident and health insurance subject to the requirements of the Affordable Care Act, as defined under section 62A.011, subdivision 1a, that is offered, sold, issued, or renewed on or after January 1, 2018, the requirements of this section do not apply. History:  1976 c 296 art 1 s 4; 1977 c 409 s 9,10; 1979 c 174 s 3; 1979 c 272 s 4; 1988 c 689 art 2 s 14,15; 1988 c 704 s 1; 1996 c 305 art 1 s 21; 1999 c 139 art 4 s 2; 2000 c 483 s 14; 2001 c 215 s 18; 2013 c 84 art 1 s 38,39; 1Sp2017 c 6 art 5 s 5
62E.05 INFORMATION ON QUALIFIED PLANS. Subdivision 1. Certification. Upon application by an insurer, fraternal, or employer for certification of a plan of health coverage as a qualified plan or a qualified Medicare supplement plan for the purposes of sections 62E.01 to 62E.19, the commissioner shall make a determination within 90 days as to whether the plan is qualified. All plans of health coverage, except Medicare supplement policies, shall be labeled as "qualified" or "nonqualified" on the front of the policy or contract, or on the schedule page. All qualified plans shall indicate whether they are number one, two, or three coverage plans. For any policy of accident and health insurance subject to the requirements of the Affordable Care Act, as defined under section 62A.011, subdivision 1a, that is offered, sold, issued, or renewed on or after January 1, 2018, the requirements of this section do not apply. Subd. 2. Annual report. The state of Minnesota or any of its departments, agencies, programs, instrumentalities, or political subdivisions, shall report in writing to the association and to the commissioner of commerce no later than September 15 of each year regarding the number of persons and the amount of premiums, deductibles, co-payments, or coinsurance that it paid for on behalf of enrollees in the Comprehensive Health Association. This report must contain only summary information and must not include any individually identifiable data. The report must cover the 12-month period ending the preceding June 30. History:  1976 c 296 art 1 s 5; 1987 c 384 art 2 s 1; 1994 c 485 s 34; 1995 c 234 art 7 s 8; 1996 c 446 art 1 s 41; 1999 c 177 s 45; 2000 c 398 s 1; 2005 c 77 s 2; 1Sp2017 c 6 art 5 s 6
62E.06 MINIMUM BENEFITS OF QUALIFIED PLAN. 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, 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 not be subject to a lifetime maximum on essential health benefits. The prohibition on lifetime maximums for essential health benefits and $3,000 limitation on total annual out-of-pocket expenses 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, advanced practice registered nurse, or physician assistant: (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, advanced practice registered nurse, or physician assistant or at the physician's, advanced practice registered nurse's, or physician assistant's direction; (3) drugs requiring a physician's, advanced practice registered nurse's, or physician assistant'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, unless coverage is required under section 62Q.675; (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, advanced practice registered nurse, or physician assistant; (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, advanced practice registered nurse, or physician assistant, 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, advanced practice registered nurse, physician assistant, 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 paragraphs (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 paragraph (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 paragraphs (a), (d), and (e), coverage for special dietary treatment for phenylketonuria when recommended by a physician, advanced practice registered nurse, or physician assistant. (g) Outpatient mental health coverage is subject to section 62A.152, subdivision 2. Subd. 2. Number two plan. A plan of health coverage shall be certified as a number two qualified plan if it meets the requirements established by subdivision 1 except that the deductible shall not exceed $500 per person. Subd. 3. Number one plan. A plan of health coverage shall be certified as a number one qualified plan if it meets the requirements established by subdivision 1 except that the deductible shall not exceed $1,000 per person. Subd. 4. Health maintenance plans. A health maintenance organization which provides the services required by chapter 62D shall be deemed to be providing a number three qualified plan. Subd. 5. Affordable Care Act compliant plans. For any policy of accident and health insurance subject to the requirements of the Affordable Care Act, as defined under section 62A.011, subdivision 1a, that is offered, sold, issued, or renewed on or after January 1, 2018, the requirements of this section do not apply. History:  1975 c 359 s 23; 1976 c 296 art 1 s 6; 1977 c 409 s 11; 1979 c 272 s 5; 1980 c 496 s 3; 1981 c 265 s 2; 1Sp1985 c 9 art 2 s 2; 1986 c 444; 1987 c 202 s 2; 1987 c 337 s 66; 1988 c 704 s 2; 1989 c 330 s 24; 2001 c 215 s 19; 1Sp2003 c 14 art 7 s 10; 2013 c 84 art 1 s 40; 1Sp2017 c 6 art 5 s 7; 2020 c 115 art 4 s 2; 2022 c 58 s 6
62E.07 QUALIFIED MEDICARE SUPPLEMENT PLAN. (a) Any plan which provides benefits may be certified as a qualified Medicare supplement plan if the plan is designed to supplement Medicare and provides coverage of 100 percent of the deductibles required under Medicare, with exclusion under paragraph (b) for any part of the Medicare Part B deductible, and 80 percent of the charges for covered services described in section 62E.06, subdivision 1, which charges are not paid by Medicare. The coverage shall include a limitation of $1,000 per person on total annual out-of-pocket expenses for the covered services. (b) Any plan sold or issued to a newly eligible individual, as defined in section 62A.3099, subdivision 18a, that provides benefits may be certified as a qualified Medicare supplemental plan if the plan is designed to supplement Medicare and provides coverage of 100 percent of the deductibles, with the exception of coverage of: (1) 100 percent or any portion of the Medicare Part B deductible; and (2) 80 percent of the charges for covered services, as provided under section 62E.06, subdivision 6, that are charges not paid by Medicare. The coverage must include a $1,000 per person limitation on total annual out-of-pocket expenses for the covered services. History:  1976 c 296 art 1 s 7; 1989 c 258 s 12; 1992 c 554 art 1 s 14; 2019 c 26 art 5 s 12,13
62E.08 STATE PLAN PREMIUM. Subdivision 1. Establishment. The association shall establish the following maximum premiums to be charged for membership in the comprehensive health insurance plan: (a) the premium for the number one qualified plan shall range from a minimum of 101 percent to a maximum of 125 percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) $1,000 annual deductible individual plans of insurance in force in Minnesota; (2) individual health maintenance organization contracts of coverage with a $1,000 annual deductible which are in force in Minnesota; and (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; (b) the premium for the number two qualified plan shall range from a minimum of 101 percent to a maximum of 125 percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) $500 annual deductible individual plans of insurance in force in Minnesota; (2) individual health maintenance organization contracts of coverage with a $500 annual deductible which are in force in Minnesota; and (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; (c) the premiums for the plans with a $2,000, $5,000, or $10,000 annual deductible shall range from a minimum of 101 percent to a maximum of 125 percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) $2,000, $5,000, or $10,000 annual deductible individual plans, respectively, in force in Minnesota; and (2) individual health maintenance organization contracts of coverage with a $2,000, $5,000, or $10,000 annual deductible, respectively, which are in force in Minnesota; or (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; (d) the premium for each type of Medicare supplement plan required to be offered by the association pursuant to section 62E.12 shall be determined by calculating and applying the weighted average of the rate increases approved for the period for which the association premiums are to be effective for the three insurers or health maintenance organizations with the most individuals enrolled in: (1) Medicare supplement plans in force in Minnesota; (2) health maintenance organization Medicare supplement contracts of coverage which are in force in Minnesota; or (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; and (e) the charge for health maintenance organization coverage shall be based on generally accepted actuarial principles. The list of insurers and health maintenance organizations whose rates are used to establish the premium for coverage offered by the association pursuant to paragraphs (a) to (d) shall be established by the commissioner on the basis of information which shall be provided to the association by all insurers and health maintenance organizations annually at the commissioner's request. This information shall include the number of individuals covered by each type of plan or contract specified in paragraphs (a) to (d) that is sold, issued, and renewed by the insurers and health maintenance organizations, including those plans or contracts available only on a renewal basis. The information shall also include the rates charged for each type of plan or contract. In establishing premiums pursuant to this section, the association shall utilize generally accepted actuarial principles, provided that the association shall not discriminate in charging premiums based upon sex. In order to compute a weighted average for each type of plan or contract specified under paragraphs (a) to (d), the association shall, using the information collected pursuant to this subdivision, list insurers and health maintenance organizations in rank order of the total number of individuals covered by each insurer or health maintenance organization. The association shall then compute a weighted average of the rates charged for coverage by all the insurers and health maintenance organizations by: (1) multiplying the numbers of individuals covered by each insurer or health maintenance organization by the rates charged for coverage; (2) separately summing both the number of individuals covered by all the insurers and health maintenance organizations and all the products computed under clause (1); and (3) dividing the total of the products computed under clause (1) by the total number of individuals covered. The association may elect to use a sample of information from the insurers and health maintenance organizations for purposes of computing a weighted average. In no case, however, may a sample used by the association to compute a weighted average include information from fewer than the two insurers or health maintenance organizations highest in rank order. (f) Notwithstanding the provisions of this section, in calculating premiums to be effective January 1, 2014, and thereafter, the association may utilize rates for individual plans of insurance, individual health maintenance organization contracts, and other individual plans of coverage that are similar to plans offered by the association based upon generally accepted actuarial principles, so long as such plans and contracts have been filed with the Department of Commerce and are reasonably anticipated to be in force and individuals are reasonably anticipated to be enrolled in them during the period for which the association premiums are to be effective, regardless of whether they are in force in Minnesota or have individuals enrolled in them at the time the association is engaged in the rate-setting process mandated by this section and section 62E.091. For purposes of determining a weighted average under paragraph (e), the association shall use generally accepted actuarial principles to project potential enrollment in plans of coverage for the period for which the association's premiums will be effective and for which no individuals have enrolled at the time the association engages in the premium setting process. Subd. 2. Self-supporting. Subject to subdivision 1, the schedule of premiums for coverage under the comprehensive health insurance plan shall be designed to be self-supporting and based on generally accepted actuarial principles. Subd. 3. Determination of rates. Premium rates under this section must be determined annually. These rates are effective July 1 of each year and must be based on a survey of approved rates of insurers and health maintenance organizations in effect, or to be in effect, on April 1 of the same calendar year. These rates may be trended to the midpoint of the period for which the premium rates will apply in order to reflect economic and inflationary changes. Notwithstanding the provisions of this subdivision, the association may set rates to be effective for the 18-month period July 1, 2012, through December 31, 2013. For calendar years beginning January 1, 2014, and thereafter, premium rates shall be determined annually and effective January 1 of each year. Premium rates shall be prospective and trended forward to the midpoint of the period for which the premium rates apply to ensure that the association's rates are based upon individual market rates for insurers and health maintenance organizations that will be in effect during the period for which the association's rates will be effective. Subd. 4. Smoker's rates. The association may establish smoker and nonsmoker premium rates that are based on generally accepted actuarial principles. History:  1976 c 296 art 1 s 8; 1977 c 409 s 12; 1979 c 272 s 6; 1983 c 123 s 1; 1991 c 165 s 2; 1993 c 324 s 1; 2000 c 398 s 2; 2003 c 109 s 2; 2012 c 170 s 1,2
62E.09 DUTIES OF COMMISSIONER. The commissioner may: (a) formulate general policies to advance the purposes of sections 62E.01 to 62E.19; (b) supervise the creation of the Minnesota Comprehensive Health Association within the limits described in section 62E.10; (c) approve the selection of the writing carrier by the association, approve the association's contract with the writing carrier, and approve the state plan coverage; (d) appoint advisory committees; (e) conduct periodic audits to assure the general accuracy of the financial data submitted by the writing carrier and the association; (f) contract with the federal government or any other unit of government to ensure coordination of the state plan with other governmental assistance programs; (g) undertake directly or through contracts with other persons studies or demonstration programs to develop awareness of the benefits of sections 62E.01 to 62E.15, so that the residents of this state may best avail themselves of the health care benefits provided by these sections; (h) contract with insurers and others for administrative services; and (i) adopt, amend, suspend and repeal rules as reasonably necessary to carry out and make effective the provisions and purposes of sections 62E.01 to 62E.19. History:  1976 c 296 art 1 s 9; 1977 c 409 s 13; 1987 c 384 art 2 s 1; 1993 c 324 s 2; 1996 c 305 art 2 s 7; 1999 c 177 s 46; 2013 c 84 art 1 s 41
62E.091 APPROVAL OF STATE PLAN PREMIUMS. The association shall submit to the commissioner any premiums it proposes to become effective for coverage under the comprehensive health insurance plan, pursuant to section 62E.08, subdivision 3. No later than 45 days before the effective date for premiums specified in section 62E.08, subdivision 3, the commissioner shall approve, modify, or reject the proposed premiums on the basis of the following criteria: (a) whether the association has complied with the provisions of section 62E.11, subdivision 11; (b) whether the association has submitted the proposed premiums in a manner which provides sufficient time for individuals covered under the comprehensive insurance plan to receive notice of any premium increase no less than 30 days prior to the effective date of the increase; (c) the degree to which the association's computations and conclusions are consistent with section 62E.08; (d) the degree to which any sample used to compute a weighted average by the association pursuant to section 62E.08 reasonably reflects circumstances projected to exist in the private marketplace for individual coverage through the use of accepted actuarial principles during the period to which the association's rates will apply; (e) the degree to which a weighted average computed pursuant to section 62E.08 that uses information pertaining to individual coverage available only on a renewal basis reflects the circumstances projected to exist through the use of accepted actuarial principles, in the private marketplace for individual coverage during the period to which the association's rates will apply; (f) a comparison of the proposed increases with increases in the cost of medical care and increases projected to occur through the use of accepted actuarial principles in the private marketplace for individual coverage during the period to which the association's rates will apply; (g) the financial consequences to enrollees of the proposed increase; (h) the actuarially projected effect of the proposed increase upon both total enrollment in, and the nature of the risks assumed by, the comprehensive health insurance plan; (i) the relative solvency of the contributing members; and (j) other factors deemed relevant by the commissioner. In no case, however, may the commissioner approve premiums for those plans of coverage described in section 62E.08, subdivision 1, paragraphs (a) to (d), that are lower than 101 percent or greater than 125 percent of the weighted averages computed by the association pursuant to section 62E.08. The commissioner shall support a decision to approve, modify, or reject any premium proposed by the association with written findings and conclusions addressing each criterion specified in this section. If the commissioner does not approve, modify, or reject the premiums proposed by the association sooner than 45 days before the effective date for premiums specified in section 62E.08, subdivision 3, the premiums proposed by the association under this section become effective. History:  1993 c 324 s 3; 2003 c 109 s 3; 2012 c 170 s 3
62E.10 COMPREHENSIVE HEALTH ASSOCIATION. Subdivision 1. Creation; tax exemption. There is established a Comprehensive Health Association to promote the public health and welfare of the state of Minnesota with membership consisting of all insurers; self-insurers; fraternals; joint self-insurance plans regulated under chapter 62H; the Minnesota employees insurance program established in section 43A.317, effective July 1, 1993; health maintenance organizations; and community integrated service networks licensed or authorized to do business in this state. The Comprehensive Health Association is exempt from the taxes imposed under chapter 297I and any other laws of this state and all property owned by the association is exempt from taxation. Subd. 2. Board of directors; organization. The board of directors of the association shall be made up of 13 members as follows: six directors selected by contributing members, subject to approval by the commissioner, one of which must be a health actuary; two directors selected by the commissioner of human services, one of whom must represent hospitals and one of whom must represent health care providers; five public directors selected by the commissioner, at least two of whom must be enrollees in the individual market and one of whom must be a licensed insurance agent. At least two of the public directors must reside outside of the seven-county metropolitan area. In determining voting rights at members' meetings, each member shall be entitled to vote in person or proxy. In approving directors of the board, the commissioner shall consider, among other things, whether all types of members are fairly represented. Directors selected by contributing members may be reimbursed from the money of the association for expenses incurred by them as directors, but shall not otherwise be compensated by the association for their services. Subd. 2a. Appeals. A person may appeal to the commissioner within 30 days after notice of an action, ruling, or decision by the board. A final action or order of the commissioner under this subdivision is subject to judicial review in the manner provided by chapter 14. In lieu of the appeal to the commissioner, a person may seek judicial review of the board's action. Subd. 3. Mandatory membership. All members shall maintain their membership in the association as a condition of doing accident and health insurance, self-insurance, health maintenance organization, or community integrated service network business in this state. The association shall submit its articles, bylaws and operating rules to the commissioner for approval; provided that the adoption and amendment of articles, bylaws and operating rules by the association and the approval by the commissioner thereof shall be exempt from the provisions of sections 14.001 to 14.69. Subd. 4. Open meetings. All meetings of the association, its board, and any committees of the association shall comply with the provisions of chapter 13D, except that during any portion of a meeting during which an enrollee's appeal of an action of the writing carrier is being heard, that portion of the meeting must be closed at the enrollee's request. Subd. 5.  [Repealed, 1979 c 272 s 11] Subd. 6. Antitrust exemption. In the performance of their duties as members of the association, the members shall be exempt from the provisions of sections 325D.49 to 325D.66. Subd. 7. General powers. The association may: (a) Exercise the powers granted to insurers under the laws of this state; (b) Sue or be sued; (c) Enter into contracts with insurers, similar associations in other states or with other persons for the performance of administrative functions including the functions provided for in clauses (e) and (f); (d) Establish administrative and accounting procedures for the operation of the association; (e) Provide for the reinsuring of risks incurred as a result of issuing the coverages required by section 62E.04 by members of the association. Each member which elects to reinsure its required risks shall determine the categories of coverage it elects to reinsure in the association. The categories of coverage are: (1) individual qualified plans, excluding group conversions; (2) group conversions; (3) group qualified plans with fewer than 50 employees or members; and (4) major medical coverage. A separate election may be made for each category of coverage. If a member elects to reinsure the risks of a category of coverage, it must reinsure the risk of the coverage of every life covered under every policy issued in that category. A member electing to reinsure risks of a category of coverage shall enter into a contract with the association establishing a reinsurance plan for the risks. This contract may include provision for the pooling of members' risks reinsured through the association and it may provide for assessment of each member reinsuring risks for losses and operating and administrative expenses incurred, or estimated to be incurred in the operation of the reinsurance plan. This reinsurance plan shall be approved by the commissioner before it is effective. Members electing to administer the risks which are reinsured in the association shall comply with the benefit determination guidelines and accounting procedures established by the association. The fee charged by the association for the reinsurance of risks shall not be less than 110 percent of the total anticipated expenses incurred by the association for the reinsurance; and (f) Provide for the administration by the association of policies which are reinsured pursuant to clause (e). Each member electing to reinsure one or more categories of coverage in the association may elect to have the association administer the categories of coverage on the member's behalf. If a member elects to have the association administer the categories of coverage, it must do so for every life covered under every policy issued in that category. The fee for the administration shall not be less than 110 percent of the total anticipated expenses incurred by the association for the administration. Subd. 8. Department of state exemption. The association is exempt from the Administrative Procedure Act but, to the extent authorized by law to adopt rules, the association may use the provisions of section 14.386, paragraph (a), clauses (1) and (3). Section 14.386, paragraph (b), does not apply to these rules. Subd. 9. Experimental delivery method. The association may petition the commissioner of commerce for a waiver to allow the experimental use of alternative means of health care delivery. The commissioner may approve the use of the alternative means the commissioner considers appropriate. The commissioner may waive any of the requirements of this chapter and chapters 60A, 62A, and 62D in granting the waiver. The commissioner may also grant to the association any additional powers as are necessary to facilitate the specific waiver, including the power to implement a provider payment schedule. Subd. 10. Cost containment goals. (a) By July 1, 2001, the association shall investigate managed care delivery systems, and if cost effective, enter into contracts with third-party entities as provided in section 62E.101. (b) By July 1, 2001, the association shall establish a system to annually identify individuals insured by the Minnesota Comprehensive Health Association who may be eligible for private health care coverage, medical assistance, state drug programs, or other state or federal programs and notify them about their eligibility for these programs. (c) The association shall endeavor to reduce health care costs using additional methods consistent with effective patient care. At a minimum, by July 1, 2001, the association shall: (1) develop a focused chronic disease management and case management program; (2) develop a comprehensive program of preventive care; and (3) implement a total drug formulary program. The association may establish an enrollee incentive based on enrollee participation in the chronic disease management and case management program developed under this section. History:  1976 c 296 art 1 s 10; 1977 c 409 s 14-16; 1979 c 272 s 7; 1981 c 253 s 23; 1982 c 424 s 130; 1Sp1985 c 10 s 63; 1987 c 337 s 67-69; 1987 c 384 art 2 s 1; 1988 c 612 s 28; 1990 c 422 s 10; 1990 c 523 s 2; 1991 c 165 s 3,4; 1991 c 264 s 1; 1992 c 549 art 3 s 14; 1992 c 554 art 1 s 15; 1992 c 564 art 1 s 35; art 4 s 11; 1993 c 324 s 4; 1994 c 426 s 12; 1994 c 625 art 8 s 11-13; art 10 s 50; 1997 c 187 art 5 s 10; 1997 c 225 art 2 s 62; 2000 c 394 art 2 s 14; 2000 c 398 s 3; 2004 c 268 s 2,3; 2008 c 344 s 13; 2013 c 84 art 1 s 42; 2017 c 13 art 1 s 1
62E.101 MANAGED CARE DELIVERY METHOD. The association may form a preferred provider network or contract with an existing provider network, health maintenance organization, or nonprofit health service plan corporation to deliver the services and benefits provided for in the plans of health coverage offered. If the association does not contract with an existing provider network, health maintenance organization, or nonprofit health service plan corporation, the association may adopt a provider payment schedule and negotiate provider payment rates subject to the approval of the commissioner. History:  1991 c 165 s 5; 2000 c 398 s 4
62E.11 OPERATION OF COMPREHENSIVE PLAN. Subdivision 1. Enrollment. Upon certification as an eligible person in the manner provided by section 62E.14, an eligible person may enroll in the comprehensive health insurance plan by payment of the state plan premium to the writing carrier. Subd. 2. Employer premium payment. Any employer which has in its employ one or more eligible persons enrolled in the comprehensive health insurance plan may make all or any portion of the state plan premium payment to the state plan directly to the writing carrier. Subd. 3. Claims payments. Not less than 85 percent of the state plan premium paid to the writing carrier shall be used to pay claims, and not more than 15 percent shall be used for the payment of agent referral fees as authorized in section 62E.15, subdivision 3 and for payment of the writing carrier's direct and indirect expenses, as specified in section 62E.13, subdivision 7. Subd. 4. Net income. Any income in excess of the costs incurred by the association in providing reinsurance or administrative services pursuant to section 62E.07, clauses (e) and (f) shall be held at interest and used by the association to offset losses due to claims expenses of the state plan or allocated to reduce state plan premiums. Subd. 5. Allocation of losses. Each contributing member of the association shall share the losses due to claims expenses of the comprehensive health insurance plan for plans issued or approved for issuance by the association, and shall share in the operating and administrative expenses incurred or estimated to be incurred by the association incident to the conduct of its affairs. Claims expenses of the state plan which exceed the premium payments allocated to the payment of benefits shall be the liability of the contributing members. Contributing members shall share in the claims expense of the state plan and operating and administrative expenses of the association in an amount equal to the ratio of the contributing member's total accident and health insurance premium, received from or on behalf of Minnesota residents as divided by the total accident and health insurance premium, received by all contributing members from or on behalf of Minnesota residents, as determined by the commissioner. Payments made by the state to a contributing member for medical assistance or MinnesotaCare services according to chapters 256 and 256B shall be excluded when determining a contributing member's total premium. Subd. 6. Member assessments. The association shall make an annual determination of each contributing member's liability, if any, and may make an annual fiscal year end assessment if necessary. The association may also, subject to the approval of the commissioner, provide for interim assessments against the contributing members whose aggregate assessments comprised a minimum of 90 percent of the most recent prior annual assessment, in the event that the association deems that methodology to be the most administratively efficient and cost-effective means of assessment, and as may be necessary to assure the financial capability of the association in meeting the incurred or estimated claims expenses of the state plan and operating and administrative expenses of the association until the association's next annual fiscal year end assessment. Payment of an assessment shall be due within 30 days of receipt by a contributing member of a written notice of a fiscal year end or interim assessment. Failure by a contributing member to tender to the association the assessment within 30 days shall be grounds for termination of the contributing member's membership. A contributing member which ceases to do accident and health insurance business within the state shall remain liable for assessments through the calendar year during which accident and health insurance business ceased. The association may decline to levy an assessment against a contributing member if the assessment, as determined herein, would not exceed ten dollars. Subd. 7. Net gain. Net gains, if any, from the operation of the state plan shall be held at interest and used by the association to offset future losses due to claims expenses of the state plan or allocated to reduce state plan premiums. Subd. 8.  [Repealed, 1987 c 268 art 2 s 38] Subd. 9. Special assessment upon termination of individual health coverage. Each contributing member that terminates individual health coverage for reasons other than (a) nonpayment of premium; (b) failure to make co-payments; (c) enrollee moving out of the area served; or (d) a materially false statement or misrepresentation by the enrollee in the application for membership; and does not provide or arrange for replacement coverage that meets the requirements of section 62D.121; shall pay a special assessment to the state plan based upon the number of terminated individuals who join the comprehensive health insurance plan as authorized under section 62E.14, subdivisions 1, paragraph (d), and 6. Such a contributing member shall pay the association an amount equal to the average cost of an enrollee in the state plan in the year in which the member terminated enrollees multiplied by the total number of terminated enrollees who enroll in the state plan. The average cost of an enrollee in the state comprehensive health insurance plan shall be determined by dividing the state plan's total annual losses by the total number of enrollees from that year. This cost will be assessed to the contributing member who has terminated health coverage before the association makes the annual determination of each contributing member's liability as required under this section. In the event that the contributing member is terminating health coverage because of a loss of health care providers, the commissioner may review whether or not the special assessment established under this subdivision will have an adverse impact on the contributing member or its enrollees or insureds, including but not limited to causing the contributing member to fall below statutory net worth requirements. If the commissioner determines that the special assessment would have an adverse impact on the contributing member or its enrollees or insureds, the commissioner may adjust the amount of the special assessment, or establish alternative payment arrangements to the state plan. For health maintenance organizations regulated under chapter 62D, the commissioner of health shall make the determination regarding any adjustment in the special assessment and shall transmit that determination to the commissioner of commerce. Subd. 10. Termination of individual plan without replacement coverage. Any contributing members who have terminated individual health plans and do not provide or arrange for replacement coverage that meets the requirements of section 62D.121, and whose former insureds or enrollees enroll in the state comprehensive health insurance plan with a waiver of the preexisting conditions pursuant to section 62E.14, subdivisions 1, paragraph (d), and 6, will be liable for the costs of any preexisting conditions of their former enrollees or insureds treated during the first six months of coverage under the state plan. The liability for preexisting conditions will be assessed before the association makes the annual determination of each contributing member's liability as required under this section. Subd. 11. Rate increase or benefit change. The association must provide notice and solicit public comment at least two weeks before filing a rate increase or benefit change with the commissioner. This requirement may be satisfied by written notice, public meeting, or electronic means. If the association holds a public meeting, notice of the public meeting to hear public comment must be mailed at least two weeks before the meeting to all plan enrollees. Subd. 12.  [Repealed, 1997 c 225 art 2 s 63] Subd. 13. State funding; effect on premium rates of members. In approving the premium rates as required in sections 62A.65, subdivision 3; and 62L.08, subdivision 8, the commissioners of health and commerce shall ensure that any appropriation to reduce the annual assessment made on the contributing members to cover the costs of the Minnesota comprehensive health insurance plan as required under this section is reflected in the premium rates charged by each contributing member. History:  1976 c 296 art 1 s 11; 1977 c 409 s 17; 1979 c 272 s 8; 1982 c 426 s 1; 1984 c 514 art 2 s 2; 1986 c 444; 1988 c 434 s 17,18; 1991 c 54 s 1; 1991 c 264 s 2; 1992 c 549 art 3 s 15,16; 1992 c 564 art 1 s 36; 1993 c 345 art 8 s 5; 1997 c 225 art 2 s 8; 1999 c 245 art 10 s 1; 2002 c 330 s 13; 2010 c 363 s 1; 2016 c 158 art 2 s 13
62E.12 MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE PLAN. (a) The association through its comprehensive health insurance plan shall offer policies which provide the benefits of a number one qualified plan and a number two qualified plan, except that the maximum lifetime benefit on these plans shall be $5,000,000; and an extended basic Medicare supplement plan and a basic Medicare supplement plan as described in sections 62A.3099 to 62A.44. The association may also offer a plan that is identical to a number one and number two qualified plan except that it has a $2,000 annual deductible and a $5,000,000 maximum lifetime benefit. The association, subject to the approval of the commissioner, may also offer plans that are identical to the number one or number two qualified plan, except that they have annual deductibles of $5,000 and $10,000, respectively; have limitations on total annual out-of-pocket expenses equal to those annual deductibles and therefore cover 100 percent of the allowable cost of covered services in excess of those annual deductibles; and have a $5,000,000 maximum lifetime benefit. The association, subject to approval of the commissioner, may also offer plans that meet all other requirements of state law except those that are inconsistent with high deductible health plans as defined in sections 220 and 223 of the Internal Revenue Code and supporting regulations. As of January 1, 2006, the association shall no longer be required to offer an extended basic Medicare supplement plan. (b) The requirement that a policy issued by the association must be a qualified plan is satisfied if the association contracts with a preferred provider network and the level of benefits for services provided within the network satisfies the requirements of a qualified plan. If the association uses a preferred provider network, payments to nonparticipating providers must meet the minimum requirements of section 72A.20, subdivision 15. (c) The association shall offer health maintenance organization contracts in those areas of the state where a health maintenance organization has agreed to make the coverage available and has been selected as a writing carrier. (d) Notwithstanding the provisions of section 62E.06 and unless those charges are billed by a provider that is part of the association's preferred provider network, the state plan shall exclude coverage of services of a home care nurse other than on an inpatient basis and any charges for treatment in a hospital or other inpatient facility located outside of the state of Minnesota in which the covered person is receiving treatment for a mental or nervous disorder, unless similar treatment for the mental or nervous disorder is medically necessary, unavailable in Minnesota and provided upon referral by a licensed Minnesota medical practitioner. History:  1976 c 296 art 1 s 12; 1980 c 565 s 1; 1Sp1985 c 10 s 64; 1991 c 165 s 6; 1992 c 554 art 1 s 16; 1992 c 564 art 4 s 12; 1995 c 96 s 1; 1995 c 258 s 41; 1998 c 293 s 2; 1999 c 130 s 1; 2000 c 398 s 5; 2003 c 109 s 4; 2004 c 268 s 4; 2005 c 17 art 1 s 14; 2005 c 132 s 13; 2007 c 104 s 16; 2010 c 363 s 2; 2014 c 291 art 9 s 5
62E.13 ADMINISTRATION OF PLAN. Subdivision 1. Submission of plans of coverage. Any member of the association may submit to the commissioner the policies of accident and health insurance or the health maintenance organization contracts which are being proposed to serve in the comprehensive health insurance plan. The time and manner of the submission shall be prescribed by rule of the commissioner. Subd. 2. Selection of writing carrier. The association may select policies and contracts, or parts thereof, submitted by a member or members of the association, or by the association or others, to develop specifications for bids from any entity which wishes to be selected as a writing carrier to administer the state plan. The selection of the writing carrier shall be based upon criteria established by the board of directors of the association and approved by the commissioner. The criteria shall outline specific qualifications that an entity must satisfy in order to be selected and, at a minimum, shall include the entity's proven ability to handle large group accident and health insurance cases, efficient claim paying capacity, and the estimate of total charges for administering the plan. The association may select separate writing carriers for the two types of qualified plans and the $2,000, $5,000, and $10,000 deductible plans, the Medicare supplement plans, and the health maintenance organization contract. Subd. 3. Duties of writing carrier. The writing carrier shall perform all administrative and claims payment functions required by this section. The writing carrier shall provide these services for a period of five years, unless a request to terminate is approved by the commissioner. The commissioner shall approve or deny a request to terminate within 90 days of its receipt. A failure to make a final decision on a request to terminate within the specified period shall be deemed to be an approval. Six months prior to the expiration of each five-year period, the association shall invite submissions of policy forms from members of the association, including the writing carrier. The association shall follow the provisions of subdivision 2 in selecting a writing carrier for the subsequent five-year period. Subd. 3a. Extension of writing carrier contract. Subject to the approval of the commissioner, and subject to the consent of the writing carrier, the association may extend the effective writing carrier contract for a period not to exceed three years, if the association and the commissioner determine that it would be in the best interest of the association's enrollees and contributing members. This subdivision applies notwithstanding anything to the contrary in subdivisions 2 and 3. Subd. 4. Policy or certificate of coverage to enrollees. The writing carrier shall provide to all eligible persons enrolled in the plan an individual policy or certificate, setting forth a statement as to the insurance protection to which they are entitled, with whom claims are to be filed and to whom benefits are payable. The policy or certificate shall indicate that coverage was obtained through the association. Subd. 5. Monthly report on operation of state plan. The writing carrier shall submit to the association and the commissioner on a monthly basis a report on the operation of the state plan. Specific information to be contained in this report shall be determined by the association prior to the effective date of the state plan. Subd. 6. Claims payments. All claims shall be paid by the writing carrier pursuant to the provisions of sections 62E.01 to 62E.19, and shall indicate that the claim was paid by the state plan. Each claim payment shall include information specifying the procedure to be followed in the event of a dispute over the amount of payment. Subd. 7. Reimbursement of writing carriers expenses. The writing carrier shall be reimbursed from the state plan premiums received for its direct and indirect expenses. Direct and indirect expenses shall include, but need not be limited to, a pro rata reimbursement for that portion of the writing carrier's administrative, printing, claims administration, management and building overhead expenses which are assignable to the maintenance and administration of the state plan. The association shall approve cost accounting methods to substantiate the writing carrier's cost reports consistent with generally accepted accounting principles. Direct and indirect expenses shall not include costs directly related to the original submission of policy forms prior to selection as the writing carrier. Subd. 8. Writing carrier as agent. The writing carrier shall at all times when carrying out its duties under sections 62E.01 to 62E.19 be considered an agent of the association and the commissioner with civil liability subject to the provisions of section 3.751. Subd. 9.  [Repealed, 1987 c 268 art 2 s 38] Subd. 10. Premiums not subject to tax. Premiums received by the writing carrier for the comprehensive health insurance plan are exempt from the taxes imposed under chapter 297I. Subd. 11. Classification of PPO agreement data. If the writing carrier uses its own provider agreements for the association's preferred provider network in lieu of agreements exclusively between the association and the providers, then the terms and conditions of those agreements are nonpublic data as defined in section 13.02, subdivision 9. History:  1976 c 296 art 1 s 13; 1977 c 409 s 18,19; 1979 c 272 s 9; 1986 c 444; 1987 c 384 art 2 s 1; 1988 c 719 art 2 s 3; 1991 c 165 s 7; 1997 c 225 art 6 s 3; 1999 c 177 s 47,48; 2000 c 394 art 2 s 15; 2000 c 398 s 6; 2003 c 109 s 5,6; 2005 c 132 s 14; 2006 c 255 s 19
62E.14 ENROLLMENT BY AN ELIGIBLE PERSON. Subdivision 1. Application, contents. The comprehensive health insurance plan shall be open for enrollment by eligible persons. An eligible person shall enroll by submission of an application to the writing carrier. The application must provide the following: (a) name, address, age, list of residences for the immediately preceding six months and length of time at current residence of the applicant; (b) name, address, and age of spouse and children if any, if they are to be insured; (c) evidence of rejection, a requirement of restrictive riders, a rate up, or a preexisting conditions limitation on a qualified plan, the effect of which is to substantially reduce coverage from that received by a person considered a standard risk, by at least one association member within six months of the date of the application, or other eligibility requirements adopted by rule by the commissioner which are not inconsistent with this chapter and which evidence that a person is unable to obtain coverage substantially similar to that which may be obtained by a person who is considered a standard risk; (d) if the applicant has been terminated from individual health coverage which does not provide replacement coverage, evidence that no replacement coverage that meets the requirements of section 62D.121 was offered, and evidence of termination of individual health coverage by an insurer, nonprofit health service plan corporation, or health maintenance organization, provided that the contract or policy has been terminated for reasons other than (1) failure to pay the charge for health care coverage; (2) failure to make co-payments required by the health care plan; (3) enrollee moving out of the area served; or (4) a materially false statement or misrepresentation by the enrollee in the application for the terminated contract or policy; and (e) a designation of the coverage desired. An eligible person may not purchase more than one policy from the state plan. Upon ceasing to be a resident of Minnesota a person is no longer eligible to purchase or renew coverage under the state plan, except as required by state or federal law with respect to renewal of Medicare supplement coverage. Subd. 2. Writing carrier's response. Within 30 days of receipt of the application described in subdivision 1, the writing carrier shall either reject the application for failing to comply with the requirements in subdivision 1 or forward the eligible person a notice of acceptance and billing information. If the applicant otherwise complies with the requirements of sections 62E.01 to 62E.19, insurance shall be effective immediately upon receipt of the first month's state plan premium, and shall be retroactive to the date the application was received by the writing carrier, unless a different effective date is provided in this section. Subd. 3. Preexisting conditions. A person who obtains coverage pursuant to this section is not covered for any preexisting condition during the first six months of coverage under the state plan if the person was diagnosed or treated for that condition during the 90 days immediately preceding the date the application was received by the writing carrier, except as provided under subdivisions 3a, 4, 4a, 4b, 4c, 4d, 4e, 5, 6, and 7 and section 62E.18. Subd. 3a. Waiver of preexisting condition. A person may enroll in the comprehensive health plan with a waiver of the preexisting condition limitation described in section 62E.14, subdivision 3, provided that the person meets the following requirements: (1) group coverage was provided through a rehabilitation facility defined in section 268A.01, subdivision 6, and coverage was terminated; (2) all other eligibility requirements for enrollment in the comprehensive health plan are met; and (3) the person submitted an application that was received by the writing carrier no later than 90 days after termination of previous coverage. Subd. 4. Waiver of preexisting conditions for Medicare supplement plan enrollees. Notwithstanding the above, any Minnesota resident holder of a policy or certificate of Medicare supplement coverages pursuant to sections 62A.315 and 62A.316, or Medicare supplement plans previously approved by the commissioner, may enroll in the comprehensive health insurance plan as described in section 62E.07, with a waiver of the preexisting condition as described in subdivision 3, without interruption in coverage, provided that the policy or certificate has been terminated by the insurer for reasons other than nonpayment of premium and, provided further that the option to enroll in the plan is exercised through submitting an application received by the writing carrier no later than 90 days after termination of the existing contract or certificate. Coverage in the state plan for purposes of this section shall be effective on the date of termination upon receipt of the proper application by the writing carrier and payment of the required premium. The application must include evidence of termination of the existing policy or certificate. Subd. 4a. Waiver of preexisting conditions for Minnesota residents. A person may enroll in the comprehensive health plan with a waiver of the preexisting condition limitation described in subdivision 3, provided that the following requirements are met: (1) the person is a Minnesota resident eligible to enroll in the comprehensive health plan; (2) the person: (a) would be eligible for continuation under federal or state law if continuation coverage were available or were required to be available; (b) would be eligible for continuation under clause (a) except that the person was exercising continuation rights and the continuation period required under federal or state law has expired; or (c) is eligible for continuation of health coverage under federal or state law; (3) continuation coverage is not available; and (4) the person's application for coverage is received by the writing carrier no later than 90 days after termination of prior coverage from a policy or plan. Coverage in the comprehensive health plan is effective on the date of termination of prior coverage. The availability of conversion rights does not affect a person's rights under this subdivision. Subd. 4b. Waiver of preexisting conditions for persons covered by retiree plans. A person who was covered by a retiree health care plan may enroll in the comprehensive health plan with a waiver of the preexisting condition limitation described in subdivision 3, provided that the following requirements are met: (1) the person is a Minnesota resident eligible to enroll in the comprehensive health plan; (2) the person was covered by a retiree health care plan from an employer and the coverage is no longer available to the person; and (3) the person's application for coverage is received by the writing carrier no later than 90 days after termination of prior coverage. Coverage in the comprehensive health plan is effective on the date of termination of prior coverage. The availability of conversion rights does not affect a person's rights under this section. Subd. 4c. Waiver of preexisting conditions for persons whose coverage is terminated or who exceed the maximum lifetime benefit. (a) A Minnesota resident may enroll in the comprehensive health plan with a waiver of the preexisting condition limitation described in subdivision 3 if that persons's application for coverage is received by the writing carrier no later than 90 days after termination of prior coverage and if the termination is for reasons other than fraud or nonpayment of premiums. For purposes of this paragraph, termination of prior coverage includes exceeding the maximum lifetime benefit of existing coverage. Coverage in the comprehensive health plan is effective on the date of termination of prior coverage. The availability of conversion rights does not affect a person's rights under this paragraph. This section does not apply to prior coverage provided under policies designed primarily to provide coverage payable on a per diem, fixed indemnity, or nonexpense incurred basis, or policies providing only accident coverage. (b) An eligible individual, as defined under the Health Insurance Portability and Accountability Act (HIPAA), United States Code, chapter 42, section 300gg-41(b), may enroll in the comprehensive health insurance plan with a waiver of the preexisting condition limitation described in subdivision 3 and a waiver of the evidence of rejection or similar events described in subdivision 1, clause (c). The eligible individual must apply for enrollment under this paragraph by submitting a substantially complete application that is received by the writing carrier no later than 63 days after termination of prior coverage, and coverage under the comprehensive health insurance plan is effective as of the date of receipt of the complete application. The six-month durational residency requirement provided in section 62E.02, subdivision 13, does not apply with respect to eligibility for enrollment under this paragraph, but the applicant must be a Minnesota resident as of the date that the application was received by the writing carrier. A person's eligibility to enroll under this paragraph does not affect the person's eligibility to enroll under any other provision. (c) A qualifying individual, as defined in the Internal Revenue Code of 1986, section 35(e)(2)(B), who is eligible under the federal Trade Act of 2002 for the Health Coverage Tax Credit (HCTC) for health insurance costs under the Internal Revenue Code of 1986, section 35, may enroll in the comprehensive health insurance plan with a waiver of the preexisting condition limitation described in subdivision 3, and without presenting evidence of rejection or similar requirements described in subdivision 1, paragraph (c). The six-month durational residency requirement provided in section 62E.02, subdivision 13, does not apply with respect to eligibility for enrollment under this paragraph, but the applicant must be a Minnesota resident as of the date of application. A person's eligibility to enroll under this paragraph does not affect the person's eligibility to enroll under any other provision. This paragraph is intended solely to meet the minimum requirements necessary to qualify the comprehensive health insurance plan as qualified health coverage under the Internal Revenue Code of 1986, section 35(e)(2). Subd. 4d. Insurer insolvency; waiver of preexisting conditions. A Minnesota resident who is otherwise eligible may enroll in the comprehensive health insurance plan with a waiver of the preexisting condition limitation described in subdivision 3, if that person submits an application for coverage that is received by the writing carrier no later than 90 days after termination of prior coverage due to the insolvency of the insurer. Coverage in the comprehensive insurance plan is effective on the date of termination of prior coverage. The availability of conversion rights does not affect a person's rights under this subdivision. Subd. 4e. Waiver of preexisting conditions; persons covered by publicly funded health programs. A person may enroll in the comprehensive plan with a waiver of the preexisting condition limitation in subdivision 3, provided that: (1) the person was formerly enrolled in the medical assistance or MinnesotaCare program; (2) the person is a Minnesota resident; and (3) the person submits an application for coverage that is received by the writing carrier no later than 90 days after termination from medical assistance or MinnesotaCare program. Subd. 4f. Waiver of preexisting conditions; persons covered by a community-based health care coverage program. A person may enroll in the comprehensive plan, with a waiver of preexisting condition limitation in subdivision 3, if the following requirements are met: (1) the person was formerly enrolled in a community-based health care coverage program under section 62Q.80; (2) the person is a Minnesota resident; and (3) the person submits an application for coverage that is received by the writing carrier no later than 90 days after coverage under the community-based health care program is terminated. For purposes of this clause, termination of coverage includes exceeding the maximum lifetime or annual benefit on existing coverage, or moving out of an area served by the program. Subd. 4g. Waiver of preexisting conditions for persons covered by healthy Minnesota contribution program. A person may enroll in the comprehensive plan with a waiver of the preexisting condition limitation in subdivision 3 if the person is eligible for the healthy Minnesota contribution program, and has been denied coverage. The six-month durational residency requirement specified in section 62E.02, subdivision 13, does not apply to individuals enrolled in the healthy Minnesota contribution program. Subd. 5. Terminated employees. An employee who is voluntarily or involuntarily terminated or laid off from employment and unable to exercise the option to continue coverage under section 62A.17, and who is a Minnesota resident and who is otherwise eligible, may enroll in the comprehensive health insurance plan, by submitting an application that is received by the writing carrier no later than 90 days after termination or layoff, with a waiver of the preexisting condition limitation set forth in subdivision 3. Subd. 6. Termination of individual policy or contract. A Minnesota resident who holds an individual health maintenance contract, individual nonprofit health service corporation contract, or an individual insurance policy previously approved by the commissioners of health or commerce, may enroll in the comprehensive health insurance plan with a waiver of the preexisting condition as described in subdivision 3, without interruption in coverage, provided (1) no replacement coverage that meets the requirements of section 62D.121 was offered by the contributing member, and (2) the policy or contract has been terminated for reasons other than (a) nonpayment of premium; (b) failure to make co-payments required by the health care plan; (c) moving out of the area served; or (d) a materially false statement or misrepresentation by the enrollee in the application for the terminated policy or contract; and, provided further, that the option to enroll in the plan is exercised by submitting an application that is received by the writing carrier no later than 90 days after termination of the existing policy or contract. Coverage allowed under this section is effective when the contract or policy is terminated and the enrollee has submitted the proper application that is received within the time period stated in this subdivision and paid the required premium or fee. Expenses incurred from the preexisting conditions of individuals enrolled in the state plan under this subdivision must be paid by the contributing member canceling coverage as set forth in section 62E.11, subdivision 10. The application must include evidence of termination of the existing policy or certificate as required in subdivision 1. Subd. 7. Terminations of conversion policies. (a) A Minnesota resident who is covered by a conversion policy or contract of health coverage may enroll in the comprehensive health plan with a waiver of the preexisting condition limitation in subdivision 3 and a waiver of the evidence of rejection in subdivision 1, paragraph (c), at any time for any reason by submitting an application that is received by the writing carrier during the term of coverage. (b) A Minnesota resident who was covered by a conversion policy or contract of health coverage may enroll in the comprehensive health plan with a waiver of the preexisting condition limitation in subdivision 3 and a waiver of the evidence of rejection in subdivision 1, paragraph (c), if that person applies for coverage by submitting an application that is received by the writing carrier no later than 90 days after termination of the conversion policy or contract coverage regardless of: (1) the reasons for the termination; or (2) the party terminating coverage. (c) Coverage under this subdivision is effective upon termination of prior coverage if the enrollee has submitted a completed application that is received within the time period stated in paragraph (a) or (b), whichever applies, and paid the required premium or fee. History:  1976 c 296 art 1 s 14; 1977 c 409 s 20; 1979 c 272 s 10; 1984 c 592 s 48; 1986 c 455 s 14; 1986 c 458 s 2; 1987 c 337 s 70; 1987 c 384 art 2 s 1; 1988 c 434 s 19-21; 1988 c 612 s 29,31; 1989 c 258 s 13; 1990 c 523 s 3-5; 1991 c 165 s 8; 1991 c 325 art 21 s 6; 1992 c 564 art 1 s 37; 1997 c 175 art 1 s 2,3; 1997 c 203 art 7 s 1; 1999 c 177 s 49; 2002 c 330 s 14-16; 2003 c 109 s 7; 2006 c 255 s 20; 2010 c 384 s 22; 2011 c 108 s 34,35; 1Sp2011 c 9 art 6 s 2; 2012 c 247 art 1 s 1; 2013 c 108 art 1 s 67; 2016 c 158 art 2 s 14
62E.141 INCLUSION IN EMPLOYER-SPONSORED PLAN. No employee of an employer that offers a health plan, under which the employee is eligible for coverage, is eligible to enroll, or continue to be enrolled, in the Comprehensive Health Association, except for enrollment or continued enrollment necessary to cover a condition that is subject to an unexpired preexisting condition limitation, preexisting condition exclusion, or exclusionary rider under the employer's health plan. This section does not apply to persons enrolled in the Comprehensive Health Association as of June 30, 1993. With respect to persons eligible to enroll in the health plan of an employer that has more than 29 current employees, as defined in section 62L.02, this section does not apply to persons enrolled in the Comprehensive Health Association as of December 31, 1994. History:  1992 c 549 art 3 s 17; 1994 c 625 art 10 s 14; 1995 c 234 art 7 s 9; 2010 c 363 s 3
62E.15 SOLICITATION OF ELIGIBLE PERSONS. Subdivision 1. Commissioner's duty. The association pursuant to a plan approved by the commissioner shall disseminate appropriate information to the residents of this state regarding the existence of the comprehensive health insurance plan and the means of enrollment. Means of communication may include use of the press, radio and television, as well as publication in appropriate state offices and publications. Subd. 2. Association's duty. The association shall devise and implement means of maintaining public awareness of the provisions of sections 62E.01 to 62E.19 and shall administer these sections in a manner which facilitates public participation in the state plan. Subd. 2a. Annual verification. The association may annually verify the uninsurability of each policyholder to insure that only eligible persons are enrolled in the plan. Subd. 3. Agent's referral fee. The writing carrier shall pay an agent's referral fee of $50 to each insurance agent who refers an applicant to the state plan, if the application is accepted. Selling or marketing of qualified state plans shall not be limited to the writing carrier or its agents. The referral fees shall be paid by the writing carrier from money received as premiums for the state plan. Subd. 4. Rejection or underwriting restrictions. Every insurer and health maintenance organization which rejects or applies underwriting restrictions to an applicant for a plan of health coverage shall: (1) provide the applicant with a written notice of rejection or the underwriting restrictions applied to the applicant in a manner consistent with the requirements in section 72A.499; (2) notify the applicant of the existence of the state plan, the requirements for being accepted in it, and the procedure for applying to it; and (3) provide the applicant with written materials explaining the state plan in greater detail. This written material shall be provided by the association to every insurer at no charge. Subd. 5. Initial notification. Every insurer and health maintenance organization before issuing a conversion policy or contract of health insurance shall: (1) notify the applicant of the existence of the state plan, the requirements for being accepted in it, the procedure for applying to it, and the plan rates; and (2) provide the applicant with written materials explaining the state plan in greater detail. This written material shall be provided by the association to every insurer and health maintenance organization at no charge. Subd. 6. Annual notification. Every insurer and health maintenance organization which provides health coverage to an insured through a conversion plan shall annually: (1) notify the insured of the existence of the state plan, the requirements for being accepted in it, the procedure for applying to it, and the plan rates; and (2) provide the applicant with written materials explaining the state plan in greater detail. This written material shall be provided by the association to every insurer and health maintenance organization at no charge. Subd. 7. Conversion rates. For Medicare supplement conversion policies issued prior to August 1, 1992, the requirements of subdivisions 5 and 6 apply only when the conversion rates offered to the applicant by the insurer or health maintenance organization exceed the association rates. History:  1976 c 296 art 1 s 15; 1984 c 592 s 49; 1990 c 523 s 6; 1992 c 564 art 1 s 38-41; 1999 c 177 s 50; 2000 c 398 s 7
62E.18 HEALTH INSURANCE FOR RETIRED EMPLOYEES NOT ELIGIBLE FOR MEDICARE. A Minnesota resident who is age 65 or over and is not eligible for the health insurance benefits of the federal Medicare program is entitled to purchase the benefits of a qualified plan, one or two, or the $2,000, $5,000, or $10,000 annual deductible plan if available, offered by the Minnesota Comprehensive Health Association without any of the limitations set forth in section 62E.14, subdivision 1, paragraph (c), and subdivision 3. History:  1987 c 337 s 71; 2000 c 398 s 8; 2003 c 109 s 8
62E.19 PAYMENTS FOR PREEXISTING CONDITIONS. Subdivision 1. Employer liability. An employer is liable to the association for the costs of any preexisting conditions of the employer's former employees or their dependents during the first six months of coverage under the state comprehensive health insurance plan under the following conditions: (1)(i) the employer has terminated or laid off employees and is required to meet the notice requirements under section 116L.976, subdivision 2; (ii) the employer has failed to provide, arrange for, or make available continuation health insurance coverage required to be provided under federal or state law to employees or their dependents; and (iii) the employer's former employees or their dependents enroll in the state comprehensive health insurance plan with a waiver of the preexisting condition limitation under section 62E.14, subdivision 4a or 5; or (2)(i) the employer has terminated or allowed the employer's plan of health insurance coverage to lapse within 90 days prior to the date of termination or layoff of an employee; and (ii) the employer's former employees or their dependents enroll in the state comprehensive health insurance plan with a waiver of the preexisting condition limitation under section 62E.14, subdivision 4a or 5. The employer shall pay a special assessment to the association for the costs of the preexisting conditions. The special assessment may be assessed before the association makes the annual determination of each contributing member's liability as required under this chapter. The association may enforce the obligation to pay the special assessment by action, as a claim in an insolvency proceeding, or by any other method not prohibited by law. If the association makes the special assessment permitted by this subdivision, the association may also make any assessment of contributing members otherwise permitted by law, without regard to the special assessment permitted by this subdivision. Contributing members must pay the assessment, subject to refund or adjustment in the event of receipt by the association of any portion of the special assessment. Subd. 2. Exemption. Subdivision 1 does not apply to a termination of or failure to implement an employee health benefit plan which results from or occurs during a strike or lockout, nor does it apply to employee health benefit plans separately provided by an employee organization or bargaining agent, regardless of any financial contribution to the plan by the employer. History:  1990 c 523 s 7; 1991 c 199 art 1 s 11; 1994 c 485 s 35; 2004 c 206 s 52
62E.21 DEFINITIONS. Subdivision 1. Application. For the purposes of sections 62E.21 to 62E.25, the terms defined in this section have the meanings given them. Subd. 2. Affordable Care Act. "Affordable Care Act" means the federal act as defined in section 62A.011, subdivision 1a. Subd. 3. Attachment point. "Attachment point" means an amount as provided in section 62E.23, subdivision 2, paragraph (b). Subd. 4. Benefit year. "Benefit year" means the calendar year for which an eligible health carrier provides coverage through an individual health plan. Subd. 5. Board. "Board" means the board of directors of the Minnesota Comprehensive Health Association created under section 62E.10. Subd. 6. Coinsurance rate. "Coinsurance rate" means the rate as provided in section 62E.23, subdivision 2, paragraph (c). Subd. 7. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 8. Eligible health carrier. "Eligible health carrier" means all of the following that offer individual health plans and incur claims costs for an individual enrollee's covered benefits in the applicable benefit year: (1) an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; (2) a nonprofit health service plan corporation operating under chapter 62C; or (3) a health maintenance organization operating under chapter 62D. Subd. 9. Individual health plan. "Individual health plan" means a health plan as defined in section 62A.011, subdivision 4, that is not a grandfathered plan as defined in section 62A.011, subdivision 1b. Subd. 10. Individual market. "Individual market" has the meaning given in section 62A.011, subdivision 5. Subd. 11. Minnesota Comprehensive Health Association or association. "Minnesota Comprehensive Health Association" or "association" has the meaning given in section 62E.02, subdivision 14. Subd. 12. Minnesota premium security plan or plan. "Minnesota premium security plan" or "plan" means the state-based reinsurance program authorized under section 62E.23. Subd. 13. Payment parameters. "Payment parameters" means the attachment point, reinsurance cap, and coinsurance rate for the plan. Subd. 14. Reinsurance cap. "Reinsurance cap" means the threshold amount as provided in section 62E.23, subdivision 2, paragraph (d). Subd. 15. Reinsurance payments. "Reinsurance payments" means an amount paid by the association to an eligible health carrier under the plan. History:   2017 c 13 art 1 s 2 
62E.22 DUTIES OF COMMISSIONER. The commissioner shall require eligible health carriers to calculate the premium amount the eligible health carrier would have charged for the benefit year if the Minnesota premium security plan had not been established. The eligible health carrier must submit this information as part of its rate filing. The commissioner must consider this information as part of the rate review. History:   2017 c 13 art 1 s 3 
62E.23 MINNESOTA PREMIUM SECURITY PLAN. Subdivision 1. Administration of plan. (a) The association is Minnesota's reinsurance entity to administer the state-based reinsurance program referred to as the Minnesota premium security plan. (b) The association may apply for any available federal funding for the plan. All funds received by or appropriated to the association shall be deposited in the premium security plan account in section 62E.25, subdivision 1. The association shall notify the chairs and ranking minority members of the legislative committees with jurisdiction over health and human services and insurance within ten days of receiving any federal funds. (c) The association must collect or access data from an eligible health carrier that are necessary to determine reinsurance payments, according to the data requirements under subdivision 5, paragraph (c). (d) The board must not use any funds allocated to the plan for staff retreats, promotional giveaways, excessive executive compensation, or promotion of federal or state legislative or regulatory changes. (e) For each applicable benefit year, the association must notify eligible health carriers of reinsurance payments to be made for the applicable benefit year no later than June 30 of the year following the applicable benefit year. (f) On a quarterly basis during the applicable benefit year, the association must provide each eligible health carrier with the calculation of total reinsurance payment requests. (g) By August 15 of the year following the applicable benefit year, the association must disburse all applicable reinsurance payments to an eligible health carrier. Subd. 2. Payment parameters. (a) The board must design and adjust the payment parameters to ensure the payment parameters: (1) will stabilize or reduce premium rates in the individual market; (2) will increase participation in the individual market; (3) will improve access to health care providers and services for those in the individual market; (4) mitigate the impact high-risk individuals have on premium rates in the individual market; (5) take into account any federal funding available for the plan; and (6) take into account the total amount available to fund the plan. (b) The attachment point for the plan is the threshold amount for claims costs incurred by an eligible health carrier for an enrolled individual's covered benefits in a benefit year, beyond which the claims costs for benefits are eligible for reinsurance payments. The attachment point shall be set by the board at $50,000 or more, but not exceeding the reinsurance cap. (c) The coinsurance rate for the plan is the rate at which the association will reimburse an eligible health carrier for claims incurred for an enrolled individual's covered benefits in a benefit year above the attachment point and below the reinsurance cap. The coinsurance rate shall be set by the board at a rate between 50 and 80 percent. (d) The reinsurance cap is the threshold amount for claims costs incurred by an eligible health carrier for an enrolled individual's covered benefits, after which the claims costs for benefits are no longer eligible for reinsurance payments. The reinsurance cap shall be set by the board at $250,000 or less. (e) The board may adjust the payment parameters to the extent necessary to secure federal approval of the state innovation waiver request in Laws 2017, chapter 13, article 1, section 8. Subd. 3. Operation. (a) The board shall propose to the commissioner the payment parameters for the next benefit year by January 15 of the year before the applicable benefit year. The commissioner shall approve or reject the payment parameters no later than 14 days following the board's proposal. If the commissioner fails to approve or reject the payment parameters within 14 days following the board's proposal, the proposed payment parameters are final and effective. (b) If the amount in the premium security plan account in section 62E.25, subdivision 1, is not anticipated to be adequate to fully fund the approved payment parameters as of July 1 of the year before the applicable benefit year, the board, in consultation with the commissioner and the commissioner of management and budget, shall propose payment parameters within the available appropriations. The commissioner must permit an eligible health carrier to revise an applicable rate filing based on the final payment parameters for the next benefit year. (c) Notwithstanding paragraph (a), the payment parameters for benefit years 2023 through 2027 are: (1) an attachment point of $50,000; (2) a coinsurance rate of 80 percent; and (3) a reinsurance cap of $250,000. Subd. 4. Calculation of reinsurance payments. (a) Each reinsurance payment must be calculated with respect to an eligible health carrier's incurred claims costs for an individual enrollee's covered benefits in the applicable benefit year. If the claims costs do not exceed the attachment point, the reinsurance payment is $0. If the claims costs exceed the attachment point, the reinsurance payment shall be calculated as the product of the coinsurance rate and the lesser of: (1) the claims costs minus the attachment point; or (2) the reinsurance cap minus the attachment point. (b) The board must ensure that reinsurance payments made to eligible health carriers do not exceed the total amount paid by the eligible health carrier for any eligible claim. "Total amount paid of an eligible claim" means the amount paid by the eligible health carrier based upon the allowed amount less any deductible, coinsurance, or co-payment, as of the time the data are submitted or made accessible under subdivision 5, paragraph (c). Subd. 5. Eligible carrier requests for reinsurance payments. (a) An eligible health carrier may request reinsurance payments from the association when the eligible health carrier meets the requirements of this subdivision and subdivision 4. (b) An eligible health carrier must make requests for reinsurance payments in accordance with any requirements established by the board. (c) An eligible health carrier must provide the association with access to the data within the dedicated data environment established by the eligible health carrier under the federal risk adjustment program under United States Code, title 42, section 18063. Eligible health carriers must submit an attestation to the board asserting compliance with the dedicated data environments, data requirements, establishment and usage of masked enrollee identification numbers, and data submission deadlines. (d) An eligible health carrier must provide the access described in paragraph (c) for the applicable benefit year by April 30 of each year of the year following the end of the applicable benefit year. (e) An eligible health carrier must maintain documents and records, whether paper, electronic, or in other media, sufficient to substantiate the requests for reinsurance payments made pursuant to this section for a period of at least six years. An eligible health carrier must also make those documents and records available upon request from the commissioner for purposes of verification, investigation, audit, or other review of reinsurance payment requests. (f) An eligible health carrier may follow the appeals procedure under section 62E.10, subdivision 2a. (g) The association may have an eligible health carrier audited to assess the health carrier's compliance with the requirements of this section. The eligible health carrier must ensure that its contractors, subcontractors, or agents cooperate with any audit under this section. If an audit results in a proposed finding of material weakness or significant deficiency with respect to compliance with any requirement of this section, the eligible health carrier may provide a response to the proposed finding within 30 days. Within 30 days of the issuance of a final audit report that includes a finding of material weakness or significant deficiency, the eligible health carrier must: (1) provide a written corrective action plan to the association for approval; (2) implement the approved plan; and (3) provide the association with written documentation of the corrective action once taken. Subd. 6. Data. Government data of the association under this section are private data on individuals, or nonpublic data, as defined under section 13.02, subdivision 9 or 12. History:  2017 c 13 art 1 s 4; 1Sp2019 c 9 art 8 s 6; 2022 c 44 s 2
62E.24 ACCOUNTING, REPORTS, AND AUDITS OF THE ASSOCIATION. Subdivision 1. Accounting. The board must keep an accounting for each benefit year of all: (1) funds appropriated for reinsurance payments and administrative and operational expenses; (2) requests for reinsurance payments received from eligible health carriers; (3) reinsurance payments made to eligible health carriers; and (4) administrative and operational expenses incurred for the plan. Subd. 2. Reports. (a) The board must submit to the commissioner and to the chairs and ranking minority members of the legislative committees with jurisdiction over commerce and health and make available to the public quarterly reports on plan operations and an annual report summarizing the plan operations for each benefit year. All reports must be made public by posting the report on the Minnesota Comprehensive Health Association website. The annual summary must be made available by November 1 of the year following the applicable benefit year or 60 calendar days following the final disbursement of reinsurance payments for the applicable benefit year, whichever is later. (b) The reports must include information about: (1) the reinsurance parameters used; (2) the metal levels affected; (3) the number of claims payments estimated and submitted for payment per products offered on-exchange and off-exchange and per eligible health carrier; (4) the estimated reinsurance payments by plan type based on carrier-submitted templates; (5) funds appropriated for reinsurance payments and administrative and operational expenses for each year, including the federal and state contributions received, investment income, and any other revenue or funds received; (6) the total amount of reinsurance payments made to each eligible health carrier; and (7) administrative and operational expenses incurred for the plan, including the total amount incurred and as a percentage of the plan's operational budget. Subd. 3. Legislative auditor. The Minnesota premium security plan is subject to audit by the legislative auditor. The board must ensure that its contractors, subcontractors, or agents cooperate with the audit. Subd. 4. Independent external audit. (a) The board must engage and cooperate with an independent certified public accountant or CPA firm licensed or permitted under chapter 326A to perform an audit for each benefit year of the plan, in accordance with generally accepted auditing standards. The audit must at a minimum: (1) assess compliance with the requirements of sections 62E.21 to 62E.25; and (2) identify any material weaknesses or significant deficiencies and address manners in which to correct any such material weaknesses or deficiencies. (b) The board, after receiving the completed audit, must: (1) provide the commissioner the results of the audit; (2) identify to the commissioner any material weakness or significant deficiency identified in the audit and address in writing to the commissioner how the board intends to correct any such material weakness or significant deficiency in compliance with subdivision 5; and (3) make public the results of the audit, to the extent the audit contains government data that is public, including any material weakness or significant deficiency and how the board intends to correct the material weakness or significant deficiency, by posting the audit results on the Minnesota Comprehensive Health Association website and making the audit results otherwise available. Subd. 5. Actions on audit findings. (a) If an audit results in a finding of material weakness or significant deficiency with respect to compliance by the association with any requirement under sections 62E.21 to 62E.25, the board must: (1) provide a written corrective action plan to the commissioner for approval within 60 days of the completed audit; (2) implement the corrective action plan; and (3) provide the commissioner with written documentation of the corrective actions taken. (b) By December 1 of each year, the board must submit a report to the standing committees of the legislature having jurisdiction over health and human services and insurance regarding any finding of material weakness or significant deficiency found in an audit. History:  2017 c 13 art 1 s 5; 1Sp2019 c 9 art 8 s 7
62E.25 ACCOUNTS. Subdivision 1. Premium security plan account. The premium security plan account is created in the special revenue fund of the state treasury. Funds in the account are appropriated annually to the commissioner of commerce for grants to the Minnesota Comprehensive Health Association for the operational and administrative costs and reinsurance payments relating to the start-up and operation of the Minnesota premium security plan. Notwithstanding section 11A.20, all investment income and all investment losses attributable to the investment of the premium security plan account shall be credited to the premium security plan account. Subd. 2. Deposits. Except as provided in subdivision 3, funds received by the commissioner of commerce or other state agency pursuant to the state innovation waiver request in Laws 2017, chapter 13, article 1, section 8, shall be deposited in the premium security plan account in subdivision 1. Subd. 3. Basic health plan trust account. Funds received by the commissioner of commerce or other state agency pursuant to the state innovation waiver request in Laws 2017, chapter 13, article 1, section 8, that are attributable to the basic health program shall be deposited in the basic health plan trust account in the federal fund. History:   2017 c 13 art 1 s 6 
62H.01 AUTHORITY TO JOINTLY SELF-INSURE. Any two or more employers, excluding the state and its political subdivisions as described in section 471.617, subdivision 1, who are authorized to transact business in Minnesota may jointly self-insure employee health, dental, short-term disability benefits, or other benefits permitted under the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001 et seq. If an employer chooses to jointly self-insure in accordance with this chapter, the employer must participate in the joint plan for at least three consecutive years. If an employer terminates participation in the joint plan before the conclusion of this three-year period, a financial penalty may be assessed under the joint plan, not to exceed the amount contributed by the employer to the plan's reserves as determined under Minnesota Rules, part 2765.1200. Joint plans must have a minimum of 1,000 covered enrollees and meet all conditions and terms of sections 62H.01 to 62H.08. Joint plans covering employers not resident in Minnesota must meet the requirements of sections 62H.01 to 62H.08 as if the portion of the plan covering Minnesota resident employees was treated as a separate plan. A multiple employer welfare arrangement as defined in United States Code, title 29, section 1002(40)(a), is subject to this chapter to the extent authorized by the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001 et seq. The commissioner of commerce may, on behalf of the state, enter into an agreement with the United States Secretary of Labor for delegation to the state of some or all of the secretary's enforcement authority with respect to multiple employer welfare arrangements, as described in United States Code, title 29, section 1136(c). History:  1983 c 241 s 1; 1987 c 337 s 74; 1992 c 549 art 3 s 18; 1992 c 564 art 1 s 43; 1994 c 485 s 36; 1997 c 175 art 4 s 1; 2002 c 330 s 17; 2004 c 288 art 6 s 4
62H.02 REQUIRED PROVISIONS. (a) A joint self-insurance plan must include aggregate excess stop-loss coverage and individual excess stop-loss coverage provided by an insurance company licensed by the state of Minnesota. (b) Aggregate excess stop-loss coverage must include provisions to cover incurred, unpaid claim liability in the event of plan termination. (c) The plan of self-insurance must have participating employers fund an amount at least equal to the point at which the excess or stop-loss insurer has contracted to assume 100 percent of additional liability. (d) A joint self-insurance plan must submit its proposed excess or stop-loss insurance contract to the commissioner of commerce at least 30 days prior to the proposed plan's effective date and at least 30 days subsequent to any renewal date. The commissioner shall review the contract to determine if they meet the standards established by sections 62H.01 to 62H.08 and respond within a 30-day period. (e) Any excess or stop-loss insurance plan must contain a provision that the excess or stop-loss insurer will give the plan and the commissioner of commerce a minimum of 180 days' notice of termination or nonrenewal. If the plan fails to secure replacement coverage within 60 days after receipt of the notice of cancellation or nonrenewal, the commissioner shall issue an order providing for the orderly termination of the plan. (f) The commissioner may waive the requirements of this section and of any rule relating to the requirements of this section, if the commissioner determines that a joint self-insurance plan has established alternative arrangements that fully fund the plan's liability or incurred but unpaid claims. The commissioner may not waive the requirement that a joint self-insurance plan have excess stop-loss coverage. History:  1983 c 241 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1987 c 337 s 75; 2004 c 288 art 6 s 5; 2007 c 147 art 12 s 3
62H.03 MARKETING, RISK MANAGEMENT, OR ADMINISTRATIVE SERVICES. No joint self-insurance plan may offer marketing, risk management, or administrative services unless these services are provided by vendors duly licensed by the commissioner to provide these services. No vendor of these services may be a trustee of any joint self-insurance plan for which they provide marketing, risk management, or administrative services. History:   1983 c 241 s 3 
62H.04 COMPLIANCE WITH OTHER LAWS. (a) A joint self-insurance plan is subject to the requirements of chapters 62A, 62E, 62L, and 62Q, and sections 72A.17 to 72A.32 unless otherwise specifically exempt. A joint self-insurance plan must pay assessments made by the Minnesota Comprehensive Health Association, as required under section 62E.11. (b) A joint self-insurance plan is exempt from providing the mandated health benefits described in chapters 62A, 62E, 62L, and 62Q if it otherwise provides the benefits required under the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001, et seq., for all employers and not just for the employers with 50 or more employees who are covered by that federal law. (c) A joint self-insurance plan is exempt from section 62L.03, subdivision 1, if the plan offers an annual open enrollment period of no less than 15 days during which all employers that qualify for membership may enter the plan without preexisting condition limitations or exclusions except those permitted under chapter 62L. (d) A joint self-insurance plan is exempt from sections 62A.146, 62A.16, 62A.17, 62A.20, 62A.21, and 62A.65, subdivision 5, paragraph (b), if the joint self-insurance plan complies with the continuation requirements under the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001, et seq., for all employers and not just for the employers with 20 or more employees who are covered by that federal law. (e) A joint self-insurance plan must provide to all employers the maternity coverage required by federal law for employers with 15 or more employees. (f) A joint self-insurance plan must comply with all the provisions and requirements of the Affordable Care Act as defined under section 62A.011, subdivision 1a, to the extent that they apply to such plans. History:  1983 c 241 s 4; 1987 c 337 s 76; 1995 c 234 art 7 s 10; 2002 c 330 s 18; 2004 c 288 art 6 s 6; 2013 c 84 art 1 s 43
62H.05 MANAGEMENT OF FUNDS. Funds collected from the participating employers under joint self-insurance plans must be held in trust subject to the following requirements: (a) A board of trustees elected by participating employers shall serve as fund managers on behalf of participants. Trustees must be plan participants. No participating employer may be represented by more than one trustee. A minimum of three and a maximum of seven trustees may be elected. Trustees shall receive no remuneration, but they may be reimbursed for actual and reasonable expenses incurred in connection with duties as trustees. (b) Trustees shall be bonded in an amount not less than $100,000 or no more than $500,000 from a licensed bonding company. (c) Investment of plan funds is subject to the same restrictions as are applicable to political subdivisions pursuant to section 118A.04. All investments must be managed by a bank or other investment organization licensed to operate in Minnesota. (d) Trustees, on behalf of the fund, shall file annual reports with the commissioner of commerce within 30 days immediately following the end of each calendar year. The reports must summarize the financial condition of the fund, itemize collection from participating employers, and detail all fund expenditures. History:  1983 c 241 s 5; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1996 c 399 art 2 s 12
62H.06 REGULATION OF PLANS BY COMMISSIONER. The commissioner of commerce shall promulgate rules to insure the solvency and operation of all self-insured plans subject to this chapter. The commissioner may examine the joint self-insurance plans pursuant to sections 60A.03 and 60A.031. History:  1983 c 241 s 6; 1983 c 289 s 114 subd 1; 1984 c 640 s 32; 1984 c 655 art 1 s 92; 1985 c 248 s 26; 1995 c 233 art 2 s 56
62H.08 EXEMPTION. A homogenous joint employer plan providing group health benefits, which was in existence prior to March 1, 1983, and which is associated with, or organized or sponsored by, an association exempt from taxation under United States Code, title 26, section 501(c)(6), and controlled by a board of trustees a majority of whom are members of the association, is exempt from the requirements of sections 62H.01 to 62H.08 and 471.617, subdivisions 1 to 3, and the insurance laws of this state, except that the association must comply with the provisions of chapter 62L with respect to any members that are small employers. History:  1983 c 241 s 8; 1995 c 234 art 7 s 11
62H.10 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 62H.10 to 62H.17, the terms in this section have the meanings given them. Subd. 2. Agent. "Agent" means an agent as defined under section 60A.02, subdivision 7. Subd. 3. Arrangement. "Arrangement" means a fund, trust, plan, program, or other mechanism by which a person provides, or attempts to provide, health care benefits to individuals. Subd. 4. Broker. "Broker" means an agent engaged in brokerage business pursuant to section 60K.49. Subd. 5. Collectively bargained arrangement. "Collectively bargained arrangement" means an arrangement which provides or represents that it is providing health care benefits or coverage under or pursuant to one or more collective bargaining agreements. Subd. 6. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 7. Employee leasing arrangement. "Employee leasing arrangement" means a labor leasing, staff leasing, employee leasing, contract labor, extended employee staffing or supply, or other arrangement, under contract or otherwise, whereby one business or entity leases or obtains all or a significant number of its workers from another business or entity. Subd. 8. Employee welfare benefit plan. "Employee welfare benefit plan" means a plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent that the plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death, or unemployment. Subd. 9. Fully insured by a licensed insurer. "Fully insured by a licensed insurer" means that, for all of the health care benefits or coverage provided or offered by or through an arrangement: (1) a licensed insurer is directly obligated by contract to provide all of the coverage to or under the arrangement; (2) the licensed insurer assumes all of the risk for payment of all covered services or benefits; and (3) the liability of the licensed insurer for payment of the covered services or benefits is directly to the individual employee, member, or dependent receiving the health care services. Subd. 10. Licensed insurer. "Licensed insurer" means an insurer having a certificate of authority to transact insurance in this state. Subd. 11. Reportable MEWA. "Reportable MEWA" means a person that provides health care benefits or coverage to the employees of two or more employers. Reportable MEWA does not include: (1) a licensed insurer; (2) an arrangement which is fully insured by a licensed insurer; (3) a collectively bargained arrangement; (4) an employee welfare benefit plan established or maintained by a rural electric cooperative or a rural telephone cooperative; (5) an employee leasing arrangement; or (6) a joint self-insurance employee health plan, which includes but is not limited to multiple employee welfare arrangements and multiple employer welfare arrangements (MEWAs), having a certificate of authority to transact insurance in this state pursuant to chapter 62H. Subd. 12. Rural electric cooperative. "Rural electric cooperative" means: (1) an organization that is exempt from tax under United States Code, title 26, section 501(a), and which is engaged primarily in providing electric service on a mutual or cooperative basis; or (2) an organization described in United States Code, title 26, section 501(c), paragraph (4) or (6), which is exempt from tax under United States Code, title 26, section 501(a), and at least 80 percent of the members of which are organizations described in clause (1). Subd. 13. Rural telephone cooperative. "Rural telephone cooperative" means an organization described in United States Code, title 26, section 501(c), paragraph (4) or (6), which is exempt from tax under United States Code, title 26, section 501(a), and at least 80 percent of the members of which are organizations engaged primarily in providing telephone service to rural areas of the United States on a mutual, cooperative, or other basis. Subd. 14. Third-party administrator. "Third-party administrator" means a vendor of risk management services or an entity administering a self-insurance or insurance plan under section 60A.23. History:  1994 c 485 s 37; 2000 c 483 s 15; 2001 c 117 art 2 s 10
62H.11 AGENTS AND BROKERS PROHIBITED FROM ASSISTING REPORTABLE MEWAS PRIOR TO FILING. (a) No agent or broker may solicit, advertise, or market in this state health benefits or coverage from, or accept an application for, or place coverage for a person who resides in this state with, a reportable MEWA unless the agent or broker first files with the commissioner the information required under section 62H.16. (b) No agent or broker may solicit another agent or broker to enter into an arrangement to solicit, advertise, or market services, health benefits, or coverage of a reportable MEWA unless the agent or broker first files with the commissioner the information required under section 62H.16. History:   1994 c 485 s 38 
62H.12 AGENTS AND BROKERS PROHIBITED FROM ASSISTING EMPLOYEE LEASING ARRANGEMENTS PRIOR TO FILING. (a) No agent or broker may solicit, advertise, or market in this state the services, health benefits, or coverage of an employee leasing arrangement or a person or arrangement which represents itself as an employee leasing arrangement unless the agent or broker first files with the commissioner the information required under section 62H.16. (b) No agent or broker may solicit another agent or broker to enter into an arrangement to solicit, advertise, or market the services, health benefits, or coverage of an employee leasing arrangement unless the agent or broker first files with the commissioner the information required under section 62H.16. History:   1994 c 485 s 39 
62H.13 AGENTS AND BROKERS PROHIBITED FROM ASSISTING COLLECTIVELY BARGAINED ARRANGEMENTS PRIOR TO FILING. (a) No agent or broker may solicit, advertise, or market in this state health benefits or coverage from, or accept an application for, or place coverage for a person who resides in this state with, a collectively bargained arrangement or an arrangement that represents itself as a collectively bargained arrangement unless the agent or broker first files with the commissioner the information required under section 62H.16. (b) No agent or broker may solicit another agent or broker to enter into an arrangement to solicit, advertise, or market the health benefits or coverage of a collectively bargained arrangement unless the agent or broker first files with the commissioner the information required under section 62H.16. History:   1994 c 485 s 40 
62H.14 THIRD-PARTY ADMINISTRATORS AND LICENSED INSURERS PROHIBITED FROM ASSISTING REPORTABLE MEWAS PRIOR TO FILING. (a) No third-party administrator may solicit or effect coverage of, underwrite for, collect charges or premium for, or adjust or settle claims of a resident of this state for, or enter into any agreement to perform any of those functions for, a reportable MEWA that provides coverage to residents of this state unless the third-party administrator first files with the commissioner the information required under section 62H.16. (b) No licensed insurer may solicit or effect coverage of, underwrite for, collect charges or premiums for, adjust or settle claims of a resident of this state for, or enter into any agreement to perform any of those functions for a reportable MEWA that provides coverage to residents of this state unless the insurer first files with the commissioner the information required under section 62H.16. (c) A licensed insurer that issues or has issued any insurance coverage to a reportable MEWA that covers residents of this state, including, but not limited to, specific or aggregate stop-loss coverage, shall file with the commissioner the information required under section 62H.16 within 30 days after the coverage is issued or within 30 days after the date the reportable MEWA first provides coverage to a resident of this state, whichever is later. History:   1994 c 485 s 41 
62H.15 LACK OF KNOWLEDGE NOT A DEFENSE. (a) Lack of knowledge or intent to deceive with respect to the organization or status of insurance coverage of a reportable MEWA, employee leasing firm, or collectively bargained arrangement is not a defense to a violation of sections 62H.10 to 62H.17. (b) A filing under sections 62H.10 to 62H.17 is solely for the purpose of providing information to the commissioner. Sections 62H.10 to 62H.17 and a filing under those sections do not authorize or license a reportable MEWA, employee leasing firm, collectively bargained arrangement, or any other arrangement to engage in business in this state if otherwise prohibited by law. History:   1994 c 485 s 42 
62H.16 INFORMATION REQUIRED TO BE FILED AND KEPT CURRENT. (a) An agent, broker, third-party administrator, or insurer required to file under sections 62H.10 to 62H.17 shall file with the commissioner all of the following information on a form prescribed by the commissioner: (1) a copy of the organizational documents of the reportable MEWA, employee leasing firm, or collectively bargained arrangement, including the articles of incorporation and bylaws, partnership agreement, or trust instrument; (2) a copy of each insurance or reinsurance contract that purports to insure or guarantee all or any portion of benefits or coverage offered by the reportable MEWA, employee leasing firm, or collectively bargained arrangement to a person who resides in this state; (3) copies of the benefit plan description and other materials intended to be distributed to potential purchasers; and (4) the names and addresses of all persons performing or expected to perform the functions of a third-party administrator for the reportable MEWA, employee leasing firm, or collectively bargained arrangement. (b) A filing under sections 62H.10 to 62H.17 is ineffective and is not in compliance with those sections if it is incomplete or inaccurate in a material respect. (c) A person who has made a filing under sections 62H.10 to 62H.17 shall amend the filing within 30 days of the date the person becomes aware, or exercising due diligence should have become aware, of any material change to the information required to be filed. The amended filing must accurately reflect the material change to the information originally filed. History:   1994 c 485 s 43 
62H.17 LIABILITY FOR VIOLATION. If an arrangement that is an unauthorized insurer fails to pay a claim or loss in this state within the provisions of its contract, a person who violates sections 62H.10 to 62H.17 with respect to the arrangement is liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of the insurance contract. History:   1994 c 485 s 44 
62H.18 AGRICULTURAL COOPERATIVE HEALTH PLAN. Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this section. (b) "Agricultural cooperative" means a cooperative organized under chapter 308A or 308B that meets the requirements of subdivision 2. (c) "Broker" means an insurance agent engaged in brokerage business according to section 60K.49. (d) "Employee Retirement Income Security Act" means the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001, et seq. (e) "Enrollee" means a natural person covered by a joint self-insurance plan operating under this section. (f) "Insurance agent" has the meaning given to insurance agent in section 60A.02, subdivision 7. (g) "Joint self-insurance plan" or "plan" means a plan or any other arrangement established for the benefit of two or more entities authorized to transact business in the state, in order to jointly self-insure through a single employee welfare benefit plan funded through a trust, to provide health, dental, or other benefits as permitted under the Employee Retirement Income Security Act. (h) "Service plan administrator" means a vendor of risk management services licensed under section 60A.23. (i) "Trust" means a trust established to accept and hold assets of the joint self-insurance plan in trust and use and disperse funds in accordance with the terms of the written trust document and joint self-insurance plan for the sole purposes of providing benefits and defraying reasonable administrative costs of providing the benefits. Subd. 2. Exemption. A joint self-insurance plan, its service plan administrator, stop loss carrier, and any broker assisting the agricultural cooperative are exempt from sections 62H.01 to 62H.17, and are governed by the requirements of this section, if the joint self-insurance plan is administrated through a trust established by an agricultural cooperative that: (1) has members who (i) actively work in production agriculture in Minnesota and file either Form 1065 or Schedule F with the member's income tax return; or (ii) provide direct services to production agriculture in Minnesota; (2) specifies criteria for membership in the agricultural cooperative in their articles of organization or bylaws, however criteria cannot be based on health status factors of the individuals to be covered through the joint self-insurance plan; and (3) grants at least 51 percent of the aggregate voting power on matters for which all members may vote to members who satisfy clause (1) and any additional criteria in the agricultural cooperative's articles of organization and bylaws. Subd. 3. Plan requirements. A joint self-insurance plan operating under this section must: (1) offer health coverage to members of the agricultural cooperative that establishes the plan and their dependents, to employees of members of the agricultural cooperative that establishes the plan and their dependents, or to employees of the agricultural cooperative that establishes the plan and their dependents. Health coverage may be offered only to those individuals who meet certain criteria described in the joint self-insurance plan governing documents, however the criteria cannot be based on health status factors of the individuals to be covered through the joint self-insurance plan; (2) include stop-loss coverage with an individual attachment point not lower than $20,000 and an aggregate attachment point not lower than 110 percent of expected claims, issued by an insurance company licensed in Minnesota; (3) establish a reserve fund, certified by an actuary to be sufficient to cover unpaid claim liability for incurred but not reported liabilities in the event of plan termination. Certification from the actuary must include all maximum funding requirements for plan fixed cost requirements and current claims liability requirements, and must include a calculation of the reserve levels needed to fund all incurred but not reported liabilities in the event of member or plan termination. These reserve funds must be held in a trust; (4) be governed by a board elected by agricultural cooperative members that participate in the plan; (5) contract for services with a service plan administrator; and (6) satisfy the requirements of the Employee Retirement Income Security Act that apply to employee welfare benefit plans. Subd. 4. Submission of documents to commissioner of commerce. A joint self-insurance plan operating under this section must submit to the commissioner of commerce copies of all filings and reports that are submitted to the United States Department of Labor according to the Employee Retirement Income Security Act. Members participating in the joint self-insurance plan may designate an agricultural cooperative that establishes the plan as the entity responsible for satisfying the reporting requirements of the Employee Retirement Income Security Act and for providing copies of these filings and reports to the commissioner of commerce. Subd. 5. Participation; termination of participation. If a member chooses to participate in a joint self-insurance plan under this section, the member must participate in the plan for at least three consecutive years. If a member terminates participation in the plan before the end of the three-year period, a financial penalty may be assessed under the plan, not to exceed the amount contributed by the member to the plan reserves. Subd. 6. Single risk pool. The enrollees of a joint self-insurance plan operating under this section shall be members of a single risk pool. The plan shall provide benefits as a single, self-insured plan with the size of the plan based on the total enrollees in the risk pool. Subd. 7. Promotion, marketing, sale of coverage. (a) Coverage in a joint self-insurance plan operating under this section may be promoted, marketed, and sold by insurance agents and brokers to members of the agricultural cooperative sponsoring the plan and their dependents, employees of members of the agricultural cooperative sponsoring the plan and their dependents, and employees of the agricultural cooperative sponsoring the plan and their dependents. (b) Coverage in a joint self-insurance plan operating under this section may be promoted and marketed by a cooperative organized under chapter 308A or 308B to persons who may be eligible to participate in the joint self-insurance plan. Subd. 8. Taxation. Joint self-insurance plans are exempt from the taxation imposed under section 297I.05, subdivision 12. Subd. 9. Compliance with other laws. A joint self-insurance plan operating under this section: (1) is exempt from providing the mandated health benefits in chapters 62A and 62Q, if the plan otherwise provides the benefits required under the Employee Retirement Income Security Act; (2) is exempt from the continuation requirements in sections 62A.146, 62A.16, 62A.17, 62A.20, and 62A.21, if the plan complies with the continuation requirements under the Employee Retirement Income Security Act; and (3) must comply with all requirements of the Affordable Care Act, as defined in section 62A.011, subdivision 1a, to the extent that they apply to such plans. History:   2017 c 2 art 2 s 10 
62I.01 CITATION. Sections 62I.01 to 62I.22 may be cited as the "Minnesota Joint Underwriting Association Act." History:   1986 c 455 s 20 
62I.02 MINNESOTA JOINT UNDERWRITING ASSOCIATION. Subdivision 1. Creation. The Minnesota Joint Underwriting Association is created to provide insurance coverage to any person or entity unable to obtain insurance through ordinary methods if the insurance is required by statute, ordinance, or otherwise required by law, or is necessary to earn a livelihood or conduct a business and serves a public purpose. Prudent business practice or mere desire to have insurance coverage is not a sufficient standard for the association to offer insurance coverage to a person or entity. For purposes of this subdivision, directors' and officers' liability insurance is considered to be a business necessity and not merely a prudent business practice. The association shall be specifically authorized to provide insurance coverage to day care providers, foster parents, foster homes, developmental achievement centers, group homes, rehabilitation facilities for mentally, emotionally, or physically disabled persons, and for liquor liability. In addition, the association shall provide medical malpractice insurance coverage to a licensed health care provider unable to obtain this insurance through ordinary methods who practices or provides professional services within Minnesota and obtains at least 60 percent of gross revenues from patients who are residents of Minnesota. The association shall not offer environmental pollution liability, product liability insurance, and completed operations insurance. The association shall not offer coverage for activities that are conducted substantially outside the state of Minnesota unless the insurance is required by statute, ordinance, or otherwise required by Minnesota law. Every insurer licensed to write property and casualty insurance and personal injury liability insurance in this state shall be a member of the association as a condition to obtaining and retaining a license to write insurance in this state. Subd. 2. Board of directors. The association shall have a board of directors composed of 15 persons chosen as follows: seven persons elected by members of the association, one of whom must be a representative of medical malpractice insurers, and one of whom must be a representative of personal injury liability insurers; four public members, as defined in section 214.02, appointed by the commissioner; and four members, appointed by the commissioner representing groups to whom coverage has been extended by the association, one of whom must be a licensed health care provider. If at any time no coverage is currently extended by the association, then either additional public members may be appointed to fill these four positions or, at the option of the commissioner, representatives from groups who had previously been covered by the association may serve as directors. The terms of the members shall be four years. Terms may be staggered so that no more than six members are appointed or elected every two years. Members may serve until their successors are appointed or elected. Subd. 3. Reauthorization. The authorization to issue insurance to day care providers, foster parents, foster homes, developmental activity centers, group homes, and rehabilitation facilities for mentally, emotionally, or physically disabled persons is valid for a period of two years from the date it was made. The issuance of insurance for these groups and other classes of business is reauthorized for additional two-year periods unless deactivated under the process pursuant to sections 62I.21 and 62I.22. Subd. 4. Liquor liability. Policies and contracts of coverage issued under this section for the purposes of providing liquor liability insurance must contain the usual and customary provisions of liability insurance policies, and must contain at least the minimum coverage required by section 340A.409, subdivision 1, or the local governing unit. Subd. 5. Accounts. For the purposes of administration and assessment, the association shall be divided into three separate accounts: (1) the property and casualty insurance account; (2) the personal injury liability insurance account-liquor; and (3) the personal injury liability insurance account-medical malpractice. Subd. 6.  [Repealed by amendment, 2017 c 34 s 1] History:  1986 c 455 s 21; 1Sp1986 c 3 art 2 s 43; 1987 c 337 s 77,78; 1988 c 689 art 2 s 268; 1989 c 260 s 7; 1994 c 485 s 45; 1996 c 446 art 1 s 45-47; 2003 c 21 s 1,2; 2005 c 56 s 1; 2017 c 34 s 1; 2018 c 182 art 1 s 5
62I.03 DEFINITION. Subdivision 1. Scope. As used in sections 62I.01 to 62I.22 the following terms have the meanings given them in this section. Subd. 2. Association. "Association" means the Minnesota Joint Underwriting Association and incorporates the duties and responsibilities of the Medical Malpractice Joint Underwriting Association previously authorized by chapter 62F. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 4. Direct written premiums. "Direct written premiums" means that amount from the Statutory Annual Statement filed annually with the National Association of Insurance Commissioners (NAIC), at column (1) of the Exhibit of Premium and Losses (statutory page 14 data) for this state. Direct written premiums are further identified by kind of insurance as follows: (1) General at column (1), lines 5, 8, 9, 17.1, 17.2, 21.2, 22, 23, 24, 26, and 27. (2) Liquor Liability at column (1), lines 5.2, 17.1, and 17.2. (3) Medical Malpractice at column (1), lines 5.2, 11, 17.1, 17.2, 19.1, and 19.3. Subd. 5. Deficit. "Deficit" means, for a particular policy year, that amount by which total paid and outstanding losses and loss adjustment expenses and operating expenses exceed premium revenue. Subd. 5a. Market assistance coordinator. "Market assistance coordinator" means an employee of the association, or a person under contract with the association, who assists a person or entity applying to the association for coverage to obtain coverage in the private market. Subd. 6.  [Repealed by amendment, 2017 c 34 s 2] Subd. 6a. Member. "Member" means an insurer licensed to write either or both of the following in this state: (1) property and casualty insurance; (2) personal injury liability insurance. Subd. 7. Personal injury liability insurance. "Personal injury liability insurance" means insurance described in section 60A.06, subdivision 1, clause (13). Subd. 8. Licensed health care provider professional services. "Licensed health care provider professional services" means services performed by an individual licensed health care provider that are undertaken with the objective of providing prevention care, rehabilitative care, treatment of specific diseases, injuries, or conditions, or care rendered with the intent of stabilizing the patient's condition and preventing further deterioration or injury. Professional services do not include services provided by licensed health care providers who rely solely on spiritual or divine intervention as the only means of care or treatment. History:  1986 c 455 s 22; 1987 c 337 s 79; 1994 c 485 s 46; 2003 c 21 s 3; 2017 c 34 s 2
62I.04 POLICY ISSUANCE. Any person or entity that is a resident of the state of Minnesota who has a current notice of refusal to insure from an insurer licensed to offer insurance in the state of Minnesota may make written application to the association for coverage. The applicable premium or required portion of it must be paid prior to coverage by the association. The association is authorized to (1) issue or cause to be issued insurance policies to applicants subject to limits specified in the plan of operation; (2) underwrite the insurance and adjust and pay losses with respect to it; (3) conduct risk management and loss prevention services; (4) assume reinsurance from its members; (5) cede reinsurance; and (6) retain, hire, or appoint individuals or companies to perform any of these functions. History:  1986 c 455 s 23; 1987 c 337 s 80; 2003 c 21 s 4
62I.05 PLAN OF OPERATION. The association shall have a plan of operation which shall be consistent with the provisions of this chapter and that provides for economic, fair, and nondiscriminatory administration and for the prompt, efficient provision of insurance coverage of the types provided by section 62I.02. It shall provide for an expedited review and determination by the board of any application for a type of coverage that has not been previously excluded or authorized, and other provisions necessary for the operation and management of the association. The plan of operation is subject to approval by the commissioner. If the commissioner disapproves all or any part of the proposed plan of operation, the directors shall within 15 days submit for review an appropriate revised plan of operation. If a revised plan is not submitted within 15 days the commissioner shall promulgate a plan of operation. The plan of operation approved or promulgated by the commissioner is effective and operational upon the order of the commissioner. Amendments to the plan of operation may be made by the directors of the association subject to approval by the commissioner. History:  1986 c 455 s 24; 2003 c 21 s 5; 2017 c 34 s 3
62I.06 POLICY FORMS; PREMIUM RATE. Subdivision 1. Requirement. The policies and contracts of coverage issued pursuant to this chapter shall contain the usual and customary provisions of similar insurance policies issued by private insurance companies. If a standard form is used in the private marketplace for any type of coverage that is to be extended by the association, then the association shall use that form. If there are varying types of forms used in the marketplace the association may choose to use a standard policy form issued by a service organization or other entity who commonly prepares standardized types of forms. If the board determines that neither of these alternatives is appropriate, then it shall adopt a policy form based upon the terms and conditions of the policies used for this type of coverage that are the most commonly used in the private market. As far as practical the board shall attempt to adopt forms that are consistent with the practice in the private market. No policy forms shall be used by the association unless it has been filed with the commissioner, and the commissioner may disapprove the form within 30 days if the commissioner determines that it is misleading, it violates public policy, or for any reason that the commissioner would be empowered to reject a similar form filed by a private company. Subd. 2. Cancellation. If the insured fails to pay a stabilization reserve fund charge the association may cancel the policy by mailing or delivering to the insured at the insured's address shown on the policy at least ten days' written notice stating the date that the cancellation is effective. Subd. 3. Rating plan. The rating plan, rating classification, and territories applicable to insurance written by the association and related statistics are subject to chapter 70A. Rates shall be on an actuarially sound basis. The commissioner shall take all appropriate steps to make available, upon request of the association, loss and expense experience of insurers previously writing or currently writing insurance of any type the association offers or intends to offer. Subd. 4.  [Repealed by amendment, 2017 c 34 s 4] Subd. 5. Examinations. The commissioner may examine the business of the association as often as is appropriate to insure that the association is operating in a manner consistent with this chapter or other Minnesota laws. If it is found that the operation is deficient or inconsistent with this chapter or other Minnesota laws the commissioner may order the association to take corrective action. Subd. 6. Deficit assessments. The association shall certify to the commissioner the estimated amount of any deficit remaining after the stabilization reserve fund has been exhausted and any required deficit assessment. Within 60 days after the certification, the commissioner shall authorize the association to recover the members' respective shares of the deficit assessment by assessing all members an amount sufficient to fully fund the obligations of the association. The assessment of each member shall be determined in the manner provided in section 62I.07. An assessment made pursuant to this section shall be deductible by the member from premium taxes due the state as provided in section 297I.20, subdivision 2. Subd. 7. Amendments to rating plan. In addition to the usual manner of amending the rating plan set forth in this section and section 62I.06, the following procedure may also be used: (1) Any person may, by written petition served upon the commissioner of commerce request that a hearing be held to amend the rating plan, or any part of the rating plan. (2) The commissioner shall forward a copy of the petition to the chief administrative law judge within three business days of its receipt. The chief administrative law judge shall, within three business days of receipt of the copy of the petition or a request for hearing by the commissioner, set a hearing date, assign an administrative law judge to hear the matter, and notify the commissioner of the hearing date and the administrative law judge assigned to hear the matter. The hearing date must be set not less than 60 days nor more than 90 days from the date of receipt of the petition by the commissioner or the date of the commissioner's request for hearing if the commissioner is the person requesting a hearing. (3) The commissioner shall publish a notice of the hearing in the State Register at least 30 days before the hearing date. The notice should be similar to that used for rulemaking under the Administrative Procedure Act. Approval of the notice by the administrative law judge is not required. (4) The hearing and all matters which occur after the hearing are a contested case under chapter 14. Within 45 days from the commencement of the hearing and within 15 days of the completion of the hearing the administrative law judge shall submit a report to the commissioner of commerce. The parties, or the administrative law judge, if the parties cannot agree, shall adjust all time requirements under the contested case procedure to conform with the 45-day requirement. (5) The commissioner shall render a decision within ten business days of the receipt of the administrative law judge's report. (6) If all parties to the proceeding agree, any of the previous requirements may be waived or modified. (7) A petition for a hearing to amend the rating plan or any part of the rating plan received by the commissioner within 180 days of the date of the commissioner's decision in a prior proceeding to amend the rating plan is invalid and requires no action provided the petition involves the same rates as the previous hearing. If the petition involves matters in addition to those dealt with in the previous hearing, then the additional matters shall be treated as a separate petition for hearing and a hearing may be held on those matters. History:  1986 c 455 s 25; 2008 c 154 art 14 s 1; 2017 c 34 s 4
62I.07 MEMBERSHIP ASSESSMENTS. Subdivision 1.  Assessment. Each member of the association 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 Statutory Annual Statements as filed by the member with the NAIC. Subd. 2.  [Repealed by amendment, 2017 c 34 s 5] Subd. 3.  [Repealed by amendment, 2017 c 34 s 5] History:  1986 c 455 s 26; 1994 c 485 s 47; 1996 c 446 art 1 s 48; 1999 c 177 s 51; 2001 c 215 s 20; 2017 c 34 s 5
62I.08 APPLICATION PROCEDURE. A person or entity that has been denied coverage or is unable to find an insurer willing to write coverage is eligible to make an application to the association. To show eligibility to participate in the association the applicant shall certify that the applicant has been unable to find the coverage sought by the applicant. No further proof shall be required of the applicant, except that the application form may require the date and the name of the insurance company denying coverage and may require a copy of a written offer if the rate qualifies the applicant to apply under section 62I.13, subdivision 2. History:  1986 c 455 s 27; 1994 c 425 s 15; 2003 c 21 s 6; 2017 c 34 s 6
62I.121 BENEFITS FOR EMPLOYEES. At the option of the board, employees may participate in the state retirement plan and the state deferred compensation plan for employees in the unclassified service, and an insurance plan administered by the commissioner of management and budget under chapter 43A. History:  1992 c 564 art 1 s 44; 2008 c 204 s 42; 2009 c 101 art 2 s 109
62I.13 ACTION BY THE MINNESOTA JOINT UNDERWRITING ASSOCIATION UPON THE APPLICATION. Subdivision 1. Generally. To be eligible to participate in the association, an applicant must apply for coverage as required by this section and section 62I.08. Subd. 2. Minimum of qualifications. Anyone who is unable to obtain insurance in the private market and who so certifies to the association is eligible to apply to the association for coverage. The application may require information as provided in section 62I.08. Payment of the applicable premium or required portion of it must be paid prior to coverage by the association. An offer of coverage at a rate in excess of the rate that would be charged by the association for similar coverage and risk shall be deemed to be a refusal of coverage for purposes of eligibility for participation in the association. It shall not be deemed to be a written notice of refusal if the rate for coverage offered is less than ten percent in excess of the joint underwriting association rates for similar coverage and risk or 20 percent in excess of the Joint Underwriting Association rates for liquor liability coverages. However, the offered rate must be the rate generally charged by the insurer for similar coverage and risk. Subd. 3. Disqualifying factors. For good cause, coverage may be denied or terminated by the association. Good cause may exist if the applicant or insured: (1) has an outstanding debt due or owing to the association at the time of application or renewal arising from a prior policy; (2) refuses to permit completion of an audit requested by the commissioner or the association; (3) submits misleading or erroneous information to the commissioner or the association; (4) disregards safety standards, laws, rules or ordinance pertaining to the risk being insured; (5) fails to supply information requested by the commissioner or the association; and (6) fails to comply with the terms of the policies or contracts for coverage issued by the association. Subd. 4.  [Repealed, 2003 c 21 s 13] Subd. 5. Notice. An application for coverage by the association must be granted or denied within ten days after receipt of a properly completed application and any supplemental information requested. Anyone covered by the association must be given at least 30 days' notice of nonrenewal or cancellation of coverage. Subd. 6.  [Repealed by amendment, 2017 c 34 s 7] History:  1986 c 455 s 32; 1987 c 337 s 82; 1994 c 425 s 16; 1994 c 485 s 48,49; 2003 c 21 s 7,8; 2005 c 10 art 1 s 14; 2017 c 34 s 7
62I.14 ASSESSMENTS. In the event the commissioner orders an assessment, an assessed insurer must pay the assessment within 30 days of receipt of notice of the assessment. The commissioner may suspend or revoke an insurer's certificate of authority and impose a civil penalty in an amount not to exceed $10,000 for an insurer's failure to pay the assessment within the 30-day period. History:  1986 c 455 s 33; 2003 c 21 s 9; 2017 c 34 s 8
62I.15 EXTENSION OF COVERAGE. If the association determines that the applicant meets the underwriting standards of the association as described in the plan of operation and section 62I.13, the association upon receipt of the premium or portion of it as described in the plan of operation shall issue a policy of insurance to the applicant. History:  1986 c 455 s 34; 2017 c 34 s 9
62I.16 STABILIZATION RESERVE FUND. Subdivision 1. Creation. There is created a stabilization reserve fund. Each policyholder shall pay to the association a stabilization reserve fund charge of 33 percent of each premium payment due for insurance through the association. This charge shall be separately stated in the policy. The association shall cancel the policy of any policyholder who fails to pay the stabilization reserve fund charge. Subd. 2. Payment. The association shall promptly pay into the stabilization reserve fund all fund charges it collects from its policyholders. Subd. 3. Supervision. All money paid into the fund shall be separately accounted for by the board of directors. The money held in the fund may be invested. All investment income shall be credited to the fund. All expenses of the administration of the fund shall be charged against the fund. Any stabilization reserve fund charges from a particular policy year must be returned to policyholders after all claims and expense obligations from that particular policy year are satisfied. Subd. 4. Exemption. The board of directors may, upon their own motion or upon application of any applicant or insured, exempt any group from the payment of the stabilization reserve charge. The exemption shall be granted only to those groups who are unable to obtain insurance coverage in the private market as a result of the private market's refusal to write coverage for that group rather than because of loss experiences or risks posed by the applicant or insured as an individual. It shall be presumed that a group is qualified for this exemption if more than 20 percent of the members of that group are unable to obtain the insurance coverage that they seek. The board of directors shall also consider granting exemption if any members of the same group are unable to obtain coverage in the private market even though no claims have been made against them or payments made on their behalf by any insurer within the last three years. Subd. 5. Surcharge. In addition to determining the basic rate for coverages to be offered, the association shall also develop a surcharge plan or similar method for adjusting the rate to be charged to those persons who have had claims made against them. The surcharge plan shall take into effect the risk posed to the association by the applicant or the insured. The surcharge plan shall be sufficient to provide for the sound financial operation of the plan based upon commonly agreed-upon actuarial principles. History:  1986 c 455 s 35; 1987 c 337 s 83; 1989 c 260 s 8; 2003 c 21 s 10; 2017 c 34 s 10
62I.17 IMMUNITY FROM LIABILITY. No cause of action of any nature shall arise against the association, the members of its board of directors, its employees or authorized agents, the commissioner or the commissioner's authorized representatives, or any other person or organization, for any action or omission made in good faith by them concerning any matters within the scope of this chapter or any related proceedings. The association, board members, employees, and authorized agents shall also be entitled to indemnification provided in section 317A.521 as if the association were a corporation within the meaning of that section. At its discretion, the association may obtain insurance coverage for matters addressed by this section. History:  1986 c 455 s 36; 2017 c 34 s 11
62I.18 RIGHT OF APPEAL. Any applicant to the association, any person insured pursuant to this chapter or their representatives, any affected insurer, or any person who has applied for coverage pursuant to this chapter may appeal to the commissioner within 30 days after any ruling, action, or decision by or on behalf of the association with respect to those items that the plan of operation defines as appealable matters. History:   1986 c 455 s 37 
62I.19 ANNUAL STATEMENTS. Annually, the association shall file with the commissioner a report of its transactions, financial conditions, and operations during the preceding year. The report shall be in a format approved by the commissioner. The commissioner may at any time require the association to furnish additional information to assist in evaluating the scope, operation, and experience of the association. History:  1986 c 455 s 38; 2017 c 34 s 12
62I.21 ACTIVATION OF JOINT UNDERWRITING ASSOCIATION. Upon submission of an application for placement of general liability insurance coverage under section 62I.13 in a class of business for which the Joint Underwriting Association is not then activated, where the applicant has been refused coverage within the meaning of section 62I.13, subdivision 2, the commissioner may by notice in the State Register activate the Joint Underwriting Association on Minnesota risks for the class of business. The association is activated for a period of 180 days from publication of the notice. At the same time the notice is published, the commissioner shall prepare a written petition requesting that a hearing be held to determine whether activation of the Joint Underwriting Association is necessary beyond the 180-day period. The hearing must be held in accordance with section 62I.22. The commissioner by order shall deactivate the Joint Underwriting Association or a class of business at any time the commissioner finds that the Joint Underwriting Association or the class of business is not necessary. History:  1986 c 455 s 40; 1994 c 425 s 17; 2003 c 21 s 11; 2017 c 34 s 13
62I.22 HEARING. Subdivision 1. Administrative law judge. The commissioner shall forward a copy of the petition to activate the Joint Underwriting Association with respect to a class of business to the chief administrative law judge. The chief administrative law judge shall, within three business days of receipt of the copy of the petition, set a hearing date, assign an administrative law judge to hear the matter, and notify the commissioner of the hearing date and the administrative law judge assigned to hear the matter. The hearing date must be no less than 60 days nor more than 90 days from the date of receipt of the petition by the chief administrative law judge. Subd. 2. Notice. The commissioner of commerce shall publish notice of the hearing in the State Register at least 30 days before the hearing date. The notice should be that used for rulemaking under chapter 14. Approval by the administrative law judge of the notice prior to publication is not required. The notice must contain a statement that anyone wishing to oppose activation beyond 180 days for any particular class, must file a petition to intervene with the administrative law judge at least ten days before the hearing date. If no notice to intervene is filed for a class, then the class is activated beyond the 180-day period without further action. Subd. 3. Contested case; report. The hearing and all matters after the hearing are a contested case under chapter 14. Within 45 days from the commencement of the hearing and within 15 days of the completion of the hearing the administrative law judge shall submit a report to the commissioner of commerce. The parties, or the administrative law judge, if the parties cannot agree, shall adjust all time requirements under the contested case procedure to conform with the 45-day requirement. Subd. 4. Decision. The commissioner shall make a decision within ten days of the receipt of the administrative law judge's report. Subd. 5. Waiver or modification. If all parties to the proceeding agree, any of the requirements of this section may be waived or modified. Subd. 6. Case presentation. The Department of Commerce, upon request by small businesses, shall assist small businesses in any specific class requesting continuation of coverage beyond the 180-day period, in coordinating the class and presenting the case in the contested hearing. For purposes of this subdivision, "small business" means a business entity, including farming and other agricultural operations and its affiliates, that (1) is independently owned and operated; (2) is not dominant in its field; and (3) employs fewer than 50 full-time employees or has gross annual sales of less than $4,000,000. History:  1986 c 455 s 41; 1987 c 337 s 84,85; 1996 c 305 art 1 s 22; 2003 c 21 s 12
62J.01 FINDINGS. The legislature finds that substantial numbers of Minnesotans have no health care coverage and that most of these residents are wage earners or their dependents. One-third of these individuals are children. The legislature further finds that when these individuals enter the health care system they have often forgone preventive care and are in need of more expensive treatment that often exceeds their financial resources. Much of the cost for these uncompensated services to the uninsured are already in the health care system in the form of increased insurance and provider rates and property and income taxes. The legislature further finds that these costs, spread among the already insured, represent a woefully inefficient method for providing basic preventive and acute care for the uninsured and represent an added cost to employers now providing health insurance to their employees. The legislature further finds that it is necessary to ensure basic and affordable health care to all Minnesotans while addressing the economic pressures on the health care system as a whole in Minnesota. History:   1989 c 327 s 1 
62J.015 PURPOSE. The legislature finds that the staggering growth in health care costs is having a devastating effect on the health and cost of living of Minnesota residents. The legislature further finds that the number of uninsured and underinsured residents is growing each year and that the cost of health care coverage for our insured residents is increasing annually at a rate that far exceeds the state's overall rate of inflation. The legislature further finds that it must enact immediate and intensive cost containment measures to limit the growth of health care expenditures, reform insurance practices, and finance a plan that offers access to affordable health care for our permanent residents by capturing dollars now lost to inefficiencies in Minnesota's health care system. The legislature further finds that controlling costs is essential to the maintenance of the many factors contributing to the quality of life in Minnesota: our environment, education system, safe communities, affordable housing, provision of food, economic vitality, purchasing power, and stable population. It is, therefore, the intent of the legislature to lay a new foundation for the delivery and financing of health care in Minnesota and to call this new foundation the MinnesotaCare Act. History:  1992 c 549 art 1 s 1; 1993 c 247 art 4 s 11; 1994 c 625 art 8 s 72
62J.016 GOALS OF RESTRUCTURING. The state seeks to bring about changes in the health care delivery and financing system that will assure quality, affordable, and accessible health care for all Minnesotans. This goal will be accomplished by restructuring the delivery system, the financial incentives, and the regulatory environment in a way that will make health care providers and health plan companies more accountable to consumers, group purchasers, and communities for their costs and quality, their effectiveness in meeting the health care needs of all of their patients and enrollees, and their contributions to improving the health of the greater community. History:   1994 c 625 art 1 s 1 
62J.017 IMPLEMENTATION TIMETABLE. The state seeks to complete the restructuring of the health care delivery and financing system. Beginning July 1, 1994, measures will be taken to increase the public accountability of existing health plan companies, to promote the development of small, community-based integrated service networks, and to reduce administrative costs by standardizing third-party billing forms and procedures and utilization review requirements. History:  1994 c 625 art 1 s 2; 1995 c 234 art 3 s 1; 1997 c 225 art 2 s 9
62J.03 DEFINITIONS. Subdivision 1. Scope of definitions. For purposes of this chapter, the terms defined in this section have the meanings given. Subd. 2. Clinically effective. "Clinically effective" means that the use of a particular medical technology improves patient clinical status, as measured by medical condition, survival rates, and other variables, and that the use of the particular technology demonstrates a clinical advantage over alternative technologies. Subd. 3.  [Repealed, 1997 c 225 art 2 s 63] Subd. 4. Commissioner. "Commissioner" means the commissioner of health, unless another commissioner is specified. Subd. 5. Cost-effective. "Cost-effective" means that the economic costs of using a particular technology to achieve improvement in a patient's health outcome are justified given a comparison to both the economic costs and the improvement in patient health outcome resulting from the use of alternative technologies. Subd. 6. Group purchaser. "Group purchaser" means a person or organization that purchases health care services on behalf of an identified group of persons, regardless of whether the cost of coverage or services is paid for by the purchaser or by the persons receiving coverage or services, as further defined in rules adopted by the commissioner. "Group purchaser" includes, but is not limited to, community integrated service networks; health insurance companies, health maintenance organizations, nonprofit health service plan corporations, and other health plan companies; employee health plans offered by self-insured employers; trusts established in a collective bargaining agreement under the federal Labor-Management Relations Act of 1947, United States Code, title 29, section 141, et seq.; the Minnesota Comprehensive Health Association; group health coverage offered by fraternal organizations, professional associations, or other organizations; state and federal health care programs; state and local public employee health plans; workers' compensation plans; and the medical component of automobile insurance coverage. Subd. 7. Improvement in health outcome. "Improvement in health outcome" means an improvement in patient clinical status, and an improvement in patient quality-of-life status, as measured by ability to function, ability to return to work, and other variables. Subd. 8. Provider or health care provider. "Provider" or "health care provider" means a person or organization other than a nursing home that provides health care or medical care services within Minnesota for a fee and is eligible for reimbursement under the medical assistance program under chapter 256B. For purposes of this subdivision, "for a fee" includes traditional fee-for-service arrangements, capitation arrangements, and any other arrangement in which a provider receives compensation for providing health care services or has the authority to directly bill a group purchaser, health carrier, or individual for providing health care services. For purposes of this subdivision, "eligible for reimbursement under the medical assistance program" means that the provider's services would be reimbursed by the medical assistance program if the services were provided to medical assistance enrollees and the provider sought reimbursement, or that the services would be eligible for reimbursement under medical assistance except that those services are characterized as experimental, cosmetic, or voluntary. Subd. 9. Safety. "Safety" means a judgment of the acceptability of risk of using a technology in a specified situation. Subd. 10. Health plan company. "Health plan company" means a health plan company as defined in section 62Q.01, subdivision 4. History:  1992 c 549 art 1 s 2; 1993 c 345 art 3 s 1; art 4 s 1; art 6 s 1; 1994 c 625 art 8 s 14,15; 1997 c 225 art 2 s 62; 1Sp2021 c 4 art 4 s 1
62J.04 MONITORING THE RATE OF GROWTH OF HEALTH CARE SPENDING. Subdivision 1. Cost containment goals. (a) The commissioner of health shall set annual cost containment goals for public and private spending on health care services for Minnesota residents, as provided in paragraph (b). The cost containment goals must be set at levels the commissioner determines to be realistic and achievable but that will reduce the rate of growth in health care spending by at least ten percent per year for the next five years. The commissioner shall set cost containment goals based on available data on spending and growth trends, including data from group purchasers, national data on public and private sector health care spending and cost trends, and trend information from other states. (b) The commissioner shall set the following annual cost containment goals for public and private spending on health care services for Minnesota residents: (1) for calendar year 1994, the cost containment goal must not exceed the change in the regional Consumer Price Index for urban consumers for calendar year 1993 plus 6.5 percentage points; (2) for calendar year 1995, the cost containment goal must not exceed the change in the regional Consumer Price Index for urban consumers for calendar year 1994 plus 5.3 percentage points; (3) for calendar year 1996, the cost containment goal must not exceed the change in the regional Consumer Price Index for urban consumers for calendar year 1995 plus 4.3 percentage points; (4) for calendar year 1997, the cost containment goal must not exceed the change in the regional Consumer Price Index for urban consumers for calendar year 1996 plus 3.4 percentage points; and (5) for calendar year 1998, the cost containment goal must not exceed the change in the regional Consumer Price Index for urban consumers for calendar year 1997 plus 2.6 percentage points. The commissioner shall adjust the cost containment goal set for calendar year 1995 to recover savings in health care spending required for the period July 1, 1993, to December 31, 1993. (c) The commissioner shall publish: (1) the projected cost containment goal in the State Register by April 15 of the year immediately preceding the year in which the cost containment goal will be effective except for the year 1993, in which the cost containment goal shall be published by July 1, 1993; (2) the quarterly change in the regional Consumer Price Index for urban consumers; and (3) the Centers for Medicare and Medicaid Services forecast for total growth in the national health care expenditures. Subd. 1a. Cost containment goals. The commissioner shall publish the final adjusted cost containment goal in the State Register by January 31 of the year that the cost containment goal is to be in effect. The adjusted cost containment goal must reflect the actual regional Consumer Price Index for urban consumers for the previous calendar year, and may deviate from the previously published projected cost containment goal to reflect differences between the actual regional Consumer Price Index for urban consumers and the projected Consumer Price Index for urban consumers. The commissioner shall report to the legislature by February 15 of each year on the implementation of the cost containment goal. This annual report shall describe the differences between the projected increase in health care expenditures, the actual expenditures based on data collected, and the impact and validity of cost containment goals within the overall health care reform strategy. Subd. 2.  [Renumbered 62J.35, subdivision 1] Subd. 2a.  [Renumbered 62J.35, subd 2] Subd. 2b.  [Renumbered 62J.35, subd 3] Subd. 3. Cost containment duties. The commissioner shall: (1) establish statewide and regional cost containment goals for total health care spending under this section and collect data as described in sections 62J.38 and 62J.40 to monitor statewide achievement of the cost containment goals; (2) divide the state into no fewer than four regions, with one of those regions being the Minneapolis/St. Paul metropolitan statistical area but excluding Chisago, Isanti, Wright, and Sherburne Counties, for purposes of fostering the development of regional health planning and coordination of health care delivery among regional health care systems and working to achieve the cost containment goals; (3) monitor the quality of health care throughout the state and take action as necessary to ensure an appropriate level of quality; (4) issue recommendations regarding uniform billing forms, uniform electronic billing procedures and data interchanges, patient identification cards, and other uniform claims and administrative procedures for health care providers and private and public sector payers. In developing the recommendations, the commissioner shall review the work of the work group on electronic data interchange (WEDI) and the American National Standards Institute (ANSI) at the national level, and the work being done at the state and local level. The commissioner may adopt rules requiring the use of the Uniform Bill 82/92 form, the National Council of Prescription Drug Providers (NCPDP) 3.2 electronic version, the Centers for Medicare and Medicaid Services 1500 form, or other standardized forms or procedures; (5) undertake health planning responsibilities; (6) authorize, fund, or promote research and experimentation on new technologies and health care procedures; (7) within the limits of appropriations for these purposes, administer or contract for statewide consumer education and wellness programs that will improve the health of Minnesotans and increase individual responsibility relating to personal health and the delivery of health care services, undertake prevention programs including initiatives to improve birth outcomes, expand childhood immunization efforts, and provide start-up grants for worksite wellness programs; (8) undertake other activities to monitor and oversee the delivery of health care services in Minnesota with the goal of improving affordability, quality, and accessibility of health care for all Minnesotans; and (9) make the cost containment goal data available to the public in a consumer-oriented manner. Subd. 4.  [Repealed, 1997 c 225 art 2 s 63] Subd. 5. Appeals. A person aggrieved may appeal a decision made under this chapter through a contested case proceeding governed under chapter 14. The notice of appeal must be served on the commissioner within 30 days of receiving notice of the decision. The commissioner shall decide the contested case. Subd. 6. Rulemaking. The commissioner shall adopt rules under chapter 14 to implement this chapter. Subd. 7.  [Repealed, 1997 c 225 art 2 s 63] Subd. 8.  [Repealed, 1994 c 625 art 8 s 74] Subd. 9. Growth limits; federal programs. The commissioners of health and human services shall establish a rate methodology for Medicare and Medicaid risk-based contracting with health plan companies that is consistent with statewide growth limits. History:  1992 c 549 art 1 s 3; 1993 c 247 art 1 s 1-6; 1993 c 345 art 1 s 1; art 3 s 2-4,18; art 5 s 7,8; art 6 s 2,3; 1994 c 625 art 8 s 16-18; 1995 c 234 art 3 s 2; art 5 s 2; 1997 c 150 s 1-3; 1997 c 187 art 1 s 5; 1998 c 254 art 1 s 11; 1999 c 245 art 2 s 2; 2000 c 260 s 83; 2002 c 277 s 32; 1Sp2003 c 14 art 7 s 88; 1Sp2011 c 9 art 2 s 1; art 6 s 3
62J.041 INTERIM HEALTH PLAN COMPANY COST CONTAINMENT GOALS. Subdivision 1. Definitions. (a) For purposes of this section, the following definitions apply. (b) "Health plan company" has the definition provided in section 62Q.01. (c) "Total expenditures" means incurred claims or expenditures on health care services, administrative expenses, charitable contributions, and all other payments made by health plan companies out of premium revenues. (d) "Net expenditures" means total expenditures minus exempted taxes and assessments and payments or allocations made to establish or maintain reserves. (e) "Exempted taxes and assessments" means direct payments for taxes to government agencies, contributions to the Minnesota Comprehensive Health Association, the medical assistance provider's surcharge under section 256.9657, the MinnesotaCare provider tax under section 295.52, assessments by the Health Coverage Reinsurance Association, assessments by the Minnesota Life and Health Insurance Guaranty Association, assessments by the Minnesota Risk Adjustment Association, and any new assessments imposed by federal or state law. (f) "Consumer cost-sharing or subscriber liability" means enrollee coinsurance, co-payment, deductible payments, and amounts in excess of benefit plan maximums. Subd. 2. Establishment. The commissioner of health shall establish cost containment goals for the increase in net expenditures by each health plan company for calendar years 1994, 1995, 1996, and 1997. The cost containment goals must be the same as the annual cost containment goals for health care spending established under section 62J.04, subdivision 1, paragraph (b). Health plan companies that are affiliates may elect to meet one combined cost containment goal. Subd. 3. Determination of expenditures. Health plan companies shall submit to the commissioner of health, by April 1, 1994, for calendar year 1993; April 1, 1995, for calendar year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, for calendar year 1996; and April 1, 1998, for calendar year 1997 all information the commissioner determines to be necessary to implement this section. The information must be submitted in the form specified by the commissioner. The information must include, but is not limited to, expenditures per member per month or cost per employee per month, and detailed information on revenues and reserves. The commissioner, to the extent possible, shall coordinate the submittal of the information required under this section with the submittal of the financial data required under chapter 62J, to minimize the administrative burden on health plan companies. The commissioner may adjust final expenditure figures for demographic changes, risk selection, changes in basic benefits, and legislative initiatives that materially change health care costs, as long as these adjustments are consistent with the methodology submitted by the health plan company to the commissioner, and approved by the commissioner as actuarially justified. The methodology to be used for adjustments and the election to meet one cost containment goal for affiliated health plan companies must be submitted to the commissioner by September 1, 1994. Community integrated service networks may submit the information with their application for licensure. The commissioner shall also accept changes to methodologies already submitted. The adjustment methodology submitted and approved by the commissioner must apply to the data submitted for calendar years 1994 and 1995. The commissioner may allow changes to accepted adjustment methodologies for data submitted for calendar years 1996 and 1997. Changes to the adjustment methodology must be received by September 1, 1996, and must be approved by the commissioner. Subd. 4. Monitoring of reserves. (a) The commissioners of health and commerce shall monitor health plan company reserves and net worth as established under chapters 60A, 62C, 62D, 62H, and 64B, with respect to the health plan companies that each commissioner respectively regulates to assess the degree to which savings resulting from the establishment of cost containment goals are passed on to consumers in the form of lower premium rates. (b) Health plan companies shall fully reflect in the premium rates the savings generated by the cost containment goals. No premium rate, currently reviewed by the Department of Health or Commerce, may be approved for those health plan companies unless the health plan company establishes to the satisfaction of the commissioner of commerce or the commissioner of health, as appropriate, that the proposed new rate would comply with this paragraph. (c) Health plan companies, except those licensed under chapter 60A to sell accident and sickness insurance under chapter 62A, shall annually before the end of the fourth fiscal quarter provide to the commissioner of health or commerce, as applicable, a projection of the level of reserves the company expects to attain during each quarter of the following fiscal year. These health plan companies shall submit with required quarterly financial statements a calculation of the actual reserve level attained by the company at the end of each quarter including identification of the sources of any significant changes in the reserve level and an updated projection of the level of reserves the health plan company expects to attain by the end of the fiscal year. In cases where the health plan company has been given a certificate to operate a new health maintenance organization under chapter 62D, or been licensed as a community integrated service network under chapter 62N, or formed an affiliation with one of these organizations, the health plan company shall also submit with its quarterly financial statement, total enrollment at the beginning and end of the quarter and enrollment changes within each service area of the new organization. The reserve calculations shall be maintained by the commissioners as trade secret information, except to the extent that such information is also required to be filed by another provision of state law and is not treated as trade secret information under such other provisions. (d) Health plan companies in paragraph (c) whose reserves are less than the required minimum or more than the required maximum at the end of the fiscal year shall submit a plan of corrective action to the commissioner of health or commerce under subdivision 7. (e) The commissioner of commerce, in consultation with the commissioner of health, shall report to the legislature no later than January 15, 1995, as to whether the concept of a reserve corridor or other mechanism for purposes of monitoring reserves is adaptable for use with indemnity health insurers that do business in multiple states and that must comply with their domiciliary state's reserves requirements. Subd. 5. Notice. The commissioner of health shall publish in the State Register and make available to the public by July 1, 1995, a list of all health plan companies that exceeded their cost containment goal for the 1994 calendar year. The commissioner shall publish in the State Register and make available to the public by July 1, 1996, a list of all health plan companies that exceeded their combined cost containment goal for calendar years 1994 and 1995. The commissioner shall notify each health plan company that the commissioner has determined that the health plan company exceeded its cost containment goal, at least 30 days before publishing the list, and shall provide each health plan company with ten days to provide an explanation for exceeding the cost containment goal. The commissioner shall review the explanation and may change a determination if the commissioner determines the explanation to be valid. Subd. 6. Assistance by the commissioner of commerce. The commissioner of commerce shall provide assistance to the commissioner of health in monitoring health plan companies regulated by the commissioner of commerce. Subd. 7.  [Repealed by amendment, 1997 c 150 s 4] History:  1993 c 345 art 2 s 4; 1994 c 625 art 3 s 4; 1995 c 234 art 3 s 9; 1997 c 150 s 4; 1997 c 225 art 2 s 62
62J.052 PROVIDER COST DISCLOSURE. Subdivision 1.  [Repealed, 2007 c 147 art 15 s 22] Subd. 2. Pharmacies. (a) Each pharmacy, as defined in section 151.01, subdivision 2, shall provide the following information to a patient upon request: (1) the pharmacy's own usual and customary price for a prescription drug; (2) a record, including all transactions on record with the pharmacy both past and present, of all co-payments and other cost-sharing paid to the pharmacy by the patient for up to two years; and (3) the total amount of all co-payments and other cost-sharing paid to the pharmacy by the patient over the previous two years. (b) The information required under paragraph (a) must be readily available at no cost to the patient. History:  2005 c 147 art 11 s 2; 2006 c 255 s 21
62J.06 IMMUNITY FROM LIABILITY. No member of the Health Technology Advisory Committee shall be held civilly or criminally liable for an act or omission by that person if the act or omission was in good faith and within the scope of the member's responsibilities under this chapter. History:  1993 c 247 art 1 s 7; 1995 c 234 art 5 s 3; 1997 c 225 art 2 s 10; 1999 c 245 art 2 s 3; 1Sp2003 c 14 art 7 s 88
62J.156 CLOSED COMMITTEE HEARINGS. Notwithstanding chapter 13D, the Health Technology Advisory Committee may meet in closed session to discuss a specific technology or procedure that involves data received that have been classified as nonpublic data, where disclosure of the data would cause harm to the competitive or economic position of the source of the data. History:  1993 c 345 art 4 s 5; 1Sp2003 c 14 art 7 s 88
62J.17 EXPENDITURE REPORTING. Subdivision 1. Purpose. To ensure access to affordable health care services for all Minnesotans it is necessary to restrain the rate of growth in health care costs. An important factor believed to contribute to escalating costs may be the purchase of costly new medical equipment, major capital expenditures, and the addition of new specialized services. After spending limits are established under section 62J.04, providers, patients, and communities will have the opportunity to decide for themselves whether they can afford capital expenditures or new equipment or specialized services within the constraints of a spending limit. In this environment, the state's role in reviewing these spending commitments can be more limited. However, during the interim period until spending targets are established, it is important to prevent unrestrained major spending commitments that will contribute further to the escalation of health care costs and make future cost containment efforts more difficult. In addition, it is essential to protect against the possibility that the legislature's expression of its attempt to control health care costs may lead a provider to make major spending commitments before targets or other cost containment constraints are fully implemented because the provider recognizes that the spending commitment may not be considered appropriate, needed, or affordable within the context of a fixed budget for health care spending. Therefore, the legislature finds that a requirement for reporting health care expenditures is necessary. Subd. 2. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given. (b) "Capital expenditure" means an expenditure which, under generally accepted accounting principles, is not properly chargeable as an expense of operation and maintenance. (c) "Health care service" means: (1) a service or item that would be covered by the medical assistance program under chapter 256B if provided in accordance with medical assistance requirements to an eligible medical assistance recipient; and (2) a service or item that would be covered by medical assistance except that it is characterized as experimental, cosmetic, or voluntary. "Health care service" does not include retail, over-the-counter sales of nonprescription drugs and other retail sales of health-related products that are not generally paid for by medical assistance and other third-party coverage. (d) "Major spending commitment" means an expenditure in excess of $1,000,000 for: (1) acquisition of a unit of medical equipment; (2) a capital expenditure for a single project for the purposes of providing health care services, other than for the acquisition of medical equipment; (3) offering a new specialized service not offered before; (4) planning for an activity that would qualify as a major spending commitment under this paragraph; or (5) a project involving a combination of two or more of the activities in clauses (1) to (4). The cost of acquisition of medical equipment, and the amount of a capital expenditure, is the total cost to the provider regardless of whether the cost is distributed over time through a lease arrangement or other financing or payment mechanism. (e) "Medical equipment" means fixed and movable equipment that is used by a provider in the provision of a health care service. "Medical equipment" includes, but is not limited to, the following: (1) an extracorporeal shock wave lithotripter; (2) a computerized axial tomography (CAT) scanner; (3) a magnetic resonance imaging (MRI) unit; (4) a positron emission tomography (PET) scanner; and (5) emergency and nonemergency medical transportation equipment and vehicles. (f) "New specialized service" means a specialized health care procedure or treatment regimen offered by a provider that was not previously offered by the provider, including, but not limited to: (1) cardiac catheterization services involving high-risk patients as defined in the Guidelines for Coronary Angiography established by the American Heart Association and the American College of Cardiology; (2) heart, heart-lung, liver, kidney, bowel, or pancreas transplantation service, or any other service for transplantation of any other organ; (3) megavoltage radiation therapy; (4) open heart surgery; (5) neonatal intensive care services; and (6) any new medical technology for which premarket approval has been granted by the United States Food and Drug Administration, excluding implantable and wearable devices. (g) "Specialty care" includes but is not limited to cardiac, neurology, orthopedic, obstetrics, mental health, substance use disorder, and emergency services. Subd. 3. Hospital and nursing home moratoria preserved; nursing homes exempt. Nothing in this section supersedes or limits the applicability of section 144.551 or 144A.071. This section does not apply to major spending commitments made by nursing homes or intermediate care facilities that are related to the provision of long-term care services to residents. Subd. 4.  [Repealed, 1993 c 345 art 6 s 26] Subd. 4a. Expenditure reporting. Each hospital, outpatient surgical center, diagnostic imaging center, and physician, advanced practice registered nurse, or physician assistant clinic shall report annually to the commissioner on all major spending commitments, in the form and manner specified by the commissioner. The report shall include the following information: (1) a description of major spending commitments made during the previous year, including the total dollar amount of major spending commitments and purpose of the expenditures; (2) the cost of land acquisition, construction of new facilities, and renovation of existing facilities; (3) the cost of purchased or leased medical equipment, by type of equipment; (4) expenditures by type for specialty care and new specialized services; (5) information on the amount and types of added capacity for diagnostic imaging services, outpatient surgical services, and new specialized services; and (6) information on investments in electronic medical records systems. For hospitals and outpatient surgical centers, this information shall be included in reports to the commissioner that are required under section 144.698. For diagnostic imaging centers, this information shall be included in reports to the commissioner that are required under section 144.565. For all other health care providers that are subject to this reporting requirement, reports must be submitted to the commissioner by March 1 each year for the preceding calendar year. Subd. 5.  [Repealed, 1993 c 345 art 6 s 26] Subd. 5a. Retrospective review. (a) The commissioner shall retrospectively review each major spending commitment and notify the provider of the results of the review. The commissioner shall determine whether the major spending commitment was appropriate. In making the determination, the commissioner may consider the following criteria: the major spending commitment's impact on the cost, access, and quality of health care; the clinical effectiveness and cost-effectiveness of the major spending commitment; and the alternatives available to the provider. (b) The commissioner may not prevent or prohibit a major spending commitment subject to retrospective review. However, if the provider fails the retrospective review, any major spending commitments by that provider for the five-year period following the commissioner's decision are subject to prospective review under subdivision 6a. Subd. 6.  [Repealed, 1993 c 345 art 6 s 26] Subd. 6a. Prospective review and approval. (a) No health care provider subject to prospective review under this subdivision shall make a major spending commitment unless: (1) the provider has filed an application with the commissioner to proceed with the major spending commitment and has provided all supporting documentation and evidence requested by the commissioner; and (2) the commissioner determines, based upon this documentation and evidence, that the major spending commitment is appropriate under the criteria provided in subdivision 5a in light of the alternatives available to the provider. (b) A provider subject to prospective review and approval shall submit an application to the commissioner before proceeding with any major spending commitment. The provider may submit information, with supporting documentation, regarding why the major spending commitment should be excepted from prospective review under subdivision 7. (c) The commissioner shall determine, based upon the information submitted, whether the major spending commitment is appropriate under the criteria provided in subdivision 5a, or whether it should be excepted from prospective review under subdivision 7. In making this determination, the commissioner may also consider relevant information from other sources. At the request of the commissioner, the health technology advisory committee shall convene an expert review panel made up of persons with knowledge and expertise regarding medical equipment, specialized services, health care expenditures, and capital expenditures to review applications and make recommendations to the commissioner. The commissioner shall make a decision on the application within 60 days after an application is received. (d) The commissioner of health has the authority to issue fines, seek injunctions, and pursue other remedies as provided by law. Subd. 7. Exceptions. (a) The reporting requirement in subdivision 4a does not apply to: (1) a major spending commitment made by a research and teaching institution for purposes of conducting medical education, medical research supported or sponsored by a medical school, or by a federal or foundation grant or clinical trials; (2) a major spending commitment for building maintenance including heating, water, electricity, and other maintenance-related expenditures; and (3) a major spending commitment for activities, not directly related to the delivery of patient care services, including food service, laundry, housekeeping, and other service-related activities. (b) In addition to the exceptions listed in paragraph (a), the reporting requirement in subdivision 4a does not apply to mergers, acquisitions, and other changes in ownership or control that, in the judgment of the commissioner, do not involve a substantial expansion of service capacity or a substantial change in the nature of health care services provided. Subd. 8. Radiation therapy facilities. (a) This subdivision shall apply only to those major spending commitments that are related to the purchase, construction, or leasing of a radiation therapy facility. (b) The term "provider" shall mean: (1) a provider as defined in section 62J.03, subdivision 8; (2) a person or organization that, upon engaging in an activity related to a major spending commitment, will become a provider as defined in section 62J.03, subdivision 8; (3) an organization under common control with an organization described in clause (1) or (2); or (4) an organization that manages a person or organization described in clause (1), (2), or (3). (c) In conducting the retrospective or prospective review, the commissioner shall consider the criteria described in subdivision 5a, paragraph (a), in determining whether the major spending commitment was appropriate. In addition, the commissioner shall consider the following criteria: (1) the alternatives available to patients in terms of avoiding an unwarranted duplication based on whether additional capacity is needed of services, facilities, or equipment in and around the location of the major spending commitment; and (2) the best interests of the patients, including conflicts of interest that may be present in influencing the utilization of the services, facility, or equipment relating to the major spending commitment. (d) In addition to subdivision 6a, paragraph (c), the commissioner has the authority to pursue the following remedies: (1) assessment of fines against providers violating subdivision 6a, paragraph (a), of up to triple the amount of the major spending commitment; (2) securing a permanent injunction against providers violating subdivision 6a, paragraph (a), halting the purchase or construction of a facility, prohibiting the operation of a facility, or the providing of a service related to the major spending commitment; and (3) obtaining a court order to invalidate any purchase agreement, management agreement, lease, or other contract relating to the major spending commitment or the conduct of any activity relating to the major spending commitment. (e) If a provider fails the retrospective review of a major spending commitment that is identified under this subdivision, the prospective review and approval required under subdivision 6a shall be limited to major spending commitments that are identified under this subdivision. (f) The provisions of this subdivision do not apply to radiation therapy facilities owned and operated or managed by a hospital licensed under chapter 144. History:  1992 c 549 art 1 s 8; 1993 c 345 art 6 s 9-11; 1995 c 234 art 8 s 8-10; 1997 c 225 art 2 s 21; 1998 c 254 art 1 s 12; 2000 c 307 s 1; 1Sp2003 c 14 art 7 s 11; 2007 c 147 art 9 s 1-4; 1Sp2011 c 9 art 2 s 2; 2020 c 115 art 4 s 3; 2022 c 58 s 7; 2022 c 98 art 4 s 51
62J.212 PUBLIC HEALTH GOALS. The commissioner shall establish specific public health goals including, but not limited to, increased delivery of prenatal care, improved birth outcomes, and expanded childhood immunizations. The commissioner shall consider the community public health goals and the input of the statewide advisory committee on community health in establishing the statewide goals. History:  1993 c 345 art 5 s 9; 1995 c 234 art 5 s 4
62J.22 PARTICIPATION OF FEDERAL PROGRAMS. The commissioner of health shall seek the full participation of federal health care programs under this chapter, including Medicare, medical assistance, veterans administration programs, and other federal programs. The commissioner of human services shall submit waiver requests and take other action necessary to obtain federal approval to allow participation of the medical assistance program. If federal approval is not given for one or more federal programs, data on the amount of health care spending that is collected under section 62J.04 shall be adjusted so that state and regional spending limits take into account the failure of the federal program to participate. History:  1992 c 549 art 1 s 11; 1997 c 225 art 2 s 22
62J.23 PROVIDER CONFLICTS OF INTEREST. Subdivision 1. Rules prohibiting conflicts of interest. The commissioner of health shall adopt rules restricting financial relationships or payment arrangements involving health care providers under which a person benefits financially by referring a patient to another person, recommending another person, or furnishing or recommending an item or service. The rules must be compatible with, and no less restrictive than, the federal Medicare antikickback statute, in section 1128B(b) of the Social Security Act, United States Code, title 42, section 1320a-7b(b), and regulations adopted under it. However, the commissioner's rules may be more restrictive than the federal law and regulations and may apply to additional provider groups and business and professional arrangements. When the state rules restrict an arrangement or relationship that is permissible under federal laws and regulations, including an arrangement or relationship expressly permitted under the federal safe harbor regulations, the fact that the state requirement is more restrictive than federal requirements must be clearly stated in the rule. Subd. 2. Restrictions. (a) From July 1, 1992, until rules are adopted by the commissioner under this section, the restrictions in the federal Medicare antikickback statutes in section 1128B(b) of the Social Security Act, United States Code, title 42, section 1320a-7b(b), and rules adopted under the federal statutes, apply to all persons in the state, regardless of whether the person participates in any state health care program. (b) Nothing in paragraph (a) shall be construed to prohibit an individual from receiving a discount or other reduction in price or a limited-time free supply or samples of a prescription drug, medical supply, or medical equipment offered by a pharmaceutical manufacturer, medical supply or device manufacturer, health plan company, or pharmacy benefit manager, so long as: (1) the discount or reduction in price is provided to the individual in connection with the purchase of a prescription drug, medical supply, or medical equipment prescribed for that individual; (2) it otherwise complies with the requirements of state and federal law applicable to enrollees of state and federal public health care programs; (3) the discount or reduction in price does not exceed the amount paid directly by the individual for the prescription drug, medical supply, or medical equipment; and (4) the limited-time free supply or samples are provided by a physician, advanced practice registered nurse, physician assistant, or pharmacist, as provided by the federal Prescription Drug Marketing Act. For purposes of this paragraph, "prescription drug" includes prescription drugs that are administered through infusion, injection, or other parenteral methods, and related services and supplies. (c) No benefit, reward, remuneration, or incentive for continued product use may be provided to an individual or an individual's family by a pharmaceutical manufacturer, medical supply or device manufacturer, or pharmacy benefit manager, except that this prohibition does not apply to: (1) activities permitted under paragraph (b); (2) a pharmaceutical manufacturer, medical supply or device manufacturer, health plan company, or pharmacy benefit manager providing to a patient, at a discount or reduced price or free of charge, ancillary products necessary for treatment of the medical condition for which the prescription drug, medical supply, or medical equipment was prescribed or provided; and (3) a pharmaceutical manufacturer, medical supply or device manufacturer, health plan company, or pharmacy benefit manager providing to a patient a trinket or memento of insignificant value. (d) Nothing in this subdivision shall be construed to prohibit a health plan company from offering a tiered formulary with different co-payment or cost-sharing amounts for different drugs. Subd. 3. Penalty. The commissioner may assess a fine against a person who violates this section. The amount of the fine is $1,000 or 110 percent of the estimated financial benefit that the person realized as a result of the prohibited financial arrangement or payment relationship, whichever is greater. A person who is in compliance with a transition plan approved by the commissioner under subdivision 2, or who is making a good faith effort to obtain the commissioner's approval of a transition plan, is not in violation of this section. Subd. 4. Chapter 62N networks. (a) The legislature finds that the formation and operation of community integrated service networks will accomplish the purpose of the federal Medicare antikickback statute, which is to reduce the overutilization and overcharging that may result from inappropriate provider incentives. Accordingly, it is the public policy of the state of Minnesota to support the development of community integrated service networks. The legislature finds that the federal Medicare antikickback laws should not be interpreted to interfere with the development of community integrated service networks or to impose liability for arrangements between an integrated service network or a community integrated service network and its participating entities. (b) An arrangement between a community integrated service network and any or all of its participating entities is not subject to liability under subdivisions 1 and 2. Subd. 5. Audits of exempt providers. The commissioner may audit the referral patterns of providers that qualify for exceptions under the federal Stark Law, United States Code, title 42, section 1395nn. The commissioner has access to provider records according to section 144.99, subdivision 2. The commissioner shall report to the legislature any audit results that reveal a pattern of referrals by a provider for the furnishing of health services to an entity with which the provider has a direct or indirect financial relationship. History:  1992 c 549 art 1 s 12; 1993 c 247 art 1 s 17; 1993 c 345 art 6 s 13; 1994 c 625 art 8 s 23; 1997 c 225 art 2 s 62; 1Sp2003 c 14 art 7 s 12; 2004 c 280 s 1; 2004 c 288 art 6 s 7; 1Sp2019 c 9 art 9 s 1; 2020 c 115 art 4 s 4; 1Sp2021 c 4 art 3 s 15; 2022 c 58 s 8
62J.25 MANDATORY MEDICARE ASSIGNMENT. (a) Effective January 1, 1993, a health care provider shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 115 percent of the Medicare-approved amount for any Medicare-covered service provided. (b) Effective January 1, 1994, a health care provider shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 110 percent of the Medicare-approved amount for any Medicare-covered service provided. (c) Effective January 1, 1995, a health care provider shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 105 percent of the Medicare-approved amount for any Medicare-covered service provided. (d) Effective January 1, 1996, a health care provider shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of the Medicare-approved amount for any Medicare-covered service provided. (e) This section does not apply to ambulance services as defined in section 144E.001, subdivision 3, or medical supplies and equipment. A vendor of medical supplies and equipment that does not accept assignment under the federal Medicare program with respect to a purchase or lease of Medicare-covered supplies or equipment shall notify any purchaser who is a Medicare beneficiary and Minnesota resident, prior to the purchase, or at any time upon the request of the purchaser, that the vendor charges an amount in excess of the Medicare-approved amount. History:  1992 c 549 art 1 s 13; 1997 c 199 s 14; 1997 c 225 art 2 s 23; 1998 c 339 s 1
62J.26 EVALUATION OF PROPOSED HEALTH COVERAGE MANDATES. Subdivision 1. Definitions. For purposes of this section, the following terms have the meanings given unless the context otherwise requires: (1) "commissioner" means the commissioner of commerce; (2) "enrollee" has the meaning given in section 62Q.01, subdivision 2b; (3) "health plan" means a health plan as defined in section 62A.011, subdivision 3, but includes coverage listed in clauses (7) and (10) of that definition; (4) "mandated health benefit proposal" or "proposal" means a proposal that would statutorily require a health plan company to do the following: (i) provide coverage or increase the amount of coverage for the treatment of a particular disease, condition, or other health care need; (ii) provide coverage or increase the amount of coverage of a particular type of health care treatment or service or of equipment, supplies, or drugs used in connection with a health care treatment or service; (iii) provide coverage for care delivered by a specific type of provider; (iv) require a particular benefit design or impose conditions on cost-sharing for: (A) the treatment of a particular disease, condition, or other health care need; (B) a particular type of health care treatment or service; or (C) the provision of medical equipment, supplies, or a prescription drug used in connection with treating a particular disease, condition, or other health care need; or (v) impose limits or conditions on a contract between a health plan company and a health care provider. "Mandated health benefit proposal" does not include health benefit proposals amending the scope of practice of a licensed health care professional. Subd. 2. Evaluation process and content. (a) The commissioner, in consultation with the commissioners of health and management and budget, must evaluate all mandated health benefit proposals as provided under subdivision 3. (b) The purpose of the evaluation is to provide the legislature with a complete and timely analysis of all ramifications of any mandated health benefit proposal. The evaluation must include, in addition to other relevant information, the following to the extent applicable: (1) scientific and medical information on the mandated health benefit proposal, on the potential for harm or benefit to the patient, and on the comparative benefit or harm from alternative forms of treatment, and must include the results of at least one professionally accepted and controlled trial comparing the medical consequences of the proposed therapy, alternative therapy, and no therapy; (2) public health, economic, and fiscal impacts of the mandated health benefit proposal on persons receiving health services in Minnesota, on the relative cost-effectiveness of the proposal, and on the health care system in general; (3) the extent to which the treatment, service, equipment, or drug is generally utilized by a significant portion of the population; (4) the extent to which insurance coverage for the mandated health benefit proposal is already generally available; (5) the extent to which the mandated health benefit proposal, by health plan category, would apply to the benefits offered to the health plan's enrollees; (6) the extent to which the mandated health benefit proposal will increase or decrease the cost of the treatment, service, equipment, or drug; (7) the extent to which the mandated health benefit proposal may increase enrollee premiums; and (8) if the proposal applies to a qualified health plan as defined in section 62A.011, subdivision 7, the cost to the state to defray the cost of the mandated health benefit proposal using commercial market reimbursement rates in accordance with Code of Federal Regulations, title 45, section 155.70. (c) The commissioner shall consider actuarial analysis done by health plan companies and any other proponent or opponent of the mandated health benefit proposal in determining the cost of the proposal. (d) The commissioner must summarize the nature and quality of available information on these issues, and, if possible, must provide preliminary information to the public. The commissioner may conduct research on these issues or may determine that existing research is sufficient to meet the informational needs of the legislature. The commissioner may seek the assistance and advice of researchers, community leaders, or other persons or organizations with relevant expertise. Subd. 3. Requirements for evaluation. (a) No later than August 1 of the year preceding the legislative session in which a legislator is planning on introducing a bill containing a mandated health benefit proposal, or is planning on offering an amendment to a bill that adds a mandated health benefit, the prospective author must notify the chair of one of the standing legislative committees that have jurisdiction over the subject matter of the proposal. No later than 15 days after notification is received, the chair must notify the commissioner that an evaluation of a mandated health benefit proposal is required to be completed in accordance with this section in order to inform the legislature before any action is taken on the proposal by either house of the legislature. (b) The commissioner must conduct an evaluation described in subdivision 2 of each mandated health benefit proposal for which an evaluation is required under paragraph (a). (c) If the evaluation of multiple proposals are required, the commissioner must consult with the chairs of the standing legislative committees having jurisdiction over the subject matter of the mandated health benefit proposals to prioritize the evaluations and establish a reporting date for each proposal to be evaluated. Subd. 4. Sources of funding. (a) The commissioner shall not use any funds for purposes of this section other than as provided in this subdivision or as specified in an appropriation. (b) The commissioner may seek and accept funding from sources other than the state to pay for evaluations under this section to supplement or replace state appropriations. Any money received under this paragraph must be deposited in the state treasury, credited to a separate account for this purpose in the special revenue fund, and is appropriated to the commissioner for purposes of this section. (c) If an evaluation is required under this section, the commissioner may use for purposes of the evaluation: (1) any funds appropriated to the commissioner specifically for purposes of this section; or (2) funds available under paragraph (b), if use of the funds for evaluation of that mandated health benefit proposal is consistent with any restrictions imposed by the source of the funds. (d) The commissioner must ensure that the source of the funding has no influence on the process or outcome of the evaluation. Subd. 5. Report to legislature. The commissioner must submit a written report on the evaluation to the author of the proposal and to the chairs and ranking minority members of the legislative committees with jurisdiction over health insurance policy and finance no later than 180 days after the commissioner receives notification from a chair as required under subdivision 3. History:  1Sp2003 c 14 art 7 s 13; 2008 c 204 s 42; 2009 c 101 art 2 s 109; 1Sp2021 c 4 art 4 s 2-6
62J.2930 INFORMATION CLEARINGHOUSE. Subdivision 1. Establishment. The commissioner of health shall establish an information clearinghouse within the Department of Health to facilitate the ability of consumers, employers, providers, health plan companies, and others to obtain information on health reform activities in Minnesota. The commissioner shall make available through the clearinghouse updates on federal and state health reform activities, including information developed or collected by the Department of Health on cost containment or other research initiatives, the development of voluntary purchasing pools, action plans submitted by health plan companies, reports or recommendations of the Health Technology Advisory Committee and other entities on technology assessments, and reports or recommendations from other formal committees applicable to health reform activities. The clearinghouse shall also refer requestors to sources of further information or assistance. The clearinghouse is subject to chapter 13. Subd. 2. Information on health plan companies. The information clearinghouse shall provide information on all health plan companies operating in a specific geographic area to consumers and purchasers who request it. Subd. 3. Consumer information. (a) The information clearinghouse or another entity designated by the commissioner shall provide consumer information to health plan company enrollees to: (1) assist enrollees in understanding their rights; (2) explain and assist in the use of all available complaint systems, including internal complaint systems within health carriers, community integrated service networks, and the Departments of Health and Commerce; (3) provide information on coverage options in each region of the state; (4) provide information on the availability of purchasing pools and enrollee subsidies; and (5) help consumers use the health care system to obtain coverage. (b) The information clearinghouse or other entity designated by the commissioner for the purposes of this subdivision shall not: (1) provide legal services to consumers; (2) represent a consumer or enrollee; or (3) serve as an advocate for consumers in disputes with health plan companies. (c) Nothing in this subdivision shall interfere with the ombudsman program established under section 256B.6903 or other existing ombudsman programs. Subd. 4. Coordination. To the extent possible, the commissioner shall coordinate the activities of the clearinghouse with the activities of the Minnesota Health Data Institute. History:  1995 c 234 art 5 s 5; 1997 c 225 art 2 s 62; 1999 c 245 art 2 s 7; 2009 c 173 art 3 s 1; 2022 c 98 art 2 s 1
62J.301 RESEARCH AND DATA INITIATIVES. Subdivision 1. Definitions. (a) For purposes of sections 62J.2930 to 62J.42, the following definitions apply: (b) "Health outcomes data" means data used in research designed to identify and analyze the outcomes and costs of alternative interventions for a given clinical condition, in order to determine the most appropriate and cost-effective means to prevent, diagnose, treat, or manage the condition, or in order to develop and test methods for reducing inappropriate or unnecessary variations in the type and frequency of interventions. (c) "Encounter level data" means data related to the utilization of health care services by, and the provision of health care services to individual patients, enrollees, or insureds, including claims data, abstracts of medical records, and data from patient interviews and patient surveys. Subd. 2. Statement of purpose. The commissioner of health shall conduct data and research initiatives in order to monitor and improve the efficiency and effectiveness of health care in Minnesota. Subd. 3. General duties. The commissioner shall: (1) collect and maintain data which enable population-based monitoring and trending of the access, utilization, quality, and cost of health care services within Minnesota; (2) collect and maintain data for the purpose of estimating total Minnesota health care expenditures and trends; (3) collect and maintain data for the purposes of setting cost containment goals under section 62J.04, and measuring cost containment goal compliance; (4) conduct applied research using existing and new data and promote applications based on existing research; (5) develop and implement data collection procedures to ensure a high level of cooperation from health care providers and health plan companies, as defined in section 62Q.01, subdivision 4; (6) work closely with health plan companies and health care providers to promote improvements in health care efficiency and effectiveness; and (7) participate as a partner or sponsor of private sector initiatives that promote publicly disseminated applied research on health care delivery, outcomes, costs, quality, and management. Subd. 4. Information to be collected. (a) The data collected may include health outcomes data, patient functional status, and health status. The data collected may include information necessary to measure and make adjustments for differences in the severity of patient condition across different health care providers, and may include data obtained directly from the patient or from patient medical records, as provided in section 62J.321, subdivision 1. (b) The commissioner may: (1) collect the encounter level data required for the research and data initiatives of sections 62J.301 to 62J.42, using, to the greatest extent possible, standardized forms and procedures; and (2) process the data collected to ensure validity, consistency, accuracy, and completeness, and as appropriate, merge data collected from different sources. (c) For purposes of estimating total health care spending and forecasting rates of growth in health care spending, the commissioner may collect from health care providers data on patient revenues and health care spending during a time period specified by the commissioner. The commissioner may also collect data on health care revenues and spending from group purchasers of health care. Health care providers and group purchasers doing business in the state shall provide the data requested by the commissioner at the times and in the form specified by the commissioner. Professional licensing boards and state agencies responsible for licensing, registering, or regulating providers and group purchasers shall cooperate fully with the commissioner in achieving compliance with the reporting requirements. Subd. 5. Nonlimiting. Nothing in this chapter shall be construed to limit the powers granted to the commissioner of health under chapter 62D, 62N, 144, or 144A. History:  1995 c 234 art 5 s 6; 1997 c 150 s 5
62J.311 ANALYSIS AND USE OF DATA. Subdivision 1. Data analysis. The commissioner shall analyze the data collected to: (1) assist the state in developing and refining its health policy in the areas of access, utilization, quality, and cost; (2) assist the state in promoting efficiency and effectiveness in the financing and delivery of health services; (3) monitor and track accessibility, utilization, quality, and cost of health care services within the state; (4) evaluate the impact of health care reform activities; (5) assist the state in its public health activities; and (6) evaluate and determine the most appropriate methods for ongoing data collection. Subd. 2. Criteria for data and research initiatives. (a) Data and research initiatives by the commissioner, pursuant to sections 62J.301 to 62J.42, must: (1) serve the needs of the general public, public sector health care programs, employers and other purchasers of health care, health care providers, including providers serving large numbers of people with low-income, and health plan companies as applicable; (2) be based on scientifically sound and statistically valid methods; (3) be statewide in scope, to the extent feasible, in order to benefit health care purchasers and providers in all parts of Minnesota and to ensure broad and representative health care data for research comparisons and applications; (4) emphasize data that is useful, relevant, and nonredundant of existing data. The initiatives may duplicate existing private data collection activities, if necessary to ensure that the data collected will be in the public domain; (5) be structured to minimize the administrative burden on health plan companies, health care providers, and the health care delivery system, and minimize any privacy impact on individuals; and (6) promote continuous improvement in the efficiency and effectiveness of health care delivery. (b) Data and research initiatives related to public sector health care programs must: (1) assist the state's current health care financing and delivery programs to deliver and purchase health care in a manner that promotes improvements in health care efficiency and effectiveness; (2) assist the state in its public health activities, including the analysis of disease prevalence and trends and the development of public health responses; (3) assist the state in developing and refining its overall health policy, including policy related to health care costs, quality, and access; and (4) provide data that allows the evaluation of state health care financing and delivery programs. History:   1995 c 234 art 5 s 7 
62J.321 DATA COLLECTION AND PROCESSING PROCEDURES. Subdivision 1. Data collection. (a) The commissioner shall collect data from health care providers, health plan companies, and individuals in the most cost-effective manner, which does not unduly burden them. The commissioner may require health care providers and health plan companies to collect and provide patient health records and claim files, and cooperate in other ways with the data collection process. The commissioner may also require health care providers and health plan companies to provide mailing lists of patients. Patient consent shall not be required for the release of data to the commissioner pursuant to sections 62J.301 to 62J.42 by any group purchaser, health plan company, health care provider; or agent, contractor, or association acting on behalf of a group purchaser or health care provider. Any group purchaser, health plan company, health care provider; or agent, contractor, or association acting on behalf of a group purchaser or health care provider, that releases data to the commissioner in good faith pursuant to sections 62J.301 to 62J.42 shall be immune from civil liability and criminal prosecution. (b) When a group purchaser, health plan company, or health care provider submits patient identifying data to the commissioner pursuant to sections 62J.301 to 62J.42, and the data is submitted to the commissioner in electronic form, or through other electronic means including, but not limited to, the electronic data interchange system, the group purchaser, health plan company, or health care provider shall submit the patient identifying data in encrypted form, using an encryption method specified by the commissioner. Submission of encrypted data as provided in this paragraph satisfies the requirements of section 144.293, subdivision 7. (c) The commissioner shall require all health care providers, group purchasers, and state agencies to use a standard patient identifier and a standard identifier for providers and health plan companies when reporting data under this chapter. The commissioner must encrypt patient identifiers to prevent identification of individual patients and to enable release of otherwise private data to researchers, providers, and group purchasers in a manner consistent with chapter 13 and sections 62J.55 and 144.291 to 144.298. This encryption must ensure that any data released must be in a form that makes it impossible to identify individual patients. Subd. 2. Failure to provide data. The intentional failure to provide the data requested under this chapter is grounds for disciplinary or regulatory action against a regulated provider or group purchaser. The commissioner may assess a fine against a provider or group purchaser who refuses to provide data required by the commissioner. If a provider or group purchaser refuses to provide the data required, the commissioner may obtain a court order requiring the provider or group purchaser to produce documents and allowing the commissioner to inspect the records of the provider or group purchaser for purposes of obtaining the data required. Subd. 3. Data collection and review. Data collection must continue for a sufficient time to permit: adequate analysis by researchers and appropriate providers, including providers who will be impacted by the data; feedback to providers; monitoring for changes in practice patterns; and the data and research criteria of section 62J.311, subdivision 2, to be fulfilled. Subd. 4. Use of existing data. (a) The commissioner shall negotiate with private sector organizations currently collecting health care data of interest to the commissioner to obtain required data in a cost-effective manner and minimize administrative costs. The commissioner shall attempt to establish links between the health care data collected to fulfill sections 62J.301 to 62J.42 and existing private sector data and shall consider and implement methods to streamline data collection in order to reduce public and private sector administrative costs. (b) The commissioner shall use existing public sector data, such as those existing for medical assistance and Medicare, to the greatest extent possible. The commissioner shall establish links between existing public sector data and consider and implement methods to streamline public sector data collection in order to reduce public and private sector administrative costs. Subd. 5. Data classification. (a) Data collected to fulfill the data and research initiatives authorized by sections 62J.301 to 62J.42 that identify individual patients or providers are private data on individuals. Data not on individuals are nonpublic data. The commissioner shall establish procedures and safeguards to ensure that data released by the commissioner is in a form that does not identify specific patients, providers, employers, individual or group purchasers, or other specific individuals and organizations, except with the permission of the affected individual or organization, or as permitted elsewhere in this chapter. (b) Raw unaggregated data collected from household and employer surveys used by the commissioner to monitor the number of uninsured individuals, reasons for lack of insurance coverage, and to evaluate the effectiveness of health care reform, are subject to the same data classifications as data collected pursuant to sections 62J.301 to 62J.42. (c) Notwithstanding sections 13.03, subdivisions 6 to 8; 13.10, subdivisions 1 to 4; and 138.17, data received by the commissioner pursuant to sections 62J.301 to 62J.42, shall retain the classification designated under this section and shall not be disclosed other than pursuant to this section. (d) Summary data collected to fulfill the data and research initiatives authorized by sections 62J.301 to 62J.42 may be disseminated under section 13.05, subdivision 7. For the purposes of this section, summary data includes nonpublic data not on individuals. (e) Notwithstanding paragraph (a), the commissioner may publish nonpublic or private data collected pursuant to sections 62J.301 to 62J.42 on health care costs and spending, quality and outcomes, and utilization for health care institutions, individual health care professionals and groups of health care professionals, and group purchasers, with a description of the methodology used for analysis. The commissioner may not make public any patient identifying information except as specified in law. The commissioner shall not reveal the name of an institution, group of professionals, individual health care professional, or group purchaser until after the institution, group of professionals, individual health care professional, or group purchaser has had 21 days to review the data and comment. The commissioner shall include comments received in the release of the data. (f) A provider or group purchaser may contest whether the data meets the criteria of section 62J.311, subdivision 2, paragraph (a), clause (2), in accordance with a contested case proceeding as set forth in sections 14.57 to 14.62, subject to appeal in accordance with sections 14.63 to 14.68. To obtain a contested case hearing, the provider or group purchaser must make a written request to the commissioner before the end of the time period for review and comment. Within ten days of the assignment of an administrative law judge, the provider or group purchaser shall make a clear showing to the administrative law judge of probable success in a hearing on the issue of whether the data are accurate and valid and were collected based on the criteria of section 62J.311, subdivision 2, paragraph (a), clause (2). If the administrative law judge determines that the provider or group purchaser has made such a showing, the data shall remain private or nonpublic during the contested case proceeding and appeal. If the administrative law judge determines that the provider or group purchaser has not made such a showing, the commissioner may publish the data immediately, with comments received in the release of the data. The contested case proceeding and subsequent appeal is not an exclusive remedy and any person may seek a remedy pursuant to section 13.08, subdivisions 1 to 4, or as otherwise authorized by law. Subd. 5a.  [Repealed, 1Sp2011 c 9 art 2 s 29] Subd. 6. Rulemaking. The commissioner may adopt rules to implement sections 62J.301 to 62J.42. Subd. 7. Federal and other grants. The commissioner may seek federal funding, and funding from private and other nonstate sources, for data and research initiatives. Subd. 8. Contracts and grants. To carry out the duties assigned in sections 62J.301 to 62J.42, the commissioner may contract with or provide grants to private sector entities. Any contract or grant must require the private sector entity to maintain the data which it receives according to the statutory provisions applicable to the data. History:  1995 c 234 art 5 s 8; 1997 c 225 art 2 s 62; 1998 c 407 art 2 s 3; 1Sp2003 c 14 art 7 s 88; 2007 c 147 art 10 s 15
62J.38 COST CONTAINMENT DATA FROM GROUP PURCHASERS. (a) The commissioner shall require group purchasers to submit detailed data on total health care spending for each calendar year. Group purchasers shall submit data for the 1993 calendar year by April 1, 1994, and each April 1 thereafter shall submit data for the preceding calendar year. (b) The commissioner shall require each group purchaser to submit data on revenue, expenses, and member months, as applicable. Revenue data must distinguish between premium revenue and revenue from other sources and must also include information on the amount of revenue in reserves and changes in reserves. Expenditure data must distinguish between costs incurred for patient care and administrative costs. Patient care and administrative costs must include only expenses incurred on behalf of health plan members and must not include the cost of providing health care services for nonmembers at facilities owned by the group purchaser or affiliate. Expenditure data must be provided separately for the following categories and for other categories required by the commissioner: physician services, dental services, other professional services, inpatient hospital services, outpatient hospital services, emergency, pharmacy services and other nondurable medical goods, mental health, and substance use disorder services, other expenditures, subscriber liability, and administrative costs. Administrative costs must include costs for marketing; advertising; overhead; salaries and benefits of central office staff who do not provide direct patient care; underwriting; lobbying; claims processing; provider contracting and credentialing; detection and prevention of payment for fraudulent or unjustified requests for reimbursement or services; clinical quality assurance and other types of medical care quality improvement efforts; concurrent or prospective utilization review as defined in section 62M.02; costs incurred to acquire a hospital, clinic, or health care facility, or the assets thereof; capital costs incurred on behalf of a hospital or clinic; lease payments; or any other costs incurred pursuant to a partnership, joint venture, integration, or affiliation agreement with a hospital, clinic, or other health care provider. Capital costs and costs incurred must be recorded according to standard accounting principles. The reports of this data must also separately identify expenses for local, state, and federal taxes, fees, and assessments. The commissioner may require each group purchaser to submit any other data, including data in unaggregated form, for the purposes of developing spending estimates, setting spending limits, and monitoring actual spending and costs. In addition to reporting administrative costs incurred to acquire a hospital, clinic, or health care facility, or the assets thereof; or any other costs incurred pursuant to a partnership, joint venture, integration, or affiliation agreement with a hospital, clinic, or other health care provider; reports submitted under this section also must include the payments made during the calendar year for these purposes. The commissioner shall make public, by group purchaser data collected under this paragraph in accordance with section 62J.321, subdivision 5. Workers' compensation insurance plans and automobile insurance plans are exempt from complying with this paragraph as it relates to the submission of administrative costs. (c) The commissioner may collect information on: (1) premiums, benefit levels, managed care procedures, and other features of health plan companies; (2) prices, provider experience, and other information for services less commonly covered by insurance or for which patients commonly face significant out-of-pocket expenses; and (3) information on health care services not provided through health plan companies, including information on prices, costs, expenditures, and utilization. (d) All group purchasers shall provide the required data using a uniform format and uniform definitions, as prescribed by the commissioner. History:  1993 c 345 art 3 s 10; 1994 c 625 art 8 s 28; 1995 c 234 art 5 s 11; 1Sp2001 c 9 art 16 s 4; 2002 c 379 art 1 s 113; 2022 c 98 art 4 s 51
62J.40 COST CONTAINMENT DATA FROM STATE AGENCIES AND OTHER GOVERNMENTAL UNITS. (a) All state departments or agencies that administer one or more health care programs shall provide to the commissioner of health any additional data on the health care programs they administer that is requested by the commissioner of health, including data in unaggregated form, for purposes of developing estimates of spending, setting spending limits, and monitoring actual spending. The data must be provided at the times and in the form specified by the commissioner of health. (b) For purposes of estimating total health care spending as provided in section 62J.301, subdivision 4, clause (c), all local governmental units shall provide expenditure data to the commissioner. The commissioner shall consult with representatives of the affected local government units in establishing definitions, reporting formats, and reporting time frames. As much as possible, the data shall be collected in a manner that ensures that the data collected is consistent with data collected from the private sector and minimizes the reporting burden to local government. History:  1993 c 345 art 3 s 11; 1995 c 234 art 5 s 12
62J.42 QUALITY, UTILIZATION, AND OUTCOME DATA. The commissioner shall also require group purchasers and health care providers to maintain and periodically report information on quality of care, utilization, and outcomes. The information must be provided at the times and in the form specified by the commissioner. History:   1993 c 345 art 3 s 13 
62J.431 EVIDENCE-BASED HEALTH CARE GUIDELINES. Evidence-based guidelines must meet the following criteria: (1) the scope and application are clear; (2) authorship is stated and any conflicts of interest disclosed; (3) authors represent all pertinent clinical fields or other means of input have been used; (4) the development process is explicitly stated; (5) the guideline is grounded in evidence; (6) the evidence is cited and grated; (7) the document itself is clear and practical; (8) the document is flexible in use, with exceptions noted or provided for with general statements; (9) measures are included for use in systems improvement; and (10) the guideline has scheduled reviews and updating. History:   2007 c 147 art 15 s 1 
62J.46 MONITORING AND REPORTS. Subdivision 1. Long-term care costs. The commissioner shall use existing state data resources to monitor trends in public and private spending on long-term care costs and spending in Minnesota. The commissioner shall recommend to the legislature any additional data collection activities needed to monitor these trends. State agencies collecting information on long-term care spending and costs shall coordinate with the Interagency Long-Term Care Planning Committee and the commissioner to facilitate the monitoring of long-term care expenditures in the state. Subd. 2. Cost shifting. The commissioner shall monitor the extent to which reimbursement rates for government health care programs lead to the shifting of costs to private payers. By January 1, 1995, the commissioner shall report any evidence of cost shifting to the legislature and make recommendations on adjustments to the cost containment plan that should be made due to cost shifting. History:  1993 c 345 art 3 s 16; 2001 c 161 s 13
62J.48 CRITERIA FOR AMBULANCE SERVICES REIMBURSEMENT. All ambulance services licensed under section 144E.10 are eligible for reimbursement under health plan companies. The commissioner shall require health plan companies to adopt the following reimbursement policies. (1) All scheduled or prearranged air and ground ambulance transports must be reimbursed if requested by an attending physician, nurse, or physician assistant, and, if the person is an enrollee in a health plan company, if approved by a designated representative of a health plan company who is immediately available on a 24-hour basis. The designated representative must be a registered nurse or a physician assistant with at least three years of critical care or trauma experience, or a licensed physician. (2) Reimbursement must be provided for all emergency ambulance calls in which a patient is transported or medical treatment rendered. (3) Special transportation services must not be billed or reimbursed if the patient needs medical attention immediately before transportation. History:  1994 c 625 art 4 s 1; 1995 c 234 art 8 s 11; 1997 c 199 s 14; 2022 c 58 s 9
62J.49 AMBULANCE SERVICES FINANCIAL DATA. Subdivision 1. Establishment. The Emergency Medical Services Regulatory Board established under chapter 144 shall establish a financial data collection system for all ambulance services licensed in this state. To establish the financial database, the Emergency Medical Services Regulatory Board may contract with an entity that has experience in ambulance service financial data collection. Subd. 2. Data classification. All financial data collected by the Emergency Medical Services Regulatory Board shall be classified as nonpublic data under section 13.02, subdivision 9. History:   1997 c 203 art 2 s 1 
62J.495 ELECTRONIC HEALTH RECORD TECHNOLOGY. Subdivision 1. Implementation. The commissioner of health, in consultation with the e-Health Advisory Committee, shall develop uniform standards to be used for the interoperable electronic health records system for sharing and synchronizing patient data across systems. The standards must be compatible with federal efforts. The uniform standards must be developed by January 1, 2009, and updated on an ongoing basis. Individual health care providers in private practice with no other providers and health care providers that do not accept reimbursement from a group purchaser, as defined in section 62J.03, subdivision 6, are excluded from the requirements of this section. Subd. 1a. Definitions. (a) "Certified electronic health record technology" means an electronic health record that is certified pursuant to section 3001(c)(5) of the HITECH Act to meet the standards and implementation specifications adopted under section 3004 as applicable. (b) "Commissioner" means the commissioner of health. (c) "Pharmaceutical electronic data intermediary" means any entity that provides the infrastructure to connect computer systems or other electronic devices utilized by prescribing practitioners with those used by pharmacies, health plans, third-party administrators, and pharmacy benefit managers in order to facilitate the secure transmission of electronic prescriptions, refill authorization requests, communications, and other prescription-related information between such entities. (d) "HITECH Act" means the Health Information Technology for Economic and Clinical Health Act in division A, title XIII and division B, title IV of the American Recovery and Reinvestment Act of 2009, including federal regulations adopted under that act. (e) "Interoperable electronic health record" means an electronic health record that securely exchanges health information with another electronic health record system that meets requirements specified in subdivision 3, and national requirements for certification under the HITECH Act. (f) "Qualified electronic health record" means an electronic record of health-related information on an individual that includes patient demographic and clinical health information and has the capacity to: (1) provide clinical decision support; (2) support provider order entry; (3) capture and query information relevant to health care quality; and (4) exchange electronic health information with, and integrate such information from, other sources. Subd. 2. E-Health Advisory Committee. (a) The commissioner shall establish an e-Health Advisory Committee governed by section 15.059 to advise the commissioner on the following matters: (1) assessment of the adoption and effective use of health information technology by the state, licensed health care providers and facilities, and local public health agencies; (2) recommendations for implementing a statewide interoperable health information infrastructure, to include estimates of necessary resources, and for determining standards for clinical data exchange, clinical support programs, patient privacy requirements, and maintenance of the security and confidentiality of individual patient data; (3) recommendations for encouraging use of innovative health care applications using information technology and systems to improve patient care and reduce the cost of care, including applications relating to disease management and personal health management that enable remote monitoring of patients' conditions, especially those with chronic conditions; and (4) other related issues as requested by the commissioner. (b) The members of the e-Health Advisory Committee shall include the commissioners, or commissioners' designees, of health, human services, administration, and commerce and additional members to be appointed by the commissioner to include persons representing Minnesota's local public health agencies, licensed hospitals and other licensed facilities and providers, private purchasers, the medical and nursing professions, health insurers and health plans, the state quality improvement organization, academic and research institutions, consumer advisory organizations with an interest and expertise in health information technology, and other stakeholders as identified by the commissioner to fulfill the requirements of section 3013, paragraph (g), of the HITECH Act. (c) This subdivision expires June 30, 2031. Subd. 3. Interoperable electronic health record requirements. (a) Hospitals and health care providers must meet the following criteria when implementing an interoperable electronic health records system within their hospital system or clinical practice setting. (b) The electronic health record must be a qualified electronic health record. (c) The electronic health record must be certified by the Office of the National Coordinator pursuant to the HITECH Act. This criterion only applies to hospitals and health care providers if a certified electronic health record product for the provider's particular practice setting is available. This criterion shall be considered met if a hospital or health care provider is using an electronic health records system that has been certified within the last three years, even if a more current version of the system has been certified within the three-year period. (d) The electronic health record must meet the standards established according to section 3004 of the HITECH Act as applicable. (e) The electronic health record must have the ability to generate information on clinical quality measures and other measures reported under sections 4101, 4102, and 4201 of the HITECH Act. (f) The electronic health record system must be connected to a state-certified health information organization either directly or through a connection facilitated by a health data intermediary as defined in section 62J.498. (g) A health care provider who is a prescriber or dispenser of legend drugs must have an electronic health record system that meets the requirements of section 62J.497. Subd. 4. Coordination with national HIT activities. (a) The commissioner, in consultation with the e-Health Advisory Committee, shall update the statewide implementation plan required under subdivision 2 and released June 2008, to be consistent with the updated federal plans. (b) The commissioner, in consultation with the e-Health Advisory Committee, shall work to ensure coordination between state, regional, and national efforts to support and accelerate efforts to effectively use health information technology to improve the quality and coordination of health care and the continuity of patient care among health care providers, to reduce medical errors, to improve population health, to reduce health disparities, and to reduce chronic disease. The commissioner's coordination efforts shall include but not be limited to: (1) providing financial and technical support to Minnesota health care providers to encourage implementation of admission, discharge and transfer alerts, and care summary document exchange transactions and to evaluate the impact of health information technology on cost and quality of care. Communications about available financial and technical support shall include clear information about the interoperable health record requirements in subdivision 1, including a separate statement in bold-face type clarifying the exceptions to those requirements; (2) providing educational resources and technical assistance to health care providers and patients related to state and national privacy, security, and consent laws governing clinical health information, including the requirements in sections 144.291 to 144.298. In carrying out these activities, the commissioner's technical assistance does not constitute legal advice; (3) assessing Minnesota's legal, financial, and regulatory framework for health information exchange, including the requirements in sections 144.291 to 144.298, and making recommendations for modifications that would strengthen the ability of Minnesota health care providers to securely exchange data in compliance with patient preferences and in a way that is efficient and financially sustainable; and (4) seeking public input on both patient impact and costs associated with requirements related to patient consent for release of health records for the purposes of treatment, payment, and health care operations, as required in section 144.293, subdivision 2. The commissioner shall provide a report to the legislature on the findings of this public input process no later than February 1, 2017. (c) The commissioner, in consultation with the e-Health Advisory Committee, shall monitor national activity related to health information technology and shall coordinate statewide input on policy development. The commissioner shall coordinate statewide responses to proposed federal health information technology regulations in order to ensure that the needs of the Minnesota health care community are adequately and efficiently addressed in the proposed regulations. The commissioner's responses may include, but are not limited to: (1) reviewing and evaluating any standard, implementation specification, or certification criteria proposed by the national HIT standards committees; (2) reviewing and evaluating policy proposed by national HIT policy committees relating to the implementation of a nationwide health information technology infrastructure; and (3) monitoring and responding to national activity related to privacy, security, and data stewardship of electronic health information and individually identifiable health information. (d) To the extent that the state is either required or allowed to apply, or designate an entity to apply for or carry out activities and programs, the commissioner of health, in consultation with the e-Health Advisory Committee and the commissioner of human services, shall be the lead applicant or sole designating authority. The commissioner shall make such designations consistent with the goals and objectives of sections 62J.495 to 62J.497 and 62J.50 to 62J.61. (e) The commissioner of human services shall apply for funding necessary to administer the incentive payments to providers authorized under title IV of the American Recovery and Reinvestment Act. Subd. 5. Collection of data for assessment and eligibility determination. (a) The commissioner of health, in consultation with the commissioner of human services, may require providers, dispensers, group purchasers, and pharmaceutical electronic data intermediaries to submit data in a form and manner specified by the commissioner to assess the status of adoption, effective use, and interoperability of electronic health records for the purpose of: (1) demonstrating Minnesota's progress on goals established by the Office of the National Coordinator to accelerate the adoption and effective use of health information technology established under the HITECH Act; (2) assisting the Centers for Medicare and Medicaid Services and the Department of Human Services in determining eligibility of health care professionals and hospitals to receive federal incentives for the adoption and effective use of health information technology under the HITECH Act or other federal incentive programs; (3) assisting the Office of the National Coordinator in completing required assessments of the impact of the implementation and effective use of health information technology in achieving goals identified in the national strategic plan, and completing studies required by the HITECH Act; (4) providing the data necessary to assist the Office of the National Coordinator in conducting evaluations of regional extension centers as required by the HITECH Act; and (5) other purposes as necessary to support the implementation of the HITECH Act. (b) The commissioner shall coordinate with the commissioner of human services and other state agencies in the collection of data required under this section to: (1) avoid duplicative reporting requirements; (2) maximize efficiencies in the development of reports on state activities as required by HITECH; and (3) determine health professional and hospital eligibility for incentives available under the HITECH Act. (c) The commissioner must not collect data or publish analyses that identify, or could potentially identify, individual patients. The commissioner must not collect individual patient data in identified or de-identified form. Subd. 6. State agency information system. Development of state agency information systems necessary to implement this section is subject to the authority of the Department of Information Technology Services in chapter 16E, including, but not limited to: (1) evaluation and approval of the system as specified in section 16E.03, subdivisions 3 and 4; (2) review of the system to ensure compliance with security policies, guidelines, and standards as specified in section 16E.03, subdivision 7; and (3) assurance that the system complies with accessibility standards developed under section 16E.03, subdivision 9. Subd. 7. Authority to administer Minnesota electronic health record incentives program. The commissioner of human services shall administer an electronic health record incentives program according to section 4201 of the American Recovery and Reinvestment Act, Public Law 111-5 and Code of Federal Regulations, title 42, part 495. Subd. 8. Definitions. (a) For purposes of subdivisions 7 to 11, the following terms have the meanings given. (b) "Certified electronic health record technology" has the same meaning as defined in Code of Federal Regulations, title 42, part 495.4. (c) "Commissioner" means the commissioner of the Department of Human Services. (d) "National Level Repository" or "NLR" has the same meaning as defined in Code of Federal Regulations, title 42, part 495. (e) "SMHP" means the state Medicaid health information technology plan. (f) "MEIP" means the Minnesota electronic health record incentive program in this section. (g) "Pediatrician" means a physician who is certified by either the American Board of Pediatrics or the American Osteopathic Board of Pediatrics. Subd. 9. Registration, application, and payment processing. (a) Eligible providers and eligible hospitals must successfully complete the NLR registration process defined by the Centers for Medicare and Medicaid Services before applying for the Minnesota electronic health record incentives program. (b) The commissioner shall collect any improper payments made under the Minnesota electronic health record incentives program. (c) Eligible providers and eligible hospitals enrolled in the Minnesota electronic health record incentives program must retain all records supporting eligibility for a minimum of six years. (d) The commissioner shall determine the allowable methodology options to be used by eligible providers and eligible hospitals for purposes of attesting to and calculating their Medicaid patient volume per Code of Federal Regulations, title 42, part 495.306. (e) Minnesota electronic health record incentives program payments must be processed and paid to the tax identification number designated by the eligible provider or eligible hospital. (f) The payment mechanism for Minnesota electronic health record incentives program payments must be determined by the commissioner. (g) The commissioner shall determine the 12-month period selected by the state as referenced in Code of Federal Regulation, title 42, part 495.310 (g)(1)(i)(B). Subd. 10. Audits. The commissioner is authorized to audit an eligible provider or eligible hospital that applies for an incentive payment through the Minnesota electronic health record incentives program, both before and after payment determination. The commissioner is authorized to use state and federal laws, regulations, and circulars to develop the department's audit criteria. Subd. 11. Provider appeals. An eligible provider or eligible hospital who has received notification of an adverse action related to the Minnesota electronic health record incentives program may appeal the action pursuant to this section. Subd. 12. MEIP appeals. An eligible provider or eligible hospital who has received notice of an appealable issue related to the Minnesota electronic health record incentives program may appeal the action in accordance with procedures in this section. Subd. 13. Definitions. (a) For purposes of subdivisions 12 to 15, the following terms have the meanings given. (b) "Provider" means an eligible provider or eligible hospital for purposes of the Minnesota electronic health record incentives program. (c) "Appealable issue" means one or more of the following issues related to the Minnesota electronic health record incentives program: (1) incentive payments; (2) incentive payment amounts; (3) provider eligibility determination; or (4) demonstration of adopting, implementing, and upgrading, and meaningful use eligibility for incentives. Subd. 14. Filing an appeal. To appeal, the provider shall file with the commissioner a written notice of appeal. The appeal must be postmarked or received by the commissioner within 30 days of the date of issuance specified in the notice of action regarding the appealable issue. The notice of appeal must specify: (1) the appealable issues; (2) each disputed item; (3) the reason for the dispute; (4) the total dollar amount in dispute; (5) the computation that the provider believes is correct; (6) the authority relied upon for each disputed item; (7) the name and address of the person or firm with whom contacts may be made regarding the appeal; and (8) other information required by the commissioner. Subd. 15. Appeals review process. (a) Upon receipt of an appeal notice satisfying subdivision 14, the commissioner shall review the appeal and issue a written appeal determination on each appealed item with 90 days. Upon mutual agreement, the commissioner and the provider may extend the time for issuing a determination for a specified period. The commissioner shall notify the provider of the appeal determination. The appeal determination takes effect upon the date of issuance specified in the determination. (b) In reviewing the appeal, the commissioner may request additional written or oral information from the provider. (c) The provider has the right to present information by telephone, in writing, or in person concerning the appeal to the commissioner prior to the issuance of the appeal determination within 30 days of the date the appeal was received by the commissioner. The provider must request an in-person conference in writing, separate from the appeal letter. Statements made during the review process are not admissible in a contested case hearing absent an express stipulation by the parties to the contested case. (d) For an appeal item on which the provider disagrees with the appeal determination, the provider may file with the commissioner a written demand for a contested case hearing to determine the proper resolution of specified appeal items. The demand must be postmarked or received by the commissioner within 30 days of the date of issuance specified in the determination. A contested case demand for an appeal item nullifies the written appeal determination issued by the commissioner for that appeal item. The commissioner shall refer any contested case demand to the Office of the Attorney General. (e) A contested case hearing must be heard by an administrative law judge according to sections 14.48 to 14.56. In any proceeding under this section, the appealing party must demonstrate by a preponderance of the evidence that the Minnesota electronic health record incentives program eligibility determination is incorrect. (f) Regardless of any appeal, the Minnesota electronic health record incentives program eligibility determination must remain in effect until final resolution of the appeal. (g) The commissioner has discretion to issue to the provider a proposed resolution for specified appeal items upon a request from the provider filed separately from the notice of appeal. The proposed resolution is final upon written acceptance by the provider within 30 days of the date the proposed resolution was mailed to or personally received by the provider, whichever is earlier. History:  1Sp2005 c 4 art 6 s 1; 2007 c 147 art 15 s 2; 2008 c 358 art 4 s 2; 2009 c 79 art 4 s 1; 2009 c 102 s 1; 2010 c 336 s 1-3; 1Sp2011 c 9 art 6 s 4-12; 2013 c 81 s 1; 2013 c 134 s 30; 2013 c 142 art 3 s 36; 2014 c 275 art 1 s 5; 2014 c 286 art 8 s 5; 2015 c 42 s 1; 2015 c 78 art 5 s 1; 2016 c 189 art 20 s 5; 1Sp2019 c 9 art 11 s 2,3; 2020 c 115 art 4 s 5; 2021 c 30 art 3 s 1; 2021 c 31 art 2 s 16; 1Sp2021 c 7 art 3 s 1-3
62J.496 ELECTRONIC HEALTH RECORD SYSTEM REVOLVING ACCOUNT AND LOAN PROGRAM. Subdivision 1. Account establishment. (a) An account is established to: (1) finance the purchase of certified electronic health records or qualified electronic health records as defined in section 62J.495, subdivision 1a; (2) enhance the utilization of electronic health record technology, which may include costs associated with upgrading the technology to meet the criteria necessary to be a certified electronic health record or a qualified electronic health record; (3) train personnel in the use of electronic health record technology; and (4) improve the secure electronic exchange of health information. (b) Amounts deposited in the account, including any grant funds obtained through federal or other sources, loan repayments, and interest earned on the amounts shall be used only for awarding loans or loan guarantees, as a source of reserve and security for leveraged loans, for activities authorized in section 62J.495, subdivision 4, or for the administration of the account. (c) The commissioner may accept contributions to the account from private sector entities subject to the following provisions: (1) the contributing entity may not specify the recipient or recipients of any loan issued under this subdivision; (2) the commissioner shall make public the identity of any private contributor to the loan fund, as well as the amount of the contribution provided; (3) the commissioner may issue letters of commendation or make other awards that have no financial value to any such entity; and (4) a contributing entity may not specify that the recipient or recipients of any loan use specific products or services, nor may the contributing entity imply that a contribution is an endorsement of any specific product or service. (d) The commissioner may use the loan funds to reimburse private sector entities for any contribution made to the loan fund. Reimbursement to private entities may not exceed the principle amount contributed to the loan fund. (e) The commissioner may use funds deposited in the account to guarantee, or purchase insurance for, a local obligation if the guarantee or purchase would improve credit market access or reduce the interest rate applicable to the obligation involved. (f) The commissioner may use funds deposited in the account as a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the state if the proceeds of the sale of the bonds will be deposited into the loan fund. (g) The commissioner shall not award new loans or loan guarantees after July 1, 2016. Subd. 2. Eligibility. (a) "Eligible borrower" means one of the following: (1) federally qualified health centers; (2) community clinics, as defined under section 145.9268; (3) nonprofit or local unit of government hospitals licensed under sections 144.50 to 144.56; (4) individual or small group physician practices that are focused primarily on primary care; (5) nursing facilities licensed under sections 144A.01 to 144A.27; (6) local public health departments as defined in chapter 145A; and (7) other providers of health or health care services approved by the commissioner for which interoperable electronic health record capability would improve quality of care, patient safety, or community health. (b) The commissioner shall administer the loan fund to prioritize support and assistance to: (1) critical access hospitals; (2) federally qualified health centers; (3) entities that serve uninsured, underinsured, and medically underserved individuals, regardless of whether such area is urban or rural; (4) individual or small group practices that are primarily focused on primary care; (5) nursing facilities certified to participate in the medical assistance program; and (6) providers enrolled in the elderly waiver program of customized living or 24-hour customized living of the medical assistance program, if at least half of their annual operating revenue is paid under the medical assistance program. (c) An eligible applicant must submit a loan application to the commissioner of health on forms prescribed by the commissioner. The application must include, at a minimum: (1) the amount of the loan requested and a description of the purpose or project for which the loan proceeds will be used; (2) a quote from a vendor; (3) a description of the health care entities and other groups participating in the project; (4) evidence of financial stability and a demonstrated ability to repay the loan; (5) a description of how the system to be financed interoperates or plans in the future to interoperate with other health care entities and provider groups located in the same geographical area; (6) a plan on how the certified electronic health record technology will be maintained and supported over time; and (7) any other requirements for applications included or developed pursuant to section 3014 of the HITECH Act. Subd. 3. Loans. (a) The commissioner of health may make a no-interest loan or low-interest loan to a provider or provider group who is eligible under subdivision 2 consistent with the priorities established in subdivision 2. The total accumulative loan principal must not exceed $3,000,000 per loan. The interest rate for each loan, if imposed, shall not exceed the current market interest rate. The commissioner of health has discretion over the size, interest rate, and number of loans made. Nothing in this section shall require the commissioner to make a loan to an eligible borrower under subdivision 2. (b) The commissioner of health may prescribe forms and establish an application process and, notwithstanding section 16A.1283, may impose a reasonable nonrefundable application fee to cover the cost of administering the loan program. Any application fees imposed and collected under the electronic health records system revolving account and loan program in this section are appropriated to the commissioner of health for the duration of the loan program. The commissioner may apply for and use all federal funds available through the HITECH Act to administer the loan program. (c) For loans approved prior to July 1, 2009, the borrower must begin repaying the principal no later than two years from the date of the loan. Loans must be amortized no later than six years from the date of the loan. (d) For loans granted on January 1, 2010, or thereafter, the borrower must begin repaying the principal no later than one year from the date of the loan. Loans must be amortized no later than six years after the date of the loan. (e) All repayments and interest paid on each loan must be credited to the account. (f) The loan agreement shall include the assurance that the borrower meets the requirements included or developed pursuant to section 3014 of the HITECH Act. The requirements shall include, but are not limited to: (1) submitting reports on quality measures in compliance with regulations adopted by the federal government; (2) demonstrating that any certified electronic health record technology purchased, improved, or otherwise financially supported by this loan program is used to exchange health information in a manner that, in accordance with law and standards applicable to the exchange of information, improves the quality of health care; (3) including a plan on how the borrower intends to maintain and support the certified electronic health record technology over time and the resources expected to be used to maintain and support the technology purchased with the loan; and (4) complying with other requirements the secretary may require to use loans funds under the HITECH Act. Subd. 4. Data classification. Data collected by the commissioner of health on the application to determine eligibility under subdivision 2 and to monitor borrowers' default risk or collect payments owed under subdivision 3 are (1) private data on individuals as defined in section 13.02, subdivision 12; and (2) nonpublic data as defined in section 13.02, subdivision 9. The names of borrowers and the amounts of the loans granted are public data. History:  2007 c 147 art 15 s 3; 2009 c 79 art 4 s 2; 2009 c 102 s 2; 2012 c 247 art 4 s 1; 2016 c 189 art 20 s 6
62J.497 ELECTRONIC PRESCRIPTION DRUG PROGRAM. Subdivision 1. Definitions. (a) For the purposes of this section, the following terms have the meanings given. (b) "Dispense" or "dispensing" has the meaning given in section 151.01, subdivision 30. Dispensing does not include the direct administering of a controlled substance to a patient by a licensed health care professional. (c) "Dispenser" means a person authorized by law to dispense a controlled substance, pursuant to a valid prescription. (d) "Electronic media" has the meaning given under Code of Federal Regulations, title 45, part 160.103. (e) "E-prescribing" means the transmission using electronic media of prescription or prescription-related information between a prescriber, dispenser, pharmacy benefit manager, or group purchaser, either directly or through an intermediary, including an e-prescribing network. E-prescribing includes, but is not limited to, two-way transmissions between the point of care and the dispenser and two-way transmissions related to eligibility, formulary, and medication history information. (f) "Electronic prescription drug program" means a program that provides for e-prescribing. (g) "Group purchaser" has the meaning given in section 62J.03, subdivision 6. (h) "HL7 messages" means a standard approved by the standards development organization known as Health Level Seven. (i) "National Provider Identifier" or "NPI" means the identifier described under Code of Federal Regulations, title 45, part 162.406. (j) "NCPDP" means the National Council for Prescription Drug Programs, Inc. (k) "NCPDP Formulary and Benefits Standard" means the most recent version of the National Council for Prescription Drug Programs Formulary and Benefits Standard or the most recent standard adopted by the Centers for Medicare and Medicaid Services for e-prescribing under Medicare Part D as required by section 1860D-4(e)(4)(D) of the Social Security Act and regulations adopted under it. The standards shall be implemented according to the Centers for Medicare and Medicaid Services schedule for compliance. (l) "NCPDP SCRIPT Standard" means the most recent version of the National Council for Prescription Drug Programs SCRIPT Standard, or the most recent standard adopted by the Centers for Medicare and Medicaid Services for e-prescribing under Medicare Part D as required by section 1860D-4(e)(4)(D) of the Social Security Act, and regulations adopted under it. The standards shall be implemented according to the Centers for Medicare and Medicaid Services schedule for compliance. (m) "Pharmacy" has the meaning given in section 151.01, subdivision 2. (n) "Prescriber" means a licensed health care practitioner, other than a veterinarian, as defined in section 151.01, subdivision 23. (o) "Prescription-related information" means information regarding eligibility for drug benefits, medication history, or related health or drug information. (p) "Provider" or "health care provider" has the meaning given in section 62J.03, subdivision 8. Subd. 2. Requirements for electronic prescribing. (a) Effective January 1, 2011, all providers, group purchasers, prescribers, and dispensers must establish, maintain, and use an electronic prescription drug program. This program must comply with the applicable standards in this section for transmitting, directly or through an intermediary, prescriptions and prescription-related information using electronic media. (b) If transactions described in this section are conducted, they must be done electronically using the standards described in this section. Nothing in this section requires providers, group purchasers, prescribers, or dispensers to electronically conduct transactions that are expressly prohibited by other sections or federal law. (c) Providers, group purchasers, prescribers, and dispensers must use either HL7 messages or the NCPDP SCRIPT Standard to transmit prescriptions or prescription-related information internally when the sender and the recipient are part of the same legal entity. If an entity sends prescriptions outside the entity, it must use the NCPDP SCRIPT Standard or other applicable standards required by this section. Any pharmacy within an entity must be able to receive electronic prescription transmittals from outside the entity using the adopted NCPDP SCRIPT Standard. This exemption does not supersede any Health Insurance Portability and Accountability Act (HIPAA) requirement that may require the use of a HIPAA transaction standard within an organization. Subd. 3. Standards for electronic prescribing. (a) Prescribers and dispensers must use the NCPDP SCRIPT Standard for the communication of a prescription or prescription-related information. (b) Providers, group purchasers, prescribers, and dispensers must use the NCPDP SCRIPT Standard for communicating and transmitting medication history information. (c) Providers, group purchasers, prescribers, and dispensers must use the NCPDP Formulary and Benefits Standard for communicating and transmitting formulary and benefit information. (d) Providers, group purchasers, prescribers, and dispensers must use the national provider identifier to identify a health care provider in e-prescribing or prescription-related transactions when a health care provider's identifier is required. (e) Providers, group purchasers, prescribers, and dispensers must communicate eligibility information and conduct health care eligibility benefit inquiry and response transactions according to the requirements of section 62J.536. Subd. 4. Development and use of uniform formulary exception form. (a) The commissioner of health, in consultation with the Minnesota Administrative Uniformity Committee, shall develop by July 1, 2009, a uniform formulary exception form that allows health care providers to request exceptions from group purchaser formularies using a uniform form. Upon development of the form, all health care providers must submit requests for formulary exceptions using the uniform form, and all group purchasers must accept this form from health care providers. (b) No later than January 1, 2011, the uniform formulary exception form must be accessible and submitted by health care providers, and accepted and processed by group purchasers, through secure electronic transmissions. Subd. 5. Electronic drug prior authorization standardization and transmission. (a) The commissioner of health, in consultation with the Minnesota e-Health Advisory Committee and the Minnesota Administrative Uniformity Committee, shall, by February 15, 2010, identify an outline on how best to standardize drug prior authorization request transactions between providers and group purchasers with the goal of maximizing administrative simplification and efficiency in preparation for electronic transmissions. (b) By January 1, 2014, the Minnesota Administrative Uniformity Committee shall develop the standard companion guide by which providers and group purchasers will exchange standard drug authorization requests using electronic data interchange standards, if available, with the goal of alignment with standards that are or will potentially be used nationally. (c) No later than January 1, 2016, drug prior authorization requests must be accessible and submitted by health care providers, and accepted by group purchasers, electronically through secure electronic transmissions. Facsimile shall not be considered electronic transmission. History:  2008 c 358 art 4 s 3; 2009 c 79 art 4 s 3-6; 2009 c 102 s 3,4; 2009 c 173 art 1 s 1; 2010 c 336 s 4,5; 2012 c 253 art 1 s 1; 2014 c 291 art 6 s 1; 2016 c 158 art 1 s 19; 1Sp2021 c 7 art 3 s 4,5
62J.498 HEALTH INFORMATION EXCHANGE. Subdivision 1. Definitions. (a) The following definitions apply to sections 62J.498 to 62J.4982: (b) "Clinical data repository" means a real time database that consolidates data from a variety of clinical sources to present a unified view of a single patient and is used by a health information exchange service provider to enable health information exchange among health care providers that are not related health care entities as defined in section 144.291, subdivision 2, paragraph (k). This does not include clinical data that are submitted to the commissioner for public health purposes required or permitted by law, including any rules adopted by the commissioner. (c) "Clinical transaction" means any meaningful use transaction or other health information exchange transaction that is not covered by section 62J.536. (d) "Commissioner" means the commissioner of health. (e) "Health care provider" or "provider" means a health care provider or provider as defined in section 62J.03, subdivision 8. (f) "Health data intermediary" means an entity that provides the technical capabilities or related products and services to enable health information exchange among health care providers that are not related health care entities as defined in section 144.291, subdivision 2, paragraph (k). This includes but is not limited to health information service providers (HISP), electronic health record vendors, and pharmaceutical electronic data intermediaries as defined in section 62J.495. (g) "Health information exchange" means the electronic transmission of health-related information between organizations according to nationally recognized standards. (h) "Health information exchange service provider" means a health data intermediary or health information organization. (i) "Health information organization" means an organization that oversees, governs, and facilitates health information exchange among health care providers that are not related health care entities as defined in section 144.291, subdivision 2, paragraph (k), to improve coordination of patient care and the efficiency of health care delivery. (j) "Major participating entity" means: (1) a participating entity that receives compensation for services that is greater than 30 percent of the health information organization's gross annual revenues from the health information exchange service provider; (2) a participating entity providing administrative, financial, or management services to the health information organization, if the total payment for all services provided by the participating entity exceeds three percent of the gross revenue of the health information organization; and (3) a participating entity that nominates or appoints 30 percent or more of the board of directors or equivalent governing body of the health information organization. (k) "Master patient index" means an electronic database that holds unique identifiers of patients registered at a care facility and is used by a health information exchange service provider to enable health information exchange among health care providers that are not related health care entities as defined in section 144.291, subdivision 2, paragraph (k). This does not include data that are submitted to the commissioner for public health purposes required or permitted by law, including any rules adopted by the commissioner. (l) "Participating entity" means any of the following persons, health care providers, companies, or other organizations with which a health information organization has contracts or other agreements for the provision of health information exchange services: (1) a health care facility licensed under sections 144.50 to 144.56, a nursing home licensed under sections 144A.02 to 144A.10, and any other health care facility otherwise licensed under the laws of this state or registered with the commissioner; (2) a health care provider, and any other health care professional otherwise licensed under the laws of this state or registered with the commissioner; (3) a group, professional corporation, or other organization that provides the services of individuals or entities identified in clause (2), including but not limited to a medical clinic, a medical group, a home health care agency, an urgent care center, and an emergent care center; (4) a health plan as defined in section 62A.011, subdivision 3; and (5) a state agency as defined in section 13.02, subdivision 17. (m) "Reciprocal agreement" means an arrangement in which two or more health information exchange service providers agree to share in-kind services and resources to allow for the pass-through of clinical transactions. (n) "State-certified health information organization" means a health information organization that has been issued a certificate of authority to operate in Minnesota. Subd. 2. Health information exchange oversight. (a) The commissioner shall protect the public interest on matters pertaining to health information exchange. The commissioner shall: (1) review and act on applications from health information organizations for certificates of authority to operate in Minnesota; (2) require information to be provided as needed from health information exchange service providers in order to meet requirements established under sections 62J.498 to 62J.4982; (3) provide ongoing monitoring to ensure compliance with criteria established under sections 62J.498 to 62J.4982; (4) respond to public complaints related to health information exchange services; (5) take enforcement actions as necessary, including the imposition of fines, suspension, or revocation of certificates of authority as outlined in section 62J.4982; (6) provide a biennial report on the status of health information exchange services that includes but is not limited to: (i) recommendations on actions necessary to ensure that health information exchange services are adequate to meet the needs of Minnesota citizens and providers statewide; (ii) recommendations on enforcement actions to ensure that health information exchange service providers act in the public interest without causing disruption in health information exchange services; (iii) recommendations on updates to criteria for obtaining certificates of authority under this section; and (iv) recommendations on standard operating procedures for health information exchange, including but not limited to the management of consumer preferences; and (7) other duties necessary to protect the public interest. (b) As part of the application review process for certification under paragraph (a), prior to issuing a certificate of authority, the commissioner shall: (1) make all portions of the application classified as public data available to the public for at least ten days while an application is under consideration. At the request of the commissioner, the applicant shall participate in a public hearing by presenting an overview of their application and responding to questions from interested parties; and (2) consult with hospitals, physicians, and other providers prior to issuing a certificate of authority. (c) When the commissioner is actively considering a suspension or revocation of a certificate of authority as described in section 62J.4982, subdivision 3, all investigatory data that are collected, created, or maintained related to the suspension or revocation are classified as confidential data on individuals and as protected nonpublic data in the case of data not on individuals. (d) The commissioner may disclose data classified as protected nonpublic or confidential under paragraph (c) if disclosing the data will protect the health or safety of patients. (e) After the commissioner makes a final determination regarding a suspension or revocation of a certificate of authority, all minutes, orders for hearing, findings of fact, conclusions of law, and the specification of the final disciplinary action, are classified as public data. History:  2010 c 336 s 6; 2015 c 71 art 8 s 2; 2020 c 83 art 2 s 1; 2021 c 30 art 3 s 2
62J.4981 CERTIFICATE OF AUTHORITY TO PROVIDE HEALTH INFORMATION EXCHANGE SERVICES. Subdivision 1. Authority to require organizations to apply. The commissioner shall require a health information organization to apply for a certificate of authority under this section. An applicant may continue to operate until the commissioner acts on the application. If the application is denied, the applicant is considered a health information exchange service provider whose certificate of authority has been revoked under section 62J.4982, subdivision 2, paragraph (d). Subd. 2.  MS 2020 [Repealed by amendment, 2021 c 30 art 3 s 3] Subd. 3. Certificate of authority for health information organizations. (a) A health information organization must obtain a certificate of authority from the commissioner and demonstrate compliance with the criteria in paragraph (c). (b) Notwithstanding any law to the contrary, an organization may apply for a certificate of authority to establish and operate a health information organization under this section. No person shall establish or operate a health information organization in this state, nor sell or offer to sell, or solicit offers to purchase or receive advance or periodic consideration in conjunction with a health information organization or health information contract unless the organization has a certificate of authority under this section. (c) In issuing the certificate of authority, the commissioner shall determine whether the applicant for the certificate of authority has demonstrated that the applicant meets the following minimum criteria: (1) the entity is a legally established organization; (2) appropriate insurance, including liability insurance, for the operation of the health information organization is in place and sufficient to protect the interest of the public and participating entities; (3) strategic and operational plans address governance, technical infrastructure, legal and policy issues, finance, and business operations in regard to how the organization will expand to support providers in achieving health information exchange goals over time; (4) the entity addresses the parameters to be used with participating entities and other health information exchange service providers for clinical transactions, compliance with Minnesota law, and interstate health information exchange trust agreements; (5) the entity's board of directors or equivalent governing body is composed of members that broadly represent the health information organization's participating entities and consumers; (6) the entity maintains a professional staff responsible to the board of directors or equivalent governing body with the capacity to ensure accountability to the organization's mission; (7) the organization is compliant with national certification and accreditation programs designated by the commissioner; (8) the entity maintains the capability to query for patient information based on national standards. The query capability may utilize a master patient index, clinical data repository, or record locator service as defined in section 144.291, subdivision 2, paragraph (j). The entity must be compliant with the requirements of section 144.293, subdivision 8, when conducting clinical transactions; (9) the organization demonstrates interoperability with all other state-certified health information organizations using nationally recognized standards; (10) the organization demonstrates compliance with all privacy and security requirements required by state and federal law; and (11) the organization uses financial policies and procedures consistent with generally accepted accounting principles and has an independent audit of the organization's financials on an annual basis. (d) Health information organizations that have obtained a certificate of authority must: (1) meet the requirements established for connecting to the National eHealth Exchange; (2) annually submit strategic and operational plans for review by the commissioner that address: (i) progress in achieving objectives included in previously submitted strategic and operational plans across the following domains: business and technical operations, technical infrastructure, legal and policy issues, finance, and organizational governance; (ii) plans for ensuring the necessary capacity to support clinical transactions; (iii) approach for attaining financial sustainability, including public and private financing strategies, and rate structures; (iv) rates of adoption, utilization, and transaction volume, and mechanisms to support health information exchange; and (v) an explanation of methods employed to address the needs of community clinics, critical access hospitals, and free clinics in accessing health information exchange services; (3) enter into reciprocal agreements with all other state-certified health information organizations to enable access to patient data, and for the transmission and receipt of clinical transactions. Reciprocal agreements must meet the requirements in subdivision 5; (4) participate in statewide shared health information exchange services as defined by the commissioner to support interoperability; and (5) comply with additional requirements for the certification or recertification of health information organizations that may be established by the commissioner. Subd. 4. Application for certificate of authority for health information organizations. (a) Each application for a certificate of authority shall be in a form prescribed by the commissioner and verified by an officer or authorized representative of the applicant. Each application shall include the following in addition to information described in the criteria in subdivision 3: (1) a copy of the basic organizational document, if any, of the applicant and of each major participating entity, such as the articles of incorporation, or other applicable documents, and all amendments to it; (2) a list of the names, addresses, and official positions of the following: (i) all members of the board of directors or equivalent governing body, and the principal officers and, if applicable, shareholders of the applicant organization; and (ii) all members of the board of directors or equivalent governing body, and the principal officers of each major participating entity and, if applicable, each shareholder beneficially owning more than ten percent of any voting stock of the major participating entity; (3) the name and address of each participating entity and the agreed-upon duration of each contract or agreement if applicable; (4) a copy of each standard agreement or contract intended to bind the participating entities and the health information organization. Contractual provisions shall be consistent with the purposes of this section, in regard to the services to be performed under the standard agreement or contract, the manner in which payment for services is determined, the nature and extent of responsibilities to be retained by the health information organization, and contractual termination provisions; (5) a statement generally describing the health information organization, its health information exchange contracts, facilities, and personnel, including a statement describing the manner in which the applicant proposes to provide participants with comprehensive health information exchange services; (6) a statement reasonably describing the geographic area or areas to be served and the type or types of participants to be served; (7) a description of the complaint procedures to be used as required under this section; (8) a description of the mechanism by which participating entities will have an opportunity to participate in matters of policy and operation; (9) a copy of any pertinent agreements between the health information organization and insurers, including liability insurers, demonstrating coverage is in place; (10) a copy of the conflict of interest policy that applies to all members of the board of directors or equivalent governing body and the principal officers of the health information organization; and (11) other information as the commissioner may reasonably require to be provided. (b) Within 45 days after the receipt of the application for a certificate of authority, the commissioner shall determine whether or not the application submitted meets the requirements for completion in paragraph (a), and notify the applicant of any further information required for the application to be processed. (c) Within 90 days after the receipt of a complete application for a certificate of authority, the commissioner shall issue a certificate of authority to the applicant if the commissioner determines that the applicant meets the minimum criteria requirements of subdivision 3. If the commissioner determines that the applicant is not qualified, the commissioner shall notify the applicant and specify the reasons for disqualification. (d) Upon being granted a certificate of authority to operate as a state-certified health information organization, the organization must operate in compliance with the provisions of this section. Noncompliance may result in the imposition of a fine or the suspension or revocation of the certificate of authority according to section 62J.4982. Subd. 5. Reciprocal agreements between health information organizations. (a) Reciprocal agreements between two health information organizations must include a fair and equitable model for charges between the entities that: (1) does not impede the secure transmission of clinical transactions; (2) does not charge a fee for the exchange of transactions transmitted according to nationally recognized standards where no additional value-added service is rendered to the sending or receiving health information organization either directly or on behalf of the client; (3) is consistent with fair market value and proportionately reflects the value-added services accessed as a result of the agreement; and (4) prevents health care stakeholders from being charged multiple times for the same service. (b) Reciprocal agreements must include comparable quality of service standards that ensure equitable levels of services. (c) Reciprocal agreements are subject to review and approval by the commissioner. (d) Nothing in this section precludes a state-certified health information organization from entering into contractual agreements for the provision of value-added services. Subd. 6.  [Repealed by amendment, 2015 c 71 art 8 s 3] History:  2010 c 336 s 7; 2015 c 71 art 8 s 3; 2020 c 83 art 2 s 2; 2021 c 30 art 3 s 3
62J.4982 ENFORCEMENT AUTHORITY; COMPLIANCE. Subdivision 1. Penalties and enforcement. (a) The commissioner may, for any violation of statute or rule applicable to a health information organization, levy an administrative penalty in an amount up to $25,000 for each violation. In determining the level of an administrative penalty, the commissioner shall consider the following factors: (1) the number of participating entities affected by the violation; (2) the effect of the violation on participating entities' access to health information exchange services; (3) if only one participating entity is affected, the effect of the violation on the patients of that entity; (4) whether the violation is an isolated incident or part of a pattern of violations; (5) the economic benefits derived by the health information organization by virtue of the violation; (6) whether the violation hindered or facilitated an individual's ability to obtain health care; (7) whether the violation was intentional; (8) whether the violation was beyond the direct control of the health information organization; (9) any history of prior compliance with the provisions of this section, including violations; (10) whether and to what extent the health information organization attempted to correct previous violations; (11) how the health information organization responded to technical assistance from the commissioner provided in the context of a compliance effort; and (12) the financial condition of the health information organization including but not limited to whether the health information organization had financial difficulties that affected its ability to comply or whether the imposition of an administrative monetary penalty would jeopardize the ability of the health information organization to continue to deliver health information exchange services. The commissioner shall give reasonable notice in writing to the health information organization of the intent to levy the penalty and the reasons for it. A health information organization may have 15 days within which to contest whether the facts found constitute a violation of sections 62J.4981 and 62J.4982, according to the contested case and judicial review provisions of sections 14.57 to 14.69. (b) If the commissioner has reason to believe that a violation of section 62J.4981 or 62J.4982 has occurred or is likely, the commissioner may confer with the persons involved before commencing action under subdivision 2. The commissioner may notify the health information organization and the representatives, or other persons who appear to be involved in the suspected violation, to arrange a voluntary conference with the alleged violators or their authorized representatives. The purpose of the conference is to attempt to learn the facts about the suspected violation and, if it appears that a violation has occurred or is threatened, to find a way to correct or prevent it. The conference is not governed by any formal procedural requirements, and may be conducted as the commissioner considers appropriate. (c) The commissioner may issue an order directing a health information organization or a representative of a health information organization to cease and desist from engaging in any act or practice in violation of sections 62J.4981 and 62J.4982. (d) Within 20 days after service of the order to cease and desist, a health information organization may contest whether the facts found constitute a violation of sections 62J.4981 and 62J.4982 according to the contested case and judicial review provisions of sections 14.57 to 14.69. (e) In the event of noncompliance with a cease and desist order issued under this subdivision, the commissioner may institute a proceeding to obtain injunctive relief or other appropriate relief in Ramsey County District Court. Subd. 2. Suspension or revocation of certificates of authority. (a) The commissioner may suspend or revoke a certificate of authority issued to a health information organization under section 62J.4981 if the commissioner finds that: (1) the health information organization is operating significantly in contravention of its basic organizational document, or in a manner contrary to that described in and reasonably inferred from any other information submitted under section 62J.4981, unless amendments to the submissions have been filed with and approved by the commissioner; (2) the health information organization is unable to fulfill its obligations to furnish comprehensive health information exchange services as required under its health information exchange contract; (3) the health information organization is no longer financially solvent or may not reasonably be expected to meet its obligations to participating entities; (4) the health information organization has failed to implement the complaint system in a manner designed to reasonably resolve valid complaints; (5) the health information organization, or any person acting with its sanction, has advertised or merchandised its services in an untrue, misleading, deceptive, or unfair manner; (6) the continued operation of the health information organization would be hazardous to its participating entities or the patients served by the participating entities; or (7) the health information organization has otherwise failed to substantially comply with section 62J.4981 or with any other statute or administrative rule applicable to health information exchange service providers, or has submitted false information in any report required under sections 62J.498 to 62J.4982. (b) A certificate of authority shall be suspended or revoked only after meeting the requirements of subdivision 3. (c) If the certificate of authority of a health information organization is suspended, the health information organization shall not, during the period of suspension, enroll any additional participating entities, and shall not engage in any advertising or solicitation. (d) If the certificate of authority of a health information organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs, and shall conduct no further business except as necessary to the orderly conclusion of the affairs of the organization. The organization shall engage in no further advertising or solicitation. The commissioner may, by written order, permit further operation of the organization as the commissioner finds to be in the best interest of participating entities, to the end that participating entities will be given the greatest practical opportunity to access continuing health information exchange services. Subd. 3. Denial, suspension, and revocation; administrative procedures. (a) When the commissioner has cause to believe that grounds for the denial, suspension, or revocation of a certificate of authority exist, the commissioner shall notify the health information organization in writing stating the grounds for denial, suspension, or revocation and setting a time within 20 days for a hearing on the matter. (b) After a hearing before the commissioner at which the health information organization may respond to the grounds for denial, suspension, or revocation, or upon the failure of the health information organization to appear at the hearing, the commissioner shall take action as deemed necessary and shall issue written findings and mail them to the health information organization. (c) If suspension, revocation, or administrative penalty is proposed according to this section, the commissioner must deliver, or send by certified mail with return receipt requested, to the health information organization written notice of the commissioner's intent to impose a penalty. This notice of proposed determination must include: (1) a reference to the statutory basis for the penalty; (2) a description of the findings of fact regarding the violations with respect to which the penalty is proposed; (3) the nature and amount of the proposed penalty; (4) any circumstances described in subdivision 1, paragraph (a), that were considered in determining the amount of the proposed penalty; (5) instructions for responding to the notice, including a statement of the health information organization's right to a contested case proceeding and a statement that failure to request a contested case proceeding within 30 calendar days permits the imposition of the proposed penalty; and (6) the address to which the contested case proceeding request must be sent. Subd. 4. Coordination. The commissioner shall, to the extent possible, seek the advice of the Minnesota e-Health Advisory Committee, in the review and update of criteria for the certification and recertification of health information organizations when implementing sections 62J.498 to 62J.4982. Subd. 5. Fees and monetary penalties. (a) The commissioner shall assess fees on every health information organization subject to sections 62J.4981 and 62J.4982 as follows: (1) filing an application for certificate of authority to operate as a health information organization, $7,000; and (2) annual health information organization certificate fee, $7,000. (b) Fees collected under this section shall be deposited in the state treasury and credited to the state government special revenue fund. (c) Administrative monetary penalties imposed under this subdivision shall be credited to an account in the special revenue fund and are appropriated to the commissioner for the purposes of sections 62J.498 to 62J.4982. History:  2010 c 336 s 8; 2015 c 71 art 8 s 4,5; 2021 c 30 art 3 s 4
62J.50 CITATION AND PURPOSE. Subdivision 1. Citation. Sections 62J.50 to 62J.61 may be cited as the "Minnesota Health Care Administrative Simplification Act." Subd. 2. Purpose. The legislature finds that significant savings throughout the health care industry can be accomplished by implementing a set of administrative standards and simplified procedures and by setting forward a plan toward the use of electronic methods of data interchange. The legislature finds that initial steps have been taken at the national level by the federal Health Care Financing Administration, now known as the Centers for Medicare and Medicaid Services, in its implementation of nationally accepted electronic transaction sets for its Medicare program. The legislature further recognizes the work done by the Workgroup for Electronic Data Interchange and the American National Standards Institute and its accredited standards committee X12, at the national level, and the Minnesota Administrative Uniformity Committee, a statewide, voluntary, public-private group representing payers, hospitals, state programs, physicians, and other health care providers in their work toward administrative simplification in the health care industry. History:  1994 c 625 art 9 s 1; 2014 c 192 art 1 s 1,2
62J.51 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 62J.50 to 62J.61, the following definitions apply. Subd. 2. ANSI. "ANSI" means the American National Standards Institute. Subd. 3. ASC X12. "ASC X12" means the American National Standards Institute committee X12. Subd. 3a. Card issuer. "Card issuer" means the group purchaser who is responsible for printing and distributing identification cards to members or insureds. Subd. 4.  [Repealed by amendment, 2014 c 192 art 1 s 3] Subd. 5.  [Repealed by amendment, 2014 c 192 art 1 s 3] Subd. 6. Claim payment/advice transaction set (ANSI ASC X12 835). "Claim payment/advice transaction set (ANSI ASC X12 835)" means the electronic transaction format used for electronic remittance advice and electronic funds transfer as adopted under Code of Federal Regulations, title 45, part 162, subpart P, and any future revisions of the subpart. Subd. 6a. Claim status transaction set (ANSI ASC X12 276/277). "Claim status transaction set (ANSI ASC X12 276/277)" means the electronic transaction format used by providers to request and receive information on the status of a health care claim or encounter that has been submitted to a group purchaser as adopted under Code of Federal Regulations, title 45, part 162, subpart N, and any future revisions of the subpart. Subd. 6b. Claim submission address. "Claim submission address" means the address to which the group purchaser requires health care providers, members, or insureds to send health care claims for processing. Subd. 6c. Claim submission number. "Claim submission number" means the unique identification number to identify group purchasers as described in section 62J.54, with its suffix identifying the claim submission address. Subd. 7. Claim submission transaction set (ANSI ASC X12 837). "Claim submission transaction set (ANSI ASC X12 837)" means the electronic transaction format used to submit all health care claims information as adopted under Code of Federal Regulations, title 45, part 162, subpart K, and any future revisions of the subpart. Subd. 8. EDI or electronic data interchange. "EDI" or "electronic data interchange" means the computer application to computer application exchange of information using nationally accepted standard formats. Subd. 9. Eligibility transaction set (ANSI ASC X12 270/271). "Eligibility transaction set (ANSI ASC X12 270/271)" means the electronic transaction format used by providers to request and receive coverage information on the member or insured as adopted under Code of Federal Regulations, title 45, part 162, subpart L, and any future revisions of the subpart. Subd. 10. Enrollment transaction set (ANSI ASC X12 834). "Enrollment transaction set (ANSI ASC X12 834)" means the electronic transaction format used to transmit enrollment and benefit information from the employer to the payer for the purpose of enrolling in a benefit plan as adopted under Code of Federal Regulations, title 45, part 162, subpart O, and any future revisions of the subpart. Subd. 11. Group purchaser. "Group purchaser" has the meaning given in section 62J.03, subdivision 6. Subd. 11a. Health care clearinghouse. "Health care clearinghouse" means a public or private entity, including a billing service, repricing company, community health management information system or community health information system, and "value-added" networks and switches that does any of the following functions: (1) processes or facilitates the processing of health information received from another entity in a nonstandard format or containing nonstandard data content into standard data elements or a standard transaction; (2) receives a standard transaction from another entity and processes or facilitates the processing of health information into nonstandard format or nonstandard data content for the receiving entity; (3) acts on behalf of a group purchaser in sending and receiving standard transactions to assist the group purchaser in fulfilling its responsibilities under section 62J.536; (4) acts on behalf of a health care provider in sending and receiving standard transactions to assist the health care provider in fulfilling its responsibilities under section 62J.536; and (5) other activities including but not limited to training, testing, editing, formatting, or consolidation transactions. A health care clearinghouse acts as an agent of a health care provider or group purchaser only if it enters into an explicit, mutually agreed upon arrangement or contract with the provider or group purchaser to perform specific clearinghouse functions. Subd. 12. ISO. "ISO" means the International Standardization Organization. Subd. 13. NCPDP. "NCPDP" means the National Council for Prescription Drug Programs, Inc. Subd. 14.  [Repealed by amendment, 2014 c 192 art 1 s 3] Subd. 15.  [Repealed by amendment, 2014 c 192 art 1 s 3] Subd. 16. Provider; health care provider. "Provider" or "health care provider" has the meaning given in section 62J.03, subdivision 8. Subd. 16a. Standard transaction. "Standard transaction" means a transaction that is defined in Code of Federal Regulations, title 45, part 162.103, and that meets the requirements of the single, uniform companion guides described in section 62J.536. Subd. 17. Uniform billing form CMS 1450. "Uniform billing form CMS 1450" means the most current version of the uniform billing form known as the CMS 1450 developed by the National Uniform Billing Committee. Subd. 18. Uniform billing form CMS 1500. "Uniform billing form CMS 1500" means the most current version of the health insurance claim form, CMS 1500, developed by the National Uniform Claim Committee. Subd. 19. Uniform dental billing form. "Uniform dental billing form" means the most current version of the uniform dental claim form developed by the American Dental Association. Subd. 19a. Uniform explanation of benefits document. "Uniform explanation of benefits document" means the document associated with and explaining the details of a group purchaser's claim adjudication for services rendered, which is sent to a patient. Subd. 19b.  [Repealed by amendment, 2014 c 192 art 1 s 3] Subd. 20. Uniform pharmacy billing form. "Uniform pharmacy billing form" means the National Council for Prescription Drug Programs/universal claim form (NCPDP/UCF). Subd. 21. WEDI. "WEDI" means the national Workgroup for Electronic Data Interchange. History:  1994 c 625 art 9 s 2; 1996 c 440 art 1 s 22-25; 2000 c 460 s 2,3; 2002 c 307 art 2 s 3; 2002 c 330 s 19; 2005 c 106 s 1,2; 2008 c 305 s 1,2; 2010 c 243 s 1,2; 2014 c 192 art 1 s 3
62J.52 ESTABLISHMENT OF UNIFORM BILLING FORMS. Subdivision 1. Uniform billing form CMS 1450. (a) On and after January 1, 1996, all institutional inpatient hospital services, ancillary services, institutionally owned or operated outpatient services rendered by providers in Minnesota, and institutional or noninstitutional home health services that are not being billed using an equivalent electronic billing format, must be billed using the most current version of the uniform billing form CMS 1450. (b) The instructions and definitions for the use of the uniform billing form CMS 1450 shall be in accordance with the uniform billing form manual specified by the commissioner. In promulgating these instructions, the commissioner may utilize the manual developed by the National Uniform Billing Committee. (c) Services to be billed using the uniform billing form CMS 1450 include: institutional inpatient hospital services and distinct units in the hospital such as psychiatric unit services, physical therapy unit services, swing bed (SNF) services, inpatient state psychiatric hospital services, inpatient skilled nursing facility services, home health services (Medicare part A), and hospice services; ancillary services, where benefits are exhausted or patient has no Medicare part A, from hospitals, state psychiatric hospitals, skilled nursing facilities, ICFs/DD, and home health (Medicare part B); institutional owned or operated outpatient services such as waivered services, hospital outpatient services, including ambulatory surgical center services, hospital referred laboratory services, hospital-based ambulance services, and other hospital outpatient services, skilled nursing facilities, home health, freestanding renal dialysis centers, comprehensive outpatient rehabilitation facilities (CORF), outpatient rehabilitation facilities (ORF), rural health clinics, federally qualified health centers, and community mental health centers; home health services such as home health intravenous therapy providers and hospice; and any other health care provider certified by the Medicare program to use this form. (d) On and after January 1, 1996, a mother and newborn child must be billed separately, and must not be combined on one claim form. (e) Services provided by Medicare Critical Access Hospitals electing Method II billing will be allowed an exception to this provision to allow the inclusion of the professional fees on the CMS 1450. Subd. 2. Uniform billing form CMS 1500. (a) On and after January 1, 1996, all noninstitutional health care services rendered by providers in Minnesota except dental or pharmacy providers, that are not currently being billed using an equivalent electronic billing format, must be billed using the most current version of the health insurance claim form CMS 1500. (b) The instructions and definitions for the use of the uniform billing form CMS 1500 shall be in accordance with the manual developed by the Administrative Uniformity Committee entitled standards for the use of the CMS 1500 form, dated February 1994, as further defined by the commissioner. (c) Services to be billed using the uniform billing form CMS 1500 include physician services and supplies, durable medical equipment, noninstitutional ambulance services, independent ancillary services including occupational therapy, physical therapy, speech therapy and audiology, home infusion therapy, podiatry services, optometry services, mental health licensed professional services, substance abuse licensed professional services, advanced practice registered nurse services, chiropractors, physician assistants, laboratories, medical suppliers, waivered services, personal care attendants, and other health care providers such as day activity centers and freestanding ambulatory surgical centers. (d) Services provided by Medicare Critical Access Hospitals electing Method II billing will be allowed an exception to this provision to allow the inclusion of the professional fees on the CMS 1450. Subd. 3. Uniform dental billing form. (a) On and after January 1, 1996, all dental services provided by dental care providers in Minnesota, that are not currently being billed using an equivalent electronic billing format, shall be billed using the most current version of the American Dental Association uniform dental billing form. (b) The instructions and definitions for the use of the uniform dental billing form shall be in accordance with the manual developed by the Administrative Uniformity Committee dated February 1994, and as amended or further defined by the commissioner. Subd. 4. Uniform pharmacy billing form. (a) On and after January 1, 1996, all pharmacy services provided by pharmacists in Minnesota that are not currently being billed using an equivalent electronic billing format shall be billed using the most current version of the NCPDP/universal claim form. (b) The instructions and definitions for the use of the uniform claim form shall be in accordance with instructions specified by the commissioner of health. Subd. 5.  [Repealed, 2008 c 305 s 11] History:  1994 c 625 art 9 s 3; 2000 c 460 s 4-6; 1Sp2003 c 14 art 7 s 14,15; 2005 c 106 s 3-5; 2007 c 147 art 9 s 6,7; 2008 c 305 s 3-5; 2013 c 125 art 1 s 107; 2014 c 192 art 1 s 4; 2020 c 115 art 4 s 6
62J.53 ACCEPTANCE OF UNIFORM BILLING FORMS BY GROUP PURCHASERS. On and after January 1, 1996, all group purchasers in Minnesota shall accept the uniform billing forms prescribed under section 62J.52 as the only nonelectronic billing forms used for payment processing purposes. History:  1994 c 625 art 9 s 4; 2014 c 192 art 1 s 5
62J.535 UNIFORM BILLING REQUIREMENTS FOR CLAIM TRANSACTIONS. Subdivision 1.  [Repealed, 2002 c 307 art 2 s 9; 2002 c 330 s 35] Subd. 1a. Additional information associated with a claim. Nothing in this section or other state law prohibits group purchasers not defined as covered entities under United States Code, title 42, sections 1320d to 1320d-8, as amended from time to time, and the regulations promulgated under those sections, from requiring, as authorized by Minnesota law or rule, additional information associated with a claim submitted by a provider. Subd. 1b. Paper claim transactions. All group purchasers that accept paper claim transactions must accept, and health care providers submitting paper claim transactions must submit, these transactions with use of the applicable medical and nonmedical data code sets specified in the federal electronic claim transaction standards adopted under United States Code, title 42, sections 1320d to 1320d-8, as amended from time to time, and the regulations promulgated under those sections. The paper claim transaction must also be conducted using the uniform billing forms as specified in section 62J.52 and the identifiers specified in section 62J.54, on and after the compliance date required by law. Notwithstanding the above, nothing in this section or other state law prohibits group purchasers not defined as covered entities under United States Code, title 42, sections 1320d to 1320d-8, as amended from time to time, and the regulations promulgated under those sections, from requiring, as authorized by Minnesota law or rule, additional information associated with a claim submitted by a provider. Subd. 2.  [Repealed by amendment, 2014 c 192 art 1 s 6] History:  1999 c 245 art 2 s 8; 2000 c 483 s 16; 2000 c 488 art 11 s 1; 2002 c 307 art 2 s 4-6,8; 2002 c 330 s 20-22,33; 2014 c 192 art 1 s 6
62J.536 UNIFORM ELECTRONIC TRANSACTIONS AND IMPLEMENTATION GUIDE STANDARDS. Subdivision 1. Electronic claims and eligibility transactions required. (a) Beginning January 15, 2009, all group purchasers must accept from health care providers the eligibility for a health plan transaction described under Code of Federal Regulations, title 45, part 162, subpart L. Beginning July 15, 2009, all group purchasers must accept from health care providers the health care claims or equivalent encounter information transaction described under Code of Federal Regulations, title 45, part 162, subpart K. (b) Beginning January 15, 2009, all group purchasers must transmit to providers the eligibility for a health plan transaction described under Code of Federal Regulations, title 45, part 162, subpart L. Beginning December 15, 2009, all group purchasers must transmit to providers the health care payment and remittance advice transaction described under Code of Federal Regulations, title 45, part 162, subpart P. (c) Beginning January 15, 2009, all health care providers must submit to group purchasers the eligibility for a health plan transaction described under Code of Federal Regulations, title 45, part 162, subpart L. Beginning July 15, 2009, all health care providers must submit to group purchasers the health care claims or equivalent encounter information transaction described under Code of Federal Regulations, title 45, part 162, subpart K. (d) Beginning January 15, 2009, all health care providers must accept from group purchasers the eligibility for a health plan transaction described under Code of Federal Regulations, title 45, part 162, subpart L. Beginning December 15, 2009, all health care providers must accept from group purchasers the health care payment and remittance advice transaction described under Code of Federal Regulations, title 45, part 162, subpart P. (e) Beginning January 1, 2012, all health care providers, health care clearinghouses, and group purchasers must provide an appropriate, standard, electronic acknowledgment when receiving the health care claims or equivalent encounter information transaction or the health care payment and remittance advice transaction. The acknowledgment provided must be based on one or more of the following American National Standards Institute, Accredited Standards Committee X12 standard transactions or National Council for Prescription Drug Program (NCPDP) standards: (1) TA1; (2) 999; (3) 277CA; or (4) the appropriate NCPDP response standard as the electronic acknowledgment. Health care providers, health care clearinghouses, and group purchasers may send and receive more than one type of standard acknowledgment as mutually agreed upon. The mutually agreed upon acknowledgments must be exchanged electronically. Electronic exchanges of acknowledgments do not include email or facsimile. (f) Each of the transactions described in paragraphs (a) to (e) shall require the use of a single, uniform companion guide to the implementation guides described under Code of Federal Regulations, title 45, part 162. The companion guides will be developed pursuant to subdivision 2. (g) Notwithstanding any other provisions in sections 62J.50 to 62J.61, all group purchasers and health care providers must exchange claims and eligibility information electronically using the transactions, companion guides, implementation guides, and timelines required under this subdivision. Group purchasers may not impose any fee on providers or providers' clearinghouses for the use of the transactions prescribed in this subdivision. Health care providers may not impose a fee on group purchasers or group purchasers' clearinghouses for the use of the transactions prescribed in this subdivision. A clearinghouse may not charge a fee solely to receive a standard transaction from a health care provider, a health care provider's clearinghouse, a group purchaser, or a group purchaser's clearinghouse when it is not an agent of the sending entity. A clearinghouse may not charge a fee solely to send a standard transaction to a health care provider, a health care provider's clearinghouse, a group purchaser, or a group purchaser's clearinghouse when it is not an agent of the receiving entity. (h) Nothing in this subdivision shall prohibit group purchasers and health care providers from using a direct data entry, web-based methodology for complying with the requirements of this subdivision. Any direct data entry method for conducting the transactions specified in this subdivision must be consistent with the data content component of the single, uniform companion guides required in paragraph (f) and the implementation guides described under Code of Federal Regulations, title 45, part 162. Subd. 2. Establishing uniform, standard companion guides. (a) At least 12 months prior to the timelines required in subdivision 1, the commissioner of health shall promulgate rules pursuant to section 62J.61 establishing and requiring group purchasers and health care providers to use the transactions and the uniform, standard companion guides required under subdivision 1, paragraph (f). (b) The commissioner of health must consult with the Minnesota Administrative Uniformity Committee on the development of the single, uniform companion guides required under subdivision 1, paragraph (f), for each of the transactions in subdivision 1. The single uniform companion guides required under subdivision 1, paragraph (f), must specify uniform billing and coding standards. The commissioner of health shall base the companion guides required under subdivision 1, paragraph (f), billing and coding rules, and standards on the Medicare program, with modifications that the commissioner deems appropriate after consulting the Minnesota Administrative Uniformity Committee. (c) No group purchaser or health care provider may add to or modify the single, uniform companion guides defined in subdivision 1, paragraph (f), through additional companion guides or other requirements. (d) In promulgating the rules in paragraph (a), the commissioner shall not require data content that is not essential to accomplish the purpose of the transactions in subdivision 1. Subd. 2a. Group purchasers not covered by HIPAA. For transactions with group purchasers defined in section 62J.03, subdivision 6, that are not covered under United States Code, title 42, sections 1320d to 1320d-8, the requirements of this section are modified as follows: (1) The group purchasers may be exempt from one or more of the requirements to exchange claims and eligibility information electronically using the transactions, companion guides, implementation guides, and timelines in subdivision 1 if the commissioner of health determines that: (i) a transaction is incapable of exchanging data that are currently being exchanged on paper and is necessary to accomplish the purpose of the transaction; or (ii) another national electronic transaction standard would be more appropriate and effective to accomplish the purpose of the transaction. (2) If group purchasers are exempt from one or more of the requirements to exchange claims and eligibility information electronically using the transactions, companion guides, implementation guides, and timelines in subdivision 1, providers shall also be exempt from exchanging those transactions with the group purchaser. (3) If the commissioner of health exempts a group purchaser from one or more of the requirements because a transaction is incapable of exchanging data that are currently being exchanged on paper and are necessary to accomplish the purpose of the transaction, the commissioner shall review that exemption annually. If the commissioner determines that the exemption is no longer necessary or appropriate, the commissioner of health shall adopt rules pursuant to section 62J.61 establishing and requiring group purchasers and health care providers to use the transactions and the uniform, standard companion guides required under subdivision 1, paragraph (e). Group purchasers and providers shall have 12 months to implement any rules adopted. (4) If the commissioner of health exempts a group purchaser from one or more of the requirements because another national electronic transaction standard would be more appropriate and effective to accomplish the purpose of the transaction, the commissioner shall adopt rules pursuant to section 62J.61 establishing and requiring group purchasers and health care providers to use the national electronic transaction standard. Group purchasers and providers shall have 12 months to implement any rules adopted. (5) The requirement of paper claims attachments shall not indicate that a health care claims or equivalent encounter information transaction described under Code of Federal Regulations, title 45, part 162, subpart K, is incapable of exchanging data that are currently being exchanged on paper provided that the electronic health care claims transaction has a mechanism to link the paper attachments to the electronic claim. Subd. 2b. Compliance and investigations. (a) The commissioner of health shall, to the extent practicable, seek the cooperation of health care providers, health care clearinghouses, and group purchasers in obtaining compliance with this section and may provide technical assistance to health care providers, health care clearinghouses, and group purchasers. (b) A person who believes a health care provider, health care clearinghouse, or group purchaser is not complying with the requirements of this section may file a complaint with the commissioner of health. Complaints filed under this section must meet the following requirements: (1) A complaint must be filed in writing, either on paper or electronically. (2) A complaint must name the person that is the subject of the complaint and describe the acts or omissions believed to be in violation of this section. (3) A complaint must be filed within 180 days of when the complainant knew or should have known that the act or omission complained of occurred. (4) The commissioner may prescribe additional procedures for the filing of complaints as required to satisfy the requirements of this section. (c) The commissioner of health may investigate complaints filed under this section. The investigation may include a review of the pertinent policies, procedures, or practices of the health care provider, health care clearinghouse, or group purchaser and of the circumstances regarding any alleged violation. At the time of initial written communication with the health care provider, health care clearinghouse, or group purchaser about the complaint, the commissioner of health shall describe the acts or omissions that are the basis of the complaint. The commissioner may conduct compliance reviews to determine whether health care providers, health care clearinghouses, and group purchasers are complying with this section. (d) Health care providers, health care clearinghouses, and group purchasers must cooperate with the commissioner of health if the commissioner undertakes an investigation or compliance review of the policies, procedures, or practices of the health care provider, health care clearinghouse, or group purchaser to determine compliance with this section. This cooperation includes, but is not limited to: (1) A health care provider, health care clearinghouse, or group purchaser must permit access by the commissioner of health during normal business hours to its facilities, books, records, accounts, and other sources of information that are pertinent to ascertaining compliance with this section. (2) If any information required of a health care provider, health care clearinghouse, or group purchaser under this section is in the exclusive possession of any other agency, institution, or person and the other agency, institution, or person fails or refuses to furnish the information, the health care provider, health care clearinghouse, or group purchaser must so certify and set forth what efforts it has made to obtain the information. (3) Any individually identifiable health information obtained by the commissioner of health in connection with an investigation or compliance review under this section may not be used or disclosed by the commissioner of health, except as necessary for ascertaining or enforcing compliance with this section. (e) If an investigation of a complaint indicates noncompliance, the commissioner of health shall attempt to reach a resolution of the matter by informal means. Informal means may include demonstrated compliance or a completed corrective action plan or other agreement. If the matter is resolved by informal means, the commissioner of health shall so inform the health care provider, health care clearinghouse, or group purchaser and, if the matter arose from a complaint, the complainant, in writing. If the matter is not resolved by informal means, the commissioner of health shall: (1) inform the health care provider, health care clearinghouse, or group purchaser and provide an opportunity for the health care provider, health care clearinghouse, or group purchaser to submit written evidence of any mitigating factors or other considerations. The health care provider, health care clearinghouse, or group purchaser must submit any such evidence to the commissioner of health within 30 calendar days of receipt of the notification; and (2) inform the health care provider, health care clearinghouse, or group purchaser, through a notice of proposed determination according to paragraph (i), that the commissioner of health finds that a civil money penalty should be imposed. (f) If, after an investigation or a compliance review, the commissioner of health determines that further action is not warranted, the commissioner of health shall so inform the health care provider, health care clearinghouse, or group purchaser and, if the matter arose from a complaint, the complainant, in writing. (g) A health care provider, health care clearinghouse, or group purchaser may not threaten, intimidate, coerce, harass, discriminate against, or take any other retaliatory action against any individual or other person for: (1) filing of a complaint under this section; (2) testifying, assisting, or participating in an investigation, compliance review, proceeding, or contested case proceeding under this section; or (3) opposing any act or practice made unlawful by this section, provided the individual or person has a good faith belief that the practice opposed is unlawful, and the manner of opposition is reasonable and does not involve an unauthorized disclosure of a patient's health information. (h) The commissioner of health may impose a civil money penalty on a health care provider, health care clearinghouse, or group purchaser if the commissioner of health determines that the health care provider, health care clearinghouse, or group purchaser has violated this section. If the commissioner of health determines that more than one health care provider, health care clearinghouse, or group purchaser was responsible for a violation, the commissioner of health may impose a civil money penalty against each health care provider, health care clearinghouse, or group purchaser. The amount of a civil money penalty shall be determined as follows: (1) The amount of a civil money penalty shall be up to $100 for each violation, but not exceed $25,000 for identical violations during a calendar year. (2) In the case of continuing violation of this section, a separate violation occurs each business day that the health care provider, health care clearinghouse, or group purchaser is in violation of this section. (3) In determining the amount of any civil money penalty, the commissioner of health may consider as aggravating or mitigating factors, as appropriate, any of the following: (i) the nature of the violation, in light of the purpose of the goals of this section; (ii) the time period during which the violation occurred; (iii) whether the violation hindered or facilitated an individual's ability to obtain health care; (iv) whether the violation resulted in financial harm; (v) whether the violation was intentional; (vi) whether the violation was beyond the direct control of the health care provider, health care clearinghouse, or group purchaser; (vii) any history of prior compliance with the provisions of this section, including violations; (viii) whether and to what extent the provider, health care clearinghouse, or group purchaser has attempted to correct previous violations; (ix) how the health care provider, health care clearinghouse, or group purchaser has responded to technical assistance from the commissioner of health provided in the context of a compliance effort; or (x) the financial condition of the health care provider, health care clearinghouse, or group purchaser including, but not limited to, whether the health care provider, health care clearinghouse, or group purchaser had financial difficulties that affected its ability to comply or whether the imposition of a civil money penalty would jeopardize the ability of the health care provider, health care clearinghouse, or group purchaser to continue to provide, or to pay for, health care. (i) If a penalty is proposed according to this section, the commissioner of health must deliver, or send by certified mail with return receipt requested, to the respondent written notice of the commissioner of health's intent to impose a penalty. This notice of proposed determination must include: (1) a reference to the statutory basis for the penalty; (2) a description of the findings of fact regarding the violations with respect to which the penalty is proposed; (3) the amount of the proposed penalty; (4) any circumstances described in paragraph (i) that were considered in determining the amount of the proposed penalty; (5) instructions for responding to the notice, including a statement of the respondent's right to a contested case proceeding and a statement that failure to request a contested case proceeding within 30 calendar days permits the imposition of the proposed penalty; and (6) the address to which the contested case proceeding request must be sent. (j) A health care provider, health care clearinghouse, or group purchaser may contest whether the finding of facts constitute a violation of this section, according to a contested case proceeding as set forth in sections 14.57 to 14.62, subject to appeal according to sections 14.63 to 14.68. (k) Any data collected by the commissioner of health as part of an active investigation or active compliance review under this section are classified as protected nonpublic data pursuant to section 13.02, subdivision 13, in the case of data not on individuals and confidential pursuant to section 13.02, subdivision 3, in the case of data on individuals. Data describing the final disposition of an investigation or compliance review are classified as public. (l) Civil money penalties imposed and collected under this subdivision shall be deposited into a revolving fund and are appropriated to the commissioner of health for the purposes of this subdivision, including the provision of technical assistance. Subd. 3. Definition. Notwithstanding section 62J.03, subdivision 8, for purposes of this section, "health care provider" includes licensed nursing homes, licensed boarding care homes, and licensed home care providers. Subd. 4. Health care clearinghouses. (a) Beginning January 1, 2012, health care clearinghouses must use and make available suitable tracking mechanisms to allow health care providers and group purchasers to determine in a timely fashion that health care claims or equivalent encounter information transactions and health care payment and remittance advice transactions were delivered to their intended final destination. Clearinghouses must provide clear, understandable, accurate information and instructions for tracking claims and remittance advice transactions to all clients, potential clients, or interested parties. Clearinghouses must provide clear, accurate information and instructions for receiving and responding to questions or concerns from health care providers or group purchasers regarding tracking of health care claims and remittance advice transactions. This information must include any designated points of contact and contact information, hours of operation, and other information to assist providers and group purchasers with questions or concerns. (b) Health care clearinghouses must make or provide electronic connections with other clearinghouses or trading partners requesting such a connection to meet the requirements of this section. A health care clearinghouse must connect electronically in a timely manner with any entity willing and capable of meeting the standard business terms and conditions of the clearinghouse, as well as any applicable laws and regulations. Any connectivity sought or established under this subdivision must be consistent with this section and with other applicable laws and rules. Health care providers and group purchasers may determine which clearinghouses they choose to work with and with which to enter into agent relationships. (c) Acceptance of a compliant standard transaction may not be contingent on purchase of additional services. A health care clearinghouse may not condition acceptance of a compliant standard transaction from a provider, provider's agent, group purchaser, or group purchaser's agent on the provider's or group purchaser's agreement to pay for an additional service such as transmitting attachments electronically. (d) The commissioner may: (1) require information and data from health care clearinghouses, including information regarding clearinghouse operations and performance, to ensure that requirements of this section and related rules are fulfilled; (2) require that clearinghouses with websites post, maintain, and regularly update on their websites point-of-contact information and other information needed by clients, potential clients, and others to obtain answers to questions or to conduct business; (3) require that all clearinghouses provide timely, clear, accurate, reliable information to their clients, potential clients, or any interested parties regarding their products or services, pricing, and other business and service information; and (4) post information from clearinghouses on a Department of Health website and make the information broadly available through other means. The commissioner shall determine the manner, content, timing, frequency, and other specifications for information to be posted or submitted by health care clearinghouses. History:  2007 c 147 art 15 s 4; 2008 c 305 s 6-8; 2010 c 243 s 3-5; 2012 c 253 art 1 s 2; 2014 c 192 art 1 s 7
62J.54 IDENTIFICATION AND IMPLEMENTATION OF UNIQUE IDENTIFIERS. Subdivision 1. Unique identification number for health care provider organizations. (a) All group purchasers and any health care provider organization that meets the definition of a health care provider under United States Code, title 42, sections 1320d to 1320d-8, as amended, and regulations adopted thereunder shall use a national provider identifier to identify health care provider organizations in Minnesota, according to this section. (b) The national provider identifier for health care providers as adopted and required in Code of Federal Regulations, title 45, part 162, subpart D, and any future modifications to the subpart shall be used as the unique identification number for health care provider organizations in Minnesota under this section. (c) All health care provider organizations in Minnesota that are eligible to obtain a national provider identifier according to United States Code, title 42, sections 1320d to 1320d-8, as amended, and regulations adopted thereunder shall obtain a national provider identifier using the process prescribed in Code of Federal Regulations, title 45, part 162, subpart D, and any future modifications to the subpart. (d) Only the national provider identifier shall be used to identify health care provider organizations when submitting and receiving paper and electronic claims and remittance advice notices, and in conjunction with other data collection and reporting functions. (e) Health care provider organizations in Minnesota shall make available their national provider identifier to other health care providers when required to be included in the administrative transactions regulated by United States Code, title 42, sections 1320d to 1320d-8, as amended, and regulations adopted thereunder. (f) The commissioner of health may contract with the federal Secretary of Health and Human Services or the Secretary's agent to implement this subdivision. Subd. 2. Unique identification number for individual health care providers. (a) All group purchasers in Minnesota and any individual health care provider that meets the definition of a health care provider under United States Code, title 42, sections 1320d to 1320d-8, as amended, and regulations adopted thereunder shall use the national provider identifier to identify an individual health care provider in Minnesota, according to this section. (b) The national provider identifier for health care providers adopted in Code of Federal Regulations, title 45, part 162, subpart D, and any future modifications to the subpart shall be used as the unique identification number for individual health care providers. (c) All individual health care providers in Minnesota that are eligible to obtain a national provider identifier according to United States Code, title 42, sections 1320d to 1320d-8, as amended, and regulations adopted thereunder shall obtain a national provider identifier using the process prescribed in Code of Federal Regulations, title 45, part 162, subpart D, and any future modifications to the subpart. (d) Only the national provider identifier shall be used to identify individual health care providers when submitting and receiving paper and electronic claims and remittance advice notices, and in conjunction with other data collection and reporting functions. (e) Individual health care providers in Minnesota shall make available their national provider identifier to other health care providers when required to be included in the administrative transactions regulated by United States Code, title 42, sections 1320d to 1320d-8, as amended, and regulations adopted thereunder. (f) The commissioner of health may contract with the federal Secretary of Health and Human Services or the Secretary's agent to implement this subdivision. Subd. 3. Unique identification number for group purchasers. (a) All group purchasers and health care providers in Minnesota shall use a unique identification number to identify group purchasers. (b) The unique health identifier for group purchasers that are health plans under Code of Federal Regulations, title 45, part 160, subpart A, shall be the Standard Unique Health Identifier for Health Plans as adopted in Code of Federal Regulations, title 45, part 162, subpart E, and any future modifications to the subpart, effective as required by the subpart. (c) Group purchasers that are health plans under Code of Federal Regulations, title 45, part 160, subpart A, shall obtain a unique health identifier using the process prescribed in Code of Federal Regulations, title 45, part 162, subpart E, and any future modifications to the subpart. (d) The unique group purchaser identifier, as described in this section, shall be used for purposes of submitting and receiving claims, and in conjunction with other data collection and reporting functions. (e) The commissioner of health may contract with the federal Secretary of Health and Human Services or the Secretary's agent to implement this subdivision. Subd. 4. Unique patient identification number. (a) Not later than 24 months after the date on which a unique health identifier for individuals is adopted or established under United States Code, title 42, sections 1320d to 1320d-8 (1996 and subsequent amendments), all group purchasers and health care providers in Minnesota shall use a unique identification number to identify each patient who receives health care services in Minnesota, except as provided in paragraph (b). (b) Small health plans, as defined by the federal Secretary of Health and Human Services under United States Code, title 42, section 1320d-4 (1996 and subsequent amendments), shall use a unique identification number to identify each patient who receives health care services in Minnesota no later than 36 months after the date on which a unique health identifier for individuals is adopted or established under United States Code, title 42, sections 1320d to 1320d-8 (1996 and subsequent amendments). (c) The unique health identifier for individuals adopted or established by the federal Secretary of Health and Human Services under United States Code, title 42, sections 1320d to 1320d-8 (1996 and subsequent amendments), shall be used as the unique patient identification number, except as provided in paragraphs (e) and (f). (d) The unique patient identification number shall be used by group purchasers and health care providers for purposes of submitting and receiving claims, and in conjunction with other data collection and reporting functions. (e) Within the limits of available appropriations, the commissioner shall develop a proposal for an alternate numbering system for patients who do not have or refuse to provide their Social Security numbers, if: (1) a unique health identifier for individuals is adopted or established under United States Code, title 42, sections 1320d to 1320d-8 (1996 and subsequent amendments); (2) the unique health identifier is the Social Security number of the patient; (3) there is no federal alternate numbering system for patients who do not have or refuse to provide their Social Security numbers; and (4) federal law or the federal Secretary of Health and Human Services explicitly allows a state to develop an alternate numbering system for patients who do not have or refuse to provide their Social Security numbers. (f) If an alternate numbering system is developed under paragraph (e), patients who use numbers issued by the alternate numbering system are not required to provide their Social Security numbers and group purchasers or providers may not demand the Social Security numbers of patients who provide numbers issued by the alternate numbering system. If an alternate numbering system is developed under paragraph (e), group purchasers and health care providers shall establish procedures to notify patients that they can elect not to have their Social Security number used as the unique patient identifier. (g) The commissioner of health may contract with the federal Secretary of Health and Human Services or the Secretary's agent to implement this subdivision. History:  1994 c 625 art 9 s 5; 1995 c 234 art 5 s 17; 1996 c 440 art 1 s 26-28; 1997 c 228 s 2; 1Sp1997 c 5 s 16; 2005 c 106 s 6,7; 2014 c 192 art 1 s 8-10
62J.55 PRIVACY OF UNIQUE IDENTIFIERS. (a) When the unique identifiers specified in section 62J.54 are used for data collection purposes, the identifiers must be encrypted, as required in section 62J.321, subdivision 1. Encryption must follow encryption standards set by the National Bureau of Standards and approved by the American National Standards Institute as ANSIX3. 92-1982/R 1987 to protect the confidentiality of the data. Social Security numbers must not be maintained in unencrypted form in the database, and the data must never be released in a form that would allow for the identification of individuals. The encryption algorithm and hardware used must not use clipper chip technology. (b) Providers and group purchasers shall treat medical records, including the Social Security number if it is used as a unique patient identifier, in accordance with sections 144.291 to 144.298. The Social Security number may be disclosed by providers and group purchasers to the commissioner as necessary to allow performance of those duties set forth in section 144.05. History:  1994 c 625 art 9 s 6; 1995 c 234 art 5 s 18; 2007 c 147 art 10 s 15
62J.56 IMPLEMENTATION OF ELECTRONIC DATA INTERCHANGE STANDARDS. Subdivision 1. General provisions. (a) The legislature finds that there is a need to advance the use of electronic methods of data interchange among all health care participants in the state in order to achieve significant administrative cost savings. The legislature also finds that in order to advance the use of health care electronic data interchange in a cost-effective manner, the state needs to implement electronic data interchange standards that are nationally accepted, widely recognized, and available for immediate use. The legislature intends to set forth a plan for a systematic phase in of uniform health care electronic data interchange standards in all segments of the health care industry. (b) The commissioner of health, with the advice of the Minnesota Administrative Uniformity Committee, shall administer the implementation of and monitor compliance with, electronic data interchange standards of health care participants, according to the plan provided in this section. Subd. 2. Identification of core transaction sets. The commissioner, with the advice of the Minnesota Administrative Uniformity Committee, and in coordination with federal efforts, may approve the use of new ASC X12 standards, or new versions of existing standards, as they become available, or other nationally recognized standards, where appropriate ASC X12 standards are not available for use. These alternative standards may be used during a transition period while ASC X12 standards are developed. Subd. 3. Implementation guides. (a) The commissioner, with the advice of the Minnesota Administrative Uniformity Committee, and the Minnesota Center for Health Care Electronic Data Interchange shall review and recommend the use of guides to implement the core transaction sets. Implementation guides must contain the background and technical information required to allow health care participants to implement the transaction set in the most cost-effective way. (b) The commissioner shall promote the development of implementation guides among health care participants for those business transaction types for which implementation guides are not available, to allow providers and group purchasers to implement electronic data interchange. In promoting the development of these implementation guides, the commissioner shall review the work done by the American Hospital Association through the national Uniform Billing Committee and its state representative organization; the American Medical Association through the National Uniform Claim Committee; the American Dental Association; the National Council of Prescription Drug Programs; and the Workgroup for Electronic Data Interchange. History:  1994 c 625 art 9 s 7; 1996 c 440 art 1 s 29; 2014 c 192 art 1 s 11-13
62J.57 MINNESOTA CENTER FOR HEALTH CARE ELECTRONIC DATA INTERCHANGE. (a) It is the intention of the legislature to support, to the extent of funds appropriated for that purpose, the creation of the Minnesota Center for Health Care Electronic Data Interchange as a broad-based effort of public and private organizations representing group purchasers, health care providers, and government programs to advance the use of health care electronic data interchange in the state. The center shall attempt to obtain private sector funding to supplement legislative appropriations, and shall become self-supporting by the end of the second year. (b) The Minnesota Center for Health Care Electronic Data Interchange shall facilitate the statewide implementation of electronic data interchange standards in the health care industry by: (1) coordinating and ensuring the availability of quality electronic data interchange education and training in the state; (2) developing an extensive, cohesive health care electronic data interchange education curriculum; (3) developing a communications and marketing plan to publicize electronic data interchange education activities, and the products and services available to support the implementation of electronic data interchange in the state; (4) administering a resource center that will serve as a clearinghouse for information relative to electronic data interchange, including the development and maintenance of a health care constituents database, health care directory and resource library, and a health care communications network through the use of electronic bulletin board services and other network communications applications; and (5) providing technical assistance in the development of implementation guides, and in other issues including legislative, legal, and confidentiality requirements. History:   1994 c 625 art 9 s 8 
62J.581 STANDARDS FOR MINNESOTA UNIFORM HEALTH CARE REIMBURSEMENT DOCUMENTS. Subdivision 1. Minnesota uniform remittance advice. All group purchasers shall provide a uniform claim payment/advice transaction to health care providers when a claim is adjudicated. The uniform claim payment/advice transaction shall comply with section 62J.536, subdivision 1b, and rules adopted under section 62J.536, subdivision 2. Subd. 2. Minnesota uniform explanation of benefits document. (a) All group purchasers shall provide a uniform explanation of benefits document to health care patients when an explanation of benefits document is provided as otherwise required or permitted by law. The uniform explanation of benefits document shall comply with the standards prescribed in this section. (b) Notwithstanding paragraph (a), this section does not apply to group purchasers not included as covered entities under United States Code, title 42, sections 1320d to 1320d-8, as amended from time to time, and the regulations promulgated under those sections. Subd. 3. Scope. For purposes of sections 62J.50 to 62J.61, the uniform claim payment/advice transaction and uniform explanation of benefits document format specified in subdivision 4 shall apply to all health care services delivered by a health care provider or health care provider organization in Minnesota, regardless of the location of the payer. Health care services not paid on an individual claims basis, such as capitated payments, are not included in this section. A health plan company is excluded from the requirements in subdivisions 1 and 2 if they comply with section 62A.01, subdivisions 2 and 3. Subd. 4. Specifications. The uniform explanation of benefits document shall be provided by use of a paper document conforming to the specifications in this section. The commissioner, after consulting with the Administrative Uniformity Committee, shall specify the data elements and definitions for the uniform explanation of benefits document. The commissioner and the Administrative Uniformity Committee must consult with the Minnesota Dental Association and Delta Dental Plan of Minnesota before requiring under this section the use of a paper document for the uniform explanation of benefits document or the uniform claim payment/advice transaction for dental care services. Subd. 5. Effective date. The requirements in subdivisions 1 and 2 are effective June 30, 2007. The requirements in subdivisions 1 and 2 apply regardless of when the health care service was provided to the patient. History:  2000 c 460 s 7; 2002 c 307 art 2 s 7; 2002 c 330 s 23; 2005 c 106 s 8; 2014 c 192 art 1 s 14-16
62J.60 MINNESOTA UNIFORM HEALTH CARE IDENTIFICATION CARD. Subdivision 1. Requirements for identification card. All individuals with health care coverage shall be issued Minnesota uniform health care identification cards by group purchasers as of January 1, 1998, unless the requirements of section 62A.01, subdivisions 2 and 3, are met. If a health benefit plan issued by a group purchaser provides coverage for prescription drugs, the group purchaser shall include uniform prescription drug information on the uniform health care identification card issued to its enrollees on or after July 1, 2003. Nothing in this section requires a group purchaser to issue a separate card containing uniform prescription drug information, provided that the Minnesota uniform health care identification card can accommodate the information necessary to process prescription drug claims as required by this section. The Minnesota uniform health care identification cards shall comply with the standards prescribed in this section. Subd. 1a. Definition; health benefit plan. For purposes of this section, "health benefit plan" means a policy, contract, or certificate offered, sold, issued, or renewed by a group purchaser for the coverage of medical and hospital benefits. A health benefit plan does not include coverage that is: (1) limited to disability or income protection coverage; (2) automobile or homeowners medical payment coverage; (3) liability insurance or supplemental to liability insurance; (4) accident-only coverage; (5) credit accident and health insurance issued under chapter 62B; (6) designed solely to provide dental or vision care; (7) designed solely to provide coverage for a specified disease or illness; (8) coverage under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance; or (9) hospital income or indemnity. Subd. 2. General characteristics. (a) The Minnesota uniform health care identification card must be a preprinted card constructed of plastic, paper, or any other medium that conforms with ANSI and ISO 7810 physical characteristics standards. The card dimensions must also conform to ANSI and ISO 7810 physical characteristics standard. The use of a signature panel is optional. The uniform prescription drug information contained on the card must conform with the format adopted by the NCPDP and, except as provided in subdivision 3, paragraph (a), clause (2), must include all of the fields required to submit a claim in conformance with the most recent pharmacy identification card implementation guide produced by the NCPDP. All information required to submit a prescription drug claim, exclusive of information provided on a prescription that is required by law, must be included on the card in a clear, readable, and understandable manner. If a health benefit plan requires a conditional or situational field, as defined by the NCPDP, the conditional or situational field must conform to the most recent pharmacy information card implementation guide produced by the NCPDP. (b) The Minnesota uniform health care identification card must have an essential information window on the front side with the following data elements: card issuer name, electronic transaction routing information, card issuer identification number, cardholder (insured) identification number, and cardholder (insured) identification name. No optional data may be interspersed between these data elements. (c) Standardized labels are required next to human readable data elements and must come before the human data elements. Subd. 2a. Issuance. A new Minnesota uniform health care identification card must be issued to individuals upon enrollment. Except for the medical assistance and MinnesotaCare programs, a new card must be issued upon any change in an individual's health care coverage that impacts the content or format of the data included on the card or no later than 24 months after adoption of any change in the NCPDP implementation guide or successor document that affects the content or format of the data included on the card. Anytime that a card is issued upon enrollment or replaced by the medical assistance or MinnesotaCare program, the card must conform to the adopted NCPDP standards in effect and to the implementation guide in use at the time of issuance. Newly issued cards must conform to the adopted NCPDP standards in effect at the time of issuance and to the implementation guide in use at the time of issuance. Stickers or other methodologies may be used to update cards temporarily. Subd. 3. Human readable data elements. (a) The following are the minimum human readable data elements that must be present on the front side of the Minnesota uniform health care identification card: (1) card issuer name or logo, which is the name or logo that identifies the card issuer. The card issuer name or logo may be located at the top of the card. No standard label is required for this data element; (2) complete electronic transaction routing information including, at a minimum, the international identification number. The standardized label of this data element is "RxBIN." Processor control numbers and group numbers are required if needed to electronically process a prescription drug claim. The standardized label for the process control numbers data element is "RxPCN" and the standardized label for the group numbers data element is "RxGrp," except that if the group number data element is a universal element to be used by all health care providers, the standardized label may be "Grp." To conserve vertical space on the card, the international identification number and the processor control number may be printed on the same line; (3) cardholder (insured) identification number, which is the unique identification number of the individual cardholder established and defined under this section. The standardized label for the data element is "ID"; (4) cardholder (insured) identification name, which is the name of the individual cardholder. The identification name must be formatted as follows: first name, space, optional middle initial, space, last name, optional space and name suffix. The standardized label for this data element is "Name"; (5) care type, which is the description of the group purchaser's plan product under which the beneficiary is covered. The description shall include the health plan company name and the plan or product name. The standardized label for this data element is "Care Type"; (6) service type, which is the description of coverage provided such as hospital, dental, vision, prescription, or mental health. The standard label for this data element is "Svc Type"; and (7) provider/clinic name, which is the name of the primary care clinic the cardholder is assigned to by the health plan company. The standard label for this field is "PCP." This information is mandatory only if the health plan company assigns a specific primary care provider to the cardholder. (b) The following human readable data elements shall be present on the back side of the Minnesota uniform health care identification card. These elements must be left justified, and no optional data elements may be interspersed between them: (1) claims submission names and addresses, which are the names and addresses of the entity or entities to which claims should be submitted. If different destinations are required for different types of claims, this must be labeled; (2) telephone numbers and names that pharmacies and other health care providers may call for assistance. These telephone numbers and names are required on the back side of the card only if one of the contacts listed in clause (3) cannot provide pharmacies or other providers with assistance or with the telephone numbers and names of contacts for assistance; and (3) telephone numbers and names; which are the telephone numbers and names of the following contacts with a standardized label describing the service function as applicable: (i) eligibility and benefit information; (ii) utilization review; (iii) precertification; or (iv) customer services. (c) The following human readable data elements are mandatory on the back side of the Minnesota uniform health care identification card for health maintenance organizations: (1) emergency care authorization telephone number or instruction on how to receive authorization for emergency care. There is no standard label required for this information; and (2) one of the following: (i) telephone number to call to appeal to or file a complaint with the commissioner of health; or (ii) for persons enrolled under section 256B.69 or 256L.12, the telephone number to call to file a complaint with the ombudsperson designated by the commissioner of human services under section 256B.69 and the address to appeal to the commissioner of human services. There is no standard label required for this information. (d) All human readable data elements not required under paragraphs (a) to (c) are optional and may be used at the issuer's discretion. Subd. 4. Machine readable data content. The Minnesota uniform health care identification card may be machine readable or nonmachine readable. If the card is machine readable, the card must contain a magnetic stripe that conforms to ANSI and ISO standards for Tracks 1. Subd. 5. Annual reporting. As part of an annual filing made with the commissioner of health or commerce on or after January 1, 2003, a group purchaser shall certify compliance with this section and shall submit to the commissioner of health or commerce a copy of the Minnesota uniform health care identification card used by the group purchaser. History:  1994 c 625 art 9 s 11; 1996 c 440 art 1 s 31,32; 1997 c 205 s 17; 1997 c 225 art 2 s 62; 2000 c 460 s 8; 2001 c 110 s 1; 2006 c 255 s 22,23; 2007 c 147 art 9 s 8,9; 2016 c 158 art 2 s 15,16
62J.61 RULEMAKING; IMPLEMENTATION. Subdivision 1. Exemption. The commissioner of health is exempt from chapter 14, including section 14.386, in implementing sections 62J.50 to 62J.54, subdivision 3, and 62J.56 to 62J.581. Subd. 2. Procedure. (a) The commissioner shall publish proposed rules in the State Register or, if the commissioner determines that publishing the text of the proposed rules would be unduly cumbersome, shall publish notice of the proposed rules that contains a detailed description of the rules along with a statement that a free copy of the entire set of rules is available upon request to the agency. (b) Interested parties have 30 days to comment on the proposed rules. After the commissioner has considered all comments, the commissioner shall publish notice in the State Register that the rules have been adopted 30 days before they are to take effect. (c) If the adopted rules are the same as the proposed rules, the notice shall state that the rules have been adopted as proposed and shall cite the prior publication. If the adopted rules differ from the proposed rules, the portions of the adopted rules which differ from the proposed rules shall be included in the notice of adoption together with a citation to the prior State Register that contained the notice of the proposed rules. (d) The commissioner may use rulemaking to implement sections 62J.54, subdivision 4, 62J.55, and 62J.60. Subd. 3. Restrictions. The commissioner shall not adopt any rules requiring patients to provide their Social Security numbers unless and until federal laws are modified to allow or require such action nor shall the commissioner adopt rules which allow medical records, claims, or other treatment or clinical data to be included on the health care identification card, except as specifically provided in this chapter. Subd. 4. Patient privacy. The commissioner shall seek comments from the Ethics and Confidentiality Committee of the Minnesota Health Data Institute and the Department of Administration, Public Information Policy Analysis Division, before adopting or publishing final rules relating to issues of patient privacy and medical records. Subd. 5. Biennial review of rulemaking procedures and rules. The commissioner shall biennially seek comments from affected parties about the effectiveness of and continued need for the rulemaking procedures set out in subdivision 2 and about the quality and effectiveness of rules adopted using these procedures. The commissioner shall seek comments by holding a meeting and by publishing a notice in the State Register that contains the date, time, and location of the meeting and a statement that invites oral or written comments. The notice must be published at least 30 days before the meeting date. The commissioner shall write a report summarizing the comments and shall submit the report to the Minnesota Health Data Institute and to the Minnesota Administrative Uniformity Committee by January 15 of every even-numbered year. History:  1994 c 625 art 9 s 12; 1997 c 187 art 4 s 3; 1998 c 254 art 1 s 14; 2014 c 192 art 1 s 17
62J.62 ELECTRONIC BILLING ASSISTANCE. The commissioner of human services shall, out of existing resources, encourage and assist providers to adopt and use electronic billing for state programs, including but not limited to the provision of training. History:   2006 c 267 art 1 s 1 
62J.63 CENTER FOR HEALTH CARE PURCHASING IMPROVEMENT. Subdivision 1. Support for state health care purchasing and performance measurement. The commissioner of health shall support the state in its efforts to be a more prudent and efficient purchaser of quality health care services, aid the state in developing and using more common strategies and approaches for health care performance measurement and health care purchasing, promote greater transparency of health care costs and quality and greater accountability for health care results and improvement, and identify barriers to more efficient, effective, quality health care and options for overcoming the barriers. Subd. 2.  Duties; scope. The commissioner of health may: (1) require reports or surveys to evaluate the performance of current health care purchasing or administrative simplification strategies; (2) calculate fiscal impacts, including net savings and return on investment, of health care purchasing strategies and initiatives; (3) support the Administrative Uniformity Committee under sections 62J.50 and 62J.536 and other relevant groups or activities to advance agreement on health care administrative process streamlining; (4) contact and participate with other relevant health care task forces, study activities, and similar efforts with regard to health care performance measurement and performance-based purchasing; and (5) assist in seeking external funding through appropriate grants or other funding opportunities and may administer grants and externally funded projects. Subd. 3.  MS 2020 [Repealed, 1Sp2021 c 7 art 3 s 47] History:  2006 c 282 art 14 s 10; 2007 c 148 art 2 s 83; 2009 c 157 art 1 s 17; 1Sp2021 c 7 art 3 s 6,7
62J.691 PURPOSE. The legislature finds that medical education and research are important to the health and economic well being of Minnesotans. The legislature further finds that, as a result of competition in the health care marketplace, these teaching and research institutions are facing increased difficulty funding medical education and research. The purpose of section 62J.692 is to help offset lost patient care revenue for those teaching institutions affected by increased competition in the health care marketplace and to help ensure the continued excellence of health care research in Minnesota. History:  1999 c 245 art 2 s 9; 2014 c 275 art 1 s 6
62J.692 MEDICAL EDUCATION. Subdivision 1. Definitions. (a) For purposes of this section, the following definitions apply: (b) "Accredited clinical training" means the clinical training provided by a medical education program that is accredited through an organization recognized by the Department of Education, the Centers for Medicare and Medicaid Services, or another national body who reviews the accrediting organizations for multiple disciplines and whose standards for recognizing accrediting organizations are reviewed and approved by the commissioner of health. (c) "Commissioner" means the commissioner of health. (d) "Clinical medical education program" means the accredited clinical training of physicians (medical students and residents), doctor of pharmacy practitioners, doctors of chiropractic, dentists, advanced practice registered nurses (clinical nurse specialists, certified registered nurse anesthetists, nurse practitioners, and certified nurse midwives), physician assistants, dental therapists and advanced dental therapists, psychologists, clinical social workers, community paramedics, and community health workers. (e) "Sponsoring institution" means a hospital, school, or consortium located in Minnesota that sponsors and maintains primary organizational and financial responsibility for a clinical medical education program in Minnesota and which is accountable to the accrediting body. (f) "Teaching institution" means a hospital, medical center, clinic, or other organization that conducts a clinical medical education program in Minnesota. (g) "Trainee" means a student or resident involved in a clinical medical education program. (h) "Eligible trainee FTE's" means the number of trainees, as measured by full-time equivalent counts, that are at training sites located in Minnesota with currently active medical assistance enrollment status and a National Provider Identification (NPI) number where training occurs in either an inpatient or ambulatory patient care setting and where the training is funded, in part, by patient care revenues. Training that occurs in nursing facility settings is not eligible for funding under this section. Subd. 2.  [Repealed, 2007 c 133 art 2 s 13] Subd. 3. Application process. (a) A clinical medical education program conducted in Minnesota by a teaching institution to train physicians, doctor of pharmacy practitioners, dentists, chiropractors, physician assistants, dental therapists and advanced dental therapists, psychologists, clinical social workers, community paramedics, or community health workers is eligible for funds under subdivision 4 if the program: (1) is funded, in part, by patient care revenues; (2) occurs in patient care settings that face increased financial pressure as a result of competition with nonteaching patient care entities; and (3) emphasizes primary care or specialties that are in undersupply in Minnesota. (b) A clinical medical education program for advanced practice nursing is eligible for funds under subdivision 4 if the program meets the eligibility requirements in paragraph (a), clauses (1) to (3), and is sponsored by the University of Minnesota Academic Health Center, the Mayo Foundation, or institutions that are part of the Minnesota State Colleges and Universities system or members of the Minnesota Private College Council. (c) Applications must be submitted to the commissioner by a sponsoring institution on behalf of an eligible clinical medical education program and must be received by October 31 of each year for distribution in the following year. An application for funds must contain the following information: (1) the official name and address of the sponsoring institution and the official name and site address of the clinical medical education programs on whose behalf the sponsoring institution is applying; (2) the name, title, and business address of those persons responsible for administering the funds; (3) for each clinical medical education program for which funds are being sought; the type and specialty orientation of trainees in the program; the name, site address, and medical assistance provider number and national provider identification number of each training site used in the program; the federal tax identification number of each training site used in the program, where available; the total number of trainees at each training site; and the total number of eligible trainee FTEs at each site; and (4) other supporting information the commissioner deems necessary to determine program eligibility based on the criteria in paragraphs (a) and (b) and to ensure the equitable distribution of funds. (d) An application must include the information specified in clauses (1) to (3) for each clinical medical education program on an annual basis for three consecutive years. After that time, an application must include the information specified in clauses (1) to (3) when requested, at the discretion of the commissioner: (1) audited clinical training costs per trainee for each clinical medical education program when available or estimates of clinical training costs based on audited financial data; (2) a description of current sources of funding for clinical medical education costs, including a description and dollar amount of all state and federal financial support, including Medicare direct and indirect payments; and (3) other revenue received for the purposes of clinical training. (e) An applicant that does not provide information requested by the commissioner shall not be eligible for funds for the current funding cycle. Subd. 4. Distribution of funds. (a) The commissioner shall annually distribute the available medical education funds to all qualifying applicants based on a public program volume factor, which is determined by the total volume of public program revenue received by each training site as a percentage of all public program revenue received by all training sites in the fund pool. Public program revenue for the distribution formula includes revenue from medical assistance and prepaid medical assistance. Training sites that receive no public program revenue are ineligible for funds available under this subdivision. For purposes of determining training-site level grants to be distributed under this paragraph, total statewide average costs per trainee for medical residents is based on audited clinical training costs per trainee in primary care clinical medical education programs for medical residents. Total statewide average costs per trainee for dental residents is based on audited clinical training costs per trainee in clinical medical education programs for dental students. Total statewide average costs per trainee for pharmacy residents is based on audited clinical training costs per trainee in clinical medical education programs for pharmacy students. Training sites whose training site level grant is less than $5,000, based on the formula described in this paragraph, or that train fewer than 0.1 FTE eligible trainees, are ineligible for funds available under this subdivision. No training sites shall receive a grant per FTE trainee that is in excess of the 95th percentile grant per FTE across all eligible training sites; grants in excess of this amount will be redistributed to other eligible sites based on the formula described in this paragraph. (b) For funds distributed in fiscal years 2014 and 2015, the distribution formula shall include a supplemental public program volume factor, which is determined by providing a supplemental payment to training sites whose public program revenue accounted for at least 0.98 percent of the total public program revenue received by all eligible training sites. The supplemental public program volume factor shall be equal to ten percent of each training site's grant for funds distributed in fiscal year 2014 and for funds distributed in fiscal year 2015. Grants to training sites whose public program revenue accounted for less than 0.98 percent of the total public program revenue received by all eligible training sites shall be reduced by an amount equal to the total value of the supplemental payment. For fiscal year 2016 and beyond, the distribution of funds shall be based solely on the public program volume factor as described in paragraph (a). (c) Funds distributed shall not be used to displace current funding appropriations from federal or state sources. (d) Funds shall be distributed to the sponsoring institutions indicating the amount to be distributed to each of the sponsor's clinical medical education programs based on the criteria in this subdivision and in accordance with the commissioner's approval letter. Each clinical medical education program must distribute funds allocated under paragraphs (a) and (b) to the training sites as specified in the commissioner's approval letter. Sponsoring institutions, which are accredited through an organization recognized by the Department of Education or the Centers for Medicare and Medicaid Services, may contract directly with training sites to provide clinical training. To ensure the quality of clinical training, those accredited sponsoring institutions must: (1) develop contracts specifying the terms, expectations, and outcomes of the clinical training conducted at sites; and (2) take necessary action if the contract requirements are not met. Action may include the withholding of payments under this section or the removal of students from the site. (e) Use of funds is limited to expenses related to clinical training program costs for eligible programs. (f) Any funds not distributed in accordance with the commissioner's approval letter must be returned to the medical education and research fund within 30 days of receiving notice from the commissioner. The commissioner shall distribute returned funds to the appropriate training sites in accordance with the commissioner's approval letter. (g) A maximum of $150,000 of the funds dedicated to the commissioner under section 297F.10, subdivision 1, clause (2), may be used by the commissioner for administrative expenses associated with implementing this section. Subd. 4a. Alternative distribution. If federal approval is not received for the formula described in subdivision 4, paragraphs (a) and (b), 100 percent of available medical education and research funds shall be distributed based on a distribution formula that reflects a summation of two factors: (1) a public program volume factor, that is determined by the total volume of public program revenue received by each training site as a percentage of all public program revenue received by all training sites in the fund pool; and (2) a supplemental public program volume factor, that is determined by providing a supplemental payment of 20 percent of each training site's grant to training sites whose public program revenue accounted for at least 0.98 percent of the total public program revenue received by all eligible training sites. Grants to training sites whose public program revenue accounted for less than 0.98 percent of the total public program revenue received by all eligible training sites shall be reduced by an amount equal to the total value of the supplemental payment. Subd. 5. Report. (a) Sponsoring institutions receiving funds under this section must sign and submit a medical education grant verification report (GVR) to verify that the correct grant amount was forwarded to each eligible training site. If the sponsoring institution fails to submit the GVR by the stated deadline, or to request and meet the deadline for an extension, the sponsoring institution is required to return the full amount of funds received to the commissioner within 30 days of receiving notice from the commissioner. The commissioner shall distribute returned funds to the appropriate training sites in accordance with the commissioner's approval letter. (b) The reports must provide verification of the distribution of the funds and must include: (1) the total number of eligible trainee FTEs in each clinical medical education program; (2) the name of each funded program and, for each program, the dollar amount distributed to each training site and a training site expenditure report; (3) documentation of any discrepancies between the initial grant distribution notice included in the commissioner's approval letter and the actual distribution; (4) a statement by the sponsoring institution stating that the completed grant verification report is valid and accurate; and (5) other information the commissioner deems appropriate to evaluate the effectiveness of the use of funds for medical education. (c) Each year, the commissioner shall provide an annual summary report to the legislature on the implementation of this section. This report is exempt from section 144.05, subdivision 7. Subd. 6. Other available funds. The commissioner is authorized to distribute, in accordance with subdivision 4, funds made available through: (1) voluntary contributions by employers or other entities; (2) allocations for the commissioner of human services to support medical education and research; and (3) other sources as identified and deemed appropriate by the legislature for inclusion in the fund. Subd. 7. Transfers from commissioner of human services. Of the amount transferred according to section 256B.69, subdivision 5c, paragraph (a), clauses (1) to (4), $21,714,000 shall be distributed as follows: (1) $2,157,000 shall be distributed by the commissioner to the University of Minnesota Board of Regents for the purposes described in sections 137.38 to 137.40; (2) $1,035,360 shall be distributed by the commissioner to the Hennepin County Medical Center for clinical medical education; (3) $17,400,000 shall be distributed by the commissioner to the University of Minnesota Board of Regents for purposes of medical education; (4) $1,121,640 shall be distributed by the commissioner to clinical medical education dental innovation grants in accordance with subdivision 7a; and (5) the remainder of the amount transferred according to section 256B.69, subdivision 5c, clauses (1) to (4), shall be distributed by the commissioner annually to clinical medical education programs that meet the qualifications of subdivision 3 based on the formula in subdivision 4, paragraph (a). Subd. 7a. Clinical medical education innovations grants. (a) The commissioner shall award grants to teaching institutions and clinical training sites for projects that increase dental access for underserved populations and promote innovative clinical training of dental professionals. In awarding the grants, the commissioner, in consultation with the commissioner of human services, shall consider the following: (1) potential to successfully increase access to an underserved population; (2) the long-term viability of the project to improve access beyond the period of initial funding; (3) evidence of collaboration between the applicant and local communities; (4) the efficiency in the use of the funding; and (5) the priority level of the project in relation to state clinical education, access, and workforce goals. (b) The commissioner shall periodically evaluate the priorities in awarding the innovations grants in order to ensure that the priorities meet the changing workforce needs of the state. Subd. 8. Federal financial participation. The commissioner of human services shall seek to maximize federal financial participation in payments for medical education and research costs. The commissioner shall use physician clinic rates where possible to maximize federal financial participation. Any additional funds that become available must be distributed under subdivision 4, paragraph (a). Subd. 9. Review of eligible providers. The commissioner may review provider groups included in the definition of a clinical medical education program to assure that the distribution of the funds continue to be consistent with the purpose of this section. The results of any such reviews must be reported to the chairs and ranking minority members of the legislative committees with jurisdiction over health care policy and finance. Subd. 10.  [Repealed, 2007 c 147 art 15 s 22] History:  1999 c 245 art 2 s 10; 2000 c 494 s 1-3; 2001 c 161 s 14; 1Sp2001 c 9 art 2 s 2,3; 2002 c 220 art 15 s 1,2; 2002 c 277 s 32; 2002 c 375 art 3 s 1; 2002 c 379 art 1 s 113; 1Sp2003 c 14 art 7 s 16-19; art 12 s 1; 1Sp2003 c 21 art 9 s 1,2; 2004 c 228 art 1 s 16; 2005 c 10 art 1 s 81; 2005 c 84 s 1-3; 1Sp2005 c 4 art 2 s 1; 2007 c 147 art 15 s 5-8; 2009 c 79 art 5 s 4; 1Sp2010 c 1 art 21 s 1; 1Sp2011 c 9 art 2 s 3; art 6 s 13; 2013 c 108 art 12 s 4-9; 2015 c 71 art 8 s 6; 2016 c 158 art 2 s 17; 2022 c 58 s 170; 2022 c 98 art 14 s 1
62J.695 CITATION. Sections 62J.695 to 62J.76 may be cited as the "Patient Protection Act." History:   1997 c 237 s 1 
62J.70 DEFINITIONS. Subdivision 1. Applicability. For purposes of sections 62J.70 to 62J.76, the terms defined in this section have the meanings given them. Subd. 2. Health care provider or provider. "Health care provider" or "provider" means: (1) a physician, nurse, or other provider as defined under section 62J.03; (2) a hospital as defined under section 144.696, subdivision 3; (3) an individual or entity that provides health care services under the medical assistance, MinnesotaCare, or state employee group insurance program; and (4) an association, partnership, corporation, limited liability corporation, or other organization of persons or entities described in clause (1) or (2) organized for the purposes of providing, arranging, or administering health care services or treatment. This section does not apply to trade associations, membership associations of health care professionals, or other organizations that do not directly provide, arrange, or administer health care services or treatment. Subd. 3. Health plan company. "Health plan company" means health plan company as defined in section 62Q.01, subdivision 4. Subd. 4. Enrollee. "Enrollee" means an individual covered by a health plan company or health insurance or health coverage plan and includes an insured policyholder, subscriber, contract holder, member, covered person, or certificate holder. History:  1997 c 237 s 2; 2016 c 158 art 2 s 18
62J.701 GOVERNMENTAL PROGRAMS. (a) Beginning January 1, 1999, the provisions in paragraphs (b) to (e) apply. (b) For purposes of sections 62J.695 to 62J.80, the requirements and other provisions that apply to health plan companies also apply to governmental programs. (c) For purposes of this section, "governmental programs" means the medical assistance program, the MinnesotaCare program, the state employee group insurance program, the public employees insurance program under section 43A.316, and coverage provided by political subdivisions under section 471.617. (d) Notwithstanding paragraph (b), section 62J.72 does not apply to the fee-for-service programs under medical assistance and MinnesotaCare. (e) If a state commissioner or local unit of government contracts with a health plan company or a third-party administrator, the contract may assign any obligations under paragraph (b) to the health plan company or third-party administrator. Nothing in this paragraph shall be construed to remove or diminish any enforcement responsibilities of the commissioners of health or commerce provided in sections 62J.695 to 62J.80. History:  1998 c 407 art 2 s 9; 2016 c 158 art 2 s 19
62J.71 PROHIBITED PROVIDER CONTRACTS. Subdivision 1. Prohibited agreements and directives. The following types of agreements and directives are contrary to state public policy, are prohibited under this section, and are null and void: (1) any agreement or directive that prohibits a health care provider from communicating with an enrollee with respect to the enrollee's health status, health care, or treatment options, if the health care provider is acting in good faith and within the provider's scope of practice as defined by law; (2) any agreement or directive that prohibits a health care provider from making a recommendation regarding the suitability or desirability of a health plan company, health insurer, or health coverage plan for an enrollee, unless the provider has a financial conflict of interest in the enrollee's choice of health plan company, health insurer, or health coverage plan; (3) any agreement or directive that prohibits a provider from providing testimony, supporting or opposing legislation, or making any other contact with state or federal legislators or legislative staff or with state and federal executive branch officers or staff; (4) any agreement or directive that prohibits a health care provider from disclosing accurate information about whether services or treatment will be paid for by a patient's health plan company or health insurer or health coverage plan; and (5) any agreement or directive that prohibits a health care provider from informing an enrollee about the nature of the reimbursement methodology used by an enrollee's health plan company, health insurer, or health coverage plan to pay the provider. Subd. 2. Persons and entities affected. The following persons and entities shall not enter into any agreement or directive that is prohibited under this section: (1) a health plan company; (2) a health care network cooperative as defined under section 62R.04, subdivision 3; or (3) a health care provider as defined in section 62J.70, subdivision 2. Subd. 3. Retaliation prohibited. No person, health plan company, or other organization may take retaliatory action against a health care provider solely on the grounds that the provider: (1) refused to enter into an agreement or provide services or information in a manner that is prohibited under this section or took any of the actions listed in subdivision 1; (2) disclosed accurate information about whether a health care service or treatment is covered by an enrollee's health plan company, health insurer, or health coverage plan; (3) discussed diagnostic, treatment, or referral options that are not covered or are limited by the enrollee's health plan company, health insurer, or health coverage plan; (4) criticized coverage of the enrollee's health plan company, health insurer, or health coverage plan; or (5) expressed personal disagreement with a decision made by a person, organization, or health care provider regarding treatment or coverage provided to a patient of the provider, or assisted or advocated for the patient in seeking reconsideration of such a decision, provided the health care provider makes it clear that the provider is acting in a personal capacity and not as a representative of or on behalf of the entity that made the decision. Subd. 4. Exclusion. (a) Nothing in this section prohibits an entity that is subject to this section from taking action against a provider if the entity has evidence that the provider's actions are illegal, constitute medical malpractice, or are contrary to accepted medical practices. (b) Nothing in this section prohibits a contract provision or directive that requires any contracting party to keep confidential or to not use or disclose the specific amounts paid to a provider, provider fee schedules, provider salaries, and other proprietary information of a specific entity that is subject to this section. History:  1997 c 237 s 3; 1998 c 407 art 2 s 10-12
62J.72 DISCLOSURE OF HEALTH CARE PROVIDER INFORMATION. Subdivision 1. Written disclosure. (a) A health plan company, as defined under section 62J.70, subdivision 3, a health care network cooperative as defined under section 62R.04, subdivision 3, and a health care provider as defined under section 62J.70, subdivision 2, shall, during open enrollment, upon enrollment, and annually thereafter, provide enrollees with a description of the general nature of the reimbursement methodologies used by the health plan company, health insurer, or health coverage plan to pay providers. The description must explain clearly any aspect of the reimbursement methodology that creates a financial incentive for the health care provider to limit or restrict the health care provided to enrollees. An entity required to disclose shall also disclose if no reimbursement methodology is used that creates a financial incentive for the health care provider to limit or restrict the health care provided to enrollees. This description may be incorporated into the member handbook, subscriber contract, certificate of coverage, or other written enrollee communication. The general reimbursement methodology shall be made available to employers at the time of open enrollment. (b) Health plan companies, health care network cooperatives, and providers must, upon request, provide an enrollee with specific information regarding the reimbursement methodology, including, but not limited to, the following information: (1) a concise written description of the provider payment plan, including any incentive plan applicable to the enrollee; (2) a written description of any incentive to the provider relating to the provision of health care services to enrollees, including any compensation arrangement that is dependent on the amount of health coverage or health care services provided to the enrollee, or the number of referrals to or utilization of specialists; and (3) a written description of any incentive plan that involves the transfer of financial risk to the health care provider. (c) The disclosure statement describing the general nature of the reimbursement methodologies must comply with the Readability of Insurance Policies Act in chapter 72C and must be filed with and approved by the commissioner prior to its use. (d) A disclosure statement that has been filed with the commissioner for approval under paragraph (c) is deemed approved 30 days after the date of filing, unless approved or disapproved by the commissioner on or before the end of that 30-day period. (e) The disclosure statement describing the general nature of the reimbursement methodologies must be provided upon request in English, Spanish, Vietnamese, and Hmong. In addition, reasonable efforts must be made to provide information contained in the disclosure statement to other non-English-speaking enrollees. (f) Health plan companies and providers may enter into agreements to determine how to respond to enrollee requests received by either the provider or the health plan company. This subdivision does not require disclosure of specific amounts paid to a provider, provider fee schedules, provider salaries, or other proprietary information of a specific health plan company or health insurer or health coverage plan or provider. Subd. 2. Additional written disclosure of provider information. In the event a health plan company prepares a written disclosure as specified in subdivision 1, in a manner that explicitly makes a comparison of the financial incentives between the providers with whom it contracts, it must describe the incentives that occur at the provider level. Subd. 3. Information on patients' medical bills. A health plan company and health care provider shall provide patients and enrollees with a copy of an explicit and intelligible bill whenever the patient or enrollee is sent a bill and is responsible for paying any portion of that bill. The bills must contain descriptive language sufficient to be understood by the average patient or enrollee. This subdivision does not apply to a flat co-pay paid by the patient or enrollee at the time the service is required. Subd. 4. Nonapplicability. Health care providers as defined in section 62J.70, subdivision 2, clause (1), need not individually provide information required under this section if it has been provided by another individual or entity that is subject to this section. History:  1997 c 237 s 4; 1998 c 407 art 2 s 13
62J.73 PROHIBITION ON EXCLUSIVE ARRANGEMENTS. Subdivision 1. Prohibition on exclusive relationships. No provider, group of providers, or health plan company shall restrict a person's right to provide health services or procedures to another provider, group of providers, or health plan company, unless the person is an employee. Subd. 2. Prohibition on restrictive contract terms. No provider, group of providers, or person providing goods or health services to a provider shall enter into a contract or subcontract with a health plan company or group of providers on terms that require the provider, group of providers, or person not to contract with another health plan company, unless the provider or person is an employee. Subd. 3. Prohibition regarding essential facilities and services. (a) No health plan company, provider, or group of providers may withhold from its competitors health care services, which are essential for competition between health care providers within the meaning of the essential facilities doctrine as interpreted by the federal courts. (b) This subdivision should be construed as an instruction to state court in interpreting federal law. Subd. 4. Violations. Any provider or other individual who believes provisions of this section may have been violated may file a complaint with the attorney general's office regarding a possible violation of this section. History:   1997 c 237 s 5 
62J.74 ENFORCEMENT. Subdivision 1. Authority. The commissioners of health and commerce shall each periodically review contracts and arrangements among health care providing entities and health plan companies they regulate to determine compliance with sections 62J.70 to 62J.73. Any person may submit a contract or arrangement to the relevant commissioner for review if the person believes sections 62J.70 to 62J.73 have been violated. Any provision of a contract or arrangement found by the relevant commissioner to violate this section is null and void, and the relevant commissioner may assess civil penalties against the health plan company in an amount not to exceed $2,500 for each day the contract or arrangement is in effect, and may use the enforcement procedures otherwise available to the commissioner. All due process rights afforded under chapter 14 apply to this section. Subd. 2. Assistance to licensing boards. A health-related licensing board as defined under section 214.01, subdivision 2, shall submit a contract or arrangement to the relevant commissioner for review if the board believes sections 62J.70 to 62J.73 have been violated. If the commissioner determines that any provision of a contract or arrangement violates those sections, the board may take disciplinary action against any person who is licensed or regulated by the board who entered into the contract arrangement. History:   1997 c 237 s 6 
62J.76 NONPREEMPTION. Nothing in the Patient Protection Act preempts or replaces requirements related to patient protections that are more protective of patient rights than the requirements established by the Patient Protection Act. History:   1997 c 237 s 8 
62J.80 RETALIATION. A health plan company or health care provider shall not retaliate or take adverse action against an enrollee or patient who, in good faith, makes a complaint against a health plan company or health care provider. If retaliation is suspected, the executive director may report it to the appropriate regulatory authority. History:   1998 c 407 art 2 s 18 
62J.81 DISCLOSURE OF PAYMENTS FOR HEALTH CARE SERVICES. Subdivision 1. Required disclosure by provider. (a) A health care provider, as defined in section 62J.03, subdivision 8, or the provider's designee as agreed to by that designee, shall, at the request of a consumer, and at no cost to the consumer or the consumer's employer, provide that consumer with a good faith estimate of the allowable payment the provider has agreed to accept from the consumer's health plan company for the services specified by the consumer, specifying the amount of the allowable payment due from the health plan company. If a consumer has no applicable public or private coverage, the health care provider must give the consumer, and at no cost to the consumer, a good faith estimate of the average allowable reimbursement the provider accepts as payment from private third-party payers for the services specified by the consumer and the estimated amount the noncovered consumer will be required to pay. (b) In addition to the information required to be disclosed under paragraph (a), a provider must also provide the consumer with information regarding other types of fees or charges that the consumer may be required to pay in conjunction with a visit to the provider, including but not limited to any applicable facility fees. (c) The information required under this subdivision must be provided to a consumer within ten business days from the day a complete request was received by the health care provider. For purposes of this section, "complete request" includes all the patient and service information the health care provider requires to provide a good faith estimate, including a completed good faith estimate form if required by the health care provider. (d) Payment information provided by a provider, or by the provider's designee as agreed to by that designee, to a patient pursuant to this subdivision does not constitute a legally binding estimate of the allowable charge for or cost to the consumer of services. (e) No contract between a health plan company and a provider shall prohibit a provider from disclosing the pricing information required under this subdivision. Subd. 1a. Required disclosure by health plan company. (a) A health plan company, as defined in section 62J.03, subdivision 10, shall, at the request of an enrollee intending to receive specific health care services or the enrollee's designee, provide that enrollee with a good faith estimate of the allowable amount the health plan company has contracted for with a specified provider within the network as total payment for a health care service specified by the enrollee and the portion of the allowable amount due from the enrollee and the enrollee's out-of-pocket costs. An estimate provided to an enrollee under this paragraph is not a legally binding estimate of the allowable amount or enrollee's out-of-pocket cost. (b) The information required under this subdivision must be provided by the health plan company to an enrollee within ten business days from the day a complete request was received by the health plan company. For purposes of this section, "complete request" includes all the patient and service information the health plan company requires to provide a good faith estimate, including a completed good faith estimate form if required by the health plan company. Subd. 2. Applicability. (a) For purposes of this section, "consumer" does not include a medical assistance or MinnesotaCare enrollee, for services covered under those programs. (b) For purposes of this section, a good faith estimate is not: (1) a guarantee of final costs for services received from a health care provider; or (2) a final determination of eligibility for coverage of benefits or provider network participation under a health plan. History:  2004 c 288 art 7 s 3; 2006 c 255 s 24; 2007 c 147 art 15 s 9; 2011 c 108 s 36; 2016 c 158 art 2 s 20; 2018 c 168 s 1
62J.812 PRIMARY CARE PRICE TRANSPARENCY. (a) Each provider shall maintain a list of the services over $25 that correspond with the provider's 25 most frequently billed current procedural terminology (CPT) codes, including the provider's ten most commonly billed evaluation and management codes, and of the ten most frequently billed CPT codes for preventive services. If the provider is associated with a health care system, the health care system may develop the list of services required under this paragraph for the providers within the health care system. (b) For each service listed in paragraph (a), the provider shall disclose the provider's charge, the average reimbursement rate received for the service from the provider's health plan payers in the commercial insurance market, and, if applicable, the Medicare allowable payment rate and the medical assistance fee-for-service payment rate. For purposes of this paragraph, "provider's charge" means the dollar amount the provider charges to a patient who has received the service and who is not covered by private or public health care coverage. (c) The list described in this subdivision must be updated annually and must be posted in the provider's reception area of the clinic or office and made available on the provider's website, if the provider maintains a website. (d) For purposes of this section, "provider" means a primary care provider or clinic that specializes in family medicine, general internal medicine, gynecology, or general pediatrics. (e) No contract between a health plan company and a provider shall prohibit a provider from disclosing the pricing information required under this section. History:  2018 c 168 s 2; 2020 c 83 art 1 s 10
62J.82 HOSPITAL INFORMATION REPORTING DISCLOSURE. Subdivision 1. Required information. The Minnesota Hospital Association shall develop a web-based system, available to the public free of charge, for reporting the following, for Minnesota residents: (1) hospital-specific performance on the measures of care developed under section 256B.072 for acute myocardial infarction, heart failure, and pneumonia; (2) by January 1, 2009, hospital-specific performance on the public reporting measures for hospital-acquired infections as published by the National Quality Forum and collected by the Minnesota Hospital Association and Stratis Health in collaboration with infection control practitioners; and (3) charge information, including, but not limited to, number of discharges, average length of stay, average charge, average charge per day, and median charge, for each of the 50 most common inpatient diagnosis-related groups and the 25 most common outpatient surgical procedures as specified by the Minnesota Hospital Association. Subd. 2. Website. The website must provide information that compares hospital-specific data to hospital statewide data. The website must be updated annually. The commissioner shall provide a link to this reporting information on the department's website. Subd. 3. Enforcement. The commissioner shall provide a link to this information on the department's website. If a hospital does not provide this information to the Minnesota Hospital Association, the commissioner of health may require the hospital to do so in accordance with section 144.55, subdivision 6. History:  1Sp2005 c 4 art 8 s 2; 2007 c 147 art 14 s 1
62J.823 HOSPITAL PRICING TRANSPARENCY. Subdivision 1. Short title. This section may be cited as the "Hospital Pricing Transparency Act." Subd. 2. Definition. For the purposes of this section, "estimate" means the actual price expected to be billed to the individual or to the individual's health plan company based on the specific diagnostic-related group code or specific procedure code or codes, reflecting any known discounts the individual would receive. Subd. 3. Applicability and scope. Any hospital, as defined in section 144.696, subdivision 3, and outpatient surgical center, as defined in section 144.696, subdivision 4, shall provide a written estimate of the cost of a specific service or stay upon the request of a patient, a doctor, an advanced practice registered nurse, a physician assistant, or the patient's representative. The request must include: (1) the health coverage status of the patient, including the specific health plan or other health coverage under which the patient is enrolled, if any; and (2) at least one of the following: (i) the specific diagnostic-related group code; (ii) the name of the procedure or procedures to be performed; (iii) the type of treatment to be received; or (iv) any other information that will allow the hospital or outpatient surgical center to determine the specific diagnostic-related group or procedure code or codes. Subd. 4. Estimate. (a) An estimate provided by the hospital or outpatient surgical center must contain: (1) the method used to calculate the estimate; (2) the specific diagnostic-related group or procedure code or codes used to calculate the estimate, and a description of the diagnostic-related group or procedure code or codes that is reasonably understandable to a patient; and (3) a statement indicating that the estimate, while accurate, may not reflect the actual billed charges and that the final bill may be higher or lower depending on the patient's specific circumstances. (b) The estimate may be provided in any method that meets the needs of the patient and the hospital or outpatient surgical center, including electronically; however, a paper copy must be provided if specifically requested. History:  2006 c 255 s 25; 2020 c 115 art 4 s 7; 2022 c 58 s 10
62J.824 FACILITY FEE DISCLOSURE. (a) Prior to the delivery of nonemergency services, a provider-based clinic that charges a facility fee shall provide notice to any patient stating that the clinic is part of a hospital and the patient may receive a separate charge or billing for the facility component, which may result in a higher out-of-pocket expense. (b) Each health care facility must post prominently in locations easily accessible to and visible by patients, including on its website, a statement that the provider-based clinic is part of a hospital and the patient may receive a separate charge or billing for the facility, which may result in a higher out-of-pocket expense. (c) This section does not apply to laboratory services, imaging services, or other ancillary health services that are provided by staff who are not employed by the health care facility or clinic. (d) For purposes of this section: (1) "facility fee" means any separate charge or billing by a provider-based clinic in addition to a professional fee for physicians' services that is intended to cover building, electronic medical records systems, billing, and other administrative and operational expenses; and (2) "provider-based clinic" means the site of an off-campus clinic or provider office, located at least 250 yards from the main hospital buildings or as determined by the Centers for Medicare and Medicaid Services, that is owned by a hospital licensed under chapter 144 or a health system that operates one or more hospitals licensed under chapter 144, and is primarily engaged in providing diagnostic and therapeutic care, including medical history, physical examinations, assessment of health status, and treatment monitoring. This definition does not include clinics that are exclusively providing laboratory, x-ray, testing, therapy, pharmacy, or educational services and does not include facilities designated as rural health clinics. History:   2019 c 7 s 1 
62J.83 REDUCED PAYMENT AMOUNTS PERMITTED. (a) Notwithstanding any provision of chapter 148 or any other provision of law to the contrary, a health care provider may provide care to a patient at a discounted payment amount, including care provided for free. (b) This section does not apply in a situation in which the discounted payment amount is not permitted under federal law. History:  2006 c 255 s 26; 2008 c 344 s 56; 2009 c 86 art 1 s 88
62J.84 PRESCRIPTION DRUG PRICE TRANSPARENCY. Subdivision 1. Short title. This section may be cited as the "Prescription Drug Price Transparency Act." Subd. 2. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given. (b) "Biosimilar" means a drug that is produced or distributed pursuant to a biologics license application approved under United States Code, title 42, section 262(K)(3). (c) "Brand name drug" means a drug that is produced or distributed pursuant to: (1) an original, new drug application approved under United States Code, title 21, section 355(c), except for a generic drug as defined under Code of Federal Regulations, title 42, section 447.502; or (2) a biologics license application approved under United States Code, title 45, section 262(a)(c). (d) "Commissioner" means the commissioner of health. (e) "Generic drug" means a drug that is marketed or distributed pursuant to: (1) an abbreviated new drug application approved under United States Code, title 21, section 355(j); (2) an authorized generic as defined under Code of Federal Regulations, title 45, section 447.502; or (3) a drug that entered the market the year before 1962 and was not originally marketed under a new drug application. (f) "Manufacturer" means a drug manufacturer licensed under section 151.252. (g) "New prescription drug" or "new drug" means a prescription drug approved for marketing by the United States Food and Drug Administration for which no previous wholesale acquisition cost has been established for comparison. (h) "Patient assistance program" means a program that a manufacturer offers to the public in which a consumer may reduce the consumer's out-of-pocket costs for prescription drugs by using coupons, discount cards, prepaid gift cards, manufacturer debit cards, or by other means. (i) "Prescription drug" or "drug" has the meaning provided in section 151.441, subdivision 8. (j) "Price" means the wholesale acquisition cost as defined in United States Code, title 42, section 1395w-3a(c)(6)(B). Subd. 3. Prescription drug price increases reporting. (a) Beginning January 1, 2022, a drug manufacturer must submit to the commissioner the information described in paragraph (b) for each prescription drug for which the price was $100 or greater for a 30-day supply or for a course of treatment lasting less than 30 days and: (1) for brand name drugs where there is an increase of ten percent or greater in the price over the previous 12-month period or an increase of 16 percent or greater in the price over the previous 24-month period; and (2) for generic drugs where there is an increase of 50 percent or greater in the price over the previous 12-month period. (b) For each of the drugs described in paragraph (a), the manufacturer shall submit to the commissioner no later than 60 days after the price increase goes into effect, in the form and manner prescribed by the commissioner, the following information, if applicable: (1) the name and price of the drug and the net increase, expressed as a percentage; (2) the factors that contributed to the price increase; (3) the name of any generic version of the prescription drug available on the market; (4) the introductory price of the prescription drug when it was approved for marketing by the Food and Drug Administration and the net yearly increase, by calendar year, in the price of the prescription drug during the previous five years; (5) the direct costs incurred by the manufacturer that are associated with the prescription drug, listed separately: (i) to manufacture the prescription drug; (ii) to market the prescription drug, including advertising costs; and (iii) to distribute the prescription drug; (6) the total sales revenue for the prescription drug during the previous 12-month period; (7) the manufacturer's net profit attributable to the prescription drug during the previous 12-month period; (8) the total amount of financial assistance the manufacturer has provided through patient prescription assistance programs, if applicable; (9) any agreement between a manufacturer and another entity contingent upon any delay in offering to market a generic version of the prescription drug; (10) the patent expiration date of the prescription drug if it is under patent; (11) the name and location of the company that manufactured the drug; and (12) if a brand name prescription drug, the ten highest prices paid for the prescription drug during the previous calendar year in any country other than the United States. (c) The manufacturer may submit any documentation necessary to support the information reported under this subdivision. Subd. 4. New prescription drug price reporting. (a) Beginning January 1, 2022, no later than 60 days after a manufacturer introduces a new prescription drug for sale in the United States that is a new brand name drug with a price that is greater than the tier threshold established by the Centers for Medicare and Medicaid Services for specialty drugs in the Medicare Part D program for a 30-day supply or a new generic or biosimilar drug with a price that is greater than the tier threshold established by the Centers for Medicare and Medicaid Services for specialty drugs in the Medicare Part D program for a 30-day supply and is not at least 15 percent lower than the referenced brand name drug when the generic or biosimilar drug is launched, the manufacturer must submit to the commissioner, in the form and manner prescribed by the commissioner, the following information, if applicable: (1) the price of the prescription drug; (2) whether the Food and Drug Administration granted the new prescription drug a breakthrough therapy designation or a priority review; (3) the direct costs incurred by the manufacturer that are associated with the prescription drug, listed separately: (i) to manufacture the prescription drug; (ii) to market the prescription drug, including advertising costs; and (iii) to distribute the prescription drug; and (4) the patent expiration date of the drug if it is under patent. (b) The manufacturer may submit documentation necessary to support the information reported under this subdivision. Subd. 5. Newly acquired prescription drug price reporting. (a) Beginning January 1, 2022, the acquiring drug manufacturer must submit to the commissioner the information described in paragraph (b) for each newly acquired prescription drug for which the price was $100 or greater for a 30-day supply or for a course of treatment lasting less than 30 days and: (1) for a newly acquired brand name drug where there is an increase of ten percent or greater in the price over the previous 12-month period or an increase of 16 percent or greater in price over the previous 24-month period; and (2) for a newly acquired generic drug where there is an increase of 50 percent or greater in the price over the previous 12-month period. (b) For each of the drugs described in paragraph (a), the acquiring manufacturer shall submit to the commissioner no later than 60 days after the acquiring manufacturer begins to sell the newly acquired drug, in the form and manner prescribed by the commissioner, the following information, if applicable: (1) the price of the prescription drug at the time of acquisition and in the calendar year prior to acquisition; (2) the name of the company from which the prescription drug was acquired, the date acquired, and the purchase price; (3) the year the prescription drug was introduced to market and the price of the prescription drug at the time of introduction; (4) the price of the prescription drug for the previous five years; (5) any agreement between a manufacturer and another entity contingent upon any delay in offering to market a generic version of the manufacturer's drug; and (6) the patent expiration date of the drug if it is under patent. (c) The manufacturer may submit any documentation necessary to support the information reported under this subdivision. Subd. 6. Public posting of prescription drug price information. (a) The commissioner shall post on the department's website, or may contract with a private entity or consortium that satisfies the standards of section 62U.04, subdivision 6, to meet this requirement, the following information: (1) a list of the prescription drugs reported under subdivisions 3, 4, and 5, and the manufacturers of those prescription drugs; and (2) information reported to the commissioner under subdivisions 3, 4, and 5. (b) The information must be published in an easy-to-read format and in a manner that identifies the information that is disclosed on a per-drug basis and must not be aggregated in a manner that prevents the identification of the prescription drug. (c) The commissioner shall not post to the department's website or a private entity contracting with the commissioner shall not post any information described in this section if the information is not public data under section 13.02, subdivision 8a; or is trade secret information under section 13.37, subdivision 1, paragraph (b); or is trade secret information pursuant to the Defend Trade Secrets Act of 2016, United States Code, title 18, section 1836, as amended. If a manufacturer believes information should be withheld from public disclosure pursuant to this paragraph, the manufacturer must clearly and specifically identify that information and describe the legal basis in writing when the manufacturer submits the information under this section. If the commissioner disagrees with the manufacturer's request to withhold information from public disclosure, the commissioner shall provide the manufacturer written notice that the information will be publicly posted 30 days after the date of the notice. (d) If the commissioner withholds any information from public disclosure pursuant to this subdivision, the commissioner shall post to the department's website a report describing the nature of the information and the commissioner's basis for withholding the information from disclosure. (e) To the extent the information required to be posted under this subdivision is collected and made available to the public by another state, by the University of Minnesota, or through an online drug pricing reference and analytical tool, the commissioner may reference the availability of this drug price data from another source including, within existing appropriations, creating the ability of the public to access the data from the source for purposes of meeting the reporting requirements of this subdivision. Subd. 7. Consultation. (a) The commissioner may consult with a private entity or consortium that satisfies the standards of section 62U.04, subdivision 6, the University of Minnesota, or the commissioner of commerce, as appropriate, in issuing the form and format of the information reported under this section; in posting information pursuant to subdivision 6; and in taking any other action for the purpose of implementing this section. (b) The commissioner may consult with representatives of the manufacturers to establish a standard format for reporting information under this section and may use existing reporting methodologies to establish a standard format to minimize administrative burdens to the state and manufacturers. Subd. 8. Enforcement and penalties. (a) A manufacturer may be subject to a civil penalty, as provided in paragraph (b), for: (1) failing to submit timely reports or notices as required by this section; (2) failing to provide information required under this section; or (3) providing inaccurate or incomplete information under this section. (b) The commissioner shall adopt a schedule of civil penalties, not to exceed $10,000 per day of violation, based on the severity of each violation. (c) The commissioner shall impose civil penalties under this section as provided in section 144.99, subdivision 4. (d) The commissioner may remit or mitigate civil penalties under this section upon terms and conditions the commissioner considers proper and consistent with public health and safety. (e) Civil penalties collected under this section shall be deposited in the health care access fund. Subd. 9. Legislative report. (a) No later than May 15, 2022, and by January 15 of each year thereafter, the commissioner shall report to the chairs and ranking minority members of the legislative committees with jurisdiction over commerce and health and human services policy and finance on the implementation of this section, including but not limited to the effectiveness in addressing the following goals: (1) promoting transparency in pharmaceutical pricing for the state and other payers; (2) enhancing the understanding on pharmaceutical spending trends; and (3) assisting the state and other payers in the management of pharmaceutical costs. (b) The report must include a summary of the information submitted to the commissioner under subdivisions 3, 4, and 5. History:  2020 c 78 s 1; 2021 c 30 art 3 s 5-9
62K.01 TITLE. This chapter may be cited as the "Minnesota Health Plan Market Rules." History:  2013 c 84 art 2 s 2,17
62K.02 PURPOSE AND SCOPE. Subdivision 1. Purpose. The market rules set forth in this chapter serve to clarify and provide guidance on the application of state law and certain requirements of the Affordable Care Act on all health carriers offering health plans in Minnesota, whether or not through MNsure, to ensure fair competition for all health carriers in Minnesota, to minimize adverse selection, and to ensure that health plans are offered in a manner that protects consumers and promotes the provision of high-quality affordable health care, and improved health outcomes. This chapter contains the regulatory requirements as specified in section 62V.05, subdivision 5, paragraph (b), and shall fully satisfy the requirements of section 62V.05, subdivision 5, paragraph (b). Subd. 2. Scope. (a) This chapter applies only to health plans offered in the individual market or the small group market. (b) This chapter applies to health carriers with respect to individual health plans and small group health plans, unless otherwise specified. (c) If a health carrier issues or renews individual or small group health plans in other states, this chapter applies only to health plans issued or renewed in this state to a Minnesota resident, or to cover a resident of the state, or issued or renewed to a small employer that is actively engaged in business in this state, unless otherwise specified. (d) This chapter does not apply to short-term coverage as defined in section 62A.65, subdivision 7, or grandfathered plan coverage as defined in section 62A.011, subdivision 1b. History:  2013 c 84 art 2 s 3; 2013 c 108 art 1 s 67
62K.03 DEFINITIONS. Subdivision 1. Applicability. For purposes of this chapter, the terms defined in this section have the meanings given. Subd. 2. Affordable Care Act. "Affordable Care Act" means the federal Patient Protection and Affordable Care Act, Public Law 111-148, as amended, including the federal Health Care and Education Reconciliation Act of 2010, Public Law 111-152, and any amendments, and any federal guidance or regulations issued under these acts. Subd. 3. Dental plan. "Dental plan" means a dental plan as defined in section 62Q.76, subdivision 3. Subd. 4. Enrollee. "Enrollee" means a natural person covered by a health plan and includes an insured policyholder, subscriber, contract holder, member, covered person, or certificate holder. Subd. 5. Health carrier. "Health carrier" means a health carrier as defined in section 62A.011, subdivision 2. Subd. 6. Health plan. "Health plan" means a health plan as defined in section 62A.011, subdivision 3. Subd. 7. Individual health plan. "Individual health plan" means an individual health plan as defined in section 62A.011, subdivision 4. Subd. 8. Limited-scope pediatric dental plan. "Limited-scope pediatric dental plan" means a dental plan meeting the requirements of section 9832(c)(2)(A) of the Internal Revenue Code of 1986, as amended, that provides only pediatric dental benefits meeting the requirements of the Affordable Care Act and is offered by a health carrier. A limited-scope pediatric dental plan includes a dental plan that is offered separately or in conjunction with an individual or small group health plan to individuals who have not attained the age of 19 years as of the beginning of the policy year or to a family. Subd. 9. MNsure. "MNsure" means MNsure as defined in section 62V.02. Subd. 10. Preferred provider organization. "Preferred provider organization" means a health plan that provides discounts to enrollees or subscribers for services they receive from certain health care providers. Subd. 11. Qualified health plan. "Qualified health plan" means a health plan that meets the definition in the Affordable Care Act and has been certified by the board of MNsure in accordance with chapter 62V to be offered through MNsure. Subd. 12. Small group health plan. "Small group health plan" means a health plan issued by a health carrier to a small employer as defined in section 62L.02, subdivision 26. History:  2013 c 84 art 2 s 4; 2013 c 108 art 1 s 67
62K.04 MARKET RULES; VIOLATION. Subdivision 1. Compliance. (a) A health carrier issuing an individual health plan to a Minnesota resident or a small group health plan to provide coverage to a small employer that is actively engaged in business in Minnesota shall meet all of the requirements set forth in this chapter. The failure to meet any of the requirements under this chapter constitutes a violation of section 72A.20. (b) The requirements of this chapter do not apply to short-term coverage as defined in section 62A.65, subdivision 7, or grandfathered plan coverage as defined in section 62A.011, subdivision 1c. Subd. 2. Penalties. In addition to any other penalties provided by the laws of this state or by federal law, a health carrier or any other person found to have violated any requirement of this chapter may be subject to the administrative procedures, enforcement actions, and penalties provided under section 45.027 and chapters 62D and 72A. History:   2013 c 84 art 2 s 5 
62K.05 FEDERAL ACT; COMPLIANCE REQUIRED. A health carrier shall comply with all provisions of the Affordable Care Act to the extent that it imposes a requirement that applies in this state. Compliance with any provision of the Affordable Care Act is required as of the effective date established for that provision in the federal act, except as otherwise specifically stated earlier in state law. History:   2013 c 84 art 2 s 6 
62K.06 METAL LEVEL MANDATORY OFFERINGS. Subdivision 1. Identification. A health carrier that offers individual or small group health plans in Minnesota must provide documentation to the commissioner of commerce to justify actuarial value levels as specified in section 1302(d) of the Affordable Care Act for all individual and small group health plans offered inside and outside of MNsure. Subd. 2. Minimum levels. (a) A health carrier that offers a catastrophic plan or a bronze level health plan within a service area in either the individual or small group market must also offer a silver level and a gold level health plan in that market and within that service area. (b) A health carrier with less than five percent market share in the respective individual or small group market in Minnesota is exempt from paragraph (a), until January 1, 2017, unless the health carrier offers a qualified health plan through MNsure. If the health carrier offers a qualified health plan through MNsure, the health carrier must comply with paragraph (a). Subd. 3. MNsure restriction. MNsure may not, by contract or otherwise, mandate the types of health plans to be offered by a health carrier to individuals or small employers purchasing health plans outside of MNsure. Solely for purposes of this subdivision, "health plan" includes coverage that is excluded under section 62A.011, subdivision 3, clause (6). Subd. 4. Metal level defined. For purposes of this section, the metal levels and catastrophic plans are defined in section 1302(d) and (e) of the Affordable Care Act. Subd. 5. Enforcement. The commissioner of commerce shall enforce this section. History:  2013 c 84 art 2 s 7,17; 2013 c 108 art 1 s 67
62K.07 INFORMATION DISCLOSURES. Subdivision 1. Generally. (a) A health carrier offering individual or small group health plans must submit the following information in a format determined by the commissioner of commerce: (1) claims payment policies and practices; (2) periodic financial disclosures; (3) data on enrollment; (4) data on disenrollment; (5) data on the number of claims that are denied; (6) data on rating practices; (7) information on cost-sharing and payments with respect to out-of-network coverage; and (8) other information required by the secretary of the United States Department of Health and Human Services under the Affordable Care Act. (b) A health carrier offering an individual or small group health plan must comply with all information disclosure requirements of all applicable state and federal law, including the Affordable Care Act. (c) Except for qualified health plans sold on MNsure, information reported under paragraph (a), clauses (3) and (4), is nonpublic data as defined under section 13.02, subdivision 9. Information reported under paragraph (a), clauses (1) through (8), must be reported by MNsure for qualified health plans sold through MNsure. Subd. 2. Prescription drug costs. (a) Each health carrier that offers a prescription drug benefit in its individual health plans or small group health plans shall include in the applicable rate filing required under section 62A.02 the following information about covered prescription drugs: (1) the 25 most frequently prescribed drugs in the previous plan year; (2) the 25 most costly prescription drugs as a portion of the individual health plan's or small group health plan's total annual expenditures in the previous plan year; (3) the 25 prescription drugs that have caused the greatest increase in total individual health plan or small group health plan spending in the previous plan year; (4) the projected impact of the cost of prescription drugs on premium rates; (5) if any health plan offered by the health carrier requires enrollees to pay cost-sharing on any covered prescription drugs including deductibles, co-payments, or coinsurance in an amount that is greater than the amount the enrollee's health plan would pay for the drug absent the applicable enrollee cost-sharing and after accounting for any rebate amount; and (6) if the health carrier prohibits third-party payments including manufacturer drug discounts or coupons that cover all or a portion of an enrollee's cost-sharing requirements including deductibles, co-payments, or coinsurance from applying toward the enrollee's cost-sharing obligations under the enrollee's health plan. (b) The commissioner of commerce, in consultation with the commissioner of health, shall release a summary of the information reported in paragraph (a) at the same time as the information required under section 62A.02, subdivision 2, paragraph (c). Subd. 3. Enforcement. The commissioner of commerce shall enforce this section. History:  2013 c 84 art 2 s 8,17; 2013 c 108 art 1 s 67; 1Sp2019 c 9 art 8 s 8
62K.075 PROVIDER NETWORK NOTIFICATIONS. (a) A health carrier must provide on the carrier's website the provider network for each product offered by the carrier, and must update the carrier's website at least once a month with any changes to the carrier's provider network, including provider changes from in-network status to out-of-network status. A health carrier must also provide on the carrier's website, for each product offered by the carrier, a list of the current waivers of the requirements in section 62K.10, subdivision 2 or 3, in a format that is easily accessed and searchable by enrollees and prospective enrollees. (b) Upon notification from an enrollee, a health carrier must reprocess any claim for services provided by a provider whose status has changed from in-network to out-of-network as an in-network claim if the service was provided after the network change went into effect but before the change was posted as required under paragraph (a) unless the health carrier notified the enrollee of the network change prior to the service being provided. This paragraph does not apply if the health carrier is able to verify that the health carrier's website displayed the correct provider network status on the health carrier's website at the time the service was provided. (c) The limitations of section 62Q.56, subdivision 2a, shall apply to payments required by paragraph (b). History:  2016 c 179 s 1; 1Sp2019 c 9 art 8 s 9
62K.08 MARKETING STANDARDS. Subdivision 1. Marketing. (a) A health carrier offering individual or small group health plans must comply with all applicable provisions of the Affordable Care Act, including, but not limited to, the following: (1) compliance with all state laws pertaining to the marketing of individual or small group health plans; and (2) establishing marketing practices and benefit designs that will not have the effect of discouraging the enrollment of individuals with significant health needs in the health plan. (b) No marketing materials may lead consumers to believe that all health care needs will be covered. Subd. 2. Enforcement. The commissioner of commerce shall enforce this section. History:   2013 c 84 art 2 s 9 
62K.09 ACCREDITATION STANDARDS. Subdivision 1. Accreditation; general. (a) A health carrier that offers any individual or small group health plans in Minnesota outside of MNsure must be accredited in accordance with this subdivision. A health carrier must obtain accreditation through URAC, the National Committee for Quality Assurance (NCQA), or any entity recognized by the United States Department of Health and Human Services for accreditation of health insurance issuers or health plans by January 1, 2018. Proof of accreditation must be submitted to the commissioner of health in a form prescribed by the commissioner of health. (b) A health carrier that rents a provider network is exempt from this subdivision, unless it is part of a holding company as defined in section 60D.15 that in aggregate exceeds ten percent market share in either the individual or small group market in Minnesota. Subd. 2. Accreditation; MNsure. (a) MNsure shall require all health carriers offering a qualified health plan through MNsure to obtain the appropriate level of accreditation no later than the third year after the first year the health carrier offers a qualified health plan through MNsure. A health carrier must take the first step of the accreditation process during the first year in which it offers a qualified health plan. A health carrier that offers a qualified health plan on January 1, 2014, must obtain accreditation by the end of the 2016 plan year. (b) To the extent a health carrier cannot obtain accreditation due to low volume of enrollees, an exception to this accreditation criterion may be granted by MNsure until such time as the health carrier has a sufficient volume of enrollees. Subd. 3. Oversight. A health carrier shall comply with a request from the commissioner of health to confirm accreditation or progress toward accreditation. Subd. 4. Enforcement. The commissioner of health shall enforce this section. History:  2013 c 84 art 2 s 10,17; 2013 c 108 art 1 s 67
62K.10 GEOGRAPHIC ACCESSIBILITY; PROVIDER NETWORK ADEQUACY. Subdivision 1. Applicability. (a) This section applies to all health carriers that either require an enrollee to use or that create incentives, including financial incentives, for an enrollee to use, health care providers that are managed, owned, under contract with, or employed by the health carrier. A health carrier that does not manage, own, or contract directly with providers in Minnesota is exempt from this section, unless it is part of a holding company as defined in section 60D.15 that in aggregate exceeds ten percent in either the individual or small group market in Minnesota. (b) Health carriers renting provider networks from other entities must submit the rental agreement or contract to the commissioner of health for approval. In reviewing the agreements or contracts, the commissioner shall review the agreement or contract to ensure that the entity contracting with health care providers accepts responsibility to meet the requirements in this section. Subd. 1a. Health care provider system access. For those counties in which a health carrier actively markets an individual health plan, the health carrier must offer, in those same counties, at least one individual health plan with a provider network that includes in-network access to more than a single health care provider system. This subdivision is applicable only for the year in which the health carrier actively markets an individual health plan. Subd. 2. Primary care; mental health services; general hospital services. The maximum travel distance or time shall be the lesser of 30 miles or 30 minutes to the nearest provider of each of the following services: primary care services, mental health services, and general hospital services. Subd. 3. Other health services. The maximum travel distance or time shall be the lesser of 60 miles or 60 minutes to the nearest provider of specialty physician services, ancillary services, specialized hospital services, and all other health services not listed in subdivision 2. Subd. 4. Network adequacy. Each designated provider network must include a sufficient number and type of providers, including providers that specialize in mental health and substance use disorder services, to ensure that covered services are available to all enrollees without unreasonable delay. In determining network adequacy, the commissioner of health shall consider availability of services, including the following: (1) primary care physician services are available and accessible 24 hours per day, seven days per week, within the network area; (2) a sufficient number of primary care physicians have hospital admitting privileges at one or more participating hospitals within the network area so that necessary admissions are made on a timely basis consistent with generally accepted practice parameters; (3) specialty physician service is available through the network or contract arrangement; (4) mental health and substance use disorder treatment providers are available and accessible through the network or contract arrangement; (5) to the extent that primary care services are provided through primary care providers other than physicians, and to the extent permitted under applicable scope of practice in state law for a given provider, these services shall be available and accessible; and (6) the network has available, either directly or through arrangements, appropriate and sufficient personnel, physical resources, and equipment to meet the projected needs of enrollees for covered health care services. Subd. 5. Waiver. (a) A health carrier may apply to the commissioner of health for a waiver of the requirements in subdivision 2 or 3 if it is unable to meet the statutory requirements. A waiver application must be submitted on a form provided by the commissioner, must be accompanied by an application fee of $500 for each application to waive the requirements in subdivision 2 or 3 for one or more provider types per county, and must: (1) demonstrate with specific data that the requirement of subdivision 2 or 3 is not feasible in a particular service area or part of a service area; and (2) include specific information as to the steps that were and will be taken to address the network inadequacy, and, for steps that will be taken prospectively to address network inadequacy, the time frame within which those steps will be taken. (b) The commissioner shall establish guidelines for evaluating waiver applications, standards governing approval or denial of a waiver application, and standards for steps that health carriers must take to address the network inadequacy and allow the health carrier to meet network adequacy requirements within a reasonable time period. The commissioner shall review each waiver application using these guidelines and standards and shall approve a waiver application only if: (1) the standards for approval established by the commissioner are satisfied; and (2) the steps that were and will be taken to address the network inadequacy and the time frame for taking these steps satisfy the standards established by the commissioner. (c) If, in its waiver application, a health carrier demonstrates to the commissioner that there are no providers of a specific type or specialty in a county, the commissioner may approve a waiver in which the health carrier is allowed to address network inadequacy in that county by providing for patient access to providers of that type or specialty via telehealth, as defined in section 62A.673, subdivision 2. (d) The waiver shall automatically expire after one year. Upon or prior to expiration of a waiver, a health carrier unable to meet the requirements in subdivision 2 or 3 must submit a new waiver application under paragraph (a) and must also submit evidence of steps the carrier took to address the network inadequacy. When the commissioner reviews a waiver application for a network adequacy requirement which has been waived for the carrier for the most recent one-year period, the commissioner shall also examine the steps the carrier took during that one-year period to address network inadequacy, and shall only approve a subsequent waiver application that satisfies the requirements in paragraph (b), demonstrates that the carrier took the steps it proposed to address network inadequacy, and explains why the carrier continues to be unable to satisfy the requirements in subdivision 2 or 3. (e) Application fees collected under this subdivision shall be deposited in the state government special revenue fund in the state treasury. Subd. 5a.  MS 2017 Supp [Expired, 2017 c 2 art 2 s 11] Subd. 6. Referral centers. Subdivisions 2 and 3 shall not apply if an enrollee is referred to a referral center for health care services. A referral center is a medical facility that provides highly specialized medical care, including but not limited to organ transplants. A health carrier or preferred provider organization may consider the volume of services provided annually, case mix, and severity adjusted mortality and morbidity rates in designating a referral center. Subd. 7. Essential community providers. Each health carrier must comply with section 62Q.19. Subd. 8. Enforcement. The commissioner of health shall enforce this section. History:  2013 c 84 art 2 s 11,17; 2017 c 2 art 2 s 11; 2017 c 13 art 2 s 1; 1Sp2019 c 9 art 8 s 10; 1Sp2021 c 7 art 6 s 28
62K.105 NETWORK ADEQUACY COMPLAINTS. The commissioner of health shall establish a clear, easily accessible process for accepting complaints from enrollees regarding health carrier compliance with section 62K.10, subdivision 2, 3, or 4. Using this process, an enrollee may file a complaint with the commissioner that a health carrier is not in compliance with the requirements of section 62K.10, subdivision 2, 3, or 4. The commissioner of health shall investigate all complaints received under this section. History:   1Sp2019 c 9 art 8 s 11 
62K.11 BALANCE BILLING PROHIBITED. (a) A network provider is prohibited from billing an enrollee for any amount in excess of the allowable amount the health carrier has contracted for with the provider as total payment for the health care service. A network provider is permitted to bill an enrollee the approved co-payment, deductible, or coinsurance. (b) A network provider is permitted to bill an enrollee for services not covered by the enrollee's health plan as long as the enrollee agrees in writing in advance before the service is performed to pay for the noncovered service. History:   2013 c 84 art 2 s 12 
62K.12 QUALITY ASSURANCE AND IMPROVEMENT. Subdivision 1. General. (a) All health carriers offering an individual health plan or small group health plan must have a written internal quality assurance and improvement program that, at a minimum: (1) provides for ongoing evaluation of the quality of health care provided to its enrollees; (2) periodically reports the evaluation of the quality of health care to the health carrier's governing body; (3) follows policies and procedures for the selection and credentialing of network providers that is consistent with community standards; (4) conducts focused studies directed at problems, potential problems, or areas with potential for improvements in care; (5) conducts enrollee satisfaction surveys and monitors oral and written complaints submitted by enrollees or members; and (6) collects and reports Health Effectiveness Data and Information Set (HEDIS) measures and conducts other quality assessment and improvement activities as directed by the commissioner of health. (b) The commissioner of health shall submit a report to the chairs and ranking minority members of senate and house of representatives committees with primary jurisdiction over commerce and health policy by February 15, 2015, with recommendations for specific quality assurance and improvement standards for all Minnesota health carriers. The recommended standards must not require duplicative data gathering, analysis, or reporting by health carriers. Subd. 2. Exemption. A health carrier that rents a provider network is exempt from this section, unless it is part of a holding company as defined in section 60D.15 that in aggregate exceeds ten percent market share in either the individual or small group market in Minnesota. Subd. 3. Waiver. A health carrier that has obtained accreditation through the URAC for network management; quality improvement; credentialing; member protection; and utilization management, or has achieved an excellent or commendable level ranking from the National Committee for Quality Assurance (NCQA), shall be deemed to meet the requirements of subdivision 1. Proof of accreditation must be submitted to the commissioner of health in a form prescribed by the commissioner. The commissioner may adopt rules to recognize similar accreditation standards from any entity recognized by the United States Department of Health and Human Services for accreditation of health insurance issuers or health plans. Subd. 4. Enforcement. The commissioner of health shall enforce this section. History:  2013 c 84 art 2 s 13,17
62K.13 SERVICE AREA REQUIREMENTS. (a) Any health carrier that offers an individual or small group health plan, must offer the health plan in a service area that is at least the entire geographic area of a county unless serving a smaller geographic area is necessary, nondiscriminatory, and in the best interest of enrollees. The service area for any individual or small group health plan must be established without regard to racial, ethnic, language, concentrated poverty, or health status-related factors, or other factors that exclude specific high-utilizing, high-cost, or medically underserved populations. (b) If a health carrier that offers an individual or small group health plan requests to serve less than the entire county, the request must be made to the commissioner of health on a form and manner determined by the commissioner and must provide specific data demonstrating that the service area is not discriminatory, is necessary, and is in the best interest of enrollees. (c) The commissioner of health shall enforce this section. History:  2013 c 84 art 2 s 14,17
62K.14 LIMITED-SCOPE PEDIATRIC DENTAL PLANS. (a) Limited-scope pediatric dental plans must be offered to the extent permitted under the Affordable Care Act: (1) on a guaranteed issue and guaranteed renewable basis; (2) with premiums rated on allowable rating factors used for health plans; and (3) without any exclusions or limitations based on preexisting conditions. (b) Notwithstanding paragraph (a), a health carrier may discontinue a limited scope pediatric dental plan at the end of a plan year if the health carrier provides written notice to enrollees before coverage is to be discontinued that the particular plan is being discontinued and the health carrier offers enrollees other dental plan options that are the same or substantially similar to the dental plan being discontinued in terms of premiums, benefits, cost-sharing requirements, and network adequacy. The written notice to enrollees must be provided at least 105 days before the end of the plan year. (c) Limited-scope pediatric dental plans must ensure primary care dental services are available within 60 miles or 60 minutes' travel time. (d) If a stand-alone dental plan as defined under the Affordable Care Act or a limited-scope pediatric dental plan is offered, either separately or in conjunction with a health plan offered to individuals or small employers, the health plan shall not be considered in noncompliance with the requirements of the essential benefit package in the Affordable Care Act because the health plan does not offer coverage of pediatric dental benefits if these benefits are covered through the stand-alone or limited-scope pediatric dental plan, to the extent permitted under the Affordable Care Act. (e) Health carriers offering limited-scope pediatric dental plans must comply with this section and sections 62K.07, 62K.08, 62K.13, and 62K.15. (f) The commissioner of commerce shall enforce paragraphs (a) and (b). Any limited-scope pediatric dental plan that is to be offered to replace a discontinued dental plan under paragraph (b) must be approved by the commissioner of commerce in terms of cost and benefit similarity, and the commissioner of health in terms of network adequacy similarity. The commissioner of health shall enforce paragraph (c). History:  2013 c 84 art 2 s 15,17
62K.15 ANNUAL OPEN ENROLLMENT PERIODS; SPECIAL ENROLLMENT PERIODS. (a) Health carriers offering individual health plans must limit annual enrollment in the individual market to the annual open enrollment periods for MNsure. Nothing in this section limits the application of special or limited open enrollment periods as defined under the Affordable Care Act. (b) Health carriers offering individual health plans must inform all applicants at the time of application and enrollees at least annually of the open and special enrollment periods as defined under the Affordable Care Act. (c) Health carriers offering individual health plans must provide a special enrollment period for enrollment in the individual market by employees of a small employer that offers a qualified small employer health reimbursement arrangement in accordance with United States Code, title 26, section 9831(d). The special enrollment period shall be available only to employees newly hired by a small employer offering a qualified small employer health reimbursement arrangement, and to employees employed by the small employer at the time the small employer initially offers a qualified small employer health reimbursement arrangement. For employees newly hired by the small employer, the special enrollment period shall last for 30 days after the employee's first day of employment. For employees employed by the small employer at the time the small employer initially offers a qualified small employer health reimbursement arrangement, the special enrollment period shall last for 30 days after the date the arrangement is initially offered to employees. (d) The commissioner of commerce shall enforce this section. History:  2013 c 84 art 2 s 16,17; 2013 c 108 art 1 s 67; 1Sp2017 c 6 art 13 s 1
62L.01 CITATION. Subdivision 1. Popular name. Sections 62L.01 to 62L.22 may be cited as the "Minnesota Small Employer Health Benefit Act." Subd. 2. Jurisdiction. Sections 62L.01 to 62L.22 apply to any health carrier that offers, issues, delivers, or renews a health benefit plan to a small employer. Subd. 3. Legislative findings and purpose. The legislature finds that underwriting and rating practices in the individual and small employer markets for health coverage create substantial hardship and unfairness, create unnecessary administrative costs, and adversely affect the health of residents of this state. The legislature finds that the premium restrictions provided by this chapter reduce but do not eliminate these harmful effects. Accordingly, the legislature declares its desire to phase out the remaining rating bands as quickly as possible, with the end result of eliminating all rating practices based on risk by July 1, 1997. History:  1992 c 549 art 2 s 1; 1994 c 625 art 10 s 50
62L.02 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to sections 62L.01 to 62L.22. Subd. 2. Actuarial opinion. "Actuarial opinion" means a written statement by a member of the American Academy of Actuaries that a health carrier is in compliance with this chapter, based on the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the health carrier in establishing premium rates for health benefit plans. Subd. 3. Association. "Association" means the Health Coverage Reinsurance Association. Subd. 4.  [Repealed, 2013 c 84 art 1 s 94] Subd. 5. Board of directors. "Board of directors" means the board of directors of the Health Coverage Reinsurance Association. Subd. 6. Case characteristics. "Case characteristics" means the relevant characteristics of a small employer, as determined by a health carrier in accordance with this chapter, which are considered by the carrier in the determination of premium rates for the small employer. Subd. 7. Coinsurance. "Coinsurance" means an established dollar amount or percentage of health care expenses that an eligible employee or dependent is required to pay directly to a provider of medical services or supplies under the terms of a health benefit plan. Subd. 8. Commissioner. "Commissioner" means the commissioner of commerce for health carriers subject to the jurisdiction of the Department of Commerce or the commissioner of health for health carriers subject to the jurisdiction of the Department of Health, or the relevant commissioner's designated representative. For purposes of sections 62L.13 to 62L.22, "commissioner" means the commissioner of commerce or that commissioner's designated representative. Subd. 9. Continuous coverage. "Continuous coverage" means the maintenance of continuous and uninterrupted qualifying coverage. An individual is considered to have maintained continuous coverage if the individual requests enrollment in qualifying coverage within 63 days of termination of qualifying coverage. Subd. 9a. Current employee. "Current employee" means an employee, as defined in this section, other than a retiree or disabled former employee. Subd. 10. Deductible. "Deductible" means the amount of health care expenses an eligible employee or dependent is required to incur before benefits are payable under a health benefit plan. Subd. 11. Dependent. "Dependent" means an eligible employee's spouse, dependent child to the limiting age as defined in section 62Q.01, subdivision 2a, dependent child of any age who is disabled and who meets the eligibility criteria in section 62A.14, subdivision 2, or any other person whom state or federal law requires to be treated as a dependent for purposes of health plans. For the purpose of this definition, a dependent child to the limiting age as defined in section 62Q.01, subdivision 2a, includes a child for whom the employee or the employee's spouse has been appointed legal guardian and an adoptive child as provided in section 62A.27. A child also means a grandchild as provided in section 62A.042 with continued eligibility of grandchildren as provided in section 62A.302, subdivision 4. Subd. 11a. Discounted eligible charges. "Discounted eligible charges" means, as determined by the board of directors, eligible charges reduced by the average difference between eligible charges and the expected liability of the health carrier for services performed. The board of directors, in its discretion, may determine additional different discounts, based upon geographic area and type of delivery system. Subd. 12. Eligible charges. "Eligible charges" means the actual charges submitted to a health carrier by or on behalf of a provider, eligible employee, or dependent for health services covered by the health carrier's health benefit plan. Eligible charges do not include charges for health services excluded by the health benefit plan or charges for which an alternate health carrier is liable under the coordination of benefit provisions of the health benefit plan. Subd. 13. Eligible employee. "Eligible employee" means an employee who has satisfied all employer participation and eligibility requirements. Subd. 13a. Employee. "Employee" means an individual employed for at least 20 hours per week and includes a sole proprietor or a partner of a partnership, if the sole proprietor or partner is included under a health benefit plan of the employer, but does not include individuals who work on a temporary, seasonal, or substitute basis. "Employee" also includes a retiree or a disabled former employee required to be covered under sections 62A.147 and 62A.148. Subd. 13b. Enrollment date. "Enrollment date" means, with respect to a covered individual, the date of enrollment of the individual in the health benefit plan or, if earlier, the first day of the waiting period for the individual's enrollment. Subd. 14. Financially impaired condition. "Financially impaired condition" means a situation in which a health carrier is not insolvent, but (1) is considered by the commissioner to be potentially unable to fulfill its contractual obligations, or (2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Subd. 14a. Guaranteed issue. "Guaranteed issue" means that a health carrier shall not decline an application by a small employer for any health benefit plan offered by that health carrier and shall not decline to cover under a health benefit plan any eligible employee or eligible dependent, including persons who become eligible employees or eligible dependents after initial issuance of the health benefit plan. Subd. 15. Health benefit plan. "Health benefit plan" means a policy, contract, or certificate offered, sold, issued, or renewed by a health carrier to a small employer for the coverage of medical and hospital benefits. Health benefit plan includes a small employer plan. Health benefit plan does not include coverage, including any combination of the following coverages, that is: (1) limited to disability or income protection coverage; (2) automobile medical payment coverage; (3) liability insurance or supplemental to liability insurance; (4) designed solely to provide coverage for a specified disease or illness or to provide payments on a per diem, fixed indemnity, or non-expense-incurred basis, if offered as independent, noncoordinated coverage; (5) credit accident and health insurance as defined in section 62B.02; (6) designed solely to provide dental or vision care; (7) blanket accident and sickness insurance as defined in section 62A.11; (8) accident-only coverage; (9) a long-term care policy as defined in section 62A.46 or a qualified long-term care insurance policy as defined in section 62S.01; (10) Medicare-related coverage as defined in section 62Q.01, subdivision 6; (11) workers' compensation insurance; or (12) limited to care provided at on-site medical clinics operated by an employer for the benefit of the employer's employees and their dependents, in connection with which the employer does not transfer risk. For the purpose of this chapter, a health benefit plan issued to eligible employees of a small employer who meets the participation requirements of section 62L.03, subdivision 3, is considered to have been issued to a small employer. A health benefit plan issued on behalf of a health carrier is considered to be issued by the health carrier. Subd. 16. Health carrier. "Health carrier" means an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a health service plan corporation licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a community integrated service network operating under chapter 62N; an accountable provider network regulated under chapter 62T; a fraternal benefit society operating under chapter 64B; a joint self-insurance employee health plan operating under chapter 62H; a multiple employer welfare arrangement, as defined in United States Code, title 29, section 1002(40), as amended. Any use of this definition in another chapter by reference does not include a community integrated service network, unless otherwise specified. For the purpose of this chapter, companies that are affiliated companies or that are eligible to file a consolidated tax return must be treated as one health carrier, except that any insurance company or health service plan corporation that is an affiliate of a health maintenance organization located in Minnesota, or any health maintenance organization located in Minnesota that is an affiliate of an insurance company or health service plan corporation, or any health maintenance organization that is an affiliate of another health maintenance organization in Minnesota, may treat the health maintenance organization as a separate health carrier. Subd. 17. Health plan. "Health plan" means a health plan as defined in section 62A.011 and includes individual and group coverage regardless of the size of the group, unless otherwise specified. Subd. 18.  [Repealed, 2013 c 84 art 1 s 94] Subd. 18a. Individual health plan. "Individual health plan" has the meaning given in section 62A.011, subdivision 4. Subd. 19.  [Repealed, 2013 c 84 art 1 s 94] Subd. 20. MCHA. "MCHA" means the Minnesota Comprehensive Health Association established under section 62E.10. Subd. 21. Medical necessity. "Medical necessity" means the appropriate and necessary medical and hospital services eligible for payment under a health benefit plan as determined by a health carrier. Subd. 22. Members. "Members" means the health carriers operating in the small employer market who may participate in the association. Subd. 23.  [Repealed, 2013 c 84 art 1 s 94] Subd. 24.  [Repealed, 2013 c 84 art 1 s 94] Subd. 25. Rating period. "Rating period" means the 12-month period for which premium rates established by a health carrier are assumed to be in effect, as determined by the health carrier. During the rating period, a health carrier may adjust the rate based on the prorated change in the index rate. Subd. 26. Small employer. (a) "Small employer" means, with respect to a calendar year and a plan year, a person, firm, corporation, partnership, association, or other entity actively engaged in business in Minnesota, including a political subdivision of the state, that employed an average of at least one, not including a sole proprietor, but not more than 50 current employees on business days during the preceding calendar year and that employs at least one current employee, not including a sole proprietor, on the first day of the plan year. A small employer plan may be offered through a domiciled association to self-employed individuals and small employers who are members of the association, even if the self-employed individual or small employer has fewer than two current employees. Entities that are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the federal Internal Revenue Code are considered a single employer for purposes of determining the number of current employees. Small employer status must be determined on an annual basis as of the renewal date of the health benefit plan. The provisions of this chapter continue to apply to an employer who no longer meets the requirements of this definition until the annual renewal date of the employer's health benefit plan. If an employer was not in existence throughout the preceding calendar year, the determination of whether the employer is a small employer is based upon the average number of current employees that it is reasonably expected that the employer will employ on business days in the current calendar year. For purposes of this definition, the term employer includes any predecessor of the employer. An employer that has more than 50 current employees but has 50 or fewer employees, as "employee" is defined under United States Code, title 29, section 1002(6), is a small employer under this subdivision. (b) Where an association, as defined in section 62L.045, comprised of employers contracts with a health carrier to provide coverage to its members who are small employers, the association and health benefit plans it provides to small employers, are subject to section 62L.045, with respect to small employers in the association, even though the association also provides coverage to its members that do not qualify as small employers. (c) If an employer has employees covered under a trust specified in a collective bargaining agreement under the federal Labor-Management Relations Act of 1947, United States Code, title 29, section 141, et seq., as amended, or employees whose health coverage is determined by a collective bargaining agreement and, as a result of the collective bargaining agreement, is purchased separately from the health plan provided to other employees, those employees are excluded in determining whether the employer qualifies as a small employer. Those employees are considered to be a separate small employer if they constitute a group that would qualify as a small employer in the absence of the employees who are not subject to the collective bargaining agreement. (d) Small group health plans offered through MNsure under chapter 62V to employees of a small employer are not considered individual health plans, regardless of whether the health plan is purchased using a defined contribution from the small employer. Subd. 27. Small employer market. (a) "Small employer market" means the market for health benefit plans for small employers. (b) A health carrier is considered to be participating in the small employer market if the carrier offers, sells, issues, or renews a health benefit plan to: (1) any small employer; or (2) the eligible employees of a small employer offering a health benefit plan if, with the knowledge of the health carrier, either of the following conditions is met: (i) any portion of the premium or benefits is paid for or reimbursed by a small employer; or (ii) the health benefit plan is treated by the employer or any of the eligible employees or dependents as part of a plan or program for the purposes of the Internal Revenue Code, section 106, 125, or 162. Subd. 28. Small employer plan. "Small employer plan" means a health benefit plan issued by a health carrier to a small employer for coverage of the medical and hospital benefits described in section 62L.05. Subd. 29. Waiting period. "Waiting period" means, with respect to an individual who is a potential enrollee under a health benefit plan, the period that must pass with respect to the individual before the individual is eligible, under the employer's eligibility requirements, for coverage under the health benefit plan. History:  1992 c 549 art 2 s 2; 1993 c 47 s 1; 1993 c 247 art 2 s 1-5; 1993 c 345 art 7 s 1-3; 1994 c 465 art 3 s 61; 1994 c 625 art 10 s 16-28,50; 1995 c 234 art 7 s 12-15; 1995 c 258 s 44; 1997 c 71 art 2 s 7; 1997 c 175 art 2 s 1-9; 1997 c 225 art 2 s 62; 1999 c 177 s 52; 1999 c 181 s 1; 2001 c 7 s 15; 2005 c 56 s 1; 2006 c 255 s 27; 2007 c 147 art 12 s 6; 2009 c 178 art 1 s 31; 2013 c 84 art 1 s 44-47; 2013 c 108 art 1 s 67; 2017 c 99 s 1
62L.03 AVAILABILITY OF COVERAGE. Subdivision 1. Guaranteed issue and reissue. (a) Every health carrier shall, as a condition of authority to transact business in this state in the small employer market, affirmatively market, offer, sell, issue, and renew any of its health benefit plans, on a guaranteed issue basis, to any small employer, including a small employer covered by paragraph (b), that meets the participation and contribution requirements of subdivision 3, as provided in this chapter. (b) A small employer that no longer meets the definition of small employer because of a reduction in workforce may continue coverage as a small employer for 12 months from the date the group is reduced to one employee. (c) Notwithstanding paragraph (a), a health carrier may, at the time of coverage renewal, modify the health coverage for a product offered in the small employer market if the modification is consistent with state law, approved by the commissioner, and effective on a uniform basis for all small employers purchasing that product other than through a qualified association in compliance with section 62L.045, subdivision 2. (d) A health carrier may cease to transact business in the small employer market as provided under section 62L.09. Subd. 2. Exceptions. (a) No health maintenance organization is required to offer coverage or accept applications under subdivision 1 in the case of the following: (1) with respect to a small employer, where the small employer does not have eligible employees who work or reside in the health maintenance organization's approved service areas; or (2) with respect to an employee, when the employee does not work or reside within the health maintenance organization's approved service areas. (b) A health carrier participating in the small employer market shall not be required to offer coverage or accept applications pursuant to subdivision 1 where the commissioner finds that the acceptance of an application or applications would place the health carrier participating in the small employer market in a financially impaired condition, provided, however, that a health carrier participating in the small employer market that has not offered coverage or accepted applications pursuant to this paragraph shall not offer coverage or accept applications for any health benefit plan until 180 days following a determination by the commissioner that the health carrier is not financially impaired and that offering coverage or accepting applications under subdivision 1 would not cause the health carrier to become financially impaired. Subd. 3. Minimum participation and contribution. (a) A small employer that has at least 75 percent of its eligible employees who have not waived coverage participating in a health benefit plan and that contributes at least 50 percent toward the cost of coverage of each eligible employee must be guaranteed coverage on a guaranteed issue basis from any health carrier participating in the small employer market. The participation level of eligible employees must be determined at the initial offering of coverage and at the renewal date of coverage. A health carrier must not increase the participation requirements applicable to a small employer at any time after the small employer has been accepted for coverage. For the purposes of this subdivision, waiver of coverage includes only waivers due to: (1) coverage under another group health plan; (2) coverage under Medicare Parts A and B; or (3) coverage under medical assistance under chapter 256B. (b) If a small employer does not satisfy the contribution or participation requirements under this subdivision, a health carrier may voluntarily issue or renew individual health plans, or a health benefit plan which must fully comply with this chapter. A health carrier that provides a health benefit plan to a small employer that does not meet the contribution or participation requirements of this subdivision must maintain this information in its files for audit by the commissioner. A health carrier may not offer an individual health plan, purchased through an arrangement between the employer and the health carrier, to any employee unless the health carrier also offers the individual health plan, on a guaranteed issue basis, to all other employees of the same employer. An arrangement permitted under section 62L.12, subdivision 2, paragraph (l), is not an arrangement between the employer and the health carrier for purposes of this paragraph. (c) Nothing in this section obligates a health carrier to issue coverage to a small employer that currently offers coverage through a health benefit plan from another health carrier, unless the new coverage will replace the existing coverage and not serve as one of two or more health benefit plans offered by the employer. This paragraph does not apply if the small employer will meet the required participation level with respect to the new coverage. (d) If a small employer cannot meet either the participation or contribution requirement, the small employer may purchase coverage only during an open enrollment period each year between November 15 and December 15. Subd. 4. Underwriting restrictions. Health carriers may collect information relating to the case characteristics and demographic composition of small employers, as well as health status and health history information about employees, and dependents of employees, of small employers. Subd. 5. Cancellations and failures to renew. (a) No health carrier shall cancel, decline to issue, or fail to renew a health benefit plan as a result of the claim experience or health status of the persons covered or to be covered by the health benefit plan. For purposes of this subdivision, a failure to renew does not include a uniform modification of coverage at time of renewal, as described in subdivision 1. (b) A health carrier may cancel or fail to renew a health benefit plan: (1) for nonpayment of the required premium; (2) for fraud or misrepresentation by the small employer with respect to eligibility for coverage or any other material fact; (3) if the employer fails to comply with the minimum contribution percentage required under subdivision 3; or (4) for any other reasons or grounds expressly permitted by the respective licensing laws and regulations governing a health carrier, including, but not limited to, service area restrictions imposed on health maintenance organizations under section 62D.03, subdivision 4, paragraph (m), to the extent that these grounds are not expressly inconsistent with this chapter. (c) A health carrier may fail to renew a health benefit plan: (1) if eligible employee participation during the preceding calendar year declines to less than 75 percent, subject to the waiver of coverage provision in subdivision 3; (2) if the health carrier ceases to do business in the small employer market under section 62L.09; or (3) if a failure to renew is based upon the health carrier's decision to discontinue the health benefit plan form previously issued to the small employer, but only if the health carrier permits each small employer covered under the prior form to switch to its choice of any other health benefit plan offered by the health carrier, without any underwriting restrictions that would not have been permitted for renewal purposes. (d) A health carrier need not renew a health benefit plan, and shall not renew a small employer plan, if an employer ceases to qualify as a small employer as defined in section 62L.02, except as provided in subdivision 1, paragraph (b). If a health benefit plan, other than a small employer plan, provides terms of renewal that do not exclude an employer that is no longer a small employer, the health benefit plan may be renewed according to its own terms. If a health carrier issues or renews a health plan to an employer that is no longer a small employer, without interruption of coverage, the health plan is subject to section 60A.082. (e) A health carrier may cancel or fail to renew the coverage of an individual employee or dependent under a health benefit plan for fraud or misrepresentation by the eligible employee or dependent with respect to eligibility for coverage or any other material fact. Subd. 6. MCHA enrollees. Health carriers shall offer coverage to any eligible employee or dependent enrolled in MCHA at the time of the health carrier's issuance or renewal of a health benefit plan to a small employer. The health benefit plan must require that the employer permit MCHA enrollees to enroll in the small employer's health benefit plan as of the first date of renewal of a health benefit plan occurring on or after July 1, 1993, and as of each date of renewal after that, or, in the case of a new group, as of the initial effective date of the health benefit plan and as of each date of renewal after that. Health carriers must not impose any underwriting restrictions, including any preexisting condition limitations or exclusions, on any eligible employee or dependent previously enrolled in MCHA and transferred to a health benefit plan. History:  1992 c 549 art 2 s 3; 1993 c 247 art 2 s 6,7; 1993 c 345 art 7 s 4,5; 1994 c 625 art 10 s 29-33; 1995 c 234 art 7 s 16-18; 1995 c 258 s 45; 1997 c 175 art 2 s 10-14; 1999 c 177 s 53; 2002 c 330 s 24,25; 2006 c 255 s 28; 2011 c 108 s 37; 2013 c 84 art 1 s 48-51; 2016 c 158 art 2 s 21
62L.04 COMPLIANCE REQUIREMENTS. Subdivision 1. Applicability of chapter requirements. (a) Beginning July 1, 1993, health carriers participating in the small employer market must offer and make available on a guaranteed issue basis any health benefit plan that they offer, including both of the small employer plans provided in section 62L.05, to all small employers that satisfy the small employer participation and contribution requirements specified in this chapter. Compliance with these requirements is required as of the first renewal date of any small employer group occurring after July 1, 1993. For new small employer business, compliance is required as of the first date of offering occurring after July 1, 1993. (b) Compliance with these requirements is required as of the first renewal date occurring after July 1, 1994, with respect to employees of a small employer who had been issued individual coverage prior to July 1, 1993, administered by the health carrier on a group basis. Notwithstanding any other law to the contrary, the health carrier shall offer to terminate any individual coverage for employees of small employers who satisfy the small employer participation and contribution requirements specified in section 62L.03 and offer to replace it with a health benefit plan. If the employer elects not to purchase a health benefit plan, the health carrier must offer all covered employees and dependents the option of maintaining their current coverage, administered on an individual basis, or replacement individual coverage. Small employer and replacement individual coverage provided under this subdivision must be without application of underwriting restrictions, provided continuous coverage is maintained. (c) With respect to small employers having no fewer than 30 nor more than 49 current employees, all dates in this subdivision become July 1, 1995, and any reference to "after" a date becomes "on or after" July 1, 1995. Subd. 2. New carriers. A health carrier entering the small employer market after July 1, 1993, shall begin complying with the requirements of this chapter as of the first date of offering of a health benefit plan to a small employer. A health carrier entering the small employer market after July 1, 1993, is considered to be a member of the health coverage reinsurance association as of the date of the health carrier's initial offer of a health benefit plan to a small employer. History:  1992 c 549 art 2 s 4; 1993 c 345 art 7 s 6; 1994 c 625 art 10 s 34
62L.045 ASSOCIATIONS. Subdivision 1. Definitions. For purposes of this section, the following terms have the meanings given: (a) "Association" means: (1) an association as defined in section 60A.02; (2) a group or organization of political subdivisions; (3) a service cooperative created under section 123A.21; or (4) a joint self-insurance pool authorized under section 471.617, subdivision 2. (b) "Qualified association" means an association, as defined in this subdivision, that: (1) is registered with the commissioner of commerce; (2) provides health plan coverage through a health carrier that participates in the small employer market in this state, other than through associations, to the extent that the association purchases health plan coverage rather than self-insures; (3) has and adheres to membership and participation criteria and health coverage eligibility criteria that are not designed to disproportionately include or attract small employers that are likely to have low costs of health coverage or to disproportionately exclude or repel small employers that are likely to have high costs of health coverage; and (4) permits any small employer that meets its membership, participation, and eligibility criteria to become a member and to obtain health coverage through the association. (c) "Health coverage" means a health benefit plan as defined in section 62L.02, subdivision 15; or similar self-insured coverage offered, sold, issued, or renewed by an association as defined in paragraph (a) to a small employer. Subd. 2. Qualified associations. (a) A qualified association, as defined in this section, and health coverage offered by it, to it, or through it, to a small employer in this state must comply with the requirements of this chapter regarding guaranteed issue, guaranteed renewal, preexisting condition limitations, treatment of MCHA enrollees, and the definition of dependent, and with section 62A.65, subdivision 5, paragraph (b). They must also comply with all other requirements of this chapter not specifically exempted in paragraph (b). (b) A qualified association and a health carrier offering, selling, issuing, or renewing health coverage to, or to cover, a small employer in this state through the qualified association, may, but are not, in connection with that health coverage, required to: (1) offer the two small employer plans described in section 62L.05; and (2) offer to small employers that are not members of the association, health coverage offered to, by, or through the qualified association. Subd. 3. Other associations. Associations as defined in this section that are not qualified associations; health coverage offered, sold, issued, or renewed by or through them; and the health carriers doing so, must fully comply with this chapter with respect to small employers that are members of the association. Subd. 4. Principles; association coverage. (a) This subdivision applies to associations as defined in this section, whether qualified associations or not, and is intended to clarify subdivisions 1 to 3. (b) This section applies only to associations that provide health coverage to small employers. (c) An arrangement between the health carrier and the association, once entered into, must comply with guaranteed issue and guaranteed renewal with respect to members of the association that are small employers and persons covered through them. (d) When an arrangement between a health carrier and an association has validly terminated, the health carrier has no continuing obligation to small employers and persons covered through them, except as otherwise provided in: (1) section 62A.65, subdivision 5, paragraph (b); (2) any other continuation or conversion rights applicable under state or federal law; and (3) section 60A.082, relating to group replacement coverage, and rules adopted under that section. (e) When an association's arrangement with a health carrier has terminated and the association has entered into a new arrangement with that health carrier or a different health carrier, the new arrangement is subject to section 60A.082 and rules adopted under it, with respect to members of the association that are small employers and persons covered through them. (f) An association that offers its members more than one plan of health coverage may have uniform rules restricting movement between the plans of health coverage, if the rules do not discriminate against small employers. (g) This chapter does not require or prohibit separation of an association's members into one group consisting only of small employers and another group or other groups consisting of all other members. The association must comply with this section with respect to the small employer group. (h) For purposes of this section, "member" of an association includes an employer participant in the association. (i) For purposes of this section, health coverage issued to, or to cover, a small employer includes a certificate of coverage issued directly to the employer's employees and dependents, rather than to the small employer. Subd. 5. Registration. The commissioner may require all associations that are subject to this section to register with the commissioner prior to an initial purchase of health coverage under this section. History:  1995 c 234 art 7 s 19; 1996 c 305 art 1 s 23; 1996 c 446 art 3 s 1; 1998 c 397 art 11 s 3; 2013 c 84 art 1 s 52,53; 2014 c 275 art 1 s 7
62L.05 SMALL EMPLOYER PLAN BENEFITS. Subdivision 1.  [Repealed, 2013 c 84 art 1 s 94] Subd. 2.  [Repealed, 2013 c 84 art 1 s 94] Subd. 3.  [Repealed, 2013 c 84 art 1 s 94] Subd. 4.  [Repealed, 2013 c 84 art 1 s 94] Subd. 4a.  [Repealed, 2013 c 84 art 1 s 94] Subd. 5.  [Repealed, 2013 c 84 art 1 s 94] Subd. 6.  [Repealed, 2013 c 84 art 1 s 94] Subd. 7.  [Repealed, 2013 c 84 art 1 s 94] Subd. 8. Continuation coverage. Small employer plans must include the continuation of coverage provisions required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Public Law 99-272, as amended, and by state law. Subd. 9. Dependent coverage. Other state law and rules applicable to health plan coverage of newborn infants, dependent children who do not reside with the eligible employee, disabled children and dependents, and adopted children apply to a small employer plan. Health benefit plans that provide dependent coverage must define "dependent" no more restrictively than the definition provided in section 62L.02. Subd. 10. Medical expense reimbursement. Health carriers may reimburse or pay for medical services, supplies, or articles provided under a small employer plan in accordance with the health carrier's provider contract requirements including, but not limited to, salaried arrangements, capitation, the payment of usual and customary charges, fee schedules, discounts from fee-for-service, per diems, diagnosis-related groups (DRGs), and other payment arrangements. Nothing in this chapter requires a health carrier to develop, implement, or change its provider contract requirements for a small employer plan. Coinsurance, deductibles, and out-of-pocket maximums must be calculated and determined in accordance with each health carrier's standard business practices. Subd. 11.  [Repealed, 2013 c 84 art 1 s 94] Subd. 12.  [Repealed, 2013 c 84 art 1 s 94] Subd. 13.  [Repealed, 2013 c 84 art 1 s 94] History:  1992 c 549 art 2 s 5; 1993 c 247 art 2 s 8; 1993 c 345 art 7 s 7-10; 1994 c 625 art 10 s 35-37; 1999 c 177 s 54; 1999 c 181 s 2,3; 2001 c 215 s 21,22; 1Sp2003 c 14 art 7 s 21; 2005 c 56 s 1; 2008 c 231 s 1; 2010 c 384 s 23; 2012 c 187 art 1 s 12; 2013 c 84 art 1 s 54
62L.06 DISCLOSURE OF UNDERWRITING RATING PRACTICES. When offering or renewing a health benefit plan, health carriers shall disclose in all solicitation and sales materials: (1) provisions concerning the health carrier's right to change premium rates; (2) provisions relating to renewability of coverage; (3) the application of any provider network limitations and their effect on eligibility for benefits; and (4) the ability of small employers to insure eligible employees and dependents currently receiving coverage from the Comprehensive Health Association. History:  1992 c 549 art 2 s 6; 1994 c 625 art 10 s 38; 2013 c 84 art 1 s 55
62L.07 SMALL EMPLOYER REQUIREMENTS. Subdivision 1. Verification of eligibility. Health benefit plans must require that small employers offering a health benefit plan maintain information verifying the continuing eligibility of the employer, its employees, and their dependents, and provide the information to health carriers on a quarterly basis or as reasonably requested by the health carrier. Subd. 2. Waivers. Health benefit plans must require that small employers offering a health benefit plan maintain written documentation indicating that each eligible employee was informed of the availability of coverage through the employer and of a waiver of coverage by the eligible employee. This documentation must be provided to the health carrier upon reasonable request. History:  1992 c 549 art 2 s 7; 1994 c 625 art 10 s 39
62L.08 RESTRICTIONS RELATING TO PREMIUM RATES. Subdivision 1. Rate restrictions. Premium rates for all health benefit plans sold or issued to small employers are subject to the restrictions specified in this section. Subd. 2.  [Repealed by amendment, 2013 c 84 art 1 s 56] Subd. 2a.  [Repealed by amendment, 2013 c 84 art 1 s 56] Subd. 3. Age-based premium variations. Each health carrier may offer premium rates to small employers that vary based upon the ages of the eligible employees and dependents of the small employer only as provided in this subdivision. Premium rates may vary based upon the ages of the eligible employees and dependents of the small employer in accordance with the provisions of the Affordable Care Act as defined in section 62A.011, subdivision 1a. Subd. 4. Geographic premium variations. Premium rates may vary based on geographic rating areas set by the commissioner. The commissioner shall grant approval if the health carrier provides actuarial justification acceptable to the commissioner for the proposed geographic variations in rates. Subd. 5. Gender-based rates prohibited. No health carrier may determine premium rates through a method that is in any way based upon the gender of eligible employees or dependents. Rates must not in any way reflect marital status or generalized differences in expected costs between employees and spouses. Subd. 6. Tobacco rating. Premium rates may vary based upon tobacco use in accordance with the provisions of the Affordable Care Act as defined in section 62A.011, subdivision 1a. Subd. 7.  Premium rate development. (a) In developing its rates and premiums, a health carrier may take into account only the following factors: (1) actuarially valid differences in benefit designs of health benefit plans; and (2) actuarially valid geographic variations if approved by the commissioner as provided in subdivision 4. (b) All premium variations permitted under this section must be based upon actuarially valid differences in expected cost to the health carrier of providing coverage. The variation must be justified in initial rate filings and upon request of the commissioner in rate revision filings. All premium variations are subject to approval by the commissioner. Subd. 7a.  [Repealed, 1995 c 234 art 7 s 28] Subd. 8. Filing requirement. A health carrier that offers, sells, issues, or renews a health benefit plan for small employers shall file with the commissioner the rates and must demonstrate that all rates shall be within the rating restrictions defined in this chapter. Such demonstration must include a description of how the health carrier intends to use demographic factors including case characteristics in calculating the premium rates. The rates shall not be approved, unless the commissioner has determined that the rates are reasonable. In determining reasonableness, the commissioner shall consider the growth rates applied under section 62J.04, subdivision 1, paragraph (b), to the calendar year or years that the proposed premium rate would be in effect, and actuarially valid changes in risk associated with the enrollee population. Subd. 9. Effect of assessments. Premium rates must comply with the rating requirements of this section, notwithstanding the imposition of any assessments or premiums paid by health carriers as provided under sections 62L.13 to 62L.22. Subd. 10.  [Repealed by amendment, 2013 c 84 art 1 s 56] Subd. 11. Loss ratio standards. Notwithstanding section 62A.02, subdivision 3, relating to loss ratios, each policy or contract form used with respect to a health benefit plan offered, or issued in the small employer market, is subject, beginning July 1, 1993, to section 62A.021. The commissioner of health has, with respect to carriers under that commissioner's jurisdiction, all of the powers of the commissioner of commerce under that section. History:  1992 c 549 art 2 s 8,23; 1993 c 345 art 7 s 11,12; 1994 c 625 art 10 s 40-46,50; 1Sp1995 c 3 art 13 s 2; 1997 c 7 art 1 s 18; 1997 c 225 art 2 s 63; 2002 c 330 s 26; 2005 c 77 s 3; 2006 c 255 s 29; 2013 c 84 art 1 s 56
62L.09 CESSATION OF SMALL EMPLOYER BUSINESS. Subdivision 1. Notice to commissioner. A health carrier electing to cease doing business in the small employer market shall notify the commissioner 180 days prior to the effective date of the cessation. The health carrier shall simultaneously provide a copy of the notice to each small employer covered by a health benefit plan issued by the health carrier. For purposes of this section, "cease doing business" means to discontinue issuing new health benefit plans to small employers and to refuse to renew all of the health carrier's existing health benefit plans issued to small employers, the terms of which permit refusal to renew under the circumstances specified in this subdivision. This section does not permit cancellation of a health benefit plan, unless permitted under its terms. Upon making the notification, the health carrier shall not offer or issue new business in the small employer market. The health carrier shall renew its current small employer business due for renewal within 120 days after the date of the notification but shall not renew any small employer business more than 120 days after the date of the notification. The renewal period for business renewed during that 120-day period shall end on the effective date of the cessation. A health carrier that elects to cease doing business in the small employer market shall continue to be governed by this chapter with respect to any continuing small employer business conducted by the health carrier. Subd. 2.  [Repealed, 1993 c 345 art 7 s 16] Subd. 3. Reentry prohibition. (a) Except as otherwise provided in paragraph (b), a health carrier that ceases to do business in the small employer market after July 1, 1993, is prohibited from writing new business in the small employer 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 small employer 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 small employer market in that same service area. (b) The commissioner of commerce or the commissioner of health may permit a health carrier that ceases to do business in the small employer market in this state after July 1, 1993, to begin writing new business in the small employer market if: (1) since the carrier ceased doing business in the small employer market, legislative action has occurred that has significantly changed the effect on the carrier of its decision to cease doing business in the small employer market; and (2) the commissioner deems it appropriate. Subd. 4. Continuing assessment liability. A health carrier that ceases to do business in the small employer market remains liable for assessments levied by the association as provided in section 62L.22. History:  1992 c 549 art 2 s 9; 1993 c 247 art 2 s 9; 1993 c 345 art 7 s 13; 1994 c 465 art 3 s 61; 1995 c 234 art 7 s 20; 1996 c 446 art 1 s 49
62L.10 SUPERVISION BY COMMISSIONER. Subdivision 1. Reports. A health carrier doing business in the small employer market shall file by April 1 of each year an annual actuarial opinion with the commissioner certifying that the health carrier complied with the underwriting and rating requirements of this chapter during the preceding year and that the rating methods used by the health carrier were actuarially sound. A health carrier shall retain a copy of the opinion at its principal place of business. Subd. 2. Records. A health carrier doing business in the small employer market shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles. Subd. 3. Submissions to commissioner. Subsequent to the annual filing, the commissioner may request information and documentation from a health carrier describing its rating practices and renewal underwriting practices, including information and documentation that demonstrates that a health carrier's rating methods and practices are in accordance with sound actuarial principles and the requirements of this chapter. Except in cases of violations of this chapter or of another chapter, information received by the commissioner as provided under this subdivision is nonpublic. Subd. 4. Review of premium rates. The commissioner shall regulate premium rates charged or proposed to be charged by all health carriers in the small employer market under section 62A.02. The commissioner of health has, with respect to carriers under that commissioner's jurisdiction, all of the powers of the commissioner of commerce under that section. Subd. 5.  [Repealed, 2013 c 84 art 1 s 94] History:   1992 c 549 art 2 s 10 
62L.11 PENALTIES AND ENFORCEMENT. Subdivision 1. Disciplinary proceedings. The commissioner may, by order, suspend or revoke a health carrier's license or certificate of authority and impose a monetary penalty not to exceed $25,000 for each violation of this chapter. Violations include the failure to pay an assessment required by section 62L.22, and knowingly and willfully encouraging a small employer to not meet the contribution or participation requirements of section 62L.03, subdivision 3, in order to avoid the requirements of this chapter. The notice, hearing, and appeal procedures specified in section 60A.052 or 62D.16, as appropriate, apply to the order. The order is subject to judicial review as provided under chapter 14. Subd. 2. Enforcement powers. The commissioners of health and commerce each has for purposes of this chapter all of each commissioner's respective powers under other chapters that are applicable to their respective duties under this chapter. History:  1992 c 549 art 2 s 11; 1993 c 13 art 2 s 1; 1993 c 345 art 7 s 14
62L.12 PROHIBITED PRACTICES. Subdivision 1. Prohibition on issuance of individual policies. A health carrier operating in the small employer market shall not knowingly offer, issue, or renew an individual health plan to an eligible employee of a small employer that meets the minimum participation and contribution requirements under section 62L.03, subdivision 3, except as authorized under subdivision 2. Subd. 2. Exceptions. (a) A health carrier may renew individual conversion policies to eligible employees otherwise eligible for conversion coverage under section 62D.104 as a result of leaving a health maintenance organization's service area. (b) A health carrier may renew individual conversion policies to eligible employees otherwise eligible for conversion coverage as a result of the expiration of any continuation of group coverage required under sections 62A.146, 62A.17, 62A.21, 62C.142, 62D.101, and 62D.105. (c) A health carrier may renew conversion policies to eligible employees. (d) A health carrier may sell, issue, or renew individual continuation policies to eligible employees as required. (e) A health carrier may sell, issue, or renew individual health plans if the coverage is appropriate due to an unexpired preexisting condition limitation or exclusion applicable to the person under the employer's group health plan or due to the person's need for health care services not covered under the employer's group health plan. (f) A health carrier may sell, issue, or renew an individual health plan, if the individual has elected to buy the individual health plan not as part of a general plan to substitute individual health plans for a group health plan nor as a result of any violation of subdivision 3 or 4. (g) A health carrier may sell, issue, or renew an individual health plan if coverage provided by the employer is determined to be unaffordable under the provisions of the Affordable Care Act as defined in section 62A.011, subdivision 1a. (h) Nothing in this subdivision relieves a health carrier of any obligation to provide continuation or conversion coverage otherwise required under federal or state law. (i) Nothing in this chapter restricts the offer, sale, issuance, or renewal of coverage issued as a supplement to Medicare under sections 62A.3099 to 62A.44, or policies or contracts that supplement Medicare issued by health maintenance organizations, or those contracts governed by sections 1833, 1851 to 1859, 1860D, or 1876 of the federal Social Security Act, United States Code, title 42, section 1395 et seq., as amended. (j) Nothing in this chapter restricts the offer, sale, issuance, or renewal of individual health plans necessary to comply with a court order. (k) A health carrier may offer, issue, sell, or renew an individual health plan to persons eligible for an employer group health plan, if the individual health plan is a high deductible health plan for use in connection with an existing health savings account, in compliance with the Internal Revenue Code, section 223. In that situation, the same or a different health carrier may offer, issue, sell, or renew a group health plan to cover the other eligible employees in the group. (l) A health carrier may offer, sell, issue, or renew an individual health plan to one or more employees of a small employer if the individual health plan is marketed directly to all employees of the small employer and the small employer does not contribute directly or indirectly to the premiums or facilitate the administration of the individual health plan. The requirement to market an individual health plan to all employees does not require the health carrier to offer or issue an individual health plan to any employee. For purposes of this paragraph, an employer is not contributing to the premiums or facilitating the administration of the individual health plan if the employer does not contribute to the premium and merely collects the premiums from an employee's wages or salary through payroll deductions and submits payment for the premiums of one or more employees in a lump sum to the health carrier. Except for coverage under section 62A.65, subdivision 5, paragraph (b), at the request of an employee, the health carrier may bill the employer for the premiums payable by the employee, provided that the employer is not liable for payment except from payroll deductions for that purpose. If an employer is submitting payments under this paragraph, the health carrier shall provide a cancellation notice directly to the primary insured at least ten days prior to termination of coverage for nonpayment of premium. Individual coverage under this paragraph may be offered only if the small employer has not provided coverage under section 62L.03 to the employees within the past 12 months. (m) A health carrier may offer, sell, issue, or renew an individual health plan to one or more employees of a small employer if the small employer, eligible employee, and individual health plan are in compliance with the 21st Century Cures Act, Public Law 114-255, section 18001. Subd. 3. Agent's licensure. An agent licensed under chapter 60K or section 62C.17 who knowingly and willfully breaks apart a small group for the purpose of selling individual health plans to eligible employees and dependents of a small employer that meets the participation and contribution requirements of section 62L.03, subdivision 3, is guilty of an unfair trade practice and subject to disciplinary action, including the revocation or suspension of license, under section 60K.43 or 62C.17. The action must be by order and subject to the notice, hearing, and appeal procedures specified in section 60K.43. The action of the commissioner is subject to judicial review as provided under chapter 14. This section does not apply to any action performed by an agent that would be permitted for a health carrier under subdivision 2. Subd. 4. Employer prohibition. A small employer shall not encourage or direct an employee or applicant to: (1) refrain from filing an application for health coverage when other similarly situated employees may file an application for health coverage; (2) file an application for health coverage during initial eligibility for coverage, the acceptance of which is contingent on health status, when other similarly situated employees may apply for health coverage, the acceptance of which is not contingent on health status; (3) seek coverage from another health carrier, including, but not limited to, MCHA; or (4) cause coverage to be issued on different terms because of the health status or claims experience of that person or the person's dependents. Subd. 5. Sale of other products. A health carrier shall not condition the offer, sale, issuance, or renewal of a health benefit plan on the purchase by a small employer of other insurance products offered by the health carrier or a subsidiary or affiliate of the health carrier, including, but not limited to, life, disability, property, and general liability insurance. This prohibition does not apply to insurance products offered as a supplement to a health maintenance organization plan, including, but not limited to, supplemental benefit plans under section 62D.05, subdivision 6. History:  1992 c 549 art 2 s 12; 1993 c 13 art 2 s 1; 1994 c 625 art 10 s 47; 1995 c 234 art 7 s 21; 2001 c 117 art 2 s 11; 2004 c 268 s 5,6; 2005 c 17 art 1 s 14; art 3 s 1; 2006 c 255 s 30; 2013 c 84 art 1 s 57; 2017 c 2 art 2 s 12
62L.13 REINSURANCE ASSOCIATION. Subdivision 1. Creation. The Health Coverage Reinsurance Association may operate as a nonprofit unincorporated association, but is authorized to incorporate under chapter 317A. All health carriers in the small employer market shall be and remain members of the association as a condition of their authority to transact business. Subd. 2. Purpose. The association is established to provide for the fair and equitable transfer of risk associated with participation by a health carrier in the small employer market to a private reinsurance pool established and maintained by the association. Subd. 3. Exemptions. The association, its transactions, and all property owned by it are exempt from taxation under the laws of this state or any of its subdivisions, including, but not limited to, premiums taxes imposed under chapter 297I, income tax, sales tax, use tax, and property tax. The association may seek exemption from payment of all fees and taxes levied by the federal government. Except as otherwise provided in this chapter, the association is not subject to the provisions of chapters 13, 13D, 60A, and 62A to 62H. The association is not a public employer and is not subject to the provisions of chapters 179A and 353. The board of directors and health carriers who are members of the association are exempt from sections 325D.49 to 325D.66 in the performance of their duties as directors and members of the association. Subd. 4. Powers of association. The association may exercise all of the powers of a corporation formed under chapter 317A, including, but not limited to, the authority to: (1) establish operating rules, conditions, and procedures relating to the reinsurance of members' risks; (2) assess members in accordance with the provisions of this section and to make advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses; (3) sue and be sued, including taking any legal action necessary to recover any assessments; (4) enter into contracts necessary to carry out the provisions of this chapter; (5) establish operating, administrative, and accounting procedures for the operation of the association; and (6) borrow money against the future receipt of premiums and assessments up to the amount of the previous year's assessment, with the prior approval of the commissioner. The provisions of this chapter govern if the provisions of chapter 317A conflict with this chapter. The association may operate under the plan of operation approved by the board and shall be governed in accordance with this chapter and may operate in accordance with chapter 317A. If the association incorporates as a nonprofit corporation under chapter 317A, the filing of the plan of operation meets the requirements of filing articles. Subd. 5. Supervision by commissioner. The commissioner of commerce shall supervise the association in accordance with this chapter. The commissioner of commerce may examine the association. The association's reinsurance policy forms, its contracts, its premium rates, and its assessments are subject to the approval of the commissioner of commerce. The association's policy forms, contracts, and premium rates are deemed approved if not disapproved by the commissioner of commerce within 60 days after the date of filing them with the commissioner of commerce. The association's assessments are deemed approved if not disapproved by the commissioner of commerce within 15 business days after filing them with the commissioner of commerce. The association shall notify the commissioner of all association or board meetings, and the commissioner or the commissioner's designee may attend all association or board meetings. The association shall file an annual report with the commissioner on or before July 1 of each year, beginning July 1, 1994, describing its activities during the preceding calendar year. The report must include a financial report and a summary of claims paid by the association. The annual report must be available for public inspection. History:  1992 c 549 art 2 s 13; 1993 c 47 s 2-4; 1993 c 247 art 2 s 10-12; 1994 c 465 art 3 s 61; 1997 c 187 art 3 s 17; 2000 c 394 art 2 s 16
62L.14 BOARD OF DIRECTORS. Subdivision 1. Composition of board. The association shall exercise its powers through a board of 13 directors. Four directors must be public members appointed by the commissioner. The public directors must not be employees of or otherwise affiliated with any member of the association. The nonpublic directors must be representative of the membership of the association and must be officers, employees, or directors of the members during their term of office. No member of the association may have more than three directors. Directors are automatically removed if they fail to satisfy this qualification. Subd. 2. Election of board. On or before July 1, 1992, the commissioner shall appoint an interim board of directors of the association who shall serve until the annual meeting in 1994. Except for the public directors, the commissioner's initial appointments must be equally apportioned among the following three categories: accident and health insurance companies, nonprofit health service plan corporations, and health maintenance organizations. Thereafter, members of the association shall elect the board of directors in accordance with this chapter and the plan of operation, subject to approval by the commissioner. Members of the association may vote in person or by proxy. The public directors shall continue to be appointed by the commissioner to terms meeting the requirements of subdivision 3. Subd. 3. Term of office. After the annual meeting in 1994, each director shall serve a three-year term, except that the board shall make appropriate arrangements to stagger the terms of the directors so that approximately one-third of the terms expire each year. Each director shall hold office until expiration of the director's term or until the director's successor is duly elected or appointed and qualified, or until the director's death, resignation, or removal. Subd. 4. Resignation and removal. A director may resign at any time by giving written notice to the commissioner. The resignation takes effect at the time the resignation is received unless the resignation specifies a later date. A nonpublic director may be removed at any time, with cause, by the members. If a vacancy occurs for a public director, the commissioner shall appoint a new public director for the duration of the unexpired term. Subd. 5. Quorum. A majority of the directors constitutes a quorum for the transaction of business. If a vacancy exists by reason of death, resignation, or otherwise, a majority of the remaining directors constitutes a quorum. Subd. 6. Duties of directors. On or before January 1, 1993, the board or the interim board shall develop a plan of operation and reasonable operating rules to assure the fair, reasonable, and equitable administration of the association. The plan of operation must include the development of procedures for selecting an administering carrier, establishment of the powers and duties of the administering carrier, and establishment of procedures for collecting assessments from members, including the imposition of interest penalties for late payments of assessments. The plan of operation must be submitted to the commissioner for review and approval and must be submitted to the members for approval at the first meeting of the members. The board of directors may subsequently amend, change, or revise the plan of operation without approval by the members. Subd. 7. Compensation. Public directors may be reimbursed by the association for reasonable and necessary expenses incurred by them in performing their duties as directors and may be compensated by the association at a rate of up to $55 per day spent on authorized association activities. Subd. 8. Officers. The board may elect officers and establish committees as provided in the bylaws of the association. Officers have the authority and duties in the management of the association as prescribed by the bylaws and determined by the board of directors. Subd. 9. Majority vote. Approval by a majority of the directors present is required for any action of the board. The majority vote must include one vote from a director representing an accident and health insurance company, one vote from a director representing a health service plan corporation, one vote from a director representing a health maintenance organization, and one vote from a public director. History:  1992 c 549 art 2 s 14; 1993 c 47 s 5-8; 1993 c 247 art 2 s 13-20; 1994 c 465 art 3 s 61; 1999 c 177 s 55
62L.15 MEMBERS. Subdivision 1. Annual meeting. The association shall conduct an annual meeting of the members of the association for the purpose of electing directors and transacting any other appropriate business of the membership of the association. The board shall determine the date, time, and place of the annual meeting. The association shall conduct its first annual member meeting on or before December 1, 1992. Subd. 2. Special meetings. Special meetings of the members must be held whenever called by any three of the directors. At least two categories must be represented among the directors calling a special meeting of the members. The categories are public directors, accident and health insurance companies, nonprofit health service plan corporations, and health maintenance organizations. Special meetings of the members must be held at a time and place designated in the notice of the meeting. Subd. 3. Member voting. Each member's vote is a weighted vote and is based on each member's total insurance premiums, subscriber contract charges, health maintenance contract payments, or other health benefit plan revenue derived from, or on behalf of, small employers during the preceding calendar year, as determined by the board and approved by the commissioner, based on annual statements and other reports considered necessary by the board of directors. Subd. 4. Initial member meeting. At least 60 days before the first annual meeting of the members, the commissioner shall give written notice to all members of the time and place of the member meeting. The members shall elect directors representing the members, approve the initial plan of operation of the association, and transact any other appropriate business of the membership of the association. Subd. 5. Member compliance. All members shall comply with the provisions of this chapter, the association's bylaws, the plan of operation developed by the board of directors, and any other operating, administrative, or other procedures established by the board of directors for the operation of the association. The board may request the commissioner to secure compliance with this chapter through the use of any enforcement action otherwise available to the commissioner. History:  1992 c 549 art 2 s 15; 1993 c 47 s 9; 1993 c 247 art 2 s 21; 1994 c 465 art 3 s 61
62L.16 ADMINISTRATION OF ASSOCIATION. Subdivision 1. Administrator. The association shall contract with a qualified entity to operate and administer the association. If there is no available qualified entity, or in the event of a termination under subdivision 2, the association may directly operate and administer the reinsurance program. The administrator shall perform all administrative functions required by this chapter. The board of directors shall develop administrative functions required by this chapter and written criteria for the selection of an administrator. The administrator must be selected by the board of directors, subject to approval by the commissioner. Subd. 2. Term. The administrator shall serve for a period of three years, unless the administrator requests the termination of its contract and the termination is approved by the board of directors. The board of directors shall approve or deny a request to terminate within 90 days of its receipt after consultation with the commissioner. A failure to make a final decision on a request to terminate within 90 days is considered an approval. Subd. 3. Duties of administrator. The association shall enter into a written contract with the administrator to carry out its duties and responsibilities. The administrator shall perform all administrative functions required by this chapter including the: (1) preparation and submission of an annual report to the commissioner; (2) preparation and submission of monthly reports to the board of directors; (3) calculation of all assessments and the notification thereof of members; (4) payment of claims to health carriers following the submission by health carriers of acceptable claim documentation; and (5) provision of claim reports to health carriers as determined by the board of directors. Subd. 4. Bid process. The association shall issue a request for proposal for administration of the reinsurance association and shall solicit responses from health carriers participating in the small employer market and from other qualified entities. Methods of compensation of the administrator must be a part of the bid process. The administrator shall substantiate its cost reports consistent with generally accepted accounting principles. Subd. 5. Audits. The board of directors may conduct periodic audits to verify the accuracy of financial data and reports submitted by the administrator. The board may establish in the plan of operation a uniform audit program. All costs of the uniform audit program and any additional audits conducted by the board to verify the accuracy of claims submissions are the responsibility of the health carrier. Failure of a health carrier to comply with the requirements of the audit program, including the failure to pay the costs of an audit, may subject the health carrier to the penalties described in section 62L.11. Subd. 6. Records of association. The association shall maintain appropriate records and documentation relating to the activities of the association. All individual patient-identifying claims data and information are confidential and not subject to disclosure of any kind, except that a health carrier shall have access upon request to individual claims data relating to eligible employees and dependents covered by a health benefit plan issued by the health carrier. All records, documents, and work product prepared by the association or by the administrator for the association are the property of the association. The commissioner shall have access to the data for the purposes of carrying out the supervisory functions provided for in this chapter. Subd. 7. Indemnification. The association shall indemnify members, directors, officers, employees, and agents to the same extent that persons may be indemnified by corporations under section 317A.521. History:  1992 c 549 art 2 s 16; 1993 c 47 s 10,11; 1993 c 247 art 2 s 22,23
62L.17 PARTICIPATION IN REINSURANCE ASSOCIATION. Subdivision 1. Minimum standards. The board of directors or the interim board shall establish minimum claim processing and managed care standards which must be met by a health carrier in order to have its business reinsured by the association. Subd. 2. Participation. A health carrier may elect to not participate in the reinsurance association through transferring risk only after filing an application with the commissioner of commerce. The commissioner may approve the application after consultation with the board of directors. In determining whether to approve an application, the commissioner shall consider whether the health carrier meets the following standards: (1) demonstration by the health carrier of a substantial and established market presence; (2) demonstrated experience in the small group market and history of rating and underwriting small employer groups; (3) commitment to comply with the requirements of this chapter for small employers in the state or its service area; and (4) financial ability to assume and manage the risk of enrolling small employer groups without the protection of the reinsurance. Initial application for nonparticipation must be filed with the commissioner no later than February 1993. The commissioner shall make the determination and notify the carrier no later than April 15, 1993. Subd. 2a. Participation of new small employer health carriers. A health carrier that enters the small employer market subsequent to February 1993, may elect to not participate in the reinsurance association by filing an application within 60 days of entry into the small employer market or May 26, 1995, whichever is later. The commissioner shall make a determination and notify the health carrier no later than 60 days after receipt of the application. In determining whether to approve the application, the commissioner shall consider the standards defined in subdivision 2, except that the commissioner may also consider whether the health carrier has a guaranteeing organization as permitted under chapter 62N. Subd. 3. Length of participation. A health carrier's initial election is for a period of two years. Subsequent elections of participation are for five-year periods. Subd. 4. Appeal. A health carrier whose application for nonparticipation has been rejected by the commissioner may appeal the decision. The association may also appeal a decision of the commissioner, if approved by a two-thirds majority of the board. Chapter 14 applies to all appeals under this subdivision. Subd. 5. Annual certification. A health carrier that has received approval to not participate in the reinsurance association shall annually certify to the commissioner on or before December 1 that it continues to meet the standards described in subdivision 2. Subd. 6. Subsequent election. Election to participate in the reinsurance association must occur on or before December 31 of each year. If after a period of nonparticipation, the nonparticipating health carrier subsequently elects to participate in the reinsurance association, the health carrier retains the risk it assumed when not participating in the association. If a participating health carrier subsequently elects to not participate in the reinsurance association, the health carrier shall cease reinsuring through the association all of its small employer business and is liable for any assessment described in section 62L.22 which has been prorated based on the business covered by the reinsurance mechanism during the year of the assessment. Subd. 7. Election modification. The commissioner, after consultation with the board, may authorize a health carrier to modify its election to not participate in the association at any time, if the risk from the carrier's existing small employer business jeopardizes the financial condition of the health carrier. If the commissioner authorizes a health carrier to participate in the association, the health carrier shall retain the risk it assumed while not participating in the association. This election option may not be exercised if the health carrier is in rehabilitation. History:  1992 c 549 art 2 s 17; 1993 c 247 art 2 s 24,25; 1995 c 234 art 7 s 22; 2005 c 10 art 1 s 15
62L.18 CEDING OF RISK. Subdivision 1. Prospective ceding. For health benefit plans issued on or after July 1, 1993, all health carriers participating in the association may prospectively reinsure an employee or dependent within a small employer group and entire employer groups of seven or fewer eligible employees. A health carrier must determine whether to reinsure an employee or dependent or entire group within 60 days of the commencement of the coverage of the small employer and must notify the association during that time period. Subd. 2. Eligibility for reinsurance. (a) A health carrier may not reinsure existing small employer business through the association. A health carrier may reinsure an employee or dependent who previously had coverage from MCHA who is now eligible for coverage through the small employer group at the time of enrollment as defined in section 62L.03, subdivision 6. A health carrier may not reinsure individuals who have existing individual health care coverage with that health carrier upon replacement of the individual coverage with group coverage as provided in section 62L.04, subdivision 1. (b) A health carrier may cede to the association the risk of any newly eligible employees or continue to reinsure small employer business for employers who, at the time of renewal of coverage by the same health carrier prior to July 1, 1995, have more than 29 current employees but fewer than 49 current employees. This paragraph is effective retroactively for coverage renewed on or after July 1, 1994. Subd. 3. Reinsurance termination. A health carrier may terminate reinsurance through the association for an employee or dependent or entire group on the anniversary date of coverage for the small employer. If the health carrier terminates the reinsurance, the health carrier may not subsequently reinsure the individual or entire group. Subd. 4. Continuing carrier responsibility. A health carrier transferring risk to the association is completely responsible for administering its health benefit plans. A health carrier shall apply its case management and claim processing techniques consistently between reinsured and nonreinsured business. Small employers, eligible employees, and dependents shall not be notified that the health carrier has reinsured their coverage through the association. History:  1992 c 549 art 2 s 18; 1995 c 234 art 7 s 23
62L.19 ALLOWED REINSURANCE BENEFITS. A health carrier may reinsure through the association only those benefits described in section 62L.05. The board may establish guidelines to clarify what coverage is included within the benefits described in this chapter. If a health plan conforms to those benefits as clarified by the board, the benefits are considered to be in accordance with this chapter for purposes of the association's obligations. History:  1992 c 549 art 2 s 19; 1993 c 47 s 12; 1993 c 247 art 2 s 26
62L.20 TRANSFER OF RISK. Subdivision 1. Reinsurance threshold. A health carrier participating in the association may transfer up to 90 percent of the risk above a reinsurance threshold of $5,000 of eligible charges resulting from issuance of a health benefit plan to an eligible employee or dependent of a small employer group whose risk has been prospectively ceded to the association. If the eligible charges exceed $55,000, a health carrier participating in the association may transfer 100 percent of the risk each policy year not to exceed 12 months. Satisfaction of the reinsurance threshold must be determined by the board of directors based on discounted eligible charges. The board may establish an audit process to assure consistency in the submission of charge calculations by health carriers to the association. The association shall determine the amount to be paid to the health carrier for claims submitted based on discounted eligible charges. The board may also establish upper limits on the amount paid by the association based on a usual and customary determination. The board shall establish in the plan of operation a procedure for determining the discounted eligible charge. Subd. 2. Conversion factors. The board shall establish a standardized conversion table for determining equivalent charges for health carriers that use alternative provider reimbursement methods. If a health carrier establishes to the board that the health carrier's conversion factor is equivalent to the association's standardized conversion table, the association shall accept the health carrier's conversion factor. Subd. 3. Board authority. The board shall establish criteria for changing the threshold amount or retention percentage. The board shall review the criteria on an annual basis. The board shall provide the members with an opportunity to comment on the criteria at the time of the annual review. Subd. 4. Notification of transfer of risk. A participating health carrier must notify the association, within 90 days of receipt of proof of loss, of satisfaction of a reinsurance threshold. After satisfaction of the reinsurance threshold, a health carrier continues to be liable to its providers, eligible employees, and dependents for payment of claims in accordance with the health carrier's health benefit plan. Health carriers shall not pend or delay payment of otherwise valid claims due to the transfer of risk to the association. Subd. 5. Periodic studies. The board shall, on a biennial basis, prepare and submit a report to the commissioner of commerce on the effect of the reinsurance association on the small employer market. The first study must be presented to the commissioner no later than January 1, 1995, and must specifically address whether there has been disruption in the small employer market due to unnecessary churning of groups for the purpose of obtaining reinsurance and whether it is appropriate for health carriers to transfer the risk of their existing small group business to the reinsurance association. After two years of operation, the board shall study both the effect of ceding both individuals and entire small groups of seven or fewer eligible employees to the reinsurance association and the composition of the board and determine whether the initial appointments reflect the types of health carriers participating in the reinsurance association and whether the voting power of members of the association should be weighted and recommend any necessary changes. History:  1992 c 549 art 2 s 20; 1993 c 47 s 13; 1993 c 247 art 2 s 27,28
62L.21 REINSURANCE PREMIUMS. Subdivision 1. Monthly premium. A health carrier ceding an individual to the reinsurance association shall be assessed a monthly reinsurance coverage premium that is 5.0 times the adjusted average market price. A health carrier ceding an entire group to the reinsurance association shall be assessed a monthly reinsurance coverage premium that is 1.5 times the adjusted average market price. The adjusted average market premium price must be established by the board of directors in accordance with its plan of operation. The board may consider benefit levels in establishing the reinsurance coverage premium. Subd. 2. Adjustment of premium rates. The board of directors shall establish operating rules to allocate adjustments to the reinsurance premium charge of no more than minus 25 percent of the monthly reinsurance premium for health carriers that can demonstrate administrative efficiencies and cost-effective handling of equivalent risks. The adjustment must be made monthly, unless the board provides for a different interval in its operating rules. The operating rules must establish objective and measurable criteria which must be met by a health carrier in order to be eligible for an adjustment. These criteria must include consideration of efficiency attributable to case management, but not consideration of such factors as provider discounts. Subd. 3. Liability for premium. A health carrier is liable for the cost of the reinsurance premium and may not directly charge the small employer for the costs. The reinsurance premium may be reflected only in the rating factors permitted in section 62L.08, as provided in section 62L.08, subdivision 10. History:  1992 c 549 art 2 s 21; 1994 c 625 art 10 s 48
62L.22 ASSESSMENTS. Subdivision 1. Assessment by board. For the purpose of providing the funds necessary to carry out the purposes of the association, the board of directors shall assess members as provided in subdivisions 2, 3, and 4 at the times and for the amounts the board of directors finds necessary. Assessments are due and payable on the date specified by the board of directors, but not less than 30 days after written notice to the member. Assessments accrue interest at the rate of six percent per year on or after the due date. Subd. 2. Initial capitalization. The interim board of directors shall determine the initial capital operating requirements for the association. The board shall assess each licensed health carrier $100 for the initial capital requirements of the association. The assessment is due and payable no later than January 1, 1993. Subd. 3. Retrospective assessment. On or before July 1 of each year, the administering carrier shall determine the association's net loss, if any, for the previous calendar year, the program expenses of administration, and other appropriate gains and losses. If reinsurance premium charges are not sufficient to satisfy the operating and administrative expenses incurred or estimated to be incurred by the association, the board of directors shall assess each member participating in the association in proportion to each member's respective share of the total insurance premiums, subscriber contract payments, health maintenance organization payments, and other health benefit plan revenue derived from or on behalf of small employers during the preceding calendar year. The assessments must be calculated by the board of directors based on annual statements and other reports considered necessary by the board of directors and filed by members with the association. The amount of the assessment shall not exceed four percent of the member's small group market premium. In establishing this assessment, the board shall consider a formula based on total small employer premiums earned and premiums earned from newly issued small employer plans. A member's assessment may not be reduced or increased by more than 50 percent as a result of using that formula, which includes a reasonable cap on assessments on any premium category or premium classification. The board of directors may provide for interim assessments as it considers necessary to appropriately carry out the association's responsibilities. The board of directors may establish operating rules to provide for changes in the assessment calculation. Subd. 4. Additional assessments. If the board of directors determines that the retrospective assessment formula described in subdivision 3 is insufficient to meet the obligations of the association, the board of directors shall assess each member not participating in the reinsurance association, but which is providing health plan coverage in the small employer market, in proportion to each member's respective share of the total insurance premiums, subscriber contract payments, health maintenance organization payments, and other health benefit plan revenue derived from or on behalf of small employers during the preceding calendar year. The assessment must be calculated by the board of directors based on annual statements and other reports considered necessary by the board of directors and filed by members with the association. The amount of the assessment may not exceed one percent of the member's small group market premium. Members who paid the retrospective assessment described in subdivision 3 are not subject to the additional assessment. If the additional assessment is insufficient to meet the obligations of the association, the board of directors may assess members participating in the association who paid the retrospective assessment described in subdivision 3 up to an additional one percent of the member's small group market premium. Subd. 5. Abatement or deferment. The association may abate or defer, in whole or in part, the retrospective assessment of a member if, in the opinion of the commissioner, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations or the member is placed under an order of rehabilitation, liquidation, receivership, or conservation by a court of competent jurisdiction. In the event that a retrospective assessment against a member is abated or deferred, in whole or in part, the amount by which the assessment is abated or deferred may be assessed against other members in accordance with the methodology specified in subdivisions 3 and 4. Subd. 6. Refund. The board of directors may refund to members, in proportion to their contributions, the amount by which the assets of the association exceed the amount the board of directors finds necessary to carry out its responsibilities during the next calendar year. A reasonable amount may be retained to provide funds for the continuing expenses of the association and for future losses. Subd. 7. Appeals. A health carrier may appeal to the commissioner of commerce within 30 days of notice of an assessment by the board of directors. A final action or order of the commissioner is subject to judicial review in the manner provided in chapter 14. Subd. 8. Liability for assessment. Employer liability for other costs of a health carrier resulting from assessments made by the association under this section are limited by the rate spread restrictions specified in section 62L.08. History:   1992 c 549 art 2 s 22 
 62L.23 [Renumbered 62L.08, subd 11] 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. History:   2001 c 215 s 23  
62M.01 CITATION, JURISDICTION, AND SCOPE. Subdivision 1. Popular name. This chapter may be cited as the "Minnesota Utilization Review Act of 1992." Subd. 2. Jurisdiction. This chapter applies to any insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a health service plan licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; the Minnesota Comprehensive Health Association created under chapter 62E; a community integrated service network licensed under chapter 62N; an accountable provider network operating under chapter 62T; a fraternal benefit society operating under chapter 64B; a joint self-insurance employee health plan operating under chapter 62H; a multiple employer welfare arrangement, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended; a third-party administrator licensed under section 60A.23, subdivision 8, that provides utilization review services for the administration of benefits under a health benefit plan as defined in section 62M.02; any other entity that provides, offers, or administers hospital, outpatient, medical, prescription drug, or other health benefits to individuals treated by a health professional under a policy, plan, or contract; or any entity performing utilization review on behalf of a business entity in this state pursuant to a health benefit plan covering a Minnesota resident. Subd. 3. Scope. (a) Nothing in this chapter applies to review of claims after submission to determine eligibility for benefits under a health benefit plan. The appeal procedure described in section 62M.06 applies to any complaint as defined under section 62Q.68, subdivision 2, that requires a medical determination in its resolution. (b) This chapter does not apply to managed care plans or county-based purchasing plans when the plan is providing coverage to state public health care program enrollees under chapter 256B or 256L. History:  1992 c 574 s 1; 1999 c 239 s 3; 2006 c 255 s 31; 2020 c 114 art 1 s 1,2; art 2 s 20
62M.02 DEFINITIONS. Subdivision 1. Terms. For the purposes of this chapter, the terms defined in this section have the meanings given them. Subd. 1a. Adverse determination. "Adverse determination" means a decision by a utilization review organization relating to an admission, extension of stay, or health care service that is partially or wholly adverse to the enrollee, including a decision to deny an admission, extension of stay, or health care service on the basis that it is not medically necessary. Subd. 2. Appeal. "Appeal" means a formal request, either orally or in writing, to reconsider an adverse determination regarding an admission, extension of stay, or other health care service. Subd. 3. Attending dentist. "Attending dentist" means the dentist with primary responsibility for the dental care provided to an enrollee. Subd. 4. Attending health care professional. "Attending health care professional" means the health care professional providing care within the scope of the professional's practice and with primary responsibility for the care provided to an enrollee. Attending health care professional shall include only physicians; chiropractors; dentists; mental health professionals as defined in section 245.462, subdivision 18, or 245.4871, subdivision 27; podiatrists; and advanced practice nurses. Subd. 5. Authorization. "Authorization" means a determination by a utilization review organization that an admission, extension of stay, or other health care service has been reviewed and that, based on the information provided, it satisfies the utilization review requirements of the applicable health plan and the health plan company will then pay for the covered benefit, provided the preexisting limitation provisions, the general exclusion provisions, and any deductible, co-payment, coinsurance, or other policy requirements have been met. Subd. 6. Claims administrator. "Claims administrator" means an entity that reviews and determines whether to pay claims to enrollees or providers based on the contract provisions of the health plan contract. Claims administrators may include insurance companies licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a health service plan licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a community integrated service network licensed under chapter 62N; an accountable provider network operating under chapter 62T; a fraternal benefit society operating under chapter 64B; a multiple employer welfare arrangement, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended. Subd. 7. Claimant. "Claimant" means the enrollee who files a claim for benefits or a provider of services who, pursuant to a contract with a claims administrator, files a claim on behalf of an enrollee or covered person. Subd. 8. Clinical criteria. "Clinical criteria" means the written policies, rules, clinical protocols, medical protocols, or any other criteria or rationale used by the utilization review organization to determine whether a health care service is authorized. Subd. 9. Concurrent review. "Concurrent review" means utilization review conducted during an enrollee's hospital stay or course of treatment and has the same meaning as continued stay review. Subd. 10. Discharge planning. "Discharge planning" means the process that assesses an enrollee's need for treatment after hospitalization in order to help arrange for the necessary services and resources to effect an appropriate and timely discharge. Subd. 10a. Emergency services. "Emergency services" has the meaning given in section 62Q.55, subdivision 3. Subd. 11. Enrollee. "Enrollee" means an individual covered by a health benefit plan and includes an insured policyholder, subscriber, contract holder, member, covered person, or certificate holder. Subd. 12. Health benefit plan. "Health benefit plan" means a policy, contract, or certificate issued by a health plan company for the coverage of medical, dental, or hospital benefits. A health benefit plan does not include coverage that is: (1) limited to disability or income protection coverage; (2) automobile medical payment coverage; (3) supplemental to liability insurance; (4) designed solely to provide payments on a per diem, fixed indemnity, or nonexpense incurred basis; (5) credit accident and health insurance issued under chapter 62B; (6) blanket accident and sickness insurance as defined in section 62A.11; (7) accident only coverage issued by a licensed and tested insurance agent; or (8) workers' compensation. Subd. 12a. Health plan company. "Health plan company" means a health plan company as defined in section 62Q.01, subdivision 4, and includes an accountable provider network operating under chapter 62T. Subd. 13. Inpatient admissions to hospitals. "Inpatient admissions to hospitals" includes admissions to all acute medical, surgical, obstetrical, psychiatric, and chemical dependency inpatient services at a licensed hospital facility, as well as other licensed inpatient facilities including skilled nursing facilities, residential treatment centers, and free standing rehabilitation facilities. Subd. 13a. Medically necessary care. "Medically necessary care" has the meaning given in section 62Q.53. Subd. 14. Outpatient services. "Outpatient services" means procedures or services performed on a basis other than as an inpatient, and includes obstetrical, psychiatric, chemical dependency, dental, and chiropractic services. Subd. 15. Prior authorization. "Prior authorization" means utilization review conducted prior to the delivery of a service, including an outpatient service. Subd. 16. Prospective review. "Prospective review" means utilization review conducted prior to an enrollee's inpatient stay. Subd. 17. Provider. "Provider" means a licensed health care facility, physician, or other health care professional that delivers health care services to an enrollee. Subd. 18. Quality assessment program. "Quality assessment program" means a structured mechanism that monitors and evaluates a utilization review organization's program and provides management intervention to support compliance with the requirements of this chapter. Subd. 19.  MS 2018 [Repealed, 2020 c 114 art 1 s 22] Subd. 20. Utilization review. "Utilization review" means the evaluation of the necessity, appropriateness, and efficacy of the use of health care services, procedures, and facilities, by a person or entity other than the attending health care professional, for the purpose of determining the medical necessity of the service or admission. Utilization review also includes prior authorization and review conducted after the admission of the enrollee. It includes situations where the enrollee is unconscious or otherwise unable to provide advance notification. Utilization review does not include a referral or participation in a referral process by a participating provider unless the provider is acting as a utilization review organization. Subd. 21. Utilization review organization. "Utilization review organization" means an entity including but not limited to an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a prepaid limited health service organization issued a certificate of authority and operating under sections 62A.451 to 62A.4528; a health service plan licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a community integrated service network licensed under chapter 62N; an accountable provider network operating under chapter 62T; a fraternal benefit society operating under chapter 64B; a joint self-insurance employee health plan operating under chapter 62H; a multiple employer welfare arrangement, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended; a third-party administrator licensed under section 60A.23, subdivision 8, which conducts utilization review and authorizes or makes adverse determinations regarding an admission, extension of stay, or other health care services for a Minnesota resident; any other entity that provides, offers, or administers hospital, outpatient, medical, prescription drug, or other health benefits to individuals treated by a health professional under a policy, plan, or contract; or any entity performing utilization review that is affiliated with, under contract with, or conducting utilization review on behalf of, a business entity in this state. Utilization review organization does not include a clinic or health care system acting pursuant to a written delegation agreement with an otherwise regulated utilization review organization that contracts with the clinic or health care system. The regulated utilization review organization is accountable for the delegated utilization review activities of the clinic or health care system. History:  1992 c 574 s 2; 1994 c 625 art 2 s 7,8; 1997 c 225 art 2 s 30; 1999 c 239 s 4-16; 1Sp2001 c 9 art 16 s 5; 2002 c 379 art 1 s 113; 2008 c 344 s 15; 2020 c 114 art 1 s 3-9; art 2 s 1,20
62M.03 COMPLIANCE WITH STANDARDS. Subdivision 1. Licensed utilization review organization. Beginning January 1, 1993, any organization that meets the definition of utilization review organization in section 62M.02, subdivision 21, must be licensed under chapter 60A, 62C, 62D, 62N, 62T, or 64B, or registered under this chapter and must comply with this chapter and section 72A.201, subdivisions 8 and 8a. Each licensed community integrated service network or health maintenance organization that has an employed staff model of providing health care services shall comply with this chapter and section 72A.201, subdivisions 8 and 8a, for any services provided by providers under contract. 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 this chapter. Initial registration must occur no later than January 1, 1993. The registration is effective for two years and may be renewed. Applications for initial and renewal registrations must be made on forms prescribed by the commissioner. 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. Subd. 3. Penalties and enforcements. If a utilization review organization fails to comply with this chapter, the organization may not provide utilization review services for any Minnesota resident. The commissioner of commerce may issue a cease and desist order under section 45.027, subdivision 5, to enforce this provision. The cease and desist order is subject to appeal under chapter 14. A nonlicensed utilization review organization that fails to comply with the provisions of this chapter is subject to all applicable penalty and enforcement provisions of section 72A.201. Each utilization review organization licensed under chapter 60A, 62C, 62D, 62N, 62T, or 64B shall comply with this chapter as a condition of licensure. History:  1992 c 574 s 3; 1994 c 625 art 2 s 9-11; 1997 c 225 art 2 s 62; 1999 c 239 s 17,18; 2001 c 215 s 24; 2002 c 330 s 27; 2020 c 114 art 2 s 20
62M.04 STANDARDS FOR UTILIZATION REVIEW PERFORMANCE. Subdivision 1. Responsibility for obtaining authorization. A health benefit plan that includes utilization review requirements must specify the process for notifying the utilization review organization in a timely manner and obtaining authorization for health care services. Each health plan company must provide a clear and concise description of this process to an enrollee as part of the policy, subscriber contract, or certificate of coverage. In addition to the enrollee, the utilization review organization must allow any provider or provider's designee, or responsible patient representative, including a family member, to fulfill the obligations under the health plan. A claims administrator that contracts directly with providers for the provision of health care services to enrollees may, through contract, require the provider to notify the review organization in a timely manner and obtain authorization for health care services. Subd. 2. Information upon which utilization review is conducted. (a) If the utilization review organization is conducting routine prospective and concurrent utilization review, utilization review organizations must collect only the information necessary to authorize the admission, procedure of treatment, and length of stay. (b) Utilization review organizations may request, but may not require providers to supply, numerically encoded diagnoses or procedures as part of the authorization process. (c) Utilization review organizations must not routinely request copies of medical records for all patients reviewed. In performing prospective and concurrent review, copies of the pertinent portion of the medical record should be required only when a difficulty develops in authorizing the medical necessity or appropriateness of the admission or extension of stay. (d) Utilization review organizations may request copies of medical records retrospectively for a number of purposes, including auditing the services provided, quality assurance review, ensuring compliance with the terms of either the health benefit plan or the provider contract, and compliance with utilization review activities. Except for reviewing medical records associated with an appeal or with an investigation or audit of data discrepancies, providers must be reimbursed for the reasonable costs of duplicating records requested by the utilization review organization for retrospective review unless otherwise provided under the terms of the provider contract. Subd. 3. Data elements. (a) Except as otherwise provided in this chapter, for purposes of authorization a utilization review organization must limit its data requirements to the following elements: (b) Patient information that includes the following: (1) name; (2) address; (3) date of birth; (4) sex; (5) Social Security number or patient identification number; (6) name of health plan company or health plan; and (7) plan identification number. (c) Enrollee information that includes the following: (1) name; (2) address; (3) Social Security number or employee identification number; (4) relation to patient; (5) employer; (6) health benefit plan; (7) group number or plan identification number; and (8) availability of other coverage. (d) Attending health care professional information that includes the following: (1) name; (2) address; (3) telephone numbers; (4) degree and license; (5) specialty or board certification status; and (6) tax identification number or other identification number. (e) Diagnosis and treatment information that includes the following: (1) primary diagnosis with associated ICD or DSM coding, if available; (2) secondary diagnosis with associated ICD or DSM coding, if available; (3) tertiary diagnoses with associated ICD or DSM coding, if available; (4) proposed procedures or treatments with ICD or associated CPT codes, if available; (5) surgical assistant requirement; (6) anesthesia requirement; (7) proposed admission or service dates; (8) proposed procedure date; and (9) proposed length of stay. (f) Clinical information that includes the following: (1) support and documentation of appropriateness and level of service proposed; and (2) identification of contact person for detailed clinical information. (g) Facility information that includes the following: (1) type; (2) licensure and certification status and DRG exempt status; (3) name; (4) address; (5) telephone number; and (6) tax identification number or other identification number. (h) Concurrent or continued stay review information that includes the following: (1) additional days, services, or procedures proposed; (2) reasons for extension, including clinical information sufficient for support of appropriateness and level of service proposed; and (3) diagnosis status. (i) For admissions to facilities other than acute medical or surgical hospitals, additional information that includes the following: (1) history of present illness; (2) patient treatment plan and goals; (3) prognosis; (4) staff qualifications; and (5) 24-hour availability of staff. Additional information may be required for other specific review functions such as discharge planning or catastrophic case management. Second opinion information may also be required, when applicable, to support benefit plan requirements. Subd. 4. Additional information. A utilization review organization may request information in addition to that described in subdivision 3 when there is significant lack of agreement between the utilization review organization and the provider regarding the appropriateness of authorization during the review or appeal process. For purposes of this subdivision, "significant lack of agreement" means that the utilization review organization has: (1) tentatively determined through its professional staff that a service cannot be authorized; (2) referred the case to a physician for review; and (3) talked to or attempted to talk to the attending health care professional for further information. Nothing in this chapter prohibits a utilization review organization from requiring submission of data necessary to comply with the quality assurance and utilization review requirements of chapter 62D or other appropriate data or outcome analyses. Subd. 5. Sharing of information. To the extent allowed under sections 72A.49 to 72A.505, a utilization review organization shall share all available clinical and demographic information on individual patients internally to avoid duplicate requests for information from enrollees or providers. History:  1992 c 574 s 4; 1999 c 239 s 19-22; 2020 c 114 art 2 s 2-5
62M.05 PROCEDURES FOR REVIEW DETERMINATION. Subdivision 1. Written procedures. A utilization review organization must have written procedures to ensure that reviews are conducted in accordance with the requirements of this chapter. Subd. 2. Concurrent review. A utilization review organization may review ongoing inpatient stays based on the severity or complexity of the enrollee's condition or on necessary treatment or discharge planning activities. Such review must not be consistently conducted on a daily basis. Subd. 3. Notification of adverse determinations and authorizations. A utilization review organization must have written procedures for providing notification of all its adverse determinations and authorizations in accordance with this section. Subd. 3a. Standard review determination. (a) Notwithstanding subdivision 3b, a standard review determination on all requests for utilization review must be communicated to the provider and enrollee in accordance with this subdivision within five business days after receiving the request if the request is received electronically, or within six business days if received through nonelectronic means, provided that all information reasonably necessary to make a determination on the request has been made available to the utilization review organization. Effective January 1, 2022, a standard review determination on all requests for utilization review must be communicated to the provider and enrollee in accordance with this subdivision within five business days after receiving the request, regardless of how the request was received, provided that all information reasonably necessary to make a determination on the request has been made available to the utilization review organization. (b) When a determination is made to authorize, notification must be provided promptly by telephone to the provider. The utilization review organization shall send written notification to the provider or shall maintain an audit trail of the determination and telephone notification. For purposes of this subdivision, "audit trail" includes documentation of the telephone notification, including the date; the name of the person spoken to; the enrollee; the service, procedure, or admission authorized; and the date of the service, procedure, or admission. If the utilization review organization indicates authorization by use of a number, the number must be called the "authorization number." For purposes of this subdivision, notification may also be made by facsimile to a verified number or by electronic mail to a secure electronic mailbox. These electronic forms of notification satisfy the "audit trail" requirement of this paragraph. (c) When an adverse determination is made, notification must be provided within the time periods specified in paragraph (a) by telephone, by facsimile to a verified number, or by electronic mail to a secure electronic mailbox to the attending health care professional and hospital or physician office as applicable. Written notification must also be sent to the hospital or physician office as applicable and attending health care professional if notification occurred by telephone. For purposes of this subdivision, notification may be made by facsimile to a verified number or by electronic mail to a secure electronic mailbox. Written notification must be sent to the enrollee and may be sent by United States mail, facsimile to a verified number, or by electronic mail to a secure mailbox. The written notification must include all reasons relied on by the utilization review organization for the determination and the process for initiating an appeal of the determination. Upon request, the utilization review organization shall provide the provider or enrollee with the criteria used to determine the necessity, appropriateness, and efficacy of the health care service and identify the database, professional treatment parameter, or other basis for the criteria. Reasons for an adverse determination may include, among other things, the lack of adequate information to authorize after a reasonable attempt has been made to contact the provider or enrollee. (d) When an adverse determination is made, the written notification must inform the enrollee and the attending health care professional of the right to submit an appeal to the internal appeal process described in section 62M.06 and the procedure for initiating the internal appeal. The written notice shall be provided in a culturally and linguistically appropriate manner consistent with the provisions of the Affordable Care Act as defined under section 62A.011, subdivision 1a. Subd. 3b. Expedited review determination. (a) An expedited determination must be utilized if the attending health care professional believes that an expedited determination is warranted. (b) Notification of an expedited determination to authorize or an expedited adverse determination must be provided to the hospital, the attending health care professional, and the enrollee as expeditiously as the enrollee's medical condition requires, but no later than 48 hours and must include at least one business day after the initial request. When an expedited adverse determination is made, the utilization review organization must also notify the enrollee and the attending health care professional of the right to submit an appeal to the expedited internal appeal as described in section 62M.06 and the procedure for initiating an expedited internal appeal. Subd. 4. Failure to provide necessary information. A utilization review organization must have written procedures to address the failure of a provider or enrollee to provide the information necessary to make a determination on the request. If the enrollee or provider will not release the necessary information to the utilization review organization, the utilization review organization may make an adverse determination in accordance with its own policy or the policy described in the health benefit plan. 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 an authorization or adverse determination to the appropriate claims administrator for the health benefit plan. If it is determined by the claims administrator that the authorized health care service is not covered by the health benefit plan, the claims administrator must promptly notify the claimant and provider of this information. History:  1992 c 574 s 5; 1994 c 485 s 65; 1994 c 625 art 2 s 12; 1999 c 239 s 23; 2001 c 215 s 25; 2009 c 178 art 1 s 32; 2013 c 84 art 1 s 58; 2020 c 114 art 1 s 10-12; art 2 s 6,7
62M.06 APPEALS OF ADVERSE DETERMINATIONS. Subdivision 1. Procedures for appeal. (a) A utilization review organization must have written procedures for appeals of adverse determinations. The right to appeal must be available to the enrollee and to the attending health care professional. (b) The enrollee shall be allowed to review the information relied upon in the course of the appeal, present evidence and testimony as part of the appeals process, and receive continued coverage pending the outcome of the appeals process. This paragraph does not apply to grandfathered plans as defined under section 62A.011, subdivision 1c. Nothing in this paragraph shall be construed to limit or restrict the appeal rights of state public health care program enrollees provided under section 256.045 and Code of Federal Regulations, title 42, section 438.420 (d). Subd. 2. Expedited appeal. (a) When an adverse determination for a health care service is made prior to or during an ongoing service requiring review and the attending health care professional believes that the determination warrants an expedited appeal, the utilization review organization must ensure that the enrollee and the attending health care professional have an opportunity to appeal the determination over the telephone on an expedited basis. In such an appeal, the utilization review organization must ensure reasonable access to its consulting physician or health care provider. (b) The utilization review organization shall notify the enrollee and attending health care professional by telephone of its determination on the expedited appeal as expeditiously as the enrollee's medical condition requires, but no later than 72 hours after receiving the expedited appeal. (c) If the adverse determination is not reversed through the expedited appeal, the utilization review organization must include in its notification the right to submit the appeal to the external appeal process described in section 62Q.73 and the procedure for initiating the process. This information must be provided in writing to the enrollee and the attending health care professional as soon as practical. Subd. 3. Standard appeal. (a) The utilization review organization must establish procedures for appeals to be made either in writing or by telephone. (b) A utilization review organization shall notify in writing the enrollee, attending health care professional, and claims administrator of its determination on the appeal within 15 days after receipt of the notice of appeal. If the utilization review organization cannot make a determination within 15 days due to circumstances outside the control of the utilization review organization, the utilization review organization may take up to four additional days to notify the enrollee, attending health care professional, and claims administrator of its determination. If the utilization review organization takes any additional days beyond the initial 15-day period to make its determination, it must inform the enrollee, attending health care professional, and claims administrator, in advance, of the extension and the reasons for the extension. (c) The documentation required by the utilization review organization may include copies of part or all of the medical record and a written statement from the attending health care professional. (d) Prior to upholding the adverse determination for clinical reasons, the utilization review organization shall conduct a review of the documentation by a physician who did not make the adverse determination. (e) The process established by a utilization review organization may include defining a period within which an appeal must be filed to be considered. The time period must be communicated to the enrollee and attending health care professional when the adverse determination is made. (f) An attending health care professional or enrollee who has been unsuccessful in an attempt to reverse an adverse determination shall, consistent with section 72A.285, be provided the following: (1) a complete summary of the review findings; (2) qualifications of the reviewers, including any license, certification, or specialty designation; and (3) the relationship between the enrollee's diagnosis and the review criteria used as the basis for the decision, including the specific rationale for the reviewer's decision. (g) In cases of appeal to reverse an adverse determination for clinical reasons, the utilization review organization must ensure that a physician of the utilization review organization's choice in the same or a similar specialty as typically manages the medical condition, procedure, or treatment under discussion is reasonably available to review the case. (h) If the adverse determination is not reversed on appeal, the utilization review organization must include in its notification the right to submit the appeal to the external review process described in section 62Q.73 and the procedure for initiating an appeal under the external process. Subd. 4. Notification to claims administrator. If the utilization review organization and the claims administrator are separate entities, the utilization review organization must notify, either electronically or in writing, the appropriate claims administrator for the health benefit plan of any adverse determination that is reversed on appeal. History:  1992 c 574 s 6; 1994 c 625 art 2 s 13; 1999 c 239 s 24; 2001 c 137 s 1; 2013 c 84 art 1 s 59; 2020 c 114 art 1 s 13,14; art 2 s 8-10
62M.07 PRIOR AUTHORIZATION OF SERVICES. Subdivision 1. Written standards. Utilization review organizations conducting prior authorization of services must have written standards that meet at a minimum the following requirements: (1) written procedures and criteria used to determine whether care is appropriate, reasonable, or medically necessary; (2) a system for providing prompt notification of its determinations to enrollees and providers and for notifying the provider, enrollee, or enrollee's designee of appeal procedures under clause (4); (3) compliance with section 62M.05, subdivisions 3a and 3b, regarding time frames for authorizing and making adverse determinations regarding prior authorization requests; (4) written procedures to appeal adverse determinations of prior authorization requests which specify the responsibilities of the enrollee and provider, and which meet the requirements of sections 62M.06 and 72A.285, regarding release of summary review findings; and (5) procedures to ensure confidentiality of patient-specific information, consistent with applicable law. Subd. 2. Prior authorization of emergency services prohibited. No utilization review organization, health plan company, or claims administrator may conduct or require prior authorization of emergency confinement or an emergency service. The enrollee or the enrollee's authorized representative may be required to notify the health plan company, claims administrator, or utilization review organization as soon as reasonably possible after the beginning of the emergency confinement or emergency service. Subd. 3. Retrospective revocation or limitation of prior authorization. No utilization review organization, health plan company, or claims administrator may revoke, limit, condition, or restrict a prior authorization that has been authorized unless there is evidence that the prior authorization was authorized based on fraud or misinformation or a previously approved prior authorization conflicts with state or federal law. Application of a deductible, coinsurance, or other cost-sharing requirement does not constitute a limit, condition, or restriction under this subdivision. Subd. 4. Submission of prior authorization requests. If prior authorization for a health care service is required, the utilization review organization, health plan company, or claim administrator must allow providers to submit requests for prior authorization of the health care services without unreasonable delay by telephone, facsimile, or voice mail or through an electronic mechanism 24 hours a day, seven days a week. This subdivision does not apply to dental service covered under MinnesotaCare or medical assistance. History:  1992 c 574 s 7; 1994 c 485 s 65; 1995 c 234 art 8 s 12; 1999 c 239 s 25; 2004 c 246 s 1; 2016 c 158 art 2 s 22; 2020 c 114 art 1 s 15
62M.072 USE OF EVIDENCE-BASED STANDARDS. If no independently developed evidence-based standards exist for a particular treatment, testing, or imaging procedure, then an insurer or utilization review organization shall not deny coverage of the treatment, testing, or imaging based solely on the grounds that the treatment, testing, or imaging does not meet an evidence-based standard. This section does not prohibit an insurer or utilization review organization from denying coverage for services that are investigational, experimental, or not medically necessary. History:   2006 c 255 s 32 
62M.08 CONFIDENTIALITY. Subdivision 1. Written procedures to ensure confidentiality. A utilization review organization must have written procedures for ensuring that patient-specific information obtained during the process of utilization review will be: (1) kept confidential in accordance with applicable federal and state laws; (2) used solely for the purposes of utilization review, quality assurance, discharge planning, and case management; and (3) shared only with those organizations or persons that have the authority to receive such information. Subd. 2. Summary data. Summary data is not subject to this section if it does not provide sufficient information to allow identification of individual patients. History:   1992 c 574 s 8 
62M.09 STAFF AND PROGRAM QUALIFICATIONS. Subdivision 1. Staff criteria. A utilization review organization shall have utilization review staff who are properly trained, qualified, and supervised. Subd. 2. Licensure requirement. Nurses, physicians, and other licensed health professionals conducting reviews of medical services, and other clinical reviewers conducting specialized reviews in their area of specialty must be currently licensed or certified by an approved state licensing agency in the United States. Subd. 3. Physician reviewer; adverse determinations. (a) A physician must review and make the adverse determination under section 62M.05 in all cases in which the utilization review organization has concluded that an adverse determination for clinical reasons is appropriate. (b) The physician conducting the review and making the adverse determination must: (1) hold a current, unrestricted license to practice medicine in this state; and (2) have the same or similar medical specialty as a provider that typically treats or manages the condition for which the health care service has been requested. This paragraph does not apply to reviews conducted in connection with policies issued by a health plan company that is assessed less than three percent of the total amount assessed by the Minnesota Comprehensive Health Association. (c) The physician should be reasonably available by telephone to discuss the determination with the attending health care professional. (d) Notwithstanding paragraph (a), a review of an adverse determination involving a prescription drug must be conducted by a licensed pharmacist or physician who is competent to evaluate the specific clinical issues presented in the review. (e) This subdivision does not apply to outpatient mental health or substance abuse services governed by subdivision 3a. Subd. 3a. Mental health and substance abuse reviews. (a) A peer of the treating mental health or substance abuse provider, a doctoral-level psychologist, or a physician must review requests for outpatient services in which the utilization review organization has concluded that an adverse determination for a mental health or substance abuse service for clinical reasons is appropriate, provided that any final adverse determination issued under section 62M.05 for a treatment is made by a psychiatrist certified by the American Board of Psychiatry and Neurology and appropriately licensed in this state or by a doctoral-level psychologist licensed in this state. (b) Notwithstanding paragraph (a), a doctoral-level psychologist shall not review any request or final adverse determination for a mental health or substance abuse service or treatment if the treating provider is a psychiatrist. (c) Notwithstanding the notification requirements of section 62M.05, a utilization review organization that has made an adverse determination to authorize in accordance with the requirements of section 62M.05 may elect to provide notification of a determination to continue coverage through facsimile or mail. (d) This subdivision does not apply to determinations made in connection with policies issued by a health plan company that is assessed less than three percent of the total amount assessed by the Minnesota Comprehensive Health Association. Subd. 4. Dentist plan reviews. A dentist must review all cases in which the utilization review organization has concluded that an adverse determination for a dental service or procedure for clinical reasons is appropriate and an appeal has been made by the attending dentist, enrollee, or designee. Subd. 4a. Chiropractic review. A chiropractor must review all cases in which the utilization review organization has concluded that an adverse determination for a chiropractic service or procedure for clinical reasons is appropriate and an appeal has been made by the attending chiropractor, enrollee, or designee. Subd. 5. Written clinical criteria. A utilization review organization's decisions must be supported by written clinical criteria and review procedures. Clinical criteria and review procedures must be established with appropriate involvement from actively practicing physicians. A utilization review organization must use written clinical criteria, as required, for determining the appropriateness of the authorization request. The utilization review organization must have a procedure for ensuring, at a minimum, the annual evaluation and updating of the written criteria based on sound clinical principles. Subd. 6. Physician consultants. A utilization review organization must use physician consultants in the appeal process described in section 62M.06, subdivision 3. The physician consultants must be board certified by the American Board of Medical Specialists or the American Osteopathic Association. Subd. 7. Training for program staff. A utilization review organization must have a formalized program of orientation and ongoing training of utilization review staff. Subd. 8. Quality assessment program. A utilization review organization must have written documentation of an active quality assessment program. Subd. 9.  [Repealed, 2012 c 247 art 1 s 32] History:  1992 c 574 s 9; 1993 c 99 s 1; 1995 c 234 art 8 s 13; 1996 c 305 art 1 s 24; 1997 c 140 s 1,2; 1999 c 239 s 26; 2001 c 137 s 2-5; 2006 c 255 s 33; 2009 c 159 s 2; 2010 c 199 s 1; 2017 c 40 art 1 s 121; 2020 c 114 art 1 s 16; art 2 s 11-14
62M.10 ACCESSIBILITY AND ON-SITE REVIEW PROCEDURES. Subdivision 1. Toll-free number. A utilization review organization must provide access to its review staff by a toll-free or collect call telephone line during normal business hours. A utilization review organization must also have an established procedure to receive timely callbacks from providers and must establish written procedures for receiving after-hour calls, either in person or by recording. Subd. 2. Reviews during normal business hours. A utilization review organization must conduct its telephone reviews, on-site reviews, and hospital communications during reasonable and normal business hours, unless otherwise mutually agreed. Subd. 3. Identification of on-site review staff. Each utilization review organization's staff must identify themselves by name and by the name of their organization and, for on-site reviews, must carry picture identification and the utilization review organization's company identification card. On-site reviews should, whenever possible, be scheduled at least one business day in advance with the appropriate hospital contact. If requested by a hospital or inpatient facility, utilization review organizations must ensure that their on-site review staff register with the appropriate contact person, if available, prior to requesting any clinical information or assistance from hospital staff. The on-site review staff must wear appropriate hospital supplied identification tags while on the premises. Subd. 4. On-site reviews. Utilization review organizations must agree, if requested, that the medical records remain available in designated areas during the on-site review and that reasonable hospital administrative procedures must be followed by on-site review staff so as to not disrupt hospital operations or patient care. Such procedures, however, must not limit the ability of the utilization review organizations to efficiently conduct the necessary review on behalf of the patient's health benefit plan. Subd. 5. Oral requests for information. Utilization review organizations shall orally inform, upon request, designated hospital personnel or the attending health care professional of the utilization review requirements of the specific health benefit plan and the general type of criteria used by the review agent. Utilization review organizations should also orally inform, upon request, a provider of the operational procedures in order to facilitate the review process. Subd. 6. Mutual agreement. Nothing in this section limits the ability of a utilization review organization and a provider to mutually agree in writing on how review should be conducted. Subd. 7. Availability of criteria. (a) For utilization review determinations other than prior authorization, a utilization review organization shall, upon request, provide to an enrollee, a provider, and the commissioner of commerce the criteria used to determine the medical necessity, appropriateness, and efficacy of a procedure or service and identify the database, professional treatment guideline, or other basis for the criteria. (b) For prior authorization determinations, a utilization review organization must submit the organization's current prior authorization requirements and restrictions, including written, evidence-based, clinical criteria used to make an authorization or adverse determination, to all health plan companies for which the organization performs utilization review. A health plan company must post on its public website the prior authorization requirements and restrictions of any utilization review organization that performs utilization review for the health plan company. These prior authorization requirements and restrictions must be detailed and written in language that is easily understandable to providers. Subd. 8. Notice; new prior authorization requirements or restrictions; change to existing requirement or restriction. (a) Before a utilization review organization may implement a new prior authorization requirement or restriction or amend an existing prior authorization requirement or restriction, the utilization review organization must submit the new or amended requirement or restriction to all health plan companies for which the organization performs utilization review. A health plan company must post on its website the new or amended requirement or restriction. (b) At least 45 days before a new prior authorization requirement or restriction or an amended existing prior authorization requirement or restriction is implemented, the utilization review organization, health plan company, or claims administrator must provide written or electronic notice of the new or amended requirement or restriction to all Minnesota-based, in-network attending health care professionals who are subject to the prior authorization requirements and restrictions. History:  1992 c 574 s 10; 1995 c 234 art 8 s 14; 1999 c 239 s 27-29; 2001 c 137 s 6; 2020 c 114 art 1 s 17,18
62M.11 COMPLAINTS TO COMMERCE OR HEALTH. Notwithstanding the provisions of this chapter, an enrollee may file a complaint regarding an adverse determination directly to the commissioner responsible for regulating the utilization review organization. History:  1992 c 574 s 11; 2020 c 114 art 2 s 15
62M.12 PROHIBITION OF INAPPROPRIATE INCENTIVES. No individual who is performing utilization review may receive any financial incentive based on the number of adverse determinations made by such individual, provided that utilization review organizations may establish medically appropriate performance standards. This prohibition does not apply to financial incentives established between health plan companies and providers. History:  1992 c 574 s 12; 1999 c 239 s 30; 2020 c 114 art 2 s 16
62M.13 SEVERABILITY. If any provisions of this chapter are held invalid, illegal, or unenforceable for any reason and in any respect, the holding does not affect the validity of the remainder of this chapter. History:  1992 c 574 s 13; 2020 c 114 art 2 s 20
62M.14 EFFECT OF COMPLIANCE. Evidence of a utilization review organization's compliance or noncompliance with the provisions of this chapter shall not be determinative in an action alleging that services denied were medically necessary and covered under the terms of the enrollee's health benefit plan. History:  1992 c 574 s 14; 2020 c 114 art 2 s 20
62M.15 APPLICABILITY OF OTHER CHAPTER REQUIREMENTS. The requirements of this chapter regarding the conduct of utilization review are in addition to any specific requirements contained in chapter 62A, 62C, 62D, 62Q, 62T, or 72A. History:  1992 c 574 s 15; 1999 c 239 s 31
62M.16 RULEMAKING. If it is determined that rules are reasonable and necessary to accomplish the purpose of this chapter, the rules must be adopted through a joint rulemaking process by both the Department of Commerce and the Department of Health. History:  1992 c 574 s 16; 2020 c 114 art 2 s 20
62M.17 CONTINUITY OF CARE; PRIOR AUTHORIZATIONS. Subdivision 1. Compliance with prior authorization approved by previous utilization review organization; change in health plan company. If an enrollee obtains coverage from a new health plan company and the health plan company for the enrollee's new health benefit plan uses a different utilization review organization from the enrollee's previous health benefit plan to conduct utilization review, the health plan company for the enrollee's new health benefit plan shall comply with a prior authorization for health care services approved by the utilization review organization used by the enrollee's previous health benefit plan for at least the first 60 days that the enrollee is covered under the new health benefit plan. In order to obtain coverage for this 60-day time period, the enrollee or the enrollee's attending health care professional must submit documentation of the previous prior authorization to the enrollee's new health plan company according to procedures in the enrollee's new health benefit plan. During this 60-day time period, the utilization review organization used by the enrollee's new health plan company may conduct its own utilization review of these health care services. Subd. 2. Effect of change in prior authorization clinical criteria. (a) If, during a plan year, a utilization review organization changes coverage terms for a health care service or the clinical criteria used to conduct prior authorizations for a health care service, the change in coverage terms or change in clinical criteria shall not apply until the next plan year for any enrollee who received prior authorization for a health care service using the coverage terms or clinical criteria in effect before the effective date of the change. (b) Paragraph (a) does not apply if a utilization review organization changes coverage terms for a drug or device that has been deemed unsafe by the United States Food and Drug Administration (FDA); that has been withdrawn by either the FDA or the product manufacturer; or when an independent source of research, clinical guidelines, or evidence-based standards has issued drug- or device-specific warnings or recommended changes in drug or device usage. (c) Paragraph (a) does not apply if a utilization review organization changes coverage terms for a service or the clinical criteria used to conduct prior authorizations for a service when an independent source of research, clinical guidelines, or evidence-based standards has recommended changes in usage of the service for reasons related to patient harm. (d) Paragraph (a) does not apply if a utilization review organization removes a brand name drug from its formulary or places a brand name drug in a benefit category that increases the enrollee's cost, provided the utilization review organization (1) adds to its formulary a generic or multisource brand name drug rated as therapeutically equivalent according to the FDA Orange Book, or a biologic drug rated as interchangeable according to the FDA Purple Book, at a lower cost to the enrollee, and (2) provides at least a 60-day notice to prescribers, pharmacists, and affected enrollees. History:   2020 c 114 art 1 s 19 
62M.18 ANNUAL POSTING ON WEBSITE; PRIOR AUTHORIZATIONS. (a) By April 1, 2022, and each April 1 thereafter, a health plan company must post on the health plan company's public website the following data for the immediately preceding calendar year for each commercial product: (1) the number of prior authorization requests for which an authorization was issued; (2) the number of prior authorization requests for which an adverse determination was issued and sorted by: (i) health care service; (ii) whether the adverse determination was appealed; and (iii) whether the adverse determination was upheld or reversed on appeal; (3) the number of prior authorization requests that were submitted electronically and not by facsimile or email or other method pursuant to section 62J.497; and (4) the reasons for prior authorization denial including but not limited to: (i) patient did not meet prior authorization criteria; (ii) incomplete information submitted by the provider to the utilization review organization; (iii) change in treatment program; and (iv) the patient is no longer covered by the plan. (b) All information posted under this section must be written in easily understandable language. History:   2020 c 114 art 1 s 20 
62N.01 CITATION AND PURPOSE. Subdivision 1. Citation. This chapter may be cited as the "Minnesota Community Integrated Service Network Act." Subd. 2.  [Repealed, 1997 c 225 art 2 s 63] History:  1993 c 345 art 1 s 2; 1Sp1993 c 6 s 36; 1994 c 625 art 8 s 33; 1997 c 225 art 2 s 31
62N.02 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to this chapter. Subd. 2.  [Repealed, 1997 c 225 art 2 s 63] Subd. 3.  [Repealed, 1997 c 225 art 2 s 63] Subd. 4. Commissioner. "Commissioner" means the commissioner of health or the commissioner's designated representative. Subd. 4a. Community integrated service network or community network. (a) "Community integrated service network" or "community network" means a formal arrangement licensed by the commissioner under section 62N.25 for providing prepaid health services to enrolled populations of 50,000 or fewer enrollees, including enrollees who are residents of other states. (b) [Expired] Subd. 4b.  [Repealed, 1997 c 225 art 2 s 63] Subd. 4c.  [Repealed, 1997 c 225 art 2 s 63] Subd. 5. Enrollee. "Enrollee" means an individual, including a member of a group, to whom a network is obligated to provide health services under this chapter. Subd. 6.  [Repealed, 1997 c 225 art 2 s 63] Subd. 6a. Health carrier. "Health carrier" has the meaning given in section 62A.011. Subd. 7.  [Repealed, 1997 c 225 art 2 s 63] Subd. 8.  [Repealed, 1997 c 225 art 2 s 63] Subd. 9.  [Repealed, 1997 c 225 art 2 s 63] Subd. 10.  [Repealed, 1997 c 225 art 2 s 63] Subd. 11. Price. "Price" means the actual amount of money paid, after discounts or other adjustments, by the person or organization paying money to buy health care coverage and health care services. "Price" does not mean the cost or costs incurred by a network or other entity to provide health care services to individuals. Subd. 12.  [Repealed, 1997 c 225 art 2 s 63] History:  1993 c 345 art 1 s 3; 1994 c 625 art 1 s 3,4; art 8 s 34; 1995 c 234 art 1 s 10,11
62N.22 DISCLOSURE OF COMMISSIONS. Before selling any coverage or enrollment in a community integrated service network, a person selling the coverage or enrollment shall disclose in writing to the prospective purchaser the amount of any commission or other compensation the person will receive as a direct result of the sale. The disclosure may be expressed in dollars or as a percentage of the premium. The amount disclosed need not include any anticipated renewal commissions. History:  1993 c 345 art 1 s 18; 1994 c 625 art 8 s 38; 1997 c 225 art 2 s 32
62N.23 TECHNICAL ASSISTANCE; LOANS. (a) The commissioner shall provide technical assistance to parties interested in establishing or operating a community integrated service network. This shall be known as the community integrated service network technical assistance program (CISNTAP). The technical assistance program shall offer seminars on the establishment and operation of community integrated service networks in all regions of Minnesota. The commissioner shall advertise these seminars in local and regional newspapers, and attendance at these seminars shall be free. The commissioner shall write a guide to establishing and operating a community integrated service network. The guide must provide basic instructions for parties wishing to establish a community integrated service network. The guide must be provided free of charge to interested parties. The commissioner shall update this guide when appropriate. The commissioner shall establish a toll-free telephone line that interested parties may call to obtain assistance in establishing or operating a community integrated service network. (b) The commissioner shall grant loans for organizational and start-up expenses to entities forming community integrated service networks, or to networks less than one year old, to the extent of any appropriation for that purpose. The commissioner shall allocate the available funds among applicants based upon the following criteria, as evaluated by the commissioner within the commissioner's discretion: (1) the applicant's need for the loan; (2) the likelihood that the loan will foster the formation or growth of a network; and (3) the likelihood of repayment. The commissioner shall determine any necessary application deadlines and forms. History:  1993 c 345 art 1 s 19; 1994 c 625 art 12 s 1; 1997 c 187 art 2 s 2; 1997 c 225 art 2 s 33
62N.25 COMMUNITY INTEGRATED SERVICE NETWORKS. Subdivision 1. Scope of licensure. Beginning July 1, 1994, the commissioner shall accept applications for licensure as a community integrated service network under this section. Licensed community integrated service networks may begin providing health coverage to enrollees no earlier than January 1, 1995, and may begin marketing coverage to prospective enrollees upon licensure. Subd. 2. Licensure requirements generally. To be licensed and to operate as a community integrated service network, an applicant must satisfy the requirements of chapter 62D, and all other legal requirements that apply to entities licensed under chapter 62D, except as exempted or modified in this section. Community networks must, as a condition of licensure, comply with section 62D.04, subdivision 5. A community integrated service network that phases in its net worth over a three-year period is not required to respond to requests for proposals under section 62D.04, subdivision 5, during the first 12 months of licensure. These community networks are not prohibited from responding to requests for proposals, however, if they choose to do so during that time period. After the initial 12 months of licensure, these community networks are required to respond to the requests for proposals as required under section 62D.04, subdivision 5. Subd. 3. Regulation; applicable law. Community integrated service networks are regulated and licensed by the commissioner under the same authority that applies to entities licensed under chapter 62D, except as exempted or modified under this section. All statutes or rules that apply to health maintenance organizations apply to community networks, unless otherwise specified. A cooperative organized under chapter 308A may establish a community integrated service network. Subd. 4. Governing body. In addition to the requirements of section 62D.06, at least 51 percent of the members of the governing body of the community integrated service network must be residents of the community integrated service network's service area. Service area, for purposes of this subdivision, may include contiguous geographic areas outside the state of Minnesota. Subd. 5. Benefits. Community integrated service networks must offer the health maintenance organization benefit set, as defined in chapter 62D, and other laws applicable to entities regulated under chapter 62D. Community networks and chemical dependency facilities under contract with a community network shall use the assessment criteria in Minnesota Rules, parts 9530.6600 to 9530.6655, when assessing enrollees for chemical dependency treatment. Subd. 6. Solvency. A community integrated service network is exempt from the deposit, reserve, and solvency requirements specified in sections 62D.041, 62D.042, and 62D.044 and shall comply instead with sections 62N.27 to 62N.32. To the extent that there are analogous definitions or procedures in chapter 62D or in rules promulgated thereunder, the commissioner shall follow those existing provisions rather than adopting a contrary approach or interpretation. Subd. 7. Exemptions from existing requirements. Community integrated service networks are exempt from the following requirements applicable to health maintenance organizations: (1) conducting focused studies under Minnesota Rules, part 4685.1125; (2) preparing and filing, as a condition of licensure, a written quality assurance plan, and annually filing such a plan and a work plan, under Minnesota Rules, parts 4685.1110 and 4685.1130; (3) maintaining statistics under Minnesota Rules, part 4685.1200; (4) filing provider contract forms under sections 62D.03, subdivision 4, and 62D.08, subdivision 1; and (5) preparing and filing, as a condition of licensure, a marketing plan, and annually filing a marketing plan, under sections 62D.03, subdivision 4, paragraph (l), and 62D.08, subdivision 1. Subd. 8. Provider contracts. The provisions of section 62D.123 are implied in every provider contract or agreement between a community integrated service network and a provider, regardless of whether those provisions are expressly included in the contract. No participating provider, agent, trustee, or assignee of a participating provider has or may maintain any cause of action against a subscriber or enrollee to collect sums owed by the community network. Subd. 9. Exceptions to enrollment limit. A community integrated service network may enroll enrollees in excess of 50,000 if necessary to comply with guaranteed issue or guaranteed renewal requirements of chapter 62L or section 62A.65. History:  1994 c 625 art 1 s 5; 1995 c 234 art 1 s 27; 1997 c 187 art 1 s 6; 1997 c 203 art 4 s 2; 1997 c 225 art 2 s 34; 2001 c 170 s 2; 2004 c 285 art 3 s 7; 2016 c 158 art 1 s 214
62N.26 SHARED SERVICES COOPERATIVE. The commissioner of health shall establish, or assist in establishing, a shared services cooperative organized under chapter 308A to make available administrative and legal services, technical assistance, provider contracting and billing services, and other services to those community integrated service networks that choose to participate in the cooperative. The commissioner shall provide, to the extent funds are appropriated, start-up loans sufficient to maintain the shared services cooperative until its operations can be maintained by fees and contributions. The cooperative must not be staffed, administered, or supervised by the commissioner of health. The cooperative shall make use of existing resources that are already available in the community, to the extent possible. History:  1994 c 625 art 1 s 7; 1997 c 225 art 2 s 35
62N.27 DEFINITIONS. Subdivision 1. Applicability. For purposes of sections 62N.27 to 62N.32, the terms defined in this section have the meanings given. Other terms used in those sections have the meanings given in sections 62D.041, 62D.042, and 62D.044. Subd. 2. Net worth. "Net worth" means admitted assets as defined in subdivision 3, minus liabilities. Liabilities do not include those obligations that are subordinated in the same manner as preferred ownership claims under section 60B.44, subdivision 10. For purposes of this subdivision, preferred ownership claims under section 60B.44, subdivision 10, include promissory notes subordinated to all other liabilities of the community integrated service network. Subd. 3. Admitted assets. "Admitted assets" means admitted assets as defined in section 62D.044, except that real estate investments allowed by section 62D.045 are not admitted assets. Admitted assets include the deposit required under section 62N.32. Subd. 4. Accredited capitated provider. "Accredited capitated provider" means a health care providing entity that: (1) receives capitated payments from a community network under a contract to provide health services to the network's enrollees. For purposes of this section, a health care providing entity is "capitated" when its compensation arrangement with a network involves the provider's acceptance of material financial risk for the delivery of a predetermined set of services for a specified period of time; (2) is licensed to provide and provides the contracted services, either directly or through an affiliate. For purposes of this section, an "affiliate" is any person that directly or indirectly controls, is controlled by, or is under common control with the health care providing entity, and "control" exists when any person, directly or indirectly, owns, controls, or holds the power to vote or holds proxies representing no less than 80 percent of the voting securities or governance rights of any other person; (3) agrees to serve as an accredited capitated provider of a community network or for the purpose of reducing the network's net worth and deposit requirements under section 62N.28; and (4) is approved by the commissioner as an accredited capitated provider for a community network in accordance with section 62N.31. Subd. 5. Percentage of risk ceded. "Percentage of risk ceded" means the ratio, expressed as a percentage, between capitated payments made or, in the case of a new entity, expected to be made by a community network to all accredited capitated providers during any contract year and the total premium revenue, adjusted to eliminate expected administrative costs, received for the same time period by the community network. Subd. 6. Provider amount at risk. "Provider amount at risk" means a dollar amount certified by a qualified actuary to represent the expected direct costs to an accredited capitated provider for providing the contracted, covered health care services to the enrollees of the network to which it is accredited for a period of 120 days. History:  1994 c 625 art 1 s 8; 2004 c 285 art 3 s 8
62N.28 NET WORTH REQUIREMENT. Subdivision 1. Requirement. Except as otherwise permitted by this chapter, each community network must maintain a minimum net worth equal to the greater of: (1) $1,000,000; (2) two percent of the first $150,000,000 of annual premium revenue plus one percent of annual premium revenue in excess of $150,000,000; (3) eight percent of the annual health services costs, except those paid on a capitated or managed hospital payment basis, plus four percent of the annual capitation and managed hospital payment costs; or (4) four months uncovered health services costs. Subd. 2. Definitions. For purposes of this section, the following terms have the meanings given: (1) "capitated basis" means fixed per member per month payment or percentage of premium paid to a provider that assumes the full risk of the cost of contracted services without regard to the type, value, or frequency of services provided. For purposes of this definition, capitated basis includes the cost associated with operating staff model facilities; (2) "managed hospital payment basis" means agreements in which the financial risk is primarily related to the degree of utilization rather than to the cost of services; and (3) "uncovered health services costs" means the cost to the community network of health services covered by the community network for which the enrollee would also be liable in the event of the community network's insolvency, and that are not guaranteed, insured, or assumed by a person other than the community network. Subd. 3. Reinsurance credit. A community network may use the subtraction for premiums paid for insurance permitted under section 62D.042, subdivision 4. Subd. 4. Phase-in for net worth requirement. A community network may choose to comply with the net worth requirement on a phase-in basis according to the following schedule: (1) 50 percent of the amount required under subdivisions 1 to 3 at the time that the community network begins enrolling enrollees; (2) 75 percent of the amount required under subdivisions 1 to 3 at the end of the first full calendar year of operation; (3) 87.5 percent of the amount required under subdivisions 1 to 3 at the end of the second full calendar year of operation; and (4) 100 percent of the amount required under subdivisions 1 to 3 at the end of the third full calendar year of operation. Subd. 5. Net worth corridor. A community network shall not maintain net worth that exceeds three times the amount required of the community network under subdivision 1. Subdivision 4 is not relevant for purposes of this subdivision. Subd. 6. Net worth reduction. If a community network has contracts with accredited capitated providers, and only for so long as those contracts or successor contracts remain in force, the net worth requirement of subdivision 1 shall be reduced by the percentage of risk ceded, but in no event shall the net worth requirements be reduced by this subdivision to less than $1,000,000. The phase-in requirements of subdivision 4 shall not be affected by this reduction. History:  1994 c 625 art 1 s 9; 1999 c 51 s 1
62N.29 GUARANTEEING ORGANIZATION. Subdivision 1. Use of guaranteeing organization. (a) A community network may satisfy its net worth and deposit requirements, in whole or in part, through the use of one or more guaranteeing organizations, with the approval of the commissioner, under the conditions permitted in this section. If the guaranteeing organization is used only to satisfy the deposit requirement, the requirements of this section do not apply to the guaranteeing organization. (b) For purposes of this section, a "guaranteeing organization" means an organization that has agreed to assume the responsibility for the obligation of the community network's net worth requirement. (c) Governmental entities, such as counties, may serve as guaranteeing organizations subject to the requirements of this section. Subd. 2. Responsibilities of guaranteeing organization. Upon an order of rehabilitation or liquidation, a guaranteeing organization shall transfer funds to the commissioner in the amount necessary to satisfy the net worth requirement. Subd. 3. Requirements for guaranteeing organization. (a) A community network's net worth requirement may be guaranteed provided that the guaranteeing organization: (1) transfers into a restricted asset account cash or securities permitted by section 61A.28, subdivisions 2 and 6, in an amount necessary to satisfy the net worth requirement. Restricted asset accounts shall be considered admitted assets for the purpose of determining whether a guaranteeing organization is maintaining sufficient net worth. Permitted securities shall not be transferred to the restricted asset account in excess of the limits applied to the community network, unless approved by the commissioner in advance; (2) designates the restricted asset account specifically for the purpose of funding the community network's net worth requirement; (3) maintains positive working capital subsequent to establishing the restricted asset account, if applicable; (4) maintains net worth, retained earnings, or surplus in an amount in excess of the amount of the restricted asset account, if applicable, and allows the guaranteeing organization: (i) to remain a solvent business organization, which shall be evaluated on the basis of the guaranteeing organization's continued ability to meet its maturing obligations without selling substantially all its operating assets and paying debts when due; and (ii) to be in compliance with any state or federal statutory net worth, surplus, or reserve requirements applicable to that organization or lesser requirements agreed to by the commissioner; and (5) fulfills requirements of clauses (1) to (4) by April 1 of each year. (b) The commissioner may require the guaranteeing organization to complete the requirements of paragraph (a) more frequently if the amount necessary to satisfy the net worth requirement increases during the year. Subd. 4. Exceptions to requirements. When a guaranteeing organization is a governmental entity, subdivision 3 is not applicable. The commissioner may consider factors which provide evidence that the governmental entity is a financially reliable guaranteeing organization. Similarly, when a guaranteeing organization is a Minnesota-licensed health maintenance organization, health service plan corporation, or insurer, subdivision 3, paragraph (a), clauses (1) and (2), are not applicable. Subd. 5. Amounts needed to meet net worth requirements. The amount necessary for a guaranteeing organization to satisfy the community network's net worth requirement is the lesser of: (1) an amount needed to bring the community network's net worth to the amount required by section 62N.28; or (2) an amount agreed to by the guaranteeing organization. Subd. 6. Consolidated calculations for guaranteed community networks. (a) If a guaranteeing organization guarantees one or more community networks, the guaranteeing organization may calculate the amount necessary to satisfy the community networks' net worth requirements on a consolidated basis. (b) Liabilities of the community network to the guaranteeing organization must be subordinated in the same manner as preferred ownership claims under section 60B.44, subdivision 10. Subd. 7. Agreement between guaranteeing organization and community network. A written agreement between the guaranteeing organization and the community network must include the commissioner as a party and include the following provisions: (1) any or all of the funds needed to satisfy the community network's net worth requirement shall be transferred, unconditionally and upon demand, according to subdivision 2; (2) the arrangement shall not terminate for any reason without the commissioner being notified of the termination at least nine months in advance. The arrangement may terminate earlier if net worth requirements will be satisfied under other arrangements, as approved by the commissioner; (3) the guaranteeing organization shall pay or reimburse the commissioner for all costs and expenses, including reasonable attorney fees and costs, incurred by the commissioner in connection with the protection, defense, or enforcement of the guarantee; (4) the guaranteeing organization shall waive all defenses and claims it may have or the community network may have pertaining to the guarantee including, but not limited to, waiver, release, res judicata, statute of frauds, lack of authority, usury, illegality; (5) the guaranteeing organization waives present demand for payment, notice of dishonor or nonpayment and protest, and the commissioner shall not be required to first resort for payment to other sources or other means before enforcing the guarantee; (6) the guarantee may not be waived, modified, amended, terminated, released, or otherwise changed except as provided by the guarantee agreement, and as provided by applicable statutes; (7) the guaranteeing organization waives its rights under the Federal Bankruptcy Code, United States Code, title 11, section 303, to initiate involuntary proceedings against the community network and agrees to submit to the jurisdiction of the commissioner and Minnesota state courts in any rehabilitation or liquidation of the community network; (8) the guarantee shall be governed by and construed and enforced according to the laws of the state of Minnesota; and (9) the guarantee must be approved by the commissioner. Subd. 8. Submission of guaranteeing organization's financial statements. The community network shall submit to the commissioner the guaranteeing organization's audited financial statements annually by April 1 or at a different date if agreed to by the commissioner. The community network shall also provide other relevant financial information regarding a guaranteeing organization as may be requested by the commissioner. Subd. 9. Performance as guaranteeing organization voluntary. No provider may be compelled to serve as a guaranteeing organization. Subd. 10. Guarantor status in rehabilitation or liquidation. Any or all of the funds in excess of the amounts needed to satisfy the community network's obligations as of the date of an order of liquidation or rehabilitation shall be returned to the guaranteeing organization in the same manner as preferred ownership claims under section 60B.44, subdivision 10. History:  1994 c 625 art 1 s 10; 2004 c 285 art 3 s 9
62N.31 STANDARDS FOR ACCREDITED CAPITATED PROVIDER ACCREDITATION. Subdivision 1. General. Each health care providing entity seeking initial accreditation as an accredited capitated provider shall submit to the commissioner of health sufficient information to establish that the applicant has operational capacity, facilities, personnel, and financial capability to provide the contracted covered services to the enrollees of the network for which it seeks accreditation (1) on an ongoing basis; and (2) for a period of 120 days following the insolvency of the network without receiving payment from the network. Accreditation shall continue until abandoned by the accredited capitated provider or revoked by the commissioner in accordance with subdivision 4. The applicant may establish financial capability by demonstrating that the provider amount at risk can be covered by or through any of allocated or restricted funds, a letter of credit, the taxing authority of the applicant or governmental sponsor of the applicant, an unrestricted fund balance at least two times the provider amount at risk, reinsurance, either purchased directly by the applicant or by the community network to which it will be accredited, or any other method accepted by the commissioner. Accreditation of a health care providing entity shall not in itself limit the right of the accredited capitated provider to seek payment of unpaid capitated amounts from a community network, whether the community network is solvent or insolvent; provided that, if the community network is subject to any liquidation, rehabilitation, or conservation proceedings, the accredited capitated provider shall have the status accorded creditors under section 60B.44, subdivision 10. Subd. 2. Annual reporting period. Each accredited capitated provider shall submit to the commissioner annually, no later than April 15, the following information for each network to which it is accredited: the provider amount at risk for that year, the number of enrollees for the network, both for the prior year and estimated for the current year, any material change in the provider's operational or financial capacity since its last report, and any other information reasonably requested by the commissioner. Subd. 3. Additional reporting. Each accredited capitated provider shall provide the commissioner with 60 days' advance written notice of termination of the accredited capitated provider relationship with a network. Subd. 4. Revocation of accreditation. The commissioner may revoke the accreditation of an accredited capitated provider if the accredited capitated provider's ongoing operational or financial capabilities fail to meet the requirements of this section. The revocation shall be handled in the same fashion as placing a health maintenance organization under administrative supervision. History:   1994 c 625 art 1 s 11 
62N.32 DEPOSIT REQUIREMENT. A community network must satisfy the deposit requirement provided in section 62D.041. The deposit counts as an admitted asset and as part of the required net worth. The deposit requirement cannot be reduced by the alternative means that may be used to reduce the net worth requirement, other than through the use of a guaranteeing organization. History:   1994 c 625 art 1 s 12 
62N.33 COVERAGE FOR ENROLLEES OF INSOLVENT NETWORKS. In the event of a community network insolvency, the commissioner shall determine whether one or more community networks or health plan companies are willing and able to provide replacement coverage to all of the failed community network's enrollees, and if so, the commissioner shall facilitate the provision of the replacement coverage. If such replacement coverage is not available, the commissioner shall randomly assign enrollees of the insolvent community network to other community networks and health plan companies in the service area, in proportion to their market share, for the remaining terms of the enrollees' contracts with the insolvent network. The other community networks and health plan companies must accept the allocated enrollees under their policy or contract most similar to the enrollees' contracts with the insolvent community network. The allocation must keep groups together. Enrollees with special continuity of care needs may, in the commissioner's discretion, be given a choice of replacement coverage rather than random assignment. Individuals and groups that are assigned randomly may choose a different community network or health plan company when their contracts expire, on the same basis as any other individual or group. The replacement health plan company must comply with any guaranteed renewal or other renewal provisions of the prior coverage, including but not limited to, provisions regarding preexisting conditions and health conditions that developed during prior coverage. History:   1994 c 625 art 1 s 13 
62N.35 BORDER ISSUES. To the extent feasible and appropriate, community networks that also operate under the health maintenance organization or similar prepaid health care law of another state must be licensed and regulated by this state in a manner that avoids unnecessary duplication and expense for the community network. The commissioner shall communicate with regulatory authorities in neighboring states to explore the feasibility of cooperative approaches to streamline regulation of border community networks, such as joint financial audits, and shall report to the legislature on any changes to Minnesota law that may be needed to implement appropriate collaborative approaches to regulation. History:   1994 c 625 art 1 s 15 
62N.40 CHEMICAL DEPENDENCY SERVICES. Each community integrated service network regulated under this chapter must ensure that chemically dependent individuals have access to cost-effective treatment options that address the specific needs of individuals. These include, but are not limited to, the need for: treatment that takes into account severity of illness and comorbidities; provision of a continuum of care, including treatment and rehabilitation programs licensed under chapter 245G; the safety of the individual's domestic and community environment; gender appropriate and culturally appropriate programs; and access to appropriate social services. History:  1995 c 234 art 1 s 28; 1997 c 225 art 2 s 36; 2016 c 158 art 1 s 20; 2018 c 182 art 2 s 1
62Q.01 DEFINITIONS. Subdivision 1. Applicability. For purposes of this chapter, the terms defined in this section have the meanings given. Subd. 1a. Affordable Care Act. "Affordable Care Act" means the Affordable Care Act as defined in section 62A.011, subdivision 1a. Subd. 1b. Bona fide association. "Bona fide association" means an association that meets all of the following criteria: (1) serves a single profession that requires a significant amount of education, training, or experience, or a license or certificate from a state authority to practice that profession; (2) has been actively in existence for five years; (3) has a constitution and bylaws or other analogous governing documents; (4) has been formed and maintained in good faith for purposes other than obtaining insurance; (5) is not owned or controlled by a health plan company or affiliated with a health plan company; (6) does not condition membership in the association on any health status-related factor; (7) has at least 1,000 members if it is a national association, 500 members if it is a state association, or 200 members if it is a local association; (8) all members and dependents of members are eligible for coverage regardless of any health status-related factor; (9) does not make health plans offered through the association available other than in connection with a member of the association; (10) is governed by a board of directors and sponsors an annual meeting of its members; and (11) produces only market association memberships, accepts applications for membership, or signs up members in the professional association where the subject individuals are actively engaged in, or directly related to, the profession represented by the association. Subd. 2. Commissioner. "Commissioner" means the commissioner of health for purposes of regulating health maintenance organizations, and community integrated service networks, or the commissioner of commerce for purposes of regulating all other health plan companies. For all other purposes, "commissioner" means the commissioner of health. Subd. 2a.  MS 2012 [Renumbered subd 2b] Subd. 2a. Dependent child to the limiting age. "Dependent child to the limiting age" or "dependent children to the limiting age" means those individuals who are eligible and covered as a dependent child under the terms of a health plan who have not yet attained 26 years of age. A health plan company must not deny or restrict eligibility for a dependent child to the limiting age based on financial dependency, residency, marital status, or student status. For coverage under plans offered by the Minnesota Comprehensive Health Association, dependent to the limiting age means dependent as defined in section 62A.302, subdivision 3. Notwithstanding the provisions in this subdivision, a health plan may include: (1) eligibility requirements regarding the absence of other health plan coverage as permitted by the Affordable Care Act for grandfathered plan coverage; or (2) an age greater than 26 in its policy, contract, or certificate of coverage. Subd. 2b. Enrollee. "Enrollee" means a natural person covered by a health plan and includes an insured, policyholder, subscriber, contract holder, member, covered person, or certificate holder. Subd. 2c. Grandfathered plan. "Grandfathered plan" means a health plan as defined in section 62A.011, subdivision 1b. Subd. 2d. Group health plan. "Group health plan" means a group health plan as defined in section 62A.011, subdivision 1c. Subd. 3. Health plan. "Health plan" means a health plan as defined in section 62A.011 or a policy, contract, or certificate issued by a community integrated service network. Subd. 4. Health plan company. "Health plan company" means: (1) a health carrier as defined under section 62A.011, subdivision 2; or (2) a community integrated service network as defined under section 62N.02, subdivision 4a. Subd. 4a. High deductible health plans. "High deductible health plans" means those health coverage plans issued by a health plan company as defined under the provisions of sections 220 and 223 of the Internal Revenue Code of 1986, and implementing regulations. Subd. 4b. Individual health plan. "Individual health plan" means an individual health plan as defined in section 62A.011, subdivision 4. Subd. 4c. Life-threatening condition. "Life-threatening condition" means a disease or condition from which the likelihood of death is probable unless the course of the disease or condition is interrupted. Subd. 5. Managed care organization. "Managed care organization" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network as defined under section 62N.02, subdivision 4a; or (3) an insurance company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers. Subd. 6. Medicare-related coverage. "Medicare-related coverage" means a policy, contract, or certificate issued as a supplement to Medicare, regulated under sections 62A.3099 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 sections 1833 (known as "cost" or "HCPP" contracts), 1851 to 1859 (Medicare Advantage), 1860D (Medicare Part D), 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 Advantage program." Subd 6a. Nonquantitative treatment limitations or NQTLs. "Nonquantitative treatment limitations" or "NQTLs" means processes, strategies, or evidentiary standards, or other factors that are not expressed numerically, but otherwise limit the scope or duration of benefits for treatment. NQTLs include but are not limited to: (1) medical management standards limiting or excluding benefits based on (i) medical necessity or medical appropriateness, or (ii) whether the treatment is experimental or investigative; (2) formulary design for prescription drugs; (3) health plans with multiple network tiers; (4) criteria and parameters for provider inclusion in provider networks, including credentialing standards and reimbursement rates; (5) health plan methods for determining usual, customary, and reasonable charges; (6) fail-first or step therapy protocols; (7) exclusions based on failure to complete a course of treatment; (8) restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the health plan; (9) in-network and out-of-network geographic limitations; (10) standards for providing access to out-of-network providers; (11) limitations on inpatient services for situations where the enrollee is a threat to self or others; (12) exclusions for court-ordered and involuntary holds; (13) experimental treatment limitations; (14) service coding; (15) exclusions for services provided by clinical social workers; and (16) provider reimbursement rates, including rates of reimbursement for mental health and substance use disorder services in primary care. Subd. 7. Primary care provider. "Primary care provider" means a health care professional who specializes in the practice of family medicine, general internal medicine, obstetrics and gynecology, or general pediatrics and is a licensed physician, a licensed and certified advanced practice registered nurse, or a licensed physician assistant. History:  1994 c 625 art 2 s 14; 1995 c 234 art 2 s 2-6; art 3 s 5; 1997 c 225 art 2 s 37-39,62; 1998 c 254 art 1 s 15; 2001 c 215 s 26; 2004 c 268 s 7; 2005 c 17 art 1 s 14; art 3 s 2; 2013 c 84 art 1 s 60-67; 1Sp2019 c 9 art 8 s 12
62Q.02 APPLICABILITY OF CHAPTER. (a) This chapter applies only to health plans, as defined in section 62Q.01, and not to other types of insurance issued or renewed by health plan companies, unless otherwise specified. (b) This chapter applies to a health plan company only with respect to health plans, as defined in section 62Q.01, issued or renewed by the health plan company, unless otherwise specified. (c) If a health plan company issues or renews health plans in other states, this chapter applies only to health plans issued or renewed in this state for Minnesota residents, or to cover a resident of the state, unless otherwise specified. History:   1995 c 234 art 2 s 7 
62Q.021 FEDERAL ACT; COMPLIANCE REQUIRED. Subdivision 1. Compliance with 1996 federal law. Each health plan company shall comply with the federal Health Insurance Portability and Accountability Act of 1996, including any federal regulations adopted under that act, to the extent that it imposes a requirement that applies in this state and that is not also required by the laws of this state. This section does not require compliance with any provision of the federal act prior to the effective date provided for that provision in the federal act. The commissioner shall enforce this subdivision. Subd. 2. Compliance with 2010 federal law. Each health plan company shall comply with the Affordable Care Act to the extent that it imposes a requirement that applies in this state but is not required under the laws of this state. This section does not require compliance with any provision of the Affordable Care Act before the effective date provided for that provision in the Affordable Care Act. The commissioner shall enforce this subdivision. History:  1997 c 175 art 4 s 2; 2013 c 84 art 1 s 68
62Q.025 HIGH DEDUCTIBLE HEALTH PLANS. Subdivision 1. Qualified plan. A high deductible health plan shall be deemed a qualified plan under sections 62E.06 and 62E.12. The plan must meet all other requirements of state law except those that are inconsistent with a high deductible health plan as defined in sections 220 and 223 of the Internal Revenue Code and supporting regulations. Subd. 2. Authorization. Notwithstanding any other law of this state, any health plan company defined in section 62Q.01, subdivision 4, is permitted to offer high deductible health plans. History:   2004 c 268 s 8 
62Q.03 PROCESS FOR RISK ADJUSTMENT SYSTEM. Subdivision 1. Purpose. The purpose of risk adjustment is to reduce the effects of risk selection on health insurance premiums by making monetary transfers from health plan companies that insure lower risk populations to health plan companies that insure higher risk populations. Risk adjustment is needed to: achieve a more equitable, efficient system of health care financing; remove current disincentives in the health care system to insure and provide adequate access for high risk and special needs populations; promote fair competition among health plan companies on the basis of their ability to efficiently and effectively provide services rather than on the risk status of those in a given insurance pool; and help maintain the viability of health plan companies, by protecting them from the financial effects of enrolling a disproportionate number of high risk individuals. It is the commitment of the state to develop and implement a risk adjustment system. The risk adjustment system shall: (1) possess a reasonable level of accuracy and administrative feasibility, be adaptable to changes as methods improve, incorporate safeguards against fraud and manipulation, and shall neither reward inefficiency nor penalize for verifiable improvements in health status; (2) require participation by all health plan companies providing coverage in the individual, small group, and Medicare supplement markets; (3) address unequal distribution of risk between health plan companies, but shall not address the financing of public programs or subsidies for low-income people; and (4) be developed and implemented by the Risk Adjustment Association with joint oversight by the commissioners of health and commerce. Subd. 2.  [Repealed, 1995 c 234 art 2 s 36] Subd. 3.  [Repealed, 1995 c 234 art 2 s 36] Subd. 4.  [Repealed, 1995 c 234 art 2 s 36] Subd. 5.  [Repealed, 1995 c 234 art 2 s 36] Subd. 5a. Public programs. (a) A separate risk adjustment system must be developed for state-run public programs, including medical assistance and MinnesotaCare. The system must be developed in accordance with the general risk adjustment methodologies described in this section, must include factors in addition to age and sex adjustment, and may include additional demographic factors, different targeted conditions, and/or different payment amounts for conditions. The risk adjustment system for public programs must attempt to reflect the special needs related to poverty, cultural, or language barriers and other needs of the public program population. (b) The commissioner of human services shall phase in risk adjustment according to the following schedule: (1) for the first contract year, no more than ten percent of reimbursements shall be risk adjusted; and (2) for the second contract year, no more than 30 percent of reimbursements shall be risk adjusted. Subd. 5b. Medicare supplement market. A risk adjustment system may be developed for the Medicare supplement market. The Medicare supplement risk adjustment system may include a demographic component and may, but is not required to, include a condition-specific risk adjustment component. Subd. 6. Creation of Risk Adjustment Association. The Minnesota Risk Adjustment Association is created on July 1, 1994, and may operate as a nonprofit unincorporated association, but is authorized to incorporate under chapter 317A. The provisions of this chapter govern if the provisions of chapter 317A conflict with this chapter. The association may operate under the approved plan of operation and shall be governed in accordance with this chapter and may operate in accordance with chapter 317A. If the association incorporates as a nonprofit corporation under chapter 317A, the filing of the plan of operation meets the requirements of filing articles of incorporation. The association, its transactions, and all property owned by it are exempt from taxation under the laws of this state or any of its subdivisions, including, but not limited to, income tax, sales tax, use tax, and property tax. The association may seek exemption from payment of all fees and taxes levied by the federal government. Except as otherwise provided in this chapter, the association is not subject to the provisions of chapters 14, 60A, and 62A. The association is not a public employer and is not subject to the provisions of chapters 179A and 353. The board of directors and health carriers who are members of the association are exempt from sections 325D.49 to 325D.66 in the performance of their duties as directors and members of the association. The Risk Adjustment Association is subject to the Open Meeting Law. Subd. 7. Purpose of association. The association is established to develop and implement a private sector risk adjustment system. Subject to state oversight set forth in subdivision 10, the association shall: (1) develop and implement comprehensive risk adjustment systems for individual, small group, and Medicare supplement markets consistent with the provisions of this chapter; (2) submit a plan for the development of the risk adjustment system which identifies appropriate implementation dates consistent with the rating and underwriting restrictions of each market, recommends whether transfers attributable to risk adjustment should be required between the individual and small group markets, and makes other appropriate recommendations to the commissioners of health and commerce by November 5, 1995; (3) develop a combination of a demographic risk adjustment system and payments for targeted conditions; (4) test an ambulatory care groups (ACGs) and diagnostic cost groups (DCGs) system, and recommend whether such a methodology should be adopted; (5) fund the development and testing of the risk adjustment system; (6) recommend market conduct guidelines; and (7) develop a plan for assessing members for the costs of administering the risk adjustment system. Subd. 8. Governance. The association shall be governed according to the plan of operation as established in subdivision 8a. Subd. 8a. Plan of operation. The board shall submit a proposed plan of operation by August 15, 1995, to the commissioners of health and commerce for review. The commissioners of health and commerce shall have the authority to approve or reject the plan of operation. Amendments to the plan of operation may be made by the commissioners or by the directors of the association, subject to the approval of the commissioners. Subd. 9. Data collection and data privacy. The association members shall not have access to unaggregated data on individuals or health plan companies. The association shall develop, as a part of the plan of operation, procedures for ensuring that data is collected by an appropriate entity. The commissioners of health and commerce shall have the authority to audit and examine data collected by the association for the purposes of the development and implementation of the risk adjustment system. Data on individuals obtained for the purposes of risk adjustment development, testing, and operation are designated as private data. Data not on individuals which is obtained for the purposes of development, testing, and operation of risk adjustment are designated as nonpublic data, except that the proposed and approved plan of operation, the risk adjustment methodologies examined, the plan for testing, the plan of the risk adjustment system, minutes of meetings, and other general operating information are classified as public data. Nothing in this section is intended to prohibit the preparation of summary data under section 13.05, subdivision 7. The association, state agencies, and any contractors having access to this data shall maintain it in accordance with this classification. The commissioners of health and human services have the authority to collect data from health plan companies as needed for the purpose of developing a risk adjustment mechanism for public programs. Subd. 10. State oversight of risk adjustment activities. The association's activities shall be supervised by the commissioners of health and commerce. The commissioners shall provide specific oversight functions during the development and implementation phases of the risk adjustment system as follows: (1) the commissioners shall approve or reject the association's plan for testing risk adjustment methods, the methods to be used, and any changes to those methods; (2) the commissioners must have the right to attend and participate in all meetings of the association and its work groups or committees, except for meetings involving privileged communication between the association and its counsel as permitted under section 13D.05, subdivision 3, paragraph (b); (3) the commissioners shall approve any consultants or administrators used by the association; (4) the commissioners shall approve or reject the association's plan of operation; and (5) the commissioners shall approve or reject the plan for the risk adjustment system described in subdivision 7, clause (2). If the commissioners reject any of the plans identified in clauses (1), (4), and (5), the directors shall submit for review an appropriate revised plan within 30 days. Subd. 11.  [Repealed, 1995 c 234 art 2 s 36] Subd. 12. Participation by all health plan companies. Upon its implementation, all health plan companies, as a condition of licensure, must participate in the risk adjustment system to be implemented under this section. History:  1994 c 625 art 2 s 15; 1995 c 234 art 2 s 8-17; 1996 c 440 art 1 s 33; 1996 c 451 art 4 s 2; 1997 c 192 s 18; 1997 c 225 art 2 s 40; 1998 c 254 art 1 s 16; 1999 c 245 art 2 s 12; 2001 c 161 s 15; 2016 c 158 art 2 s 23
62Q.075 LOCAL PUBLIC ACCOUNTABILITY AND COLLABORATION PLAN. Subdivision 1.  [Repealed by amendment, 2001 c 171 s 1] Subd. 2. Requirement. Beginning October 31, 2004, all health maintenance organizations shall file a plan every four years with the commissioner of health describing the actions the health maintenance organization intends to take to contribute to achieving one or more high priority public health goals. This plan must be jointly developed in collaboration with the local public health units, and other community organizations providing health services within the same service area as the health maintenance organization. Local government units with responsibilities and authority defined under chapter 145A may designate individuals to participate in the collaborative planning with the health maintenance organization to provide expertise and represent community needs and goals as identified under chapter 145A. Every other year, beginning October 31, 2002, all health maintenance organizations shall file reports updating progress on the four-year collaboration plan. Subd. 3. Contents. The plan must address the following: (1) specific measurement strategies and a description of any activities which contribute to one or more high priority public health goals; (2) description of the process by which the health maintenance organization will coordinate its activities with the community health boards, and other relevant community organizations servicing the same area; (3) documentation indicating that local public health units and local government unit designees were involved in the development of the plan; and (4) documentation of compliance with the plan filed previously, including data on the previously identified progress measures. Subd. 4. Review. Upon receipt of the plan, the commissioner of health shall provide a copy to the local community health boards, and other relevant community organizations within the health maintenance organization's service area. After reviewing the plan, these community groups may submit written comments on the plan to the commissioner of health and may advise the commissioner of the health maintenance organization's effectiveness in assisting to achieve high priority public health goals. The plan may be reviewed by the county boards, or city councils acting as a community health board in accordance with chapter 145A, within the health maintenance organization's service area to determine whether the plan is consistent with the goals and objectives of the plans required under chapter 145A and whether the plan meets the needs of the community. The county board, or applicable city council, may also review and make recommendations on the availability and accessibility of services provided by the health maintenance organization. The county board, or applicable city council, may submit written comments to the commissioner of health, and may advise the commissioner of the health maintenance organization's effectiveness in assisting to meet the needs and goals as defined under the responsibilities of chapter 145A. Copies of these written comments must be provided to the health maintenance organization. The plan and any comments submitted must be filed with the information clearinghouse to be distributed to the public. History:  1994 c 625 art 7 s 1; 1995 c 234 art 8 s 17; 1996 c 451 art 4 s 3; 1997 c 225 art 2 s 62; 1999 c 245 art 2 s 13; 2001 c 171 s 1; 2005 c 98 art 3 s 24; 2015 c 21 art 1 s 109
62Q.096 CREDENTIALING OF PROVIDERS. If a health plan company has initially credentialed, as providers in its provider network, individual providers employed by or under contract with an entity that: (1) is authorized to bill under section 256B.0625, subdivision 5; (2) is a mental health clinic certified under section 245I.20; (3) is designated an essential community provider under section 62Q.19; and (4) is under contract with the health plan company to provide mental health services, the health plan company must continue to credential at least the same number of providers from that entity, as long as those providers meet the health plan company's credentialing standards. A health plan company shall not refuse to credential these providers on the grounds that their provider network has a sufficient number of providers of that type. History: 1998 c 407 art 8 s 4; 2021 c 30 art 17 s 3 NOTE: The amendment to this section by Laws 2021, chapter 30, article 17, section 3, is effective upon federal approval. The commissioner of human services shall notify the revisor of statutes when federal approval is obtained. Laws 2021, chapter 30, article 17, section 114.
62Q.097 REQUIREMENTS FOR TIMELY PROVIDER CREDENTIALING. Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this section. (b) "Clean application for provider credentialing" or "clean application" means an application for provider credentialing submitted by a health care provider to a health plan company that is complete, is in the format required by the health plan company, and includes all information and substantiation required by the health plan company and does not require evaluation of any identified potential quality or safety concern. (c) "Provider credentialing" means the process undertaken by a health plan company to evaluate and approve a health care provider's education, training, residency, licenses, certifications, and history of significant quality or safety concerns in order to approve the health care provider to provide health care services to patients at a clinic or facility. Subd. 2. Time limit for credentialing determination. A health plan company that receives an application for provider credentialing must: (1) if the application is determined to be a clean application for provider credentialing and if the health care provider submitting the application or the clinic or facility at which the health care provider provides services requests the information, affirm that the health care provider's application is a clean application and notify the health care provider or clinic or facility of the date by which the health plan company will make a determination on the health care provider's application; (2) if the application is determined not to be a clean application, inform the health care provider of the application's deficiencies or missing information or substantiation within three business days after the health plan company determines the application is not a clean application; and (3) make a determination on the health care provider's clean application within 45 days after receiving the clean application unless the health plan company identifies a substantive quality or safety concern in the course of provider credentialing that requires further investigation. Upon notice to the health care provider, clinic, or facility, the health plan company is allowed 30 additional days to investigate any quality or safety concerns. History:   2021 c 30 art 6 s 1 
62Q.101 EVALUATION OF PROVIDER PERFORMANCE. A health plan company, or a vendor of risk management services as defined under section 60A.23, subdivision 8, shall, in evaluating the performance of a health care provider: (1) conduct the evaluation using a bona fide baseline based upon practice experience of the provider group; and (2) disclose the baseline to the health care provider in writing and prior to the beginning of the time period used for the evaluation. History:   2007 c 147 art 15 s 10 
62Q.1055 CHEMICAL DEPENDENCY. All health plan companies shall use the assessment criteria in Minnesota Rules, parts 9530.6600 to 9530.6655, when assessing and placing enrollees for chemical dependency treatment. History:  1995 c 234 art 2 s 22; 2016 c 158 art 1 s 214
62Q.106 DISPUTE RESOLUTION BY COMMISSIONER. (a) A complainant may at any time submit a complaint to the appropriate commissioner to investigate. After investigating a complaint, or reviewing a company's decision, the appropriate commissioner may order a remedy as authorized under chapter 45, 60A, or 62D. (b) In investigating a complaint filed against a health maintenance organization regarding a vulnerable adult, upon request, the commissioner of health must interview at least one family member of the complainant or the subject of the complaint. If the complainant or the subject of the complaint does not want any family members to be interviewed, this information will be included in the investigative file. History:  1995 c 234 art 2 s 23; 1997 c 225 art 2 s 41; 1999 c 239 s 32; 2013 c 43 s 2
62Q.107 PROHIBITED PROVISION; JUDICIAL REVIEW. Beginning January 1, 1999, no health plan, including the coverages described in section 62A.011, subdivision 3, clauses (7) and (10), may specify a standard of review upon which a court may review denial of a claim or of any other decision made by a health plan company with respect to an enrollee. This section prohibits limiting court review to a determination of whether the health plan company's decision is arbitrary and capricious, an abuse of discretion, or any other standard less favorable to the enrollee than a preponderance of the evidence. History:   1998 c 407 art 2 s 21 
62Q.12 DENIAL OF ACCESS. No health plan company may deny access to a covered health care service unless the denial is made by, or under the direction of, or subject to the review of a health care professional licensed to provide the service in question. History:   1994 c 625 art 2 s 20 
62Q.121 LICENSURE OF MEDICAL DIRECTORS. (a) No health plan company may employ a person as a medical director unless the person is licensed as a physician in this state. This section does not apply to a health plan company that is assessed less than three percent of the total amount assessed by the Minnesota Comprehensive Health Association. (b) For purposes of this section, "medical director" means a physician employed by a health plan company who has direct decision-making authority, based upon medical training and knowledge, regarding the health plan company's medical protocols, medical policies, or coverage of treatment of a particular enrollee, regardless of the physician's title. (c) This section applies only to medical directors who make recommendations or decisions that involve or affect enrollees who live in this state. (d) Each health plan company that is subject to this section shall provide the commissioner with the names and licensure information of its medical directors and shall provide updates no later than 30 days after any changes. History:  1Sp2001 c 9 art 16 s 6; 2002 c 379 art 1 s 113
62Q.135 CONTRACTING FOR CHEMICAL DEPENDENCY SERVICES. No health plan company shall contract with a chemical dependency treatment program, unless the program participates in the chemical dependency treatment accountability plan established by the commissioner of human services. The commissioner of human services shall make data on chemical dependency services and outcomes collected through this program available to health plan companies. History:   1994 c 625 art 2 s 21 
62Q.137 CHEMICAL DEPENDENCY TREATMENT; COVERAGE. (a) Any health plan that provides coverage for chemical dependency treatment must cover chemical dependency treatment provided to an enrollee by the Department of Corrections while the enrollee is committed to the custody of the commissioner of corrections following a conviction for a first-degree driving while impaired offense under section 169A.24 if: (1) a court of competent jurisdiction makes a preliminary determination based on a chemical use assessment conducted under section 169A.70 that treatment may be appropriate and includes this determination as part of the sentencing order; and (2) the Department of Corrections makes a determination based on a chemical assessment conducted while the individual is in the custody of the department that treatment is appropriate. Treatment provided by the Department of Corrections that meets the requirements of this section shall not be subject to a separate medical necessity determination under the health plan company's utilization review procedures. (b) The health plan company must be given a copy of the court's preliminary determination and supporting documents and the assessment conducted by the Department of Corrections. (c) Payment rates for treatment provided by the Department of Corrections shall not exceed the lowest rate for outpatient chemical dependency treatment paid by the health plan company to a participating provider of the health plan company. (d) For purposes of this section, chemical dependency treatment means all covered services that are intended to treat chemical dependency and that are covered by the enrollee's health plan or by law. History:  1Sp2001 c 9 art 19 s 1; 2002 c 379 art 1 s 113
62Q.14 RESTRICTIONS ON ENROLLEE SERVICES. No health plan company may restrict the choice of an enrollee as to where the enrollee receives services related to: (1) the voluntary planning of the conception and bearing of children, provided that this clause does not refer to abortion services; (2) the diagnosis of infertility; (3) the testing and treatment of a sexually transmitted disease; and (4) the testing for AIDS or other HIV-related conditions. History:   1994 c 625 art 2 s 22 
62Q.145 ABORTION AND SCOPE OF PRACTICE. Health plan company policies related to scope of practice for allied independent health providers, midlevel practitioners as defined in section 144.1501, subdivision 1, and other nonphysician health care professionals must comply with the requirements governing the performance of abortions in section 145.412, subdivision 1. History:  1995 c 234 art 2 s 25; 1997 c 183 art 2 s 20; 1Sp2003 c 14 art 7 s 88; 2018 c 182 art 1 s 108
62Q.16 MIDMONTH TERMINATION PROHIBITED. The termination of a person's coverage under any health plan as defined in section 62A.011, subdivision 3, with the exception of individual health plans, issued or renewed on or after January 1, 1995, must provide coverage until the end of the month in which coverage was terminated. History:   1994 c 625 art 2 s 23 
62Q.165 UNIVERSAL COVERAGE. Subdivision 1. Definition. It is the commitment of the state to achieve universal health coverage for all Minnesotans by the year 2011. Universal coverage is achieved when: (1) every Minnesotan has access to a full range of quality health care services; (2) every Minnesotan is able to obtain affordable health coverage which pays for the full range of services, including preventive and primary care; and (3) every Minnesotan pays into the health care system according to that person's ability. Subd. 2. Goal. It is the goal of the state to make continuous progress toward reducing the number of Minnesotans who do not have health coverage so that by January 1, 2011, all Minnesota residents have access to affordable health care. The goal will be achieved by improving access to private health coverage through insurance reforms and market reforms, by making health coverage more affordable for low-income Minnesotans through purchasing pools and state subsidies, and by reducing the cost of health coverage through cost containment programs and methods of ensuring that all Minnesotans are paying into the system according to their ability. Subd. 3.  [Repealed, 1997 c 225 art 2 s 63] History:  1994 c 625 art 6 s 1; 1995 c 234 art 4 s 1; 2007 c 147 art 15 s 11,12
62Q.17 VOLUNTARY PURCHASING POOLS. Subdivision 1. Permission to form. Notwithstanding section 62A.10, employers, groups, and individuals may voluntarily form purchasing pools, solely for the purpose of negotiating and purchasing health plan coverage from health plan companies for members of the pool. Subd. 2. Common factors. All participants in a purchasing pool must live within a common geographic region, be employed in a similar occupation, or share some other common factor as approved by the commissioner of commerce. The membership criteria must not be designed to include disproportionately employers, groups, or individuals likely to have low costs of health coverage, or to exclude disproportionately employers, groups, or individuals likely to have high costs of health coverage. Subd. 3. Governing structure. Each pool must have a governing structure controlled by its members. The governing structure of the pool is responsible for administration of the pool. The governing structure shall review and evaluate all bids for coverage from health plan companies, shall determine criteria for joining and leaving the pool, and may design incentives for healthy lifestyles and health promotion programs. The governing structure may design uniform entrance standards for all employers, except small employers as defined under section 62L.02. Small employers must be permitted to enter any pool if the small employer meets the pool's membership requirements. Pools must provide as much choice in health plans to members as is financially possible. The governing structure may charge all members a fee for administrative purposes. Subd. 4. Enrollment. Pools must have an annual open enrollment period of not less than 15 days, during which all individuals or groups that qualify for membership may enter the pool without any preexisting condition limitations or exclusions or exclusionary riders, except those permitted under chapter 62L for groups or section 62A.65 for individuals. Pools must reach and maintain an enrolled population of at least 1,000 members within six months of formation. If a pool fails to reach or maintain the minimum enrollment, all coverage subsequently purchased through the purchasing pool must be regulated through existing applicable laws and forgo all advantages under this section. Subd. 5. Members. The governing structure of the pool shall set a minimum time period for membership. Members must stay in the purchasing pool for the entire minimum period to avoid paying a penalty. Penalties for early withdrawal from the purchasing pool shall be established by the governing structure. Subd. 6. Employer-based purchasing pools. Employer-based purchasing pools must, with respect to small employers as defined in section 62L.02, meet all the requirements of chapter 62L. The experience of the pool must be pooled and the rates blended across all groups. Subd. 7. Individual members. Purchasing pools that contain individual members must meet all of the underwriting and rate restrictions found in the individual health plan market. Subd. 8. Reports. Prior to the initial effective date of coverage, and annually on July 1 thereafter, each pool shall file a report with the information clearinghouse and the commissioner of commerce. The information clearinghouse must use the report to promote the purchasing pools. The annual report must contain the following information: (1) the number of lives in the pool; (2) the geographic area the pool intends to cover; (3) the number of health plans offered; (4) a description of the benefits under each plan; (5) a description of the premium structure, including any co-payments or deductibles, of each plan offered; (6) evidence of compliance with chapter 62L; (7) a sample of marketing information, including a phone number where the pool may be contacted; and (8) a list of all administrative fees charged. Subd. 9. Enforcement. Purchasing pools must register prior to offering coverage, and annually on July 1 thereafter, with the commissioner of commerce on a form prescribed by the commissioner. The commissioner of commerce shall enforce this section and all other state laws with respect to purchasing pools, and has for that purpose all general rulemaking and enforcement powers otherwise available to the commissioner of commerce. The commissioner may charge an annual registration fee sufficient to meet the costs of the commissioner's duties under this section. History:  1994 c 625 art 6 s 2; 1995 c 234 art 7 s 24-26; 2013 c 84 art 1 s 69
62Q.18 PORTABILITY OF COVERAGE. Subdivision 1. Definition. For purposes of this section: (1) "continuous coverage" has the meaning given in section 62L.02, subdivision 9; (2) "guaranteed issue" means: (i) for individual health plans, that a health plan company shall not decline an application by an individual for any individual health plan offered by that health plan company, including coverage for a dependent of the individual to whom the health plan has been or would be issued; and (ii) for group health plans, that a health plan company shall not decline an application by a group for any group health plan offered by that health plan company and shall not decline to cover under the group health plan any person eligible for coverage under the group's eligibility requirements, including persons who become eligible after initial issuance of the group health plan; and (3) "large employer" means an entity that would be a small employer, as defined in section 62L.02, subdivision 26, except that the entity has more than 50 current employees, based upon the method provided in that subdivision for determining the number of current employees. Subd. 2.  [Repealed, 1995 c 234 art 4 s 4] Subd. 3.  [Repealed, 1995 c 234 art 4 s 4] Subd. 4.  [Repealed, 1995 c 234 art 4 s 4] Subd. 5.  [Repealed, 1995 c 234 art 4 s 4] Subd. 6.  [Repealed, 1995 c 234 art 4 s 4] Subd. 7. Portability of coverage. Effective July 1, 1994, no health plan company shall offer, sell, issue, or renew any group health plan that does not, with respect to individuals who maintain continuous coverage and who qualify under the group's eligibility requirements: (1) make coverage available on a guaranteed issue basis; (2) give full credit for previous continuous coverage against any applicable preexisting condition limitation or preexisting condition exclusion; and (3) with respect to a group health plan offered, sold, issued, or renewed to a large employer, impose preexisting condition limitations or preexisting condition exclusions except to the extent that would be permitted under chapter 62L if the group sponsor were a small employer as defined in section 62L.02, subdivision 26. To the extent that this subdivision conflicts with chapter 62L, chapter 62L governs, regardless of whether the group sponsor is a small employer as defined in section 62L.02, except that for group health plans issued to groups that are not small employers, this subdivision's requirement that the individual have maintained continuous coverage applies. An individual who has maintained continuous coverage, but would be considered a late entrant under chapter 62L, may be treated as a late entrant in the same manner under this subdivision as permitted under chapter 62L. Subd. 8.  [Repealed, 1995 c 234 art 4 s 4] Subd. 9.  [Repealed, 1995 c 234 art 4 s 4] Subd. 10. Guaranteed issue. No health plan company shall offer, sell, or issue any health plan that does not make coverage available on a guaranteed issue basis in accordance with the Affordable Care Act. History:  1994 c 625 art 6 s 3; art 8 s 72; 1995 c 96 s 2; 1995 c 234 art 4 s 2; 1997 c 175 art 3 s 1,2; 1997 c 225 art 2 s 63; 2013 c 84 art 1 s 70; 2016 c 158 art 1 s 21
62Q.181 WRITTEN CERTIFICATION OF COVERAGE. A health plan company shall provide the written certifications of coverage required under United States Code, title 42, sections 300gg(e) and 300gg-43. This section applies only to coverage that is subject to regulation under state law and only to the extent that the certification of coverage is required under federal law. The commissioner shall enforce this section. History:   1997 c 175 art 4 s 3 
62Q.184 STEP THERAPY OVERRIDE. Subdivision 1. Definitions. (a) For the purposes of this section, the terms in this subdivision have the meanings given them. (b) "Clinical practice guideline" means a systematically developed statement to assist health care providers and enrollees in making decisions about appropriate health care services for specific clinical circumstances and conditions developed independently of a health plan company, pharmaceutical manufacturer, or any entity with a conflict of interest. A clinical practice guideline also includes a preferred drug list developed in accordance with section 256B.0625. (c) "Clinical review criteria" means the written screening procedures, decision abstracts, clinical protocols, and clinical practice guidelines used by a health plan company to determine the medical necessity and appropriateness of health care services. (d) "Health plan company" has the meaning given in section 62Q.01, subdivision 4, but also includes a county-based purchasing plan participating in a public program under chapter 256B or 256L and an integrated health partnership under section 256B.0755. (e) "Step therapy protocol" means a protocol or program that establishes the specific sequence in which prescription drugs for a specified medical condition, including self-administered drugs and drugs that are administered by a physician, advanced practice registered nurse, or physician assistant, are medically appropriate for a particular enrollee and are covered under a health plan. (f) "Step therapy override" means that the step therapy protocol is overridden in favor of coverage of the selected prescription drug of the prescribing health care provider because at least one of the conditions of subdivision 3, paragraph (a), exists. Subd. 2. Establishment of a step therapy protocol. A health plan company shall consider available recognized evidence-based and peer-reviewed clinical practice guidelines when establishing a step therapy protocol. Upon written request of an enrollee, a health plan company shall provide any clinical review criteria applicable to a specific prescription drug covered by the health plan. Subd. 3. Step therapy override process; transparency. (a) When coverage of a prescription drug for the treatment of a medical condition is restricted for use by a health plan company through the use of a step therapy protocol, enrollees and prescribing health care providers shall have access to a clear, readily accessible, and convenient process to request a step therapy override. The process shall be made easily accessible on the health plan company's website. A health plan company may use its existing medical exceptions process to satisfy this requirement. A health plan company shall grant an override to the step therapy protocol if at least one of the following conditions exist: (1) the prescription drug required under the step therapy protocol is contraindicated pursuant to the pharmaceutical manufacturer's prescribing information for the drug or, due to a documented adverse event with a previous use or a documented medical condition, including a comorbid condition, is likely to do any of the following: (i) cause an adverse reaction to the enrollee; (ii) decrease the ability of the enrollee to achieve or maintain reasonable functional ability in performing daily activities; or (iii) cause physical or mental harm to the enrollee; (2) the enrollee has had a trial of the required prescription drug covered by their current or previous health plan, or another prescription drug in the same pharmacologic class or with the same mechanism of action, and was adherent during such trial for a period of time sufficient to allow for a positive treatment outcome, and the prescription drug was discontinued by the enrollee's health care provider due to lack of effectiveness, or an adverse event. This clause does not prohibit a health plan company from requiring an enrollee to try another drug in the same pharmacologic class or with the same mechanism of action if that therapy sequence is supported by the evidence-based and peer-reviewed clinical practice guideline, Food and Drug Administration label, or pharmaceutical manufacturer's prescribing information. This clause does not apply to the commissioner of human services or a managed care plan, county-based purchasing plan, or integrated health partnership administering a pharmacy benefit under chapter 256B or 256L; (3) for the fee-for-service system administered by the commissioner of human services, or a managed care plan, county-based purchasing plan, or integrated health partnership administering a pharmacy benefit under chapter 256B or 256L, the enrollee has had a trial of the required prescription drug covered by their current or previous health plan, or a drug in the same pharmacological class with the same mechanism of action, and was adherent during such trial for a period of time sufficient to allow for a positive treatment outcome, and the prescription drug was discontinued by the enrollee's health care provider due to lack of effectiveness, or an adverse event, or the prescriber submits an evidence-based and peer-reviewed clinical practice guideline supporting the use of the requested drug over the required prescription drug. This clause does not prohibit a managed care plan, county-based purchasing plan, or integrated health partnership from requiring an enrollee to try another drug in the same pharmacologic class with the same mechanism of action if that therapy sequence is supported by the evidence-based and peer-reviewed clinical practice guideline, Food and Drug Administration label, or pharmaceutical manufacturer's prescribing information; or (4) the enrollee is currently receiving a positive therapeutic outcome on a prescription drug for the medical condition under consideration if, while on their current health plan or the immediately preceding health plan, the enrollee received coverage for the prescription drug and the enrollee's prescribing health care provider gives documentation to the health plan company that the change in prescription drug required by the step therapy protocol is expected to be ineffective or cause harm to the enrollee based on the known characteristics of the specific enrollee and the known characteristics of the required prescription drug. (b) Upon granting a step therapy override, a health plan company shall authorize coverage for the prescription drug if the prescription drug is a covered prescription drug under the enrollee's health plan. (c) The enrollee, or the prescribing health care provider if designated by the enrollee, may appeal the denial of a step therapy override by a health plan company using the complaint procedure under sections 62Q.68 to 62Q.73 or 256.045. (d) In a denial of an override request and any subsequent appeal, a health plan company's decision must specifically state why the step therapy override request did not meet the condition under paragraph (a) cited by the prescribing health care provider in requesting the step therapy override and information regarding the procedure to request external review of the denial pursuant to section 62Q.73. A denial of a request for a step therapy override that is upheld on appeal is a final adverse determination for purposes of section 62Q.73 and is eligible for a request for external review by an enrollee pursuant to section 62Q.73. (e) A health plan company shall respond to a step therapy override request or an appeal within five days of receipt of a complete request. In cases where exigent circumstances exist, a health plan company shall respond within 72 hours of receipt of a complete request. If a health plan company does not send a response to the enrollee or prescribing health care provider if designated by the enrollee within the time allotted, the override request or appeal is granted and binding on the health plan company. (f) Step therapy override requests must be accessible to and submitted by health care providers, and accepted by group purchasers electronically through secure electronic transmission, as described under section 62J.497, subdivision 5. (g) Nothing in this section prohibits a health plan company from: (1) requesting relevant documentation from an enrollee's medical record in support of a step therapy override request; or (2) requiring an enrollee to try a generic equivalent drug pursuant to section 151.21, or a biosimilar, as defined under United States Code, chapter 42, section 262(i)(2), prior to providing coverage for the equivalent branded prescription drug. (h) This section shall not be construed to allow the use of a pharmaceutical sample for the primary purpose of meeting the requirements for a step therapy override. History:  2018 c 162 s 1; 1Sp2019 c 9 art 7 s 3,4; 2020 c 115 art 4 s 8; 2022 c 58 s 11
62Q.1841 PROHIBITION ON USE OF STEP THERAPY FOR METASTATIC CANCER. Subdivision 1. Definitions. (a) For purposes of this section, the following definitions apply. (b) "Health plan" has the meaning given in section 62Q.01, subdivision 3. Health plan includes health coverage provided by a county-based purchasing plan participating in a public program under chapter 256B or 256L or an integrated health partnership under section 256B.0755. (c) "Stage four advanced metastatic cancer" means cancer that has spread from the primary or original site of the cancer to nearby tissues, lymph nodes, or other parts of the body. (d) "Step therapy protocol" has the meaning given in section 62Q.184, subdivision 1. Subd. 2. Prohibition on use of step therapy protocols. A health plan that provides coverage for the treatment of stage four advanced metastatic cancer or associated conditions must not limit or exclude coverage for a drug approved by the United States Food and Drug Administration that is on the health plan's prescription drug formulary by mandating that an enrollee with stage four advanced metastatic cancer or associated conditions follow a step therapy protocol if the use of the approved drug is consistent with: (1) a United States Food and Drug Administration-approved indication; and (2) a clinical practice guideline published by the National Comprehensive Care Network. History:   1Sp2019 c 9 art 8 s 13 
62Q.185 GUARANTEED RENEWABILITY; LARGE EMPLOYER GROUP. (a) No health plan company, as defined in section 62Q.01, subdivision 4, shall refuse to renew a health benefit plan, as defined in section 62L.02, subdivision 15, but issued to a large employer, as defined in section 62Q.18, subdivision 1. (b) This section does not require renewal if: (1) the large employer has failed to pay premiums or contributions as required under the terms of the health benefit plan, or the health plan company has not received timely premium payments unless the late payments were received within a grace period provided under state law; (2) the large employer has performed an act or practice that constitutes fraud or misrepresentation of material fact under the terms of the health benefit plan; (3) the large employer has failed to comply with a material plan provision relating to employer contribution or group participation rules not prohibited by state law; (4) the health plan company is ceasing to offer coverage in the large employer market in this state in compliance with United States Code, title 42, section 300gg-12(c), and applicable state law; (5) in the case of a health maintenance organization, there is no longer any enrollee in the large employer's health benefit plan who lives, resides, or works in the approved service area; or (6) in the case of a health benefit plan made available to large employers only through one or more bona fide associations, the membership of the large employer in the association ceases, but only if such coverage is terminated uniformly without regard to any health-related factor relating to any covered individual. (c) This section does not prohibit a health plan company from modifying the premium rate or from modifying the coverage for purposes of renewal. (d) This section does not require renewal of the coverage of individual enrollees under the health benefit plan if the individual enrollee has performed an act or practice that constitutes fraud or misrepresentation of material fact under the terms of the health benefit plan. History:  1997 c 175 art 3 s 3; 1999 c 177 s 57
62Q.186 PROHIBITION ON RESCISSIONS OF HEALTH PLANS. Subdivision 1. Definitions. (a) "Rescission" means a cancellation or discontinuance of coverage under a health plan that has a retroactive effect. (b) "Rescission" does not include: (1) a cancellation or discontinuance of coverage under a health plan if: (i) the cancellation or discontinuance of coverage has only a prospective effect; or (ii) the cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions toward the cost of coverage; or (2) when the health plan covers only active employees and, if applicable, dependents and those covered under continuation coverage provisions, the employee pays no premiums for coverage after termination of employment and the cancellation or discontinuance of coverage is effective retroactively back to the date of termination of employment due to a delay in administrative record keeping. Subd. 2. Prohibition on rescissions. (a) A health plan company shall not rescind coverage under a health plan with respect to an individual, including a group to which the individual belongs or family coverage in which the individual is included, after the individual is covered under the health plan, unless: (1) the individual, or a person seeking coverage on behalf of the individual, performs an act, practice, or omission that constitutes fraud; or (2) the individual makes an intentional misrepresentation or omission of material fact, as prohibited by the terms of the health plan. For purposes of this section, a person seeking coverage on behalf of an individual does not include an insurance producer or employee or authorized representative of the health carrier. (b) This section does not apply to any benefits classified as excepted benefits under United States Code, title 42, section 300gg-91(c), or regulations enacted thereunder from time to time. Subd. 3. Notice required. A health plan company shall provide at least 30 days' advance written notice to each individual who would be affected by the proposed rescission of coverage before coverage under the health plan may be terminated retroactively. Subd. 4. Compliance with other restrictions on rescissions. Nothing in this section allows rescission if rescission would otherwise be prohibited under section 62A.04, subdivision 2, clause (2). History:  2013 c 84 art 1 s 71; 2014 c 275 art 1 s 8
62Q.188 FLEXIBLE BENEFITS PLANS. Subdivision 1. Definitions. For the purposes of this section, the terms used in this section have the meanings defined in section 62Q.01, except that "health plan" includes individual coverage and group coverage for employer plans with up to 100 employees. Subd. 2. Flexible benefits plan. Notwithstanding any provision of this chapter, chapter 363A, or any other law to the contrary, a health plan company may offer, sell, issue, and renew a health plan that is a flexible benefits plan under this section if the following requirements are satisfied: (1) the health plan must be offered in compliance with the laws of this state, except as otherwise permitted in this section; (2) the health plan must be designed to enable covered persons to better manage costs and coverage options through the use of co-pays, deductibles, and other cost-sharing arrangements; (3) the health plan may modify or exclude any or all coverages of benefits that would otherwise be required by law, except for maternity benefits and other benefits required under federal law; (4) each health plan and plan's premiums must be approved by the commissioner of health or commerce, whichever is appropriate under section 62Q.01, subdivision 2, but neither commissioner may disapprove a plan on the grounds of a modification or exclusion permitted under clause (3); and (5) prior to the sale of the health plan, the purchaser must be given a written list of the coverages otherwise required by law that are modified or excluded in the health plan. The list must include a description of each coverage in the list and indicate whether the coverage is modified or excluded. If coverage is modified, the list must describe the modification. The list may, but is not required to, also list any or all coverages otherwise required by law that are included in the health plan and indicate that they are included. The health plan company must require that a copy of this written list be provided, prior to the effective date of the health plan, to each enrollee or employee who is eligible for health coverage under the plan. Subd. 3. Employer health plan. An employer may provide a health plan permitted under this section to its employees, the employees' dependents, and other persons eligible for coverage under the employer's plan, notwithstanding chapter 363A or any other law to the contrary. History:   2010 c 384 s 24 
62Q.19 ESSENTIAL COMMUNITY PROVIDERS. Subdivision 1. Designation. (a) The commissioner shall designate essential community providers. The criteria for essential community provider designation shall be the following: (1) a demonstrated ability to integrate applicable supportive and stabilizing services with medical care for uninsured persons and high-risk and special needs populations, underserved, and other special needs populations; and (2) a commitment to serve low-income and underserved populations by meeting the following requirements: (i) has nonprofit status in accordance with chapter 317A; (ii) has tax-exempt status in accordance with the Internal Revenue Service Code, section 501(c)(3); (iii) charges for services on a sliding fee schedule based on current poverty income guidelines; and (iv) does not restrict access or services because of a client's financial limitation; (3) status as a local government unit as defined in section 62D.02, subdivision 11, a hospital district created or reorganized under sections 447.31 to 447.37, an Indian tribal government, an Indian health service unit, or a community health board as defined in chapter 145A; (4) a former state hospital that specializes in the treatment of cerebral palsy, spina bifida, epilepsy, closed head injuries, specialized orthopedic problems, and other disabling conditions; (5) a sole community hospital. For these rural hospitals, the essential community provider designation applies to all health services provided, including both inpatient and outpatient services. For purposes of this section, "sole community hospital" means a rural hospital that: (i) is eligible to be classified as a sole community hospital according to Code of Federal Regulations, title 42, section 412.92, or is located in a community with a population of less than 5,000 and located more than 25 miles from a like hospital currently providing acute short-term services; (ii) has experienced net operating income losses in two of the previous three most recent consecutive hospital fiscal years for which audited financial information is available; and (iii) consists of 40 or fewer licensed beds; (6) a birth center licensed under section 144.615; or (7) a hospital and affiliated specialty clinics that predominantly serve patients who are under 21 years of age and meet the following criteria: (i) provide intensive specialty pediatric services that are routinely provided in fewer than five hospitals in the state; and (ii) serve children from at least one-half of the counties in the state. (b) Prior to designation, the commissioner shall publish the names of all applicants in the State Register. The public shall have 30 days from the date of publication to submit written comments to the commissioner on the application. No designation shall be made by the commissioner until the 30-day period has expired. (c) The commissioner may designate an eligible provider as an essential community provider for all the services offered by that provider or for specific services designated by the commissioner. (d) For the purpose of this subdivision, supportive and stabilizing services include at a minimum, transportation, child care, cultural, and linguistic services where appropriate. Subd. 2. Application. (a) Any provider may apply to the commissioner for designation as an essential community provider by submitting an application form developed by the commissioner. (b) Each application submitted must be accompanied by an application fee of $60. The fee shall be no more than what is needed to cover the administrative costs of processing the application. (c) The name, address, contact person, and the date by which the commissioner's decision is expected to be made shall be classified as public data under section 13.41. All other information contained in the application form shall be classified as private data under section 13.41 until the application has been approved, approved as modified, or denied by the commissioner. Once the decision has been made, all information shall be classified as public data unless the applicant designates and the commissioner determines that the information contains trade secret information. Subd. 2a. Definition of health plan company. For purposes of this section, "health plan company" does not include a health plan company as defined in section 62Q.01 with fewer than 50,000 enrollees, all of whose enrollees are covered under medical assistance or MinnesotaCare. Subd. 3. Health plan company affiliation. A health plan company must offer a provider contract to any designated essential community provider located within the area served by the health plan company. A health plan company shall not restrict enrollee access to services designated to be provided by the essential community provider for the population that the essential community provider is certified to serve. A health plan company may also make other providers available for these services. A health plan company may require an essential community provider to meet all data requirements, utilization review, and quality assurance requirements on the same basis as other health plan providers. Subd. 4. Essential community provider responsibilities. Essential community providers must agree to serve enrollees of all health plan companies operating in the area in which the essential community provider is located. Subd. 5. Contract payment rates. An essential community provider and a health plan company may negotiate the payment rate for covered services provided by the essential community provider. This rate must be at least the same rate per unit of service as is paid to other health plan providers for the same or similar services. Subd. 5a. Cooperation. Each health plan company and essential community provider shall cooperate to facilitate the use of the essential community provider by the high risk and special needs populations. This includes cooperation on the submission and processing of claims, sharing of all pertinent records and data, including performance indicators and specific outcomes data, and the use of all dispute resolution methods. Subd. 5b. Enforcement. For any violation of this section or any rule applicable to an essential community provider, the commissioner may suspend, modify, or revoke an essential community provider designation. The commissioner may also use the enforcement authority specified in section 62D.17. Subd. 6. Termination or renewal of designation; commissioner review. The designation as an essential community provider shall be valid for a five-year period from the date of designation. Every five years after the designation or renewal of the designation of essential community provider is granted to a provider, the commissioner shall review the need for and appropriateness of continuing the designation for that provider. The commissioner may require a provider whose designation is to be reviewed to submit an application to the commissioner for renewal of the designation and may require an application fee of $60 to be submitted with the application to cover the administrative costs of processing the application. Based on that review, the commissioner may renew a provider's essential community provider designation for an additional five-year period or terminate the designation. Once the designation terminates, the former essential community provider has no rights or privileges beyond those of any other health care provider. Subd. 7. Rulemaking. By January 1, 1996, the commissioner shall adopt rules for establishing essential community providers and for governing their relationship with health plan companies. The commissioner shall also identify and address any conflict of interest issues regarding essential community provider designation for local governments. The rules shall require health plan companies to comply with all provisions of section 62Q.14 with respect to enrollee use of essential community providers. History:  1994 c 625 art 4 s 6; 1995 c 234 art 2 s 26; 1996 c 451 art 2 s 1,2; 1997 c 225 art 2 s 42; 1999 c 239 s 33; 2000 c 340 s 1,2; 2001 c 170 s 3; 2003 c 100 s 1; 1Sp2003 c 14 art 7 s 22,23; 2004 c 279 art 9 s 1; 2006 c 212 art 3 s 4; 2007 c 50 s 1,2; 1Sp2010 c 1 art 20 s 4; 2013 c 108 art 12 s 10; 2016 c 158 art 2 s 24
62Q.22 HEALTH CARE SERVICES PREPAID OPTION. Subdivision 1. Scope. A community health clinic that is designated as an essential community provider under section 62Q.19 and is associated with a hospital, a governmental unit, or the University of Minnesota may offer to individuals and families the option of purchasing basic health care services on a fixed prepaid basis without satisfying the requirements of chapter 60A, 62A, 62C, or 62D, or any other law or rule that applies to entities licensed under those chapters. Subd. 2. Registration. A community health clinic that offers a prepaid option under this section must register on an annual basis with the commissioner of health. Subd. 3. Premiums. The premiums for a prepaid option offered under this section must be based on a sliding fee schedule based on current poverty income guidelines. Subd. 4. Health care services. (a) A prepaid option offered under this section must provide basic health care services including: (1) services for the diagnosis and treatment of injuries, illnesses, or conditions; (2) child health supervision services up to age 18, as defined under section 62A.047; and (3) preventive health services, including: (i) health education; (ii) health supervision, evaluation, and follow-up; (iii) immunization; and (iv) early disease detection. (b) Inpatient hospital services shall not be offered as a part of a community health clinic's prepaid option. A clinic may associate with a hospital to provide hospital services to an individual or family who is enrolled in the prepaid option so long as these services are not offered as part of the prepaid option. (c) All health care services included by the community health clinic in a prepaid option must be services that are offered within the scope of practice of the clinic by the clinic's professional staff. Subd. 5. Guaranteed renewability. A community health clinic shall not refuse to renew a prepaid option, except for nonpayment of premiums, fraud, or misrepresentation, or as permitted under subdivisions 8 and 9, paragraph (b). Subd. 6. Information to be provided. (a) A community health clinic must provide an individual or family who purchases a prepaid option a clear and concise written statement that includes the following information: (1) the health care services that the prepaid option covers; (2) any exclusions or limitations on the health care services offered, including any preexisting condition limitations, cost-sharing arrangements, or prior authorization requirements; (3) where the health care services may be obtained; (4) a description of the clinic's method for resolving patient complaints, including a description of how a patient can file a complaint with the Department of Health; and (5) a description of the conditions under which the prepaid option may be canceled or terminated. (b) The commissioner of health must approve a copy of the written statement before the community health clinic may offer the prepaid option described in this section. Subd. 7. Complaint process. (a) A community health clinic that offers a prepaid option under this section must establish a complaint resolution process. As an alternative to establishing its own process, a community health clinic may use the complaint process of another organization. (b) A community health clinic must make reasonable efforts to resolve complaints and to inform complainants in writing of the clinic's decision within 60 days of receiving the complaint. (c) A community health clinic that offers a prepaid option under this section must report all complaints that are not resolved within 60 days to the commissioner of health. Subd. 8. Public assistance program eligibility. A community health clinic may require an individual or family enrolled in the clinic's prepaid option to apply for medical assistance or the MinnesotaCare program. The clinic must assist the individual or family in filing the application for the appropriate public program. If, upon the request of the clinic, an individual or family refuses to apply for these programs, the clinic may disenroll the individual or family from the prepaid option at any time. Subd. 9. Limitations on enrollment. (a) A community health clinic may limit enrollment in its prepaid option. If enrollment is limited, a waiting list must be established. (b) A community health clinic may deny enrollment in its prepaid option to an individual or family whose gross family income is greater than 275 percent of the federal poverty guidelines. (c) No community health clinic may restrict or deny enrollment in its prepaid option because of an individual's or a family's financial limitations, except as permitted under this subdivision. History:  1997 c 194 s 1; 2016 c 158 art 2 s 25
62Q.23 GENERAL SERVICES. (a) Health plan companies shall comply with all continuation and conversion of coverage requirements applicable to health maintenance organizations under state or federal law. (b) Health plan companies shall comply with sections 62A.047, 62A.27, and any other coverage required under chapter 62A of newborn infants, dependent children to the limiting age as defined in section 62Q.01, subdivision 2a, disabled dependent children, and adopted children. A health plan company providing dependent coverage shall comply with section 62A.302. (c) Health plan companies shall comply with the equal access requirements of section 62A.15. History:  1994 c 625 art 4 s 8; 2005 c 56 s 1; 2013 c 84 art 1 s 72; 2017 c 99 s 1
62Q.32 LOCAL OMBUDSPERSON. County board or community health service agencies may establish an office of ombudsperson to provide a system of consumer advocacy for persons receiving health care services through a health plan company. The ombudsperson's functions may include, but are not limited to: (1) mediation or advocacy on behalf of a person accessing the complaint and appeal procedures to ensure that necessary medical services are provided by the health plan company; and (2) investigation of the quality of services provided to a person and determine the extent to which quality assurance mechanisms are needed or any other system change may be needed. History:  1994 c 625 art 7 s 2; 1995 c 234 art 8 s 18; 1Sp2011 c 9 art 6 s 14
62Q.33 LOCAL GOVERNMENT PUBLIC HEALTH FUNCTIONS. Subdivision 1. Findings. The legislature finds that the local government public health functions of community assessment, policy development, and assurance of service delivery are essential elements in consumer protection and in achieving the objectives of health care reform in Minnesota. The legislature further finds that the site-based and population-based services provided by state and local health departments are a critical strategy for the long-term containment of health care costs. The legislature further finds that without adequate resources, the local government public health system will lack the capacity to fulfill these functions in a manner consistent with the needs of a reformed health care delivery system. Subd. 2. Report on system development. The commissioner of health, in consultation with the State Community Health Services Advisory Committee and the commissioner of human services, and representatives of local health departments, county government, a municipal government acting as a community health board, area Indian health services, health care providers, and citizens concerned about public health, shall coordinate the process for defining implementation and financing responsibilities of the local government core public health functions. The commissioner shall submit recommendations and an initial and final report on local government core public health functions according to the timeline established in subdivision 5. Subd. 3. Core public health functions. (a) The report required by subdivision 2 must describe the local government core public health functions of: assessment of community health needs; goal-determination, public policy, and program development for addressing these needs; and assurance of service availability and accessibility to meet community health goals and needs. The report must further describe activities for implementation of these functions that are the continuing responsibility of the local government public health system, taking into account the ongoing reform of the health care delivery system. (b) The activities to be defined in terms of the local government core public health functions include, but are not limited to: (1) consumer protection and advocacy; (2) targeted outreach and linkage to personal services; (3) health status monitoring and disease surveillance; (4) investigation and control of diseases and injuries; (5) protection of the environment, work places, housing, food, and water; (6) laboratory services to support disease control and environmental protection; (7) health education and information; (8) community mobilization for health-related issues; (9) training and education of public health professionals; (10) public health leadership and administration; (11) emergency medical services; (12) violence prevention; and (13) other activities that have the potential to improve the health of the population or special needs populations and reduce the need for or cost of health care services. Subd. 4. Capacity building, accountability and funding. The recommendations required by subdivision 2 shall include: (1) a definition of minimum outcomes for implementing core public health functions, including a local ombudsperson under the assurance of services function; (2) the identification of counties and applicable cities with public health programs that need additional assistance to meet the minimum outcomes; (3) a budget for supporting all functions needed to achieve the minimum outcomes, including the local ombudsperson assurance of services function; (4) an analysis of the costs and benefits expected from achieving the minimum outcomes; (5) strategies for improving local government public health functions throughout the state to meet the minimum outcomes including: (i) funding distribution for local government public health functions necessary to meet the minimum outcomes; and (ii) strategies for the financing of personal health care services through the health plan companies and identifying appropriate mechanisms for the delivery of these services; and (6) a recommended level of dedicated funding for local government public health functions in terms of a percentage of total health service expenditures by the state or in terms of a per capita basis, including methods of allocating the dedicated funds to local government. Funding recommendations must be broad-based and must consider all financial resources. Subd. 5. Timeline. (a) MS 2000 [Obsolete] (b) By January 15, 1997, and by January 15 of each odd-numbered year thereafter, the commissioner shall present to the legislature an updated report and recommendations. History:  1994 c 625 art 7 s 3; 1995 c 234 art 8 s 19,20; 1997 c 225 art 2 s 43; 2015 c 21 art 1 s 109
62Q.37 AUDITS CONDUCTED BY INDEPENDENT ORGANIZATION. Subdivision 1. Applicability. This section applies only to (1) a nonprofit health service plan corporation operating under chapter 62C; (2) a health maintenance organization operating under chapter 62D; (3) a community integrated service network operating under chapter 62N; and (4) managed care organizations operating under chapter 256B or 256L. Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings given them. (b) "Commissioner" means the commissioner of health for purposes of regulating health maintenance organizations and community integrated service networks, the commissioner of commerce for purposes of regulating nonprofit health service plan corporations, or the commissioner of human services for the purpose of contracting with managed care organizations serving persons enrolled in programs under chapter 256B or 256L. (c) "Health plan company" means (1) a nonprofit health service plan corporation operating under chapter 62C; (2) a health maintenance organization operating under chapter 62D; (3) a community integrated service network operating under chapter 62N; or (4) a managed care organization operating under chapter 256B or 256L. (d) "Nationally recognized independent organization" means (1) an organization that sets specific national standards governing health care quality assurance processes, utilization review, provider credentialing, marketing, and other topics covered by this chapter and other chapters and audits and provides accreditation to those health plan companies that meet those standards. The American Accreditation Health Care Commission (URAC), the National Committee for Quality Assurance (NCQA), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), and the Accreditation Association for Ambulatory Health Care (AAAHC) are, at a minimum, defined as nationally recognized independent organizations; and (2) the Centers for Medicare and Medicaid Services for purposes of reviews or audits conducted of health plan companies under Part C of Title XVIII of the Social Security Act or under section 1876 of the Social Security Act. (e) "Performance standard" means those standards relating to quality management and improvement, access and availability of service, utilization review, provider selection, provider credentialing, marketing, member rights and responsibilities, complaints, appeals, grievance systems, enrollee information and materials, enrollment and disenrollment, subcontractual relationships and delegation, confidentiality, continuity and coordination of care, assurance of adequate capacity and services, coverage and authorization of services, practice guidelines, health information systems, and financial solvency. Subd. 3. Audits. (a) The commissioner may conduct routine audits and investigations as prescribed under the commissioner's respective state authorizing statutes. If a nationally recognized independent organization has conducted an audit of the health plan company using audit procedures that are comparable to or more stringent than the commissioner's audit procedures: (1) the commissioner shall accept the independent audit, including standards and audit practices, and require no further audit if the results of the independent audit show that the performance standard being audited meets or exceeds state standards; (2) the commissioner may accept the independent audit and limit further auditing if the results of the independent audit show that the performance standard being audited partially meets state standards; (3) the health plan company must demonstrate to the commissioner that the nationally recognized independent organization that conducted the audit is qualified and that the results of the audit demonstrate that the particular performance standard partially or fully meets state standards; and (4) if the commissioner has partially or fully accepted an independent audit of the performance standard, the commissioner may use the finding of a deficiency with regard to statutes or rules by an independent audit as the basis for a targeted audit or enforcement action. (b) If a health plan company has formally delegated activities that are required under either state law or contract to another organization that has undergone an audit by a nationally recognized independent organization, that health plan company may use the nationally recognized accrediting body's determination on its own behalf under this section. Subd. 4. Disclosure of national standards and reports. The health plan company shall: (1) request that the nationally recognized independent organization provide to the commissioner a copy of the current nationally recognized independent organization's standards upon which the acceptable accreditation status has been granted; and (2) provide the commissioner a copy of the most current final audit report issued by the nationally recognized independent organization. Subd. 5.  [Repealed, 2013 c 84 art 1 s 94] Subd. 6. Continued authority. Nothing in this section precludes the commissioner from conducting audits and investigations or requesting data as granted under the commissioner's respective state authorizing statutes. Subd. 7. Human services. The commissioner of human services shall implement this section in a manner that is consistent with applicable federal laws and regulations and that avoids the duplication of review activities performed by a nationally recognized independent organization. Subd. 8. Confidentiality. Any documents provided to the commissioner related to the audit report that may be accepted under this section are private data on individuals pursuant to chapter 13 and may only be released as permitted under section 60A.03, subdivision 9. History:  2004 c 288 art 6 s 8; 1Sp2005 c 4 art 8 s 4; 2009 c 174 art 2 s 1; 2015 c 71 art 8 s 7; 2016 c 158 art 2 s 26,27; 2022 c 98 art 14 s 2
62Q.43 GEOGRAPHIC ACCESS. Subdivision 1. Closed-panel health plan. For purposes of this section, "closed-panel health plan" means a health plan as defined in section 62Q.01 that requires an enrollee to receive all or a majority of primary care services from a specific clinic or primary care provider designated by the enrollee that is within the health plan company's clinic or provider network. Subd. 2. Access requirement. Every closed-panel health plan must allow enrollees under the age of 26 years to change their designated clinic or primary care provider at least once per month, as long as the clinic or provider is part of the health plan company's statewide clinic or provider network. A health plan company shall not charge enrollees who choose this option higher premiums or cost sharing than would otherwise apply to enrollees who do not choose this option. A health plan company may require enrollees to provide 15 days' written notice of intent to change their designated clinic or primary care provider. History:  1995 c 234 art 2 s 27; 2013 c 84 art 1 s 73; 2020 c 115 art 4 s 9,10
62Q.45 COVERAGE FOR OUT-OF-AREA PRIMARY CARE. Subdivision 1. Study. The commissioner of health shall develop methods to allow enrollees of managed care organizations to obtain primary care health services outside of the service area of their managed care organization, from health care providers who are employed by or under contract with another managed care organization. The commissioner shall make recommendations on: (1) whether this out-of-area primary care coverage should be available to students and/or other enrollees without additional premium charges or cost sharing; (2) methods to coordinate the services provided by different managed care organizations; (3) methods to manage the quality of care provided by different managed care organizations and monitor health care outcomes; (4) methods to reimburse managed care organizations for care provided to enrollees of other managed care organizations; and (5) other issues relevant to the design and administration of out-of-area primary care coverage. The commissioner shall present recommendations to the legislature by January 15, 1996. Subd. 2. Definition. For purposes of this section, "managed care organization" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network as defined under section 62N.02, subdivision 4a; or (3) an insurance company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers. History:  1995 c 234 art 2 s 28; 1997 c 225 art 2 s 44
62Q.46 PREVENTIVE ITEMS AND SERVICES. Subdivision 1. Coverage for preventive items and services. (a) "Preventive items and services" has the meaning specified in the Affordable Care Act. (b) A health plan company must provide coverage for preventive items and services at a participating provider without imposing cost-sharing requirements, including a deductible, coinsurance, or co-payment. Nothing in this section prohibits a health plan company that has a network of providers from excluding coverage or imposing cost-sharing requirements for preventive items or services that are delivered by an out-of-network provider. (c) A health plan company is not required to provide coverage for any items or services specified in any recommendation or guideline described in paragraph (a) if the recommendation or guideline is no longer included as a preventive item or service as defined in paragraph (a). Annually, a health plan company must determine whether any additional items or services must be covered without cost-sharing requirements or whether any items or services are no longer required to be covered. (d) Nothing in this section prevents a health plan company from using reasonable medical management techniques to determine the frequency, method, treatment, or setting for a preventive item or service to the extent not specified in the recommendation or guideline. (e) This section does not apply to grandfathered plans. (f) This section does not apply to plans offered by the Minnesota Comprehensive Health Association. Subd. 2. Coverage for office visits in conjunction with preventive items and services. (a) A health plan company may impose cost-sharing requirements with respect to an office visit if a preventive item or service is billed separately or is tracked separately as individual encounter data from the office visit. (b) A health plan company must not impose cost-sharing requirements with respect to an office visit if a preventive item or service is not billed separately or is not tracked separately as individual encounter data from the office visit and the primary purpose of the office visit is the delivery of the preventive item or service. (c) A health plan company may impose cost-sharing requirements with respect to an office visit if a preventive item or service is not billed separately or is not tracked separately as individual encounter data from the office visit and the primary purpose of the office visit is not the delivery of the preventive item or service. Subd. 3. Additional services not prohibited. Nothing in this section prohibits a health plan company from providing coverage for preventive items and services in addition to those specified in the Affordable Care Act, or from denying coverage for preventive items and services that are not recommended as preventive items and services under the Affordable Care Act. A health plan company may impose cost-sharing requirements for a treatment not described in the Affordable Care Act even if the treatment results from a preventive item or service described in the Affordable Care Act. History:   2013 c 84 art 1 s 74 
62Q.47 ALCOHOLISM, MENTAL HEALTH, AND CHEMICAL DEPENDENCY SERVICES. (a) All health plans, as defined in section 62Q.01, that provide coverage for alcoholism, mental health, or chemical dependency services, must comply with the requirements of this section. (b) Cost-sharing requirements and benefit or service limitations for outpatient mental health and outpatient chemical dependency and alcoholism services, except for persons placed in chemical dependency services under Minnesota Rules, parts 9530.6600 to 9530.6655, must not place a greater financial burden on the insured or enrollee, or be more restrictive than those requirements and limitations for outpatient medical services. (c) Cost-sharing requirements and benefit or service limitations for inpatient hospital mental health and inpatient hospital and residential chemical dependency and alcoholism services, except for persons placed in chemical dependency services under Minnesota Rules, parts 9530.6600 to 9530.6655, must not place a greater financial burden on the insured or enrollee, or be more restrictive than those requirements and limitations for inpatient hospital medical services. (d) A health plan company must not impose an NQTL with respect to mental health and substance use disorders in any classification of benefits unless, under the terms of the health plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the NQTL to mental health and substance use disorders in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the NQTL with respect to medical and surgical benefits in the same classification. (e) All health plans must meet the requirements of the federal Mental Health Parity Act of 1996, Public Law 104-204; Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008; the Affordable Care Act; and any amendments to, and federal guidance or regulations issued under, those acts. (f) The commissioner may require information from health plan companies to confirm that mental health parity is being implemented by the health plan company. Information required may include comparisons between mental health and substance use disorder treatment and other medical conditions, including a comparison of prior authorization requirements, drug formulary design, claim denials, rehabilitation services, and other information the commissioner deems appropriate. (g) Regardless of the health care provider's professional license, if the service provided is consistent with the provider's scope of practice and the health plan company's credentialing and contracting provisions, mental health therapy visits and medication maintenance visits shall be considered primary care visits for the purpose of applying any enrollee cost-sharing requirements imposed under the enrollee's health plan. (h) By June 1 of each year, beginning June 1, 2021, the commissioner of commerce, in consultation with the commissioner of health, shall submit a report on compliance and oversight to the chairs and ranking minority members of the legislative committees with jurisdiction over health and commerce. The report must: (1) describe the commissioner's process for reviewing health plan company compliance with United States Code, title 42, section 18031(j), any federal regulations or guidance relating to compliance and oversight, and compliance with this section and section 62Q.53; (2) identify any enforcement actions taken by either commissioner during the preceding 12-month period regarding compliance with parity for mental health and substance use disorders benefits under state and federal law, summarizing the results of any market conduct examinations. The summary must include: (i) the number of formal enforcement actions taken; (ii) the benefit classifications examined in each enforcement action; and (iii) the subject matter of each enforcement action, including quantitative and nonquantitative treatment limitations; (3) detail any corrective action taken by either commissioner to ensure health plan company compliance with this section, section 62Q.53, and United States Code, title 42, section 18031(j); and (4) describe the information provided by either commissioner to the public about alcoholism, mental health, or chemical dependency parity protections under state and federal law. The report must be written in nontechnical, readily understandable language and must be made available to the public by, among other means as the commissioners find appropriate, posting the report on department websites. Individually identifiable information must be excluded from the report, consistent with state and federal privacy protections. History:  1995 c 234 art 2 s 29; 2008 c 344 s 16; 2013 c 84 art 1 s 75; 2016 c 158 art 1 s 22,214; 1Sp2019 c 9 art 8 s 14
62Q.471 EXCLUSION FOR SUICIDE ATTEMPTS PROHIBITED. (a) No health plan may exclude or reduce coverage for health care for an enrollee who is otherwise covered under the health plan on the basis that the need for the health care arose out of a suicide or suicide attempt by the enrollee. (b) For purposes of this section, "health plan" has the meaning given in section 62Q.01, subdivision 3, but includes the coverages described in section 62A.011, subdivision 3, clauses (4), (6), and (7) through (10). History:  1Sp2001 c 9 art 9 s 1; 2002 c 379 art 1 s 113; 2005 c 132 s 16; 2014 c 275 art 1 s 9
62Q.472 SCREENING AND TESTING FOR OPIOIDS. (a) A health plan company shall not place a lifetime or annual limit on screenings and urinalysis testing for opioids for an enrollee in an inpatient or outpatient substance use disorder treatment program when the screening or testing is ordered by a health care provider and performed by an accredited clinical laboratory. A health plan company is not prohibited from conducting a medical necessity review when screenings or urinalysis testing for an enrollee exceeds 24 tests in any 12-month period. (b) This section does not apply to managed care plans or county-based purchasing plans when the plan provides coverage to public health care program enrollees under chapter 256B or 256L. History:   1Sp2021 c 4 art 3 s 16 
62Q.48 COST-SHARING IN PRESCRIPTION INSULIN DRUGS. Subdivision 1. Scope of coverage. This section applies to all health plans issued or renewed to a Minnesota resident. Subd. 2. Definitions. (a) For the purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Cost-sharing" means a deductible payment, co-payment, or coinsurance amount imposed on an enrollee for a covered prescription drug in accordance with the terms and conditions of the enrollee's health plan. (c) "Legend drug" has the same meaning as in section 151.01, subdivision 17. (d) "Prescription insulin drug" means a legend drug that contains insulin and is used to treat diabetes. (e) "Net price" means the health plan company's cost for a prescription insulin drug, including any rebates or discounts received by or accrued directly or indirectly to the health plan company from a drug manufacturer or pharmacy benefit manager. Subd. 3. Cost-sharing limits. (a) A health plan that imposes a cost-sharing requirement on the coverage of a prescription insulin drug shall limit the total amount of cost-sharing that an enrollee is required to pay at point of sale, including deductible payments and the cost-sharing amounts charged once the deductible is met at an amount that does not exceed the net price of the prescription insulin drug. (b) Nothing in this section shall prevent a health plan company from imposing a cost-sharing requirement that is less than the amount specified in paragraph (a). History:   1Sp2019 c 9 art 8 s 15 
62Q.49 ENROLLEE COST SHARING; NEGOTIATED PROVIDER PAYMENTS. Subdivision 1. Applicability. This section applies to all health plans, as defined in section 62Q.01, subdivision 3, that provide coverage for health care to be provided entirely or partially: (1) through contracts in which health care providers agree to accept discounted charges, negotiated charges, or other limits on health care provider charges; (2) by employees of, or facilities or entities owned by, the issuer of the health plan; or (3) through contracts with health care providers that provide for payment to the providers on a fully or partially capitated basis or on any other non-fee-for-service basis. Subd. 2. Disclosure required. (a) All health plans included in subdivision 1 must clearly specify how the cost of health care used to calculate any co-payments, coinsurance, or lifetime benefits will be affected by the arrangements described in subdivision 1. (b) Any summary or other marketing material used in connection with marketing of a health plan that is subject to this section must prominently disclose and clearly explain the provisions required under paragraph (a), if the summary or other marketing material refers to co-payments, coinsurance, or maximum lifetime benefits. (c) A health plan that is subject to paragraph (a) must not be used in this state if the commissioner of commerce or health, as appropriate, has determined that it does not comply with this section. History:   1996 c 446 art 1 s 50 
62Q.50 PROSTATE CANCER SCREENING. A health plan must cover prostate cancer screening for men 40 years of age or over who are symptomatic or in a high-risk category and for all men 50 years of age or older. The screening must consist at a minimum of a prostate-specific antigen blood test and a digital rectal examination. This coverage is subject to any deductible, coinsurance, co-payment, or other limitation on coverage applicable to other coverages under the plan. For purposes of this section, "health plan" includes coverage that is excluded under section 62A.011, subdivision 3, clauses (7) and (10). History:  1996 c 446 art 1 s 51,72,73; 1998 c 339 s 12
62Q.51 POINT-OF-SERVICE OPTION. Subdivision 1. Definition. For purposes for this section, "point-of-service option" means a health plan under which the health plan company will reimburse an appropriately licensed or registered provider for providing covered services to an enrollee, without regard to whether the provider belongs to a particular network and without regard to whether the enrollee was referred to the provider by another provider. Subd. 2. Required point-of-service option. Each health plan company operating in the small group or large group market shall offer at least one point-of-service option in each such market in which it operates. Subd. 3. Rate approval. The premium rates and cost sharing requirements for each option must be submitted to the commissioner of health or the commissioner of commerce as required by law. A health plan that includes lower enrollee cost sharing for services provided by network providers than for services provided by out-of-network providers, or lower enrollee cost sharing for services provided with prior authorization or second opinion than for services provided without prior authorization or second opinion, qualifies as a point-of-service option. Subd. 4. Exemption. This section does not apply to a health plan company with fewer than 50,000 enrollees in its commercial health plan products. History:  1996 c 446 art 1 s 52; 1999 c 181 s 6
62Q.52 DIRECT ACCESS TO OBSTETRIC AND GYNECOLOGIC SERVICES. Subdivision 1. Direct access. (a) Health plan companies shall allow female enrollees direct access to providers who specialize in obstetrics and gynecology for the following services: (1) evaluation and necessary treatment for obstetric conditions or emergencies; (2) maternity care; and (3) evaluation and necessary treatment for gynecologic conditions or emergencies, including annual preventive health examinations. (b) For purposes of this section, "direct access" means that a female enrollee may obtain the obstetric and gynecologic services specified in paragraph (a) from providers who specialize in obstetrics and gynecology in the enrollee's network without a referral from, or prior approval through a primary care provider, another physician, the health plan company, or its representatives. (c) The health plan company shall treat the provision of obstetrical and gynecological care and the ordering of related obstetrical and gynecological items and services, pursuant to paragraph (a), by a participating health care provider who specializes in obstetrics or gynecology as the authorization of a primary care provider. (d) The health plan company may require the health care provider to agree to otherwise adhere to the health plan company's policies and procedures, including procedures for obtaining prior authorization and for providing services in accordance with a treatment plan, if any, approved by the health plan company. (e) Health plan companies shall not require higher co-payments, coinsurance, deductibles, or other enrollee cost-sharing for direct access. (f) This section applies only to services described in paragraph (a) that are covered by the enrollee's coverage, but coverage of a preventive health examination for female enrollees must not exclude coverage of a gynecologic examination. (g) For purposes of this section, a health care provider who specializes in obstetrics or gynecology means any individual, including an individual other than a physician, who is authorized under state law to provide obstetrical or gynecological care. (h) This section does not: (1) waive any exclusions of coverage under the terms and conditions of the health plan with respect to coverage of obstetrical or gynecological care; or (2) preclude the health plan company from requiring that the participating health care provider providing obstetrical or gynecological care notify the primary care provider or the health plan company of treatment decisions. Subd. 2. Notice. A health plan company shall provide notice to enrollees of the provisions of subdivision 1 in accordance with the requirements of the Affordable Care Act. Subd. 3. Enforcement. The commissioner of health shall enforce this section. History:  1997 c 26 s 1; 2013 c 84 art 1 s 76
62Q.521 POSTNATAL CARE. (a) For purposes of this section, "comprehensive postnatal visit" means a visit with a health care provider that includes a full assessment of the mother's and infant's physical, social, and psychological well-being, including but not limited to: mood and emotional well-being; infant care and feeding; sexuality, contraception, and birth spacing; sleep and fatigue; physical recovery from birth; chronic disease management; and health maintenance. (b) A health plan must provide coverage for the following: (1) a comprehensive postnatal visit with a health care provider not more than three weeks from the date of delivery; (2) any postnatal visits recommended by a health care provider between three and 11 weeks from the date of delivery; and (3) a comprehensive postnatal visit with a health care provider 12 weeks from the date of delivery. (c) The requirements of this section are separate from and cannot be met by a visit made pursuant to section 62A.0411. History:   2022 c 44 s 3 
62Q.525 COVERAGE FOR OFF-LABEL DRUG USE. Subdivision 1. Scope of coverage. This section applies to all health plans, including the coverages described in section 62A.011, subdivision 3, clauses (7) and (10), that are issued or renewed to a Minnesota resident. Subd. 2. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Medical literature" means articles from major peer reviewed medical journals that have recognized the drug or combination of drugs' safety and effectiveness for treatment of the indication for which it has been prescribed. Each article shall meet the uniform requirements for manuscripts submitted to biomedical journals established by the International Committee of Medical Journal Editors or be published in a journal specified by the United States Secretary of Health and Human Services pursuant to United States Code, title 42, section 1395x, paragraph (t), clause (2), item (B), as amended, as acceptable peer review medical literature. Each article must use generally acceptable scientific standards and must not use case reports to satisfy this criterion. (c) "Off-label use of drugs" means when drugs are prescribed for treatments other than those stated in the labeling approved by the federal Food and Drug Administration. (d) "Standard reference compendia" means any authoritative compendia as identified by the Medicare program for use in the determination of a medically accepted indication of drugs and biologicals used off-label. Subd. 3. Required coverage. (a) Every type of coverage included in subdivision 1 that provides coverage for drugs may not exclude coverage of a drug for the treatment of cancer on the ground that the drug has not been approved by the federal Food and Drug Administration for the treatment of cancer if the drug is recognized for treatment of cancer in one of the standard reference compendia or in one article in the medical literature, as defined in subdivision 2. (b) Coverage of a drug required by this subdivision includes coverage of medically necessary services directly related to and required for appropriate administration of the drug. (c) Coverage required by this subdivision does not include coverage of a drug not listed on the formulary of the coverage included in subdivision 1. (d) Coverage of a drug required under this subdivision must not be subject to any co-payment, coinsurance, deductible, or other enrollee cost-sharing greater than the coverage included in subdivision 1 applies to other drugs. (e) The commissioner of commerce or health, as appropriate, may direct a person that issues coverage included in subdivision 1 to make payments required by this section. Subd. 4. Construction. This section must not be construed to: (1) alter existing law limiting the coverage of drugs that have not been approved by the federal Food and Drug Administration; (2) require coverage for any drug when the federal Food and Drug Administration has determined its use to be contraindicated; (3) require coverage for experimental drugs not otherwise approved for any indication by the federal Food and Drug Administration; or (4) reduce or limit coverage for off-label use of drugs otherwise required by law or contract. History:  1998 c 301 s 1; 2009 c 159 s 3
62Q.526 COVERAGE FOR PARTICIPATION IN APPROVED CLINICAL TRIALS. Subdivision 1. Definitions. (a) As used in this section, the following definitions apply: (b) "Approved clinical trial" means a phase I, phase II, phase III, or phase IV clinical trial that is conducted in relation to the prevention, detection, or treatment of cancer or a life-threatening condition and is not designed exclusively to test toxicity or disease pathophysiology and must be: (1) conducted under an investigational new drug application reviewed by the United States Food and Drug Administration (FDA); (2) exempt from obtaining an investigational new drug application; or (3) approved or funded by: (i) the National Institutes of Health (NIH), the Centers for Disease Control and Prevention, the Agency for Health Care Research and Quality, the Centers for Medicare and Medicaid Services, or a cooperating group or center of any of the entities described in this item; (ii) a cooperative group or center of the United States Department of Defense or the United States Department of Veterans Affairs; (iii) a qualified nongovernmental research entity identified in the guidelines issued by the NIH for center support grants; or (iv) the United States Departments of Veterans Affairs, Defense, or Energy if the trial has been reviewed or approved through a system of peer review determined by the secretary to: (A) be comparable to the system of peer review of studies and investigations used by the NIH; and (B) provide an unbiased scientific review by qualified individuals who have no interest in the outcome of the review. (c) "Qualified individual" means an individual with health plan coverage who is eligible to participate in an approved clinical trial according to the trial protocol for the treatment of cancer or a life-threatening condition because: (1) the referring health care professional is participating in the trial and has concluded that the individual's participation in the trial would be appropriate; or (2) the individual provides medical and scientific information establishing that the individual's participation in the trial is appropriate because the individual meets the conditions described in the trial protocol. (d)(1) "Routine patient costs" includes all items and services covered by the health benefit plan of individual market health insurance coverage when the items or services are typically covered for an enrollee who is not a qualified individual enrolled in an approved clinical trial. (2) Routine patient costs does not include: (i) an investigational item, device, or service that is part of the trial; (ii) an item or service provided solely to satisfy data collection and analysis needs for the trial if the item or service is not used in the direct clinical management of the patient; (iii) a service that is clearly inconsistent with widely accepted and established standards of care for the individual's diagnosis; or (iv) an item or service customarily provided and paid for by the sponsor of a trial. Subd. 2. Prohibited acts. A health plan company that offers a health plan to a Minnesota resident may not: (1) deny participation by a qualified individual in an approved clinical trial; (2) deny, limit, or impose additional conditions on the coverage of routine patient costs for items or services furnished in connection with participation in the trial; or (3) discriminate against an individual on the basis of an individual's participation in an approved clinical trial. Subd. 3. Network plan conditions. A health plan company that designates a network or networks of contracted providers may require a qualified individual who wishes to participate in an approved clinical trial to participate in a trial that is offered through a health care provider who is part of the plan's network if the provider is participating in the trial and the provider accepts the individual as a participant in the trial. Subd. 4. Application to clinical trials outside of the state. This section applies to a qualified individual residing in this state who participates in an approved clinical trial that is conducted outside of this state. Subd. 5. Construction. (a) This section shall not be construed to require a health plan company offering health plan coverage through a network or networks of contracted providers to provide benefits for routine patient costs if the services are provided outside of the plan's network unless the out-of-network benefits are otherwise provided under the coverage. (b) This section shall not be construed to limit a health plan company's coverage with respect to clinical trials. (c) This section shall apply to all health plan companies offering a health plan to a Minnesota resident, unless otherwise amended by federal regulations under the Affordable Care Act. History:   2013 c 84 art 1 s 77 
62Q.527 NONFORMULARY ANTIPSYCHOTIC DRUGS; REQUIRED COVERAGE. Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given them. (b) "Emotional disturbance" has the meaning given in section 245.4871, subdivision 15. (c) "Mental illness" has the meaning given in section 245.462, subdivision 20, paragraph (a). (d) "Health plan" has the meaning given in section 62Q.01, subdivision 3, but includes the coverages described in section 62A.011, subdivision 3, clauses (7) and (10). Subd. 2. Required coverage for antipsychotic drugs. (a) A health plan that provides prescription drug coverage must provide coverage for an antipsychotic drug prescribed to treat emotional disturbance or mental illness regardless of whether the drug is in the health plan's drug formulary, if the health care provider prescribing the drug: (1) indicates to the dispensing pharmacist, orally or in writing according to section 151.21, that the prescription must be dispensed as communicated; and (2) certifies in writing to the health plan company that the health care provider has considered all equivalent drugs in the health plan's drug formulary and has determined that the drug prescribed will best treat the patient's condition. (b) The health plan is not required to provide coverage for a drug if the drug was removed from the health plan's drug formulary for safety reasons. (c) For drugs covered under this section, no health plan company that has received a certification from the health care provider as described in paragraph (a) may: (1) impose a special deductible, co-payment, coinsurance, or other special payment requirement that the health plan does not apply to drugs that are in the health plan's drug formulary; or (2) require written certification from the prescribing provider each time a prescription is refilled or renewed that the drug prescribed will best treat the patient's condition. Subd. 3. Continuing care. (a) Enrollees receiving a prescribed drug to treat a diagnosed mental illness or emotional disturbance may continue to receive the prescribed drug for up to one year without the imposition of a special deductible, co-payment, coinsurance, or other special payment requirements, when a health plan's drug formulary changes or an enrollee changes health plans and the medication has been shown to effectively treat the patient's condition. In order to be eligible for this continuing care benefit: (1) the patient must have been treated with the drug for 90 days prior to a change in a health plan's drug formulary or a change in the enrollee's health plan; (2) the health care provider prescribing the drug indicates to the dispensing pharmacist, orally or in writing according to section 151.21, that the prescription must be dispensed as communicated; and (3) the health care provider prescribing the drug certifies in writing to the health plan company that the drug prescribed will best treat the patient's condition. (b) The continuing care benefit shall be extended annually when the health care provider prescribing the drug: (1) indicates to the dispensing pharmacist, orally or in writing according to section 151.21, that the prescription must be dispensed as communicated; and (2) certifies in writing to the health plan company that the drug prescribed will best treat the patient's condition. (c) The health plan company is not required to provide coverage for a drug if the drug was removed from the health plan's drug formulary for safety reasons. Subd. 4. Exception to formulary. A health plan company must promptly grant an exception to the health plan's drug formulary for an enrollee when the health care provider prescribing the drug indicates to the health plan company that: (1) the formulary drug causes an adverse reaction in the patient; (2) the formulary drug is contraindicated for the patient; or (3) the health care provider demonstrates to the health plan that the prescription drug must be dispensed as written to provide maximum medical benefit to the patient. History:  1Sp2001 c 9 art 9 s 2; 2002 c 379 art 1 s 113
62Q.528 DRUG COVERAGE IN EMERGENCY SITUATIONS. A health plan that provides prescription drug coverage must provide coverage for a prescription drug dispensed by a pharmacist under section 151.211, subdivision 3, under the terms of coverage that would apply had the prescription drug been dispensed according to a prescription. History:   1Sp2019 c 9 art 9 s 2 
62Q.529 COVERAGE FOR DRUGS PRESCRIBED AND DISPENSED BY PHARMACIES. (a) A health plan that provides prescription coverage must provide coverage for self-administered hormonal contraceptives, nicotine replacement medications, and opiate antagonists for the treatment of an acute opiate overdose prescribed and dispensed by a licensed pharmacist in accordance with section 151.37, subdivision 14, 15, or 16, under the same terms of coverage that would apply had the prescription drug been prescribed by a licensed physician, physician assistant, or advanced practice registered nurse. (b) A health plan is not required to cover the drug if dispensed by an out-of-network pharmacy, unless the health plan covers prescription drugs dispensed by out-of-network pharmacies. History:  2020 c 115 art 2 s 2; 2022 c 58 s 170
62Q.53 MENTAL HEALTH COVERAGE; MEDICALLY NECESSARY CARE. Subdivision 1. Requirement. No health plan that covers mental health services may be offered, sold, issued, or renewed in this state that requires mental health services to satisfy a definition of "medically necessary care," "medical necessity," or similar term that is more restrictive with respect to mental health than the definition provided in subdivision 2. Subd. 2. Minimum definition. "Medically necessary care" means health care services appropriate, in terms of type, frequency, level, setting, and duration, to the enrollee's diagnosis or condition, and diagnostic testing and preventive services. Medically necessary care must be consistent with generally accepted practice parameters as determined by health care providers in the same or similar general specialty as typically manages the condition, procedure, or treatment at issue and must: (1) help restore or maintain the enrollee's health; or (2) prevent deterioration of the enrollee's condition. Subd. 3. Health plan; definition. For purposes of this section, "health plan" has the meaning given in section 62Q.01, subdivision 3, but includes the coverages listed in section 62A.011, subdivision 3, clauses (7) and (10). History:   1997 c 49 s 1 
62Q.535 COVERAGE FOR COURT-ORDERED MENTAL HEALTH SERVICES. Subdivision 1. Mental health services. For purposes of this section, mental health services means all covered services that are intended to treat or ameliorate an emotional, behavioral, or psychiatric condition and that are covered by the policy, contract, or certificate of coverage of the enrollee's health plan company or by law. Subd. 2. Coverage required. (a) All health plan companies that provide coverage for mental health services must cover or provide mental health services ordered by a court of competent jurisdiction under a court order that is issued on the basis of a behavioral care evaluation performed by a licensed psychiatrist or a doctoral level licensed psychologist, which includes a diagnosis and an individual treatment plan for care in the most appropriate, least restrictive environment. The health plan company must be given a copy of the court order and the behavioral care evaluation. The health plan company shall be financially liable for the evaluation if performed by a participating provider of the health plan company and shall be financially liable for the care included in the court-ordered individual treatment plan if the care is covered by the health plan and ordered to be provided by a participating provider or another provider as required by rule or law. This court-ordered coverage must not be subject to a separate medical necessity determination by a health plan company under its utilization procedures. (b) A party or interested person, including a health plan company or its designee, may make a motion for modification of the court-ordered plan of care pursuant to the applicable rules of procedure for modification of the court's order. The motion may include a request for a new behavioral care evaluation according to this section. History:  1Sp2001 c 9 art 9 s 3; 2002 c 379 art 1 s 113
62Q.54 REFERRALS FOR RESIDENTS OF HEALTH CARE FACILITIES. If an enrollee is a resident of a health care facility licensed under chapter 144A or an assisted living facility licensed under chapter 144G, the enrollee's primary care provider must refer the enrollee to that facility's skilled nursing unit or that facility's appropriate care setting, provided that the health plan company and the provider can best meet the patient's needs in that setting, if the following conditions are met: (1) the facility agrees to be reimbursed at that health plan company's contract rate negotiated with similar providers for the same services and supplies; and (2) the facility meets all guidelines established by the health plan company related to quality of care, utilization, referral authorization, risk assumption, use of health plan company network, and other criteria applicable to providers under contract for the same services and supplies. History:  1997 c 225 art 2 s 45; 2020 c 115 art 4 s 11; 7Sp2020 c 1 art 6 s 25
62Q.545 COVERAGE OF HOME CARE NURSING. (a) Home care nursing services, as provided under section 256B.0625, subdivision 7, with the exception of section 256B.0654, subdivision 4, shall be covered under a health plan for persons who are concurrently covered by both the health plan and enrolled in medical assistance under chapter 256B. (b) For purposes of this section, a period of home care nursing services may be subject to the co-payment, coinsurance, deductible, or other enrollee cost-sharing requirements that apply under the health plan. Cost-sharing requirements for home care nursing services must not place a greater financial burden on the insured or enrollee than those requirements applied by the health plan to other similar services or benefits. Nothing in this section is intended to prevent a health plan company from requiring prior authorization by the health plan company for such services as required by section 256B.0625, subdivision 7, or use of contracted providers under the applicable provisions of the health plan. History:  1Sp2010 c 1 art 19 s 1; 2014 c 291 art 9 s 5
62Q.55 EMERGENCY SERVICES. Subdivision 1. Access to emergency services. (a) Enrollees have the right to available and accessible emergency services, 24 hours a day and seven days a week. The health plan company shall inform its enrollees how to obtain emergency care for treatment of emergency medical conditions. Emergency services shall be covered whether provided by participating or nonparticipating providers and whether provided within or outside the health plan company's service area. In reviewing a denial for coverage of emergency services, the health plan company shall take the following factors into consideration: (1) a reasonable layperson's belief that the circumstances required immediate medical care that could not wait until the next working day or next available clinic appointment; (2) the time of day and day of the week the care was provided; (3) the presenting symptoms, including, but not limited to, severe pain, to ensure that the decision to reimburse the emergency care is not made solely on the basis of the actual diagnosis; (4) the enrollee's efforts to follow the health plan company's established procedures for obtaining emergency care; and (5) any circumstances that precluded use of the health plan company's established procedures for obtaining emergency care. (b) The health plan company may require enrollees to notify the health plan company of nonreferred emergency care as soon as possible, but not later than 48 hours, after the emergency care is initially provided. However, emergency care which would have been covered under the contract had notice been provided within the set time frame must be covered. (c) Notwithstanding paragraphs (a) and (b), a health plan company that is in compliance with the rules regarding accessibility of services adopted under section 62D.20 is in compliance with this section. Subd. 2. Emergency medical condition. For purposes of this section, "emergency medical condition" means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in a condition described in clause (i), (ii), or (iii), of section 1867(e)(1)(A) of the Social Security Act. Subd. 3. Emergency services. As used in this section, "emergency services" means, with respect to an emergency medical condition: (1) a medical screening examination, as required under section 1867 of the Social Security Act, that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition; (2) within the capabilities of the staff and facilities available at the hospital, such further medical examination and treatment as are required under section 1867 of the Social Security Act to stabilize the patient; and (3) emergency services as defined in sections 245.462, subdivision 11, and 245.4871, subdivision 14. Subd. 4. Stabilize. For purposes of this section, "stabilize," with respect to an emergency medical condition, has the meaning given in section 1867(e)(3) of the Social Security Act, United States Code, title 42, section 1395dd(e)(3). Subd. 5. Coverage restrictions or limitations. If emergency services are provided by a nonparticipating provider, with or without prior authorization, the health plan company shall not impose coverage restrictions or limitations that are more restrictive than apply to emergency services received from a participating provider. Cost-sharing requirements that apply to emergency services received out-of-network must be the same as the cost-sharing requirements that apply to services received in-network. History:  1997 c 237 s 11; 2013 c 84 art 1 s 78; 2015 c 71 art 2 s 3
62Q.556 UNAUTHORIZED PROVIDER SERVICES. Subdivision 1. Unauthorized provider services. (a) Except as provided in paragraph (c), unauthorized provider services occur when an enrollee receives services: (1) from a nonparticipating provider at a participating hospital or ambulatory surgical center, when the services are rendered: (i) due to the unavailability of a participating provider; (ii) by a nonparticipating provider without the enrollee's knowledge; or (iii) due to the need for unforeseen services arising at the time the services are being rendered; or (2) from a participating provider that sends a specimen taken from the enrollee in the participating provider's practice setting to a nonparticipating laboratory, pathologist, or other medical testing facility. (b) Unauthorized provider services do not include emergency services as defined in section 62Q.55, subdivision 3. (c) The services described in paragraph (a), clause (2), are not unauthorized provider services if the enrollee gives advance written consent to the provider acknowledging that the use of a provider, or the services to be rendered, may result in costs not covered by the health plan. Subd. 2. Prohibition. (a) An enrollee's financial responsibility for the unauthorized provider services shall be the same cost-sharing requirements, including co-payments, deductibles, coinsurance, coverage restrictions, and coverage limitations, as those applicable to services received by the enrollee from a participating provider. A health plan company must apply any enrollee cost sharing requirements, including co-payments, deductibles, and coinsurance, for unauthorized provider services to the enrollee's annual out-of-pocket limit to the same extent payments to a participating provider would be applied. (b) A health plan company must attempt to negotiate the reimbursement, less any applicable enrollee cost sharing under paragraph (a), for the unauthorized provider services with the nonparticipating provider. If a health plan company's and nonparticipating provider's attempts to negotiate reimbursement for the health care services do not result in a resolution, the health plan company or provider may elect to refer the matter for binding arbitration, chosen in accordance with paragraph (c). A nondisclosure agreement must be executed by both parties prior to engaging an arbitrator in accordance with this section. The cost of arbitration must be shared equally between the parties. (c) The commissioner of health, in consultation with the commissioner of the Bureau of Mediation Services, must develop a list of professionals qualified in arbitration, for the purpose of resolving disputes between a health plan company and nonparticipating provider arising from the payment for unauthorized provider services. The commissioner of health shall publish the list on the Department of Health website, and update the list as appropriate. (d) The arbitrator must consider relevant information, including the health plan company's payments to other nonparticipating providers for the same services, the circumstances and complexity of the particular case, and the usual and customary rate for the service based on information available in a database in a national, independent, not-for-profit corporation, and similar fees received by the provider for the same services from other health plans in which the provider is nonparticipating, in reaching a decision. History:  2017 c 2 art 2 s 13; 2017 c 13 art 2 s 6
62Q.56 CONTINUITY OF CARE. Subdivision 1. Change in health care provider; general notification. (a) If enrollees are required to access services through selected primary care providers for coverage, the health plan company shall prepare a written plan that provides for continuity of care in the event of contract termination between the health plan company and any of the contracted primary care providers, specialists, or general hospital providers. The written plan must explain: (1) how the health plan company will inform affected enrollees about termination at least 30 days before the termination is effective, if the health plan company or health care network cooperative has received at least 120 days' prior notice; (2) how the health plan company will inform the affected enrollees about what other participating providers are available to assume care and how it will facilitate an orderly transfer of its enrollees from the terminating provider to the new provider to maintain continuity of care; (3) the procedures by which enrollees will be transferred to other participating providers, when special medical needs, special risks, or other special circumstances, such as cultural or language barriers, require them to have a longer transition period or be transferred to nonparticipating providers; (4) who will identify enrollees with special medical needs or at special risk and what criteria will be used for this determination; and (5) how continuity of care will be provided for enrollees identified as having special needs or at special risk, and whether the health plan company has assigned this responsibility to its contracted primary care providers. (b) For purposes of this section, contract termination includes nonrenewal. Subd. 1a. Change in health care provider; termination not for cause. (a) If the contract termination was not for cause and the contract was terminated by the health plan company, the health plan company must provide the terminated provider and all enrollees being treated by that provider with notification of the enrollees' rights to continuity of care with the terminated provider. (b) The health plan company must provide, upon request, authorization to receive services that are otherwise covered under the terms of the health plan through the enrollee's current provider: (1) for up to 120 days if the enrollee is engaged in a current course of treatment for one or more of the following conditions: (i) an acute condition; (ii) a life-threatening mental or physical illness; (iii) pregnancy beyond the first trimester of pregnancy; (iv) a physical or mental disability defined as an inability to engage in one or more major life activities, provided that the disability has lasted or can be expected to last for at least one year, or can be expected to result in death; or (v) a disabling or chronic condition that is in an acute phase; or (2) for the rest of the enrollee's life if a physician, advanced practice registered nurse, or physician assistant certifies that the enrollee has an expected lifetime of 180 days or less. For all requests for authorization to receive services under this paragraph, the health plan company must grant the request unless the enrollee does not meet the criteria provided in this paragraph. (c) The health plan company shall prepare a written plan that provides a process for coverage determinations regarding continuity of care of up to 120 days for enrollees who request continuity of care with their former provider, if the enrollee: (1) is receiving culturally appropriate services and the health plan company does not have a provider in its preferred provider network with special expertise in the delivery of those culturally appropriate services within the time and distance requirements of section 62D.124, subdivision 1; or (2) does not speak English and the health plan company does not have a provider in its preferred provider network who can communicate with the enrollee, either directly or through an interpreter, within the time and distance requirements of section 62D.124, subdivision 1. The written plan must explain the criteria that will be used to determine whether a need for continuity of care exists and how it will be provided. Subd. 1b. Change in health care provider; termination for cause. If the contract termination was for cause, enrollees must be notified of the change and transferred to participating providers in a timely manner so that health care services remain available and accessible to the affected enrollees. The health plan company is not required to refer an enrollee back to the terminating provider if the termination was for cause. Subd. 2. Change in health plans. (a) If an enrollee is subject to a change in health plans, the enrollee's new health plan company must provide, upon request, authorization to receive services that are otherwise covered under the terms of the new health plan through the enrollee's current provider: (1) for up to 120 days if the enrollee is engaged in a current course of treatment for one or more of the following conditions: (i) an acute condition; (ii) a life-threatening mental or physical illness; (iii) pregnancy beyond the first trimester of pregnancy; (iv) a physical or mental disability defined as an inability to engage in one or more major life activities, provided that the disability has lasted or can be expected to last for at least one year, or can be expected to result in death; or (v) a disabling or chronic condition that is in an acute phase; or (2) for the rest of the enrollee's life if a physician certifies that the enrollee has an expected lifetime of 180 days or less. For all requests for authorization under this paragraph, the health plan company must grant the request for authorization unless the enrollee does not meet the criteria provided in this paragraph. (b) The health plan company shall prepare a written plan that provides a process for coverage determinations regarding continuity of care of up to 120 days for new enrollees who request continuity of care with their former provider, if the new enrollee: (1) is receiving culturally appropriate services and the health plan company does not have a provider in its preferred provider network with special expertise in the delivery of those culturally appropriate services within the time and distance requirements of section 62D.124, subdivision 1; or (2) does not speak English and the health plan company does not have a provider in its preferred provider network who can communicate with the enrollee, either directly or through an interpreter, within the time and distance requirements of section 62D.124, subdivision 1. The written plan must explain the criteria that will be used to determine whether a need for continuity of care exists and how it will be provided. (c) This subdivision applies only to group coverage and continuation and conversion coverage, and applies only to changes in health plans made by the employer. Subd. 2a. Limitations. (a) Subdivisions 1, 1a, 1b, and 2 apply only if the enrollee's health care provider agrees to: (1) accept as payment in full the lesser of the health plan company's reimbursement rate for in-network providers for the same or similar service or the enrollee's health care provider's regular fee for that service; (2) adhere to the health plan company's preauthorization requirements; and (3) provide the health plan company with all necessary medical information related to the care provided to the enrollee. (b) Nothing in this section requires a health plan company to provide coverage for a health care service or treatment that is not covered under the enrollee's health plan. Subd. 2b. Request for authorization. The health plan company may require medical records and other supporting documentation to be submitted with the requests for authorization made under subdivision 1, 1a, 1b, or 2. If the authorization is denied, the health plan company must explain the criteria it used to make its decision on the request for authorization. If the authorization is granted, the health plan company must explain how continuity of care will be provided. Subd. 3. Disclosure. Information regarding an enrollee's rights under this section must be included in member contracts or certificates of coverage and must be provided by a health plan company upon request of an enrollee or prospective enrollee. History:  1997 c 237 s 12; 1Sp2001 c 9 art 16 s 7; 2002 c 379 art 1 s 113; 2017 c 59 s 1
62Q.57 DESIGNATION OF PRIMARY CARE PROVIDER. Subdivision 1. Choice of primary care provider. (a) If a health plan company offering a group health plan, or an individual health plan that is not a grandfathered plan, requires or provides for the designation by an enrollee of a participating primary care provider, the health plan company shall permit each enrollee to: (1) designate any participating primary care provider available to accept the enrollee; and (2) for a child, designate any participating physician, advanced practice registered nurse, or physician assistant who specializes in pediatrics as the child's primary care provider and is available to accept the child. (b) This section does not waive any exclusions of coverage under the terms and conditions of the health plan with respect to coverage of pediatric care. Subd. 2. Notice. A health plan company shall provide notice to enrollees of the provisions of subdivision 1 in accordance with the requirements of the Affordable Care Act. Subd. 3. Enforcement. The commissioner shall enforce this section. History:  2013 c 84 art 1 s 79; 2020 c 115 art 4 s 12; 2022 c 58 s 12
62Q.58 ACCESS TO SPECIALTY CARE. Subdivision 1. Standing referral. A health plan company shall establish a procedure by which an enrollee may apply for and, if appropriate, receive a standing referral to a health care provider who is a specialist if a referral to a specialist is required for coverage. This procedure for a standing referral must specify the necessary managed care review and approval an enrollee must obtain before such a standing referral is permitted. Subd. 1a. Mandatory standing referral. (a) An enrollee who requests a standing referral to a specialist qualified to treat the specific condition described in clauses (1) to (5) must be given a standing referral for visits to such a specialist if benefits for such treatment are provided under the health plan and the enrollee has any of the following conditions: (1) a chronic health condition; (2) a life-threatening mental or physical illness; (3) pregnancy beyond the first trimester of pregnancy; (4) a degenerative disease or disability; or (5) any other condition or disease of sufficient seriousness and complexity to require treatment by a specialist. (b) Nothing in this section limits the application of section 62Q.52 specifying direct access to obstetricians and gynecologists. (c) Paragraph (a) does not apply to health plans issued under sections 43A.23 to 43A.31. Subd. 2. Coordination of services. An enrollee with a standing referral to a specialist may request primary care services from that specialist. The specialist, in agreement with the enrollee and primary care provider or primary care group, may elect to provide primary care services to the enrollee, authorize tests and services, and make secondary referrals according to procedures established by the health plan company. The health plan company may limit the primary care services, tests and services, and secondary referrals authorized under this subdivision to those that are related to the specific condition or conditions for which the standing referral was made. Subd. 3. Disclosure. Information regarding referral procedures must be included in member contracts or certificates of coverage and must be provided to an enrollee or prospective enrollee by a health plan company upon request. Subd. 4. Referral. (a) If a standing referral is authorized under subdivision 1 or is mandatory under subdivision 1a, the health plan company must provide a referral to an appropriate participating specialist who is reasonably available and accessible to provide the treatment or to a nonparticipating specialist if the health plan company does not have an appropriate participating specialist who is reasonably available and accessible to treat the enrollee's condition or disease. (b) If an enrollee receives services from a nonparticipating specialist because a participating specialist is not available, services must be provided at no additional cost to the enrollee beyond what the enrollee would otherwise pay for services received from a participating specialist. History:  1997 c 237 s 13; 1Sp2001 c 9 art 16 s 8; 2002 c 379 art 1 s 113
62Q.645 EFFICIENCY REPORTS AND DISTRIBUTION OF INFORMATION. (a) The commissioner may use reports submitted by health plan companies, service cooperatives, and the public employee insurance program created in section 43A.316 to compile entity specific administrative efficiency reports; may make these reports available on state agency websites, including minnesotahealthinfo.com; and may include information on: (1) number of covered lives; (2) covered services; (3) geographic availability; (4) whom to contact to obtain current premium rates; (5) administrative costs, using the definition of administrative costs developed under section 62J.38; (6) Internet links to information on the health plan, if available; and (7) any other information about the health plan identified by the commissioner as being useful for employers, consumers, providers, and others in evaluating health plan options. (b) This section does not apply to a health plan company unless its annual Minnesota premiums exceed $50,000,000 based on the most recent assessment base of the Minnesota Comprehensive Health Association. For purposes of this determination, the premiums of a health plan company include those of its affiliates. History:   2006 c 255 s 34 
62Q.65 ACCESS TO PROVIDER DISCOUNTS. Subdivision 1. Requirement. A high deductible health plan must, when used in connection with a medical savings account or health savings account, provide the enrollee access to any discounted provider fees for services covered by the high deductible health plan, regardless of whether the enrollee has satisfied the deductible for the high deductible health plan. Subd. 2. Definitions. For purposes of this section, the following terms have the meanings given: (1) "high deductible health plan" has the meaning given under the Internal Revenue Code of 1986, section 220(c)(2), with respect to a medical savings account; and the meaning given under Internal Revenue Code of 1986, section 223(c)(2), with respect to a health savings account; (2) "medical savings account" has the meaning given under the Internal Revenue Code of 1986, section 220(d)(1); (3) "discounted provider fees" means fees contained in a provider agreement entered into by the issuer of the high deductible health plan, or an affiliate of the issuer, for use in connection with the high deductible health plan; and (4) "health savings account" has the meaning given under the Internal Revenue Code of 1986, section 223(d). History:  1997 c 225 art 2 s 46; 2005 c 132 s 17
62Q.66 DURABLE MEDICAL EQUIPMENT COVERAGE. No health plan company that covers durable medical equipment may utilize medical coverage criteria for durable medical equipment that limits coverage solely to equipment used in the home. History:   1998 c 334 s 1 
62Q.67 DISCLOSURE OF COVERED DURABLE MEDICAL EQUIPMENT. Subdivision 1. Disclosure. A health plan company that covers durable medical equipment shall provide enrollees, and upon request prospective enrollees, written disclosure that includes the information set forth in subdivision 2. The health plan company may include the information in the member contract, certificate of coverage, schedule of payments, member handbook, or other written enrollee communication. Subd. 2. Information to be disclosed. A health plan company that covers durable medical equipment shall disclose the following information: (1) general descriptions of the coverage for durable medical equipment, level of coverage available, and criteria and procedures for any required prior authorizations; and (2) the address and telephone number of a health plan representative whom an enrollee may contact to obtain specific information verbally, or upon request in writing, about prior authorization including criteria used in making coverage decisions and information on limitations or exclusions for durable medical equipment. History:   1998 c 334 s 2 
62Q.675 HEARING AIDS; PERSONS 18 OR YOUNGER. A health plan must cover hearing aids for individuals 18 years of age or younger for hearing loss that is not correctable by other covered procedures. Coverage required under this section is limited to one hearing aid in each ear every three years. No special deductible, coinsurance, co-payment, or other limitation on the coverage under this section that is not generally applicable to other coverages under the plan may be imposed. History:  1Sp2003 c 14 art 7 s 24; 2007 c 60 s 1
62Q.676 MEDICATION THERAPY MANAGEMENT. A pharmacy benefit manager that provides prescription drug services must make available medication therapy management services for enrollees taking four or more prescriptions to treat or prevent two or more chronic medical conditions. For purposes of this section, "medication therapy management" means the provision of the following pharmaceutical care services by, or under the supervision of, a licensed pharmacist to optimize the therapeutic outcomes of the patient's medications: (1) performing a comprehensive medication review to identify, resolve, and prevent medication-related problems, including adverse drug events; (2) communicating essential information to the patient's other primary care providers; and (3) providing verbal education and training designed to enhance patient understanding and appropriate use of the patient's medications. Nothing in this section shall be construed to expand or modify the scope of practice of the pharmacist as defined in section 151.01, subdivision 27. History:   2009 c 79 art 4 s 7 
62Q.677 LIFETIME AND ANNUAL LIMITS. Subdivision 1. Applicability and scope. Except as provided in subdivision 2, this section applies to a health plan company providing coverage under an individual or group health plan. For purposes of this section, essential health benefits is defined under section 62Q.81. Subd. 2. Grandfathered plan limits. (a) The prohibition on lifetime limits applies to grandfathered plans providing individual health plan coverage or group health plan coverage. (b) The prohibition and limits on annual limits apply to grandfathered plans providing group health plan coverage, but do not apply to grandfathered plans providing individual health plan coverage. Subd. 3. Prohibition on lifetime and annual limits. (a) Except as provided in subdivisions 4 and 5, a health plan company offering coverage under an individual or group health plan shall not establish a lifetime limit on the dollar amount of essential health benefits for any individual. (b) Except as provided in subdivisions 4, 5, and 6, a health plan company shall not establish any annual limit on the dollar amount of essential health benefits for any individual. Subd. 4. Nonessential benefits; out-of-network providers. (a) Subdivision 3 does not prevent a health plan company from placing annual or lifetime dollar limits for any individual on specific covered benefits that are not essential health benefits as defined in section 62Q.81, subdivision 4, to the extent that the limits are otherwise permitted under applicable federal or state law. (b) Subdivision 3 does not prevent a health plan company from placing an annual or lifetime limit for services provided by out-of-network providers. Subd. 5. Excluded benefits. This section does not prohibit a health plan company from excluding all benefits for a given condition. Subd. 6. Annual limits prior to January 1, 2014. For plan or policy years beginning before January 1, 2014, for any individual, a health plan company may establish an annual limit on the dollar amount of benefits that are essential health benefits provided the limit is no less than the following: (1) for a plan or policy year beginning after September 22, 2010, but before September 23, 2011, $750,000; (2) for a plan or policy year beginning after September 22, 2011, but before September 23, 2012, $1,250,000; and (3) for a plan or policy year beginning after September 22, 2012, but before January 1, 2014, $2,000,000. In determining whether an individual has received benefits that meet or exceed the allowable limits, a health plan company shall take into account only essential health benefits. Subd. 7. Waivers. For plan or policy years beginning before January 1, 2014, a health plan is exempt from the annual limit requirements if the health plan is approved for a waiver from the requirements by the United States Department of Health and Human Services, but the exemption only applies for the specified period of time that the waiver from the United States Department of Health and Human Services is applicable. Subd. 8. Notices. (a) At the time a health plan company receives a waiver from the United States Department of Health and Human Services, the health plan company shall notify prospective applicants and affected policyholders and the commissioner in each state where prospective applicants and any affected insured are known to reside. (b) At the time the waiver expires or is otherwise no longer in effect, the health plan company shall notify affected policyholders and the commissioner in each state where any affected insured is known to reside. Subd. 9. Reinstatement. A health plan company shall comply with all provisions of the Affordable Care Act with regard to reinstatement of coverage for individuals whose coverage or benefits under a health plan ended by reason of reaching a lifetime dollar limit on the dollar value of all benefits for the individual. Subd. 10. Compliance. This section does not require compliance with any provision of the Affordable Care Act before the effective date provided for that provision in the Affordable Care Act. The commissioner shall enforce this section. History:   2013 c 84 art 1 s 80 
62Q.678 DEPENDENT CHILD NOTICE. Group health plans and health plan companies that offer group or individual health plans with dependent coverage must provide written notice to an enrollee with dependent child coverage that the dependent child's coverage ends when the child reaches the age of 26. Notice must be sent to the enrollee at the enrollee's last known address at least 60 days before the dependent child reaches the age of 26. The notice must include the date on which coverage ends and information on accessing the MNsure website as applicable. History:   2020 c 73 s 2 
62Q.68 DEFINITIONS. Subdivision 1. Application. For purposes of sections 62Q.68 to 62Q.72, the terms defined in this section have the meanings given them. For purposes of sections 62Q.69 and 62Q.70, the term "health plan company" does not include an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01 or a nonprofit health service plan corporation regulated under chapter 62C that only provides dental coverage or vision coverage. For purposes of sections 62Q.69 through 62Q.73, the term "health plan company" does not include the Comprehensive Health Association created under chapter 62E. Section 62Q.70 does not apply to individual coverage. However, a health plan company offering individual coverage may, pursuant to section 62Q.69, subdivision 3, paragraph (c), follow the process outlined in section 62Q.70. Subd. 2. Complaint. "Complaint" means any grievance against a health plan company that is not the subject of litigation and that has been submitted by a complainant to a health plan company regarding the provision of health services including, but not limited to, the scope of coverage for health care services; retrospective denials or limitations of payment for services; eligibility issues; denials, cancellations, or nonrenewals of coverage; administrative operations; and the quality, timeliness, and appropriateness of health care services rendered. If the complaint is from an applicant, the complaint must relate to the application. If the complaint is from a former enrollee, the complaint must relate to services received during the period of time the individual was an enrollee. Any grievance requiring a medical determination in its resolution must have the medical determination aspect of the complaint processed under the appeal procedure described in section 62M.06. Subd. 3. Complainant. "Complainant" means an enrollee, applicant, or former enrollee, or anyone acting on behalf of an enrollee, applicant, or former enrollee, who submits a complaint. History:  1999 c 239 s 34; 2002 c 330 s 28; 2013 c 84 art 1 s 81
62Q.69 COMPLAINT RESOLUTION. Subdivision 1. Establishment. Each health plan company must establish and maintain an internal complaint resolution process that meets the requirements of this section to provide for the resolution of a complaint initiated by a complainant. Subd. 2. Procedures for filing a complaint. (a) A complainant may submit a complaint to a health plan company either by telephone or in writing. If a complaint is submitted orally and the resolution of the complaint, as determined by the complainant, is partially or wholly adverse to the complainant, or the oral complaint is not resolved to the satisfaction of the complainant, by the health plan company within ten days of receiving the complaint, the health plan company must inform the complainant that the complaint may be submitted in writing. The health plan company must also offer to provide the complainant with any assistance needed to submit a written complaint, including an offer to complete the complaint form for a complaint that was previously submitted orally and promptly mail the completed form to the complainant for the complainant's signature. At the complainant's request, the health plan company must provide the assistance requested by the complainant. The complaint form must include the following information: (1) the telephone number of the health plan company member services or other departments or persons equipped to advise complainants on complaint resolution; (2) the address to which the form must be sent; (3) a description of the health plan company's internal complaint procedure and the applicable time limits; and (4) the toll-free telephone number of either the commissioner of health or commerce and notification that the complainant has the right to submit the complaint at any time to the appropriate commissioner for investigation. (b) Upon receipt of a written complaint, the health plan company must notify the complainant within ten business days that the complaint was received, unless the complaint is resolved to the satisfaction of the complainant within the ten business days. (c) Each health plan company must provide, in the member handbook, subscriber contract, or certification of coverage, a clear and concise description of how to submit a complaint and a statement that, upon request, assistance in submitting a written complaint is available from the health plan company. Subd. 3. Notification of complaint decisions. (a) The health plan company must notify the complainant in writing of its decision and the reasons for it as soon as practical but in no case later than 30 days after receipt of a written complaint. If the health plan company cannot make a decision within 30 days due to circumstances outside the control of the health plan company, the health plan company may take up to 14 additional days to notify the complainant of its decision. If the health plan company takes any additional days beyond the initial 30-day period to make its decision, it must inform the complainant, in advance, of the extension and the reasons for the extension. (b) For group health plans, if the decision is partially or wholly adverse to the complainant, the notification must inform the complainant of the right to appeal the decision to the health plan company's internal appeal process described in section 62Q.70 and the procedure for initiating an appeal. (c) For individual health plans, if the decision is partially or wholly adverse to the complainant, the notification must inform the complainant of the right to submit the complaint decision to the external review process described in section 62Q.73 and the procedure for initiating the external review process. Notwithstanding the provisions in this subdivision, a health plan company offering individual coverage may instead follow the process for group health plans outlined in paragraph (b). (d) The notification must also inform the complainant of the right to submit the complaint at any time to either the commissioner of health or commerce for investigation and the toll-free telephone number of the appropriate commissioner. History:  1999 c 239 s 35; 2008 c 221 s 1; 2013 c 84 art 1 s 82
62Q.70 APPEAL OF THE COMPLAINT DECISION. Subdivision 1. Establishment. (a) Each health plan company shall establish an internal appeal process for reviewing a health plan company's decision regarding a complaint filed in accordance with section 62Q.69. The appeal process must meet the requirements of this section. This section applies only to group health plans. However, a health plan company offering individual coverage may, pursuant to section 62Q.69, subdivision 3, paragraph (c), follow the process outlined in this section. (b) The person or persons with authority to resolve or recommend the resolution of the internal appeal must not be solely the same person or persons who made the complaint decision under section 62Q.69. (c) The internal appeal process must permit the enrollee to review the information relied upon in the course of the appeal and the receipt of testimony, correspondence, explanations, or other information from the complainant, staff persons, administrators, providers, or other persons as deemed necessary by the person or persons investigating or presiding over the appeal. (d) The enrollee must be allowed to receive continued coverage pending the outcome of the appeals process. Subd. 2. Procedures for filing an appeal. The health plan company must provide notice to enrollees of its internal appeals process in a culturally and linguistically appropriate manner consistent with the provisions of the Affordable Care Act. If a complainant notifies the health plan company of the complainant's desire to appeal the health plan company's decision regarding the complaint through the internal appeal process, the health plan company must provide the complainant the option for the appeal to occur either in writing or by hearing. Subd. 3. Notification of appeal decisions. (a) If a complainant appeals in writing, the health plan company must give the complainant written notice of the appeal decision and all key findings within 30 days of the health plan company's receipt of the complainant's written notice of appeal. If a complainant appeals by hearing, the health plan company must give the complainant written notice of the appeal decision and all key findings within 45 days of the health plan company's receipt of the complainant's written notice of appeal. (b) If the appeal decision is partially or wholly adverse to the complainant, the notice must advise the complainant of the right to submit the appeal decision to the external review process described in section 62Q.73 and the procedure for initiating the external process. (c) Upon the request of the complainant, the health plan company must provide the complainant with a complete summary of the appeal decision. History:  1999 c 239 s 36; 2013 c 84 art 1 s 83,84
62Q.71 NOTICE TO ENROLLEES. Each health plan company shall provide to enrollees a clear and concise description of its complaint resolution procedure, if applicable under section 62Q.68, subdivision 1, and the procedure used for utilization review as defined under chapter 62M as part of the member handbook, subscriber contract, or certificate of coverage. If the health plan company does not issue a member handbook, the health plan company may provide the description in another written document. The description must specifically inform enrollees: (1) how to submit a complaint to the health plan company; (2) if the health plan includes utilization review requirements, how to notify the utilization review organization in a timely manner and how to obtain authorization for health care services; (3) how to request an appeal either through the procedures described in section 62Q.70, if applicable, or through the procedures described in chapter 62M; (4) of the right to file a complaint with either the commissioner of health or commerce at any time during the complaint and appeal process; (5) of the toll-free telephone number of the appropriate commissioner; and (6) of the right, for individual and group coverage, to obtain an external review under section 62Q.73 and a description of when and how that right may be exercised, including that under most circumstances an enrollee must exhaust the internal complaint or appeal process prior to external review. However, an enrollee may proceed to external review without exhausting the internal complaint or appeal process under the following circumstances: (i) the health plan company waives the exhaustion requirement; (ii) the health plan company is considered to have waived the exhaustion requirement by failing to substantially comply with any requirements including, but not limited to, time limits for internal complaints or appeals; or (iii) the enrollee has applied for an expedited external review at the same time the enrollee has applied for internal review under chapter 62M. History:  1999 c 239 s 37; 2003 c 2 art 1 s 8; 2013 c 84 art 1 s 85; 2020 c 114 art 2 s 17
62Q.72 RECORD KEEPING; REPORTING. Subdivision 1. Record keeping. Each health plan company shall maintain records of all enrollee complaints and their resolutions. These records shall be retained for five years and shall be made available to the appropriate commissioner upon request. An insurance company licensed under chapter 60A may instead comply with section 72A.20, subdivision 30. Subd. 2. Reporting. Each health plan company shall submit to the appropriate commissioner, as part of the company's annual filing, data on the number and type of complaints that are not resolved within 30 days, or 30 business days as provided under section 72A.201, subdivision 4, clause (3), for insurance companies licensed under chapter 60A. The commissioner shall also make this information available to the public upon request. History:   1999 c 239 s 38 
62Q.73 EXTERNAL REVIEW OF ADVERSE DETERMINATIONS. Subdivision 1. Definition. For purposes of this section, "adverse determination" means: (1) for individual health plans, a complaint decision relating to a health care service or claim that is partially or wholly adverse to the complainant; (2) an individual health plan that is grandfathered plan coverage may instead apply the definition of adverse determination for group coverage in clause (3); (3) for group health plans, a complaint decision relating to a health care service or claim that has been appealed in accordance with section 62Q.70 and the appeal decision is partially or wholly adverse to the complainant; (4) any adverse determination, as defined in section 62M.02, subdivision 1a, that has been appealed in accordance with section 62M.06 and the appeal did not reverse the adverse determination; (5) a decision relating to a health care service made by a health plan company licensed under chapter 60A that denies the service on the basis that the service was not medically necessary; or (6) the enrollee has met the requirements of subdivision 6, paragraph (e). An adverse determination does not include complaints relating to fraudulent marketing practices or agent misrepresentation. Subd. 2. Exception. (a) This section does not apply to governmental programs except as permitted under paragraph (b). For purposes of this subdivision, "governmental programs" means the prepaid medical assistance program, the MinnesotaCare program, the demonstration project for people with disabilities, and the federal Medicare program. (b) In the course of a recipient's appeal of a medical determination to the commissioner of human services under section 256.045, the recipient may request an expert medical opinion be arranged by the external review entity under contract to provide independent external reviews under this section. If such a request is made, the cost of the review shall be paid by the commissioner of human services. Any medical opinion obtained under this paragraph shall only be used by a state human services judge as evidence in the recipient's appeal to the commissioner of human services under section 256.045. (c) Nothing in this subdivision shall be construed to limit or restrict the appeal rights provided in section 256.045 for governmental program recipients. 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 and must be refunded if the adverse determination is completely reversed. No enrollee may be subject to filing fees totaling more than $75 during a plan year for group coverage or policy year for individual coverage. (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. (d) The enrollee must request external review within six months from the date of the adverse determination. Subd. 4. Contract. Pursuant to a request for proposal, the commissioner of administration, in consultation with the commissioners of health and commerce, shall contract with at least three organizations or business entities to provide independent external reviews of all adverse determinations submitted for external review. The contract shall ensure that the fees for services rendered in connection with the reviews are reasonable. Subd. 5. Criteria. The request for proposal must require that the entity demonstrate: (1) no conflicts of interest in that it is not owned, a subsidiary of, or affiliated with a health plan company, utilization review organization, or a trade organization of health care providers; (2) an expertise in dispute resolution; (3) an expertise in health-related law; (4) an ability to conduct reviews using a variety of alternative dispute resolution procedures depending upon the nature of the dispute; (5) an ability to maintain written records, for at least three years, regarding reviews conducted and provide data to the commissioners of health and commerce upon request on reviews conducted; (6) an ability to ensure confidentiality of medical records and other enrollee information; (7) accreditation by nationally recognized private accrediting organization; and (8) the ability to provide an expedited external review process. Subd. 6. Process. (a) Upon receiving a request for an external review, the commissioner shall assign an external review entity on a random basis. The assigned external review entity must provide immediate notice of the review to the enrollee and to the health plan company. Within ten business days of receiving notice of the review, the health plan company and the enrollee must provide the assigned external review entity with any information that they wish to be considered. Each party shall be provided an opportunity to present its version of the facts and arguments. The assigned external review entity must furnish to the health plan company any additional information submitted by the enrollee within one business day of receipt. An enrollee may be assisted or represented by a person of the enrollee's choice. (b) As part of the external review process, any aspect of an external review involving a medical determination must be performed by a health care professional with expertise in the medical issue being reviewed. (c) An external review shall be made as soon as practical but in no case later than 45 days after receiving the request for an external review and must promptly send written notice of the decision and the reasons for it to the enrollee, the health plan company, and the commissioner who is responsible for regulating the health plan company. (d) The external review entity and the clinical reviewer assigned must not have a material professional, familial, or financial conflict of interest with: (1) the health plan company that is the subject of the external review; (2) the enrollee, or any parties related to the enrollee, whose treatment is the subject of the external review; (3) any officer, director, or management employee of the health plan company; (4) a plan administrator, plan fiduciaries, or plan employees; (5) the health care provider, the health care provider's group, or practice association recommending treatment that is the subject of the external review; (6) the facility at which the recommended treatment would be provided; or (7) the developer or manufacturer of the principal drug, device, procedure, or other therapy being recommended. (e)(1) An expedited external review must be provided if the enrollee requests it after receiving: (i) an adverse determination that involves a medical condition for which the time frame for completion of an expedited internal appeal would seriously jeopardize the life or health of the enrollee or would jeopardize the enrollee's ability to regain maximum function and the enrollee has simultaneously requested an expedited internal appeal; (ii) an adverse determination that concerns an admission, availability of care, continued stay, or health care service for which the enrollee received emergency services but has not been discharged from a facility; or (iii) an adverse determination that involves a medical condition for which the standard external review time would seriously jeopardize the life or health of the enrollee or jeopardize the enrollee's ability to regain maximum function. (2) The external review entity must make its expedited determination to uphold or reverse the adverse determination as expeditiously as possible but within no more than 72 hours after the receipt of the request for expedited review and notify the enrollee and the health plan company of the determination. (3) If the external review entity's notification is not in writing, the external review entity must provide written confirmation of the determination within 48 hours of the notification. Subd. 7. Standards of review. (a) For an external review of any issue in an adverse determination that does not require a medical necessity determination, the external review must be based on whether the adverse determination was in compliance with the enrollee's health benefit plan. (b) For an external review of any issue in an adverse determination by a health plan company licensed under chapter 62D that requires a medical necessity determination, the external review must determine whether the adverse determination was consistent with the definition of medically necessary care in Minnesota Rules, part 4685.0100, subpart 9b. (c) For an external review of any issue in an adverse determination by a health plan company, other than a health plan company licensed under chapter 62D, that requires a medical necessity determination, the external review must determine whether the adverse determination was consistent with the definition of medically necessary care in section 62Q.53, subdivision 2. (d) For an external review of an adverse determination involving experimental or investigational treatment, the external review entity must base its decision on all documents submitted by the health plan company and enrollee, including: (1) medical records; (2) the recommendation of the attending physician, advanced practice registered nurse, physician assistant, or health care professional; (3) consulting reports from health care professionals; (4) the terms of coverage; (5) federal Food and Drug Administration approval; and (6) medical or scientific evidence or evidence-based standards. Subd. 8. Effects of external review. A decision rendered under this section shall be nonbinding on the enrollee and binding on the health plan company. The health plan company may seek judicial review of the decision on the grounds that the decision was arbitrary and capricious or involved an abuse of discretion. Subd. 9. Immunity from civil liability. A person who participates in an external review by investigating, reviewing materials, providing technical expertise, or rendering a decision shall not be civilly liable for any action that is taken in good faith, that is within the scope of the person's duties, and that does not constitute willful or reckless misconduct. Subd. 10. Data reporting. The commissioners shall make available to the public, upon request, summary data on the decisions rendered under this section, including the number of reviews heard and decided and the final outcomes. Any data released to the public must not individually identify the enrollee initiating the request for external review. History:  1999 c 239 s 39; 2000 c 474 s 2; 2001 c 215 s 27; 2013 c 84 art 1 s 86; 2013 c 107 art 1 s 9; 2016 c 158 art 2 s 28; 2020 c 114 art 2 s 18; 2020 c 115 art 4 s 13; 2022 c 58 s 13
62Q.731 APPEAL FROM ADVERSE DETERMINATION. Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in this subdivision have the meanings given. (b) "Enrollee" means an eligible person as defined in section 62E.02, subdivision 13, and who meets the eligibility criteria established in section 62E.14. (c) "Board" means the board of directors of the Comprehensive Health Association, as described in section 62E.10, subdivision 2. Subd. 2. Appeal to external review entity. If an enrollee receives an adverse determination as a result of the Comprehensive Health Association's internal appeal process, by which an established enrollee appeal committee renders an adverse determination, the enrollee then has the option of: (1) appealing the adverse determination to the external review entity under section 62Q.73, which shall constitute a final determination subject to the conditions specified in section 62Q.73; or (2) appealing to the commissioner of commerce from an adverse determination as provided by the operating rules of the Comprehensive Health Association, in which case the commissioner has the option of making a determination regarding the appeal, or submitting the appeal to the external review entity retained under section 62Q.73. History:   2002 c 330 s 29 
62Q.732 CITATION. Sections 62Q.732 to 62Q.75 may be cited as the "Minnesota Health Plan Contracting Act." History:   2004 c 246 s 2 
62Q.733 DEFINITIONS. Subdivision 1. Applicability. For purposes of sections 62Q.732 to 62Q.739, the following definitions apply. Subd. 2. Contract. "Contract" means a written agreement between a health care provider and a health plan company to provide health care services. Subd. 3. Health care provider or provider. "Health care provider" or "provider" means a physician, advanced practice registered nurse, physician assistant, chiropractor, dentist, podiatrist, or other provider as defined under section 62J.03, other than hospitals, ambulatory surgical centers, or freestanding emergency rooms. Subd. 4. Health plan company. (a) "Health plan company" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network operating under chapter 62N; (3) a preferred provider organization as defined in section 145.61, subdivision 4c; or (4) an insurance company licensed under chapter 60A, nonprofit health service corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other entity that establishes, operates, or maintains a health benefit plan or network of health care providers where the providers have entered into a contract with the entity to provide health care services. (b) This subdivision does not apply to a health plan company with respect to coverage described in section 62A.011, subdivision 3, clauses (1) to (5) and (7) to (12). Subd. 5. Fee schedule. "Fee schedule" means the total expected financial compensation paid to a health care provider for providing a health care service as determined by the contract between the health plan company and the provider, inclusive of withhold amounts and any amount for which the patient or other third party may be obligated to pay under the contract. History:  2004 c 246 s 3; 2020 c 115 art 4 s 14; 2022 c 58 s 14
62Q.734 EXEMPTION. Sections 62Q.735 to 62Q.739 and 62Q.74 do not apply to health plan companies whose annual Minnesota health premium revenues are less than three percent of the total annual Minnesota health premium revenues, as measured by the assessment base of the Minnesota Comprehensive Health Association. For purposes of this percentage calculation, a health plan company's premiums include the Minnesota health premium revenues of its affiliates. History:   2004 c 246 s 4 
62Q.735 PROVIDER CONTRACTING PROCEDURES. Subdivision 1. Contract disclosure. (a) Before requiring a health care provider to sign a contract, a health plan company shall give to the provider a complete copy of the proposed contract, including: (1) all attachments and exhibits; (2) operating manuals; (3) a general description of the health plan company's health service coding guidelines and requirement for procedures and diagnoses with modifiers, and multiple procedures; and (4) all guidelines and treatment parameters incorporated or referenced in the contract. (b) The health plan company shall make available to the provider the fee schedule or a method or process that allows the provider to determine the fee schedule for each health care service to be provided under the contract. (c) Notwithstanding paragraph (b), a health plan company that is a dental plan organization, as defined in section 62Q.76, shall disclose information related to the individual contracted provider's expected reimbursement from the dental plan organization. Nothing in this section requires a dental plan organization to disclose the plan's aggregate maximum allowable fee table used to determine other providers' fees. The contracted provider must not release this information in any way that would violate any state or federal antitrust law. Subd. 2. Proposed amendments. (a) Any amendment or change in the terms of an existing contract between a health plan company and a provider must be disclosed to the provider at least 45 days prior to the effective date of the proposed change, with the exception of amendments required of the health plan company by law or governmental regulatory authority, when notice shall be given to the provider when the requirement is made known to the health plan company. (b) Any amendment or change in the contract that alters the fee schedule or materially alters the written contractual policies and procedures governing the relationship between the provider and the health plan company must be disclosed to the provider not less than 45 days before the effective date of the proposed change and the provider must have the opportunity to terminate the contract before the amendment or change is deemed to be in effect. (c) By mutual consent, evidenced in writing in amendments separate from the base contract and not contingent on participation, the parties may waive the disclosure requirements under paragraphs (a) and (b). (d) Notwithstanding paragraphs (a) and (b), the effective date of contract termination shall comply with the terms of the contract when a provider terminates a contract. Subd. 3. Hospital contract amendment disclosure. (a) Any amendment or change in the terms of an existing contract between a network organization and a hospital, ambulatory surgical center, or freestanding emergency room must be disclosed to that provider. (b) Any amendment or change in the contract that alters the financial reimbursement or alters the written contractual policies and procedures governing the relationship between the hospital, ambulatory surgical center, or freestanding emergency room and the network organization must be disclosed to that provider before the amendment or change is deemed to be in effect. (c) For purposes of this subdivision, "network organization" means a preferred provider organization, as defined in section 145.61, subdivision 4c; a managed care organization, as defined in section 62Q.01, subdivision 5; or other entity that uses or consists of a network of health care providers. Subd. 4. Contract amendment and renewal provisions. (a) A health plan company shall not require a provider to provide notice of intention to terminate its contract before communicating with the provider regarding contract renewals. A health plan company shall not communicate with enrollees about the possible termination until final termination notice is received from the provider. (b) A health plan company shall not preclude a nonnetwork provider from subsequent network participation solely as a result of the provider having terminated its participation in accordance with the terms of its contract. Subd. 5. Fee schedules. (a) A health plan company shall provide, upon request, any additional fees or fee schedules relevant to the particular provider's practice beyond those provided with the renewal documents for the next contract year to all participating providers, excluding claims paid under the pharmacy benefit. Health plan companies may fulfill the requirements of this section by making the full fee schedules available through a secure web portal for contracted providers. (b) A dental organization may satisfy paragraph (a) by complying with section 62Q.735, subdivision 1, paragraph (c). Subd. 6. Reimbursement tiering methodologies. Where health plan company reimbursement is related to tiering of providers, the health plan company shall provide to any tiered providers upon request an explanation of the methodology used to calculate tier ranking, including information on cost and quality. This explanation need not allow any provider access to proprietary or trade secret information. When a tiered product is used by a health plan, the health plan company shall provide notification to the provider of the tier in which the provider is included prior to the effective date of the tiered product. History:  2004 c 246 s 5; 2010 c 331 s 1-3
62Q.736 PAYMENT RATES. A contract between a health plan company and a provider shall comply with section 62A.64. History:   2004 c 246 s 6 
62Q.737 SERVICE CODE CHANGES. (a) For purposes of this section, "service code" means current procedural terminology (CPT), current dental terminology (CDT), ICD-CM, diagnosis-related groups (DRGs), or other coding system. (b) The health plan company shall determine the manner in which it adjudicates claims. The provider may request a description of the general coding guidelines applicable to the health care services the provider is reasonably expected to render pursuant to the contract. The health plan company or its designee shall provide the coding guidelines not later than 30 days after the date the health plan receives the request. The health plan company shall provide notice of material changes to the coding guidelines not later than 45 days prior to the date the changes take effect and shall not make retroactive revision to the coding guidelines, but may issue new guidelines. A provider who receives information under this section may use or disclose the information only for the purpose of practice management, billing activities, or other business operations and may not disclose the information to third parties without the consent of the health plan company. (c) The health plan company may correct an error in a submitted claim that prevents the claim from being processed, provided that the health plan company: (1) notifies the provider of the change and reason for the change according to federal Health Insurance Portability and Accountability Act (HIPAA) transaction standards; and (2) offers the provider the opportunity to appeal any changes. (d) Nothing in this section shall be interpreted to require a health plan company to violate copyright or other law by disclosing proprietary licensed software. In addition to the above, the health plan company shall, upon request of a contracted provider, disclose the name, edition, and model version of the software that the health plan company uses to determine bundling and unbundling of claims. (e) This section does not apply to government programs, including state public programs, Medicare, and Medicare-related coverage. History:   2004 c 246 s 7 
62Q.739 UNILATERAL TERMS PROHIBITED. (a) A contract between a health plan company and a health care provider shall not contain or require unilateral terms regarding indemnification or arbitration. Notwithstanding any prohibitions in this section, a contract between a health plan company and a health care provider may be unilaterally terminated by either party in accordance with the terms of the contract. (b) A health plan company may not terminate or fail to renew a health care provider's contract without cause unless the company has given the provider a written notice of the termination or nonrenewal 120 days before the effective date. History:   2004 c 246 s 8 
62Q.74 NETWORK SHADOW CONTRACTING. Subdivision 1. Definitions. (a) For purposes of this section, "category of coverage" means one of the following types of health-related coverage: (1) health; (2) no-fault automobile medical benefits; or (3) workers' compensation medical benefits. (b) "Health care provider" or "provider" means a physician, advanced practice registered nurse, physician assistant, chiropractor, dentist, podiatrist, hospital, ambulatory surgical center, freestanding emergency room, or other provider, as defined in section 62J.03. Subd. 2. Provider consent required. (a) No health plan company shall require a health care provider to participate in a network under a category of coverage that differs from the category or categories of coverage to which the existing contract between the health plan company and the provider applies, without the affirmative consent of the provider obtained under subdivision 3. (b) No health plan company shall require, as a condition of participation in any health plan, product, or other arrangement, the provider to participate in a new or different health plan, product, or other arrangement within a category of coverage that results in a different underlying financial reimbursement methodology without the affirmative consent of the provider obtained under subdivision 3. This paragraph does not apply to participation in health plan products or other arrangements that provide health care services to government programs, including state public programs, Medicare, and Medicare-related coverage. (c) Compliance with this section may not be waived in a contract or otherwise. Subd. 3. Consent procedure. (a) The health plan company, if it wishes to apply an existing contract with a provider to a different category of coverage or health plan, product, or other arrangement within a category of coverage that results in a different underlying financial reimbursement methodology, shall first notify the provider in writing. The written notice must include at least the following: (1) the health plan company's name, address, and telephone number, and the name of the specific network, if it differs from that of the health plan company; (2) a description of the proposed new category of coverage or health plan, product, or other arrangement within a category of coverage; (3) the names of all payers expected by the health plan company to use the network for the new category of coverage or health plan, product, or other arrangement within a category of coverage; (4) the approximate number of current enrollees of the health plan company in that category of coverage or health plan, product, or other arrangement within a category of coverage within the provider's geographical area; (5) a disclosure of all contract terms of the proposed new category of coverage or health plan, product, or other arrangement within a category of coverage, including the discount or reduced fees, care guidelines, utilization review criteria, prior notification process, prior authorization process, and dispute resolution process; (6) a form for the provider's convenience in accepting or declining participation in the proposed new category of coverage or health plan, product, or other arrangement within a category of coverage, provided that the provider need not use that form in responding; and (7) a statement informing the provider of the provisions of paragraph (b). (b) Unless the provider has affirmatively agreed to participate within 60 days after the postmark date of the notice, the provider is deemed to have not accepted the proposed new category of coverage or health plan, product, or other arrangement within a category of coverage that results in a different underlying financial reimbursement methodology. Subd. 4. Contract termination restricted. A health plan company must not terminate an existing contract with a provider, or fail to honor the contract in good faith, based solely on the provider's decision not to accept a proposed new category of coverage or health plan, product, or other arrangement within a category of coverage that results in a different underlying financial reimbursement methodology. The most recent agreed-upon contractual obligations remain in force until the existing contract's renewal or termination date. Subd. 5. Remedy. If a health plan company violates this section by reimbursing a provider as if the provider had agreed under this section to participate in the network under a category of coverage or health plan, product, or other arrangement within a category of coverage that results in a different underlying financial reimbursement methodology to which the provider has not agreed, the provider has a cause of action against the health plan company to recover two times the difference between the reasonable charges for claims affected by the violation and the amounts actually paid to the provider. The provider is also entitled to recover costs, disbursements, and reasonable attorney fees. Subd. 6. Benefit design changes. For purposes of this section, "different underlying financial reimbursement methodology" does not include health plan benefit design changes, including, but not limited to, changes in co-payment or deductible amounts or other changes in member cost-sharing requirements. History:  1999 c 94 s 1; 2000 c 322 s 1; 2001 c 170 s 4,5; 2004 c 246 s 9; 2020 c 115 art 4 s 15; 2022 c 58 s 15
62Q.746 ACCESS TO CERTAIN INFORMATION REGARDING PROVIDERS. Upon request of the commissioner, a health plan company licensed under chapters 62C and 62D must provide the following information: (1) a detailed description of the health plan company's methods and procedures, standards, qualifications, criteria, and credentialing requirements for designating the providers who are eligible to participate in the health plan company's provider network, including any limitations on the numbers of providers to be included in the network; (2) the number of full-time equivalent physicians, by specialty, nonphysician providers, and allied health providers used to provide services; and (3) summary data that is broken down by type of provider, reflecting actual utilization of network and non-network practitioners and allied professionals by enrollees of the health plan company. History:   2001 c 170 s 7 
62Q.75 PROMPT PAYMENT REQUIRED. Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given to them. (b) "Clean claim" means a claim that has no defect or impropriety, including any lack of any required substantiating documentation, including, but not limited to, coordination of benefits information, or particular circumstance requiring special treatment that prevents timely payment from being made on a claim under this section. A special circumstance includes, but is not limited to, a claim held pending payment of an overdue premium for the time period during which the expense was incurred as allowed by the Affordable Care Act. Nothing in this section alters an enrollee's obligation to disclose information as required by law. (c) "Third-party administrator" means a third-party administrator or other entity subject to section 60A.23, subdivision 8, and Minnesota Rules, chapter 2767. Subd. 2. Claims payments. (a) This section applies to clean claims submitted to a health plan company or third-party administrator for services provided by any: (1) health care provider, as defined in section 62Q.74, but does not include a provider licensed under chapter 151; (2) home health care provider, as defined in section 144A.43, subdivision 4; or (3) health care facility. All health plan companies and third-party administrators must pay or deny claims that are clean claims within 30 calendar days after the date upon which the health plan company or third-party administrator received the claim. (b) The health plan company or third-party administrator shall, upon request, make available to the provider information about the status of a claim submitted by the provider consistent with section 62J.581. (c) If a health plan company or third-party administrator does not pay or deny a clean claim within the period provided in paragraph (a), the health plan company or third-party administrator must pay interest on the claim for the period beginning on the day after the required payment date specified in paragraph (a) and ending on the date on which the health plan company or third-party administrator makes the payment or denies the claim. In any payment, the health plan company or third-party administrator must itemize any interest payment being made separately from other payments being made for services provided. The health plan company or third-party administrator shall not require the health care provider to bill the health plan company or third-party administrator for the interest required under this section before any interest payment is made. Interest payments must be made to the health care provider no less frequently than quarterly. (d) The rate of interest paid by a health plan company or third-party administrator under this subdivision shall be 1.5 percent per month or any part of a month. (e) A health plan company or third-party administrator is not required to make an interest payment on a claim for which payment has been delayed for purposes of reviewing potentially fraudulent or abusive billing practices. (f) The commissioner may assess a financial administrative penalty against a health plan company for violation of this subdivision when there is a pattern of abuse that demonstrates a lack of good faith effort and a systematic failure of the health plan company to comply with this subdivision. Subd. 3. Claims filing. Unless otherwise provided by contract, by section 16A.124, subdivision 4a, or by federal law, the health care providers and facilities specified in subdivision 2 must submit their charges to a health plan company or third-party administrator within six months from the date of service or the date the health care provider knew or was informed of the correct name and address of the responsible health plan company or third-party administrator, whichever is later. A health care provider or facility that does not make an initial submission of charges within the six-month period shall not be reimbursed for the charge and may not collect the charge from the recipient of the service or any other payer. The six-month submission requirement may be extended to 12 months in cases where a health care provider or facility specified in subdivision 2 has determined and can substantiate that it has experienced a significant disruption to normal operations that materially affects the ability to conduct business in a normal manner and to submit claims on a timely basis. Any request by a health care provider or facility specified in subdivision 2 for an exception to a contractually defined claims submission timeline must be reviewed and acted upon by the health plan company within the same time frame as the contractually agreed upon claims filing timeline. This subdivision also applies to all health care providers and facilities that submit charges to workers' compensation payers for treatment of a workers' compensation injury compensable under chapter 176, or to reparation obligors for treatment of an injury compensable under chapter 65B. Subd. 4. Claims adjustment timeline. (a) Once a clean claim, as defined in section 62Q.75, subdivision 1, has been paid, the contract must provide a 12-month deadline on all adjustments to and recoupments of the payment with the exception of payments related to coordination of benefits, subrogation, duplicate claims, retroactive terminations, and cases of fraud and abuse. (b) Paragraph (a) shall not apply to pharmacy contracts entered into between or on behalf of health plan companies. History:  2000 c 349 s 1; 2004 c 246 s 10; 2005 c 77 s 4; 2010 c 331 s 4,5; 2013 c 84 art 1 s 87
62Q.751 COLLECTING DEDUCTIBLES AND COINSURANCE. A health plan company shall not prohibit providers from collecting deductibles and coinsurance from patients at or prior to the time of service. Providers may not withhold a service to a health plan company enrollee based on a patient's failure to pay a deductible or coinsurance at or prior to the time of service. Overpayments by patients to providers must be returned to the patient by the provider by check or electronic payment within 30 days of the date in which the claim adjudication is received by the provider. History:   2010 c 331 s 6 
62Q.76 DEFINITIONS. Subdivision 1. Applicability. For purposes of sections 62Q.76 to 62Q.79, the terms defined in this section have the meanings given them. Subd. 2. Dental care services. "Dental care services" means services performed by a licensed dentist or any person working under the dentist's supervision as permitted under chapter 150A, which an enrollee might reasonably require to maintain good dental health, including preventive services, diagnostic services, emergency dental care, and restorative services. Subd. 3. Dental plan. "Dental plan" means a policy, contract, or certificate offered by a dental organization for the coverage of dental care services. Dental plan means individual or group coverage. Subd. 4. Dentist. "Dentist" means a person licensed to practice dentistry under chapter 150A. Subd. 5. Emergency dental care. "Emergency dental care" means the provision of dental care services for a sudden, acute dental condition that would lead a prudent layperson to reasonably expect that the absence of immediate care would result in serious impairment to the dentition or would place the person's oral health in serious jeopardy. Subd. 6. Enrollee. "Enrollee" means an individual covered by a dental organization and includes an insured, policyholder, subscriber, contract holder, member, covered person, or certificate holder. Subd. 7. Dental organization. "Dental organization" means a health insurer licensed under chapter 60A; a health service plan corporation licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a community integrated service network licensed under chapter 62N; or a third-party administrator that: (1) provides, either directly or through contracts with providers or other persons, dental care services; (2) arranges for the provision of these services to enrollees on the basis of a fixed, prepaid sum without regard to the frequency or extent of services furnished to any particular enrollee; or (3) administers dental plans. Subd. 8. Dental provider contract. "Dental provider contract" means a written agreement between a dentist or dental clinic and dental organization to provide dental care services. History:  2000 c 410 s 1; 2011 c 64 s 1
62Q.77 TERMS OF COVERAGE DISCLOSURE. A dental organization shall make available to an enrollee, upon request, a clear and concise description of the following terms of coverage: (1) the dental care services and other benefits to which the enrollee is entitled under the dental plan; (2) any exclusions or limitation on the services, kind of services, benefits, or kind of benefits to be provided, including any deductible or co-payment features and any requirements for referrals to specialists; (3) a description as to how services, including emergency dental care and out-of-area service, may be obtained; (4) a general description of payment and co-payment amounts, if any, for dental care services, which the enrollee is obligated to pay; and (5) a telephone number by which the enrollee may obtain additional information regarding coverage. History:   2000 c 410 s 2 
62Q.78 DENTAL BENEFIT PLAN REQUIREMENTS. Subdivision 1. Utilization profiling. (a) A dental organization that uses utilization profiling as a method of differentiating provider reimbursement or as a requirement for continued participation in the organization's provider network shall, upon request, make available to participating dentists the following information: (1) a description of the methodology used in profiling so that dentists can clearly understand why and how they are affected; and (2)(i) a list of the codes measured; (ii) a dentist's personal frequency data within each code so that the accuracy of the data can be verified; and (iii) an individual dentist's representation of scoring compared to classification points and how the dentist compares with peers in each category including the cutoff point of the score impacting qualification in order to inform the dentist about how the dentist may qualify or retain qualification for differentiated provider reimbursement or continued participation in the dental organization's provider network. (b) A dental organization that uses utilization profiling as a method of differentiating provider reimbursement or as a requirement for continued participation in the organization's provider network shall, upon request, provide a clear and concise description of the methodology of the utilization profiling on dental benefits to group purchasers and enrollees. (c) A dental organization shall not be considered to be engaging in the practice of dentistry pursuant to chapter 150A, to the extent it releases utilization profiling information as required by sections 62Q.76 to 62Q.79. Subd. 2. Reimbursement codes. (a) Unless the federal government requires the use of other procedural codes, for all dental care services in which a procedural code is used by the dental organization to determine coverage or reimbursement, the organization must use the most recent American Dental Association current dental terminology code that is available, within a year of its release. Current dental terminology codes must be used as specifically defined, must be listed separately, and must not be altered or changed by either the dentist or the dental organization. (b) Enrollee benefits must be determined on the basis of individual codes subject to provider and group contracts. (c) This subdivision does not prohibit or restrict dental organizations from setting reimbursement and pricing with groups, purchasers, and participating providers or addressing issues of fraud or errors in claims submissions. Subd. 3. Treatment options. No contractual provision between a dental organization and a dentist shall in any way prohibit or limit a dentist from discussing all clinical options for treatment with the patient. Subd. 4. Contract amendment. An amendment or change in terms of an existing contract between a dental organization and a dentist must be disclosed to the dentist at least 90 days before the effective date of the proposed change. Subd. 5. Provider audits. (a) A dental organization that conducts audits of dental providers shall: (1) provide a written explanation to the dental provider of the reason for the audit and the process the dental organization intends to use to audit patient charts, as well as a written explanation of the processes available to the provider once the dental organization completes its review of the audited patient records; and (2) allow the provider a reasonable period of time from the date that the provider receives the verified audit or investigation findings to review, meet, and negotiate a resolution to the audit or investigation. (b) If a dental organization conducts a provider audit, the dental organization must use a licensed dentist whose license is in good standing to review patient charts. Subd. 6. Payment for covered services. (a) No contract of any dental plan or dental organization that covers any dental services or dental provider agreement with a dentist may require, directly or indirectly, that a dentist provide services to an enrolled participant at a fee set by, or at a fee subject to the approval of, the dental plan or dental organization unless the dental services are covered services. (b) A dental plan or dental organization or other person providing third-party administrator services shall not make available any providers in its dentist network to a plan that sets dental fees for any services except covered services. (c) "Covered services" means dental care services for which a reimbursement is available under an enrollee's plan contract, or for which a reimbursement would be available but for the application of contractual limitations such as deductibles, co-payments, coinsurance, waiting periods, annual or lifetime maximums, frequency limitations, alternative benefit payments, or any other limitation. History:  2000 c 410 s 3; 2011 c 64 s 2-4
62Q.79 LIMITATIONS. (a) The provisions contained in section 62Q.77 shall not require a dental organization to disclose information which the dental organization is already obligated to disclose under applicable Minnesota law governing the operation of the dental organization. (b) Any information a dental organization is required to disclose or communicate under section 62Q.77 to its subscribers, enrollees, participating providers, contracting groups, or dentists may be accomplished by electronic communication including, but not limited to, email, the Internet, websites, and employer electronic bulletin boards. History:   2000 c 410 s 4 
62Q.80 COMMUNITY-BASED HEALTH CARE COVERAGE PROGRAM. Subdivision 1. Scope. (a) Any community-based health care initiative may develop and operate community-based health care coverage programs that offer to eligible individuals and their dependents the option of purchasing through their employer health care coverage on a fixed prepaid basis without meeting the requirements of chapter 60A, 62A, 62C, 62D, 62M, 62N, 62Q, 62T, or 62U, or any other law or rule that applies to entities licensed under these chapters. (b) Each initiative shall establish health outcomes to be achieved through the programs and performance measurements in order to determine whether these outcomes have been met. The outcomes must include, but are not limited to: (1) a reduction in uncompensated care provided by providers participating in the community-based health network; (2) an increase in the delivery of preventive health care services; and (3) health improvement for enrollees with chronic health conditions through the management of these conditions. In establishing performance measurements, the initiative shall use measures that are consistent with measures published by nonprofit Minnesota or national organizations that produce and disseminate health care quality measures. (c) Any program established under this section shall not constitute a financial liability for the state, in that any financial risk involved in the operation or termination of the program shall be borne by the community-based initiative and the participating health care providers. Subd. 1a.  [Repealed by amendment, 2012 c 247 art 2 s 1] Subd. 2. Definitions.  (a) For purposes of this section, the following definitions apply: (b) "Community-based" means located in or primarily relating to the community, as determined by the board of a community-based health initiative that is served by the community-based health care coverage program. (c) "Community-based health care coverage program" or "program" means a program administered by a community-based health initiative that provides health care services through provider members of a community-based health network or combination of networks to eligible individuals and their dependents who are enrolled in the program. (d) "Community-based health initiative" or "initiative" means a nonprofit corporation that is governed by a board that has at least 80 percent of its members residing in the community and includes representatives of the participating network providers and employers, or a county-based purchasing organization as defined in section 256B.692. (e) "Community-based health network" means a contract-based network of health care providers organized by the community-based health initiative to provide or support the delivery of health care services to enrollees of the community-based health care coverage program on a risk-sharing or nonrisk-sharing basis. (f) "Dependent" means an eligible employee's spouse or child who is under the age of 26 years. Subd. 3. Approval.  (a) Prior to the operation of a community-based health care coverage program, a community-based health initiative, defined in subdivision 2, paragraph (d), shall submit to the commissioner of health for approval the community-based health care coverage program developed by the initiative. The commissioner shall ensure that each program meets the requirements described in this section and is actuarially sound based on a review of appropriate records and methods utilized by the community-based health initiative in establishing premium rates for the community-based health care coverage programs. (b) Prior to approval, the commissioner shall also ensure that: (1) the benefits offered comply with subdivision 8 and that there are adequate numbers of health care providers participating in the community-based health network to deliver the benefits offered under the program; (2) the activities of the program are limited to activities that are exempt under this section or otherwise from regulation by the commissioner of commerce; (3) the complaint resolution process meets the requirements of subdivision 10; and (4) the data privacy policies and procedures comply with state and federal law. Subd. 4. Establishment.  The initiative shall establish and operate upon approval by the commissioner of health community-based health care coverage programs. The operational structure established by the initiative shall include, but is not limited to: (1) establishing a process for enrolling eligible individuals and their dependents; (2) collecting and coordinating premiums from enrollees and employers of enrollees; (3) providing payment to participating providers; (4) establishing a benefit set according to subdivision 8 and establishing premium rates and cost-sharing requirements; (5) creating incentives to encourage primary care and wellness services; and (6) initiating disease management services, as appropriate. Subd. 5. Qualifying employees.  To be eligible for the community-based health care coverage program, an individual must: (1) reside in or work within the designated community-based geographic area served by the program; (2) be employed by a qualifying employer, be an employee's dependent, or be self-employed on a full-time basis; (3) not be enrolled in or have currently available health coverage, except for catastrophic health care coverage; and (4) not be eligible for or enrolled in medical assistance, and not be enrolled in MinnesotaCare or Medicare. Subd. 6. Qualifying employers.  (a) To qualify for participation in the community-based health care coverage program, an employer must: (1) employ at least one but no more than 50 employees at the time of initial enrollment in the program; (2) pay its employees a median wage that equals 350 percent of the federal poverty guidelines or less for an individual; and (3) not have offered employer-subsidized health coverage to its employees for at least 12 months prior to the initial enrollment in the program. For purposes of this section, "employer-subsidized health coverage" means health care coverage for which the employer pays at least 50 percent of the cost of coverage for the employee. (b) To participate in the program, a qualifying employer agrees to: (1) offer health care coverage through the program to all eligible employees and their dependents regardless of health status; (2) participate in the program for an initial term of at least one year; (3) pay a percentage of the premium established by the initiative for the employee; and (4) provide the initiative with any employee information deemed necessary by the initiative to determine eligibility and premium payments. Subd. 7. Participating providers. Any health care provider participating in the community-based health network must accept as payment in full the payment rate established by the initiatives and may not charge to or collect from an enrollee any amount in access of this amount for any service covered under the program. Subd. 8. Coverage.  (a) The initiatives shall establish the health care benefits offered through the community-based health care coverage programs. The benefits established shall include, at a minimum: (1) child health supervision services up to age 18, as defined under section 62A.047; and (2) preventive services, including: (i) health education and wellness services; (ii) health supervision, evaluation, and follow-up; (iii) immunizations; and (iv) early disease detection. (b) Coverage of health care services offered by the program may be limited to participating health care providers or health networks. All services covered under the programs must be services that are offered within the scope of practice of the participating health care providers. (c) The initiatives may establish cost-sharing requirements. Any co-payment or deductible provisions established may not discriminate on the basis of age, sex, race, disability, economic status, or length of enrollment in the programs. (d) If any of the initiatives amends or alters the benefits offered through the program from the initial offering, that initiative must notify the commissioner of health and all enrollees of the benefit change. Subd. 9. Enrollee information. (a) The initiatives must provide an individual or family who enrolls in the program a clear and concise written statement that includes the following information: (1) health care services that are covered under the program; (2) any exclusions or limitations on the health care services covered, including any cost-sharing arrangements or prior authorization requirements; (3) a list of where the health care services can be obtained and that all health care services must be provided by or through a participating health care provider or community-based health network; (4) a description of the program's complaint resolution process, including how to submit a complaint; how to file a complaint with the commissioner of health; and how to obtain an external review of any adverse decisions as provided under subdivision 10; (5) the conditions under which the program or coverage under the program may be canceled or terminated; and (6) a precise statement specifying that this program is not an insurance product and, as such, is exempt from state regulation of insurance products. (b) The commissioner of health must approve a copy of the written statement prior to the operation of the program. Subd. 10. Complaint resolution process. (a) The initiatives must establish a complaint resolution process. The process must make reasonable efforts to resolve complaints and to inform complainants in writing of the initiative's decision within 60 days of receiving the complaint. Any decision that is adverse to the enrollee shall include a description of the right to an external review as provided in paragraph (c) and how to exercise this right. (b) The initiatives must report any complaint that is not resolved within 60 days to the commissioner of health. (c) The initiatives must include in the complaint resolution process the ability of an enrollee to pursue the external review process provided under section 62Q.73 with any decision rendered under this external review process binding on the initiatives. Subd. 11. Data privacy. The initiatives shall establish data privacy policies and procedures for the program that comply with state and federal data privacy laws. Subd. 12. Limitations on enrollment. (a) The initiatives may limit enrollment in the program. If enrollment is limited, a waiting list must be established. (b) The initiatives shall not restrict or deny enrollment in the program except for nonpayment of premiums, fraud or misrepresentation, or as otherwise permitted under this section. (c) The initiatives may require a certain percentage of participation from eligible employees of a qualifying employer before coverage can be offered through the program. Subd. 13. Report.  Each initiative shall submit an annual status report to the commissioner of health on January 15 of each year, with the first report due January 15, 2008. Each status report shall include: (1) the financial status of the program, including the premium rates, cost per member per month, claims paid out, premiums received, and administrative expenses; (2) a description of the health care benefits offered and the services utilized; (3) the number of employers participating, the number of employees and dependents covered under the program, and the number of health care providers participating; (4) a description of the health outcomes to be achieved by the program and a status report on the performance measurements to be used and collected; and (5) any other information requested by the commissioner of health or commerce or the legislature. Subd. 14.  [Repealed by amendment, 2012 c 247 art 2 s 1] History:  2006 c 255 s 35; 2007 c 147 art 9 s 10-13; art 10 s 1; 2010 c 310 art 2 s 1; 2012 c 247 art 2 s 1; 2013 c 84 art 1 s 88; 2016 c 158 art 2 s 29
62Q.81 ESSENTIAL HEALTH BENEFIT PACKAGE REQUIREMENTS. Subdivision 1. Essential health benefits package. (a) Health plan companies offering individual and small group health plans must include the essential health benefits package required under section 1302(a) of the Affordable Care Act and as described in this subdivision. (b) The essential health benefits package means coverage that: (1) provides essential health benefits as outlined in the Affordable Care Act; (2) limits cost-sharing for such coverage in accordance with the Affordable Care Act, as described in subdivision 2; and (3) subject to subdivision 3, provides bronze, silver, gold, or platinum level of coverage in accordance with the Affordable Care Act. Subd. 2. Coverage for enrollees under the age of 21. If a health plan company offers health plans in any level of coverage specified under section 1302(d) of the Affordable Care Act, as described in subdivision 1, paragraph (b), clause (3), the health plan company shall also offer coverage in that level to individuals who have not attained 21 years of age as of the beginning of a policy year. Subd. 3. Alternative compliance for catastrophic plans. A health plan company that does not provide an individual or small group health plan in the bronze, silver, gold, or platinum level of coverage, as described in subdivision 1, paragraph (b), clause (3), shall be treated as meeting the requirements of section 1302(d) of the Affordable Care Act with respect to any policy year if the health plan company provides a catastrophic plan that meets the requirements of section 1302(e) of the Affordable Care Act. Subd. 4. Essential health benefits; definition. For purposes of this section, "essential health benefits" has the meaning given under section 1302(b) of the Affordable Care Act and includes: (1) ambulatory patient services; (2) emergency services; (3) hospitalization; (4) laboratory services; (5) maternity and newborn care; (6) mental health and substance use disorder services, including behavioral health treatment; (7) pediatric services, including oral and vision care; (8) prescription drugs; (9) preventive and wellness services and chronic disease management; (10) rehabilitative and habilitative services and devices; and (11) additional essential health benefits included in the EHB-benchmark plan, as defined under the Affordable Care Act. Subd. 5. Exception. This section does not apply to a dental plan described in section 1311(d)(2)(B)(ii) of the Affordable Care Act. Subd. 6. Prescription drug benefits. (a) A health plan company that offers individual health plans must ensure that, in each geographic area the health plan company services, no fewer than one silver plan and one gold plan the health plan company offers apply a predeductible, flat-dollar amount co-payment structure to the entire drug benefit, including all tiers. (b) A health plan company that offers small group health plans must ensure that, in each geographic area the health plan company services, no fewer than one silver plan and one gold plan the health plan company offers apply a predeductible, flat-dollar amount co-payment structure to the entire drug benefit, including all tiers. (c) The highest allowable co-payment for the highest cost drug tier for health plans offered pursuant to this subdivision must be no greater than 1/12 of the plan's out-of-pocket maximum for an individual. (d) The flat-dollar amount co-payment tier structure for prescription drugs under this subdivision must be graduated and proportionate. (e) All individual and small group health plans offered pursuant to this subdivision must be: (1) clearly and appropriately named to aid the purchaser in the selection process; (2) marketed in the same manner as other health plans offered by the health plan company; and (3) offered for purchase to any individual or small group. (f) This subdivision does not apply to catastrophic plans, grandfathered plans, large group health plans, health savings accounts, qualified high deductible health benefit plans, limited health benefit plans, or short-term limited-duration health insurance policies. (g) A health plan company or a pharmacy benefit manager, as defined in section 62W.02, subdivision 15, must not delay or divide payment to a pharmacy or pharmacy provider, as defined in section 62W.02, subdivision 14, because of the co-payment structure of a health plan offered pursuant to this subdivision. (h) Health plan companies must meet the requirements in this subdivision separately for plans offered through MNsure under chapter 62V and plans offered outside of MNsure. (i) Notwithstanding section 62A.65, subdivision 2, a health plan company may discontinue offering a health plan under this subdivision if, three years after the date the silver or gold health plan is initially offered, the silver or gold health plan has fewer than 75 enrollees enrolled in the plan. A health plan company discontinuing a plan under this paragraph must only discontinue the silver or gold health plan that has fewer than 75 enrollees and: (1) provide notice of the plan's discontinuation in writing, in a form prescribed by the commissioner, to each individual enrolled in the plan at least 90 calendar days before the date the coverage is discontinued; (2) offer on a guaranteed issue basis to each individual enrolled the option to purchase an individual health plan currently being offered by the health plan company for individuals in that geographic rating area. An enrollee who does not select an option must be automatically enrolled in the individual health plan closest in actuarial value to the enrollee's current plan; and (3) act uniformly without regard to any health status-related factor of enrolled individuals or dependents of enrolled individuals who may become eligible for coverage. (j) A health plan company must annually report to the commissioner, as specified by the commissioner, the total enrollment in silver and gold plans under this subdivision. History:  2013 c 84 art 1 s 89; 2022 c 44 s 4
62Q.82 BENEFITS AND COVERAGE EXPLANATION. Subdivision 1. Summary. Health plan companies offering health plans shall provide a summary of benefits and coverage explanation as required by the Affordable Care Act to: (1) an applicant at the time of application; (2) an enrollee prior to the time of enrollment or reenrollment, as applicable; and (3) a policyholder at the time of issuance of the policy. Subd. 2. Compliance. A health plan company described in subdivision 1 shall be deemed to have complied with subdivision 1 if the summary of benefits and coverage explanation is provided in paper or electronic form as required under the Affordable Care Act. Subd. 3. Notice of modification. Except in connection with a policy renewal or reissuance, if a health plan company makes any material modifications in any of the terms of the coverage, as defined for purposes of section 102 of the federal Employee Retirement Income Security Act of 1974, as amended, that is not reflected in the most recently provided summary of benefits and coverage explanation, the health plan company shall provide notice of the modification to enrollees not later than 60 days prior to the date on which the modification will become effective. History:   2013 c 84 art 1 s 90 
62R.01 STATEMENT OF LEGISLATIVE PURPOSE AND INTENT. The legislature finds that the goals of containing health care costs, improving the quality of health care, and increasing the access of Minnesota citizens to health care services reflected under chapters 62J and 62N may be further enhanced through the promotion of health care cooperatives. The legislature further finds that locally based and controlled efforts among health care providers, local businesses, units of local government, and health care consumers, can promote the attainment of the legislature's goals of health care reform, and takes notice of the long history of successful operations of cooperative organizations in this state. Therefore, in order to encourage cooperative efforts which are consistent with the goals of health care reform, including efforts among health care providers as sellers of health care services and efforts of consumers as buyers of health care services and health plan coverage, and to encourage the formation of and increase the competition among health plans in Minnesota, the legislature enacts the Minnesota Health Care Cooperative Act. History:   1994 c 625 art 11 s 1 
62R.02 CITATION. This chapter may be cited as the "Minnesota Health Care Cooperative Act." History:   1994 c 625 art 11 s 2 
62R.03 APPLICABILITY OF OTHER LAWS. Subdivision 1. Minnesota Cooperative Law. A health care cooperative is subject to chapter 308A unless otherwise provided in this chapter. After incorporation, a health care cooperative shall enjoy the powers and privileges and shall be subject to the duties and liabilities of other cooperatives organized under chapter 308A, to the extent applicable and except as limited or enlarged by this chapter. If any provision of this chapter conflicts with a provision of chapter 308A, the provision of this chapter takes precedence. Subd. 2. Health plan licensure and operation. A health care network cooperative must be licensed as a health maintenance organization licensed under chapter 62D, a nonprofit health service plan corporation licensed under chapter 62C, or a community integrated service network licensed under chapter 62N, at the election of the health care network cooperative. The health care network cooperative shall be subject to the duties and liabilities of health plans licensed pursuant to the chapter under which the cooperative elects to be licensed, to the extent applicable and except as limited or enlarged by this chapter. If any provision of any chapter under which the cooperative elects to be licensed conflicts with the provisions of this chapter, the provisions of this chapter take precedence. A health care network cooperative, upon licensure as provided in this subdivision, is a contributing member of the Minnesota Comprehensive Health Association, on the same basis as other entities having the same licensure. Subd. 3. Health provider cooperatives. A health provider cooperative shall not be considered a mutual insurance company under chapter 60A, a health maintenance organization under chapter 62D, a nonprofit health services corporation under chapter 62C, or a community integrated service network under chapter 62N. A health provider network shall not be considered to violate any limitations on the corporate practice of medicine. Health care service contracts under section 62R.06 shall not be considered to violate section 62J.23. History:  1994 c 625 art 11 s 3; 1997 c 225 art 2 s 62
62R.04 DEFINITIONS. Subdivision 1. Scope. For purposes of this chapter, the terms defined in this section have the meanings given. Subd. 2. Health care cooperative. "Health care cooperative" means a health care network cooperative or a health provider cooperative. Subd. 3. Health care network cooperative. "Health care network cooperative" means a corporation organized under this chapter and licensed in accordance with section 62R.03, subdivision 2. A health care network cooperative shall not have more than 50,000 enrollees, unless exceeding the enrollment limit is necessary to comply with guaranteed issue or guaranteed renewal requirements of chapter 62L or section 62A.65. Subd. 4. Health provider cooperative. "Health provider cooperative" means a corporation organized under this chapter and operated on a cooperative plan to market health care services to purchasers of those services. Subd. 5. Commissioner. Unless otherwise specified, "commissioner" means the commissioner of health for a health care network cooperative licensed under chapter 62D or 62N and the commissioner of commerce for a health care network cooperative licensed under chapter 62C. Subd. 6. Health carrier. "Health carrier" has the meaning provided in section 62A.011. Subd. 7. Health care providing entity. "Health care providing entity" means a participating entity that provides health care to enrollees of a health care cooperative. History:   1994 c 625 art 11 s 4 
62R.05 POWERS. In addition to the powers enumerated under section 308A.201, a health care cooperative shall have all of the powers granted a nonprofit corporation under section 317A.161, except to the extent expressly inconsistent with the provisions of chapter 308A. History:   1994 c 625 art 11 s 5 
62R.06 HEALTH CARE SERVICE CONTRACTS. Subdivision 1. Provider contracts. A health provider cooperative and its licensed members may execute marketing and service contracts requiring the provider members to provide some or all of their health care services through the provider cooperative to the enrollees, members, subscribers, or insureds, of a health care network cooperative, community integrated service network, nonprofit health service plan, health maintenance organization, accident and health insurance company, or any other purchaser, including the state of Minnesota and its agencies, instruments, or units of local government. Each purchasing entity is authorized to execute contracts for the purchase of health care services from a health provider cooperative in accordance with this section. A contract between a provider cooperative and a purchaser may provide for payment by the purchaser to the health provider cooperative on a capitated or similar risk-sharing basis, by fee-for-service arrangements, or by other financial arrangements authorized under state law. Each contract between a provider cooperative and a purchaser shall be filed by the provider network cooperative with the commissioner of health and is subject to the provisions of section 62D.19. Subd. 2. No network limitation. A health care network cooperative may contract with any health provider cooperative and may contract with any other licensed health care provider to provide health care services for its enrollees. Subd. 3. Restraint of trade. Subject to section 62R.08, a health care provider cooperative is not a combination in restraint of trade, and any contracts or agreements between a health care provider cooperative and its members regarding the price the cooperative will charge to purchasers of its services, or regarding the prices the members will charge to the cooperative, or regarding the allocation of gains or losses among the members, or regarding the delivery, quality, allocation, or location of services to be provided, are not contracts that unreasonably restrain trade. History:  1994 c 625 art 11 s 6; 1997 c 225 art 2 s 62; 1999 c 245 art 2 s 14
62R.07 RELICENSURE. (a) A health care network cooperative licensed under chapter 62C or 62D may relinquish that license and be granted a new license as a community integrated service network under chapter 62N in accordance with this section, provided that the cooperative meets all requirements for licensure as a network under chapter 62N, to the extent not expressly inconsistent with the provisions of chapter 308A. (b) The relicensure shall be effective at the time specified in the plan of relicensure, which must not be earlier than the date upon which the previous license is surrendered. (c) Upon the relicensure of the cooperative as a community integrated service network: (1) all existing group and individual enrollee benefit contracts in force on the effective date of the relicensure shall continue in effect and with the same terms and conditions, notwithstanding the cooperative's new licensure as a network, until the date of each contract's next renewal or amendment, but no later than one year from the date of the relicensure. At this time, each benefit contract then in force must be amended to comply with all statutory and regulatory requirements for network benefit contracts as of that date; and (2) all contracts between the cooperative and any health care providing entity, including a health care provider cooperative, in force on the effective date of relicensure shall remain in effect under the cooperative's new licensure as a network until the date of the next renewal or amendment of that contract, but no later than one year from the date of relicensure. (d) Except as otherwise provided in this section, nothing in the relicensure of a health care network cooperative shall in any way affect its corporate existence or any of its contracts, rights, privileges, immunities, powers or franchises, debts, duties or other obligations or liabilities. History:  1994 c 625 art 11 s 7; 1997 c 225 art 2 s 62
62R.08 PROHIBITED PRACTICES. (a) It shall be unlawful for any person, company, or corporation, or any agent, officer, or employee thereof, to coerce or require any person to agree, either in writing or orally, not to join or become or remain a member of, any health care provider cooperative, as a condition of securing or retaining a contract for health care services with the person, firm, or corporation. (b) It shall be unlawful for any person, company, or corporation, or any combination of persons, companies, or corporations, or any agents, officers, or employees thereof, to engage in any acts of coercion, intimidation, or boycott of, or any refusal to deal with, any health care providing entity arising from that entity's actual or potential participation in a health care network cooperative or health care provider cooperative. (c) It shall be unlawful for any health care network cooperative, other than a health care network cooperative operating on an employed, staff model basis, to require that its participating providers provide health care services exclusively to or through the health care network cooperative. It shall be unlawful for any health care provider cooperative to require that its members provide health care services exclusively to or through the health care provider cooperative. (d) It shall be unlawful for any health care provider cooperative to engage in any acts of coercion, intimidation, or boycott of, or any concerted refusal to deal with, any health plan company seeking to contract with the cooperative on a competitive, reasonable, and nonexclusive basis. (e) The prohibitions in this section are in addition to any conduct that violates sections 325D.49 to 325D.66. (f) This section shall be enforced in accordance with sections 325D.56 to 325D.65. History:   1994 c 625 art 11 s 8 
62R.09 STATE OVERSIGHT AND SUPERVISION. Subdivision 1. Review and approval; monitoring. (a) The commissioner of health shall review and authorize contracts and business or financial arrangements under section 62R.06, subdivision 1, and any modification, renewal, or extension of a contract or business or financial arrangement that previously has been approved. All contracts and business or financial arrangements, modifications, renewals, or extensions must be submitted on an application for approval to the commissioner. (b) Within 30 days after receiving an application, the commissioner may request additional information that is necessary to complete the review required under this section. The commissioner must approve or deny an application within 60 days after receiving the application or within 60 days after receiving any additional information requested by the commissioner, whichever is later. The commissioner must not deny an application unless the commissioner determines, using the criteria in paragraph (g), that: (1) the anticompetitive effects of the arrangement on the marketplace exceed the procompetitive effects or efficiencies, or that any price agreements included in the arrangement are not necessary to achieve the efficiencies that are expected to result from the arrangement; or (2) the applicant has not provided complete or sufficient information requested by the commissioner to evaluate the impact of the proposed arrangement on the health care marketplace. (c) The commissioner may collect information from other persons to assist in evaluating the impact of the proposed arrangement on the health care marketplace. The commissioner shall collect information from health plan companies and health care providers operating in the same geographic area as the health care cooperative. Data collected from health plan companies and health care providers under this paragraph are nonpublic data or private data on individuals, as defined in section 13.02. (d) The commissioner may solicit public comment on the impact of the proposed arrangement. (e) The commissioner may condition approval of a proposed arrangement on a modification of all or part of the arrangement to eliminate any restriction on competition that is not reasonably related to the goals of improving health care access or quality. The commissioner may also establish conditions for approval that are reasonably necessary to protect against abuses of private economic power and to ensure that the arrangement has oversight by the state. (f) The commissioner shall actively monitor arrangements approved under this section to ensure that the arrangement remains in compliance with the conditions of approval. Upon request, the health care cooperative shall provide information to the commissioner regarding compliance. The commissioner may revoke an approval upon a finding that the arrangement is not in substantial compliance with the terms of the application or the conditions of approval. (g) In evaluating applications received under this section, the commissioner shall consider whether: (1) the arrangement is likely to produce significant efficiencies that benefit consumers, such as cost savings or improvements in quality of or access to care; (2) the arrangement is likely to have any anticompetitive effects on the marketplace; and (3) the potential anticompetitive effects outweigh the procompetitive efficiencies resulting from the arrangement. Subd. 2. Applications. (a) Applications for approval under this section must include a detailed description of the proposed arrangement. (b) The application must include: (1) the identities of all the parties to the arrangement; (2) the participation rules for the cooperative, including the terms and conditions under which participating providers may be members of the cooperative; (3) a description of the geographic areas served by the cooperative and the products provided, and a list of competing providers that are not members of the cooperative; (4) a description of any restriction on participating members of the cooperative entering into other contracts with payers; and (5) a description of the increased efficiency, improved health care access, improved health care quality, or increased market competition that will result from the arrangement. (c) Data on providers collected under this section are private data on individuals or nonpublic data, as defined in section 13.02. Subd. 3. Application fee. When submitting an initial application to the commissioner, a health care cooperative shall pay a fee of $2,000 for the commissioner's cost of reviewing and monitoring the arrangement. When submitting an application for modification, renewal, or extension of a previously approved contract and business or financial arrangement, the health care cooperative shall pay a fee of $500. Revenue received by the commissioner under this section is appropriated to the commissioner for the purpose of administering this section. History:   2009 c 97 s 2 
62S.01 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to this chapter. Subd. 2. Activities of daily living. "Activities of daily living" means eating, toileting, transferring, bathing, dressing, and continence. Subd. 3. Acute condition. "Acute condition" means that the individual is medically unstable and requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain the individual's health status. Subd. 4. Adult day care. "Adult day care" means a program for six or more individuals of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly, or other disabled adults who can benefit from care in a group setting outside the home. Subd. 5. Applicant. "Applicant" means: (1) in the case of an individual long-term care insurance policy, the person who seeks to contract for benefits; or (2) in the case of a group long-term care insurance policy, the proposed certificate holder. Subd. 6. Bathing. "Bathing" means washing oneself by sponge bath; or in either a tub or shower, including the task of getting into or out of the tub or shower. Subd. 7. Certificate. "Certificate" means a certificate issued under a group long-term care insurance policy delivered or issued for delivery in this state. Subd. 8. Chronically ill individual. "Chronically ill individual" means an individual who has been certified by a licensed health care practitioner, within the preceding 12-month period, as either: (1) being unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity; or (2) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment. Subd. 9. Cognitive impairment. "Cognitive impairment" means a deficiency in a person's short or long-term memory, orientation as a person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness. Subd. 10. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 11. Continence. "Continence" means the ability to maintain control of bowel and bladder function, or when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene, including caring for catheter or colostomy bag. Subd. 12. Dressing. "Dressing" means putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs. Subd. 13. Eating. "Eating" means feeding oneself by getting food into the body from a receptacle, such as a plate, cup, or table, or by a feeding tube or intravenously. Subd. 13a. Exceptional increase. (a) "Exceptional increase" means only those premium rate increases filed by an insurer as exceptional for which the commissioner determines that the need for the premium rate increase is justified due to changes in laws or rules applicable to long-term care coverage in this state, or due to increased and unexpected utilization that affects the majority of insurers of similar products. (b) Except as provided in section 62S.265, exceptional increases are subject to the same requirements as other premium rate schedule increases. The commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase. The commissioner, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs. Subd. 14. Loss of functional capacity. "Loss of functional capacity" means requiring the substantial assistance of another person to perform the prescribed activities of daily living. Subd. 15. Group long-term care insurance. "Group long-term care insurance" means a long-term care insurance policy delivered or issued for delivery in this state and issued to: (1) one or more employers or labor organizations, or to a trust or to the trustees of a fund established by one or more employers or labor organizations, or a combination, for employees or former employees, or a combination, or for members or former members, or a combination, of the labor organizations; (2) a professional, trade, or occupational association for its members or former or retired members, or combination, if the association: (i) is composed of individuals, all of whom are or were actively engaged in the same profession, trade, or occupation; and (ii) has been maintained in good faith for purposes other than obtaining insurance; (3) an association or a trust or the trustee of a fund established, created, or maintained for the benefit of members of one or more associations. Before advertising, marketing, or offering the policy within this state, the association or the insurer of the association must file evidence with the commissioner that the association has at the outset a minimum of 100 persons and has been organized and maintained in good faith for purposes other than that of obtaining insurance; has been in active existence for at least one year; and has a constitution and bylaws that provide that: (i) the association holds regular meetings not less than annually to further purposes of the members; (ii) except for credit unions, the association collects dues or solicits contributions from members; and (iii) the members have voting privileges and representation on the governing board and committees. Thirty days after the filing, the association is considered to have satisfied the organizational requirements, unless the commissioner makes a finding that the association does not satisfy the organizational requirements; or (4) a group other than as described in clauses (1) to (3), subject to a finding by the commissioner that: (i) the issuance of the group policy is not contrary to the best interest of the public; (ii) the issuance of the group policy would result in economies of acquisition or administration; and (iii) the benefits are reasonable in relation to the premiums charged. Subd. 16. Guaranteed renewable. "Guaranteed renewable" means the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and the insurer has no unilateral right to make any change in any provision of the policy or rider while the insurance is in force and cannot decline to renew, except that rates may be revised by the insurer on a class basis. Subd. 16a. Hands-on assistance. "Hands-on assistance" means minimal, moderate, or maximal physical assistance without which the individual would not be able to perform the activity of daily living. Subd. 17. Home health care services. "Home health care services" means medical and nonmedical services provided to ill, disabled, or infirm persons in their residences. The services may include homemaker services, assistance with activities of daily living, and respite care services. Subd. 17a. Incidental. "Incidental," as used in section 62S.265, subdivision 10, means that the value of the long-term care benefits provided is less than ten percent of the total value of the benefits provided over the life of the policy. These values must be measured as of the date of issue. Subd. 18. Long-term care insurance. "Long-term care insurance" means a qualified long-term care insurance policy or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes: (1) group and individual annuities and life insurance policies or riders that provide directly or that supplement long-term care insurance; and (2) a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance does not include an insurance policy that is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage. With regard to life insurance, long-term care insurance does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement, and that provide the option of a lump-sum payment for those benefits and in which neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care. Subd. 19. Maintenance or personal care services. "Maintenance" or "personal care services" means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual, including the protection from threats to health and safety due to severe cognitive impairment. Subd. 20. Medicare. "Medicare" means 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 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America, as amended. Subd. 21. Mental or nervous disorder. "Mental or nervous disorder" means a neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder. Subd. 22. Noncancelable. "Noncancelable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the insurer has no right to unilaterally make any change in any provision of the insurance or in the premium rate. Subd. 22a. Personal care. "Personal care" means the provision of hands-on services to assist an individual with activities of daily living. Subd. 23. Policy. "Policy" means a policy, contract, subscriber agreement, rider, or endorsement delivered or issued for delivery in this state by an insurer; fraternal benefit society; nonprofit health, hospital, or medical service corporation; prepaid health plan; health maintenance organization; or a similar organization. Subd. 23a. Qualified actuary. "Qualified actuary" means a member in good standing of the American Academy of Actuaries. Subd. 23b. Providers of services. All providers of services, including but not limited to "skilled nursing facility," "extended care facility," "convalescent nursing home," "personal care facility," "specialized care providers," "assisted living facility," and "home care agency" are defined in relation to the services and facilities required to be available and the licensure, certification, registration, or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified, or registered, it must also state what requirements a provider must meet in lieu of licensure, certification, or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified, or registered, or when the state licenses, certifies, or registers the provider of services under another name. Subd. 24. Qualified long-term care insurance policy. "Qualified long-term care insurance policy" means a policy that meets the requirements of section 7702B of the Internal Revenue Code, as amended, and this chapter. Subd. 25. Qualified long-term care services. "Qualified long-term care services" means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services and maintenance or personal care services, which are: (1) required by a chronically ill individual; and (2) provided pursuant to a plan of care prescribed by a licensed health care practitioner. Subd. 25a. Similar policy forms. "Similar policy forms" means all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in section 62S.01, subdivision 15, clause (1), are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, noninstitutional long-term care benefits only, or comprehensive long-term care benefits. Subd. 25b. Skilled nursing care, personal care, home care, specialized care, assisted living care, and other services. "Skilled nursing care," "personal care," "home care," "specialized care," "assisted living care," and other services are defined in relation to the level of skill required, the nature of the care, and the setting in which care must be delivered. Subd. 26. Toileting. "Toileting" means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene. Subd. 27. Transferring. "Transferring" means moving into or out of a bed, chair, or wheelchair. History:  1997 c 71 art 1 s 1; 1998 c 328 s 4; 1999 c 177 s 59; 1Sp2001 c 9 art 8 s 4-7; 2002 c 379 art 1 s 113; 2008 c 344 s 18-21; 2009 c 86 art 1 s 10
62S.02 QUALIFIED LONG-TERM CARE INSURANCE POLICY. Subdivision 1. Requirements. A qualified long-term care insurance policy may not be offered, issued, delivered, or renewed in this state unless the policy satisfies the requirements of this chapter and the filing provisions of section 62A.02. A qualified long-term care insurance policy must cover qualified long-term care services. Subd. 2. Nonforfeiture requirement. An insurer shall offer a nonforfeiture provision available in the event of default in the payment of any premiums. The amount of the benefit may be adjusted after being initially granted, if necessary, to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts. The nonforfeiture provision must provide at least one of the following: (1) reduced paid-up insurance; (2) extended term insurance; or (3) shortened benefit period. Subd. 3. Refund restrictions. A qualified long-term care insurance policy shall not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed. The aggregate premium paid under the policy may be refunded in the event of death of the insured or a complete surrender or cancellation of the policy. Subd. 4. Nonreimbursable expenses. A qualified long-term care insurance policy shall not pay or reimburse expenses incurred for services or items if the expenses are reimbursable under Medicare or would be reimbursable if a deductible or coinsurance amount was not applied. This subdivision does not apply to expenses which are reimbursable under Medicare only as a secondary payor and does not prohibit the offering of a qualified long-term care insurance policy on the basis that the policy coordinates its benefits with those provided under Medicare. Notwithstanding this subdivision, payments may be made under a long-term care insurance policy on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate. Subd. 5. Activities of daily living. A qualified long-term care insurance policy shall take into account at least five of the activities of daily living in making the determination of whether an individual is chronically ill. Assessments of activities of daily living and cognitive impairment must be performed by a licensed or certified professional, such as a physician, physician assistant, nurse, or social worker. Subd. 6. Appeals process. A qualified long-term care insurance policy must include a clear description of the process for appealing and resolving benefit determinations. History:  1997 c 71 art 1 s 2; 2000 c 483 s 17; 2022 c 58 s 16
62S.021 LONG-TERM CARE INSURANCE; INITIAL FILING. Subdivision 1. Applicability. This section applies to any long-term care policy issued in this state on or after January 1, 2002, under this chapter or sections 62A.46 to 62A.56. Subd. 2. Required submission to commissioner. An insurer shall provide the following information to the commissioner 30 days prior to making a long-term care insurance form available for sale: (1) a copy of the disclosure documents required in section 62S.081; and (2) an actuarial certification consisting of at least the following: (i) a statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated; (ii) a statement that the policy design and coverage provided have been reviewed and taken into consideration; (iii) a statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration; and (iv) a complete description of the basis for contract reserves that are anticipated to be held under the form, to include: (A) sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held; (B) a statement that the assumptions used for reserves contain reasonable margins for adverse experience; (C) a statement that the net valuation premium for renewal years does not increase, except for attained age rating where permitted; (D) a statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses, or if such a statement cannot be made, a complete description of the situations in which this does not occur. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under item (i) based on a standard age distribution; and (E) either a statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits, or a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences. Subd. 3. Actuarial demonstration. The commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration must include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both. If the commissioner asks for additional information under this subdivision, the 30-day time limit in subdivision 2 does not include the time during which the insurer is preparing the requested information. History:  1Sp2001 c 9 art 8 s 8; 2002 c 379 art 1 s 113
62S.03 EXTRATERRITORIAL JURISDICTION. Group long-term care insurance coverage may not be offered to a resident of this state under a group policy issued in another state to a group described in section 62S.01, subdivision 15, clause (4), unless this state or another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in this state has made a determination that the requirements have been met. History:   1997 c 71 art 1 s 3 
62S.04 PROHIBITIONS. A long-term care insurance policy may not: (1) be canceled, nonrenewed, or otherwise terminated on the grounds of the age or the deterioration of the mental or physical health of the insured individual or certificate holder; (2) contain a provision establishing a new waiting period in the event existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder; or (3) provide coverage for skilled nursing care only, or provide significantly more coverage for skilled care in a facility than coverage for lower levels of care in the same facility. History:   1997 c 71 art 1 s 4 
62S.05 PREEXISTING CONDITION. Subdivision 1. Authorized definition. A long-term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in section 62S.01, subdivision 15, clause (1), may not use a definition of preexisting condition that is more restrictive than the definition in this subdivision. "Preexisting condition" means a condition for which medical advice or treatment was recommended by, or received from a provider of health care services, within six months before the effective date of coverage of an insured person. Subd. 2. Prohibited exclusion. A long-term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in section 62S.01, subdivision 15, clause (1), may not exclude coverage for a loss or confinement that is the result of a preexisting condition more than six months following the effective date of coverage of an insured person. Subd. 3. Underwriting standards. The definition of preexisting condition does not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant and, on the basis of the answers on that application, from underwriting according to that insurer's established underwriting standards. Unless otherwise provided in the policy or certificate, a preexisting condition, regardless of whether it is disclosed on the application, need not be covered until the waiting period described in subdivision 2 expires. A long-term care insurance policy or certificate may not exclude or use waivers of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period described in subdivision 2. Subd. 4. Extension of limitation periods. The commissioner may extend the limitation periods set forth in subdivisions 1 and 2 as to specific age group categories in specific policy forms upon finding that the extension is in the best interest of the public. History:  1997 c 71 art 1 s 5; 1999 c 177 s 60; 2006 c 255 s 36; 2006 c 282 art 17 s 2
62S.06 PRIOR HOSPITALIZATION OR INSTITUTIONALIZATION. Subdivision 1. Prohibited conditions. A long-term care insurance policy may not be delivered or issued for delivery in this state if the policy conditions eligibility for any benefits: (1) on a prior hospitalization requirement; (2) provided in an institutional care setting on the receipt of a higher level of institutional care; or (3) other than waiver of premium, postconfinement, postacute care, or recuperative benefits on a prior institutionalization requirement. Subd. 2. Benefit labeling. A long-term care insurance policy containing postconfinement, postacute care, or recuperative benefits must clearly label in a separate paragraph of the policy or certificate entitled "limitations or conditions on eligibility for benefits" the limitations or conditions, including any required number of days of confinement. Subd. 3. Benefit conditions. (a) A long-term care insurance policy or rider that conditions eligibility of noninstitutional benefits on the prior receipt of institutional care may not require a prior institutional stay of more than 30 days. (b) A long-term care insurance policy or rider that provides benefits only following institutionalization may not condition the benefits upon admission to a facility for the same or related conditions within a period of less than 30 days after discharge from the institution. History:   1997 c 71 art 1 s 6 
62S.07 RIGHT TO RETURN; REFUND. Subdivision 1. Right to return. A long-term care insurance applicant may return the policy or certificate within 30 days of its delivery and is entitled to a refund of the premium if, after examination of the policy or certificate, the applicant is not satisfied for any reason. Long-term care insurance policies and certificates must include a notice prominently printed on the first page or attached to the first page stating in substance that the applicant may return the policy or certificate within 30 days of its delivery and have the premium refunded if for any reason, after examination of the policy or certificate, other than a certificate issued under a policy issued to a group as defined in section 62S.01, subdivision 15, clause (1), the applicant is not satisfied. Subd. 2. Refund. If an application for a qualified long-term care insurance policy is denied, the issuer shall refund to the applicant any premium and fees submitted by the applicant within 30 days of the denial. History:   1997 c 71 art 1 s 7 
62S.08 COVERAGE OUTLINE. Subdivision 1. Delivery. An outline of coverage must be delivered to a prospective applicant for long-term care insurance at the time of initial solicitation through means that prominently direct the attention of the recipient to the document and its purpose. In the case of agent solicitations, an agent must deliver the outline of coverage before the presentation of an application or enrollment form. In the case of direct response solicitations, the outline of coverage must be presented in conjunction with an application or enrollment form. Subd. 2. Requirements. The outline of coverage must be a freestanding document, using no smaller than ten-point type, and may not contain material of an advertising nature. Text which is capitalized or underscored in the standard format outline of coverage may be emphasized by other means which provide prominence equivalent to the capitalization or underscoring. Subd. 3. Mandatory format. The following standard format outline of coverage must be used, unless otherwise specifically indicated: COMPANY NAME ADDRESS - CITY AND STATE TELEPHONE NUMBER LONG-TERM CARE INSURANCE OUTLINE OF COVERAGE Policy Number or Group Master Policy and Certificate Number (Except for policies or certificates which are guaranteed issue, the following caution statement, or language substantially similar, must appear as follows in the outline of coverage.) CAUTION: The issuance of this long-term care insurance (policy) (certificate) is based upon your responses to the questions on your application. A copy of your (application) (enrollment form) (is enclosed) (was retained by you when you applied). If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises. If, for any reason, any of your answers are incorrect, contact the company at this address: (insert address). (1) This policy is (an individual policy of insurance) (a group policy) which was issued in the (indicate jurisdiction in which group policy was issued). (2) PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy contains governing contractual provisions. This means that the policy or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY. (3) THIS PLAN IS INTENDED TO BE A QUALIFIED LONG-TERM CARE INSURANCE CONTRACT AS DEFINED UNDER SECTION 7702(B)(b) OF THE INTERNAL REVENUE CODE OF 1986. (4) TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE CONTINUED IN FORCE OR DISCONTINUED. (a) (For long-term care health insurance policies or certificates describe one of the following permissible policy renewability provisions:) (1) (Policies and certificates that are guaranteed renewable shall contain the following statement:) RENEWABILITY: THIS POLICY (CERTIFICATE) IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy, (certificate) to continue this policy as long as you pay your premiums on time. (Company name) cannot change any of the terms of your policy on its own, except that, in the future, IT MAY INCREASE THE PREMIUM YOU PAY. (2) (Policies and certificates that are noncancelable shall contain the following statement:) RENEWABILITY: THIS POLICY (CERTIFICATE) IS NONCANCELABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time. (Company name) cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, (company name) may increase your premium at that time for those additional benefits. (b) (For group coverage, specifically describe continuation/conversion provisions applicable to the certificate and group policy.) (c) (Describe waiver of premium provisions or state that there are not such provisions.) (5) TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS. (In bold type larger than the maximum type required to be used for the other provisions of the outline of coverage, state whether or not the company has a right to change the premium and, if a right exists, describe clearly and concisely each circumstance under which the premium may change.) (6) TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED. (a) (Provide a brief description of the right to return -- "free look" provision of the policy.) (b) (Include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include a description of them.) (7) THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the insurance company. (a) (For agents) neither (insert company name) nor its agents represent Medicare, the federal government, or any state government. (b) (For direct response) (insert company name) is not representing Medicare, the federal government, or any state government. (8) LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community, or in the home. This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy (limitations), (waiting periods), and (coinsurance) requirements. (Modify this paragraph if the policy is not an indemnity policy.) (9) BENEFITS PROVIDED BY THIS POLICY. (a) (Covered services, related deductible(s), waiting periods, elimination periods, and benefit maximums.) (b) (Institutional benefits, by skill level.) (c) (Noninstitutional benefits, by skill level.) (d) (Eligibility for payment of benefits.) (Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and must be defined and described as part of the outline of coverage.) (Any benefit screens must be explained in this section. If these screens differ for different benefits, explanation of the screen should accompany each benefit description. If an attending physician, advanced practice registered nurse, physician assistant, or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified. If activities of daily living (ADLs) are used to measure an insured's need for long-term care, then these qualifying criteria or screens must be explained.) (10) LIMITATIONS AND EXCLUSIONS: Describe: (a) preexisting conditions; (b) noneligible facilities/provider; (c) noneligible levels of care (e.g., unlicensed providers, care or treatment provided by a family member, etc.); (d) exclusions/exceptions; and (e) limitations. (This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in paragraph (8).) THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS. (11) RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted. As applicable, indicate the following: (a) that the benefit level will not increase over time; (b) any automatic benefit adjustment provisions; (c) whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage; (d) if there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations; and (e) whether there will be any additional premium charge imposed and how that is to be calculated. (12) ALZHEIMER'S DISEASE AND OTHER ORGANIC BRAIN DISORDERS. (State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer's disease or related degenerative and dementing illnesses. Specifically, describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.) (13) PREMIUM. (a) State the total annual premium for the policy. (b) If the premium varies with an applicant's choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option. (14) ADDITIONAL FEATURES. (a) Indicate if medical underwriting is used. (b) Describe other important features. (15) CONTACT THE STATE DEPARTMENT OF COMMERCE OR SENIOR LINKAGE LINE IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE. Subd. 4. Outline of coverage. The outline of coverage must include the inflation protection information required under section 62S.23, subdivision 3, and the notice to buyer requirements specified under section 62S.29, subdivision 1, clause (3). History:  1997 c 71 art 1 s 8; 2006 c 255 s 37; 2006 c 282 art 17 s 3; 2020 c 115 art 4 s 16; 2022 c 58 s 17
62S.081 REQUIRED DISCLOSURE OF RATING PRACTICES TO CONSUMERS. Subdivision 1. Application. This section applies as follows: (a) Except as provided in paragraph (b), this section applies to any long-term care policy or certificate issued in this state on or after January 1, 2002. (b) For certificates issued on or after July 1, 2001, under a policy of group long-term care insurance as defined in section 62S.01, subdivision 15, that was in force on July 1, 2001, this section applies on the policy anniversary following June 30, 2002. Subd. 2. Required disclosures. Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in this subdivision to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time; in this case, an insurer shall provide all of the information listed in this subdivision to the applicant no later than at the time of delivery of the policy or certificate: (1) a statement that the policy may be subject to rate increases in the future; (2) an explanation of potential future premium rate revisions and the policyholder's or certificate holder's option in the event of a premium rate revision; (3) the premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase; (4) a general explanation of applying premium rate or rate schedule adjustments that must include: (i) a description of when premium rate or rate schedule adjustments will be effective, for example the next anniversary date or the next billing date; and (ii) the right to a revised premium rate or rate schedule as provided in clause (3) if the premium rate or rate schedule is changed; and (5)(i) information regarding each premium rate increase on this policy form or similar policy forms over the past ten years for this state or any other state that, at a minimum, identifies: (A) the policy forms for which premium rates have been increased; (B) the calendar years when the form was available for purchase; and (C) the amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics; (ii) the insurer may, in a fair manner, provide additional explanatory information related to the rate increases; (iii) an insurer has the right to exclude from the disclosure premium rate increases that apply only to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition; (iv) if an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of July 1, 2001, or the end of a 24-month period following the acquisition of the block of policies, the acquiring insurer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company must include the disclosure of that rate increase according to item (i); and (v) if the acquiring insurer in item (iv) files for a subsequent rate increase, even within the 24-month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in item (iv), the acquiring insurer shall make all disclosures required by this subdivision, including disclosure of the earlier rate increase referenced in item (iv). Subd. 3. Acknowledgment. An applicant shall sign an acknowledgment at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under subdivision 2. If, due to the method of application, the applicant cannot sign an acknowledgment at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate. Subd. 4. Forms. An insurer shall use the forms in Appendices B (Personal Worksheet) and F (Potential Rate Increase Disclosure Form) of the Long-term Care Insurance Model Regulation adopted by the National Association of Insurance Commissioners to comply with the requirements of subdivisions 1 and 2. Subd. 5. Notice of increase. An insurer shall provide notice of an upcoming premium rate schedule increase, after the increase has been approved by the commissioner, to all policyholders or certificate holders, if applicable, at least 45 days prior to the implementation of the premium rate schedule increase by the insurer. The notice must include the information required by subdivision 2 when the rate increase is implemented. History:  1Sp2001 c 9 art 8 s 9; 2002 c 379 art 1 s 113; 2006 c 255 s 38; 2006 c 282 art 17 s 4
62S.09 CERTIFICATE REQUIREMENTS. Subdivision 1. Content. A certificate issued under a group long-term care insurance policy delivered or issued for delivery in this state must include: (1) a description of the principal benefits and coverage provided in the policy; (2) a statement of the exclusions, reductions, and limitations contained in the policy; and (3) a statement that the group master policy determines governing contractual provisions. Subd. 2. Delivery. The issuer of a qualified long-term care insurance policy shall deliver to the applicant, policyholder, or certificate holder the contract or certificate no later than 30 days after the date of approval. History:   1997 c 71 art 1 s 9 
62S.10 POLICY SUMMARY. Subdivision 1. Delivery. At the time of policy delivery, a policy summary must be delivered for an individual life insurance policy that provides long-term care benefits within the policy or by rider. In the case of direct response solicitations, the insurer must deliver the policy summary upon the applicant's request, but regardless of request, must make the delivery no later than at the time of policy delivery. Subd. 2. Contents. The summary must include the following information: (1) an explanation of how the long-term care benefit interacts with other components of the policy, including deductions from death benefits; (2) an illustration of the amount of benefits, the length of benefits, and the guaranteed lifetime benefits, if any, for each covered person; (3) any exclusions, reductions, and limitations on benefits of long-term care; and (4) a statement that any long-term care inflation protection option required by section 62S.23 is not available under this policy. Subd. 3. Additional information required. If applicable to the policy type, the summary must include the following information: (1) a disclosure of the effects of exercising other rights under the policy; (2) a disclosure of guarantees related to long-term care costs of insurance charges; and (3) current and projected maximum lifetime benefits. History:  1997 c 71 art 1 s 10; 2006 c 255 s 39; 2006 c 282 art 17 s 5
62S.11 MONTHLY REPORT. Subdivision 1. Required report. Any time a long-term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in benefit payment status, a monthly report must be provided to the policyholder. Subd. 2. Contents. The report must include the following information: (1) long-term care benefits paid out during the month; (2) an explanation of changes in the policy, such as death benefits or cash values, due to long-term care benefits being paid out; and (3) the amount of long-term care benefits existing or remaining. History:   1997 c 71 art 1 s 11 
62S.12 CLAIM DENIAL. If a claim under a qualified long-term care insurance contract is denied, the issuer shall provide a written explanation of the reasons for the denial and make available all information directly related to the denial within 60 days of the date of a written request by the policyholder or certificate holder, or a representative of the policyholder or certificate holder. History:   1997 c 71 art 1 s 12 
62S.13 INCONTESTABILITY PERIOD. Subdivision 1. Rescission before six months. For a policy or certificate that has been in force for less than six months, an insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is material to acceptance for coverage. Subd. 2. Rescission after six months. For a policy or certificate that has been in force for at least six months, but less than two years, an insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is both material to the acceptance for coverage and that pertains to the condition for which benefits are sought. Subd. 3. Contested policy after two years. After a policy or certificate has been in force for two years, it is not contestable upon the grounds of misrepresentation alone. The policy or certificate may be contested only upon a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health. Subd. 4. Field issue prohibition. A long-term care insurance policy or certificate may not be field issued based on medical or health status. For purposes of this section, "field issued" means a policy or certificate issued by an agent or a third-party administrator under the underwriting authority granted to the agent or third-party administrator by an insurer and using the insurer's underwriting guidelines. Subd. 5. Benefit payments not recoverable. If an insurer has paid benefits under the long-term care insurance policy or certificate, the benefit payments may not be recovered by the insurer in the event that the policy or certificate is rescinded. Subd. 6. Death of insured. In the event of the death of the insured, this section shall not apply to the remaining death benefit of a life insurance policy that accelerates benefits for long-term care. In this situation, the remaining death benefits under these policies shall be governed by section 61A.03, subdivision 1, paragraph (c). In all other situations, this section shall apply to life insurance policies that accelerate benefits for long-term care. History:  1997 c 71 art 1 s 13; 2006 c 255 s 40; 2006 c 282 art 17 s 6; 2008 c 344 s 22
62S.14 RENEWABILITY. Subdivision 1. Guaranteed renewable. A qualified long-term care insurance policy must be guaranteed renewable. Subd. 2. Terms. The terms "guaranteed renewable" and "noncancelable" may not be used in an individual long-term care insurance policy without further explanatory language that complies with the disclosure requirements of section 62S.20. The term "level premium" may only be used when the insurer does not have the right to change the premium. Subd. 3. Authorized renewal provisions. A policy issued to an individual may not contain renewal provisions other than guaranteed renewable or noncancelable. History:  1997 c 71 art 1 s 14; 2006 c 255 s 41; 2006 c 282 art 17 s 7
62S.15 AUTHORIZED LIMITATIONS AND EXCLUSIONS. (a) No policy may be delivered or issued for delivery in this state as long-term care insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition, or accident, except as follows: (1) preexisting conditions or diseases; (2) mental or nervous disorders; except that the exclusion or limitation of benefits on the basis of Alzheimer's disease is prohibited; (3) alcoholism and drug addiction; (4) illness, treatment, or medical condition arising out of war or act of war; participation in a felony, riot, or insurrection; service in the armed forces or auxiliary units; suicide, attempted suicide, or intentionally self-inflicted injury; or non-fare-paying aviation; (5) treatment provided in a government facility unless otherwise required by law, services for which benefits are available under Medicare or other government program except Medicaid, state or federal workers' compensation, employer's liability or occupational disease law, motor vehicle no-fault law; services provided by a member of the covered person's immediate family; and services for which no charge is normally made in the absence of insurance; (6) expenses for services or items available or paid under another long-term care insurance or health insurance policy; and (7) in the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount. (b) This subdivision does not prohibit exclusions and limitations by type of provider or territorial limitations. However, no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued under the following conditions: (1) when the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification, or registration; or (2) when the state other than the state of policy issue licenses, certifies, or registers the provider under another name. For purposes of this paragraph, "state of policy issue" means the state in which the individual policy or certificate was originally issued. History:  1997 c 71 art 1 s 15; 2006 c 255 s 42; 2006 c 282 art 17 s 8; 2008 c 344 s 23
62S.16 EXTENSION OF BENEFITS. Termination of long-term care insurance must be without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period or to payment of the maximum benefits and may be subject to a policy waiting period, and all other applicable provisions of the policy. History:   1997 c 71 art 1 s 16 
62S.17 CONTINUATION OR CONVERSION. Subdivision 1. Requirement. Group long-term care insurance shall provide covered individuals with a basis for continuation or conversion of coverage. Subd. 2. Basis for continuation of coverage. A basis for continuation of coverage policy provision must maintain coverage under the existing group policy when the coverage would otherwise terminate and is subject only to the continued timely payment of premium when due. Group policies which restrict provision of benefits and services to, or contain incentives to use certain providers or facilities, may provide continuation benefits which are substantially equivalent to the benefits of the existing group policy. The commissioner shall make a determination as to the substantial equivalency of benefits and shall take into consideration the differences between managed care and nonmanaged care plans, including provider system arrangements, service availability, benefit levels, and administrative complexity. Subd. 3. Basis for conversion of coverage. A basis for conversion of coverage policy provision must provide that an individual whose coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy and any group policy which it replaced, for at least six months immediately prior to termination, is entitled to the issuance of a converted policy by the insurer under whose group policy the insured is covered, without evidence of insurability. Subd. 4. Converted individual policy. A converted individual policy of long-term care insurance must provide benefits identical to or benefits determined by the commissioner to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made. Where the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain providers or facilities, the commissioner, in making a determination as to the substantial equivalency of benefits, shall take into consideration the differences between managed care and nonmanaged care plans, including provider system arrangements, service availability, benefit levels, and administrative complexity. Subd. 5. Converted policy application. Written application for the converted policy must be made and the first premium due, if any, must be paid as directed by the insurer not later than 31 days after termination of coverage under the group policy. The converted policy must be issued effective on the day following the termination of coverage under the group policy, and is renewable annually. Subd. 6. Converted policy premium calculation. Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy is calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy is calculated on the basis of the insured's age at inception of coverage under the group policy replaced. Subd. 7. Exceptions. Continuation of coverage or issuance of a converted policy is mandatory, except under the following conditions: (1) termination of group coverage resulting from an individual's failure to make a required payment of premium or contribution when due; or (2) replacement group coverage: (i) is in place not later than 31 days after termination and is effective on the day following the termination of coverage; (ii) provides benefits identical to or benefits determined by the commissioner to be substantially equivalent to or in excess of those provided by the terminating coverage; and (iii) premium is calculated in a manner consistent with the requirements of subdivision 6. Subd. 8. Reduction in benefits. Notwithstanding any other provision of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy which provides benefits on the basis of incurred expenses, may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses. This provision may only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable. Subd. 9. Benefit limit. A converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, shall not exceed those that would have been payable had the individual's coverage under the group policy remained in effect. Subd. 10. Eligibility. Notwithstanding any other provision of this section, an insured individual whose eligibility for group long-term care coverage is based upon the insured individual's relationship to another person, is entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage. Subd. 11. Managed care plan. For the purposes of this section, a "managed care plan" is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management, or use of specific provider networks. History:   1997 c 71 art 1 s 17 
62S.18 DISCONTINUANCE AND REPLACEMENT. Subdivision 1. Required coverage. If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced and shall not vary or otherwise depend on the individual's health or disability status, claim experience, or use of long-term care services. Subd. 2. Premiums. (a) The premiums charged to an insured for long-term care insurance replaced under subdivision 1 shall not increase due to either the increasing age of the insured at ages beyond 65 or the duration the insured has been covered under this policy. (b) The purchase of additional coverage must not be considered a premium rate increase, but for purposes of the calculation required under section 62S.291, the portion of the premium attributable to the additional coverage must be added to and considered part of the initial annual premium. (c) A reduction in benefits must not be considered a premium change, but for purpose of the calculation required under section 62S.291, the initial annual premium must be based on the reduced benefits. History:  1997 c 71 art 1 s 18; 2008 c 344 s 24
62S.181 ELECTRONIC ENROLLMENT FOR GROUP POLICIES. Subdivision 1. Employers or labor unions. In the case of a group defined in section 62S.01, subdivision 15, clause (1), any requirement that a signature of an insured be obtained by an agent or insurer is satisfied if: (1) the consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer. A verification of enrollment information must be provided to the enrollee; (2) the telephonic or electronic enrollment provides necessary and reasonable safeguards to ensure the accuracy, retention, and prompt retrieval of records; and (3) the telephonic or electronic enrollment provides necessary and reasonable safeguards to ensure that the confidentiality of individually identifiable information and "privileged information" as defined by section 72A.491, subdivision 19, is maintained. Subd. 2. Availability of insurer records. The insurer shall make available, upon request of the commissioner, records that will demonstrate the insurer's ability to confirm enrollment and coverage amounts. History:   2008 c 344 s 25 
62S.19 UNINTENTIONAL LAPSE. Subdivision 1. Notice before lapse or termination. No individual long-term care policy or certificate shall be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant has the right to designate at least one person who is to receive the notice of termination in addition to the insured. Designation shall not constitute acceptance of any liability on the third party for services provided to the insured. The form used for the written designation must provide space clearly designated for listing at least one person. The designation shall include each person's full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver must state: "Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate any person to receive such notice." The insurer shall notify the insured of the right to change this written designation at least once every two years. Subd. 2. Payment plan provisions. When the policyholder or certificate holder pays the premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements specified under subdivision 1 are effective 60 days after the policyholder or certificate holder is no longer on the payment plan. The application or enrollment form for the policies or certificates must clearly indicate the payment plan selected by the applicant. Subd. 3. Notice requirements. No individual long-term care policy or certificate shall lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated under subdivision 1, at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice must be given by first class United States mail, postage prepaid, and notice may not be given until 30 days after a premium is due and unpaid. Notice is considered to have been given as of five days after the date of mailing. Subd. 4. Reinstatement. In addition to the requirement in subdivision 1, a long-term care insurance policy or certificate must include a provision which provides for reinstatement of coverage, in the event of lapse, if the insurer is provided proof of cognitive impairment or the loss of functional capacity. This option must be available to the insured if requested within five months after termination and must allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity, if any, contained in the policy and certificate. History:   1997 c 71 art 1 s 19 
62S.20 REQUIRED DISCLOSURE PROVISIONS. Subdivision 1. Renewability. (a) Individual long-term care insurance policies must contain a renewability provision that is appropriately captioned, appears on the first page of the policy, and clearly states that the coverage is guaranteed renewable or noncancelable. This subdivision does not apply to policies which are part of or combined with life insurance policies which do not contain a renewability provision and under which the right to nonrenew is reserved solely to the policyholder. (b) A long-term care insurance policy or certificate, other than one where the insurer does not have the right to change the premium, shall include a statement that premium rates may change. Subd. 2. Riders and endorsements. Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy must require signed acceptance by the individual insured. After the date of policy issue, a rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to, in writing, signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge must be specified in the policy, rider, or endorsement. Subd. 3. Payment of benefits. A long-term care insurance policy which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or similar words must include a definition and an explanation of the terms in its accompanying outline of coverage. Subd. 4. Limitations. If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations must appear as a separate paragraph of the policy or certificate and must be labeled as "preexisting condition limitations." Subd. 5. Other limitations or conditions on eligibility for benefits. A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in section 62S.06 shall provide a description of the limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label the paragraph "limitations or conditions on eligibility for benefits." Subd. 5a. Disclosure of tax consequences. With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement is required at the time of application for the policy or rider and at the same time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor. The disclosure statement must be prominently displayed on the first page of the policy or rider and any other related documents. This subdivision does not apply to qualified long-term care insurance contracts. Subd. 5b. Benefit triggers. Activities of daily living and cognitive impairment must be used to measure an insured's need for long-term care and must be described in the policy or certificate in a separate paragraph and must be labeled "Eligibility for the Payment of Benefits." Any additional benefit triggers must also be explained in this section. If these triggers differ for different benefits, explanation of the trigger must accompany each benefit description. If an attending physician, advanced practice registered nurse, physician assistant, or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified. Subd. 6. Qualified long-term care insurance policy. A qualified long-term care insurance policy must include a disclosure statement in the policy that the policy is intended to be a qualified long-term care insurance policy under section 7702B(b) of the Internal Revenue Code of 1986, as amended. History:  1997 c 71 art 1 s 20; 2006 c 255 s 43; 2006 c 282 art 17 s 9; 2008 c 344 s 26-28; 2020 c 115 art 4 s 17; 2022 c 58 s 18
62S.21 PROHIBITION AGAINST POSTCLAIMS UNDERWRITING. Subdivision 1. Health condition. All applications for long-term care insurance policies or certificates, except those which are guaranteed issue must contain clear and unambiguous questions designed to ascertain the health condition of the applicant. Subd. 2. Medication information required. If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, advanced practice registered nurse, or physician assistant, it must also ask the applicant to list the medication that has been prescribed. If the medications listed in the application were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate shall not be rescinded for that condition. Subd. 3. Language required. (a) The following language must be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate: CAUTION: If your answers on this application are incorrect or untrue, (company) has the right to deny benefits or rescind your policy. (b) The following language, or language substantially similar to the following, must be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery: CAUTION: The issuance of this long-term care insurance (policy) (certificate) is based upon your responses to the questions on your application. A copy of your (application) (enrollment form) (is enclosed) (was retained by you when you applied). If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises. If, for any reason, any of your answers are incorrect, contact the company at this address: (insert address). Subd. 4. Necessary information. Before issuing a long-term care policy or certificate to an applicant aged 80 or older, the insurer shall obtain one of the following: (1) a report of a physical examination; (2) an assessment of functional capacity; (3) an attending physician's statement; or (4) copies of medical records. Subd. 5. Exception. Subdivisions 3 and 4 do not apply to policies or certificates which are guaranteed issue. Subd. 6. Copy requirement. A copy of the completed application or enrollment form, whichever is applicable, must be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application. Subd. 7. Records. An insurer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and shall annually furnish this information to the commissioner. History:  1997 c 71 art 1 s 21; 2020 c 115 art 4 s 18; 2022 c 58 s 19
62S.22 MINIMUM STANDARDS FOR HOME HEALTH AND COMMUNITY CARE BENEFITS. Subdivision 1. Prohibited limitations. A long-term care insurance policy or certificate shall not, if it provides benefits for home health care or community care services, limit or exclude benefits by: (1) requiring that the insured would need care in a skilled nursing facility if home health care services were not provided; (2) requiring that the insured first or simultaneously receive nursing or therapeutic services in a home, community, or institutional setting before home health care services are covered; (3) limiting eligible services to services provided by a registered nurse or licensed practical nurse; (4) requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of licensure or certification; (5) excluding coverage for personal care services provided by a home health aide; (6) requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service; (7) requiring that the insured have an acute condition before home health care services are covered; (8) limiting benefits to services provided by Medicare-certified agencies or providers; (9) excluding coverage for adult day care services; or (10) excluding coverage based upon location or type of residence in which the home health care services would be provided. Subd. 2. Required coverage amount. A long-term care insurance policy or certificate, if it provides for home health or community care services, must provide total home health or community care coverage that is a dollar amount equivalent to at least one-half of one year's coverage available for nursing home benefits under the policy or certificate, at the time covered home health or community care services are being received. This requirement does not apply to policies or certificates issued to residents of continuing care retirement communities. Subd. 3. Application of home health care coverage. Home health care coverage may be applied to the nonhome health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate. History:  1997 c 71 art 1 s 22; 1Sp2003 c 14 art 2 s 5
62S.23 REQUIREMENT TO OFFER INFLATION PROTECTION. Subdivision 1. Inflation protection feature. (a) No insurer may offer a long-term care insurance policy unless the insurer also offers to the policyholder, in addition to any other inflation protection, the option to purchase a policy that provides for benefit levels to increase with benefit maximums or reasonable durations which are meaningful to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. In addition to other options that may be offered, insurers must offer to each policyholder, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favorable than one of the following: (1) increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than five percent; (2) guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or (3) covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit. (b) A long-term care partnership policy must provide the inflation protection described in this subdivision. If the policy is sold to an individual who: (1) has not attained age 61 as of the date of purchase, the policy must provide compound annual inflation protection; (2) has attained age 61, but has not attained age 76 as of such date, the policy must provide some level of inflation protection; and (3) has attained the age of 76 as of such date, the policy may, but is not required to, provide some level of inflation protection. Inflation protection for a long-term care partnership policy may not be less than one percent per year or a rate based on changes in the Consumer Price Index. The commissioner, however, may approve other types of inflation protection that comply with this section and further the goals of the partnership program. Subd. 2. Group offer. Except as otherwise provided in this subdivision, if the policy is issued to a group, the required offer in subdivision 1 must be made to the group policyholder. If the policy is issued to a group as defined in section 62S.01, subdivision 15, clause (4), other than to a continuing care retirement community, the offering must be made to each proposed certificate holder. Subd. 3. Required information. Insurers shall include the following information in or with the outline of coverage: (1) a graphic comparison of the benefit levels of a policy that increases benefits over the policy period with a policy that does not increase benefits. The graphic comparison must show benefit levels over at least a 20-year period; and (2) any expected premium increases or additional premiums to pay for automatic or optional benefit increases. An insurer may use a reasonable, hypothetical, or a graphic demonstration for the purposes of this disclosure. Subd. 4. Benefit continued. Inflation protection benefit increases under a policy which contains this benefit shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy. Subd. 5. Automatic benefit increases. An offer of inflation protection which provides for automatic benefit increases must include an offer of a premium which the insurer expects to remain constant. The offer must disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant. Subd. 6. Rejection. Inflation protection as provided in subdivision 1, clause (1), must be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder as required in this section. The rejection may be either in the application or on a separate form. The rejection shall be considered a part of the application and shall state: I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protections. Specifically, I have reviewed plans ......., and I reject inflation protection. Subd. 7. Exception. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits. History:  1997 c 71 art 1 s 23; 2007 c 104 s 17; 2008 c 344 s 29; 2015 c 59 s 2
62S.24 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE. Subdivision 1. Required questions. An application form must include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent, except where the coverage is sold without an agent, containing the following questions may be used. If a replacement policy is issued to a group as defined under section 62S.01, subdivision 15, clause (1), the following questions may be modified only to the extent necessary to elicit information about long-term care insurance policies other than the group policy being replaced; provided, however, that the certificate holder has been notified of the replacement: (1) do you have another long-term care insurance policy or certificate in force (including health care service contract or health maintenance organization contract)?; (2) did you have another long-term care insurance policy or certificate in force during the last 12 months?; (i) if so, with which company?; and (ii) if that policy lapsed, when did it lapse?; (3) are you covered by Medicaid?; and (4) do you intend to replace any of your medical or health insurance coverage with this policy (certificate)? Subd. 1a. Other health insurance policies sold by agent. Agents shall list all other health insurance policies they have sold to the applicant that are still in force or were sold in the past five years and are no longer in force. Subd. 2. Additional application requirements. An application for a long-term care insurance policy or certificate must meet the requirements specified under section 62S.21. Subd. 3. Solicitations other than direct response. After determining that a sale will involve replacement, an insurer, other than an insurer using direct response solicitation methods or its agent, shall furnish the applicant, before issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long-term care coverage. One copy of the notice must be retained by the applicant and an additional copy signed by the applicant must be retained by the insurer. The required notice must be provided in the following manner: NOTICE TO APPLICANT REGARDING REPLACEMENT OF INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE (Insurance company's name and address) SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE. According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with an individual long-term care insurance policy to be issued by (company name) insurance company. Your new policy provides 30 days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy. You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision. STATEMENT TO APPLICANT BY AGENT (BROKER OR OTHER REPRESENTATIVE): (Use additional sheets, as necessary.) I have reviewed your current medical health insurance coverage. I believe the replacement of insurance involved in this transaction materially improves your position. My conclusion has taken into account the following considerations, which I call to your attention: (a) Health conditions which you presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy. (b) State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy. (c) If you are replacing existing accident and sickness or long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage. (d) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.      .     (Signature of Agent, Broker, or Other Representative)    (Typed Name and Address of Agency or Broker)    The above "Notice to Applicant" was delivered to me on:           .     (Date)      .     (Applicant's Signature)   Subd. 4.Direct response solicitations. Insurers using direct response solicitation methods shall deliver a notice regarding replacement of long-term care coverage to the applicant upon issuance of the policy. The required notice must be provided in the following manner: NOTICE TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE (Insurance company's name and address) SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE. According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with the long-term care insurance policy delivered herewith issued by (company name) insurance company. Your new policy provides 30 days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy. You should review this new coverage carefully, comparing it with all long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision. (a) Health conditions which you presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy. (b) State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. Your insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy. (c) If you are replacing existing accident and sickness or long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage. (d) (To be included only if the application is attached to the policy.) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to (company name and address) within 30 days if any information is not correct and complete, or if any past medical history has been left out of the application.       .     (Company Name)   Subd. 5.Replacement notification. Where replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy must be identified by the insurer, name of the insured, and policy number or address including zip code. The notice must be made within five working days from the date the application is received by the insurer or the date the policy is issued, whichever is sooner. Subd. 6. Waiver of preexisting condition and probationary periods. If a long-term care insurance policy or certificate replaces another long-term care policy or certificate, the replacing insurer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy. Subd. 7. Life insurance policies. Life insurance policies that accelerate benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy. If the policy being replaced is a life insurance policy, the insurer shall comply with the replacement requirements of sections 61A.53 to 61A.60. If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing insurer shall comply with both the long-term care and the life insurance replacement requirements. Subd. 8. Exchange for long-term care partnership policy; addition of policy rider. (a) With respect to the long-term care partnership program referenced in section 256B.0571, issuers of long-term care policies may voluntarily exchange a current long-term care insurance policy for a long-term care partnership policy that meets the requirements of Public Law 109-171, section 6021, after the effective date of the state plan amendment implementing the partnership program in this state. The exchange may be in the form of: (1) an amendment or rider; or (2) a disclosure statement indicating that the coverage is now partnership qualified. (b) With respect to the long-term care partnership program referenced in section 256B.0571, to allow an existing long-term care insurance policy to qualify as a partnership policy by addition of: (1) a policy rider or amendment; or (2) a disclosure statement, the issuer of the policy is authorized to add the rider, amendment, or disclosure statement to the policy after the effective date of the state plan amendment implementing the partnership program in this state. (c) The commissioner, in cooperation with the commissioner of human services, shall pursue any federal law changes or waivers necessary to allow the implementation of paragraphs (a) and (b). Subd. 9. Certain pre-July 1, 2006, policies. (a) Notwithstanding section 256B.0571, subdivision 6, a long-term care insurance policy issued before July 1, 2006, that otherwise meets all requirements for partnership policy status shall be qualified as a partnership policy, provided that benefits have not yet been paid out on the policy. (b) An insured may make written inquiry to the issuer of the long-term care insurance policy as to whether the policy meets the requirements for partnership policy status. The issuer of the policy must reply to the inquiry within 30 days, and if the policy does so qualify, must add a rider, amendment, or disclosure statement to the policy as documentation of the partnership policy status. History:  1997 c 71 art 1 s 24; 2006 c 255 s 44-49; 2006 c 282 art 17 s 10-15; 2010 c 310 art 4 s 1; 2010 c 384 s 25; 2015 c 59 s 3
62S.25 REPORTING REQUIREMENTS. Subdivision 1. Insurer records. Each insurer shall maintain records for each agent of that agent's amount of replacement sales as a percent of the agent's total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent's total annual sales. Subd. 2. Required information on agents. Each insurer shall report annually by June 30 the ten percent of its agents with the greatest percentages of lapses and replacements as measured under subdivision 1. Subd. 3. Intent. Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports are for the purpose of reviewing more closely agent activities regarding the sale of long-term care insurance. Subd. 4. Lapsed policies. Each insurer shall report annually by June 30 the number of lapsed long-term care insurance policies as a percent of its total annual sales and as a percent of its total number of long-term care insurance policies in force as of the end of the preceding calendar year. Subd. 5. Replacement policies. Each insurer shall report annually by June 30 the number of replacement long-term care insurance policies sold as a percent of its total annual sales and as a percent of its total number of long-term care insurance policies in force as of the preceding calendar year. Subd. 6. Claims denied. Each insurer shall report annually by June 30 the number of claims denied for any reason during the reporting period for each class of business, expressed as a percentage of claims denied, other than claims denied for failure to meet the waiting period or because of any applicable preexisting condition. For purposes of this subdivision, "claim" means a request for payment of benefits under an in-force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met. Subd. 7. Reports.  Reports under this section shall be done on a statewide basis and filed with the commissioner. They shall include, at a minimum, the information in the format contained in Appendix E (Claim Denial Reporting Form) and in Appendix G (Replacement and Lapse Reporting Form) of the Long-Term Care Model Regulation adopted by the National Association of Insurance Commissioners. History:  1997 c 71 art 1 s 25; 2006 c 255 s 50,51; 2006 c 282 art 17 s 16,17
62S.251 RESERVE STANDARDS. Subdivision 1. Benefits provided through acceleration of benefits under life policies. When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to these policies, policy reserves for the benefits must be determined in accordance with section 61A.25. Claim reserves must also be established in the case when the policy or rider is in claim status. Reserves for policies and riders subject to this section must be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event must the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit. In the development and calculation of reserves for policies and riders subject to this subdivision, due regard must be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to, the following: (1) definition of insured events; (2) covered long-term care facilities; (3) existence of home convalescence care coverage; (4) definition of facilities; (5) existence or absence of barriers to eligibility; (6) premium waiver provision; (7) renewability; (8) ability to raise premiums; (9) marketing method; (10) underwriting procedures; (11) claims adjustment procedures; (12) waiting period; (13) maximum benefit; (14) availability of eligible facilities; (15) margins in claim costs; (16) optional nature of benefit; (17) delay in eligibility for benefit; (18) inflation protection provisions; and (19) guaranteed insurability option. Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries. Subd. 2. Benefits provided otherwise. When long-term care benefits are provided other than as in subdivision 1, reserves must be determined in accordance with sections 60A.76 to 60A.768. History:   2008 c 344 s 30 
62S.26 LOSS RATIO. Subdivision 1. Minimum loss ratio. The minimum loss ratio must be at least 60 percent, calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, the commissioner shall give consideration to all relevant factors, including: (1) statistical credibility of incurred claims experience and earned premiums; (2) the period for which rates are computed to provide coverage; (3) experienced and projected trends; (4) concentration of experience within early policy duration; (5) expected claim fluctuation; (6) experience refunds, adjustments, or dividends; (7) renewability features; (8) all appropriate expense factors; (9) interest; (10) experimental nature of the coverage; (11) policy reserves; (12) mix of business by risk classification; and (13) product features such as long elimination periods, high deductibles, and high maximum limits. Subd. 2. Life insurance policies. Subdivision 1 shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions: (1) the interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy; (2) the portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of section 61A.24; (3) the policy meets the disclosure requirements of sections 62S.09, 62S.10, and 62S.11; (4) any policy illustration that meets the applicable requirements of the NAIC Life Insurance Illustrations Model Regulation; and (5) an actuarial memorandum is filed with the commissioner that includes: (i) a description of the basis on which the long-term care rates were determined; (ii) a description of the basis for the reserves; (iii) a summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance; (iv) a description and a table of each actuarial assumption used. For expenses, an insurer must include percentage of premium dollars per policy and dollars per unit of benefits, if any; (v) a description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives; (vi) the estimated average annual premium per policy and the average issue age; (vii) a statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and (viii) a description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status. Subd. 3. Nonapplication.  This section does not apply to policies or certificates that are subject to sections 62S.021, 62S.081, and 62S.265, and that comply with those sections. History:  1997 c 71 art 1 s 26; 1Sp2001 c 9 art 8 s 10; 2002 c 379 art 1 s 113; 2006 c 255 s 52; 2006 c 282 art 17 s 18; 2008 c 344 s 31
62S.265 PREMIUM RATE SCHEDULE INCREASES. Subdivision 1. Applicability. (a) Except as provided in paragraph (b), this section applies to any long-term care policy or certificate issued in this state on or after January 1, 2002, under this chapter or sections 62A.46 to 62A.56. (b) For certificates issued on or after July 1, 2001, under a group long-term care insurance policy as defined in section 62S.01, subdivision 15, issued under this chapter, that was in force on July 1, 2001, this section applies on the policy anniversary following June 30, 2002. Subd. 2. Notice. An insurer shall file a requested premium rate schedule increase, including an exceptional increase, to the commissioner for prior approval at least 60 days prior to the notice to the policyholders and shall include: (1) all information required by section 62S.081; (2) certification by a qualified actuary that: (i) if the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated; and (ii) the premium rate filing complies with this section; (3) an actuarial memorandum justifying the rate schedule change request that includes: (i) lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale; (A) annual values for the five years preceding and the three years following the valuation date must be provided separately; (B) the projections must include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase; (C) the projections must demonstrate compliance with subdivision 3; and (D) for exceptional increases, the projected experience must be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase and, if the commissioner determines that offsets to higher claim costs may exist, the insurer shall use appropriate net projected experience; (ii) disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse; (iii) disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied upon by the actuary; (iv) a statement that policy design, underwriting, and claims adjudication practices have been taken into consideration; and (v) if it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer shall file composite rates reflecting projections of new certificates; (4) a statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the commissioner; and (5) sufficient information for review and approval of the premium rate schedule increase by the commissioner. Subd. 3. Requirements pertaining to rate increases. All premium rate schedule increases must be determined according to the following requirements: (1) exceptional increases must provide that 70 percent of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits; (2) premium rate schedule increases must be calculated so that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following: (i) the accumulated value of the initial earned premium times 58 percent; (ii) 85 percent of the accumulated value of prior premium rate schedule increases on an earned basis; (iii) the present value of future projected initial earned premiums times 58 percent; and (iv) 85 percent of the present value of future projected premiums not in item (iii) on an earned basis; (3) if a policy form has both exceptional and other increases, the values in clause (2), items (ii) and (iv), must also include 70 percent for exceptional rate increase amounts; and (4) all present and accumulated values used to determine rate increases must use the maximum valuation interest rate for contract reserves permitted for valuation of whole life insurance policies issued in this state on the same date. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages. Subd. 4. Projections. For each rate increase that is implemented, the insurer shall file for approval by the commissioner updated projections, as described in subdivision 2, clause (3), item (i), annually for the next three years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than three years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in subdivision 11, the projections required by this subdivision must be provided to the policyholder in lieu of filing with the commissioner. Subd. 5. Lifetime projections. If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as described in subdivision 2, clause (3), item (i), must be filed for approval by the commissioner every five years following the end of the required period in subdivision 4. For group insurance policies that meet the conditions in subdivision 11, the projections required by this subdivision must be provided to the policyholder in lieu of filing with the commissioner. Subd. 6. Effect of actual experience. (a) If the commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in subdivision 3, the commissioner may require the insurer to implement any of the following: (1) premium rate schedule adjustments; or (2) other measures to reduce the difference between the projected and actual experience. (b) In determining whether the actual experience adequately matches the projected experience, consideration must be given to subdivision 2, clause (3), item (v), if applicable. Subd. 7. Contingent benefit upon lapse. If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file: (1) a plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or a demonstration that appropriate administration and claims processing have been implemented or are in effect; otherwise, the commissioner may impose the condition in subdivision 8, paragraph (b); and (2) the original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to subdivision 3 had the greater of the original anticipated lifetime loss ratio or 58 percent been used in the calculations described in subdivision 3, clause (2), items (i) and (iii). Subd. 8. Projected lapse rates. (a) For a rate increase filing that meets the following criteria, the commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated: (1) the rate increase is not the first rate increase requested for the specific policy form or forms; (2) the rate increase is not an exceptional increase; and (3) the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse. (b) If significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner may require the insurer to offer, without underwriting, to all in-force insureds subject to the rate increase, the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates. The offer must: (1) be subject to the approval of the commissioner; (2) be based upon actuarially sound principles, but not be based upon attained age; and (3) provide that maximum benefits under any new policy accepted by an insured are reduced by comparable benefits already paid under the existing policy. (c) The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase must be limited to the lesser of the maximum rate increase determined based on the combined experience and the maximum rate increase determined based only upon the experience of the insureds originally issued the form plus ten percent. Subd. 9. Persistent practice of inadequate initial rates. If the commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the commissioner may, in addition to the provisions of subdivision 8, prohibit the insurer from either of the following: (1) filing and marketing comparable coverage for a period of up to five years; or (2) offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases. Subd. 10. Incidental long-term care benefits. Subdivisions 1 to 9 do not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in section 62S.01, subdivision 17a, if the policy complies with all of the following provisions: (1) the interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy; (2) the portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following: (i) for life insurance, section 61A.25; (ii) for individual deferred annuities, section 61A.245; and (iii) for variable annuities, section 61A.21; (3) the policy meets the disclosure requirements of sections 62S.10 and 62S.11 if the policy is governed by chapter 62S and of section 62A.50 if the policy is governed by sections 62A.46 to 62A.56; (4) the portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following: (i) policy illustrations to the extent required by state law applicable to life insurance; (ii) disclosure requirements in state law applicable to annuities; and (iii) disclosure requirements applicable to variable annuities; and (5) an actuarial memorandum is filed with the commissioner that includes: (i) a description of the basis on which the long-term care rates were determined; (ii) a description of the basis for the reserves; (iii) a summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance; (iv) a description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any; (v) a description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives; (vi) the estimated average annual premium per policy and the average issue age; (vii) a statement as to whether underwriting is performed at the time of application. The statement must indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement must indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and (viii) a description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status. Subd. 11. Large group policies. Subdivisions 6 and 9 do not apply to group long-term care insurance policies as defined in section 62S.01, subdivision 15, where: (1) the policies insure 250 or more persons, and the policyholder has 5,000 or more eligible employees of a single employer; or (2) the policyholder, and not the certificate holder, pays a material portion of the premium, which is not less than 20 percent of the total premium for the group in the calendar year prior to the year in which a rate increase is filed. History:  1Sp2001 c 9 art 8 s 11; 2002 c 379 art 1 s 113
62S.266 NONFORFEITURE BENEFIT REQUIREMENT. Subdivision 1. Applicability. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits. Subd. 2. Requirement. (a) An insurer must offer each prospective policyholder a nonforfeiture benefit in compliance with the following requirements: (1) a policy or certificate offered with nonforfeiture benefits must have coverage elements, eligibility, benefit triggers, and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer must be the benefit described in subdivision 5; and (2) the offer must be in writing if the nonforfeiture benefit is not otherwise described in the outline of coverage or other materials given to the prospective policyholder. (b) When a group long-term care insurance policy is issued, the offer required in paragraph (a) shall be made to the group policyholder. However, if the policy is issued as group long-term care insurance as defined in section 62S.01, subdivision 15, clause (4), other than to a continuing care retirement community or other similar entity, the offering shall be made to each proposed certificate holder. Subd. 3. Effect of rejection of offer. If the offer required to be made under subdivision 2 is rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Subd. 4. Contingent benefit upon lapse. (a) After rejection of the offer required under subdivision 2, for individual and group policies without nonforfeiture benefits issued after July 1, 2001, the insurer shall provide a contingent benefit upon lapse. (b) If a group policyholder elects to make the nonforfeiture benefit an option to the certificate holder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse. (c) The contingent benefit on lapse must be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium based on the insured's issue age provided in this paragraph, and the policy or certificate lapses within 120 days of the due date of the premium increase. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.       Issue Age  Percent Increase OverInitial Premium  29 and Under  200  30-34  190  35-39  170  40-44  150  45-49  130  50-54  110  55-59  90  60  70  61  66  62  62  63  58  64  54  65  50  66  48  67  46  68  44  69  42  70  40  71  38  72  36  73  34  74  32  75  30  76  28  77  26  78  24  79  22  80  20  81  19  82  18  83  17  84  16  85  15  86  14  87  13  88  12  89  11  90 and over  10   (d) A contingent benefit on lapse must also be triggered for policies with a fixed or limited premium paying period every time an insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in paragraph (f), clause (2), is 40 percent or more. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.     Triggers for a Substantial Premium Increase   Issue Age Percent Increase Over Initial Premium   Under 65 50%   65-80 30%   Over 80 10%   This provision shall be in addition to the contingent benefit provided by paragraph (c) and where both are triggered, the benefit provided must be at the option of the insured. (e) On or before the effective date of a substantial premium increase as defined in paragraph (c), the insurer shall: (1) offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased; (2) offer to convert the coverage to a paid-up status with a shortened benefit period according to the terms of subdivision 5. This option may be elected at any time during the 120-day period referenced in paragraph (c); and (3) notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in paragraph (c) is deemed to be the election of the offer to convert in clause (2). (f) On or before the effective date of a substantial premium increase as defined in paragraph (d), the insurer shall: (1) offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased; (2) offer to convert the coverage to a paid-up status where the amount payable for each benefit is 90 percent of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in paragraph (d); and (3) notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in paragraph (d) shall be deemed to be the election of the offer to convert in clause (2) if the ratio is 40 percent or more. Subd. 5. Nonforfeiture benefits; requirements. (a) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse, must be as described in this subdivision. (b) For purposes of this subdivision, "attained age rating" is defined as a schedule of premiums starting from the issue date which increases with age at least one percent per year prior to age 50, and at least three percent per year beyond age 50. (c) For purposes of this subdivision, the nonforfeiture benefit must be of a shortened benefit period providing paid-up, long-term care insurance coverage after lapse. The same benefits, amounts, and frequency in effect at the time of lapse, but not increased thereafter, will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits must be determined as specified in paragraph (d). (d) The standard nonforfeiture credit will be equal to 100 percent of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, so long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit must not be less than 30 times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of this subdivision. (e) The nonforfeiture benefit must begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse must be effective during the first three years as well as thereafter. (f) Notwithstanding paragraph (e), for a policy or certificate with attained age rating, the nonforfeiture benefit must begin on the earlier of: (1) the end of the tenth year following the policy or certificate issue date; or (2) the end of the second year following the date the policy or certificate is no longer subject to attained age rating. (g) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate. Subd. 6. Benefit limit. All benefits paid by the insurer while the policy or certificate is in premium-paying status and in the paid-up status will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium-paying status. Subd. 7. Minimum benefits; individual and group policies. There must be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies. Subd. 8. Application; effective dates. This section becomes effective January 1, 2002, and applies as follows: (a) Except as provided in paragraph (b), this section applies to any long-term care policy issued in this state on or after January 1, 2002. (b) For certificates issued on or after January 1, 2002, under a group long-term care insurance policy that was in force on January 1, 2002, the provisions of this section do not apply. Subd. 9. Effect on loss ratio. Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse are subject to the loss ratio requirements of section 62A.48, subdivision 4, or 62S.26, treating the policy as a whole, except for policies or certificates that are subject to sections 62S.021, 62S.081, and 62S.265 and that comply with those sections. Subd. 10. Purchased blocks of business. To determine whether contingent nonforfeiture upon lapse provisions are triggered under subdivision 4, paragraph (c) or (d), a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer. Subd. 11. Level premium contracts. A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts must be offered that meets the following requirements: (1) the nonforfeiture provision must be appropriately captioned; (2) the nonforfeiture provision must provide a benefit available in the event of a default in the payment of any premiums and must state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the commissioner for the same contract form; and (3) the nonforfeiture provision must provide at least one of the following: (i) reduced paid-up insurance; (ii) extended term insurance; (iii) shortened benefit period; or (iv) other similar offerings approved by the commissioner. History:  1Sp2001 c 9 art 8 s 12; 2002 c 379 art 1 s 113; 2006 c 255 s 53; 2006 c 282 art 17 s 19; 2008 c 344 s 32,33; 2010 c 384 s 26
62S.267 STANDARDS FOR BENEFIT TRIGGERS. Subdivision 1. Benefit payment determinations. A long-term care insurance policy must condition the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. Eligibility for the payment of benefits must not be more restrictive than requiring either a deficiency in the ability to perform not more than two of the activities of daily living or the presence of cognitive impairment. Activities of daily living include at least the following as defined in section 62S.01 and in the policy: bathing, continence, dressing, eating, toileting, and transferring. Insurers may use activities of daily living to trigger covered benefits in addition to those contained in this subdivision as long as they are defined in the policy. Subd. 2. Additional provisions for determining benefit payments. An insurer may use additional provisions for the determination of when benefits are payable under a policy or certificate if the provisions do not restrict, and are not in lieu of, the requirements contained in subdivision 1. Subd. 3. Deficiency determination. For purposes of this section, the determination of a deficiency must not be more restrictive than requiring the hands-on assistance of another person to perform the prescribed activities of daily living, or if the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others. Subd. 4. Assessments. Assessments of activities if daily living and cognitive impairment must be performed by licensed or certified professionals, such as physicians, nurses, or social workers. Subd. 5. Appeal process. Long-term care insurance policies must include a clear description of the process for appealing and resolving benefit determinations. History:   2008 c 344 s 34 
62S.268 ADDITIONAL STANDARDS FOR BENEFIT TRIGGERS FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS. Subdivision 1. Definitions. For purposes of this section, the following terms have the meanings given them: (a) "Qualified long-term care services" means services that meet the requirements of section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows: necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation, and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner. (b) "Chronically ill individual" has the meaning prescribed for this term by section 7702B(c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a chronically ill individual means any individual who has been certified by a licensed health care practitioner as being unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity, or requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment. The term "chronically ill individual" does not include an individual otherwise meeting these requirements unless within the preceding 12-month period a licensed health care practitioner has certified that the individual meets these requirements. (c) "Licensed health care practitioner" means a physician, as defined in section 1861(r)(1) of the Social Security Act, an advanced practice registered nurse, a physician assistant, a registered professional nurse, a licensed social worker, or other individual who meets requirements prescribed by the Secretary of the Treasury. (d) "Maintenance or personal care services" means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual, including the protection from threats to health and safety due to severe cognitive impairment. Subd. 2. Services. A qualified long-term care insurance contract shall pay only for qualified long-term care services received by a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner. Subd. 3. Payment of benefits. A qualified long-term care insurance contract shall condition the payment of benefits on a determination of the insured's inability to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity or to severe cognitive impairment. Subd. 4. Certifications. (a) Certifications regarding activities of daily living and cognitive impairment required pursuant to subdivision 3 shall be performed by the following licensed or certified professionals: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the Treasury. (b) Certifications required pursuant to subdivision 3 may be performed by a licensed health care professional at the direction of the carrier as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the 90-day period. Subd. 5. Dispute resolution. Qualified long-term care insurance contracts must include a clear description of the process for appealing and resolving disputes with respect to benefit determinations. History:  2008 c 344 s 35; 2020 c 115 art 4 s 19; 2022 c 58 s 20
62S.27 FILING REQUIREMENT. Before an insurer or similar organization offers group long-term care insurance to a resident of this state under section 62S.03, it must file with the commissioner evidence that the group policy or certificate has been approved by a state having statutory or regulatory long-term care insurance requirements substantially similar to those adopted in this state. History:   1997 c 71 art 1 s 27 
62S.28 FILING REQUIREMENTS FOR ADVERTISING. Subdivision 1. Advertisement copy. An insurer or other entity providing long-term care insurance or benefits in this state shall provide a copy of any long-term care insurance advertisement intended for use in this state whether through written, radio, or television medium to the commissioner for review or approval by the commissioner, to the extent it may be required under state law. All advertisements must be retained by the insurer or other entity for at least three years from the date the advertisement was first used. Subd. 2. Exemption. The commissioner may exempt from these requirements any advertising form or material when, in the commissioner's opinion, this requirement may not be reasonably applied. History:   1997 c 71 art 1 s 28 
62S.29 STANDARDS FOR MARKETING. Subdivision 1. Requirements. An insurer or other entity marketing long-term care insurance coverage in this state, directly or through its producers, shall: (1) establish marketing procedures and agent training requirements to assure that any marketing activities, including any comparison of policies by its agents or other producers, are fair and accurate; (2) establish marketing procedures to assure excessive insurance is not sold or issued; (3) display prominently by type, stamp, or other appropriate means, on the first page of the outline of coverage and policy, the following: "Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations."; (4) provide copies of the disclosure forms required in section 62S.081, subdivision 4, to the applicant; (5) inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has long-term care insurance and the types and amounts of the insurance; (6) establish auditable procedures for verifying compliance with this subdivision; (7) if applicable, provide written notice to the prospective policyholder and certificate holder, at solicitation, that a senior insurance counseling program approved by the commissioner, the Senior LinkAge Line, is available and the name, address, and telephone number of the program; (8) use the terms "noncancelable" or "level premium" only when the policy or certificate conforms to section 62S.14; and (9) provide an explanation of contingent benefit upon lapse provided for in section 62S.266. Subd. 2. Prohibitions. In addition to the practices prohibited in chapter 72A, the following acts and practices are prohibited: (1) knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer; (2) employing a method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance; (3) making use directly or indirectly of a method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company; and (4) misrepresenting a material fact in selling or offering to sell a policy. Subd. 2a. Associations to educate members. With respect to the obligations set forth in this section, the primary responsibility of an association, as defined in section 62S.01, subdivision 15, clause (2), when endorsing or selling long-term care insurance is to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by the associations to ensure that members of such associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold. Subd. 3. Filing of material. The insurer shall file with the commissioner the following material: (1) the policy and certificate; (2) a corresponding outline of coverage; and (3) all advertisements requested by the commissioner. Subd. 4. Association disclosure requirements. An association shall disclose in a long-term care insurance solicitation: (1) the specific nature and amount of the compensation arrangements, including all fees, commissions, administrative fees, and other forms of financial support, that the association receives from endorsement or sale of the policy or certificate to its members; and (2) a brief description of the process under which the policies and the insurer issuing the policies were selected. Subd. 5. Additional disclosure requirements. If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose this fact to its members. Subd. 6. Policy review and approval. The board of directors of associations selling or endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer. Subd. 6a. Additional association duties. An association shall also at the time of the association's decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the insurer to conduct an examination of the policies, including its benefits, features, and rates and update the examination thereafter in the event of material change; actively monitor the marketing efforts of the insurer and its agents; and review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates. This subdivision does not apply to qualified long-term care insurance contracts. Subd. 7. Information required. No group long-term care insurance policy or certificate may be issued to an association unless the insurer files with the commissioner the information required in this section. Subd. 8. Insurer certification. The insurer shall not issue a long-term care policy or certificate to an association or continue to market a policy or certificate unless the insurer certifies annually that the association has complied with the requirements specified in this section. Subd. 9. Unfair trade practices. Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice in violation of sections 72A.17 to 72A.32. History:  1997 c 71 art 1 s 29; 2006 c 255 s 54; 2006 c 282 art 17 s 20; 2008 c 344 s 36-38; 2010 c 384 s 27
62S.291 AVAILABILITY OF NEW SERVICES OR PROVIDERS. Subdivision 1. Requirement. An insurer shall notify policyholders of the availability of a new long-term policy series that provides coverage for new long-term care services or providers material in nature and not previously available through the insurer to the general public. The notice must be provided within 12 months of the date that the new policy series is made available for sale in this state. Subd. 2. Exception. (a) Notwithstanding subdivision 1, notification is not required for any policy issued before August 1, 2008, or to any policyholder or certificate holder who is currently eligible for benefits, within an elimination period or on a claim, or who previously had been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add new services or providers. (b) An insurer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this subdivision, "limited distribution channel" means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased a new proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distribution channel. Subd. 3. Compliance. An insurer shall make the new coverage available in one of the following ways: (1) by adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age; (2) by exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits must be based on premiums paid or reserves held for the prior policy or certificate; (3) by exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status is recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or (4) by an alternative program developed by the insurer that meets the intent of this section if the program is filed with and approved by the commissioner. Subd. 4. Policies considered exchanges. Policies issued pursuant to this section shall be considered exchanges and not replacements. These exchanges are not subject to sections 62S.24 and 62S.30, and the reporting requirements of section 62S.25, subdivisions 1 to 6. Subd. 5. Notification to certain groups. Where the policy is offered through an employer, labor organization, professional, trade, or occupational organization, the required notification in subdivision 1 must be made to the offering entity. However, if the policy is issued to a group defined in section 62S.01, subdivision 15, clause (4), the notification must be made to each certificate holder. Subd. 6. Effect on coverage offers and requests for coverage. Nothing in this section prohibits an insurer from offering any policy, rider, certificate, or coverage change to any policyholder or certificate holder. However, upon request any policyholder may apply for currently available coverage that includes the new services or providers. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add new services or providers. Subd. 7. Life policies or riders. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits. History:   2008 c 344 s 39 
62S.292 RIGHT TO REDUCE COVERAGE AND LOWER PREMIUMS. Subdivision 1. Required policy or certificate provision. Every long-term care insurance policy and certificate shall include a provision that allows the policyholder or certificate holder to reduce coverage and lower the policy or certificate premium in at least one of the following ways: (1) reducing the maximum benefit; or (2) reducing the daily, weekly, or monthly benefit amount. The insurer may also offer other reduction options that are consistent with the policy or certificate design or the carrier's administrative processes. The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage. Subd. 2. Age determination. The age to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force. Subd. 3. Limitation. The insurer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable. Subd. 4. Written reminder. If a policy or certificate is about to lapse, the insurer shall provide a written reminder to the policyholder or certificate holder of the right to reduce coverage and premiums in the notice required by section 62S.19, subdivision 3. Subd. 5. Nonapplication. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits. History:  2008 c 344 s 40; 2009 c 86 art 1 s 11
62S.30 SUITABILITY. Subdivision 1. Standards. Every insurer or other entity marketing long-term care insurance shall: (1) develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant; (2) train its agents in the use of its suitability standards; and (3) maintain a copy of its suitability standards and make them available for inspection upon request by the commissioner. Subd. 2. Procedures. (a) To determine whether the applicant meets the standards developed by the insurer or other entity marketing long-term care insurance, the agent and insurer or other entity marketing long-term care insurance shall develop procedures that take the following into consideration: (1) the ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage; (2) the applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet those goals or needs; and (3) the values, benefits, and costs of the applicant's existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement. (b) The insurer or other entity marketing long-term care insurance, and the agent, where an agent is involved, shall make reasonable efforts to obtain the information set forth in paragraph (a). The efforts shall include presentation to the applicant, at or prior to application, of the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the insurer or other entity marketing long-term care insurance shall contain, at a minimum, the information in the format contained in Appendix B of the Long-Term Care Model Regulation adopted by the National Association of Insurance Commissioners, in not less than 12-point type. The insurer or other entity marketing long-term care insurance may request the applicant to provide additional information to comply with its suitability standards. The insurer or other entity marketing long-term care insurance shall file a copy of its personal worksheet with the commissioner. (c) A completed personal worksheet shall be returned to the insurer or other entity marketing long-term care insurance prior to consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses. The sale or dissemination by the insurer or other entity marketing long-term care insurance, or the agent, of information obtained through the personal worksheet, is prohibited. (d) The insurer or other entity marketing long-term care insurance shall use the suitability standards it has developed under this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate. Agents shall use the suitability standards developed by the insurer or other entity marketing long-term care insurance in marketing long-term care insurance. (e) At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form shall be in the format contained in Appendix C of the Long-Term Care Insurance Model Regulation adopted by the National Association of Insurance Commissioners in not less than 12-point type. (f) If the insurer or other entity marketing long-term care insurance determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the insurer or other entity marketing long-term care insurance may reject the application. In the alternative, the insurer or other entity marketing long-term care insurance shall send the applicant a letter similar to Appendix D of the Long-Term Care Insurance Model Regulation adopted by the National Association of Insurance Commissioners. However, if the applicant has declined to provide financial information, the insurer or other entity marketing long-term care insurance may use some other method to verify the applicant's intent. The applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file. Subd. 3. Reports. The insurer or other entity marketing long-term care insurance shall report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter. Subd. 4. Application. This section shall not apply to life insurance policies that accelerate benefits for long-term care. History:  1997 c 71 art 1 s 30; 2001 c 117 art 2 s 12; 2006 c 255 s 55; 2006 c 282 art 17 s 21
62S.31 REQUIREMENT TO DELIVER SHOPPER'S GUIDE. Subdivision 1. Shopper's guide. A long-term care insurance shopper's guide in the format developed by the National Association of Insurance Commissioners, or a guide developed or approved by the commissioner, shall be provided to all prospective applicants of a long-term care insurance policy or certificate: (1) in the case of agent solicitations, an agent must deliver the shopper's guide before the presentation of an application or enrollment form; and (2) in the case of direct response solicitations, the shopper's guide must be presented in conjunction with an application or enrollment form. Subd. 2. Exception. Subdivision 1 does not apply to life insurance policies or riders containing accelerated long-term care benefits. The policy summary required under section 62S.10 must be furnished with a life insurance policy or rider containing accelerated long-term care benefits. History:   1997 c 71 art 1 s 31 
62S.312 CONSUMER PROTECTION STANDARDS FOR LONG-TERM CARE PARTNERSHIP POLICIES. To qualify as a long-term care partnership policy under this chapter, long-term care insurance policies must meet the requirements for being tax qualified as defined in section 7702B(b) of the Internal Revenue Code and meet certain consumer protection requirements in section 6021(a)(1)(B)(5)(A) of the Deficit Reduction Act of 2005, Public Law 109-171, which are taken from the National Association of Insurance Commissioners (NAIC) Model Act and Regulation of 2000. Insurance carriers must certify for each policy form to be included in the long-term care partnership that the form complies with the requirements of the NAIC Model Act and Regulation of 2000 as implemented in sections 62S.05 to 62S.11; 62S.13 to 62S.18; 62S.19; 62S.20, subdivisions 1 to 5; 62S.21; 62S.22; 62S.24; 62S.25; 62S.266; 62S.28; 62S.29; 62S.30; and 62S.31. History:   2010 c 310 art 4 s 2 
62S.315 PRODUCER TRAINING. The commissioner shall approve producer training requirements in accordance with the NAIC Long-Term Care Insurance Model Act provisions. The commissioner of the Department of Human Services shall provide technical assistance and information to the commissioner in accordance with Public Law 109-171, section 6021. History:   2006 c 255 s 56; 2006 c 282 art 17 s 22; 2009 c 86 art 1 s 88 
62S.32 APPLICATION. Subdivision 1. Medicare supplement insurance policy. Medicare supplement insurance policy laws do not apply to long-term care insurance. Subd. 2. Qualified long-term care insurance policy. This chapter applies to long-term care insurance marketed as a qualified long-term care policy. This chapter does not apply to long-term care insurance governed by sections 62A.46 to 62A.56. History:   1997 c 71 art 1 s 32 
62S.33 PENALTIES. In addition to any other penalties provided by the laws of this state, an insurer or agent found to have violated any requirement of this state relating to the regulation of long-term care insurance or the marketing of the insurance is subject to a fine of up to three times the amount of any commissions paid for each policy involved in the violation or up to $10,000, whichever is greater. History:   1997 c 71 art 1 s 33 
62S.34 REGULATORY FLEXIBILITY. The commissioner may, upon written request, issue an order to modify or suspend a specific provision or provisions of this chapter with respect to a specific long-term care insurance policy or certificate upon a written finding that: (1) the modification or suspension is in the best interest of the insureds; (2) the purpose to be achieved could not be effectively or efficiently achieved without the modification or suspension; and (3)(i) the modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; (ii) the policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or (iii) the modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product. History:   1Sp2003 c 14 art 2 s 6 
62T.01 DEFINITIONS. Subdivision 1. Scope. For purposes of this chapter, the terms in this section have the meanings given. Subd. 2. Health care purchasing alliance. "Health care purchasing alliance" means a business organization created under this chapter to negotiate the purchase of health care services for employers. Nothing in this chapter shall be deemed to regulate or impose any requirements on a self-insured employer or labor union. A health care purchasing alliance may include a grouping of: (1) businesses, including small businesses with one employee. The businesses may or may not be organized under section 62Q.17 as a purchasing pool; (2) trade association members or church organizations under section 60A.02 or union members who are not in a self-insured benefit plan; (3) multiple employer welfare associations under chapter 62H; (4) municipalities, townships, or counties; (5) other government entities; or (6) any combination of clauses (1) to (5). The alliance may determine the definition of a business of one employee, but must adhere to its definition and show no bias in selection of members based on that definition. Subd. 3. Accountable provider network. "Accountable provider network" means a group of health care providers organized to market health care services on a risk-sharing or non-risk-sharing basis with a health care purchasing alliance. Accountable provider networks shall operate as not-for-profit entities or as health care cooperatives, as allowed under chapter 62R. This chapter applies only when an accountable provider network is marketing and selling services and benefits to the employees of businesses as authorized in section 62T.05. Subd. 4. Commissioner. "Commissioner" means the commissioner of health. History:   1997 c 225 art 5 s 1 
62T.02 PURCHASING ALLIANCES. Subdivision 1. Registration. Purchasing alliances must register prior to offering coverage, and annually on July 1 thereafter, with the commissioner on a form prescribed by the commissioner. Subd. 2. Common factors. All participants in a purchasing alliance must live within a common geographic region, be employed in a similar occupation, or share some other common factor as approved by the commissioner. The membership criteria must not be designed to include disproportionately employers, groups, or individuals likely to have low costs of health coverage, or to exclude disproportionately employers, groups, or individuals likely to have high costs of health coverage. Subd. 3. Seasonal employees. A purchasing alliance may define eligible employees to include seasonal employees. For purposes of this chapter, "seasonal employee" means an employee who is employed on a full-time basis for at least six months during the calendar year and is unemployed for no longer than four months during the calendar year. If seasonal employees are included: (1) the alliance must not show bias in the selection of members based on the percentage of seasonal employees employed by an employer member; (2) prior to issuance or renewal, the employer must inform the alliance that it will include seasonal employees; (3) the employer must cover seasonal employees for the entire term of its plan year; and (4) the purchasing alliance may require an employer-member contribution of at least 50 percent of the cost of employee coverage during the months the seasonal employee is unemployed. History:  1997 c 225 art 5 s 2; 2004 c 268 s 10; 2004 c 288 art 6 s 9
62T.025 EMPLOYER-MEMBER CONTRIBUTION. If an employer-member of a purchasing alliance can demonstrate that the member has not offered employee health coverage for a year or more, the member may contribute 25 percent or more of the cost of employee coverage for up to 36 months. This provision only applies to rural purchasing alliances organized under this chapter and operating prior to May 1, 2000. The affected purchasing alliances may develop membership criteria which disallow an employer contribution below 50 percent. History:   2000 c 295 s 1 
62T.03 APPLICATION OF OTHER LAWS. Subdivision 1. State law. An accountable provider network is subject to all requirements applicable to a health plan company licensed in the state, except as otherwise noted in this chapter. An accountable provider network and a health care purchasing alliance must comply with all requirements of chapter 62L, except for modifications and waivers permitted under this chapter. A contracting arrangement between a health care purchasing alliance and an accountable provider network for provision of health care benefits must provide consumer protection functions comparable to those currently required of a health plan company licensed under section 62N.25, and other statutes referenced in that section, except for modifications and waivers permitted under this chapter. Subd. 2. Federal law. A self-insured employer may participate as an affiliate member of a purchasing alliance without participation affecting the employer's standing under the federal Employee Retirement Income Security Act (ERISA) of 1974. An affiliate member is one that may purchase administrative services with the purchasing alliance and may participate in activities undertaken to educate and promote health improvement of the purchasing alliance enrollees or community residents. History:  1997 c 225 art 5 s 3; 2000 c 295 s 2
62T.04 COMPLAINT SYSTEM. Accountable provider networks must establish and maintain an enrollee complaint system as required under sections 62Q.68 to 62Q.72 or as required by a contract with a purchasing alliance. The contract must be approved by the commissioner. The accountable provider network may contract with the health care purchasing alliance or a vendor for operation of this system. The commissioner may not waive any enrollee rights relating to external review. History:  1997 c 225 art 5 s 4; 1999 c 239 s 40; 2000 c 295 s 3
62T.05 BENEFITS. An accountable provider network may offer and sell any benefits permitted to be offered and sold by health plan companies under Minnesota law. An accountable provider network may, after consultation with the purchasing alliance, offer only one benefit plan to employer-members of the alliance. History:  1997 c 225 art 5 s 5; 2000 c 295 s 4
62T.06 WAIVERS. Subdivision 1. Authorization. The commissioner may grant waivers from the requirements of law for the contracting arrangement between a health care purchasing alliance and an accountable provider network in the areas listed in subdivisions 2 to 4. The commissioner may not waive the following state consumer protection and quality assurance laws: (1) laws requiring that enrollees be informed of any restrictions, requirements, or limitations on coverage, services, or access to specialists and other providers; (2) laws allowing consumers to complain to or appeal to a state regulatory agency if denied benefits or services; (3) laws prohibiting gag clauses and other restrictions on communication between a patient and their physician or provider; (4) laws allowing consumers to obtain information on provider financial incentives, which may affect treatment; (5) laws requiring the submission of information needed to monitor quality of care and enrollee rights, except the submission may be done in a manner approved by the commissioner under subdivision 4; (6) laws protecting enrollee privacy and confidentiality of records; (7) minimum standards for adequate provider network capacity and geographic access to services; (8) laws assuring continuity of care when a patient must change providers; (9) laws governing coverage of emergency services; (10) laws prohibiting excessive or unreasonable administrative fees or expenses; and (11) other laws or rules that are directly related to quality of care, consumer protection, and due process rights. Subd. 2. Solvency protection. (a) The commissioner may waive the requirements of sections 62N.27 to 62N.32, and may substitute capital and surplus requirements that are reduced from the levels required of other risk-bearing entities in order to reflect its reduced risk exposure. If risk is being underwritten, the underwriter cannot have more than 25 percent of the representation on the governing board of the accountable provider network. The reduced requirements must include at least the following levels of capital and surplus: (i) a deposit of $500,000 and (ii) the greater of an estimated 15 percent of gross premium revenues or twice the net retained annual risk up to $750,000 on a single enrollee. Net retained annual risk may be, for example, the lowest annual deductible under a provider stop-loss insurance policy that covers all costs above the deductible. Assets supporting the deposit must meet the standards for deposits referenced in section 62N.32 or be guaranteed by an entity that is approved and can be monitored by the commissioner. Assets supporting the capital must meet the investment guidelines referenced in section 62N.27. Members of a purchasing alliance may assist in meeting the solvency requirements through a subordinated solvency contribution under a contract approved by the commissioner. For the purposes of this subdivision, "subordinated solvency contribution" means a contribution to the accountable provider network by a purchasing alliance member that is evidenced by a promissory note or other instrument that allows for repayment of the contribution in the manner provided in a contract approved by the commissioner. (b) An accountable provider network may propose a method of reporting income, expenses, claims payments, and other financial information in a manner which adequately demonstrates ongoing compliance with the standards for capital, surplus, and claims reserves agreed to under this waiver. (c) An accountable provider network may demonstrate ability to continue to deliver the contracted health care services to the purchasing alliance through arrangements which ensure that, subject to 60 days' notice of intent to discontinue the contracting arrangement, provider participants will continue to meet their obligation to provide health care services to enrollees for a period of 60 days. Subd. 3. Marketing and disclosure. The accountable provider network, in conjunction with the health care purchasing alliance, may propose alternative methods to present marketing and disclosure information which assure the accountability to consumers who are offered and who receive their services. Subd. 4. Quality assurance. The accountable provider network may propose an alternative quality assurance program which incorporates effective methods for reviewing and evaluating data related to quality of care and ways to identify and correct quality problems. History:  1997 c 225 art 5 s 6; 2000 c 295 s 5,6
62T.07 CRITERIA FOR GRANTING WAIVERS. The commissioner may approve a request for waiver under section 62T.06 if the applicant demonstrates that the contracting arrangement between a health care purchasing alliance and an accountable provider network will meet the following criteria: (a) The arrangement would be likely to result in: (1) more choice in benefits and prices; (2) lower costs; (3) increased access to health care coverage by small businesses; (4) increased access to providers who have demonstrated a long-term commitment to the community being serviced; or (5) increased quality of health care than would otherwise occur under the existing market conditions. In the event that a proposed arrangement appears likely to improve one or two of the criteria at the expense of another one or two of the criteria, the commissioner shall not approve the waiver. (b) The proposed alternative methods would provide equal or improved results in consumer protection than would result under the existing consumer protections requirements. History:   1997 c 225 art 5 s 7 
62T.08 SUPERVISION AND REVOCATION OF WAIVERS. (a) The commissioner shall appropriately supervise and monitor approved waivers. (b) The commissioner may revoke approval of a waiver if the contracting arrangement no longer satisfies the criteria in section 62T.07, paragraphs (a) and (b). History:   1997 c 225 art 5 s 8 
62T.09 MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION. A health care purchasing alliance must pay the assessment required of contributing members pursuant to section 62E.11. History:   1997 c 225 art 5 s 9 
62T.10 MINNESOTACARE TAX. An accountable provider network shall file with the commissioner of revenue all returns and pay to the commissioner of revenue all amounts required under chapter 297I. History:  1997 c 225 art 5 s 10; 2000 c 394 art 2 s 17
62T.11 DUTIES OF COMMISSIONER. (a) By July 1, 1997, the commissioner shall make available application forms for licensure as an accountable provider network. The accountable provider network may begin doing business after application has been approved. (b) Upon receipt of an application for a certificate of authority, the commissioner shall grant or deny licensure and waivers requested within 90 days of receipt of a complete application if all requirements are substantially met. For a period of six years after July 1, 1997, the commissioner may approve up to five applications, none of which may be from health plan companies. If no written response has been received within 90 days, the application is approved. When the commissioner denies an application or waiver request, the commissioner shall notify the applicant in writing specifically stating the grounds for the denial and specific suggestions for how to remedy the denial. The commissioner will entertain reconsiderations. Within 90 days after the denial, the applicant may file a written request for an administrative hearing and review of the commissioner's determination. The hearing is subject to judicial review as provided by chapter 14. (c) All monitoring, enforcement, and rulemaking powers available under chapter 62N are granted to the commissioner to assure continued compliance with provisions of this chapter. The commissioner shall honor the intent of this section to foster community-focused, affordable health coverage for small employers and their employees. (d) The commissioner may contract with other entities as necessary to carry out the responsibilities in this chapter. History:  1997 c 225 art 5 s 11; 2000 c 295 s 7
62T.12 FEES. Every accountable provider network subject to this chapter shall pay to the commissioner fees as prescribed by the commissioner pursuant to section 144.122. The initial fees are: (1) filing an application for licensure, $500; (2) filing an amendment to a license, $90; (3) filing an annual report, $200; (4) filing of renewal of licensure based on a fee of $1,000 per 1,000 enrollees, with renewal every three years; and (5) other filing fees as specified by rule. History:   1997 c 225 art 5 s 12 
62U.01 DEFINITIONS. Subdivision 1. Applicability. For purposes of this chapter, the terms defined in this section have the meanings given, unless otherwise specified. Subd. 2. Basket or baskets of care. "Basket" or "baskets of care" means a collection of health care services that are paid separately under a fee-for-service system, but which are ordinarily combined by a provider in delivering a full diagnostic or treatment procedure to a patient. Subd. 3. Clinically effective. "Clinically effective" means that the use of a particular health technology or service improves or prevents a decline in patient clinical status, as measured by medical condition, survival rates, and other variables, and that the use of the particular technology or service demonstrates a clinical or outcome advantage over alternative technologies or services. This definition shall not be used to exclude or deny technology or treatment necessary to preserve life on the basis of an individual's age or expected length of life or of the individual's present or predicted disability, degree of medical dependency, or quality of life. Subd. 4. Commissioner. "Commissioner" means the commissioner of health unless otherwise specified. Subd. 5. Cost-effective. "Cost-effective" means that the economic costs of using a particular service, device, or health technology to achieve improvement or prevent a decline in a patient's health outcome are justified given the comparison to both the economic costs and the improvement or prevention of decline in patient health outcome resulting from the use of an alternative service, device, or technology, or from not providing the service, device, or technology. This definition shall not be used to exclude or deny technology or treatment necessary to preserve life on the basis of an individual's age or expected length of life or of the individual's present or predicted disability, degree of medical dependency, or quality of life. Subd. 6. Group purchaser. "Group purchaser" has the meaning provided in section 62J.03. Subd. 7. Health plan. "Health plan" means a health plan as defined in section 62A.011. Subd. 8. Health plan company. "Health plan company" has the meaning provided in section 62Q.01, subdivision 4. For the purposes of this chapter, health plan company shall include county-based purchasing arrangements authorized under section 256B.692. Subd. 9. Participating provider. "Participating provider" means a provider who has entered into a service agreement with a health plan company. Subd. 10. Provider or health care provider. "Provider" or "health care provider" means a health care provider as defined in section 62J.03, subdivision 8. Subd. 10a. Self-insurer. "Self-insurer" has the meaning given in section 62E.02, subdivision 21. Subd. 11. Service agreement. "Service agreement" means an agreement, contract, or other arrangement between a health plan company and a provider under which the provider agrees that when health services are provided for an enrollee, the provider shall not make a direct charge against the enrollee for those services or parts of services that are covered by the enrollee's contract, but shall look to the health plan company for the payment for covered services, to the extent they are covered. Subd. 12. State health care program. "State health care program" means the medical assistance and MinnesotaCare programs. Subd. 13. Third-party administrator. "Third-party administrator" means a vendor of risk-management services or an entity administering a self-insurance or health insurance plan under section 60A.23. History:  2008 c 358 art 4 s 4; 2009 c 159 s 4; 2016 c 158 art 2 s 30; 2018 c 180 s 1
62U.02 PAYMENT RESTRUCTURING; QUALITY INCENTIVE PAYMENTS. Subdivision 1. Development. (a) The commissioner of health shall develop a standardized set of measures for use by health plan companies as specified in subdivision 5. As part of the standardized set of measures, the commissioner shall establish statewide measures by which to assess the quality of health care services offered by health care providers, including health care providers certified as health care homes under section 62U.03. The statewide measures shall be used for the quality incentive payment system developed in subdivision 2 and the quality transparency requirements in subdivision 3. The statewide measures must: (1) for purposes of assessing the quality of care provided at physician clinics, including clinics certified as health care homes under section 62U.03, be selected from the available measures as defined in Code of Federal Regulations, title 42, part 414 or 495, as amended, unless the stakeholders identified under paragraph (b) determine that a particular diagnosis, condition, service, or procedure is not reflected in any of the available measures in a way that meets identified needs; (2) be based on medical evidence; (3) be developed through a process in which providers participate and consumer and community input and perspectives are obtained; (4) include uniform definitions, measures, and forms for submission of data, to the greatest extent possible; (5) seek to avoid increasing the administrative burden on health care providers; and (6) place a priority on measures of health care outcomes, rather than process measures, wherever possible. The measures may also include measures of care infrastructure and patient satisfaction. (b) By June 30, 2018, the commissioner shall develop a measurement framework that identifies the most important elements for assessing the quality of care, articulates statewide quality improvement goals, ensures clinical relevance, fosters alignment with other measurement efforts, and defines the roles of stakeholders. By December 15, 2018, the commissioner shall use the framework to update the statewide measures used to assess the quality of health care services offered by health care providers, including health care providers certified as health care homes under section 62U.03. No more than six statewide measures shall be required for single-specialty physician practices and no more than ten statewide measures shall be required for multispecialty physician practices. Measures in addition to the six statewide measures for single-specialty practices and the ten statewide measures for multispecialty practices may be included for a physician practice if derived from administrative claims data. Care infrastructure measures collected according to section 62J.495 shall not be counted toward the maximum number of measures specified in this paragraph. The commissioner shall develop the framework in consultation with stakeholders that include consumer, community, and advocacy organizations representing diverse communities and patients; health plan companies; health care providers whose quality is assessed, including providers who serve primarily socioeconomically complex patient populations; health care purchasers; community health boards; and quality improvement and measurement organizations. The commissioner, in consultation with stakeholders, shall review the framework at least once every three years. The commissioner shall also submit a report to the chairs and ranking minority members of the legislative committees with jurisdiction over health and human services policy and finance by September 30, 2018, summarizing the development of the measurement framework and making recommendations on the type and appropriate maximum number of measures in the statewide measures set for implementation on January 1, 2020. (c) Effective July 1, 2016, the commissioner shall stratify quality measures by race, ethnicity, preferred language, and country of origin beginning with five measures, and stratifying additional measures to the extent resources are available. On or after January 1, 2018, the commissioner may require measures to be stratified by other sociodemographic factors or composite indices of multiple factors that according to reliable data are correlated with health disparities and have an impact on performance on quality or cost indicators. New methods of stratifying data under this paragraph must be tested and evaluated through pilot projects prior to adding them to the statewide system. In determining whether to add additional sociodemographic factors and developing the methodology to be used, the commissioner shall consider the reporting burden on providers and determine whether there are alternative sources of data that could be used. The commissioner shall ensure that categories and data collection methods are developed in consultation with those communities impacted by health disparities using culturally appropriate community engagement principles and methods. The commissioner shall implement this paragraph in coordination with the contracting entity retained under subdivision 4, in order to build upon the data stratification methodology that has been developed and tested by the entity. Nothing in this paragraph expands or changes the commissioner's authority to collect, analyze, or report health care data. Any data collected to implement this paragraph must be data that is available or is authorized to be collected under other laws. Nothing in this paragraph grants authority to the commissioner to collect or analyze patient-level or patient-specific data of the patient characteristics identified under this paragraph. (d) The statewide measures shall be reviewed at least annually by the commissioner. Subd. 2. Quality incentive payments. (a) By July 1, 2009, the commissioner shall develop a system of quality incentive payments under which providers are eligible for quality-based payments that are in addition to existing payment levels, based upon a comparison of provider performance against specified targets, and improvement over time. The targets must be based upon and consistent with the quality measures established under subdivision 1. (b) To the extent possible, the payment system must adjust for variations in patient population in order to reduce incentives to health care providers to avoid high-risk patients or populations, including those with risk factors related to race, ethnicity, language, country of origin, and sociodemographic factors. (c) The requirements of section 62Q.101 do not apply under this incentive payment system. Subd. 3. Quality transparency. (a) The commissioner shall establish standards for measuring health outcomes, establish a system for risk adjusting quality measures, and issue periodic public reports on trends in provider quality at the statewide, regional, or clinic levels. (b) Effective July 1, 2017, the risk adjustment system established under this subdivision shall adjust for patient characteristics identified under subdivision 1, paragraph (c), that are correlated with health disparities and have an impact on performance on cost and quality measures. The risk adjustment method may consist of reporting based on an actual-to-expected comparison that reflects the characteristics of the patient population served by the clinic or hospital. The commissioner shall implement this paragraph in coordination with any contracting entity retained under subdivision 4. (c) Physician clinics and hospitals shall submit standardized information for the identified statewide measures to the commissioner or the commissioner's designee in the formats specified by the commissioner, which must include alternative formats for clinics or hospitals experiencing technological or economic barriers to submission in standardized electronic form. The commissioner shall ensure that any quality data reporting requirements for physician clinics are aligned with the specifications and timelines for the selected measures as defined in subdivision 1, paragraph (a), clause (1). The commissioner may develop additional data on race, ethnicity, preferred language, country of origin, or other sociodemographic factors as identified under subdivision 1, paragraph (c), and as required for stratification or risk adjustment. None of the statewide measures selected shall require providers to use an external vendor to administer or collect data. Subd. 4. Contracting. The commissioner may contract with a private entity or consortium of private entities to complete the tasks in subdivisions 1 to 3. The private entity or consortium must be nonprofit and have governance that includes representatives from the following stakeholder groups: health care providers, including providers serving high concentrations of patients and communities impacted by health disparities; health plan companies; consumers, including consumers representing groups who experience health disparities; employers or other health care purchasers; and state government. No one stakeholder group shall have a majority of the votes on any issue or hold extraordinary powers not granted to any other governance stakeholder. Subd. 5. Implementation. Health plan companies shall use the standardized set of measures established under this section and shall not require providers to use and report health plan company-specific quality and outcome measures. History:  2008 c 358 art 4 s 5; 2009 c 101 art 2 s 109; 2015 c 71 art 9 s 4-7; 1Sp2017 c 6 art 4 s 3; 2020 c 115 art 3 s 39
62U.03 HEALTH CARE HOMES. Subdivision 1. Payment restructuring and care coordination payments. (a) By January 1, 2010, health plan companies shall include health care homes in their provider networks and by July 1, 2010, shall pay a care coordination fee for their members who choose to enroll in health care homes certified by the commissioner under this section. Health plan companies shall develop payment conditions and terms for the care coordination fee for health care homes participating in their network in a manner that is consistent with the system developed under section 256B.0753. Nothing in this section shall restrict the ability of health plan companies to selectively contract with health care providers, including health care homes. Health plan companies may reduce or reallocate payments to other providers to ensure that implementation of care coordination payments is cost neutral. (b) By July 1, 2010, the commissioner of management and budget shall implement the care coordination payments for participants in the state employee group insurance program. The commissioner of management and budget may reallocate payments within the health care system in order to ensure that the implementation of this section is cost neutral. Subd. 2. Definitions. (a) For purposes of this section, the following definitions apply. (b) "Commissioner" means the commissioner of health. (c) "Health plan company" has the meaning provided in section 62Q.01, subdivision 4. (d) "Personal clinician" means a physician licensed under chapter 147, a physician assistant licensed and practicing under chapter 147A, or an advanced practice nurse licensed and registered to practice under chapter 148. Subd. 3. Development and implementation of standards. (a) The commissioner of health shall develop and implement standards of certification for health care homes. In developing these standards, the commissioner shall consider existing standards developed by national independent accrediting and medical home organizations. The standards developed by the commissioner must meet the following criteria: (1) emphasize, enhance, and encourage the use of primary care, and include the use of primary care physicians, advanced practice nurses, and physician assistants as personal clinicians; (2) focus on delivering high-quality, efficient, and effective health care services; (3) encourage patient-centered care, including active participation by the patient and family or a legal guardian, or a health care agent as defined in chapter 145C, as appropriate in decision making and care plan development, and providing care that is appropriate to the patient's race, ethnicity, and language; (4) provide patients with a consistent, ongoing contact with a personal clinician or team of clinical professionals to ensure continuous and appropriate care for the patient's condition; (5) ensure that health care homes develop and maintain appropriate comprehensive care plans for their patients with complex or chronic conditions, including an assessment of health risks and chronic conditions; (6) enable and encourage utilization of a range of qualified health care professionals, including dedicated care coordinators, in a manner that enables providers to practice to the fullest extent of their license; (7) focus initially on patients who have or are at risk of developing chronic health conditions; (8) incorporate measures of quality, resource use, cost of care, and patient experience; (9) ensure the use of health information technology and systematic follow-up, including the use of patient registries; and (10) encourage the use of scientifically based health care, patient decision-making aids that provide patients with information about treatment options and their associated benefits, risks, costs, and comparative outcomes, and other clinical decision support tools. (b) In developing these standards, the commissioner shall consult with national and local organizations working on health care home models, physicians, relevant state agencies, health plan companies, hospitals, other providers, patients, and patient advocates. (c) For the purposes of developing and implementing these standards, the commissioner may use the expedited rulemaking process under section 14.389. Subd. 4. Requirements for clinicians certified as health care homes. (a) A personal clinician or a primary care clinic may be certified as a health care home. If a primary care clinic is certified, all of the primary care clinic's clinicians must meet the criteria of a health care home. To be certified as a health care home, a clinician or clinic must meet the standards set by the commissioner in accordance with this section. Certification as a health care home is voluntary. To maintain their status as health care homes, clinicians or clinics must renew their certification every three years. (b) Clinicians or clinics certified as health care homes must offer their health care home services to all their patients with complex or chronic health conditions who are interested in participation. (c) Health care homes must participate in the health care home collaborative established under subdivision 6. Subd. 5. Alternative models and waivers of requirements. (a) Nothing in this section precludes the continued development of existing medical or health care home projects currently operating or under development by the commissioner of human services or precludes the commissioner of human services from establishing alternative models and payment mechanisms for persons who are enrolled in integrated Medicare and Medicaid programs under section 256B.69, subdivisions 23 and 28, are enrolled in managed care long-term care programs under section 256B.69, subdivision 6b, are dually eligible for Medicare and medical assistance, are in the waiting period for Medicare, or who have other primary coverage. (b) The commissioner shall waive health care home certification requirements if an applicant demonstrates that compliance with a certification requirement will create a major financial hardship or is not feasible, and the applicant establishes an alternative way to accomplish the objectives of the certification requirement. Subd. 6. Health care home collaborative. The commissioner shall establish a health care home collaborative to provide an opportunity for health care homes and state agencies to exchange information related to quality improvement and best practices. Subd. 7. Evaluation and continued development. (a) For continued certification under this section, health care homes must meet process, outcome, and quality standards as developed and specified by the commissioner. The commissioner shall collect data from health care homes necessary for monitoring compliance with certification standards and for evaluating the impact of health care homes on health care quality, cost, and outcomes. (b) The commissioner may contract with a private entity to perform an evaluation of the effectiveness of health care homes. Data collected under this subdivision is classified as nonpublic data under chapter 13. Subd. 8. Outreach. The commissioner of human services shall encourage state health care program enrollees who have a complex or chronic condition to select a primary care clinic with clinicians who have been certified as health care homes. Subd. 9. Coordination with local services. The health care home and the county shall coordinate care and services provided to patients enrolled with a health care home who have complex medical needs or a disability, and who need and are eligible for additional local services administered by counties, including but not limited to waivered services, mental health services, social services, public health services, transportation, and housing. The coordination of care and services must be as provided in the plan established by the patient and the health care home. Subd. 10. Pediatric care coordination. The commissioner of human services shall implement a pediatric care coordination service for children with high-cost medical or high-cost psychiatric conditions who are at risk of recurrent hospitalization or emergency room use for acute, chronic, or psychiatric illness, who receive medical assistance services. Care coordination services must be targeted to children not already receiving care coordination through another service and may include but are not limited to the provision of health care home services to children admitted to hospitals that do not currently provide care coordination. Care coordination services must be provided by care coordinators who are directly linked to provider teams in the care delivery setting, but who may be part of a community care team shared by multiple primary care providers or practices. For purposes of this subdivision, the commissioner of human services shall, to the extent possible, use the existing health care home certification and payment structure established under this section and section 256B.0753. Subd. 11. Health care homes advisory committee. (a) The commissioner shall establish a health care homes advisory committee to advise the commissioner on the ongoing statewide implementation of the health care homes program authorized in this section. (b) The commissioner shall establish an advisory committee that includes representatives of the health care professions such as primary care providers, mental health providers, nursing and care coordinators, certified health care home clinics with statewide representation, health plan companies, state agencies, employers, academic researchers, consumers, and organizations that work to improve health care quality in Minnesota. At least 25 percent of the committee members must be consumers or patients in health care homes. The commissioner, in making appointments to the committee, shall ensure geographic representation of all regions of the state. (c) The advisory committee shall advise the commissioner on ongoing implementation of the health care homes program, including, but not limited to, the following activities: (1) implementation of certified health care homes across the state on performance management and implementation of benchmarking; (2) implementation of modifications to the health care homes program based on results of the legislatively mandated health care homes evaluation; (3) statewide solutions for engagement of employers and commercial payers; (4) potential modifications of the health care homes rules or statutes; (5) consumer engagement, including patient and family-centered care, patient activation in health care, and shared decision making; (6) oversight for health care homes subject matter task forces or workgroups; and (7) other related issues as requested by the commissioner. (d) The advisory committee shall have the ability to establish subcommittees on specific topics. The advisory committee is governed by section 15.059. Notwithstanding section 15.059, the advisory committee does not expire. History:  2008 c 358 art 2 s 1,art 4 s 6; 2009 c 101 art 2 s 109; 2009 c 159 s 91; 1Sp2011 c 9 art 6 s 54,55; 2012 c 247 art 1 s 11; 2014 c 312 art 24 s 36; 2016 c 158 art 2 s 93; 2016 c 163 art 3 s 7;2020 c 115 art 3 s 2,29,39
62U.04 PAYMENT REFORM; HEALTH CARE COSTS; QUALITY OUTCOMES. Subdivision 1. Development of tools to improve costs and quality outcomes. The commissioner of health shall develop a plan to create transparent prices, encourage greater provider innovation and collaboration across points on the health continuum in cost-effective, high-quality care delivery, reduce the administrative burden on providers and health plans associated with submitting and processing claims, and provide comparative information to consumers on variation in health care cost and quality across providers. Subd. 2. Calculation of health care costs and quality. The commissioner of health shall develop a uniform method of calculating providers' relative cost of care, defined as a measure of health care spending including resource use and unit prices, and relative quality of care. In developing this method, the commissioner must address the following issues: (1) provider attribution of costs and quality; (2) appropriate adjustment for outlier or catastrophic cases; (3) appropriate risk adjustment to reflect differences in the demographics and health status across provider patient populations, using generally accepted and transparent risk adjustment methodologies and case mix adjustment; (4) specific types of providers that should be included in the calculation; (5) specific types of services that should be included in the calculation; (6) appropriate adjustment for variation in payment rates; (7) the appropriate provider level for analysis; (8) payer mix adjustments, including variation across providers in the percentage of revenue received from government programs; and (9) other factors that the commissioner and the advisory committee, established under subdivision 3, determine are needed to ensure validity and comparability of the analysis. Subd. 3. Provider peer grouping; system development; advisory committee. (a) The commissioner shall develop a peer grouping system for providers that incorporates both provider risk-adjusted cost of care and quality of care, and for specific conditions as determined by the commissioner. For purposes of the final establishment of the peer grouping system, the commissioner shall not contract with any private entity, organization, or consortium of entities that has or will have a direct financial interest in the outcome of the system. (b) The commissioner shall establish an advisory committee comprised of representatives of health care providers, health plan companies, consumers, state agencies, employers, academic researchers, and organizations that work to improve health care quality in Minnesota. The advisory committee shall meet no fewer than three times per year. The commissioner shall consult with the advisory committee in developing and administering the peer grouping system, including but not limited to the following activities: (1) establishing peer groups; (2) selecting quality measures; (3) recommending thresholds for completeness of data and statistical significance for the purposes of public release of provider peer grouping results; (4) considering whether adjustments are necessary for facilities that provide medical education, level 1 trauma services, neonatal intensive care, or inpatient psychiatric care; (5) recommending inclusion or exclusion of other costs; and (6) adopting patient attribution and quality and cost-scoring methodologies. Subd. 3a. Provider peer grouping; dissemination of data to providers. (a) The commissioner shall disseminate information to providers on their total cost of care, total resource use, total quality of care, and the total care results of the grouping developed under subdivision 3 in comparison to an appropriate peer group. Data used for this analysis must be the most recent data available. Any analyses or reports that identify providers may only be published after the provider has been provided the opportunity by the commissioner to review the underlying data in order to verify, consistent with the recommendations developed pursuant to subdivision 3c, paragraph (d), and adopted by the commissioner, the accuracy and representativeness of any analyses or reports and submit comments to the commissioner or initiate an appeal under subdivision 3b. Upon request, providers shall be given any data for which they are the subject of the data. The provider shall have 60 days to review the data for accuracy and initiate an appeal as specified in subdivision 3b. (b) The commissioner shall disseminate information to providers on their condition-specific cost of care, condition-specific resource use, condition-specific quality of care, and the condition-specific results of the grouping developed under subdivision 3 in comparison to an appropriate peer group. Data used for this analysis must be the most recent data available. Any analyses or reports that identify providers may only be published after the provider has been provided the opportunity by the commissioner to review the underlying data in order to verify, consistent with the recommendations developed pursuant to subdivision 3c, paragraph (d), and adopted by the commissioner, the accuracy and representativeness of any analyses or reports, and submit comments to the commissioner or initiate an appeal under subdivision 3b. Upon request, providers shall be given any data for which they are the subject of the data. The provider shall have 60 days to review the data for accuracy and initiate an appeal as specified in subdivision 3b. Subd. 3b. Provider peer grouping; appeals process. The commissioner shall establish a process to resolve disputes from providers regarding the accuracy of the data used to develop analyses or reports or errors in the application of standards or methodology established by the commissioner in consultation with the advisory committee. When a provider submits an appeal, the provider shall: (1) clearly indicate the reason or reasons for the appeal; (2) provide any evidence, calculations, or documentation to support the reason for the appeal; and (3) cooperate with the commissioner, including allowing the commissioner access to data necessary and relevant to resolving the dispute. The commissioner shall cooperate with the provider during the data review period specified in subdivisions 3a and 3c by giving the provider information necessary for the preparation of an appeal. If a provider does not meet the requirements of this subdivision, a provider's appeal shall be considered withdrawn. The commissioner shall not publish peer grouping results for a provider until the appeal has been resolved. Subd. 3c. Provider peer grouping; publication of information for the public. (a) The commissioner may publicly release summary data related to the peer grouping system as long as the data do not contain information or descriptions from which the identity of individual hospitals, clinics, or other providers may be discerned. (b) The commissioner may publicly release analyses or results related to the peer grouping system that identify hospitals, clinics, or other providers only if the following criteria are met: (1) the results, data, and summaries, including any graphical depictions of provider performance, have been distributed to providers at least 120 days prior to publication; (2) the commissioner has provided an opportunity for providers to verify and review data for which the provider is the subject consistent with the recommendations developed pursuant to subdivision 3c, paragraph (d), and adopted by the commissioner; (3) the results meet thresholds of validity, reliability, statistical significance, representativeness, and other standards that reflect the recommendations of the advisory committee, established under subdivision 3; and (4) any public report or other usage of the analyses, reports, or data used by the state clearly notifies consumers about how to use and interpret the results, including any limitations of the data and analyses. (c) After publishing the first public report, the commissioner shall, no less frequently than annually, publish information on providers' total cost, total resource use, total quality, and the results of the total care portion of the peer grouping process, as well as information on providers' condition-specific cost, condition-specific resource use, and condition-specific quality, and the results of the condition-specific portion of the peer grouping process. The results that are published must be on a risk-adjusted basis, including case mix adjustments. (d) The commissioner shall convene a work group comprised of representatives of physician clinics, hospitals, their respective statewide associations, and other relevant stakeholder organizations to make recommendations on data to be made available to hospitals and physician clinics to allow for verification of the accuracy and representativeness of the provider peer grouping results. Subd. 3d. Provider peer grouping; standards for dissemination and publication. (a) Prior to disseminating data to providers under subdivision 3a or publishing information under subdivision 3c, the commissioner, in consultation with the advisory committee, shall ensure the scientific and statistical validity and reliability of the results according to the standards described in paragraph (b). If additional time is needed to establish the scientific validity, statistical significance, and reliability of the results, the commissioner may delay the dissemination of data to providers under subdivision 3a, or the publication of information under subdivision 3c. The commissioner must disseminate the information to providers under subdivision 3a at least 120 days before publishing results under subdivision 3c. (b) The commissioner's assurance of valid, timely, and reliable clinic and hospital peer grouping performance results shall include, at a minimum, the following: (1) use of the best available evidence, research, and methodologies; and (2) establishment of explicit minimum reliability thresholds for both quality and costs developed in collaboration with the subjects of the data and the users of the data, at a level not below nationally accepted standards where such standards exist. In achieving these thresholds, the commissioner shall not aggregate clinics that are not part of the same system or practice group. The commissioner shall consult with and solicit feedback from the advisory committee and representatives of physician clinics and hospitals during the peer grouping data analysis process to obtain input on the methodological options prior to final analysis and on the design, development, and testing of provider reports. Subd. 4. Encounter data. (a) All health plan companies and third-party administrators shall submit encounter data on a monthly basis to a private entity designated by the commissioner of health. The data shall be submitted in a form and manner specified by the commissioner subject to the following requirements: (1) the data must be de-identified data as described under the Code of Federal Regulations, title 45, section 164.514; (2) the data for each encounter must include an identifier for the patient's health care home if the patient has selected a health care home and, for claims incurred on or after January 1, 2019, data deemed necessary by the commissioner to uniquely identify claims in the individual health insurance market; and (3) except for the identifier described in clause (2), the data must not include information that is not included in a health care claim or equivalent encounter information transaction that is required under section 62J.536. (b) The commissioner or the commissioner's designee shall only use the data submitted under paragraph (a) to carry out the commissioner's responsibilities in this section, including supplying the data to providers so they can verify their results of the peer grouping process consistent with the recommendations developed pursuant to subdivision 3c, paragraph (d), and adopted by the commissioner and, if necessary, submit comments to the commissioner or initiate an appeal. (c) Data on providers collected under this subdivision are private data on individuals or nonpublic data, as defined in section 13.02. Notwithstanding the definition of summary data in section 13.02, subdivision 19, summary data prepared under this subdivision may be derived from nonpublic data. The commissioner or the commissioner's designee shall establish procedures and safeguards to protect the integrity and confidentiality of any data that it maintains. (d) The commissioner or the commissioner's designee shall not publish analyses or reports that identify, or could potentially identify, individual patients. (e) The commissioner shall compile summary information on the data submitted under this subdivision. The commissioner shall work with its vendors to assess the data submitted in terms of compliance with the data submission requirements and the completeness of the data submitted by comparing the data with summary information compiled by the commissioner and with established and emerging data quality standards to ensure data quality. Subd. 5. Pricing data. (a) All health plan companies and third-party administrators shall submit, on a monthly basis, data on their contracted prices with health care providers to a private entity designated by the commissioner of health for the purposes of performing the analyses required under this subdivision. The data shall be submitted in the form and manner specified by the commissioner of health. (b) The commissioner or the commissioner's designee shall only use the data submitted under this subdivision to carry out the commissioner's responsibilities under this section, including supplying the data to providers so they can verify their results of the peer grouping process consistent with the recommendations developed pursuant to subdivision 3c, paragraph (d), and adopted by the commissioner and, if necessary, submit comments to the commissioner or initiate an appeal. (c) Data collected under this subdivision are nonpublic data as defined in section 13.02. Notwithstanding the definition of summary data in section 13.02, subdivision 19, summary data prepared under this section may be derived from nonpublic data. The commissioner shall establish procedures and safeguards to protect the integrity and confidentiality of any data that it maintains. Subd. 5a. Self-insurers. The commissioner shall not require a self-insurer governed by the federal Employee Retirement Income Security Act of 1974 (ERISA) to comply with this section. Subd. 6. Contracting. The commissioner may contract with a private entity or consortium of entities to develop the standards. The private entity or consortium must be nonprofit and have governance that includes representatives from the following stakeholder groups: health care providers, health plan companies, hospitals, consumers, employers or other health care purchasers, and state government. The entity or consortium must ensure that the representatives of stakeholder groups in the aggregate reflect all geographic areas of the state. No one stakeholder group shall have a majority of the votes on any issue or hold extraordinary powers not granted to any other governance stakeholder. Subd. 7. Consumer engagement. The commissioner of health shall convene a work group to develop strategies for engaging consumers in understanding the importance of health care cost and quality, specifically as it relates to health care outcomes, consumer out-of-pocket costs, and variations in health care cost and quality across providers. The work group shall develop strategies to assist consumers in becoming advocates for higher value health care and a more efficient, effective health care system. The work group shall make recommendations to the commissioner and the legislature by January 1, 2010, and shall identify specific action steps needed to achieve the recommendations. Subd. 8. Provider innovation to reduce health care costs and improve quality. (a) Nothing in this section shall prohibit group purchasers and health care providers, upon mutual agreement, from entering into arrangements that establish package prices for a comprehensive set of services or separately for the cost of care for specific health conditions in addition to the baskets of care established in section 62U.05, in order to give providers the flexibility to innovate on ways to reduce health care costs while improving overall quality of care and health outcomes. (b) The commissioner of health may convene working groups of private sector payers and health care providers to discuss and develop new strategies for reforming health care payment systems to promote innovative care delivery that reduces health care costs and improves quality. Subd. 9. Uses of information. For product renewals or for new products that are offered: (1) the commissioner of management and budget may use the information and methods developed under subdivisions 3 to 3d to strengthen incentives for members of the state employee group insurance program to use high-quality, low-cost providers; (2) political subdivisions, as defined in section 13.02, subdivision 11, that offer health benefits to their employees may offer plans that differentiate providers on their cost and quality performance and create incentives for members to use better-performing providers; (3) health plan companies may use the information and methods developed under subdivisions 3 to 3d to develop products that encourage consumers to use high-quality, low-cost providers; and (4) health plan companies that issue health plans in the individual market or the small employer market may offer at least one health plan that uses the information developed under subdivisions 3 to 3d to establish financial incentives for consumers to choose higher-quality, lower-cost providers through enrollee cost-sharing or selective provider networks. Subd. 10. Suspension. Notwithstanding subdivisions 3, 3a, 3b, 3c, and 3d, the commissioner shall suspend the development and implementation of the provider peer grouping system required under this section. This suspension shall continue until the legislature authorizes the commissioner to resume this activity. Subd. 11. Restricted uses of the all-payer claims data. (a) Notwithstanding subdivision 4, paragraph (b), and subdivision 5, paragraph (b), the commissioner or the commissioner's designee shall only use the data submitted under subdivisions 4 and 5 for the following purposes: (1) to evaluate the performance of the health care home program as authorized under section 62U.03, subdivision 7; (2) to study, in collaboration with the reducing avoidable readmissions effectively (RARE) campaign, hospital readmission trends and rates; (3) to analyze variations in health care costs, quality, utilization, and illness burden based on geographical areas or populations; (4) to evaluate the state innovation model (SIM) testing grant received by the Departments of Health and Human Services, including the analysis of health care cost, quality, and utilization baseline and trend information for targeted populations and communities; and (5) to compile one or more public use files of summary data or tables that must: (i) be available to the public for no or minimal cost by March 1, 2016, and available by web-based electronic data download by June 30, 2019; (ii) not identify individual patients, payers, or providers; (iii) be updated by the commissioner, at least annually, with the most current data available; (iv) contain clear and conspicuous explanations of the characteristics of the data, such as the dates of the data contained in the files, the absence of costs of care for uninsured patients or nonresidents, and other disclaimers that provide appropriate context; and (v) not lead to the collection of additional data elements beyond what is authorized under this section as of June 30, 2015. (b) The commissioner may publish the results of the authorized uses identified in paragraph (a) so long as the data released publicly do not contain information or descriptions in which the identity of individual hospitals, clinics, or other providers may be discerned. (c) Nothing in this subdivision shall be construed to prohibit the commissioner from using the data collected under subdivision 4 to complete the state-based risk adjustment system assessment due to the legislature on October 1, 2015. (d) The commissioner or the commissioner's designee may use the data submitted under subdivisions 4 and 5 for the purpose described in paragraph (a), clause (3), until July 1, 2023. (e) The commissioner shall consult with the all-payer claims database work group established under subdivision 12 regarding the technical considerations necessary to create the public use files of summary data described in paragraph (a), clause (5). Subd. 12. All-payer claims database work group. (a) The commissioner of health shall convene a work group to develop a framework for the expanded use of the all-payer claims database established under this section. The work group shall develop recommendations based on the following questions and other topics as identified by the work group: (1) what should the parameters be for allowable uses of the all-payer claims data collected under this section, beyond the uses authorized in subdivision 11; (2) what type of advisory or governing body should guide the release of data from the all-payer claims database; (3) what type of funding or fee structure would be needed to support the expanded use of all-payer claims data; (4) what should the mechanisms be by which the data would be released or accessed, including the necessary information technology infrastructure to support the expanded use of the data under different assumptions related to the number of potential requests and manner of access; (5) what are the appropriate privacy and security protections needed for the expanded use of the all-payer claims database; and (6) what additional resources might be needed to support the expanded use of the all-payer claims database, including expected resources related to information technology infrastructure, review of proposals, maintenance of data use agreements, staffing an advisory body, or other new efforts. (b) The commissioner of health shall appoint the members to the work group as follows: (1) two members recommended by the Minnesota Medical Association; (2) two members recommended by the Minnesota Hospital Association; (3) two members recommended by the Minnesota Council of Health Plans; (4) one member who is a data practices expert from the Department of Administration; (5) three members who are academic researchers with expertise in claims database analysis; (6) two members representing two state agencies determined by the commissioner; (7) one member representing the Minnesota Health Care Safety Net Coalition; and (8) three members representing consumers. (c) The commissioner of health shall submit a report on the recommendations of the work group to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over health and human services, judiciary, and civil law by February 1, 2015. In considering the recommendations provided in the report, the legislature may consider whether the currently authorized uses of the all-payer claims data under this section should continue to be authorized. History:  2008 c 358 art 4 s 7; 2009 c 101 art 2 s 109; 2010 c 344 s 1,2; 1Sp2011 c 9 art 6 s 15,16; 2012 c 164 s 2-7; 2014 c 178 s 1-4; 2014 c 275 art 1 s 10,11; 2015 c 71 art 8 s 8; 2016 c 179 s 2; 2018 c 180 s 2,3; 1Sp2019 c 9 art 8 s 16; 2020 c 115 art 3 s 3,39; 1Sp2021 c 7 art 3 s 8,9
62U.05 PROVIDER PRICING FOR BASKETS OF CARE. Subdivision 1. Establishment of definitions. (a) By July 1, 2009, the commissioner of health shall establish uniform definitions for baskets of care beginning with a minimum of seven baskets of care. In selecting health conditions for which baskets of care should be defined, the commissioner shall consider coronary artery and heart disease, diabetes, asthma, and depression. In selecting health conditions, the commissioner shall also consider the prevalence of the health conditions, the cost of treating the health conditions, and the potential for innovations to reduce cost and improve quality. (b) The commissioner shall convene one or more work groups to assist in establishing these definitions. Each work group shall include members appointed by statewide associations representing relevant health care providers and health plan companies, and organizations that work to improve health care quality in Minnesota. (c) To the extent possible, the baskets of care must incorporate a patient-directed, decision-making support model. Subd. 2. Package prices. (a) Beginning January 1, 2010, health care providers may establish package prices for the baskets of care defined under subdivision 1. (b) Beginning January 1, 2010, no health care provider or group of providers that has established a package price for a basket of care under this section shall vary the payment amount that the provider accepts as full payment for a health care service based upon the identity of the payer, upon a contractual relationship with a payer, upon the identity of the patient, or upon whether the patient has coverage through a group purchaser. This paragraph applies only to health care services provided to Minnesota residents or to non-Minnesota residents who obtain health insurance through a Minnesota employer. This paragraph does not apply to services paid for by Medicare, state public health care programs through fee-for-service or prepaid arrangements, workers' compensation, or no-fault automobile insurance. This paragraph does not affect the right of a provider to provide charity care or care for a reduced price due to financial hardship of the patient or due to the patient being a relative or friend of the provider. Subd. 3. Quality measurements for baskets of care. (a) The commissioner shall establish quality measurements for the defined baskets of care by December 31, 2009. The commissioner may contract with an organization that works to improve health care quality to make recommendations about the use of existing measures or establishing new measures where no measures currently exist. (b) Beginning July 1, 2010, the commissioner or the commissioner's designee shall publish comparative price and quality information on the baskets of care in a manner that is easily accessible and understandable to the public, as this information becomes available. History:   2008 c 358 art 4 s 8 
62U.06 COORDINATION; LEGISLATIVE OVERSIGHT. Subdivision 1. Coordination. In carrying out the responsibilities of this chapter, the commissioner of health shall ensure that the activities and data collection are implemented in an integrated and coordinated manner that avoids unnecessary duplication of effort. To the extent possible, the commissioner shall use existing data sources and implement methods to streamline data collection in order to reduce public and private sector administrative costs. Subd. 2. Legislative oversight. Beginning January 15, 2009, the commissioner of health shall submit to the chairs and ranking minority members of the legislative committees with jurisdiction over health care policy and finance periodic progress reports on the implementation of this chapter and sections 62U.03 and 256B.0753 to 256B.0754. Subd. 3. Rulemaking. For purposes of this chapter, the commissioner may use the expedited rulemaking process under section 14.389. History:  2008 c 358 art 4 s 9; 1Sp2011 c 9 art 6 s 17; 2020 c 115 art 3 s 39; 2022 c 55 art 1 s 15
62U.07 SECTION 125 PLANS. Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given them. (b) "Employee" means an employee currently on an employer's payroll other than a retiree or disabled former employee. (c) "Employer" means a person, firm, corporation, partnership, association, business trust, or other entity employing one or more persons, including a political subdivision of the state, filing payroll tax information on the employed person or persons. (d) "Section 125 Plan" means a cafeteria or premium-only plan under section 125 of the Internal Revenue Code that allows employees to pay for health coverage premiums with pretax dollars. (e) "Small employer" means an employer with two to 50 employees. Subd. 2. Section 125 Plan requirement. (a) Effective July 1, 2009, all employers with 11 or more current full-time equivalent employees in this state shall establish and maintain a Section 125 Plan to allow their employees to purchase individual market or employer-based health coverage with pretax dollars. Nothing in this section requires employers to offer or purchase group health coverage for their employees. The following employers are exempt from the Section 125 Plan requirement: (1) employers that offer a health plan as defined in section 62A.011, subdivision 3, that is group coverage; (2) employers that provide self-insurance as defined in section 62E.02; or (3) employers that have no employees who are eligible to participate in a Section 125 Plan. (b) Notwithstanding paragraph (a), an employer may opt out of the requirement to establish a Section 125 Plan by sending a form to the commissioner of commerce. The commissioner of commerce shall create a check-box form for employers to opt out. The form must contain a check box indicating the employer is choosing to opt out and a check box indicating that the employer certifies they have received education and information on the advantages of Section 125 Plans. The commissioner of commerce shall make the form available through their website by April 1, 2009. Subd. 3. Employer requirements. (a) Employers that do not offer a health plan as defined in section 62A.011, subdivision 3, that is group coverage and are required to offer or choose to offer a Section 125 Plan shall: (1) allow employees to purchase an individual market health plan for themselves and their dependents; (2) allow employees to choose any insurance producer licensed in accident and health insurance under chapter 60K to assist them in purchasing an individual market health plan; (3) upon an employee's request, deduct premium amounts on a pretax basis in an amount not to exceed an employee's wages, and remit these employee payments to the health plan; and (4) provide notice to employees that individual market health plans purchased by employees through payroll deduction are not employer-sponsored or administered. (b) Employers shall be held harmless from any and all claims related to the individual market health plans purchased by employees under a Section 125 Plan. Subd. 4. Section 125 Plan employer incentives. (a) The commissioner of employment and economic development shall award grants to eligible small employers that establish Section 125 Plans. (b) In order to be eligible for a grant, a small employer must: (1) not have offered health insurance to employees through a group health insurance plan as defined in section 62A.10 or through a self-insured plan as defined in section 62E.02 in the 12 months prior to applying for grant funding under this section; (2) have established a Section 125 Plan within 90 days prior to applying for grant funding under this section, and must not have offered a Section 125 Plan to employees for at least a nine-month period prior to the establishment of the Section 125 Plan under this section; and (3) certify to the commissioner that the employer has established a Section 125 Plan and meets the requirements of subdivision 3. (c) The amount of the grant awarded to a small employer under this section shall be $350. History:   2008 c 358 art 4 s 10 
62U.08 ESSENTIAL BENEFIT SET. Subdivision 1. Work group created. The commissioner of health shall convene a work group to make recommendations on the design of a health benefit set that provides coverage for a broad range of services and technologies, is based on scientific evidence that the services and technologies are clinically effective and cost-effective, and provides lower enrollee cost sharing for services and technologies that have been determined to be cost-effective. The work group shall include representatives of health care providers, health plans, state agencies, and employers. Members of the work group must have expertise in standards for evidence-based care, benefit design and development, actuarial analysis, or knowledge relating to the analysis of the cost impact of coverage of specified benefits. The work group must meet at least once per year and at other times as necessary to make recommendations to the commissioner on updating the benefit set as necessary to ensure that the benefit set continues to be safe, effective, and scientifically based. Subd. 2. Duties. By October 15, 2009, the work group shall develop and submit to the commissioner an initial essential benefit set and design that includes coverage for a broad range of services, is based on scientific evidence that services are clinically effective and cost-effective, and provides lower enrollee cost sharing for services that have been determined to be cost-effective. The benefit set must include necessary evidence-based health care services, procedures, diagnostic tests, and technologies that are scientifically proven to be both clinically effective and cost-effective. In developing its recommendations, the work group may consult with the Institute for Clinical Systems Improvement (ICSI) to assemble existing scientifically based practice standards. Subd. 3. Report. By January 15, 2010, the commissioner shall report the recommendations of the work group to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over health care policy and finance. History:   2008 c 358 art 4 s 11 
62U.10 HEALTH CARE TRANSFER, SAVINGS, AND REPAYMENT. Subdivision 1. Health care access fund transfer. On June 30, 2009, the commissioner of management and budget shall transfer $50,000,000 from the health care access fund to the general fund. Subd. 2. Projected spending baseline. (a) By June 1, 2009, the commissioner of health shall calculate the annual projected total private and public health care spending for residents of this state and establish a health care spending baseline, beginning for calendar year 2008 and for the next ten years based on the annual projected growth in spending. (b) In establishing the health care spending baseline, the commissioner shall use the Centers for Medicare and Medicaid Services forecast for total growth in national health care expenditures and adjust this forecast to reflect the demographics, health status, and other factors deemed necessary by the commissioner. The commissioner shall contract with an actuarial consultant to make recommendations for the adjustments needed to specifically reflect projected spending for residents of this state. (c) The commissioner may adjust the projected baseline as necessary to reflect any updated federal projections or account for unanticipated changes in federal policy. (d) Medicare and long-term care spending must not be included in the calculations required under this section. Subd. 3.  MS 2020 [Repealed, 2022 c 98 art 14 s 33] Subd. 4. Repayment of transfer. When accumulated savings accruing to state-administered health care programs, as calculated under subdivision 3, meet or exceed $50,000,000, the commissioner of health shall certify that event to the commissioner of management and budget. In the next fiscal year following the certification, the commissioner of management and budget shall transfer $50,000,000 from the general fund to the health care access fund. The amount necessary to make the transfer is appropriated from the general fund to the commissioner of management and budget. Subd. 5. Definitions. (a) For purposes of this section, the following definitions apply. (b) "Public health care spending" means spending for a state-administered health care program. (c) "State-administered health care program" means medical assistance, MinnesotaCare, and the state employee group insurance program. Subd. 6. Projected spending baseline. Beginning February 15, 2016, and each February 15 thereafter, the commissioner of health shall report the projected impact on spending from specified health indicators related to various preventable illnesses and death. The impacts shall be reported over a ten-year time frame using a baseline forecast of private and public health care and long-term care spending for residents of this state, beginning with calendar year 2009 projected estimates of costs, and updated annually for each of the following health indicators: (1) costs related to rates of obesity, including obesity-related cancers, coronary heart disease, stroke, and arthritis; (2) costs related to the utilization of tobacco products; (3) costs related to hypertension; (4) costs related to diabetes or prediabetes; and (5) costs related to dementia and chronic disease among an elderly population over 60, including additional long-term care costs. Subd. 7. Outcomes reporting; savings determination. (a) Beginning November 1, 2016, and each November 1 thereafter, the commissioner of health shall determine the actual total private and public health care and long-term care spending for Minnesota residents related to each health indicator projected in subdivision 6 for the most recent calendar year available. The commissioner shall determine the difference between the projected and actual spending for each health indicator and for each year, and determine the savings attributable to changes in these health indicators. The assumptions and research methods used to calculate actual spending must be determined to be appropriate by an independent actuarial consultant. If the actual spending is less than the projected spending, the commissioner, in consultation with the commissioners of human services and management and budget, shall use the proportion of spending for state-administered health care programs to total private and public health care spending for each health indicator for the calendar year two years before the current calendar year to determine the percentage of the calculated aggregate savings amount accruing to state-administered health care programs. (b) The commissioner may use the data submitted under section 62U.04, subdivisions 4 and 5, to complete the activities required under this section, but may only report publicly on regional data aggregated to granularity of 25,000 lives or greater for this purpose. Subd. 8. Transfers. When accumulated annual savings accruing to state-administered health care programs, as calculated under subdivision 7, meet or exceed $50,000,000 for all health indicators in aggregate statewide, the commissioner of health shall certify that event to the commissioner of management and budget, no later than December 15 of each year. In the next fiscal year following the certification, the commissioner of management and budget shall transfer $50,000,000 from the general fund to the health care access fund. This transfer shall repeat in each fiscal year following subsequent certifications of additional cumulative savings, up to $50,000,000 per year. The amount necessary to make the transfer is appropriated from the general fund to the commissioner of management and budget. History:  2008 c 363 art 17 s 1; 2009 c 101 art 2 s 109; 2015 c 71 art 8 s 9-11; 2016 c 158 art 2 s 31
62U.15 ALZHEIMER'S DISEASE; PREVALENCE AND SCREENING MEASURES. Subdivision 1. Data from providers. (a) By July 1, 2012, the commissioner shall review currently available quality measures and make recommendations for future measurement aimed at improving assessment and care related to Alzheimer's disease and other dementia diagnoses, including improved rates and results of cognitive screening, rates of Alzheimer's and other dementia diagnoses, and prescribed care and treatment plans. (b) The commissioner may contract with a private entity to complete the requirements in this subdivision. If the commissioner contracts with a private entity already under contract through section 62U.02, then the commissioner may use a sole source contract and is exempt from competitive procurement processes. Subd. 2.  MS 2018 [Repealed, 2020 c 115 art 3 s 40] Subd. 3. Comparison data. The commissioner, with the commissioner of human services, the Minnesota Board on Aging, and other appropriate state offices, shall jointly review existing and forthcoming literature in order to estimate differences in the outcomes and costs of current practices for caring for those with Alzheimer's disease and other dementias, compared to the outcomes and costs resulting from: (1) earlier identification of Alzheimer's and other dementias; (2) improved support of family caregivers; and (3) improved collaboration between medical care management and community-based supports. Subd. 4. Reporting. By January 15, 2013, the commissioner must report to the legislature on progress toward establishment and collection of quality measures required under this section. History:   1Sp2011 c 9 art 2 s 4 
62V.01 TITLE. This chapter may be cited as the "MNsure Act." History:  2013 c 9 s 3; 2013 c 108 art 1 s 67
62V.02 DEFINITIONS. Subdivision 1. Scope. For the purposes of this chapter, the following terms have the meanings given. Subd. 2. Board. "Board" means the Board of Directors of MNsure specified in section 62V.04. Subd. 3. Dental plan. "Dental plan" has the meaning defined in section 62Q.76, subdivision 3. Subd. 4. Health plan. "Health plan" means a policy, contract, certificate, or agreement defined in section 62A.011, subdivision 3. Subd. 5. Health carrier. "Health carrier" has the meaning defined in section 62A.011. Subd. 6. Individual market. "Individual market" means the market for health insurance coverage offered to individuals. Subd. 7. Insurance producer. "Insurance producer" has the meaning defined in section 60K.31. Subd. 8. MNsure. "MNsure" means the state health benefit exchange as described in section 1311 of the federal Patient Protection and Affordable Care Act, Public Law 111-148, and further defined through amendments to the act and regulations issued under the act. Subd. 9. Navigator. "Navigator" has the meaning described in section 1311(i) of the federal Patient Protection and Affordable Care Act, Public Law 111-148, and further defined through amendments to the act and regulations issued under the act. Subd. 10. Public health care program. "Public health care program" means any public health care program administered by the commissioner of human services. Subd. 11. Qualified health plan. "Qualified health plan" means a health plan that meets the definition in section 1301(a) of the Affordable Care Act, Public Law 111-148, and has been certified by the board in accordance with section 62V.05, subdivision 5, to be offered through MNsure. Subd. 12. Small group market. "Small group market" means the market for health insurance coverage offered to small employers as defined in section 62L.02, subdivision 26. Subd. 13. Website. "Website" means a site maintained on the World Wide Web by MNsure that allows for access to information and services provided by MNsure. History:  2013 c 9 s 4; 2013 c 108 art 1 s 67
62V.03 MNSURE; ESTABLISHMENT. Subdivision 1. Creation. MNsure is created as a board under section 15.012, paragraph (a), to: (1) promote informed consumer choice, innovation, competition, quality, value, market participation, affordability, suitable and meaningful choices, health improvement, care management, reduction of health disparities, and portability of health plans; (2) facilitate and simplify the comparison, choice, enrollment, and purchase of health plans for individuals purchasing in the individual market through MNsure and for employees and employers purchasing in the small group market through MNsure; (3) assist small employers with access to small business health insurance tax credits and to assist individuals with access to public health care programs, premium assistance tax credits and cost-sharing reductions, and certificates of exemption from individual responsibility requirements; (4) facilitate the integration and transition of individuals between public health care programs and health plans in the individual or group market and develop processes that, to the maximum extent possible, provide for continuous coverage; and (5) establish and modify as necessary a name and brand for MNsure based on market studies that show maximum effectiveness in attracting the uninsured and motivating them to take action. Subd. 2. Application of other law. (a) MNsure must be reviewed by the legislative auditor under section 3.971. The legislative auditor shall audit the books, accounts, and affairs of MNsure once each year or less frequently as the legislative auditor's funds and personnel permit. Upon the audit of the financial accounts and affairs of MNsure, MNsure is liable to the state for the total cost and expenses of the audit, including the salaries paid to the examiners while actually engaged in making the examination. The legislative auditor may bill MNsure either monthly or at the completion of the audit. All collections received for the audits must be deposited in the general fund and are appropriated to the legislative auditor. Pursuant to section 3.97, subdivision 3a, the Legislative Audit Commission is requested to direct the legislative auditor to report by March 1, 2014, to the legislature on any duplication of services that occurs within state government as a result of the creation of MNsure. The legislative auditor may make recommendations on consolidating or eliminating any services deemed duplicative. The board shall reimburse the legislative auditor for any costs incurred in the creation of this report. (b) Board members of MNsure are subject to sections 10A.07 and 10A.09. Board members and the personnel of MNsure are subject to section 10A.071. (c) All meetings of the board and of the Minnesota Eligibility System Executive Steering Committee established under section 62V.055 shall comply with the open meeting law in chapter 13D. (d) The board and the website are exempt from chapter 60K. Any employee of MNsure who sells, solicits, or negotiates insurance to individuals or small employers must be licensed as an insurance producer under chapter 60K. (e) Section 3.3005 applies to any federal funds received by MNsure. (f) A MNsure decision that requires a vote of the board, other than a decision that applies only to hiring of employees or other internal management of MNsure, is an "administrative action" under section 10A.01, subdivision 2. Subd. 3. Continued operation of a private marketplace. (a) Nothing in this chapter shall be construed to prohibit: (1) a health carrier from offering outside of MNsure a health plan to a qualified individual or qualified employer; and (2) a qualified individual from enrolling in, or a qualified employer from selecting for its employees, a health plan offered outside of MNsure. (b) Nothing in this chapter shall be construed to restrict the choice of a qualified individual to enroll or not enroll in a qualified health plan or to participate in MNsure. Nothing in this chapter shall be construed to compel an individual to enroll in a qualified health plan or to participate in MNsure. (c) For purposes of this subdivision, "qualified individual" and "qualified employer" have the meanings given in section 1312 of the Affordable Care Act, Public Law 111-148, and further defined through amendments to the act and regulations issued under the act. History:  2013 c 9 s 5; 2013 c 108 art 1 s 67; 2015 c 71 art 12 s 2; 2016 c 163 art 4 s 1
62V.04 GOVERNANCE. Subdivision 1. Board. MNsure is governed by a board of directors with seven members. Subd. 2. Appointment. (a) Board membership of MNsure consists of the following: (1) three members appointed by the governor with the advice and consent of both the senate and the house of representatives acting separately in accordance with paragraph (d), with one member representing the interests of individual consumers eligible for individual market coverage, one member representing individual consumers eligible for public health care program coverage, and one member representing small employers. Members are appointed to serve four-year terms following the initial staggered-term lot determination; (2) three members appointed by the governor with the advice and consent of both the senate and the house of representatives acting separately in accordance with paragraph (d) who have demonstrated expertise, leadership, and innovation in the following areas: one member representing the areas of health administration, health care finance, health plan purchasing, and health care delivery systems; one member representing the areas of public health, health disparities, public health care programs, and the uninsured; and one member representing health policy issues related to the small group and individual markets. Members are appointed to serve four-year terms following the initial staggered-term lot determination; and (3) the commissioner of human services or a designee. (b) Section 15.0597 shall apply to all appointments, except for the commissioner. (c) The governor shall make appointments to the board that are consistent with federal law and regulations regarding its composition and structure. All board members appointed by the governor must be legal residents of Minnesota. (d) Upon appointment by the governor, a board member shall exercise duties of office immediately. If both the house of representatives and the senate vote not to confirm an appointment, the appointment terminates on the day following the vote not to confirm in the second body to vote. (e) Initial appointments shall be made by April 30, 2013. (f) One of the six members appointed under paragraph (a), clause (1) or (2), must have experience in representing the needs of vulnerable populations and persons with disabilities. (g) Membership on the board must include representation from outside the seven-county metropolitan area, as defined in section 473.121, subdivision 2. Subd. 3. Terms. (a) Board members may serve no more than two consecutive terms, except for the commissioner or the commissioner's designee, who shall serve until replaced by the governor. (b) A board member may resign at any time by giving written notice to the board. (c) The appointed members under subdivision 2, paragraph (a), clauses (1) and (2), shall have an initial term of two, three, or four years, determined by lot by the secretary of state. Subd. 4. Conflicts of interest. (a) Within one year prior to or at any time during their appointed term, board members appointed under subdivision 2, paragraph (a), clauses (1) and (2), shall not be employed by, be a member of the board of directors of, or otherwise be a representative of a health carrier, institutional health care provider or other entity providing health care, navigator, insurance producer, or other entity in the business of selling items or services of significant value to or through MNsure. For purposes of this paragraph, "health care provider or entity" does not include an academic institution. (b) Board members must recuse themselves from discussion of and voting on an official matter if the board member has a conflict of interest. A conflict of interest means an association including a financial or personal association that has the potential to bias or have the appearance of biasing a board member's decisions in matters related to MNsure or the conduct of activities under this chapter. (c) No board member shall have a spouse who is an executive of a health carrier. (d) No member of the board may currently serve as a lobbyist, as defined under section 10A.01, subdivision 21. Subd. 5. Acting chair; first meeting; supervision. (a) The governor shall designate as acting chair one of the appointees described in subdivision 2. (b) The board shall hold its first meeting within 60 days of enactment. (c) The board shall elect a chair to replace the acting chair at the first meeting. Subd. 6. Chair. The board shall have a chair, elected by a majority of members. The chair shall serve for one year. Subd. 7. Officers. The members of the board shall elect officers by a majority of members. The officers shall serve for one year. Subd. 8. Vacancies. If a vacancy occurs, the governor shall appoint a new member within 90 days, and the newly appointed member shall be subject to the same confirmation process described in subdivision 2. Subd. 9. Removal. (a) A board member may be removed by the appointing authority and a majority vote of the board following notice and hearing before the board. For purposes of this subdivision, the appointing authority or a designee of the appointing authority shall be a voting member of the board for purposes of constituting a quorum. (b) A conflict of interest as defined in subdivision 4, shall be cause for removal from the board. Subd. 10. Meetings. The board shall meet at least quarterly. Subd. 11. Quorum. A majority of the members of the board constitutes a quorum, and the affirmative vote of a majority of members of the board is necessary and sufficient for action taken by the board. Subd. 12. Compensation. (a) The board members shall be paid a salary not to exceed the salary limits established under section 15A.0815, subdivision 4. The salary for board members shall be set in accordance with this subdivision and section 15A.0815, subdivision 5. This paragraph expires December 31, 2015. (b) Beginning January 1, 2016, the board members may be compensated in accordance with section 15.0575. Subd. 13. Advisory committees. (a) The board shall establish and maintain advisory committees to provide insurance producers, health care providers, the health care industry, consumers, and other stakeholders with the opportunity to advise the board regarding the operation of MNsure as required under section 1311(d)(6) of the Affordable Care Act, Public Law 111-148. The board shall regularly consult with the advisory committees. The advisory committees established under this paragraph shall not expire. (b) The board may establish additional advisory committees, as necessary, to gather and provide information to the board in order to facilitate the operation of MNsure. The advisory committees established under this paragraph shall not expire, except by action of the board. (c) Section 15.0597 shall not apply to any advisory committee established by the board under this subdivision. (d) The board may provide compensation and expense reimbursement under section 15.059, subdivision 3, to members of the advisory committees. History:  2013 c 9 s 6; 2013 c 108 art 1 s 67
62V.05 RESPONSIBILITIES AND POWERS OF MNSURE. Subdivision 1. General. (a) The board shall operate MNsure according to this chapter and applicable state and federal law. (b) The board has the power to: (1) employ personnel and delegate administrative, operational, and other responsibilities to the director and other personnel as deemed appropriate by the board. This authority is subject to chapters 43A and 179A. The director and managerial staff of MNsure shall serve in the unclassified service and shall be governed by a compensation plan prepared by the board, submitted to the commissioner of management and budget for review and comment within 14 days of its receipt, and approved by the Legislative Coordinating Commission and the legislature under section 3.855, except that section 15A.0815, subdivision 5, paragraph (e), shall not apply; (2) establish the budget of MNsure; (3) seek and accept money, grants, loans, donations, materials, services, or advertising revenue from government agencies, philanthropic organizations, and public and private sources to fund the operation of MNsure. No health carrier or insurance producer shall advertise on MNsure; (4) contract for the receipt and provision of goods and services; (5) enter into information-sharing agreements with federal and state agencies and other entities, provided the agreements include adequate protections with respect to the confidentiality and integrity of the information to be shared, and comply with all applicable state and federal laws, regulations, and rules, including the requirements of section 62V.06; and (6) exercise all powers reasonably necessary to implement and administer the requirements of this chapter and the Affordable Care Act, Public Law 111-148. (c) The board shall establish policies and procedures to gather public comment and provide public notice in the State Register. (d) Within 180 days of enactment, the board shall establish bylaws, policies, and procedures governing the operations of MNsure in accordance with this chapter. Subd. 2. Operations funding. (a) Prior to January 1, 2015, MNsure shall retain or collect up to 1.5 percent of total premiums for individual and small group market health plans and dental plans sold through MNsure to fund the cash reserves of MNsure, but the amount collected shall not exceed a dollar amount equal to 25 percent of the funds collected under section 62E.11, subdivision 6, for calendar year 2012. (b) Beginning January 1, 2015, MNsure shall retain or collect up to 3.5 percent of total premiums for individual and small group market health plans and dental plans sold through MNsure to fund the operations of MNsure, but the amount collected shall not exceed a dollar amount equal to 50 percent of the funds collected under section 62E.11, subdivision 6, for calendar year 2012. (c) Beginning January 1, 2016, MNsure shall retain or collect up to 3.5 percent of total premiums for individual and small group market health plans and dental plans sold through MNsure to fund the operations of MNsure, but the amount collected may never exceed a dollar amount greater than 100 percent of the funds collected under section 62E.11, subdivision 6, for calendar year 2012. (d) For fiscal years 2014 and 2015, the commissioner of management and budget is authorized to provide cash flow assistance of up to $20,000,000 from the special revenue fund or the statutory general fund under section 16A.671, subdivision 3, paragraph (a), to MNsure. Any funds provided under this paragraph shall be repaid, with interest, by June 30, 2015. (e) Funding for the operations of MNsure shall cover any compensation provided to navigators participating in the navigator program. Subd. 3. Insurance producers. (a) By April 30, 2013, the board, in consultation with the commissioner of commerce, shall establish certification requirements that must be met by insurance producers in order to assist individuals and small employers with purchasing coverage through MNsure. Prior to January 1, 2015, the board may amend the requirements, only if necessary, due to a change in federal rules. (b) Certification requirements shall not exceed the requirements established under Code of Federal Regulations, title 45, part 155.220. Certification shall include training on health plans available through MNsure, available tax credits and cost-sharing arrangements, compliance with privacy and security standards, eligibility verification processes, online enrollment tools, and basic information on available public health care programs. Training required for certification under this subdivision shall qualify for continuing education requirements for insurance producers required under chapter 60K, and must comply with course approval requirements under chapter 45. (c) Producer compensation shall be established by health carriers that provide health plans through MNsure. The structure of compensation to insurance producers must be similar for health plans sold through MNsure and outside MNsure. (d) Any insurance producer compensation structure established by a health carrier for the small group market must include compensation for defined contribution plans that involve multiple health carriers. The compensation offered must be commensurate with other small group market defined health plans. (e) Any insurance producer assisting an individual or small employer with purchasing coverage through MNsure must disclose, orally and in writing, to the individual or small employer at the time of the first solicitation with the prospective purchaser the following: (1) the health carriers and qualified health plans offered through MNsure that the producer is authorized to sell, and that the producer may not be authorized to sell all the qualified health plans offered through MNsure; (2) that the producer may be receiving compensation from a health carrier for enrolling the individual or small employer into a particular health plan; and (3) that information on all qualified health plans offered through MNsure is available through the MNsure website. For purposes of this paragraph, "solicitation" means any contact by a producer, or any person acting on behalf of a producer made for the purpose of selling or attempting to sell coverage through MNsure. If the first solicitation is made by telephone, the disclosures required under this paragraph need not be made in writing, but the fact that disclosure has been made must be acknowledged on the application. (f) Beginning January 15, 2015, each health carrier that offers or sells qualified health plans through MNsure shall report in writing to the board and the commissioner of commerce the compensation and other incentives it offers or provides to insurance producers with regard to each type of health plan the health carrier offers or sells both inside and outside of MNsure. Each health carrier shall submit a report annually and upon any change to the compensation or other incentives offered or provided to insurance producers. (g) Nothing in this chapter shall prohibit an insurance producer from offering professional advice and recommendations to a small group purchaser based upon information provided to the producer. (h) An insurance producer that offers health plans in the small group market shall notify each small group purchaser of which group health plans qualify for Internal Revenue Service approved section 125 tax benefits. The insurance producer shall also notify small group purchasers of state law provisions that benefit small group plans when the employer agrees to pay 50 percent or more of its employees' premium. Individuals who are eligible for cost-effective medical assistance will count toward the 75 percent participation requirement in section 62L.03, subdivision 3. (i) Nothing in this subdivision shall be construed to limit the licensure requirements or regulatory functions of the commissioner of commerce under chapter 60K. Subd. 4. Navigator; in-person assisters; call center. (a) The board shall establish policies and procedures for the ongoing operation of a navigator program, in-person assister program, call center, and customer service provisions for MNsure to be implemented beginning January 1, 2015. (b) Until the implementation of the policies and procedures described in paragraph (a), the following shall be in effect: (1) the navigator program shall be met by section 256.962; (2) entities eligible to be navigators, including entities defined in Code of Federal Regulations, title 45, part 155.210 (c)(2), may serve as in-person assisters; (3) the board shall establish requirements and compensation for the navigator program and the in-person assister program by April 30, 2013. Compensation for navigators and in-person assisters must take into account any other compensation received by the navigator or in-person assister for conducting the same or similar services; and (4) call center operations shall utilize existing state resources and personnel, including referrals to counties for medical assistance. (c) The board shall establish a toll-free number for MNsure and may hire and contract for additional resources as deemed necessary. (d) The navigator program and in-person assister program must meet the requirements of section 1311(i) of the Affordable Care Act, Public Law 111-148. In establishing training standards for the navigators and in-person assisters, the board must ensure that all entities and individuals carrying out navigator and in-person assister functions have training in the needs of underserved and vulnerable populations; eligibility and enrollment rules and procedures; the range of available public health care programs and qualified health plan options offered through MNsure; and privacy and security standards. For calendar year 2014, the commissioner of human services shall ensure that the navigator program under section 256.962 provides application assistance for both qualified health plans offered through MNsure and public health care programs. (e) The board must ensure that any information provided by navigators, in-person assisters, the call center, or other customer assistance portals be accessible to persons with disabilities and that information provided on public health care programs include information on other coverage options available to persons with disabilities. Subd. 4a. Background study required. (a) The board must initiate background studies under section 245C.031 of: (1) each navigator; (2) each in-person assister; and (3) each certified application counselor. (b) The board may initiate the background studies required by paragraph (a) using the online NETStudy 2.0 system operated by the commissioner of human services. (c) The board shall not permit any individual to provide any service or function listed in paragraph (a) until the board has received notification from the commissioner of human services indicating that the individual: (1) is not disqualified under chapter 245C; or (2) is disqualified, but has received a set aside from the board of that disqualification according to sections 245C.22 and 245C.23. (d) The board or its delegate shall review a reconsideration request of an individual in paragraph (a), including granting a set aside, according to the procedures and criteria in chapter 245C. The board shall notify the individual and the Department of Human Services of the board's decision. Subd. 5. Health carrier and health plan requirements; participation. (a) Beginning January 1, 2015, the board may establish certification requirements for health carriers and health plans to be offered through MNsure that satisfy federal requirements under section 1311(c)(1) of the Affordable Care Act, Public Law 111-148. (b) Paragraph (a) does not apply if by June 1, 2013, the legislature enacts regulatory requirements that: (1) apply uniformly to all health carriers and health plans in the individual market; (2) apply uniformly to all health carriers and health plans in the small group market; and (3) satisfy minimum federal certification requirements under section 1311(c)(1) of the Affordable Care Act, Public Law 111-148. (c) In accordance with section 1311(e) of the Affordable Care Act, Public Law 111-148, the board shall establish policies and procedures for certification and selection of health plans to be offered as qualified health plans through MNsure. The board shall certify and select a health plan as a qualified health plan to be offered through MNsure, if: (1) the health plan meets the minimum certification requirements established in paragraph (a) or the market regulatory requirements in paragraph (b); (2) the board determines that making the health plan available through MNsure is in the interest of qualified individuals and qualified employers; (3) the health carrier applying to offer the health plan through MNsure also applies to offer health plans at each actuarial value level and service area that the health carrier currently offers in the individual and small group markets; and (4) the health carrier does not apply to offer health plans in the individual and small group markets through MNsure under a separate license of a parent organization or holding company under section 60D.15, that is different from what the health carrier offers in the individual and small group markets outside MNsure. (d) In determining the interests of qualified individuals and employers under paragraph (c), clause (2), the board may not exclude a health plan for any reason specified under section 1311(e)(1)(B) of the Affordable Care Act, Public Law 111-148. The board may consider: (1) affordability; (2) quality and value of health plans; (3) promotion of prevention and wellness; (4) promotion of initiatives to reduce health disparities; (5) market stability and adverse selection; (6) meaningful choices and access; (7) alignment and coordination with state agency and private sector purchasing strategies and payment reform efforts; and (8) other criteria that the board determines appropriate. (e) For qualified health plans offered through MNsure on or after January 1, 2015, the board shall establish policies and procedures under paragraphs (c) and (d) for selection of health plans to be offered as qualified health plans through MNsure by February 1 of each year, beginning February 1, 2014. The board shall consistently and uniformly apply all policies and procedures and any requirements, standards, or criteria to all health carriers and health plans. For any policies, procedures, requirements, standards, or criteria that are defined as rules under section 14.02, subdivision 4, the board may use the process described in subdivision 9. (f) For 2014, the board shall not have the power to select health carriers and health plans for participation in MNsure. The board shall permit all health plans that meet the certification requirements under section 1311(c)(1) of the Affordable Care Act, Public Law 111-148, to be offered through MNsure. (g) Under this subdivision, the board shall have the power to verify that health carriers and health plans are properly certified to be eligible for participation in MNsure. (h) The board has the authority to decertify health carriers and health plans that fail to maintain compliance with section 1311(c)(1) of the Affordable Care Act, Public Law 111-148. (i) For qualified health plans offered through MNsure beginning January 1, 2015, health carriers must use the most current addendum for Indian health care providers approved by the Centers for Medicare and Medicaid Services and the tribes as part of their contracts with Indian health care providers. MNsure shall comply with all future changes in federal law with regard to health coverage for the tribes. Subd. 6. Appeals. (a) The board may conduct hearings, appoint hearing officers, and recommend final orders related to appeals of any MNsure determinations, except for those determinations identified in paragraph (d). An appeal by a health carrier regarding a specific certification or selection determination made by MNsure under subdivision 5 must be conducted as a contested case proceeding under chapter 14, with the report or order of the administrative law judge constituting the final decision in the case, subject to judicial review under sections 14.63 to 14.69. For other appeals, the board shall establish hearing processes which provide for a reasonable opportunity to be heard and timely resolution of the appeal and which are consistent with the requirements of federal law and guidance. An appealing party may be represented by legal counsel at these hearings, but this is not a requirement. (b) MNsure may establish service-level agreements with state agencies to conduct hearings for appeals. Notwithstanding section 471.59, subdivision 1, a state agency is authorized to enter into service-level agreements for this purpose with MNsure. (c) For proceedings under this subdivision, MNsure may be represented by an attorney who is an employee of MNsure. (d) This subdivision does not apply to appeals of determinations where a state agency hearing is available under section 256.045. (e) An appellant aggrieved by an order of MNsure issued in an eligibility appeal, as defined in Minnesota Rules, part 7700.0101, may appeal the order to the district court of the appellant's county of residence by serving a written copy of a notice of appeal upon MNsure and any other adverse party of record within 30 days after the date MNsure issued the order, the amended order, or order affirming the original order, and by filing the original notice and proof of service with the court administrator of the district court. Service may be made personally or by mail; service by mail is complete upon mailing; no filing fee shall be required by the court administrator in appeals taken pursuant to this subdivision. MNsure shall furnish all parties to the proceedings with a copy of the decision and a transcript of any testimony, evidence, or other supporting papers from the hearing held before the appeals examiner within 45 days after service of the notice of appeal. (f) Any party aggrieved by the failure of an adverse party to obey an order issued by MNsure may compel performance according to the order in the manner prescribed in sections 586.01 to 586.12. (g) Any party may obtain a hearing at a special term of the district court by serving a written notice of the time and place of the hearing at least ten days prior to the date of the hearing. The court may consider the matter in or out of chambers, and shall take no new or additional evidence unless it determines that such evidence is necessary for a more equitable disposition of the appeal. (h) Any party aggrieved by the order of the district court may appeal the order as in other civil cases. No costs or disbursements shall be taxed against any party nor shall any filing fee or bond be required of any party. (i) If MNsure or district court orders eligibility for qualified health plan coverage through MNsure, or eligibility for federal advance payment of premium tax credits or cost-sharing reductions contingent upon full payment of respective premiums, the premiums must be paid or provided pending appeal to the district court, court of appeals, or supreme court. Provision of eligibility by MNsure pending appeal does not render moot MNsure's position in a court of law. Subd. 7. Agreements; consultation. (a) The board shall: (1) establish and maintain an agreement with the commissioner of human services for cost allocation and services regarding eligibility determinations and enrollment for public health care programs that use a modified adjusted gross income standard to determine program eligibility. The board may establish and maintain an agreement with the commissioner of human services for other services; (2) establish and maintain an agreement with the commissioners of commerce and health for services regarding enforcement of MNsure certification requirements for health plans and dental plans offered through MNsure. The board may establish and maintain agreements with the commissioners of commerce and health for other services; and (3) establish interagency agreements to transfer funds to other state agencies for their costs related to implementing and operating MNsure, excluding medical assistance allocatable costs. (b) The board shall consult with the commissioners of commerce and health regarding the operations of MNsure. (c) The board shall consult with Indian tribes and organizations regarding the operation of MNsure. (d) Beginning March 15, 2016, and each March 15 thereafter, the board shall submit a report to the chairs and ranking minority members of the committees in the senate and house of representatives with primary jurisdiction over commerce, health, and human services on all the agreements entered into with the chief information officer of the Department of Information Technology Services, or the commissioners of human services, health, or commerce in accordance with this subdivision. The report shall include the agency in which the agreement is with; the time period of the agreement; the purpose of the agreement; and a summary of the terms of the agreement. A copy of the agreement must be submitted to the extent practicable. Subd. 8. Rulemaking. The board may adopt rules to implement any provisions in this chapter using the expedited rulemaking process in section 14.389. Subd. 9. Dental plans. (a) The provisions of this section that apply to health plans shall apply to dental plans offered as stand-alone dental plans through MNsure, to the extent practicable. (b) A stand-alone dental plan offered through MNsure must meet all certification requirements under section 1311(c)(1) of the Affordable Care Act, Public Law 111-148, that are applicable to health plans, except for certification requirements that cannot be met because the dental plan only covers dental benefits. Subd. 10. Limitations; risk-bearing. (a) The board shall not bear insurance risk or enter into any agreement with health care providers to pay claims. (b) Nothing in this subdivision shall prevent MNsure from providing insurance for its employees. Subd. 11. Prohibition on other product lines. MNsure is prohibited from certifying, selecting, or offering products and policies of coverage that do not meet the definition of health plan or dental plan as provided in section 62V.02. Subd. 12. Reports on interagency agreements and intra-agency transfers. The MNsure Board shall provide quarterly reports to the chairs and ranking minority members of the legislative committees with jurisdiction over health and human services policy and finance on: (1) interagency agreements or service-level agreements and any renewals or extensions of existing interagency or service-level agreements with a state department under section 15.01, state agency under section 15.012, or the Department of Information Technology Services, with a value of more than $100,000, or related agreements with the same department or agency with a cumulative value of more than $100,000; and (2) transfers of appropriations of more than $100,000 between accounts within or between agencies. The report must include the statutory citation authorizing the agreement, transfer or dollar amount, purpose, and effective date of the agreement, the duration of the agreement, and a copy of the agreement. History:  2013 c 9 s 7; 2013 c 108 art 1 s 67; 2013 c 134 s 30; 2013 c 142 art 3 s 36; 2015 c 71 art 12 s 3-6; 2016 c 189 art 19 s 2; 2021 c 31 art 2 s 16; 1Sp2021 c 7 art 2 s 1
62V.051 MNSURE; CONSUMER RETROACTIVE APPOINTMENT OF A NAVIGATOR OR PRODUCER PERMITTED. Notwithstanding any other law or rule to the contrary, for up to six months after the effective date of the qualified health plan, MNsure must permit a qualified health plan policyholder, who has not designated a navigator or an insurance producer, to retroactively appoint a navigator or insurance producer. MNsure must provide notice of the retroactive appointment to the health carrier. The health carrier must retroactively pay commissions to the insurance producer if the producer can demonstrate that they were certified by MNsure at the time of the original enrollment, were appointed by the selected health carrier at the time of the enrollment, and that an agent of record agreement was executed prior to or at the time of the effective date of the policy. MNsure must adopt a standard form of agent of record agreement for purposes of this section. History:   2015 c 58 s 4 
62V.055 MINNESOTA ELIGIBILITY SYSTEM EXECUTIVE STEERING COMMITTEE. Subdivision 1. Definition; Minnesota eligibility system. For purposes of this section, "Minnesota eligibility system" means the system that supports eligibility determinations using a modified adjusted gross income methodology for medical assistance under section 256B.056, subdivision 1a, paragraph (b), clause (1); MinnesotaCare under chapter 256L; and qualified health plan enrollment under section 62V.05, subdivision 5, paragraph (c). Subd. 2. Establishment; committee membership; costs. (a) The Minnesota Eligibility System Executive Steering Committee is established to provide recommendations to the MNsure board, the commissioner of human services, and the commissioner of information technology services on the governance, administration, and business operations of the Minnesota eligibility system. The steering committee shall be composed of: (1) two members appointed by the commissioner of human services; (2) two members appointed by the board; (3) two members appointed jointly by the Association of Minnesota Counties, the Minnesota Inter-County Association, and the Minnesota Association of County Social Service Administrators. One member appointed under this clause shall represent counties within the seven-county metropolitan area, and one member shall represent counties outside the seven-county metropolitan area; and (4) two nonvoting members appointed by the commissioner of information technology services. (b) One member appointed by the commissioner of human services and one member appointed by the commissioner of information technology services shall serve as co-chairpersons for the steering committee. (c) Steering committee costs must be paid from the budgets of the Department of Human Services, the Department of Information Technology Services, and MNsure. Subd. 3. Duties. The Minnesota Eligibility System Executive Steering Committee shall provide recommendations on an overall governance structure for the Minnesota eligibility system and the ongoing administration and business operations of the Minnesota eligibility system. The steering committee shall make recommendations on setting system goals and priorities, allocating the system's resources, making major system decisions, and tracking total funding and expenditures for the system from all sources. The steering committee shall also report to the Legislative Oversight Committee on a quarterly basis on Minnesota eligibility system funding and expenditures, including amounts received in the most recent quarter by funding source and expenditures made in the most recent quarter by funding source. Subd. 4. Meetings. (a) All meetings of the steering committee must: (1) be held in the State Office Building, the Minnesota Senate Building, or when approved by the Legislative Oversight Committee, another public location with the capacity to live stream steering committee meetings; and (2) whenever possible, be made available on a website for live audio or video streaming and be archived on a website for playback at a later time. (b) The steering committee must: (1) as part of every steering committee meeting, provide the opportunity for oral and written public testimony and comments on steering committee recommendations for the governance, administration, and business operations of the Minnesota eligibility system; and (2) provide documents under discussion or review by the steering committee to be electronically posted on MNsure's website. Documents must be provided and posted prior to the meeting at which the documents are scheduled for review or discussion. (c) All votes of the steering committee must be recorded, with each member's vote identified. Subd. 5. Administrative structure. The Department of Information Technology Services shall be responsible for the design, build, maintenance, operation, and upgrade of the information technology for the Minnesota eligibility system. In carrying out its duties, the office shall consider recommendations made by the steering committee. History:  2016 c 163 art 4 s 2; 2021 c 31 art 2 s 16
62V.06 DATA PRACTICES. Subdivision 1. Applicability. MNsure is a state agency for purposes of the Minnesota Government Data Practices Act and is subject to all provisions of chapter 13, in addition to the requirements contained in this section. Subd. 2. Definitions. As used in this section: (1) "individual" means an individual according to section 13.02, subdivision 8, but does not include a vendor of services; and (2) "participating" means that an individual, employee, or employer is seeking, or has sought an eligibility determination, enrollment processing, or premium processing through MNsure. Subd. 3. General data classifications. The following data collected, created, or maintained by MNsure are classified as private data on individuals, as defined in section 13.02, subdivision 12, or nonpublic data, as defined in section 13.02, subdivision 9: (1) data on any individual participating in MNsure; (2) data on any individuals participating in MNsure as employees of an employer participating in MNsure; and (3) data on employers participating in MNsure. Subd. 4. Application and certification data. (a) Data submitted by an insurance producer in an application for certification to sell a health plan through MNsure, or submitted by an applicant seeking permission or a commission to act as a navigator or in-person assister, are classified as follows: (1) at the time the application is submitted, all data contained in the application are private data, as defined in section 13.02, subdivision 12, or nonpublic data as defined in section 13.02, subdivision 9, except that the name of the applicant is public; and (2) upon a final determination related to the application for certification by MNsure, all data contained in the application are public, with the exception of trade secret data as defined in section 13.37. (b) Data created or maintained by a government entity as part of the evaluation of an application are protected nonpublic data, as defined in section 13.02, subdivision 13, until a final determination as to certification is made and all rights of appeal have been exhausted. Upon a final determination and exhaustion of all rights of appeal, these data are public, with the exception of trade secret data as defined in section 13.37 and data subject to attorney-client privilege or other protection as provided in section 13.393. (c) If an application is denied, the public data must include the criteria used by the board to evaluate the application and the specific reasons for the denial, and these data must be published on the MNsure website. Subd. 5. Data sharing. (a) MNsure may share or disseminate data classified as private or nonpublic in subdivision 3 as follows: (1) to the subject of the data, as provided in section 13.04; (2) according to a court order; (3) according to a state or federal law specifically authorizing access to the data; (4) with other state or federal agencies, only to the extent necessary to verify the identity of, determine the eligibility of, process premiums for, process enrollment of, or investigate fraud related to an individual, employer, or employee participating in MNsure, provided that MNsure must enter into a data-sharing agreement with the agency prior to sharing data under this clause; and (5) with a nongovernmental person or entity, only to the extent necessary to verify the identity of, determine the eligibility of, process premiums for, process enrollment of, or investigate fraud related to an individual, employer, or employee participating in MNsure, provided that MNsure must enter into a contract with the person or entity, as provided in section 13.05, subdivision 6 or 11, prior to disseminating data under this clause. (b) MNsure may share or disseminate data classified as private or nonpublic in subdivision 4 as follows: (1) to the subject of the data, as provided in section 13.04; (2) according to a court order; (3) according to a state or federal law specifically authorizing access to the data; (4) with other state or federal agencies, only to the extent necessary to carry out the functions of MNsure, provided that MNsure must enter into a data-sharing agreement with the agency prior to sharing data under this clause; and (5) with a nongovernmental person or entity, only to the extent necessary to carry out the functions of MNsure, provided that MNsure must enter a contract with the person or entity, as provided in section 13.05, subdivision 6 or 11, prior to disseminating data under this clause. (c) Sharing or disseminating data outside of MNsure in a manner not authorized by this subdivision is prohibited. The list of authorized dissemination and sharing contained in this subdivision must be included in the Tennessen warning required by section 13.04, subdivision 2. (d) Until July 1, 2014, state agencies must share data classified as private or nonpublic on individuals, employees, or employers participating in MNsure with MNsure, only to the extent such data are necessary to verify the identity of, determine the eligibility of, process premiums for, process enrollment of, or investigate fraud related to a MNsure participant. The agency must enter into a data-sharing agreement with MNsure prior to sharing any data under this paragraph. Subd. 6. Notice and disclosures. (a) In addition to the Tennessen warning required by section 13.04, subdivision 2, MNsure must provide any data subject asked to supply private data with: (1) a notice of rights related to the handling of genetic information, pursuant to section 13.386; and (2) a notice of the records retention policy of MNsure, detailing the length of time MNsure will retain data on the individual and the manner in which it will be destroyed upon expiration of that time. (b) All notices required by this subdivision, including the Tennessen warning, must be provided in an electronic format suitable for downloading or printing. Subd. 7. Summary data. In addition to creation and disclosure of summary data derived from private data on individuals, as permitted by section 13.05, subdivision 7, MNsure may create and disclose summary data derived from data classified as nonpublic under this section. Subd. 8. Access to data; audit trail. (a) Only individuals with explicit authorization from the board may enter, update, or access not public data collected, created, or maintained by MNsure. The ability of authorized individuals to enter, update, or access data must be limited through the use of role-based access that corresponds to the official duties or training level of the individual, and the statutory authorization that grants access for that purpose. All queries and responses, and all actions in which data are entered, updated, accessed, or shared or disseminated outside of MNsure, must be recorded in a data audit trail. Data contained in the audit trail are public, to the extent that the data are not otherwise classified by this section. The board shall immediately and permanently revoke the authorization of any individual determined to have willfully entered, updated, accessed, shared, or disseminated data in violation of this section, or any provision of chapter 13. If an individual is determined to have willfully gained access to data without explicit authorization from the board, the board shall forward the matter to the county attorney for prosecution. (b) This subdivision shall not limit or affect the authority of the legislative auditor to access data needed to conduct audits, evaluations, or investigations of MNsure or the obligation of the board and MNsure employees to comply with section 3.978, subdivision 2. (c) This subdivision does not apply to actions taken by a MNsure participant to enter, update, or access data held by MNsure, if the participant is the subject of the data that is entered, updated, or accessed. Subd. 9. Sale of data prohibited. MNsure may not sell any data collected, created, or maintained by MNsure, regardless of its classification, for commercial or any other purposes. Subd. 10. Gun and firearm ownership. MNsure shall not collect information that indicates whether or not an individual owns a gun or has a firearm in the individual's home. History:  2013 c 9 s 8; 2013 c 108 art 1 s 67
62V.07 FUNDS. (a) The MNsure account is created in the special revenue fund of the state treasury. All funds received by MNsure shall be deposited in the account. Funds in the account are appropriated to MNsure for the operation of MNsure. Notwithstanding section 11A.20, all investment income and all investment losses attributable to the investment of the MNsure account not currently needed, shall be credited to the MNsure account. (b) The budget submitted to the legislature under section 16A.11 must include budget information for MNsure. History:  2013 c 9 s 9; 2013 c 108 art 1 s 67
62V.08 REPORTS. (a) MNsure shall submit a report to the legislature by January 15, 2015, and each January 15 thereafter, on: (1) the performance of MNsure operations; (2) meeting MNsure responsibilities; (3) an accounting of MNsure budget activities; (4) practices and procedures that have been implemented to ensure compliance with data practices laws, and a description of any violations of data practices laws or procedures; and (5) the effectiveness of the outreach and implementation activities of MNsure in reducing the rate of uninsurance. (b) MNsure must publish its administrative and operational costs on a website to educate consumers on those costs. The information published must include: (1) the amount of premiums and federal premium subsidies collected; (2) the amount and source of revenue received under section 62V.05, subdivision 1, paragraph (b), clause (3); (3) the amount and source of any other fees collected for purposes of supporting operations; and (4) any misuse of funds as identified in accordance with section 3.975. The website must be updated at least annually. History:  2013 c 9 s 10; 2013 c 108 art 1 s 67
62V.09 EXPIRATION AND SUNSET EXCLUSION. Notwithstanding section 15.059, the board and its advisory committees shall not expire, except as specified in section 62V.04, subdivision 13. The board and its advisory committees are not subject to review or sunsetting under chapter 3D. History:   2013 c 9 s 11 
62V.10 RIGHT NOT TO PARTICIPATE. Nothing in this chapter infringes on the right of a Minnesota citizen not to participate in MNsure. History:  2013 c 9 s 12; 2013 c 108 art 1 s 67
62V.11 LEGISLATIVE OVERSIGHT COMMITTEE. Subdivision 1. Legislative oversight. (a) The Legislative Oversight Committee is established to provide oversight to the implementation of this chapter and the operation of MNsure. (b) The committee shall review the operations of MNsure at least annually and shall recommend necessary changes in policy, implementation, and statutes to the board and to the legislature. (c) MNsure shall present to the committee the annual report required in section 62V.08, the appeals process under section 62V.05, subdivision 6, and the actions taken regarding the treatment of multiemployer plans. Subd. 2. Membership; meetings; compensation. (a) The Legislative Oversight Committee shall consist of five members of the senate, three members appointed by the majority leader of the senate, and two members appointed by the minority leader of the senate; and five members of the house of representatives, three members appointed by the speaker of the house, and two members appointed by the minority leader of the house of representatives. (b) Appointed legislative members serve at the pleasure of the appointing authority and shall continue to serve until their successors are appointed. (c) The first meeting of the committee shall be convened by the chair of the Legislative Coordinating Commission. Members shall elect a chair at the first meeting. The chair must convene at least one meeting annually, and may convene other meetings as deemed necessary. Subd. 3.  [Repealed, 2015 c 71 art 12 s 9] Subd. 4. Review of costs. The board shall submit for review the annual budget of MNsure for the next fiscal year by March 15 of each year, beginning March 15, 2014. Subd. 5. Review of Minnesota eligibility system funding and expenditures. The committee shall review quarterly reports submitted by the Minnesota Eligibility System Executive Steering Committee under section 62V.055, subdivision 3, regarding Minnesota eligibility system funding and expenditures. History:  2013 c 9 s 13; 2013 c 108 art 1 s 67; 2016 c 163 art 4 s 3
62W.01 CITATION. This chapter may be cited as the "Minnesota Pharmacy Benefit Manager Licensure and Regulation Act." History:   2019 c 39 s 1 
62W.02 DEFINITIONS. Subdivision 1. Scope. For purposes of this chapter, the following terms have the meanings given. Subd. 2. Aggregate retained rebate. "Aggregate retained rebate" means the percentage of all rebates received by a pharmacy benefit manager from a drug manufacturer for drug utilization that is not passed on to the pharmacy benefit manager's client. Subd. 3. Claims processing service. "Claims processing service" means the administrative services performed in connection with the processing and adjudicating of claims relating to pharmacy services that includes: (1) receiving payments for pharmacy services; (2) making payments to pharmacists or pharmacies for pharmacy services; or (3) both clauses (1) and (2). Subd. 4. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 5. Enrollee. "Enrollee" means a natural person covered by a health plan and includes an insured, policyholder, subscriber, contract holder, member, covered person, or certificate holder. Subd. 6. Health carrier. "Health carrier" has the meaning given in section 62A.011, subdivision 2. Subd. 7. Health plan. "Health plan" means a policy, contract, certificate, or agreement defined in section 62A.011, subdivision 3. Subd. 8. Mail order pharmacy. "Mail order pharmacy" means a pharmacy whose primary business is to receive prescriptions by mail, fax, or through electronic submissions, dispense prescription drugs to enrollees through the use of the United States mail or other common carrier services, and provide consultation with patients electronically rather than face-to-face. Subd. 9. Maximum allowable cost price. "Maximum allowable cost price" means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for a group of therapeutically and pharmaceutically equivalent multiple source drugs. The maximum allowable cost price does not include a dispensing or professional fee. Subd. 10. Multiple source drugs. "Multiple source drugs" means a therapeutically equivalent drug that is available from at least two manufacturers. Subd. 11. Network pharmacy. "Network pharmacy" means a retail or other licensed pharmacy provider that directly contracts with a pharmacy benefit manager. Subd. 12. Other prescription drug or device services. "Other prescription drug or device services" means services other than claims processing services, provided directly or indirectly, whether in connection with or separate from claims processing services, including: (1) negotiating rebates, discounts, or other financial incentives and arrangements with drug manufacturers; (2) disbursing or distributing rebates; (3) managing or participating in incentive programs or arrangements for pharmacy services; (4) negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both; (5) developing prescription drug formularies; (6) designing prescription benefit programs; or (7) advertising or promoting services. Subd. 13. Pharmacist. "Pharmacist" means an individual with a valid license issued by the Board of Pharmacy under chapter 151. Subd. 14. Pharmacy or pharmacy provider. "Pharmacy" or "pharmacy provider" means a place of business licensed by the Board of Pharmacy under chapter 151 in which prescription drugs are prepared, compounded, or dispensed under the supervision of a pharmacist. Subd. 15. Pharmacy benefit manager. (a) "Pharmacy benefit manager" means a person, business, or other entity that contracts with a plan sponsor to perform pharmacy benefits management, including but not limited to: (1) contracting directly or indirectly with pharmacies to provide prescription drugs to enrollees or other covered individuals; (2) administering a prescription drug benefit; (3) processing or paying pharmacy claims; (4) creating or updating prescription drug formularies; (5) making or assisting in making prior authorization determinations on prescription drugs; (6) administering rebates on prescription drugs; or (7) establishing a pharmacy network. (b) Pharmacy benefit manager does not include the Department of Human Services. Subd. 16. Plan sponsor. "Plan sponsor" means a group purchaser as defined under section 62J.03; an employer in the case of an employee health benefit plan established or maintained by a single employer; or an employee organization in the case of a health plan established or maintained by an employee organization, an association, joint board trustees, a committee, or other similar group that establishes or maintains the health plan. This term includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefit management. Plan sponsor does not include the Department of Human Services. Subd. 17. Rebates. "Rebates" means all price concessions paid by a drug manufacturer to a pharmacy benefit manager or plan sponsor, including discounts and other price concessions that are based on the actual or estimated utilization of a prescription drug. Rebates also include price concessions based on the effectiveness of a prescription drug as in a value-based or performance-based contract. Subd. 18. Retail pharmacy. "Retail pharmacy" means a chain pharmacy, a supermarket pharmacy, an independent pharmacy, or a network of independent pharmacies, licensed under chapter 151, that dispenses prescription drugs to the public. Subd. 19. Specialty drug. "Specialty drug" means a prescription drug that: (1) cannot be routinely dispensed at a majority of retail pharmacies; (2) is used to treat chronic and complex, or rare medical conditions; (3) has special storage, handling, or distribution requirements that typically cannot be met by a retail pharmacy; and (4) meets at least three of the following criteria: (i) requires complex and extended patient education and counseling; (ii) requires intensive monitoring; (iii) requires clinical oversight; and (iv) requires product support services. Subd. 20. Specialty pharmacy. "Specialty pharmacy" means a pharmacy that specializes in dispensing specialty drugs for patients with serious health conditions requiring complex therapies and high cost biotech and injectable medications. A pharmacy benefit manager or health carrier may require a specialty pharmacy to be accredited as a specialty pharmacy from one of the following accrediting organizations: (1) Utilization Review Accreditation Commission (URAC); (2) Accreditation Commissioner for Health Care, Inc.; or (3) Joint Accreditation Commission. History:   2019 c 39 s 2 
62W.03 LICENSE TO DO BUSINESS. Subdivision 1. General. (a) Beginning January 1, 2020, no person shall perform, act, or do business in this state as a pharmacy benefit manager unless the person has a valid license issued under this chapter by the commissioner of commerce. (b) A license issued in accordance with this chapter is nontransferable. Subd. 2. Application. (a) A pharmacy benefit manager seeking a license shall apply to the commissioner of commerce on a form prescribed by the commissioner. The application form must include at a minimum the following information: (1) the name, address, and telephone number of the pharmacy benefit manager; (2) the name and address of the pharmacy benefit manager agent for service of process in this state; and (3) the name, address, official position, and professional qualifications of each person responsible for the conduct of affairs of the pharmacy benefit manager, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee; the principal officers in the case of a corporation; or the partners or members in the case of a partnership or association. (b) Each application for licensure must be accompanied by a nonrefundable fee of $8,500. The fees collected under this subdivision shall be deposited in the general fund. (c) Within 30 days of receiving an application, the commissioner may require additional information or submissions from an applicant and may obtain any document or information reasonably necessary to verify the information contained in the application. Within 90 days after receipt of a completed application, the network adequacy report required under section 62W.05, and the applicable license fee, the commissioner shall review the application and issue a license if the applicant is deemed qualified under this section. If the commissioner determines the applicant is not qualified, the commissioner shall notify the applicant and shall specify the reason or reasons for the denial. Subd. 3. Renewal. (a) A license issued under this chapter is valid for one year. To renew a license, an applicant must submit a completed renewal application on a form prescribed by the commissioner, the network adequacy report required under section 62W.05, and a renewal fee of $8,500. The fees collected under this paragraph shall be deposited in the general fund. The commissioner may request a renewal applicant to submit additional information to clarify any new information presented in the renewal application. (b) A renewal application submitted after the renewal deadline date must be accompanied by a nonrefundable late fee of $500. The fees collected under this paragraph shall be deposited in the general fund. (c) The commissioner may deny the renewal of a license for any of the following reasons: (1) the pharmacy benefit manager has been determined by the commissioner to be in violation or noncompliance with federal or state law; or (2) the pharmacy benefit manager has failed to timely submit a renewal application and the information required under paragraph (a). In lieu of a denial of a renewal application, the commissioner may permit the pharmacy benefit manager to submit to the commissioner a corrective action plan to cure or correct deficiencies. Subd. 4. Oversight. (a) The commissioner may suspend, revoke, or place on probation a pharmacy benefit manager license issued under this chapter for any of the following circumstances: (1) the pharmacy benefit manager has engaged in fraudulent activity that constitutes a violation of state or federal law; (2) the commissioner has received consumer complaints that justify an action under this subdivision to protect the safety and interests of consumers; (3) the pharmacy benefit manager fails to pay an application license or renewal fee; and (4) the pharmacy benefit manager fails to comply with a requirement set forth in this chapter. (b) The commissioner may issue a license subject to restrictions or limitations, including the types of services that may be supplied or the activities in which the pharmacy benefit manager may be engaged. Subd. 5. Penalty. If a pharmacy benefit manager acts without a license, the pharmacy benefit manager may be subject to a fine of $5,000 per day for the period the pharmacy benefit manager is found to be in violation. Any penalties collected under this subdivision shall be deposited in the general fund. Subd. 6. Enforcement. The commissioner shall enforce this chapter under the provisions of chapter 45. History:   2019 c 39 s 3 
62W.04 PHARMACY BENEFIT MANAGER GENERAL BUSINESS PRACTICES. (a) A pharmacy benefit manager must exercise good faith and fair dealing in the performance of its contractual duties. A provision in a contract between a pharmacy benefit manager and a health carrier or a network pharmacy that attempts to waive or limit this obligation is void. (b) A pharmacy benefit manager must notify a health carrier in writing of any activity, policy, or practice of the pharmacy benefit manager that directly or indirectly presents a conflict of interest with the duties imposed in this section. History:   2019 c 39 s 4 
62W.05 PHARMACY BENEFIT MANAGER NETWORK ADEQUACY. Subdivision 1. Requirements. (a) A pharmacy benefit manager must provide an adequate and accessible pharmacy network for the provision of prescription drugs that meet the relevant requirements in section 62K.10. Mail order pharmacies must not be included in the calculations of determining the adequacy of the pharmacy benefit manager's pharmacy network under section 62K.10. (b) A pharmacy benefit manager must submit to the commissioner a pharmacy network adequacy report describing the pharmacy network and pharmacy accessibility in this state, with the pharmacy benefit manager's license application and renewal, in a manner prescribed by the commissioner. Subd. 2. Network adequacy waiver. A pharmacy benefit manager may apply for a waiver from the commissioner of health if the pharmacy benefit manager is unable to meet the network adequacy requirements under subdivision 1. A waiver application must be submitted to the commissioner of health on a form prescribed by the commissioner of health and must: (1) demonstrate with specific data why the pharmacy benefit manager is not able to meet the requirements; and (2) include information as to the steps that were and will be taken to address network adequacy. If a waiver is granted by the commissioner of health, the waiver shall automatically expire after three years. If a renewal of the waiver is sought, the commissioner of health shall consider steps that the pharmacy benefit manager has taken over the past three-year period to address network adequacy. Subd. 3. Accreditation standards. A pharmacy benefit manager must not require pharmacy accreditation standards or recertification requirements to participate in a network that are inconsistent with, more stringent than, or in addition to federal and state requirements for licensure as a pharmacy in this state unless authorized under this chapter. History:   2019 c 39 s 5 
62W.06 PHARMACY BENEFIT MANAGER TRANSPARENCY. Subdivision 1. Transparency to plan sponsors. (a) Beginning in the second quarter after the effective date of a contract between a pharmacy benefit manager and a plan sponsor, the pharmacy benefit manager must disclose, upon the request of the plan sponsor, the following information with respect to prescription drug benefits specific to the plan sponsor: (1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale drug distributor for each therapeutic category of prescription drugs; (2) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale drug distributor for each therapeutic category of prescription drugs available to the plan sponsor's enrollees; (3) the aggregate amount of rebates received by the pharmacy benefit manager by therapeutic category of prescription drugs. The aggregate amount of rebates must include any utilization discounts the pharmacy benefit manager receives from a drug manufacturer or wholesale drug distributor; (4) any other fees received from a drug manufacturer or wholesale drug distributor; (5) whether the pharmacy benefit manager has a contract, agreement, or other arrangement with a drug manufacturer to exclusively dispense or provide a drug to a plan sponsor's enrollees, and the application of all consideration or economic benefits collected or received pursuant to the arrangement; (6) prescription drug utilization information for the plan sponsor's enrollees; (7) de-identified claims level information in electronic format that allows the plan sponsor to sort and analyze the following information for each claim: (i) whether the claim required prior authorization; (ii) the amount paid to the pharmacy for each prescription, net of the aggregate amount of fees or other assessments imposed on the pharmacy, including point-of-sale and retroactive charges; (iii) any spread between the net amount paid to the pharmacy in item (ii) and the amount charged to the plan sponsor; (iv) whether the pharmacy is, or is not, under common control or ownership with the pharmacy benefit manager; (v) whether the pharmacy is, or is not, a preferred pharmacy under the plan; (vi) whether the pharmacy is, or is not, a mail order pharmacy; and (vii) whether enrollees are required by the plan to use the pharmacy; (8) the aggregate amount of payments made by the pharmacy benefit manager to pharmacies owned or controlled by the pharmacy benefit manager on behalf of the sponsor's plan; (9) the aggregate amount of payments made by the pharmacy benefit manager to pharmacies not owned or controlled by the pharmacy benefit manager on behalf of the sponsor's plan; and (10) the aggregate amount of the fees imposed on, or collected from, network pharmacies or other assessments against network pharmacies, including point-of-sale fees and retroactive charges, and the application of those amounts collected pursuant to the contract with the plan sponsor. (b) A pharmacy benefit manager may require a plan sponsor to agree to a nondisclosure agreement that specifies that the information reported under this section is proprietary information. The pharmacy benefit manager is not required to disclose the information to the plan sponsor until the plan sponsor has executed the nondisclosure agreement, if required by the pharmacy benefit manager. Subd. 2. Transparency report to commissioner. (a) Beginning June 1, 2020, and annually thereafter, each pharmacy benefit manager must submit to the commissioner a transparency report containing data from the prior calendar year as it pertains to plan sponsors doing business in Minnesota. The report must contain the following information: (1) the aggregate wholesale acquisition costs from a drug manufacturer or wholesale drug distributor for each therapeutic category of prescription drugs for all of the pharmacy benefit manager's plan sponsor clients, and these costs net of all rebates and other fees and payments, direct or indirect, from all sources; (2) the aggregate amount of all rebates that the pharmacy benefit manager received from all drug manufacturers for all of the pharmacy benefit manager's plan sponsor clients. The aggregate amount of rebates must include any utilization discounts the pharmacy benefit manager receives from a drug manufacturer or wholesale drug distributor; (3) the aggregate of all fees from all sources, direct or indirect, that the pharmacy benefit manager received for all of the pharmacy benefit manager's plan sponsor clients; (4) the aggregate retained rebates and other fees, as listed in clause (3), that the pharmacy benefit manager received from all sources, direct or indirect, that were not passed through to plan sponsors; (5) the aggregate retained rebate and fees percentage; (6) the highest, lowest, and mean aggregate retained rebate and fees percentage for all of the pharmacy benefit manager's plan sponsor clients; and (7) de-identified claims level information in electronic format that allows the commissioner to sort and analyze the following information for each claim: (i) the drug and quantity for each prescription; (ii) whether the claim required prior authorization; (iii) patient cost-sharing paid on each prescription. This data is classified pursuant to paragraph (d); (iv) the amount paid to the pharmacy for each prescription, net of the aggregate amount of fees or other assessments imposed on the pharmacy, including point-of-sale and retroactive charges. This data is classified pursuant to paragraph (d); (v) any spread between the net amount paid to the pharmacy in item (iv) and the amount charged to the plan sponsor. This data is classified pursuant to paragraph (d); (vi) identity of the pharmacy for each prescription; (vii) whether the pharmacy is, or is not, under common control or ownership with the pharmacy benefit manager; (viii) whether the pharmacy is, or is not, a preferred pharmacy under the plan; (ix) whether the pharmacy is, or is not, a mail order pharmacy; and (x) whether enrollees are required by the plan to use the pharmacy. (b) Within 60 days upon receipt of the transparency report, the commissioner shall publish the report from each pharmacy benefit manager on the Department of Commerce's website, with the exception of data considered trade secret information under section 13.37. The transparency report must be published in such a way as to not disclose the identity of a specific plan sponsor, the prices charged for a specific prescription drug or classes of drugs, or the amount of any rebates provided for a specific prescription drug or classes of drugs. (c) For purposes of this subdivision, the aggregate retained rebate and fee percentage must be calculated for each plan sponsor for rebates and fees in the previous calendar year as follows: (1) the sum total dollar amount of rebates and fees from all drug manufacturers for all utilization of enrollees of a plan sponsor that was not passed through to the plan sponsor; and (2) divided by the sum total dollar amount of all rebates and fees received from all sources, direct or indirect, for all enrollees of a plan sponsor. (d) Data, documents, materials, or other information in the possession or control of the commissioner of commerce that are obtained by, created by, or disclosed to the commissioner pursuant to paragraph (a), clause (7), items (iii), (iv), and (v), are classified as confidential, protected nonpublic, or both. Those data, documents, materials, or other information are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action. However, the commissioner may use the data, documents, materials, or other information in the furtherance of a regulatory or legal action brought as a part of the commissioner's official duties. The commissioner shall not otherwise make the data, documents, materials, or other information public without the prior written consent of the pharmacy benefit manager. Neither the commissioner nor any person who received data, documents, materials, or other information while acting under the authority of the commissioner are permitted or required to testify in any private civil action concerning data, documents, materials, or information subject to this paragraph that are classified as confidential, protected nonpublic, or both. Subd. 3. Penalty. The commissioner may impose civil penalties of not more than $1,000 per day per violation of this section. History:   2019 c 39 s 6 
62W.07 PHARMACY OWNERSHIP INTEREST; PHARMACY SERVICES. (a) A pharmacy benefit manager that has an ownership interest either directly or indirectly, or through an affiliate or subsidiary, in a pharmacy must disclose to a plan sponsor that contracts with the pharmacy benefit manager any difference between the amount paid to that pharmacy and the amount charged to the plan sponsor. (b) A pharmacy benefit manager or health carrier is prohibited from penalizing, requiring, or providing financial incentives, including variations in premiums, deductibles, co-payments, or coinsurance, to an enrollee as an incentive to use a retail pharmacy, mail order pharmacy, specialty pharmacy, or other network pharmacy provider in which a pharmacy benefit manager has an ownership interest or in which the pharmacy provider has an ownership interest in the pharmacy benefit manager. (c) Paragraph (b) does not apply if the pharmacy benefit manager or health carrier offers an enrollee the same financial incentives for using a network retail pharmacy, mail order pharmacy, specialty pharmacy, or other network pharmacy in which the pharmacy benefit manager has no ownership interest and the network pharmacy has agreed to accept the same pricing terms, conditions, and requirements related to the cost of the prescription drug and the cost of dispensing the prescription drug that are in the agreement with a network pharmacy in which the pharmacy benefit manager has an ownership interest. (d) A pharmacy benefit manager or health carrier is prohibited from imposing limits, including quantity limits or refill frequency limits, on an enrollee's access to medication that differ based solely on whether the health carrier or pharmacy benefit manager has an ownership interest in a pharmacy or the pharmacy has an ownership interest in the pharmacy benefit manager. (e) Nothing in paragraph (d) shall be construed to prohibit a pharmacy benefit manager from imposing different limits, including quantity limits or refill frequency limits on an enrollee's access to medication based on whether the enrollee uses a mail order pharmacy or retail pharmacy so long as the enrollee has the option to use a mail order pharmacy or retail pharmacy with the same limits imposed in which the pharmacy benefit manager or health carrier does not have an ownership interest. (f) A pharmacy benefit manager or health carrier must not prohibit an entity authorized to participate in the federal 340B Drug Pricing Program under section 340B of the Public Health Service Act, United States Code, title 42, chapter 6A, or a pharmacy under contract with such an entity to provide pharmacy services from participating in the pharmacy benefit manager's or health carrier's provider network. A pharmacy benefit manager or health carrier must not reimburse an entity or a pharmacy under contract with such an entity participating in the federal 340B Drug Pricing Program differently than other similarly situated pharmacies. A pharmacy benefit manager that contracts with a managed care plan or county-based purchasing plan under contract with the commissioner of human services under chapter 256B or 256L must comply with this paragraph only if the entity or contracted pharmacy can identify all claims eligible for 340B drugs at the time of initial claims submission at the point of sale. This paragraph does not preclude a pharmacy benefit manager that contracts with a managed care plan or county-based purchasing plan under contract with the commissioner of human services under chapter 256B or 256L from reimbursing an entity or pharmacy identified in this paragraph at a lower rate for any prescription drug purchased by the entity or pharmacy through the federal 340B Drug Pricing Program. History:   2019 c 39 s 7 
62W.075 THERAPEUTIC ALTERNATIVE PRESCRIPTION DRUG. A pharmacy benefit manager or health carrier must not require, or demonstrate a preference for, a pharmacy to dispense a therapeutically equivalent or therapeutically alternative drug that costs the enrollee more out-of-pocket than the prescribed drug, unless the substitution is made for medical reasons that benefit the patient. Before a substitution is made under this section, the pharmacy must obtain approval from the prescribing practitioner and must inform the enrollee of the reason for the substitution. History:   2019 c 39 s 8 
62W.076 SPECIALTY PHARMACY. A pharmacy benefit manager that contracts with a specialty pharmacy must disclose to an enrollee, upon request, the enrollee's out-of-pocket costs at the specialty pharmacy for the prescription drug referenced by the enrollee and the enrollee's out-of-pocket cost at a network retail pharmacy that is identified by the enrollee that is within the enrollee's health plan network. History:   2019 c 39 s 9 
62W.077 PREFERRED NETWORK. A pharmacy benefit manager that uses a preferred network of pharmacies must disclose to an enrollee upon request the enrollee's out-of-pocket cost at the preferred pharmacy for the prescription drug referenced by the enrollee and the enrollee's out-of-pocket cost at a nonpreferred pharmacy identified by the enrollee that is within the enrollee's health plan network. History:   2019 c 39 s 10 
62W.08 MAXIMUM ALLOWABLE COST PRICING. (a) With respect to each contract and contract renewal between a pharmacy benefit manager and a pharmacy, the pharmacy benefits manager must: (1) provide to the pharmacy, at the beginning of each contract and contract renewal, the sources utilized to determine the maximum allowable cost pricing of the pharmacy benefit manager; (2) update any maximum allowable cost price list at least every seven business days, noting any price changes from the previous list, and provide a means by which network pharmacies may promptly review current prices in an electronic, print, or telephonic format within one business day at no cost to the pharmacy; (3) maintain a procedure to eliminate products from the list of drugs subject to maximum allowable cost pricing in a timely manner in order to remain consistent with changes in the marketplace; (4) ensure that the maximum allowable cost prices are not set below sources utilized by the pharmacy benefits manager; and (5) upon request of a network pharmacy, disclose the sources utilized for setting maximum allowable cost price rates on each maximum allowable cost price list included under the contract and identify each maximum allowable cost price list that applies to the network pharmacy. A pharmacy benefit manager must make the list of the maximum allowable costs available to a contracted pharmacy in a format that is readily accessible and usable to the network pharmacy. (b) A pharmacy benefit manager must not place a prescription drug on a maximum allowable cost list unless the drug is available for purchase by pharmacies in this state from a national or regional drug wholesaler and is not obsolete. (c) Each contract between a pharmacy benefit manager and a pharmacy must include a process to appeal, investigate, and resolve disputes regarding maximum allowable cost pricing that includes: (1) a 15-business-day limit on the right to appeal following the initial claim; (2) a requirement that the appeal be investigated and resolved within seven business days after the appeal is received; and (3) a requirement that a pharmacy benefit manager provide a reason for any appeal denial and identify the national drug code of a drug that may be purchased by the pharmacy at a price at or below the maximum allowable cost price as determined by the pharmacy benefit manager. (d) If an appeal is upheld, the pharmacy benefit manager must make an adjustment to the maximum allowable cost price no later than one business day after the date of determination. The pharmacy benefit manager must make the price adjustment applicable to all similarly situated network pharmacy providers as defined by the plan sponsor. History:   2019 c 39 s 11 
62W.09 PHARMACY AUDITS. Subdivision 1. Procedure and process for conducting and reporting an audit. (a) Unless otherwise prohibited by federal requirements or regulations, any entity conducting a pharmacy audit must follow the following procedures: (1) a pharmacy must be given notice 14 days before an initial on-site audit is conducted; (2) an audit that involves clinical or professional judgment must be conducted by or in consultation with a licensed pharmacist; and (3) each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies. (b) Unless otherwise prohibited by federal requirements or regulations, for any entity conducting a pharmacy audit the following items apply: (1) the period covered by the audit may not exceed 24 months from the date that the claim was submitted to or adjudicated by the entity, unless a longer period is required under state or federal law; (2) if an entity uses random sampling as a method for selecting a set of claims for examination, the sample size must be appropriate for a statistically reliable sample. The auditing entity shall provide the pharmacy a masked list that provides a prescription number or date range that the auditing entity is seeking to audit; (3) an on-site audit may not take place during the first five business days of the month unless consented to by the pharmacy; (4) auditors may not enter the pharmacy area unless escorted where patient-specific information is available and to the extent possible must be out of sight and hearing range of the pharmacy customers; (5) any recoupment will not be deducted against future remittances until after the appeals process and both parties have received the results of the final audit; (6) a pharmacy benefit manager may not require information to be written on a prescription unless the information is required to be written on the prescription by state or federal law. Recoupment may be assessed for items not written on the prescription if: (i) additional information is required in the provider manual; or (ii) the information is required by the Food and Drug Administration (FDA); or (iii) the information is required by the drug manufacturer's product safety program; and (iv) the information in item (i), (ii), or (iii) is not readily available for the auditor at the time of the audit; and (7) the auditing company or agent may not receive payment based on a percentage of the amount recovered. This section does not prevent the entity conducting the audit from charging or assessing the responsible party, directly or indirectly, based on amounts recouped if both of the following conditions are met: (i) the plan sponsor and the entity conducting the audit have a contract that explicitly states the percentage charge or assessment to the plan sponsor; and (ii) a commission to an agent or employee of the entity conducting the audit is not based, directly or indirectly, on amounts recouped. (c) An amendment to pharmacy audit terms in a contract between a pharmacy benefit manager and a pharmacy must be disclosed to the pharmacy at least 60 days prior to the effective date of the proposed change. Subd. 2. Requirement for recoupment or chargeback. For recoupment or chargeback, the following criteria apply: (1) audit parameters must consider consumer-oriented parameters based on manufacturer listings; (2) a pharmacy's usual and customary price for compounded medications is considered the reimbursable cost unless the pricing methodology is outlined in the pharmacy provider contract; (3) a finding of overpayment or underpayment must be based on the actual overpayment or underpayment and not a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs; (4) the entity conducting the audit shall not use extrapolation in calculating the recoupment or penalties for audits unless required by state or federal law or regulations; (5) calculations of overpayments must not include dispensing fees unless a prescription was not actually dispensed, the prescriber denied authorization, the prescription dispensed was a medication error by the pharmacy, or the identified overpayment is solely based on an extra dispensing fee; (6) an entity may not consider any clerical or record-keeping error, such as a typographical error, scrivener's error, or computer error regarding a required document or record as fraud, however such errors may be subject to recoupment; (7) in the case of errors that have no actual financial harm to the patient or plan, the pharmacy benefit manager must not assess any chargebacks. Errors that are a result of the pharmacy failing to comply with a formal corrective action plan may be subject to recovery; and (8) interest may not accrue during the audit period for either party, beginning with the notice of the audit and ending with the final audit report. Subd. 3. Documentation. (a) To validate the pharmacy record and delivery, the pharmacy may use authentic and verifiable statements or records including medication administration records of a nursing home, assisted living facility, hospital, physician, or other authorized practitioner or additional audit documentation parameters located in the provider manual. (b) Any legal prescription that meets the requirements in this chapter may be used to validate claims in connection with prescriptions, refills, or changes in prescriptions, including medication administration records, faxes, e-prescriptions, or documented telephone calls from the prescriber or the prescriber's agents. Subd. 4. Appeals process. The entity conducting the audit must establish a written appeals process which must include appeals of preliminary reports and final reports. Subd. 5. Audit information and reports. (a) A preliminary audit report must be delivered to the pharmacy within 60 days after the conclusion of the audit. (b) A pharmacy must be allowed at least 45 days following receipt of the preliminary audit to provide documentation to address any discrepancy found in the audit. (c) A final audit report must be delivered to the pharmacy within 120 days after receipt of the preliminary audit report or final appeal, whichever is later. (d) An entity shall remit any money due to a pharmacy or pharmacist as a result of an underpayment of a claim within 45 days after the appeals process has been exhausted and the final audit report has been issued. Subd. 6. Disclosure to plan sponsor. Where contractually required, an auditing entity must provide a copy to the plan sponsor of its claims that were included in the audit, and any recouped money shall be returned to the plan sponsor. Subd. 7. Applicability of other laws and regulations. This section does not apply to any investigative audit that involves suspected fraud, willful misrepresentation, abuse, or any audit completed by Minnesota health care programs. Subd. 8. Definitions. For purposes of this section, "entity" means a pharmacy benefit manager or any person or organization that represents a pharmacy benefit manager. History:  2019 c 39 s 12; 2022 c 55 art 1 s 16
62W.10 SYNCHRONIZATION. (a) For purposes of this section, "synchronization" means the coordination of prescription drug refills for a patient taking two or more medications for one or more chronic conditions, to allow the patient's medications to be refilled on the same schedule for a given period of time. (b) A contract between a pharmacy benefit manager and a pharmacy must allow for synchronization of prescription drug refills for a patient on at least one occasion per year, if the following criteria are met: (1) the prescription drugs are covered under the patient's health plan or have been approved by a formulary exceptions process; (2) the prescription drugs are maintenance medications as defined by the health plan and have one or more refills available at the time of synchronization; (3) the prescription drugs are not Schedule II, III, or IV controlled substances; (4) the patient meets all utilization management criteria relevant to the prescription drug at the time of synchronization; (5) the prescription drugs are of a formulation that can be safely split into short-fill periods to achieve synchronization; and (6) the prescription drugs do not have special handling or sourcing needs that require a single, designated pharmacy to fill or refill the prescription. (c) When necessary to permit synchronization, the pharmacy benefit manager must apply a prorated, daily patient cost-sharing rate to any prescription drug dispensed by a pharmacy under this section. The dispensing fee must not be prorated, and all dispensing fees shall be based on the number of prescriptions filled or refilled. (d) Synchronization may be requested by the patient or by the patient's parent or legal guardian if the patient is under the age of 18 or is incapacitated as defined in section 524.5-102, or by the patient's health care agent as defined in chapter 145C. History:   2019 c 39 s 13 
62W.11 GAG CLAUSE PROHIBITION. (a) No contract between a pharmacy benefit manager or health carrier and a pharmacy or pharmacist shall prohibit, restrict, or penalize a pharmacy or pharmacist from disclosing to an enrollee any health care information that the pharmacy or pharmacist deems appropriate regarding the nature of treatment; the risks or alternatives; the availability of alternative therapies, consultations, or tests; the decision of utilization reviewers or similar persons to authorize or deny services; the process that is used to authorize or deny health care services or benefits; or information on financial incentives and structures used by the health carrier or pharmacy benefit manager. (b) A pharmacy or pharmacist must provide to an enrollee information regarding the enrollee's total cost for each prescription drug dispensed where part or all of the cost of the prescription is being paid or reimbursed by the employer-sponsored plan or by a health carrier or pharmacy benefit manager, in accordance with section 151.214, subdivision 1. (c) A pharmacy benefit manager or health carrier must not prohibit a pharmacist or pharmacy from discussing information regarding the total cost for pharmacy services for a prescription drug, including the patient's co-payment amount, the pharmacy's own usual and customary price for the prescription drug, the pharmacy's acquisition cost for the prescription drug, and the amount the pharmacy is being reimbursed by the pharmacy benefit manager or health carrier for the prescription drug. (d) A pharmacy benefit manager must not prohibit a pharmacist or pharmacy from discussing with a health carrier the amount the pharmacy is being paid or reimbursed for a prescription drug by the pharmacy benefit manager or the pharmacy's acquisition cost for a prescription drug. (e) A pharmacy benefit manager or health carrier must not prohibit a pharmacist or pharmacy from discussing the availability of any therapeutically equivalent alternative prescription drugs or alternative methods for purchasing the prescription drug, including but not limited to paying out-of-pocket the pharmacy's usual and customary price when that amount is less expensive to the enrollee than the amount the enrollee is required to pay for the prescription drug under the enrollee's health plan. History:  2019 c 39 s 14; 2021 c 30 art 5 s 1
62W.12 POINT OF SALE. No pharmacy benefit manager or health carrier shall require an enrollee to make a payment at the point of sale for a covered prescription drug in an amount greater than the lesser of: (1) the applicable co-payment for the prescription drug; (2) the allowable claim amount for the prescription drug; or (3) the amount an enrollee would pay for the prescription drug if the enrollee purchased the prescription drug without using a health plan or any other source of prescription drug benefits or discounts. History:   2019 c 39 s 15 
62W.13 RETROACTIVE ADJUSTMENTS. No pharmacy benefit manager shall retroactively adjust a claim for reimbursement submitted by a pharmacy for a prescription drug, unless the adjustment is a result of a: (1) pharmacy audit conducted in accordance with section 62W.09; or (2) technical billing error. History:   2019 c 39 s 16 
62W.14 PROMPT FILLING FOR SPECIALTY DRUGS. (a) A health carrier or pharmacy benefit manager that requires or provides financial incentives for enrollees to use a mail order pharmacy to fill a prescription for a specialty drug must ensure through contract and other means that the mail order pharmacy dispenses the prescription drug to the enrollee in a timely manner, such that the enrollee receives the filled prescription within seven business days of the date of transmittal to the mail order pharmacy. The health carrier or pharmacy benefit manager may grant to a mail order pharmacy an exemption from this requirement if the mail order pharmacy can document that the specialty drug was out of stock due to a delay in shipment by the specialty drug manufacturer or wholesaler. If an exemption is granted, the health carrier or pharmacy benefit manager must notify the enrollee within 24 hours of granting the exemption and, if medically necessary, must provide the enrollee with an emergency supply of the specialty drug. (b) For purposes of this section, "health carrier" includes managed care plans and county-based purchasing plans participating in a public health care program under chapter 256B or 256L, and integrated health partnerships established under section 256B.0755. History:   2019 c 39 s 17 
64B.01 FRATERNAL BENEFIT SOCIETIES. Any incorporated society, order, or supreme lodge, without capital stock, including one exempted under section 64B.38, subdivision 1, clause (2), whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work or branch system that confines its membership to any one religious denomination, having a representative form of government, and which provides benefits in accordance with this chapter, is hereby declared to be a fraternal benefit society. History:  1985 c 49 s 1; 1986 c 313 s 7
64B.02 LODGE SYSTEM. Subdivision 1. Definition. A society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws, rules, and rituals. Subordinate lodges shall be required by the laws of the society to hold regular meetings at least once every three months in furtherance of the purposes of the society. Subd. 2. Children's lodges. A society may, at its option, organize and operate lodges for children under the minimum age for adult membership. Membership and initiation in local lodges shall not be required of the children, nor shall they have a voice or vote in the management of the society. History:   1985 c 49 s 2 
64B.03 REPRESENTATIVE FORM OF GOVERNMENT. (a) A society has a representative form of government when it has a supreme governing body constituted in one of the following ways: (1) The supreme governing body is an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as may be prescribed in the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and shall not have less than two-thirds of the votes and not less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every four years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's laws. (2) The supreme governing body is a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board member may not exceed four years, except that the commissioner has the discretion to approve completion of a term of office exceeding four years where the board member completing the term was elected pursuant to clause (1). Vacancies on the board between elections may be filled in the manner prescribed by the society's laws. Those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society. (b) A society has a representative form of government when the officers of the society are elected either by the supreme governing body or by the board of directors. (c) A society has a representative form of government when only benefit members are eligible for election to the supreme governing body and the board of directors. (d) A society has a representative form of government when each voting member shall have one vote and no vote may be cast by proxy. History:  1985 c 49 s 3; 1986 c 313 s 8; 2000 c 304 s 2
64B.04 TERMS USED. For the purposes of this chapter, the following terms have the meanings given them: (a) "Benefit contract" means the agreement for provision of benefits authorized by section 64B.16, as that agreement is described in section 64B.19, subdivision 1. (b) "Benefit member" means an adult member who is designated by the laws or rules of the society to be a benefit member under a benefit contract. (c) "Certificate" means the document issued as written evidence of the benefit contract. (d) "Commissioner" means the commissioner of commerce of the state of Minnesota or a duly appointed deputy charged with the responsibility of administering the insurance laws of the state of Minnesota. (e) "Premiums" means premiums, rates, dues, or other required contributions by whatever name known, which are payable under the certificate. (f) "Laws" means the society's articles of incorporation, constitution, and bylaws, however designated. (g) "Rules" means all rules, regulations, or resolutions adopted by the supreme governing body or board of directors which are intended to have general application to the members of the society. (h) "Society" means fraternal benefit society, unless otherwise indicated. (i) "Lodge" means subordinate member units of the society, known as camps, courts, councils, branches, or by any other designation. History:   1985 c 49 s 4 
64B.05 PURPOSES AND POWERS. Subdivision 1. Purposes. A society shall operate for the benefit of members and their beneficiaries by: (1) providing benefits as specified in section 64B.16; and (2) operating for one or more social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its members, which may also be extended to others. The purposes provided for in this subdivision may be carried out directly by the society, or indirectly through subsidiary corporations or affiliated organizations which are to be operated primarily for member service. The subsidiaries authorized under section 64B.12 are to be operated primarily for investment purposes. Subd. 2. Adoption of laws and rules. Every society may adopt laws and rules for the government of the society, the admission of its members, and the management of its affairs. It may change, alter, add to, or amend such laws and rules and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society. History:  1985 c 49 s 5; 1Sp1986 c 3 art 1 s 9
64B.06 QUALIFICATIONS FOR MEMBERSHIP. Subdivision 1. Qualifications. A society shall specify in its laws or rules: (1) eligibility standards for each and every class of membership, provided that if benefits are provided on the lives of children, the minimum age for adult membership shall be set at not less than age 15 and not greater than age 21; (2) the process for admission to membership for each membership class; and (3) the rights and privileges of each membership class, provided that only benefit members may vote on the management of the insurance affairs of the society. Subd. 2. Social members. A society may also admit social members who shall have no voice or vote in the management of the insurance affairs of the society. Subd. 3. Membership rights. Membership rights in the society are personal to the member and are not assignable. History:   1985 c 49 s 6 
64B.07 LOCATION OF OFFICE, MEETINGS, COMMUNICATIONS TO MEMBERS, GRIEVANCE PROCEDURES. Subdivision 1. Location of office; meetings. The principal office of any domestic society shall be located in this state. The meetings of its supreme governing body may be held in any state, district, province, or territory where the society has at least one subordinate lodge, or in any other location as determined by the supreme governing body, and all business transacted at the meetings shall be as valid in all respects as if the meetings were held in this state. The minutes of the proceedings of the supreme governing body and of the board of directors shall be in English. Subd. 2. Communications. (a) A society may provide in its laws for an official publication in which any notice, report, or statement required by law to be given to members, including notice of election, may be published. The required reports, notices, and statements shall be printed conspicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members at the same address unless a member requests a separate copy. (b) Not later than June 1 of each year, a synopsis of the society's annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society or, in lieu thereof, the synopsis may be published in the society's official publication. Subd. 3. Grievance procedures. A society may provide in its laws or rules for grievance or complaint procedures for members. History:   1985 c 49 s 7 
64B.08 PERSONAL LIABILITY; INDEMNIFICATION; INSURANCE; ADVANCES. Subdivision 1. No personal liability. The officers and members of the supreme governing body or any subordinate body of a society shall not be personally liable for any benefits provided by a society. Subd. 2. Indemnification. A person may be indemnified and reimbursed by a society for expenses reasonably incurred by and liabilities imposed upon the person in connection with or arising out of any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or threat thereof, in which the person may be involved by reason of the fact that the person is or was a director, officer, employee, or agent of the society or of any firm, corporation, or organization which the person served in any capacity at the request of the society. A person shall not be so indemnified or reimbursed (1) in relation to any matter in the action, suit, or proceeding as to which the person shall finally be adjudged to be or have been guilty of breach of a duty as a director, officer, employee, or agent of the society, or (2) in relation to any matter in the action, suit, or proceeding, or threat thereof, which has been made the subject of a compromise settlement, unless in either such case the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that the person's conduct was unlawful. The determination whether the conduct of the person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in clause (1) or (2) may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to the action, suit, or proceeding or by a court of competent jurisdiction. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, as to the person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The foregoing right of indemnification and reimbursement shall not be exclusive of other rights to which the person may be entitled as a matter of law and shall inure to the benefit of heirs, executors, and administrators. Subd. 3. Insurance. A society may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the society, or who is or was serving at the request of the society as a director, officer, employee, or agent of any other firm, corporation, or organization against any liability asserted against the person and incurred in any such capacity or arising out of the person's status as such, whether or not the society would have the power to indemnify the person against such liability under this section. Subd. 4. Advances. If a person is made or threatened to be made a party to a proceeding, the person is entitled, upon written request to the society, to payment or reimbursement by the society of reasonable expenses, including attorneys' fees and disbursements, incurred by the person in advance of the final disposition of the proceeding, (1) upon receipt by the society of a written affirmation by the person of a good faith belief that the criteria for indemnification set forth in subdivision 2 and the bylaws of the society have been satisfied and a written undertaking by the person to repay all amounts so paid or reimbursed by the society, if it is ultimately determined that the criteria for indemnification have not been satisfied; and (2) after a determination that the facts then known to those making the determination would not preclude indemnification under this section. The written undertaking required by clause (1) is an unlimited general obligation of the person making it but need not be secured and shall be accepted without reference to financial ability to make the repayment. Subd. 5. Elimination or limitation of liability. A director's personal liability to the society, supreme governing body, or members for monetary damages for breach of fiduciary duty as a director may be eliminated or limited in the articles. The articles shall not eliminate or limit the liability of a director: (1) for any breach of the director's duty of loyalty to the society, the supreme governing body, or its members; (2) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (3) for any transaction from which the director derived an improper personal benefit; or (4) for any act or omission occurring prior to the date when the provision in the articles eliminating or limiting liability becomes effective. History:  1985 c 49 s 8; 1986 c 444; 1987 c 33 s 1,2
64B.09 WAIVER. The laws of the society may provide that no subordinate body, nor any of its subordinate officers or members, may waive any of the provisions of the laws of the society. The provision is binding on the society and every member and beneficiary of a member. History:   1985 c 49 s 9 
64B.10 ORGANIZATION. Subdivision 1. Regulation. A domestic society organized on or after August 1, 1985 shall be formed according to subdivisions 2 to 6. Subd. 2. Formation. Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society, may make, sign, and acknowledge before some officer competent to take acknowledgment of deeds, articles of incorporation in which shall be stated: (1) the proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing; (2) the purposes for which it is being formed and the mode in which its corporate powers are to be exercised. These purposes shall not include more liberal powers than are granted by this chapter; (3) the names and residences of the incorporators and the names, residences, and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority. Subd. 3. Filing of articles and documents. Articles of incorporation, duly certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the commissioner, who may require such further information as the commissioner deems necessary. The bond with sureties approved by the commissioner shall be in such amount, not less than $300,000 nor more than $1,500,000, as required by the commissioner. All documents filed are to be in English. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the commissioner shall so certify, retain and file the articles of incorporation, and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members as hereinafter provided. Subd. 4. Initial solicitations and qualifications. No preliminary certificate of authority granted under this section shall be valid after one year from its date or after such further period, not exceeding one year, as may be authorized by the commissioner upon cause shown, unless the 500 applicants hereinafter required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to do business. Subd. 5. Time for completing organization. Upon receipt of a preliminary certificate of authority from the commissioner, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall issue to each applicant a receipt for the amount collected. No society shall incur any liability other than for the return of such advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any benefit to any person until: (1) actual bona fide applications for benefits have been secured on not less than 500 applicants, and any necessary evidence of insurability has been furnished to and approved by the society; (2) at least ten subordinate lodges have been established into which the 500 applicants have been admitted; (3) there has been submitted to the commissioner, under oath of the president or secretary, or corresponding officer of the society, a list of applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted, and premiums therefor; and (4) it shall have been shown to the commissioner, by sworn statement of the treasurer, or corresponding officer of such society, that at least 500 applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least $150,000. Advance premiums shall be held in trust during the period of organization and if the society has not qualified for a certificate of authority within one year, the premiums shall be returned to the applicants. Subd. 6. Certificate of compliance; certified copy as evidence. The commissioner may make such examination and require such further information as the commissioner deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the commissioner shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to this chapter. The certificate of authority is prima facie evidence of the existence of the society at the date of the certificate. The commissioner shall cause a record of the certificate of authority to be made. A certified copy of the record may be given in evidence with like effect as the original certificate of authority. Subd. 7. Corporate powers retained. An incorporated society authorized to transact business in this state August 1, 1985 shall not be required to reincorporate. History:   1985 c 49 s 10 
64B.11 AMENDMENTS TO LAWS. Subdivision 1. Amendment procedure. A domestic society may amend its laws in accordance with the provisions thereof by action of its supreme governing body at any regular or special meeting thereof or, if its laws so provide, by referendum. The referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members, or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum shall be adopted unless, within six months from the date of submission, a majority of the members voting shall have signified their consent to the amendment by one of the methods herein specified. Subd. 2. Approval of amendments. No amendment to the laws of any domestic society shall take effect unless approved by the commissioner who shall approve the amendment if the commissioner finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects, and purposes of the society. Unless the commissioner disapproves the amendment within 60 days after the filing of same, the amendment shall be considered approved. The approval or disapproval by the commissioner shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. In case the commissioner disapproves the amendment, the reasons therefor shall be stated in the written notice. Subd. 3. Publication of amendments. Within 90 days from the approval thereof by the commissioner, all amendments, or a synopsis thereof, shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of any officer of the society or of anyone authorized by it to mail any amendments or synopsis thereof, stating facts which show that same have been duly addressed and mailed, shall be prima facie evidence that the amendments or synopsis thereof, have been furnished the addressee. Subd. 4. Filing of amendments by foreign or alien society. Every foreign or alien society authorized to do business in this state shall be subject to the requirements of section 72A.061, subdivision 2, as to amendments or additions to its bylaws. Subd. 5. Certified copies of amendments. Printed copies of the laws as amended, certified by the secretary or corresponding officer of the society, shall be prima facie evidence of their legal adoption. History:  1985 c 49 s 11; 1987 c 337 s 86
64B.12 INSTITUTIONS. A society may create, maintain, and operate, or may establish organizations to operate, not for profit institutions to further the purposes permitted by section 64B.05, subdivision 1, clause (2). The institutions may furnish services free or at a reasonable charge. Any real or personal property owned, held, or leased by the society for this purpose shall be reported in every annual statement. History:   1985 c 49 s 12 
64B.13 REINSURANCE. (a) A domestic society may, by a reinsurance agreement, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state, or if not so authorized, one which is approved by the commissioner, but no such society may reinsure substantially all of its insurance in force without the written permission of the commissioner. It may take credit for the reserves on the ceded risks to the extent reinsured, but no credit shall be allowed as an admitted asset or as a deduction from liability to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after August 1, 1985, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society. (b) Notwithstanding the limitation in paragraph (a), a society may reinsure the risks of another society in a consolidation or merger approved by the commissioner under section 64B.14, or under such other circumstances as approved by the commissioner including reinsurance of an affiliated insurance company. History:  1985 c 49 s 13; 2006 c 204 s 9
64B.14 CONSOLIDATIONS AND MERGERS. Subdivision 1. Requirements. A domestic society may consolidate or merge with any other society by complying with the provisions of this section. It shall file with the commissioner: (1) a certified copy of the written contract containing the terms and conditions of the consolidation or merger; (2) a sworn statement by the president and secretary, or corresponding officers of each society, showing the financial condition thereof on a date fixed by the commissioner but not earlier than December 31 next preceding the date of the contract; (3) a certificate of the officers, duly verified by their respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme governing body of each society, the vote being conducted at a regular or special meeting of each such body, or, if the society's laws so permit, by mail; and (4) evidence that at least 60 days prior to the action of the supreme governing body of each society, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official publication of each society. Subd. 2. Approval by commissioner. If the commissioner finds that the contract is in conformity with this section, that the financial statements are correct and that the consolidation or merger is just and equitable to the members of each society, the commissioner shall approve the contract and issue a certificate to such effect. Upon approval, the contract shall be in full force and effect unless any society which is a party to the contract is incorporated under the laws of any other state or territory. In the event the consolidation or merger shall not become effective unless and until it has been approved as provided by the laws of the state or territory and a certificate of approval filed with the commissioner of this state or, if the laws of the state or territory contain no such provision, then the consolidation or merger shall not become effective unless and until it has been approved by the commissioner of such state or territory and a certificate of the approval filed with the commissioner of this state. Subd. 3. Payment of expenses. (a) All necessary and actual expenses and compensation incident to all the proceedings provided hereby shall be paid as provided by the contract of merger, consolidation, or reinsurance. An itemized statement of all these expenses shall be filed with the commissioner or commissioners, as the case may be, subject to approval, and when approved the same shall be binding on the parties. (b) No brokerage or commission shall be included in the expenses and compensation or shall be paid to any person by either of the parties to the contract in connection with the negotiation therefor, or execution thereof. (c) No compensation shall be paid to any officer or employee of either of the parties to the contract for, directly or indirectly, aiding in effecting the contract of merger, consolidation, or reinsurance. (d) Except as fully expressed in the contract of merger, consolidation, or reinsurance, or the approved itemized statement of expenses, as approved by the commissioner or commissioners, as the case may be, no compensation shall be paid to any person and no officer or employee of the state shall receive any compensation, directly or indirectly, for in any manner aiding, promoting, or assisting in any merger, consolidation, or reinsurance. Subd. 4. Effect of consolidation or merger. Upon the consolidation or merger becoming effective, all the rights, franchises, and interests of the consolidated or merged societies in and to every species of property, real, personal, or mixed, and things in action thereunto belonging shall be vested in the society resulting from or remaining after the consolidation or merger without any other instrument, except that conveyances of real property may be evidenced by proper deeds, and the title to any real estate or interest therein, vested under the laws of this state in any of the societies consolidated or merged, shall not revert or be in any way impaired by reason of the consolidation or merger, but shall vest absolutely in the society resulting from or remaining after the consolidation or merger. Subd. 5. Affidavit of officer. The affidavit of any officer of the society or of anyone authorized by it to mail any notice or document, stating that the notice or document has been duly addressed and mailed, shall be prima facie evidence that the notice or document has been furnished the addressees. History:   1985 c 49 s 14 
64B.15 CONVERSION OF FRATERNAL BENEFIT SOCIETY INTO MUTUAL LIFE INSURANCE COMPANY. A domestic fraternal benefit society may be converted and licensed as a mutual life insurance company by compliance with all the financial requirements for a mutual life insurance company. A plan of conversion shall be prepared in writing by the board of directors setting forth in full the terms and conditions of conversion. The affirmative vote of two-thirds of all members of the supreme governing body at a regular or special meeting shall be necessary for the approval of the plan. No conversion shall take effect unless and until approved by the commissioner who may give the approval if the commissioner finds that the proposed change is in conformity with the requirements of law and not prejudicial to the certificate holders of the society. History:   1985 c 49 s 15 
64B.16 BENEFITS. Subdivision 1. Scope. A society may provide the following contractual benefits on an individual or nongroup basis: (1) death benefits; (2) endowment benefits; (3) annuity benefits; (4) temporary or permanent disability benefits; (5) hospital, medical, or nursing benefits; (6) monument or tombstone benefits to the memory of deceased members; and (7) such other benefits as authorized for life insurers and which are not inconsistent with this chapter. Subd. 2. Persons eligible for benefits; children's benefits. A society shall specify in its rules those persons who may be issued, or covered by, the contractual benefits in subdivision 1, consistent with providing benefits to members and their dependents. A society may provide benefits on the lives of children under the minimum age for adult membership upon application of an adult person. Subd. 3. Benefit authority continued. Subdivision 1, clauses (1) to (6), continues the benefit authority provided in Minnesota Statutes 1984, chapter 64A. Subdivision 1, clause (7), provides that the current parity between the types of products that fraternals and other life insurers can provide be maintained in the future. Under this provision, any new product authorities granted to life insurers will also be available to fraternals if the new products are not inconsistent with fraternal code provisions, such as membership, and representative forms of government. History:   1985 c 49 s 16 
64B.17 BENEFICIARIES. Subdivision 1. Change; eligibility; rights. The owner of a benefit contract may at all times change the beneficiary or beneficiaries in accordance with the laws or rules of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or rules, limit the scope of beneficiary designations and shall provide that no revocable beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract. Subd. 2. Support and other payments. The member may at any time, by written instrument, authorize the society to provide and pay for the support, care, medical and surgical treatment, and funeral of a member and deduct the amount so paid, with legal interest, from the net reserve to the credit of the member's certificate or from the amount otherwise payable under the certificate to the beneficiary, or the member may, at any time, designate the society as beneficiary and, in such case, the society shall use this reserve or amount to the extent necessary for the purpose aforesaid. Subd. 3. Absence of designation. If, at the death of any person insured under a benefit contract, there is no lawful beneficiary to whom the proceeds shall be payable, the amount of the benefit, except to the extent that funeral benefits may be paid, shall be payable to the personal representative of the deceased insured, provided that if the owner of the certificate is other than the insured, the proceeds shall be payable to the owner. History:   1985 c 49 s 17 
64B.18 BENEFITS NOT ATTACHABLE. The cash value, proceeds, or benefits under any matured or unmatured life insurance or annuity contract issued before, on, or after June 2, 1987, by any society authorized to do business under this chapter, is exempt from attachment, garnishment, execution, or other legal process to the extent provided by section 550.37, subdivisions 10, 23, and 24. History:  1985 c 49 s 18; 1987 c 337 s 87; 1987 c 384 art 1 s 3
64B.19 BENEFIT CONTRACT. Subdivision 1. Certificate. Every society authorized to do business in this state shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided thereby. The certificate, together with any riders or endorsements attached to it, the laws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant, and all amendments to each thereof, shall constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate shall so state. A copy of the application for insurance and declaration of insurability, if any, shall be endorsed upon or attached to the certificate. All statements on the application shall be representations and not warranties. Any waiver of this provision shall be void. Subd. 2. Amendments to laws. Any changes, additions, or amendments to the laws of the society duly made or enacted subsequent to the issuance of the certificate, shall bind the owner and the beneficiaries, and shall govern and control the benefit contract in all respects the same as though the changes, additions, or amendments had been made prior to and were in force at the time of the application for insurance, except that no change, addition, or amendment shall destroy or diminish benefits that the society contracted to give the owner as of the date of issuance. Subd. 3. Minor bound by certificate. A person upon whose life a benefit contract is issued prior to attaining the age of majority shall be bound by the terms of the application and certificate and by all the laws and rules of the society to the same extent as though the age of majority had been attained at the time of the application. Subd. 4. Extra assessments. A society shall provide in its laws that if its reserves as to all or any class of certificates become impaired, its board of directors or corresponding body may require that there shall be paid by the owner to the society the amount of the owner's equitable proportion of such deficiency as ascertained by its board, and that if the payment is not made either (1) it shall stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates; or (2) in lieu of or in combination with (1), the owner may accept a proportionate reduction in benefits under the certificate. The society may specify the manner of the election and which alternative is to be presumed if no election is made. Subd. 4a. Notice of extra assessments. In the event that a society intends to make extra assessments, as provided in subdivision 4, it shall provide notice of the assessments it plans to make to the commissioner, and to the insurance regulator of its state of domicile if it is a foreign society, at least 90 days before the effective date of the assessments. Subd. 4b. Disapproval of extra assessments. Within 60 days of filing, the commissioner may disapprove the extra assessment of a domestic society that has had a fraternal action level event under section 64B.42, or a fraternal authorized control level event under section 64B.43, if the commissioner determines that the assessment was not duly adopted, is not in the best interests of the benefit members, or does not materially improve the long-term viability of the society. The commissioner may approve an earlier effective date for the extra assessment. Subd. 5. Certified copy as evidence. Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof. Subd. 6. Filing of certificates; contents. No certificate shall be delivered or issued for delivery in this state unless a copy of the form has been filed with the commissioner in the manner provided for like policies issued by life insurers in this state. Every life, accident, health, or disability insurance certificate and every annuity certificate issued on or after one year from August 1, 1985 shall meet the standard contract provision requirements not inconsistent with this chapter for like policies issued by life insurers in this state, except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate shall also contain a provision stating the amount of premiums which are payable under the certificate and a provision reciting or setting forth the substance of any sections of the society's laws or rules in force at the time of issuance of the certificate which, if violated, will result in the termination or reduction of benefits payable under the certificate. If the laws of the society provide for expulsion or suspension of a member, the certificate shall also contain a provision that any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership or insurance, shall have the privilege of maintaining the certificate in force by continuing payment of the required premium. Subd. 7. Ownership of certificates. Benefit contracts issued on the lives of persons below the society's minimum age for adult membership may provide for transfer of control or ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer, and may provide in all other respects for the regulation, government, and control of such certificates and all rights, obligations, and liabilities incident thereto and connected therewith. Ownership rights prior to the transfer shall be specified in the certificate. Subd. 8. Assignment of certificates. A society may specify the terms and conditions on which benefit contracts may be assigned. Subd. 9. Payment to welfare recipients. No society authorized to do business in this state which provides or pays for any health care benefits shall issue any certificate which contains any provision denying or reducing benefits because services are rendered to a certificate holder or beneficiary who is eligible for or receiving medical assistance pursuant to chapter 256B or services pursuant to section 252.27; 260B.331, subdivision 2; 260C.331, subdivision 2; or 393.07, subdivision 1 or 2. Subd. 10. Disability offset prohibited. No certificate, contract, or other evidence of coverage entered into, issued, amended, renewed, or delivered on or after January 1, 1976, shall contain any provision offsetting, or in any other manner reducing, any benefit to a member or other beneficiary by the amount of, or in any proportion to any increase in disability benefits received or receivable under the Social Security Act, United States Code, title 42, section 301 et seq., as amended subsequent to the date of commencement of the benefit. History:  1985 c 49 s 19; 1999 c 139 art 4 s 2; 2010 c 275 art 2 s 1; 2018 c 175 s 2,3
64B.20 NONFORFEITURE BENEFITS, CASH SURRENDER VALUES, CERTIFICATE LOANS, AND OTHER OPTIONS. Subdivision 1. Prior certificates. For certificates issued prior to one year after August 1, 1985, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall comply with the provisions of law applicable immediately prior to August 1, 1985. Subd. 2. Future certificates. For certificates issued on or after one year from August 1, 1985 for which reserves are computed on the Commissioner's 1941 Standard Ordinary Mortality Table, the Commissioner's 1941 Standard Industrial Table, the Commissioner's 1958 Standard Ordinary Mortality Table, or the Commissioner's 1980 Standard Mortality Table, or any more recent table made applicable to life insurers, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall not be less than the corresponding amount ascertained in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits based upon such tables. History:   1985 c 49 s 20 
64B.21 INVESTMENTS. A society shall invest its funds only in investments authorized by the laws of this state for the investment of assets of life insurers and subject to the limitations thereon. Any foreign or alien society permitted or seeking to do business in this state that invests its funds in accordance with the laws of the state, district, territory, country, or province in which it is incorporated, shall be held to meet the requirements of this section for the investment of funds. History:   1985 c 49 s 21 
64B.22 FUNDS. Subdivision 1. Assets. All assets shall be held, invested, and disbursed for the use and benefit of the society and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportionment on the surrender of any part thereof, except as provided in the benefit contract. Subd. 2. Special funds. A society may create, maintain, invest, disburse, and apply any special fund or funds necessary to carry out any purpose permitted by the laws of the society. Subd. 3. Separate accounts. A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of law regulating life insurers establishing such accounts and issuing such contracts. To the extent the society deems it necessary in order to comply with any applicable federal or state laws, or any rules issued thereunder, the society may adopt special procedures for the conduct of the business and affairs of a separate account, may, for persons having beneficial interests therein, provide special voting and other rights, including without limitation special rights and procedures relating to investment policy, investment advisor services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account, and may issue contracts on a variable basis to which section 64B.19, subdivisions 2 and 4 shall not apply. Subd. 4. Authority of fraternal benefit societies clarified. Subdivision 3 clarifies the authority of a fraternal benefit society to establish separate accounts, and to provide that the open contract and maintenance of solvency provisions may be deleted from contracts issued on a variable basis if so required to be consistent with other state or federal laws regulating variable contracts. The establishment of a separate account for variable products may be difficult to integrate into a society's existing mechanisms of representative form of government, so the statute emphasizes the care that must be taken in the decision by requiring that the supreme governing body authorize the establishment of the account. History:   1985 c 49 s 22 
64B.23 EXEMPTIONS. Subdivision 1. Application of chapter. Except as herein provided, the societies shall be governed exclusively by this chapter and shall be exempt from all provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose, and no law hereafter passed shall apply to them unless they be expressly designated therein. Subd. 2. Domestic and foreign societies. All provisions of this chapter, except as otherwise provided, shall be taken and construed as applying to both domestic and foreign societies. Subd. 3. Application of certain sections. The provisions of sections 61A.39 to 61A.50 shall not apply to fraternal benefit societies nor shall anything therein be construed as governing or in any way regulating these societies. History:   1985 c 49 s 23 
64B.24 TAXATION. Fraternal benefit societies are declared to be charitable institutions, and the property held and used for lodge purposes, and the funds of these societies shall be exempt from taxation under the general tax or revenue laws of this state, except that the real estate of the society shall be taxable. Insurance premiums paid to a fraternal benefit society are exempt from the taxes imposed under chapter 297I. History:  1985 c 49 s 24; 2000 c 394 art 2 s 18
64B.25 VALUATION. Subdivision 1. Prior certificates. Standards of valuation for certificates issued prior to one year after August 1, 1985 shall be those provided by the laws applicable immediately prior to August 1, 1985. Subd. 2. Future certificates. The minimum standards of valuation for certificates issued on or after one year from August 1, 1985 shall be based on the following tables: (1) For certificates of life insurance: The Commissioner's 1941 Standard Ordinary Mortality Table, the Commissioner's 1941 Standard Industrial Mortality Table, the Commissioner's 1958 Standard Ordinary Mortality Table, the Commissioner's 1980 Standard Ordinary Mortality Table, or any more recent table made applicable to life insurers; (2) For annuity and pure endowment certificates, total and permanent disability benefits, accidental death benefits, and noncancelable accident and health benefits: Such tables as are authorized for use by life insurers in this state. All of the above shall be under valuation methods and standards (including interest assumptions) in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits. Subd. 3. Other standards. The commissioner may accept other standards for valuation if the commissioner finds that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard herein prescribed. The commissioner may vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in this state. Subd. 4. Excess reserves. Any society, with the consent of the commissioner of the state of domicile of the society and under the conditions, if any, that the commissioner may impose, may establish and maintain reserves on its certificates in excess of the reserves required thereunder, but the contractual rights of any benefit member shall not be affected thereby. History:  1985 c 49 s 25; 1986 c 444
64B.26 REPORTS. Reports shall be filed in accordance with the provisions of this section. Every society transacting business in this state shall annually, on or before the first day of March, unless for cause shown such time has been extended by the commissioner, file with the commissioner a true statement of its financial condition, transactions, and affairs for the preceding calendar year. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner. As part of the annual statement herein required, each society shall, on or before the first day of March, file with the commissioner a valuation of its certificates in force on December 31 last preceding. The commissioner of insurance may, for cause shown, extend the time for filing the valuation for not more than two calendar months. The valuation shall be done in accordance with the standards specified in section 64B.25. The valuation and underlying data shall be certified by a qualified actuary or, at the expense of the society, verified by the actuary of the department of insurance of the state of domicile of the society. A society neglecting to file the annual statement in the form and within the time provided by this section shall forfeit $100 for each day during which the neglect continues, and, upon notice by the commissioner to that effect, its authority to do business in this state shall cease while the default continues. History:  1985 c 49 s 26; 1986 c 444
64B.27 ANNUAL LICENSE. Societies that are now authorized to transact business in this state may continue this business until the first day of June next succeeding August 1, 1985. The authority of the societies and all societies hereafter licensed, may thereafter be renewed annually, subject to section 60A.13, subdivisions 1, 5, 6, and 7. However, a license so issued shall continue in full force and effect until the new license is issued or specifically refused. A duly certified copy or duplicate of the license is prima facie evidence that the licensee is a fraternal benefit society within the meaning of this chapter. History:  1985 c 49 s 27; 1987 c 337 s 88
64B.28 EXAMINATION OF SOCIETIES; NO ADVERSE PUBLICATIONS. Subdivision 1. Procedure. The commissioner, or any person the commissioner may appoint, may examine any domestic, foreign, or alien society transacting or applying for admission to transact business in this state in the same manner as authorized for examination of domestic, foreign, or alien insurers. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurers shall also be applicable to the examination of societies. Subd. 2. Expense. The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the commissioner. History:  1985 c 49 s 28; 1986 c 444
64B.29 FOREIGN OR ALIEN SOCIETY; ADMISSION. No foreign or alien society shall transact business in this state without a license issued by the commissioner. Any society desiring admission to this state shall comply substantially with the requirements and limitations of this chapter applicable to domestic societies. A society may be licensed to transact business in this state upon filing with the commissioner: (1) a duly certified copy of its articles of incorporation; (2) a copy of its bylaws, certified by its secretary or corresponding officer; (3) a power of attorney to the commissioner as prescribed in section 64B.35; (4) a statement of its business under oath of its president and secretary or corresponding officers in a form prescribed by the commissioner, duly verified by an examination made by the supervising insurance official of its home state or other state, territory, province, or country, satisfactory to the commissioner of this state; (5) certification from the proper official of its home state, territory, province, or country that the society is legally incorporated and licensed to transact business therein; (6) copies of its certificate forms; (7) such other information as the commissioner may deem necessary and upon a showing that its assets are invested in accordance with the provisions of this chapter. History:   1985 c 49 s 29 
64B.30 DOMESTIC ASSOCIATIONS; EXAMINATION; REHABILITATION; DISSOLUTION. Subdivision 1. Visitation and examination. The commissioner, or any person the commissioner may appoint, shall have the power of visitation and examination into the affairs of any domestic society. The commissioner shall conduct an examination at least as often as is required in section 60A.031, subdivision 1. The commissioner may: (1) employ assistance for the purposes of examination and the commissioner, or any person the commissioner may appoint, shall have free access to any books, papers, and documents that relate to the business of the association; and (2) summon and qualify as witnesses, under oath, and examine its officers, agents, and employees, or other persons, in relation to the affairs, transactions, and condition of the association. Subd. 2. Conditions. Wherever the commissioner is satisfied that any of the conditions exist as stated in chapter 60B, the commissioner may proceed as provided therein. Subd. 3. Voluntary dissolution. Upon application to the commissioner, a domestic society may request that it be dissolved and that its existence be terminated. Such application shall demonstrate that the applicant has satisfied its members' policy obligations or that it has transferred such obligations to another society, domestic or foreign, by means of assumption or bulk reinsurance or otherwise, that the applicant's supreme governing body has approved such termination and dissolution and that the application includes such other information that the commissioner requires. Any limitation in section 64B.13 related to reinsurance by a domestic society with another society shall not apply to reinsurance entered into in conjunction with the transfer of member policy obligations as a part of a voluntary dissolution. Upon the approval of the application by the commissioner, the society shall be deemed dissolved and its existence terminated upon the date set forth in the application. History:  1985 c 49 s 30; 1986 c 444; 2000 c 483 s 18; 2005 c 118 s 11
64B.31 SUSPENSION, REVOCATION, OR REFUSAL OF LICENSE OF FOREIGN OR ALIEN SOCIETY. Subdivision 1. Grounds for revocation. When the commissioner upon investigation finds that a foreign or alien society transacting or applying to transact business in this state: (1) has exceeded its powers; (2) has failed to comply with any of the provisions of this chapter; (3) is not fulfilling its contracts in good faith; or (4) is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public, the commissioner shall notify the society of the deficiency or deficiencies and state in writing the reasons for dissatisfaction. The commissioner shall at once issue a written notice to the society requiring that the deficiency or deficiencies which exist are corrected. After the notice the society shall have a 30-day period in which to comply with the commissioner's request for correction, and if the society fails to comply the commissioner shall notify the society of the findings of noncompliance and require the society to show cause on a date named why its license should not be suspended, revoked, or refused. If on the date the society does not present good and sufficient reason why its authority to do business in this state should not be suspended, revoked, or refused, the commissioner may suspend or refuse the license of the society to do business in this state until satisfactory evidence is furnished to the commissioner that the suspension or refusal should be withdrawn or the commissioner may revoke the authority of the society to do business in this state. Subd. 2. Continuance of contracts. Nothing contained in this section shall be taken or construed as preventing any society from continuing in good faith all contracts made in this state during the time the society was legally authorized to transact business herein. History:  1985 c 49 s 31; 1986 c 444
64B.32 INJUNCTION. No application or petition for injunction against any domestic, foreign, or alien society, or lodge thereof, shall be recognized in any court of this state unless made by the attorney general upon request of the commissioner. History:   1985 c 49 s 32 
64B.33 LICENSING OF AGENTS. Agents of societies shall be licensed in accordance with the provisions of chapters 60A and 60K regulating the licensing, revocation, suspension, or termination of license of resident and nonresident agents, except as otherwise provided in section 60K.35. History:  1985 c 49 s 33; 1992 c 564 art 3 s 24; 2001 c 117 art 2 s 13
64B.34 UNFAIR METHODS OF COMPETITION AND UNFAIR AND DECEPTIVE ACTS AND PRACTICES. Every society authorized to do business in this state shall be subject to the provisions of chapter 72A relating to prohibitions and penalties in general and the regulation of trade practices; provided, however, that nothing in those provisions shall be construed as applying to or affecting the right of any society to determine its eligibility requirements for membership, or be construed as applying to or affecting the offering of benefits exclusively to members or persons eligible for membership in the society by a subsidiary corporation or affiliated organization of the society. History:   1985 c 49 s 34 
64B.35 SERVICE OF PROCESS. Subdivision 1. Appointment of commissioner as attorney. Every society authorized to do business in this state shall appoint in writing the commissioner and each successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding against it shall be served, and shall agree in writing that any lawful process against it which is served on the attorney shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of the appointment, certified by the commissioner, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted. Subd. 2. Service. Service under this section shall be made in compliance with section 45.028, subdivision 2. No service shall require a society to file its answer, pleading, or defense in less than 30 days from the date of mailing the copy of the service to a society. Legal process shall not be served upon a society except in the manner herein provided. History:  1985 c 49 s 35; 1992 c 564 art 2 s 5
64B.36 REVIEW. All decisions and findings of the commissioner made under the provisions of this chapter shall be subject to review by proper proceedings in any court of competent jurisdiction in this state. History:   1985 c 49 s 36 
64B.37 PENALTIES. Subdivision 1. Violations generally. Any person violating the provisions of section 64B.14, subdivisions 2 and 3, shall be guilty of a felony; and, upon conviction, liable to a fine of not more than $10,000, or to imprisonment for not more than five years, or to both fine and imprisonment. Subd. 2. False or fraudulent statements or representations. Any person, officer, member, or examining physician, who knowingly or willfully makes any false or fraudulent statement or representation in, or with reference to, any application for membership for the purpose of obtaining money from or benefit in any society transacting business under this chapter is guilty of a misdemeanor: (1) any person who willfully makes a false statement of any material fact or thing in a sworn statement as to the death or disability of a certificate holder in any such society, for the purpose of procuring payment of a benefit named in the certificate of such holder, and any person who willfully makes any false statement and any verified report or declaration under oath, required or authorized under this chapter, is guilty of perjury and shall be proceeded against and punished as provided by the statutes of this state in relation to the crime of perjury; (2) any person who solicits membership for, or in any manner assists in procuring membership in, any society not licensed to do business in this state, or who solicits membership for or in any manner assists in procuring membership in, any such society not authorized to do business in this state, is guilty of a misdemeanor; (3) any society, or any officer, agent, or employee thereof, neglecting, refusing to comply with, or violating, any of the provisions of this chapter, the penalty for which neglect, refusal, or violation is not specified in this section, shall be fined not more than $1,000. History:  1985 c 49 s 37; 1Sp1986 c 3 art 1 s 10; 1987 c 329 s 21; 2005 c 10 art 3 s 4
64B.38 CERTAIN ORGANIZATIONS EXEMPT. Subdivision 1. Application of chapter. Nothing contained in this chapter shall be construed to affect or apply to: (1) grand or subordinate lodges of Masons, Odd Fellows, Elks, or Knights of Pythias, exclusive of the insurance branch of the supreme lodge of Knights of Pythias, or to similar orders which do not issue insurance certificates; (2) to associations which admit to membership only persons engaged in one or more hazardous occupations, in the same or similar lines of business; (3) to local lodges of an association which was doing business in this state at the time of the enactment of Laws 1907, chapter 345, that provide death benefits not exceeding $600 to any one person, or disability benefits not exceeding $600 in any one year to any one person, or both; (4) to any contracts or reinsurance of or between such local lodges of such associations now doing business on such plan in this state; (5) to domestic associations which limit their membership to the employees of a particular city or town, designated firm, business house, or corporation; (6) to domestic lodges, orders, or associations of a purely religious, charitable, and benevolent description, which do not operate with a view to profit, and which do not provide for a death benefit of more than $100, or for disability benefits of more than $150 to any one person in any one year; or (7) to any domestic lodge, order, or association which was incorporated under the laws of this state prior to 1917 and has been doing business in this state since incorporation and which now has less than $4,000 in cash or in securities acceptable to the commissioner and which has agreed in its constitution or bylaws to pay $300 as death benefits and $200 as funeral expenses, and which does not operate with a view to profit and which shall hereafter pay no funeral expenses and pay not more than $300 as death benefits, and shall hereafter collect from its members, at their then attained ages, regular payments or assessments not lower than those required by the National Fraternal Congress table of mortality, with interest at four percent per annum; and save and except as in this section otherwise specifically modified, limited, or qualified that any such domestic order or association which has more than 500 members, and provides for death or disability benefits, and any such domestic lodge, order, or association which issues to any person a certificate providing for the payment of benefits shall not be exempt by the provisions of this section, but shall comply with the requirements of this chapter. All foreign associations transacting business in this state shall comply with the provisions of section 64B.35. Subd. 2. Aid associations. Any aid association confining its membership to one religious denomination, not operating for profit, and not charging stipulated premiums, which has been so operating in this state for more than 30 years and which pays death benefits not exceeding $2,000 in any one case, shall not be subject to the insurance laws of this state. Subd. 3. Information furnished commissioner. The commissioner may require from any association such information as will enable the commissioner to determine whether the association is exempt from the provisions of this chapter. No association which is exempt by the provisions of this section from the requirements of this chapter shall give or allow, or promise to give or allow, to any person any compensation for procuring new members. History:  1985 c 49 s 38; 1986 c 444
64B.39 BENEFICIARY ASSOCIATIONS. Subdivision 1. Definitions. "Beneficiary association" means a corporation, society, or voluntary association heretofore organized and now existing and carried on for the sole benefit of its members and their families, relatives, or dependents, but not for profit, to insure the lives of its members only upon the whole life assessment plan, so-called, and in which organization admission to membership by a vote of the members or some governing body thereof, is a prerequisite to being entitled to such relief or policy of insurance, and which association sells neither endowments nor annuities. Subd. 2. Benefits. Any beneficiary association may make provisions for the payment of benefits in case of sickness, or temporary or permanent physical disability, as a result of disease, accident, or age exceeding 70 years, and may also provide for the payment of funeral expenses of a member not exceeding $250; in any case, all of these benefits to be paid, subject to compliance by its members with its constitution and bylaws, out of funds derived from assessments and dues collected from its members. Subd. 3. Eligible beneficiaries. Payments of death benefits shall be made only to the families, heirs, blood relatives, adopted children, fiance or fiancee of the member, or persons dependent upon the member, or, when the certificate of membership may so provide, the executor or administrator of the estate of the member in trust for the person or persons above mentioned as may be designated in the certificate. Any member who, by reason of old age, or other disability, is dependent for support, in whole or in part, upon another, whether or not such other stands in the above relationship to the member, may, with the consent of the association, and under regulations it prescribes, designate the person upon whom the member is so dependent as a beneficiary under the certificate; and, in that case, the death benefits shall be paid according to this designation. Subd. 4. Reserve; taxation. Every association may create and maintain a reserve fund for that purpose and shall be held to be an institution of public charity, and shall be exempt from payment of any taxes for state, county, or municipal purposes, except that the real estate of the association shall be taxed as other real estate in the state. Subd. 5. Law applicable. The beneficiary society or association shall be governed by the provisions of this chapter not inconsistent with this section and be excluded from all provisions of the insurance laws of this state to the same extent as fraternal benefit societies. History:  1985 c 49 s 39; 1986 c 444; 1992 c 564 art 1 s 54
64B.40 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 64B.40 to 64B.48, the terms defined in this section have the meanings given them. Subd. 2. Adjusted risk-based capital report. "Adjusted risk-based capital report" means a risk-based capital report that has been adjusted by the commissioner according to section 64B.41, subdivision 3. Subd. 3. Corrective order. "Corrective order" means an order issued by the commissioner specifying corrective actions that the commissioner has determined are required. Subd. 4. NAIC. "NAIC" means the National Association of Insurance Commissioners. Subd. 5. Negative trend. "Negative trend" means, with respect to a society, negative trend over a period of time, as determined according to the "trend test calculation" included in the risk-based capital instructions. Subd. 6. Risk-based capital instructions. "Risk-based capital instructions" means the risk-based capital report including risk-based capital instructions adopted by the NAIC, as those risk-based instructions may be amended by the NAIC from time to time according to the procedures adopted by the NAIC. Subd. 7. Risk-based capital level. "Risk-based capital level" means a fraternal action level risk-based capital or fraternal authorized control level risk-based capital where: (1) "fraternal action level risk-based capital" means the product of 2.0 and its authorized control level risk-based capital; and (2) "fraternal authorized control level risk-based capital" means the number determined under the risk-based capital formula according to the risk-based capital instructions. Subd. 8. Risk-based capital plan. "Risk-based capital plan" means a comprehensive financial plan containing the elements specified in section 64B.42. If the commissioner rejects the risk-based capital plan, and it is revised by the society, with or without the commissioner's recommendation, the plan must be called the "revised risk-based capital plan." Subd. 9. Risk-based capital report. "Risk-based capital report" means the report required in section 64B.41. Subd. 10. Society. "Society" means a fraternal benefit society that is admitted to do business in this state under this chapter. Subd. 11. Total adjusted capital. "Total adjusted capital" means the sum of: (1) a society's statutory capital and surplus as determined in accordance with statutory accounting applicable to the annual statement required to be filed under section 60A.13; and (2) other items, if any, as the risk-based capital instructions may provide. History:   2010 c 275 art 2 s 2 
64B.41 RISK-BASED CAPITAL REPORTS. Subdivision 1. General requirements. Every society shall, on or before each March 1, prepare and submit to the commissioner a report of its risk-based capital levels as of the end of the calendar year just ended, in a form and containing the information required by the risk-based capital instructions. In addition, every society shall file its risk-based capital report with the NAIC according to the risk-based capital instructions. Subd. 2. Specific requirements. A society's risk-based capital must be determined according to the formula set forth in the risk-based capital instructions. The formula must take into account, and may adjust for the covariance between: (1) the risk with respect to the society's assets; (2) the risk of adverse insurance experience with respect to the society's liabilities and obligations; (3) the interest rate risk with respect to the society's business; and (4) all other business risks and other relevant risks set forth in the risk-based capital instructions; determined in each case by applying the factors in the manner set forth in the risk-based capital instructions. Subd. 3. Adjusted risk-based capital report. If a society files a risk-based capital report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the risk-based capital report to correct the inaccuracy and shall notify the society of the adjustment. The notice must contain a statement of the reason for the adjustment. A risk-based capital report as so adjusted is referred to as an "adjusted risk-based capital report." History:   2010 c 275 art 2 s 3 
64B.42 FRATERNAL ACTION LEVEL EVENT. Subdivision 1. Definition. "Fraternal action level event" means, with respect to a society, any of the following events: (1) the filing of a risk-based capital report by the society that indicates that: (i) the society's total adjusted capital is greater than or equal to its fraternal authorized control level risk-based capital but less than its fraternal action level risk-based capital; or (ii) the society's total adjusted capital is greater than or equal to its fraternal action level risk-based capital but less than the product of its fraternal authorized control level risk-based capital and 2.5 and has a negative trend; (2) the notification by the commissioner to a society of an adjusted risk-based capital report that indicates an event in clause (1), provided the society does not challenge the adjusted risk-based capital report under section 64B.44; (3) if, pursuant to section 64B.44, the society challenges an adjusted risk-based capital report that indicates an event in clause (1), the notification by the commissioner to the society that the commissioner has, after a hearing, rejected the society's challenge; or (4) the failure of the society to file a risk-based capital report by March 1, unless the society has provided an explanation for the failure that is satisfactory to the commissioner and has cured the failure within ten days after March 1. Subd. 2. Commissioner's duties. In the event of a fraternal action level event, the commissioner shall: (1) require the society to prepare and submit a risk-based capital plan, or, if applicable, a revised risk-based capital plan that: (i) identifies the conditions that contribute to the fraternal action level event; (ii) contains proposals of corrective actions that the society intends to take and would be expected to result in the elimination of the fraternal action level event; (iii) provides projections of the society's financial results in the current year and at least the four succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projected statutory balance sheets, income statements, and cash flow statements. The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense, and benefit component; (iv) identifies the key assumptions impacting the society's projections and the sensitivity of the projections to the assumptions; and (v) identifies the quality of, and problems associated with, the society's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case; (2) examine or analyze as the commissioner considers necessary the assets, liabilities, and operations of the society including reviewing its risk-based capital plan or revised risk-based capital plan; and (3) subsequent to the examination or analysis, issue a corrective order specifying the corrective actions the commissioner determines are required. Subd. 3. Corrective action. In determining corrective actions, the commissioner may take into account factors considered relevant with respect to the society based upon the commissioner's examination or analysis of the assets, liabilities, and operations of the society, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the risk-based capital instructions. The risk-based capital plan or revised risk-based capital plan must be submitted: (1) within 45 days after the occurrence of the fraternal action level event; (2) if the society challenges an adjusted risk-based capital report pursuant to section 64B.44 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the society that the commissioner has, after a hearing, rejected the society's challenge; or (3) if the society challenges a revised risk-based capital plan pursuant to section 64B.44 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the society that the commissioner has, after a hearing, rejected the society's challenge. Subd. 4. Examination and review. The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the society's risk-based capital plan or revised risk-based capital plan; examine or analyze the assets, liabilities, and operations of the society; and formulate the corrective order with respect to the society. The fees, costs, and expenses relating to consultants must be borne by the affected society or other party as directed by the commissioner. History:   2010 c 275 art 2 s 4 
64B.43 FRATERNAL AUTHORIZED CONTROL LEVEL EVENT; DOMESTIC SOCIETIES. Subdivision 1. Definitions. (a) For purposes of this section, the terms in this subdivision have the meanings given. (b) "Fraternal authorized control level event" means any of the following events: (1) the filing of a risk-based capital report by the society that indicates that the society's total adjusted capital is less than its fraternal authorized control level risk-based capital; (2) the notification by the commissioner to the society of an adjusted risk-based capital report that indicates the event in clause (1), provided the society does not challenge the adjusted risk-based capital report under section 64B.44; (3) if, pursuant to section 64B.44, the society challenges an adjusted risk-based capital report that indicates the event in clause (1), notification by the commissioner to the society that the commissioner has, after a hearing, rejected the society's challenge; (4) the failure of the society to respond, in a manner satisfactory to the commissioner, to a corrective order, provided the society has not challenged the corrective order under section 64B.44; (5) if the society has challenged a corrective order under section 64B.44 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the society to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner; (6) the failure of the society to submit a risk-based capital plan to the commissioner within the time period in section 64B.42; (7) notification by the commissioner to the society that: (i) the risk-based capital plan or revised risk-based capital plan submitted by the society is, in the judgment of the commissioner, unsatisfactory; and (ii) the society has not challenged the determination under section 64B.44; (8) if, pursuant to section 64B.44, the society challenges a determination by the commissioner under the notification by the commissioner to the society that the commissioner has, after a hearing, rejected the challenge; (9) notification by the commissioner to the society that the society has failed to adhere to its risk-based capital plan or revised risk-based capital plan, but only if the failure has a substantial adverse effect on the ability of the society to eliminate the fraternal action level event according to its risk-based capital plan or revised risk-based capital plan and the commissioner has so stated in the notification, provided the society has not challenged the determination under section 64B.44; or (10) if, pursuant to section 64B.44, the society challenges a determination by the commissioner under clause (9), the notification by the commissioner to the society that the commissioner has, after a hearing, rejected the challenge. (c) "Qualifying society" means a fraternal benefit society, whether foreign or domestic, that has the financial strength and administrative capability to accept a transfer of certificates under subdivision 3 and is domiciled in a state accredited by the National Association of Insurance Commissioners. (d) "Society" means a domestic fraternal benefit society organized and operated under the laws of this state. Subd. 2. Commissioner's duties. In the event of a fraternal authorized control level event with respect to a society, the commissioner shall: (1) take the actions required under section 64B.42 regarding a society with respect to which a fraternal action level event has occurred; or (2) if the commissioner considers it to be in the best interests of the certificate holders of the society, require the society to take one or more of the following actions: (i) merge or otherwise consolidate with another willing authorized society; (ii) cede any individual risk or risks, in whole or in part, to a willing society or life insurer; (iii) suspend the issuance of new business; and (iv) discontinue its insurance operations; or (3) take the actions necessary to cause the society to be placed under regulatory control under chapter 60B. In the event the commissioner takes these actions, the fraternal authorized control level event is considered sufficient grounds for the commissioner to take action under chapter 60B, and the commissioner has the rights, powers, and duties with respect to the society set forth in chapter 60B. In the event the commissioner takes actions under this clause pursuant to an adjusted risk-based capital report, the society is entitled to the protections afforded to societies under section 60B.11 pertaining to summary proceedings. Subd. 3. Plan to transfer members. (a) Within 45 days of a fraternal authorized control level event with respect to a society, the society shall present to the commissioner a plan to protect the interests of its members. The plan shall include transferring all members, certificates, and related assets and liabilities of the society, together with any other assets and liabilities the society desires to transfer, to another firm, corporation, or organization through merger, consolidation, assumption, or other means. Any transfer shall constitute a novation of the transferring society's certificates effective upon the date of transfer. The commissioner shall review the plan within 45 days of its submission and may approve the plan within that time frame if the plan provides sound financial security for the payment of obligations arising under the certificates of the society and is otherwise in the best interest of the members. (b) The transfer shall be: (1) concluded within the time frame established by the commissioner, which shall not exceed 90 days; (2) approved by the society upon majority vote of its board of directors prior to the submission of the plan to the commissioner; and (3) effective notwithstanding the provisions of section 64B.14 or any other requirement of statute or rule or the laws of the society requiring another form of notice to members or approval by the supreme governing body. Any notice to or approval of a transfer required by the laws of the society or statute or rule shall be suspended by this subdivision. (c) Upon application, the commissioner may approve a transfer under this subdivision to a foreign qualifying society that does not have a certificate of authority to transact insurance in this state. If the commissioner determines that the foreign fraternal benefit society has sufficient financial strength and servicing capabilities to satisfy the obligations arising under the transferring society's certificates, the commissioner may issue an order to authorize the foreign fraternal benefit society to service the certificates resulting from a transfer, including issuing any amendments or revisions requested by the holder of the certificate and to fulfill all obligations arising under the certificate, but not to otherwise transact insurance business in this state. (d) Upon the effective date of a transfer to an insurer with a certificate of authority to do business in this state and in consideration of that transfer, each member of the society shall be deemed to agree that any terms of a certificate subjecting the certificate to the laws of the society or providing rights or obligations of membership, except to the extent of any outstanding lien not released by the terms of the transfer, shall be null and void and the insurer shall endorse the certificates accordingly. (e) Upon the effective date of a transfer to a firm, corporation, or organization that is not a fraternal benefit society and in consideration of that transfer, each member of the society shall be deemed to agree that any terms of a certificate subjecting the certificate to the laws of the society or providing rights or obligations of membership, except to the extent of any outstanding lien not released by the terms of the transfer, shall be null and void and the firm, corporation, or organization shall endorse the certificates accordingly. (f) The board of directors of a society may suspend or modify its qualifications for membership as necessary or appropriate to facilitate a transfer under this subdivision, notwithstanding the laws of the society or any statute or rule to the contrary. (g) Each society shall amend its laws to permit the transactions contemplated by this subdivision, including suspending any provisions requiring any notice to members or approval of the supreme governing body with respect to the transfer of its certificates if the society has a fraternal authorized control level event and the transfer is approved by the commissioner. Subd. 4. Liquidation. (a) In the event of a fraternal authorized control level event with respect to a society under circumstances the commissioner determines will not be promptly remedied pursuant to the authorization provided in subdivision 3, the commissioner may apply for a verified petition to commence liquidation of the society under section 60B.20. These circumstances shall be deemed to satisfy grounds to commence a liquidation under section 60B.20. The commissioner may issue an order declaring the society to be in hazardous financial condition under the standards of section 60G.20, subdivision 1, clause (15), and initiate proceedings pursuant to this subdivision. Nothing in this subdivision prevents the commissioner from applying for an order to commence the liquidation of a society under any of the grounds in section 60B.20. (b) Liquidation proceedings for a society shall be governed by chapter 60B, except to the extent the provisions of chapter 60B are in conflict or inconsistent with any provisions in this chapter. (c) Liquidation proceedings for a society shall be conducted consistent with the purposes of section 60B.01, subdivision 4, paragraph (c), in a manner designed to conserve assets and to limit expenses of the liquidation under section 60B.44, subdivision 2. History:  2010 c 275 art 2 s 5; 2018 c 175 s 4
64B.44 HEARINGS. Upon notification to a society by the commissioner: (1) that the risk-based capital report is being adjusted by the commissioner; (2) that the society's risk-based capital plan or revised risk-based capital plan is unsatisfactory, and that the notification constitutes a fraternal action level event or fraternal authorized control level event with respect to the society; (3) that the society has failed to adhere to its risk-based capital plan or revised risk-based capital plan and that the failure has substantial adverse effect on the ability of the society to eliminate the fraternal action level event with respect to the society according to its risk-based capital plan or revised risk-based capital plan; or (4) that a corrective order will be issued with respect to the society; the society has the right to a contested case hearing conducted in accordance with chapter 14, on a record, at which the society may challenge a determination or action by the commissioner. The society shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under clause (1), (2), (3), or (4). Upon receipt of the society's request for a hearing, the commissioner shall set a date for the hearing no less than ten nor more than 30 days after the date of the society's request. History:   2010 c 275 art 2 s 6 
64B.45 PROHIBITION ON ANNOUNCEMENTS. Except as otherwise required under sections 64B.40 to 64B.48, the making, publishing, dissemination, circulating, or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to the risk-based capital levels of a society, or of any component derived in the calculation, by a society, agent, broker, or other person engaged in any manner in the insurance business would be misleading and is prohibited. History:   2010 c 275 art 2 s 7 
64B.46 SUPPLEMENTAL PROVISIONS. Sections 64B.40 to 64B.48 are supplemental to other laws of this state and do not preclude or limit other powers or duties of the commissioner under those laws, including, but not limited to, chapters 60B and 60G. History:   2010 c 275 art 2 s 8 
64B.47 IMMUNITY. There is no liability on the part of, and no cause of action arises against, the commissioner or the Department of Commerce or its employees or agents for an action taken by them in the performance of their powers and duties under sections 64B.40 to 64B.48. History:   2010 c 275 art 2 s 9 
64B.48 NOTICES. All notices by the commissioner to a society that may result in regulatory action under sections 64B.40 to 64B.48 are effective upon dispatch if transmitted by registered or certified mail, or, in the case of other transmission, are effective upon the society's receipt of the notice. History:   2010 c 275 art 2 s 10 
65A.01 MINNESOTA STANDARD FIRE INSURANCE POLICY. Subdivision 1. Designation and scope. The printed form of a policy of fire insurance, as set forth in subdivisions 3 and 3a, shall be known and designated as the "Minnesota standard fire insurance policy" to be used in the state of Minnesota. No policy or contract of fire insurance shall be made, issued or delivered by any insurer including reciprocals or interinsurance exchanges or any agent or representative thereof, on any property in this state, unless it shall provide the specified coverage and conform as to all provisions, stipulations, and conditions, with such form of policy, except as provided in sections 60A.08, subdivision 9; 60A.352; 65A.06; 65A.29; 72A.20, subdivision 17; and other statutes containing specific requirements that are inconsistent with the form of this policy. Any policy or contract otherwise subject to the provisions of this subdivision, subdivisions 3 and 3a which includes either on an unspecified basis as to coverage or for a single premium, coverage against the peril of fire and coverage against other perils may be issued without incorporating the exact language of the Minnesota standard fire insurance policy, provided: Such policy or contract shall, with respect to the peril of fire, afford the insured all the rights and benefits of the Minnesota standard fire insurance policy and such additional benefits as the policy provides; the provisions in relation to mortgagee interests and obligations in said Minnesota standard fire insurance policy shall be incorporated therein without change; such policy or contract is complete as to its terms of coverage; and, the commissioner is satisfied that such policy or contract complies with the provisions hereof. Subd. 2. Company information. There shall be printed on the first or front page at the head of said "Minnesota standard fire insurance policy" the name of the insurer or insurers issuing the policy, the location of the home office or United States office of the insurer or insurers, a statement whether said insurer or insurers are stock corporations, mutual corporations, reciprocal insurers or Lloyds Underwriters; there may be added thereto such device or devices as the insurer or insurers issuing said policy may desire. Any company organized under special charter provisions may so indicate upon its policy, and may add a statement of the plan under which it operates in this state. Subd. 2a. Facsimile signatures authorized. On any policy of insurance regulated under this chapter, the signature of an officer or agent of the insurer may be a facsimile signature. Subd. 3. Policy provisions. On said policy following such matter as provided in subdivisions 1 and 2, printed in type of such size or sizes and arranged in such manner, as is approved by the commissioner of commerce, the following provisions and subject matter shall be stated in the following words and in the following sequence, but with the convenient placing, if desired, of such matter as will act as a cover or back for such policy when folded, with the blanks below indicated being left to be filled in at the time of the issuing of the policy, to wit: (Space for listing the amounts of insurance, rates and premiums for the basic coverages provided under the standard form of policy and for additional coverages or perils provided under endorsements attached. The description and location of the property covered and the insurable value(s) of any building(s) or structure(s) covered by the policy or its attached endorsements; also in the above space may be stated whether other insurance is limited and if limited the total amount permitted.) In consideration of the provisions and stipulations herein or added hereto and of the premium above specified this company, for a term of ..... from ..... (At 12:01 a.m. Standard Time) to ..... (At 12:01 a.m. Standard Time) at location of property involved, to an amount not exceeding the amount(s) above specified does insure ..... and legal representatives ........................................... (In above space may be stated whether other insurance is limited.) (And if limited the total amount permitted.) Subject to form No.(s) ..... attached hereto. This policy is made and accepted subject to the foregoing provisions and stipulations and those hereinafter stated, which are hereby made a part of this policy, together with such provisions, stipulations and agreements as may be added hereto as provided in this policy. The insurance effected above is granted against all loss or damage by fire originating from any cause, except as hereinafter provided, also any damage by lightning and by removal from premises endangered by the perils insured against in this policy, to the property described hereinafter while located or contained as described in this policy, or pro rata for five days at each proper place to which any of the property shall necessarily be removed for preservation from the perils insured against in this policy, but not elsewhere. The amount of said loss or damage, except in case of total loss on buildings, to be estimated according to the actual value of the insured property at the time when such loss or damage happens. If the insured property shall be exposed to loss or damage from the perils insured against, the insured shall make all reasonable exertions to save and protect same. This entire policy shall be void if, whether before a loss, the insured has willfully, or after a loss, the insured has willfully and with intent to defraud, concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interests of the insured therein. This policy shall not cover accounts, bills, currency, deeds, evidences of debt, money or securities; nor, unless specifically named hereon in writing, bullion, or manuscripts. This company shall not be liable for loss by fire or other perils insured against in this policy caused, directly or indirectly by: (a) enemy attack by armed forces, including action taken by military, naval or air forces in resisting an actual or immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) usurped power; (h) order of any civil authority except acts of destruction at the time of and for the purpose of preventing the spread of fire, providing that such fire did not originate from any of the perils excluded by this policy. This company shall not be liable for loss by fire or other perils insured against in a commercial policy caused, directly or indirectly, by terrorism, unless an endorsement specifically assuming coverage for loss or damage caused by terrorism is attached to the policy. Other insurance may be prohibited or the amount of insurance may be limited by so providing in the policy or an endorsement, rider or form attached thereto. Unless otherwise provided in writing added hereto this company shall not be liable for loss occurring: (a) while the hazard is increased by any means within the control or knowledge of the insured; or (b) while the described premises, whether intended for occupancy by owner or tenant, are vacant or unoccupied beyond a period of 60 consecutive days; or (c) as a result of explosion or riot, unless fire ensue, and in that event for loss by fire only. Any other peril to be insured against or subject of insurance to be covered in this policy shall be by endorsement in writing hereon or added hereto. The extent of the application of insurance under this policy and the contributions to be made by this company in case of loss, and any other provision or agreement not inconsistent with the provisions of this policy, may be provided for in writing added hereto, but no provision may be waived except such as by the terms of this policy is subject to change. No permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. No provision, stipulation or forfeiture shall be held to be waived by any requirements or proceeding on the part of this company relating to appraisal or to any examination provided for herein. This policy shall be canceled at any time at the request of the insured, in which case this company shall, upon demand and surrender of this policy, refund the excess of paid premium above the customary short rates for the expired time. This policy may be canceled at any time by this company by giving to the insured a written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand. Notice of cancellation shall state that said excess premium (if not tendered) will be refunded on demand. If loss hereunder is made payable, in whole or in part, to a designated mortgagee or contract for deed vendor not named herein as insured, such interest in this policy may be canceled by giving to such mortgagee or vendor a ten days' written notice of cancellation. Notwithstanding any other provisions of this policy, if this policy shall be made payable to a mortgagee or contract for deed vendor of the covered real estate, no act or default of any person other than such mortgagee or vendor or the mortgagee's or vendor's agent or those claiming under the mortgagee or vendor, whether the same occurs before or during the term of this policy, shall render this policy void as to such mortgagee or vendor nor affect such mortgagee's or vendor's right to recover in case of loss on such real estate; provided, that the mortgagee or vendor shall on demand pay according to the established scale of rates for any increase of risks not paid for by the insured; and whenever this company shall be liable to a mortgagee or vendor for any sum for loss under this policy for which no liability exists as to the mortgagor, vendee, or owner, and this company shall elect by itself, or with others, to pay the mortgagee or vendor the full amount secured by such mortgage or contract for deed, then the mortgagee or vendor shall assign and transfer to the company the mortgagee's or vendor's interest, upon such payment, in the said mortgage or contract for deed together with the note and debts thereby secured. This company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved. In case of any loss under this policy the insured shall give immediate written notice to this company of any loss, protect the property from further damage, and a statement in writing, signed and sworn to by the insured, shall within 60 days be rendered to the company, setting forth the value of the property insured, except in case of total loss on buildings the value of said buildings need not be stated, the interest of the insured therein, all other insurance thereon, in detail, the purposes for which and the persons by whom the building insured, or containing the property insured, was used, and the time at which and manner in which the fire originated, so far as known to the insured. The insured, as often as may be reasonably required, shall exhibit to any person designated by this company all that remains of any property herein described, and, after being informed of the right to counsel and that any answers may be used against the insured in later civil or criminal proceedings, the insured shall, within a reasonable period after demand by this company, submit to examinations under oath by any person named by this company, and subscribe the oath. The insured, as often as may be reasonably required, shall produce for examination all records and documents reasonably related to the loss, or certified copies thereof if originals are lost, at a reasonable time and place designated by this company or its representatives, and shall permit extracts and copies thereof to be made. In case the insured and this company, except in case of total loss on buildings, shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of such demand. In case either fails to select an appraiser within the time provided, then a presiding judge of the district court of the county wherein the loss occurs may appoint such appraiser for such party upon application of the other party in writing by giving five days' notice thereof in writing to the party failing to appoint. The appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon such umpire, then a presiding judge of the above mentioned court may appoint such an umpire upon application of party in writing by giving five days' notice thereof in writing to the other party. The appraisers shall then appraise the loss, stating separately actual value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual value and loss. Each appraiser shall be paid by the selecting party, or the party for whom selected, and the expense of the appraisal and umpire shall be paid by the parties equally. It shall be optional with this company to take all of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on giving notice of its intention so to do within 30 days after the receipt of the proof of loss herein required. There can be no abandonment to this company of any property. The amount of loss for which this company may be liable shall be payable 60 days after proof of loss, as herein provided, is received by this company and ascertainment of the loss is made either by agreement between the insured and this company expressed in writing or by the filing with this company of an award as herein provided. It is moreover understood that there can be no abandonment of the property insured to the company, and that the company will not in any case be liable for more than the sum insured, with interest thereon from the time when the loss shall become payable, as above provided. No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy have been complied with, and unless commenced within two years after inception of the loss. This company is subrogated to, and may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by this company; and the insurer may prosecute therefor in the name of the insured retaining such amount as the insurer has paid. Assignment of this policy shall not be valid except with the written consent of this company. IN WITNESS WHEREOF, this company has executed and attested these presents.      .   (Signature)    .   (Name of office)   Subd. 3a.Cancellation. (1) There shall be printed in the policy or an endorsement attached to the policy a printed form in the following words: When this policy has been issued to cover buildings used for residential purposes other than a hotel or motel and has been in effect for at least 60 days, or if it has been renewed, this policy shall not be canceled, except for one or more of the following reasons which shall be stated in the notice of cancellation: (a) Nonpayment of premium; (b) Misrepresentation or fraud made by or with the knowledge of the insured in obtaining the policy or in pursuing a claim thereunder; (c) An act or omission of the insured which materially increases the risk originally accepted; (d) Physical changes in the insured property which are not corrected or restored within a reasonable time after they occur and which result in the property becoming uninsurable; or (e) Nonpayment of dues to an association or organization, other than an insurance association or organization, where payment of dues is a prerequisite to obtaining or continuing the insurance. Provided, however, that this limitation on cancellation shall not apply to additional coverages in a divisible policy, other than a policy of fire and extended coverage insurance. If this company cancels the additional coverages, it may issue a new, separate fire policy at a premium calculated on a pro rata basis for the remaining period of the original policy. (2) The provisions of clause (1)(e) shall not be included in the language of the policy or endorsement unless the payment of dues to an association or organization, other than an insurance association or organization, is a prerequisite to obtaining or continuing the insurance. Subd. 3b. Rescission and voidability. This policy must not be rescinded or voided except where the insured has willfully and with intent to defraud concealed or misrepresented a material fact or circumstance concerning this insurance or the subject of this insurance or the interests of the insured in this insurance. This provision must not operate to defeat a claim by a third party or a minor child of the named insured for damage or loss for which the policy provides coverage. Subd. 3c. Time requirements. (a) In the event of a policy less than 60 days old that is declined, or a policy that it is being canceled for nonpayment of premium, the notice must be mailed to the insured at least 20 days before the effective cancellation date. If a policy is being declined or canceled for underwriting considerations, the insured must be informed of the source from which the information was received. (b) In the event of a midterm cancellation, for reasons listed in subdivision 3a, or according to policy provisions, notice must be mailed to the insured at least 30 days before the effective cancellation date. (c) In the event of a nonrenewal, notice must be mailed to the insured at least 60 days before the effective date of nonrenewal, containing the specific underwriting or other reason for the indicated actions. (d) This subdivision does not apply to commercial policies regulated under sections 60A.36 and 60A.37. Subd. 4. Additional provisions permitted. (1) There may be printed in the policy or an endorsement attached to the policy, in case the assured desires liability to attach to several buildings, divisions or locations under one item, a printed form filed with and approved by the commissioner of commerce. (2) There may be printed in the policy or an endorsement attached to the policy, a printed form in the following words, to wit: The insured has relinquished all rights to recover for loss or damage by fire from ..... (here insert name of individual, partnership, association or corporation). (3) There may be printed upon a policy issued in compliance herewith the words "Minnesota standard fire insurance policy." (4) A company, if incorporated or formed in this state, may print in the policy any provisions which it is authorized or required by law to insert therein, if not incorporated in this state, it may, with the approval of the commissioner of commerce, print in the policy any provision required by its charter or deed of settlement, or by the laws of its own state or country, not contrary to the laws of this state. (5) Appropriate forms of other contracts or endorsements, whereby the property described in such policy shall be insured against one or more of the additional perils which the insurer is empowered to assume, and forms of provisions or endorsements which serve to modify the policy or premium in favor of the insured, may be attached to, used in or in connection with the Minnesota standard fire insurance policy when approved by the commissioner of commerce. Such forms of other contracts, provisions or endorsements attached to or printed thereon may contain provisions and stipulations inconsistent with the Minnesota standard fire insurance policy if applicable only to such other perils. There may be placed upon the Minnesota standard fire insurance policy, in such manner and form as is approved by the commissioner of commerce, such data as may be conveniently included for duplication on the daily reports for the office records of the company writing the policy. (6) A company may print or use on its policy, printed forms covering the maintenance or supervision of security guard's service, automatic sprinkler service or the maintenance of a clear space in lumber yards, when approved by the commissioner of commerce, but no such clause shall contain any provision calling for the lapse or the suspension of the insurance coverage. (7) A company may print or use in its policy printed forms for insurance against loss of rents and rental value, leasehold values, use and occupancy, and indirect or consequential loss or damage caused by change of temperature resulting from the destruction of refrigeration or cooling apparatus, or any of its connections. It may also use a form specifically excluding the last mentioned hazard. All contracts of insurance against loss of rents or rental values, use and occupancy, shall contain the following provisions: The period of indemnity under this contract shall be limited to such length of time (commencing with the date of the fire or lightning and not limited by the date of the expiration of the policy) as would be required through the exercise of due diligence and dispatch to rebuild, repair or replace such part of the property described in said policy as may be destroyed or damaged. (8) There may be printed in the policy in a convenient place approved by the commissioner of commerce, or on an endorsement attached to the policy, a printed form providing that in the case of loss, such loss shall be payable to the mortgagee, or other persons, as their interest may appear, to wit: Subject to the stipulations, provisions and conditions contained in this policy, the loss, if any, is payable to ....., mortgagee, as the mortgagee's interest may appear. Subd. 5. Provision prohibited, total loss; limiting amount to be paid. No provision shall be attached to or included in such policy limiting the amount to be paid in case of total loss on buildings by fire, lightning or other hazard to less than the amount of insurance on the same. Subd. 6. Clear statement of reasons for cancellation. When policies covered by this section are subject to limitations or cancellation as provided in subdivision 3a, the notice of cancellation shall include a statement of the reason for cancellation in a sufficiently clear and specific form so that an insured of reasonable intelligence will be able to identify the basis for the company's cancellation without making further inquiry. History:  1967 c 395 art 6 s 1; 1978 c 769 s 1-3; 1979 c 115 s 2; 1983 c 208 s 1; 1983 c 289 s 114 subd 1; 1984 c 592 s 50; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 337 s 89; 1994 c 435 s 1; 1994 c 485 s 51,65; 1995 c 258 s 46; 1996 c 446 art 1 s 53; 1999 c 177 s 61-63; 2003 c 10 s 1; 2004 c 202 s 1; 2013 c 130 s 3
65A.02 JOINT POLICY. When two or more authorized companies unite in the issue of a joint policy, the heading thereof may show the severalty of the contract, and the policy shall show the proportion of premiums to be paid to each, and the proportion of liability which each assumes, and shall contain a provision to the effect that service of process, or any notice or proof of loss required by such policy, upon any of the insurers executing such policy, shall be deemed to be service upon all such insurers. History:   1967 c 395 art 6 s 2 
65A.03 BINDERS, TEMPORARY INSURANCE. Subdivision 1. Generally. Binders or other contracts for temporary insurance may be made orally or in writing, and shall be deemed to include all the terms of such standard fire insurance policy and all such applicable endorsements as may be designated in such contract of temporary insurance; except that the clause specifying the hour of the day at which the insurance shall commence, may be superseded by the express terms of such contract of temporary insurance. Subd. 2. Evidence for property purchase financing. A duly authorized binder shall be acceptable as evidence of insurance coverage required as a condition of financing the purchase of real or personal property, provided that a mortgagee or lender shall not be required to accept renewal or extension thereof. This section does not require the approval of a binder by any person, firm, corporation, trustee, director, officer, agent, or employee, where there are reasonable grounds for believing that the insurance evidenced by the binder is unsatisfactory as to placement with an unauthorized insurer, the financial solvency of the insurer, adequacy of the coverage, adequacy of the insurer to assume the risk to be insured, the assessment feature to which the policy is subject, or other grounds which are not arbitrary, unreasonable, or discriminatory, nor does this section forbid the securing of insurance or a renewal thereof at the request of the borrower or because of the borrower's failure to furnish necessary insurance or renewal thereof. Subd. 3. Penalty. If any person, firm, corporation, trustee, director, officer, agent, or employee, refuses to accept a duly authorized binder pursuant to subdivisions 1 and 2, the commissioner of commerce may issue an order requiring acceptance and impose a civil penalty of $500 per violation. History:  1967 c 395 art 6 s 3; 1984 c 592 s 51; 1987 c 337 s 90
65A.04 EFFECT ON SECTION 65A.08. Nothing in the preceding sections of this chapter shall be construed to limit the effect of or in any way modify or repeal section 65A.08. History:   1967 c 395 art 6 s 4 
65A.05 NUCLEAR REACTION, RADIATION OR RADIOACTIVE CONTAMINATION; ENDORSEMENT. Loss or damage caused by nuclear reaction, nuclear radiation or radioactive contamination, all whether directly or indirectly resulting from an insured peril under the standard policy issued pursuant to sections 65A.01, 65A.02, 65A.03, and 65A.04, may be insured under said policy only by a written endorsement providing such insurance, with such endorsement affixed to said standard policy. History:   1967 c 395 art 6 s 5 
65A.06 MOTOR VEHICLE, OCEAN AND INLAND MARINE POLICIES. Insurance on automobiles, motorcycles, other motor vehicles, or on property insured by ocean marine, and inland marine policies as defined by section 70A.03, clause (3), against loss or damage by fire, when combined in one policy with insurance against one or more of the other hazards mentioned in section 60A.06, subdivision 1, clause (1), need not be in accordance with section 65A.01, but in no event shall this section be applicable to insurance on buildings or structures. History:  1967 c 395 art 6 s 6; 1971 c 24 s 10
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. History:   1989 c 330 s 25 
65A.07 CANCELLATION OF FIRE POLICY. Any fire insurance company which has not collected the premium on its policy at the time of the delivery thereof may print or endorse, or attach by rider, on its policy the following clause: "If the insured hereunder shall not have actually paid the premium hereon, or any part thereof, within 60 days from the date of this policy, then this policy may be canceled by the insurer by giving five days' written notice to the insured and to the mortgagee, or other person to whom the policy is made payable, if any, without tendering any part or portion of such premium, anything to the contrary in the policy contract notwithstanding." History:   1967 c 395 art 6 s 7 
65A.08 SPECIAL PROVISIONS. Subdivision 1.  [Repealed, 1979 c 175 s 1] Subd. 2. Amount collectible. (a) In the absence of any change increasing the risk, without the consent of the insurer, of which the burden of proof shall be upon it, and in the absence of intentional fraud on the part of the insured, the insurer shall pay the whole amount mentioned in the policy or renewal upon which it receives a premium, in case of total loss, and in case of partial loss, the full amount thereof. (b) Notwithstanding paragraph (a), on a policy issued by the Minnesota FAIR plan under section 65A.36, the Minnesota FAIR plan may contest the whole amount set forth in the policy in the case of a total loss. If the Minnesota FAIR plan takes the position that the value of the property was less than the whole amount set forth in the policy, the Minnesota FAIR plan has the burden of proving by clear and convincing evidence that the value was less than that set forth in the policy. If the Minnesota FAIR plan pays less than the whole amount mentioned in the policy for a total loss, pursuant to this paragraph, the Minnesota FAIR plan shall refund to the insured the premium paid attributable to the difference between the whole amount mentioned in the policy and the amount paid for the total loss. Subd. 3. Agreement on amount of loss. Policies on farm buildings or other structures may, in consideration of a reduction in the premium by the company, include a provision determining the amount of loss in connection with repair or replacement of the insured property. Subd. 4. Prorating provided. If there are two or more policies upon the property, each shall contribute to the payment of the whole or partial loss in proportion to the amount specified. Subd. 5. Coinsurance provision. Any policy may contain a coinsurance clause, if the insured requests the same, in writing, of which fact such writing shall be the only evidence, and if, in consideration thereof, a reduction in the rate of premium is made by the company. When so demanded and attached to the policy, this agreement shall be binding upon both the insured and the company, and, in case of loss, the actual cash value of the property so insured at the time of the loss, including the buildings, shall be the basis for determining the proper amount of the coinsurance, and the amount of loss, notwithstanding any previous valuation of the building. Subd. 6. Term of policies. No company shall knowingly issue any policy upon property in this state for a longer term than five years. History:  1967 c 395 art 6 s 8; 2005 c 66 s 1; 1Sp2005 c 7 s 1
65A.09 INSURANCE IN EXCESS OF REPLACEMENT COST. Subdivision 1. Insurance limited. No company shall knowingly issue any policy upon property in this state for an amount which, together with any existing insurance thereon, exceeds the replacement cost of the buildings and any other covered improvements on the property. Any company willfully insuring property for more than that amount shall forfeit to the state, for the benefit of the school fund, double the premium collected on the policy. Subd. 2. Lenders; excess insurance. No mortgage company, bank, savings association, finance company, or other mortgage lender of any kind may require insurance coverage in violation of section 72A.31, subdivision 1, clause (4). Any lender that willfully violates this subdivision is subject to penalties available under chapter 45. History:  1967 c 395 art 6 s 9; 2002 c 295 s 1
65A.10 LIMITATION. Subdivision 1. Buildings. Nothing contained in sections 65A.08 and 65A.09 shall be construed to preclude insurance against the cost, in excess of actual cash value at the time any loss or damage occurs, of actually repairing, rebuilding or replacing the insured property. Subject to any applicable policy limits, where an insurer offers replacement cost insurance: (i) the insurance must cover the cost of replacing, rebuilding, or repairing any loss or damaged property in accordance with the minimum code as required by state or local authorities; and (ii) the insurance coverage may not be conditioned on replacing or rebuilding the damaged property at its original location on the owner's property if the structure must be relocated because of zoning or land use regulations of state or local government. In the case of a partial loss, unless more extensive coverage is otherwise specified in the policy, this coverage applies only to the damaged portion of the property. Subd. 2. Personal property. Subject to applicable policy limits, replacement cost insurance coverage for personal property must cover the cost of replacing or repairing any loss or damaged property. In the case of a partial loss, unless more extensive coverage is otherwise specified in the policy, this coverage applies only to the damaged portion of the property. If a homeowner's policy does not provide replacement cost coverage for personal property, the declarations page of the policy shall so indicate by containing the term "nonreplacement cost." History:  1967 c 395 art 6 s 10; 1987 c 337 s 91; 1991 c 244 s 1; 1996 c 446 art 1 s 54
65A.11 PAYMENT TO MORTGAGEE. When the whole, or any part, of the loss is payable, in terms or otherwise, to or for one or more mortgagees, upon proof before payment of the rights of the parties, the company shall pay the same in the order of priority to the extent of its liability and every such payment to such extent shall be payment and satisfaction of its liability under the policy. History:   1967 c 395 art 6 s 11 
65A.12 WAIVER OF RIGHT TO APPRAISAL. Subdivision 1. Right to appraisal. Any person who shall not, within 20 days after written request, appoint a qualified appraiser, as provided in the policy, shall at the election of the other party be deemed to have waived the right to appraisal, and, if it be the insurer, shall be liable to suit. Subd. 2. Appraiser. No person shall be a qualified appraiser who is not disinterested and willing to act. History:  1967 c 395 art 6 s 12; 2011 c 52 s 2
65A.13 LIABILITY OF COMPANY. Notwithstanding any penalty prescribed for the making, issuing, or delivery of any policy in violation of any provision of law, every such policy shall be binding upon the company issuing the same. History:   1967 c 395 art 6 s 13 
65A.14 PERSON WHO PROCURES AN APPLICATION AGENT OF ISSUING COMPANY. Every person who solicits insurance and procures an application therefor shall be held to be the agent of the party afterward issuing insurance thereon or a renewal thereof. History:   1967 c 395 art 6 s 14 
65A.15 VIOLATION. Every company and every agent who shall willfully make, issue, or deliver a policy in violation of sections 65A.01, 65A.02, and 65A.03 shall be guilty of a gross misdemeanor; but every stipulation of the policy in favor of the insured shall, nevertheless, be binding upon the company issuing the same. History:   1967 c 395 art 6 s 15 
65A.16 GUARANTY SURPLUS AND SPECIAL RESERVE FUND. Any insurance company organized under the laws of this state authorized to transact a fire insurance business may create the funds herein provided for, to be known and designated as the guaranty surplus fund and the special reserve fund, and may avail itself of the provisions of sections 65A.16 to 65A.24, upon complying with the requirements thereof. History:  1967 c 395 art 6 s 16; 1997 c 7 art 1 s 19
65A.17 ACTION OF STOCKHOLDERS FILED WITH COMMISSIONER. Any such insurance company, desiring to create such funds, may do so if such action is authorized by its stockholders, upon the adoption of a resolution to that effect by its board of directors at a regular meeting of the board, or at any special meeting called for that purpose, and filing with the commissioner a copy thereof, declaring the intention of the company to create these funds and to do business under the provisions of sections 65A.16 to 65A.24; and, as soon after the filing of a copy of the resolution as convenient, the commissioner shall make, or cause to be made, an examination of the company, and shall make a certificate of the result thereof, which shall particularly set forth the amount of surplus funds held by the company at the date of the examination, the whole or any part of which, under the provisions of sections 65A.16 to 65A.24, may be equally divided between and set apart to constitute guaranty surplus and special reserve funds, which certificate shall be recorded in the Department of Commerce. History:  1967 c 395 art 6 s 17; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1997 c 7 art 1 s 19
65A.18 DIVIDENDS DECLARED OUT OF SURPLUS PROFITS. After the date of filing any such resolution with the commissioner, the company shall not make or declare or pay in any form any dividend upon its capital stock, exceeding eight percent per annum thereupon and six percent per annum upon the surplus funds to be formed hereunder, until after its guaranty surplus fund and its special reserve fund shall have together accumulated to an amount equal to its capital stock or to the sum of $2,000,000; and any part of the surplus profits of the company above this annual dividend may be equally divided between and set apart to constitute the guaranty surplus fund and the special reserve fund, which funds shall be held and used as hereinafter provided, and not otherwise. Any company doing business under sections 65A.16 to 65A.24, whose guaranty surplus fund and special reserve fund shall have together accumulated to an amount equal to its capital stock or to the sum of $2,000,000, may, from time to time, declare dividends out of its surplus profits in such amounts as its board of directors may prescribe, subject only to the limitation that the payment of these dividends shall not deplete its capital, nor reduce the aggregate amount of the guaranty surplus and special reserve funds to an amount less than the amount of its capital stock, or if its capital stock exceeds $2,000,000, to an amount less than $2,000,000; and, subject to the further limitation that no dividends exceeding ten percent upon the capital stock shall be declared in any year if the payment thereof would reduce the aggregate amount of all surplus funds, including guaranty surplus and special reserve funds, below an amount equal to 30 percent of its unearned premiums. Any company doing business under sections 65A.16 to 65A.24, which shall declare or pay any dividend contrary to the provisions herein contained, shall be liable to be proceeded against under chapter 60B for its dissolution. History:  1967 c 395 art 6 s 18; 1969 c 708 s 63; 1997 c 7 art 1 s 19
65A.19 EXAMINATION. When the company shall notify the commissioner that it has fulfilled the requirements already expressed in sections 65A.16 to 65A.24, and that its guaranty surplus fund and its special reserve fund, taken together, equal its capital stock or amount to the sum of $2,000,000, the commissioner shall make an examination of the company and make a certificate of the result thereof, and file the same in the commissioner's office and, if the commissioner shall find that the combined funds shall equal the capital stock of the company or amount to the sum of $2,000,000, thereafter the company may continue, out of any subsequent profits of its business, to add to these funds; provided, that when any addition is made to the special reserve fund, an equal sum shall be carried to the guaranty surplus fund. History:  1967 c 395 art 6 s 19; 1986 c 444; 1997 c 7 art 1 s 19
65A.20 ITEMS CONSIDERED IN ESTIMATING PROFIT. In estimating the profit of any such company for the purpose of making a division thereof between the guaranty surplus fund and the special reserve fund, until these funds shall together amount to a sum equal to the capital stock of the company or amount to the sum of $2,000,000, there shall be deducted from the gross assets of the company, including for this purpose the amount of the special reserve fund, the sum of the following items: (1) the amount of all outstanding claims; (2) an amount sufficient to meet the liability of the company for the unearned premiums upon its unexpired policies, which amount shall at least equal one-half the premiums received on policies having one year or less to run from the date of policy, and a pro rata proportion of the premiums received on the policies having more than one year to run from the date of policy, and shall be known as the reinsurance liability; (3) the amount of its guaranty surplus fund and of its special reserve fund; (4) the amount of the capital of the company; and (5) interest at the rate of eight percent per annum upon the amount of capital, and six percent per annum upon the amount of the said funds for whatever time shall have elapsed since the last preceding cash dividend. The balance shall constitute the net surplus of the company, any portion of which is subject to an equal division between these funds, as herein provided. History:   1967 c 395 art 6 s 20 
65A.21 INVESTMENT OF GUARANTY SURPLUS. The guaranty surplus shall be held and be invested by the company in the same manner as its capital stock and surplus accumulation may be held and be invested, and shall be liable and applicable in the same manner as the capital stock to the payment generally of the losses of the company. History:   1967 c 395 art 6 s 21 
65A.22 INVESTMENT OF SPECIAL RESERVE FUND. The special reserve fund shall be invested according to existing laws relating to investments of capital by fire insurance companies and shall be deposited, from time to time, as the same shall accumulate and be invested, with the commissioner in accordance with section 60A.10, subdivision 4, who shall permit the company depositing the same to change these deposits by substituting for those withdrawn others of equal amount and value, and to collect and receive the interest or dividends upon these securities as the same may accrue; and this fund shall not be regarded as any part of the assets in possession of the company, so as to be or render the same liable for any claim for loss by fire, or otherwise, except as provided in sections 65A.16 to 65A.24. History:  1967 c 395 art 6 s 22; 1974 c 425 s 7; 1997 c 7 art 1 s 19
65A.23 WHEN CLAIMS EXCEED GUARANTY SURPLUS AND CAPITAL STOCK. (1) When the claims upon the company shall exceed the amount of its capital stock and of guaranty surplus fund, provided for by sections 65A.16 to 65A.24, and of its surplus funds, other than the special reserve fund, the company shall notify the commissioner of the fact, who shall then make, or cause to be made, an examination of the company, and issue a certificate of the result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of reinsurance liability, and of other assets, and upon the commissioner's issuing this certificate, in duplicate, one copy to be given to the company and one to be recorded in the Department of Commerce, the special reserve fund shall be immediately held to protect all policyholders of the company, other than such as are claimants upon it at the date of the certificate, and the special reserve fund, together with other assets, certified by the commissioner as equal in value to the amount of the unearned premiums of the company, to be ascertained, as hereinbefore provided, shall constitute the capital and assets of the company for the protection of policyholders, other than these claimants, and for the further conduct of its business, and any official certificate of the commissioner, herein provided for, shall be binding and conclusive upon all parties interested in the company, whether as stockholders, creditors, or policyholders, and upon the payment to claimants who are such at the date of the certificate, of the full amount of the capital of the company and of its guaranty surplus fund and of its assets at that date, excepting only the special reserve fund and an amount of its assets equal to the liability of the company for unearned premiums, as so certified by such commissioner of commerce, the company shall be forever discharged from any and all further liability to these claimants, and to each of them, and the commissioner shall, after issuing a certificate, upon the demand of the company, transfer to it all such securities as shall have been deposited by the company as a special reserve fund and, if the amount of this special reserve fund be less than 50 percent of the full amount of the capital of the company, if the capital be $2,000,000, or less, or if the amount of the special reserve fund be less than $1,000,000, if the capital be over $2,000,000, a requisition shall be issued by the commissioner upon the stockholders, to make up the capital to that proportion of its full amount, not exceeding $1,000,000; provided, that any capital so impaired shall be made up at least to the sum of $100,000, and in case the company, after this requisition, shall fail to make up its capital at least to the sum of $100,000, as therein directed, the special reserve fund shall still be held as security and liable for any and all losses occurring upon policies of the company. (2) If, after this application of the special reserve fund and requisition on the stockholders, the par value of outstanding shares of stock shall exceed the new amount of capital so established, outstanding shares, to the amount of the excess, shall be surrendered by the stockholders pro rata. (3) The company shall, in its annual statement to the commissioner, set forth the amount of the special reserve fund and of its guaranty surplus fund. (4) If, in consequence of the payment of losses by fires, or of the expenses of the business, or of the interest or dividends payable under the provisions of sections 65A.16 to 65A.24 to stockholders, or from any cause, the guaranty surplus fund shall be reduced in amount below the amount of the special reserve fund, the directors of the corporation shall make no additions to the special reserve fund until the guaranty surplus fund is equal to the special reserve fund. (5) The policy registers, insurance maps, books of record, and other books in use by the company in its business, and its policy and other blanks, office furniture, fixtures, and supplies are not to be considered as assets, but shall be held by the company for its use in the protection of its policyholders. (6) If any amount greater than a sum equal to one-half of its capital stock shall, by the company under the provisions of sections 65A.16 to 65A.24, have been deposited with the commissioner, the commissioner shall retain of these securities an amount equal to one-half of what amount the commissioner shall so hold thereof in excess of a sum equal to such one-half of such capital stock if the capital be $2,000,000, or less, or in excess of $3,000,000 if the capital be over $2,000,000, and the commissioner shall transfer the balance thereof to the company, as herein provided, and the amount so transferred to the company shall, from the time of the transfer, provided the amount thereof shall not be less than $100,000, constitute the capital stock of the company for the further conduct of its business, as hereinbefore provided, and the securities so retained shall be regarded as the special reserve fund of the company, to which additions may be made, as herein provided, and shall be held in the same manner, and for the same purpose, and under the same conditions, as the original special reserve fund of the company was held. The provisions of this section, providing for discharge of the company from further liability to existing claimants upon application to the payment of such claims of its capital, surplus, and assets, excepting the special reserve fund, and an amount equal to the liability for unearned premiums, shall not be construed to relieve the stockholders of the corporation from any liability imposed by the constitution of this state. History:  1967 c 395 art 6 s 23; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1997 c 7 art 1 s 19
65A.24 STOCKHOLDERS TO MAKE UP IMPAIRMENT. If, at any time after the special reserve fund shall have been accumulated by any company, the directors of the company shall present evidence satisfactory to the commissioner that the capital of the company has become impaired, the commissioner shall order the directors to call upon the stockholders to make up this impairment, and the board of directors may thereupon require the necessary payment by the stockholders to make good the whole of the impairment, or they may apply for that purpose the whole or any part of the special reserve fund and require of the stockholders payment of such amount as may be necessary to make up the balance of the impairment not made up out of the special reserve fund. The stock of every stockholder shall be pledged and liable for the amount assessed to make up the impairment, either in whole or in part, and in case any stockholder refuses to pay the assessment, the stock standing in that person's name may be sold at public auction, after 30 days' notice, in such manner as the directors may provide. If the board of directors elect to make good the impairment, or any part thereof, out of the special reserve fund, the commissioner shall, upon request of the board, transfer to the company so much of the special reserve fund as is necessary for the purpose. No company doing business under sections 65A.16 to 65A.24 shall insure any larger amount upon any single risk than is permitted by law to a company possessing the same amount of capital, irrespective of the fund provided for in sections 65A.16 to 65A.24. History:  1967 c 395 art 6 s 24; 1986 c 444; 1997 c 7 art 1 s 19
65A.26 HAIL INSURANCE, POLICIES, LOSS ADJUSTMENT. Every policy of insurance against damage by hail issued by any company, however organized, must provide as follows: "In case of loss under this policy, and failure of the parties to agree as to the amount of the loss, it is mutually agreed that, on written demand of either party, the company and the insured each shall select a competent appraiser and notify the other of the appraiser selected within ten days of the demand. The appraisers shall first select a competent and disinterested umpire; and, failing for ten days to agree upon the umpire, then, on request of either appraiser, the umpire shall be selected by a judge of a court of record in the state in which the property covered is located. By mutual agreement the two appraisers may agree to have the umpire selected by a judge of a court of record and waive the ten-day provision. The appraisers and the umpire shall then appraise the loss. A written award of any two of these persons determines the amount of loss. The written award of a majority of these referees is final and conclusive upon the parties as to amount of loss, and this selection, unless waived by the parties, is a condition precedent to any right of action to recover for a loss. No suit for the recovery of any claim by virtue of this policy may be sustained unless commenced within one year after the loss occurred." The policy must also provide the form, manner, and length of notice to be given to the company by the insured of any loss sustained. History:  1967 c 395 art 6 s 26; 1973 c 363 s 1; 1974 c 161 s 4; 1983 c 208 s 2
65A.27 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 65A.27 to 65A.302, the following terms have the meanings given. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce. Subd. 3. Decline or declination. "Decline" or "declination" means an agent's refusal to accept an application for homeowner's insurance or an insurer's refusal to issue a policy of homeowner's insurance to a person who has submitted a written application. Subd. 4. Homeowner's insurance. "Homeowner's insurance" means insurance coverage, as provided in section 60A.06, subdivision 1, clause (1)(c), normally written by the insurer as a standard homeowner's package policy or as a standard residential renter's package policy. This definition includes, but is not limited to, policies that are generally described as homeowner's policies, mobile/manufactured homeowner's policies, dwelling owner policies, condominium owner policies, and tenant policies. Subd. 5. Insurer. "Insurer" means any insurer licensed to write insurance, as defined in section 60A.06, subdivision 1, clause (1), and writing homeowner's insurance in this state. Subd. 6. Metropolitan area. "Metropolitan area" means the area defined in section 473.121, subdivision 2. Subd. 7. Nonpayment of premium. "Nonpayment of premium" means a failure of the named insured to pay the premium when due on a policy of homeowner's insurance or any installment of the premium, whether the premium is payable directly to the insurer or its agent or indirectly under a premium finance plan or an extension of credit. Subd. 8. Renewal or renew. "Renewal" or "renew" means an insurer's issuance and delivery to the insured of a new insurance policy at the end of the policy period of an existing policy written by the insurer or an insurer's issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term. History:  1979 c 207 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1996 c 326 s 1; 1999 c 177 s 64; 2009 c 178 art 1 s 33
65A.28 DISCLOSURE AND FILING REQUIREMENTS. Subdivision 1. Annual report. Each insurer writing homeowner's insurance for property located in the metropolitan area or a statutory or home rule charter city of the first class shall compile and file annually with the commissioner on or before May 1 a report for the preceding calendar year. This report shall contain the following information reported by postal zip code areas for each zip code area located in a city of the first class which contains property for which the insurer wrote, declined to write, or canceled homeowner's insurance: (a) the number of policies written; (b) the number of policies canceled; (c) the number of policies nonrenewed; and (d) the number of applications for homeowner's insurance declined. If the commissioner determines that additional information is necessary to effectuate the purposes of sections 65A.27 to 65A.29 and 72A.20, subdivision 13, the commissioner may require, by rule: (i) that the required information be reported for additional areas of the state, or (ii) that additional types of information, including premium and claims data, be reported for some or all of the areas subject to the reporting requirements. If the commissioner has reason to believe that an insurance company or insurance agent has violated section 72A.20, subdivision 13 or 14, the commissioner may issue an order requiring the company or agent to compile and submit within a reasonable time information on its homeowner's insurance marketing, underwriting, or rating practices for a specific geographic area or areas. This information may be in addition to the types and categories of information required to be reported by this section or rules promulgated under subdivision 4. Subd. 2. Reports available for public inspection. The commissioner shall make the reports filed pursuant to subdivision 1 available for public inspection. Subd. 3. Failure to report; penalty. Any insurer required to report under this section which fails to file a report, containing the data and within the time prescribed by this section or rules promulgated under subdivision 4, shall be subject to a penalty of $10 for each day in default. Any penalty imposed under this section may be recovered in a civil action brought by and in the name of the state. Subd. 4. Rules. The commissioner may prescribe rules necessary to carry out the purposes of this section. The rules may provide for classifications, differentiations, adjustments or exceptions, as in the judgment of the commissioner are necessary and proper to effectuate the purposes of, prevent circumvention or evasion of, or to facilitate compliance with this section. History:  1979 c 207 s 3; 1986 c 444
65A.285 SURCHARGE PROHIBITION. Subdivision 1. Surcharge prohibition. An insurer may not impose a surcharge on homeowners insurance solely as a result of a consumer inquiry. Subd. 2. Definitions. For purposes of this section: (1) "consumer inquiry" means a telephone call or other communication made to an insurer that does not result in a paid claim and that is in regard to the general terms or conditions of or coverage offered under an insurance policy. The term includes a question concerning the process for filing a claim and whether a policy will cover a loss; and (2) "surcharge" means an increase in premium for a policy, including the removal of a claim-free discount. History:   2014 c 198 art 4 s 7 
65A.29 CANCELLATION; NONRENEWAL; REFUSAL TO WRITE. Subdivision 1. Cancellation. No insurer may cancel a policy of homeowner's insurance except for the reasons specified in section 65A.01. Subd. 2.  [Repealed, 1984 c 602 s 6] Subd. 3. Refusal to write. Upon completion in writing of the insurer's application form for homeowner's insurance, any person having an insurable interest in real or tangible property at a fixed location shall be entitled upon written request either (a) to the insurer's offer of coverage, including type, amount and premium cost of coverage, or (b) to a written declination, stating specifically the underwriting or other reason for the refusal to write. For purposes of this subdivision, "insurer" means only an insurer writing or offering to write homeowner's insurance for property in the same statutory or home rule charter city or town in which the applicant's property is located. Subd. 4. Form requirements. Any notice or statement required by subdivisions 1 to 3, or any other notice canceling a homeowner's insurance policy must be written in language which is easily readable and understandable by a person of average intelligence and understanding. The statement of reason must be sufficiently specific to convey, clearly and without further inquiry, the basis for the insurer's refusal to renew or to write the insurance coverage. The notice or statement must also inform the insured of: (1) the possibility of coverage through the Minnesota FAIR plan under sections 65A.31 to 65A.42; (2) the right to object to the commissioner under subdivision 9; and (3) the right to the return of unearned premium in appropriate situations under subdivision 10. Subd. 5. Inclusion in policies after 1980. Notwithstanding sections 65A.01 and 65A.07, any policy of homeowner's insurance issued after January 1, 1980 shall contain nonrenewal provisions consistent with this section. Subd. 6. Immunity of insurer or commissioner. There shall be no liability on the part of and no cause of action of any nature shall arise against the commissioner or against any insurer, its authorized representative, its agents, its employees or any firm, person or corporation furnishing to the insured information as to reasons for declination, nonrenewal, or cancellation, for any statement made by them in any written notice of declination, nonrenewal or cancellation, for the providing of information relating thereto, or for statements made or evidence submitted at any hearings or investigations conducted in connection therewith. This subdivision shall not apply to any action or proceeding arising under section 72A.20. 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. Subd. 8. Rules. (a) The commissioner may adopt rules pursuant to chapter 14, to specify the grounds for nonrenewal, reduction in limits of coverage, or elimination of coverage of a homeowner's policy. The rules must limit the grounds to the following factors: (1) reasons stated for cancellation in section 65A.01, subdivision 3a; (2) reasons stated in section 72A.20, subdivision 13; (3) insured's loss experience, not to include natural causes; and (4) other factors deemed reasonable by the commissioner. The rules may give consideration to the form and content of the termination notice to the insured, a statement as to what constitutes receipt of the termination notice, and the procedure by which the insured may appeal a termination notice. The rules adopted under this subdivision may provide for imposition of a monetary penalty not greater than $500 per occurrence upon insurers who are found to be in violation of the law or the rules. (b) In addition to any rules adopted under this subdivision, an insured may appeal any nonrenewal under this section to the commissioner of commerce. If the commissioner finds that the nonrenewal is unjustified, arbitrary, or capricious, the commissioner shall order the insurer to reinstate the insured's policy. The commissioner's order may be appealed pursuant to chapter 14. The insured's policy shall continue in force pending the conclusion of the appeal to the commissioner. The insurer must notify the insured of the insured's right to appeal the nonrenewal to the commissioner in the notice of nonrenewal required under subdivision 7. Subd. 9. Notice of right to complain. A named insured who believes a nonrenewal, reduction in the limits of coverage, elimination of coverage, or cancellation under section 65A.01, subdivision 3a, is in violation of the law or the rules may, within 30 days after receipt of the notice, file in writing an objection to the action with the commissioner. Upon receipt of a written objection, the commissioner shall notify the insurer of receipt of the objection and of the right of the insurer to file a written response within ten days of receipt of the notification. Within 30 days of receipt of written objection by an insured, the commissioner shall approve or disapprove the insurer's action and shall notify the insured and insurer of the final decision. A decision which disapproves the insurer's action constitutes a charge that the insurer has violated the law or the rules. Either party may institute proceedings for judicial review of the commissioner's decision. The commissioner's decision is binding pending judicial review. Subd. 10. Return of unearned premium. Cancellation of a policy of homeowner's insurance pursuant to this section is not effective unless any unearned premium due the insured is returned to the insured with the notice of cancellation or is delivered or sent by mail to the insured so as to be received by the insured not later than the effective date of cancellation. If the premium has been paid by the insured's agent and debited to the agent's account with the company, upon cancellation, the unearned premium must be credited to the agent's account with the company. Subd. 11. Nonrenewal. Every insurer shall establish a plan that sets out the minimum number and amount of claims during an experience period that may result in a nonrenewal. For purposes of the plan, the insurer may not consider as a claim the insured's inquiry about a hypothetical claim, or the insured's inquiry to the insured's agent regarding a potential claim. No homeowner's insurance policy may be nonrenewed based on the insured's loss experience unless the insurer has sent a written notice that any future losses may result in nonrenewal due to loss experience. Any nonrenewal of a homeowner's insurance policy must, at a minimum, comply with the requirements of subdivision 8 and the rules adopted by the commissioner. Subd. 12.  [Repealed, 1999 c 177 s 88] Subd. 13. Notice of possible cancellation. (a) A written notice must be provided to all applicants for homeowners' insurance, at the time the application is submitted, containing the following language in bold print: "THE INSURER MAY ELECT TO CANCEL COVERAGE AT ANY TIME DURING THE FIRST 59 DAYS FOLLOWING ISSUANCE OF THE COVERAGE FOR ANY REASON WHICH IS NOT SPECIFICALLY PROHIBITED BY STATUTE." (b) If the insurer provides the notice on the insurer's website, the insurer or agent may advise the applicant orally or in writing of its availability for review on the insurer's website in lieu of providing a written notice, if the insurer advises the applicant of the availability of a written notice upon the applicant's request. The insurer shall provide the notice in writing if requested by the applicant. An oral notice shall be presumed delivered if the agent or insurer makes a contemporaneous notation in the applicant's record of the notice having been delivered or if the insurer or agent retains an audio recording of the notification provided to the applicant. History:  1979 c 207 s 4; 1983 c 94 s 1; 1984 c 602 s 2-4; 1986 c 444; 1987 c 337 s 92; 1989 c 260 s 9-11; 1992 c 564 art 4 s 13; 1994 c 485 s 52; 1996 c 337 s 1; 1999 c 177 s 65; 2001 c 215 s 28; 2003 c 40 s 4; 2005 c 132 s 18; 2009 c 178 art 1 s 34; 2010 c 384 s 28
65A.295 HOMEOWNER'S INSURANCE COVERAGE. (a) Every insurer writing homeowner's insurance in this state shall make available at least one form of homeowner's policy for each level of peril coverage offered by the insurer in which the insured has the option to specify the dollar amount of coverage provided for structures other than the dwelling and for personal property. The premium must be reduced to reflect the reduced risk of lesser coverage. (b) Coverage for structures other than the dwelling is the coverage provided under "Coverage B, Other Structures" in the standard homeowner's policy. Coverage for personal property is the coverage provided under "Coverage C, Personal Property" in the standard homeowner's package policy. (c) "Level of peril" refers to basic, broad, and all risk levels of coverage. History:  1987 c 293 s 1; 1996 c 446 art 1 s 55
65A.296 PROOF OF LOSS. Subdivision 1. Notice from insurer. After receiving written notice of a claim by an insured on a homeowner's insurance policy, the insurer may notify the insured that the insurer may deny the claim unless a completed proof of loss is received by the insurer within 60 days of the date on which the written notice under this subdivision was received by the insured. The notice given by the insurer must be sent by certified mail, return receipt requested, and must include a proof of loss form to be completed by the insured together with accompanying instructions for completing the form. The proof of loss form and the accompanying instructions must meet the readability standards of chapter 72C. Subd. 2. Failure to complete timely proof of loss. In an action for the recovery of a claim on a homeowner's insurance policy, an insured's failure to comply with the 60-day proof of loss requirement: (1) is a bar to recovery if the insured received the notice specified in subdivision 1, unless the insured demonstrates to the court's satisfaction that the insured had good cause for failing to comply; (2) is not a bar to recovery if the insured did not receive the notice specified in subdivision 1, unless the insurer demonstrates to the court's satisfaction that its rights were prejudiced by the insured's failure to comply. Subd. 3. Definitions. For purposes of this section, the terms "insurer" and "homeowner's insurance" have the meanings given them in section 65A.27. Subd. 4. Effect on other law. This section supersedes any inconsistent provision of section 65A.01, 72A.201, or other law. History:  1996 c 285 s 1; 1997 c 77 s 1
65A.297 ACTIVE DUTY MEMBER OF ARMED SERVICES RESERVE OR NATIONAL GUARD; USE IN UNDERWRITING PROHIBITED. No insurer, including the Minnesota FAIR plan, shall refuse to renew, decline to offer or write, reduce the limits of, cancel, or charge differential rates for equivalent coverage for any coverage in a homeowner's policy because the dwelling is vacant or occupied by a caretaker if the insured's absence is caused solely by the insured being called to active duty as a member of the armed services reserve or the National Guard. History:   2005 c 132 s 19 
65A.30 DAY CARE SERVICES; COVERAGE. Subdivision 1. No coverage. There shall be no coverage under a day care provider's homeowner's insurance for losses or damages arising out of the operation of day care services unless: (1) specifically covered in a policy; or (2) covered by a rider for business coverage attached to a policy. For purposes of this section, "day care" means "family day care" and "group family day care" as defined in Minnesota Rules, part 9502.0315. "Day care" does not include care provided by an individual who is related, as defined in Minnesota Rules, part 9502.0315, to the person being cared for or care provided by an unrelated individual to persons from a single family of persons related to each other. Subd. 2. Prohibited underwriting practices. No insurer shall refuse to renew, or decline to offer or write, homeowner's insurance coverage solely because the property to be covered houses day care services for five or fewer children. History:  1996 c 326 s 2; 2004 c 239 s 1
65A.301 ADULT FOSTER CARE SERVICES; COVERAGE. Subdivision 1. No coverage. There shall be no coverage under a foster care for adults provider's homeowner's insurance policy for losses or damages arising out of the operation of foster care for adults services unless: (1) specifically covered in a policy; or (2) covered by a rider for business coverage attached to a policy. For purposes of this section, "foster care for adults" has the meaning given in section 245A.02, subdivision 6c. Subd. 2. Prohibited underwriting practices. No insurer shall refuse to renew, or decline to offer or write, homeowner's insurance coverage solely because the property to be covered houses foster care for adults services for five or fewer adult residents. History:   2006 c 215 s 1 
65A.302 FLOOD INSURANCE COVERAGE; DISCLOSURE OF NONCOVERAGE. Every insurer shall annually provide a written notice to the policyholder entitled "Important Information About Damage Caused by Flooding." This title must be in at least 18-point type. The notice must disclose that the policy does not cover damage caused by flooding and disclose sufficient information to allow the policyholder to contact the National Flood Insurance Program to inquire about purchasing flood insurance. The following language satisfies the notice requirements of this section: "The policy does not cover damage to your property caused by flooding. Flood insurance is available to communities and property that participate in the National Flood Insurance Program ("NFIP"). Not all communities participate in the NFIP. Flood insurance may be available even if you do not live in a flood hazard area as defined by the NFIP. If your community does not participate in the NFIP, you may contact your insurance agent or broker to see if there is other flood insurance coverage available to you." The disclosure may also inform the policyholders that the insurer offers flood insurance as a participant in the NFIP's "Write Your Own" program. History:   2008 c 293 s 1 
65A.31 MINNESOTA FAIR PLAN ACT. Sections 65A.31 to 65A.42 shall be known and may be cited as the "Minnesota FAIR Plan Act." History:  1969 c 483 s 1; 1993 c 248 s 2
65A.32 PURPOSES. The purposes of sections 65A.31 to 65A.42 are: (1) to encourage stability in the property and liability insurance market for property located in this state; (2) to encourage maximum use, in obtaining property and liability insurance, as defined in sections 65A.31 to 65A.42, of the normal insurance market provided by the private property and casualty insurance industry; (3) to encourage the improvement of the condition of properties located in this state and to further orderly community development generally; (4) to provide for an organization known as the Minnesota FAIR plan, which will assure fair access to insurance requirements in order that no property is denied property or liability insurance through the FAIR plan due to the condition of the property, except after a physical inspection of the property and a fair evaluation of its individual underwriting characteristics; (5) to publicize the purposes and procedures of the FAIR plan to the end that no one may fail to seek its assistance through lack of knowledge of its existence; and (6) to provide for the formulation and administration by the Minnesota FAIR plan of a reinsurance arrangement whereby property and casualty insurers share equitably the responsibility for insuring insurable property for which property and liability insurance cannot be obtained through the normal insurance markets. History:  1969 c 483 s 2; 1986 c 455 s 42; 1993 c 248 s 3; 1999 c 120 s 1; 2003 c 40 s 5
65A.33 DEFINITIONS. Subdivision 1. Scope. As used in sections 65A.31 to 65A.42, unless the context otherwise requires, the terms defined in this section have the following meanings given to them. Subd. 2. Insurer. "Insurer" means any insurance company or other organization licensed to write and engaged in writing property or liability insurance business, including the property or liability insurance components of multiperil policies, on a direct basis, in this state, except where such insurer is specifically exempted by statute from participation in this program. Subd. 3. Property or liability insurance. "Property or liability insurance" means the coverage against direct loss to real or tangible personal property at a fixed location that is provided in the standard fire policy, extended coverage endorsement, homeowners insurance, as defined in section 65A.27, subdivision 4, cooperative housing insurance, condominium unit owners insurance, builders risk, and such vandalism and malicious mischief insurance and such other classes of insurance as may be added to the program with respect to said property by amendment as hereinafter provided. Property or liability insurance does not include automobile, commercial liability, or such manufacturing risks as may be excluded by the commissioner. Subd. 4. Minnesota FAIR plan. "Minnesota FAIR plan," or "plan," means the organization formed by insurers to assist applicants in securing property or liability insurance and to administer the FAIR plan. Subd. 5.  [Repealed, 2003 c 40 s 21] Subd. 5a. Member. "Member" means any insurer as defined in subdivision 2. Subd. 6. Premiums written. "Premiums written" means direct written premiums charged during the second preceding calendar year with respect to property in this state for fire, allied lines, homeowners, the nonliability component of farm policies, and the nonliability component of commercial multiperil policies, as reported by the members to the NAIC. Subd. 7. Commissioner. "Commissioner" means the commissioner of commerce of the state of Minnesota. Subd. 8.  [Repealed, 1993 c 248 s 17] Subd. 9. Board. "Board" means the governing board of directors of the Minnesota FAIR plan. Subd. 10. NAIC. "NAIC" means the National Association of Insurance Commissioners. History:  1969 c 483 s 3; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 455 s 43; 1989 c 260 s 12; 1993 c 248 s 4-6; 1994 c 465 art 2 s 1; 1999 c 120 s 2,3; 2003 c 40 s 6-10
65A.34 PLAN COVERAGE. Subdivision 1. Application. Any person having an insurable interest in real or tangible personal property who has been canceled, nonrenewed, or otherwise rejected for coverage in the private market may submit an application for coverage to the plan. If an inspection of the premises is performed, it must be done at no cost to the applicant. Subd. 2. Inspections. Before the plan may deny coverage due to the condition of the property or write coverage with a condition charge, it must first inspect the property for which coverage has been requested. The manner and scope of the inspections of Minnesota FAIR plan business must be prescribed by the plan with the approval of the commissioner. Subd. 3. Initial inspection report. An inspection report must be made for each property inspected. The report must cover pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken during the inspection. Subd. 4. Condition charges. Either during the inspection or immediately after the inspection, an employee of the FAIR plan shall inform the applicant as to the features that result in a condition charge if the risk is accepted. No inspector has the authority to advise whether the plan will provide the coverage. Subd. 5. Completed inspection report. Within ten business days after the inspection, the FAIR plan shall prepare or have prepared a completed inspection report that includes conditions that are subject to a condition charge under the rating plan approved by the commissioner. A copy of the inspection report must be made available to the applicant or the applicant's agent upon request. Subd. 6.  [Repealed by amendment, 2003 c 40 s 11] History:  1969 c 483 s 4; 1986 c 444; 1986 c 455 s 44; 1993 c 248 s 7; 1999 c 120 s 4-6; 2003 c 40 s 11
65A.35 ADMINISTRATION. Subdivision 1. Membership. Each insurer authorized to write and engaged in writing within this state, on a direct basis, property or liability insurance or any component of this insurance contained in a multiperil policy, including homeowners and commercial multiperil policies, shall participate in the plan as a condition of its authority to write such kinds of insurance within this state. Subd. 2. Purposes. The purposes of the Minnesota FAIR plan are: (1) to formulate and administer, subject to the approval of the commissioner, a plan assuring fair access to insurance requirements in order that no property is denied property or liability insurance through the FAIR plan due to the condition of the property, except after a physical inspection of the property and a fair evaluation of its individual underwriting characteristics; and (2) to formulate and administer, subject to the approval of the commissioner, a reinsurance arrangement whereby the members of the Minnesota FAIR plan share equitably the responsibility for insuring property which is insurable but for which property or liability insurance cannot be obtained through normal insurance markets. Subd. 3. Plan of operation. The plan of operation of the Minnesota FAIR plan, consistent with the provisions of sections 65A.31 to 65A.42 and the purpose of the plan must provide for the FAIR plan, the reinsurance arrangement, and the economical and efficient administration of the Minnesota FAIR plan, including, but not limited to, management of the plan, establishment of necessary facilities within this state, assessment of members to defray losses and expenses, commission arrangements, reasonable underwriting standards, acceptance and cession of reinsurance, and procedures for determining amounts of insurance to be provided. The plan of operation is subject to approval by the commissioner. Subd. 4. Amendment of plan of operation. The Minnesota FAIR plan shall amend the plan of operation on its own initiative, subject to prior approval by the commissioner, or at the direction of the commissioner. Subd. 5. Administration. (1) The Minnesota FAIR plan is administered by a board of nine directors, five of whom are elected by the members of the plan and four who represent the public. Public directors may include licensed insurance agents. Public directors are appointed by the commissioner. No less than two elected directors must be representatives of domestic insurers. In the election of directors, each member of the Minnesota FAIR plan is allotted votes bearing the same ratio to the total number of votes to be cast as its degree of participation in the plan bears to the total participation. (2) Any vacancy among the elected directors must be filled by a vote of the other elected directors. (3) If at any time the members fail to elect the required number of directors to the board, or a vacancy remains unfilled for more than 15 days, the commissioner may appoint the directors necessary to constitute a full board of directors. (4) Vacancies among directors appointed by the commissioner must be filled by appointment by the commissioner. A person so appointed serves until the end of the term of the director the person is replacing. (5) All public directors serve for a period of two years. The terms of all public directors begin on July 1 of the year their appointments begin. (6) The plan of operation must provide for adequate compensation of public directors. A per diem amount and a procedure for reimbursement of expenses incurred in the discharge of their duties must be included in the plan. Private directors are not eligible for compensation. (7) At the option of the board, employees may participate in an insurance plan administered by the commissioner of management and budget under chapter 43A, except as otherwise provided in section 43A.27, subdivision 2, clause (6). Subd. 6. Participation. All members of the Minnesota FAIR plan shall participate in its expenses, losses, and equity distribution in the proportion that the premiums written as defined in this subdivision, but excluding that portion, if any, of premiums attributable to the reinsurance arrangement maintained by the facility, by each such member during the second preceding calendar year bear to the aggregate premiums written in this state by all members of the plan. Participation by each member in the plan is determined annually by the plan on the basis of such premiums written during the second preceding calendar year as disclosed in the annual statements and other reports filed by the member with the NAIC. History:  1969 c 483 s 5; 1979 c 207 s 5; 1986 c 444; 1986 c 455 s 45,46; 1987 c 337 s 93; 1993 c 248 s 8; 2003 c 40 s 12; 2014 c 184 s 2
65A.36 UNDERWRITING. Subdivision 1. Evaluation of risk. Agents are not permitted to bind coverage. The Minnesota FAIR plan shall issue a policy if the risk meets preliminary underwriting requirements. The plan may request an inspection report to obtain further underwriting information. If the inspection reveals that the applicant is not eligible for the coverage applied for, the plan shall inform the applicant within 59 days of the inception of the policy that the policy will be rescinded under section 65A.01, subdivision 3, paragraph (b), or canceled under section 65A.38. If the applicant is eligible for other coverage provided by the plan, the plan will offer to replace the rescinded or canceled policy with a policy providing coverage for which the applicant is eligible. Before the 60th day after the inception of the policy, the FAIR plan shall advise the applicant that: (1) the risk is acceptable with or without a condition charge or adjustment of policy limits. If a condition charge applies, the plan will tell the insured what improvements are necessary in order to remove the charge; (2) the risk is not acceptable unless improvements noted by the plan are made by the applicant and confirmed by the plan; or (3) the risk is not acceptable for the reasons stated by the plan. Subd. 2. Premium invoice. If the risk is accepted, an invoice will be delivered to the applicant requiring remittance of the appropriate premium. Subd. 3. Declining a risk. In the event a risk is declined because it fails to meet reasonable underwriting standards, the applicant must be so notified. Reasonable underwriting standards include, but are not limited to: (1) the physical condition of the property, such as its construction, heating, wiring, evidence of previous fires, significant unrepaired damage, or general deterioration; (2) the present use or housekeeping of the property such as vacancy, overcrowding, storage of rubbish, or flammable materials; or (3) other specific characteristics of ownership, condition, occupancy, or maintenance which are violative of public policy and result in increased exposure to loss. Neighborhood or area location or any environmental hazard beyond the control of the property owner are not acceptable criteria for declining a risk. Subd. 4. Appeal of plan decision. In the event that a risk is declined on the basis that it does not meet reasonable underwriting standards, or the coverage will be written on condition that the property be improved, the plan shall, within five business days, send copies of the inspection report to the applicant and the commissioner, and shall advise the applicant of the right to and the procedure for an appeal to the governing board and to the commissioner. Subd. 5. Action on completed application. The plan must within five business days of the receipt of a completed application advise the applicant that the risk has been declined, the risk has been accepted, or that the limit of coverage has been adjusted to reflect the insurable value of the subject property. History:  1969 c 483 s 6; 1986 c 444; 1993 c 248 s 9; 1999 c 120 s 7,8; 2003 c 40 s 13
65A.37 POLICY FORMS. All policies must be on standard policy forms issued for a term of one year and approved by the commissioner. History:  1969 c 483 s 7; 1986 c 455 s 47; 1993 c 248 s 10; 1999 c 120 s 9; 2003 c 40 s 14; 2008 c 344 s 41
65A.375 RATES. The commissioner shall set the insurance rates for cooperative housing, organized under chapter 308A, and for neighborhood real estate trusts, characterized as nonprofit ownership of real estate with resident control. The rates must be actuarially sound. All other rates used by the Minnesota FAIR plan must be approved by the commissioner prior to use. History:  1987 c 337 s 94; 1989 c 356 s 5; 1993 c 248 s 11; 2003 c 40 s 15
65A.38 POLICY CANCELLATION. Subdivision 1. Reasons. The Minnesota FAIR plan shall not cancel a policy issued under sections 65A.31 to 65A.42 except: (1) for cause which would have been grounds for nonacceptance of the risk under the program had the cause been known to the plan at the time of acceptance; (2) for nonpayment of premium; or (3) with the approval of the governing board. Subd. 2. Notice and statement of reasons. Except as otherwise required under subdivision 4 or 5, at least 15 days' notice of cancellation together with a statement of the reason therefor shall be sent to the insured with a copy sent to the commissioner. Subd. 3. Statement of appeal rights. Any cancellation notice or notice of refusal to renew to the insured shall be accompanied by a statement that the insured has a right of appeal as hereinafter provided. Subd. 4. Homeowner's insurance. Cancellation of homeowner's insurance, as defined in sections 65A.27 to 65A.29, is subject to the provisions of those sections. Subd. 5. Commercial property insurance. Cancellation of a commercial property insurance policy issued by the Minnesota FAIR plan must comply with sections 60A.35 to 60A.38. History:  1969 c 483 s 8; 1993 c 248 s 12; 1994 c 485 s 65; 1999 c 120 s 10; 2003 c 40 s 16,17
65A.39 APPEALS. (a) Any applicant or participating insurer shall have the right of appeal to the board of directors, which shall promptly determine the appeal. A decision of the board may be appealed to the commissioner within 30 days from notice of the action or decision. The commissioner shall promptly determine the appeal. Each denial of insurance shall be accompanied by a statement that the applicant has the right of appeal to the board and the commissioner and setting forth the procedures to be followed for the appeal. A final action of the commissioner is subject to judicial review as provided in chapter 14. (b) In lieu of the appeal to the commissioner under paragraph (a), an applicant or insurer may seek judicial review of the board's action. History:  1969 c 483 s 9; 1987 c 337 s 95; 1993 c 248 s 13
65A.40 EDUCATION PROGRAMS. The plan will undertake a continuing public education program, in cooperation with producers and others, to assure that the Minnesota FAIR Plan Act receives adequate public attention. History:  1969 c 483 s 10; 1993 c 248 s 14; 2003 c 40 s 18
65A.41 AGENTS. Subdivision 1. Generally. A person licensed under chapter 60K may submit an application for coverage to the Minnesota FAIR plan and receive a commission from the plan for premiums paid for coverage. However, the licensee is not an agent of the Minnesota FAIR plan for purposes of state law. All checks or similar instruments submitted in payment of plan premiums must be made payable to the Minnesota FAIR plan and not the agent. Subd. 2. Duty to submit application. An agent or broker shall not refuse to submit an application for basic property insurance coverage to the Minnesota FAIR plan if licensed to write and actively engaged in writing such insurance. History:  1969 c 483 s 11; 1986 c 444; 1993 c 248 s 15; 2003 c 40 s 19
65A.42 IMMUNITY FROM LIABILITY. There is no civil or criminal liability on the part of, and no cause of action of any nature arises against insurers, the Minnesota FAIR plan, the governing board, or employees of the plan or the commissioner or the commissioner's authorized representatives, for any acts or omissions by them if the acts or omissions were in good faith and within the scope of their responsibilities under sections 65A.31 to 65A.42. The inspection reports and communications of the inspection vendors and the Minnesota FAIR plan are not public documents. History:  1969 c 483 s 12; 1971 c 24 s 11; 1986 c 444; 1993 c 248 s 16; 1999 c 120 s 11; 2003 c 40 s 20
65A.44 DEFINITIONS. Subdivision 1. Application. The definitions in this section apply to this section and section 65A.45. Subd. 2. Insurer. "Insurer" means an insurer licensed to write insurance and writing residential renter's insurance in this state. Subd. 3. Residential renter's insurance policy. "Residential renter's insurance policy" means insurance coverage normally written by the insurer as a standard residential renter's package policy. History:   1991 c 244 s 2 
65A.45 RESIDENTIAL RENTER'S INSURANCE POLICY. No insurer shall refuse to issue a single residential renter's insurance policy for the purpose of providing coverage to up to four individuals residing in the same household, if all of the individuals are named insureds on the policy and meet the insurer's normal underwriting requirements. History:   1991 c 244 s 3 
65A.50 TRUST OR ESCROW ACCOUNTS; INSURED REAL PROPERTY FIRE OR EXPLOSION LOSS PROCEEDS. Subdivision 1. Definitions. (a) "Municipality" means statutory or home rule charter city or town. (b) "Final settlement" means a determination of the amount due and owing to the insured, for a loss to insured real property, by any of the following means: (1) acceptance of a proof of loss by the insurer; (2) execution of a release by the insured; (3) acceptance of an arbitration award by both the insured and the insurer; or (4) judgment of a court of competent jurisdiction. Subd. 2. Partial withholding from settlement payments; notice. Except as otherwise provided in this section, with respect to insured real property located in a municipality which has elected to apply this section as provided in subdivision 12, when a claim is filed for a loss to insured real property due to fire or explosion and a final settlement is reached on the loss to the insured real property, an insurer shall withhold from payment 25 percent of the actual cash value of the insured real property at the time of the loss or 25 percent of the final settlement, whichever is less. At the time that 25 percent of the settlement or judgment is withheld, the insurer shall give notice of the withholding to the treasurer of the municipality in which the insured real property is located, to the insured, and to any mortgagee having an existing lien or liens against the insured real property, if the mortgagee is named on the policy. In the case of a judgment, notice shall also be provided to the court in which judgment was entered. The notice shall include all of the following: (1) the identity and address of the insurer; (2) the name and address of each policyholder, including any mortgagee; (3) location of the insured real property; (4) the date of loss, policy number, and claim number; (5) the amount of money withheld; (6) a statement that the municipality may have the withheld amount paid into a trust or escrow account established for the purposes of this section if it shows cause, pursuant to subdivision 3, within 30 days that the money should be withheld to protect the public health and safety, otherwise the withheld amount shall be paid to the insured at the expiration of 30 days; and (7) an explanation of the provisions of this section and a verbatim reproduction of subdivision 16. Subd. 3. Escrow procedure. In order for a municipality to escrow the amount withheld by the insurer, and to retain that amount, the following procedure shall be used. (a) An affidavit prepared by the chief fire official or another authorized representative of the municipality designated by the governing body of the municipality that the damaged insured structure violates existing named health and safety standards requiring the escrow of the withheld amount as surety for the repair, replacement, or removal of the damaged structure shall constitute cause for the escrowing of the withheld amount. (b) In the case of a settlement, the affidavit shall be sent to the insurer, the insured, and any mortgagees. Upon receipt of the affidavit, the insurer shall forward the withheld amount to the treasurer of the municipality and shall provide notice of the forwarding to the insured and any mortgagees. (c) In the case of a judgment, the affidavit shall be sent to the insurer, the insured, any mortgagees, and the court in which the judgment was entered. Upon receipt of the affidavit, the insurer shall forward the withheld amount to the treasurer of the municipality and shall provide notice of the forwarding to the insured, any mortgagees, and the court in which judgment was entered. Subd. 4. Deposit in trust or escrow account; release of proceeds to mortgagee. Upon receipt of money and information from an insurer as prescribed in subdivisions 2 and 3, the local treasurer shall record the information and the date of receipt of the money and shall immediately deposit the money in a trust or escrow account established for purposes of this section. The account may be interest-bearing. If the mortgage on the insured property is in default, the treasurer of the municipality, upon written request from a first mortgagee of property with respect to which policy proceeds were withheld and placed into a trust or escrow account under subdivisions 2, 3, and this subdivision, shall release to the mortgagee all or any part of the policy proceeds received by the municipality with respect to that property, not later than ten days after receipt of the written request by the mortgagee, to the extent necessary to satisfy any outstanding lien of the mortgagee. Subd. 5. Commingling of funds; retention of interest. Except as provided in subdivision 8, money deposited in an account pursuant to subdivision 4 shall not be commingled with municipal funds. Any interest earned on money placed in a trust or escrow account shall be retained by the municipality to defray expenses incurred under this section. Subd. 6. Release of deposited proceeds to insured. Except as provided in clause (3), the policy proceeds deposited under subdivision 4 shall immediately be forwarded to the insured when the chief fire official or another authorized representative of the municipality designated by the governing body of the municipality receives or is shown reasonable proof of any of the following: (1) that the damaged or destroyed portions of the insured structure have been repaired or replaced, except to the extent that the amount withheld under this subdivision is needed to complete repair or replacement; (2) that the damaged or destroyed structure and any and all remnants of the structure have been removed from the land on which the structure or the remnants of the structure were situated, by the owner or by any other person, in compliance with the local code requirements of the municipality in which the structure was located; or (3) that the insured has entered into a contract to perform repair, replacement, or removal services with respect to the insured real property and that the insured consents to payment of funds directly to the contractor performing the services. Funds released under this clause may be forwarded only to a contractor performing services on the insured property. Subd. 7. Reasonable proof. Reasonable proof required under subdivision 6 shall include any of the following: (1) originals or copies of pertinent contracts, invoices, receipts, and other similar papers evidencing both the work performed or to be performed and the materials used or to be used by all contractors performing repair, replacement, or removal services with respect to the insured real property, other than a contractor subject to clause (2); (2) an affidavit executed by the contractor which has performed the greatest amount of repair or replacement work on the structure, or which has done most of the clearing and removal work if structure repair or replacement is not to be performed. The contractor shall attach to the affidavit all pertinent contracts, invoices, and receipts and shall swear that these attached papers correctly indicate the nature and extent of the work performed to date by the contractor and the materials used; or (3) an inspection of the insured real property to verify that repair, replacement, or clearing has been completed in accordance with subdivision 6. Subd. 8. Use of retained proceeds. If with respect to a loss, reasonable proof is not received by or shown to a fire official or another authorized representative of the municipality designated by the governing body of the municipality within 45 days after the policy proceeds portion was received by the treasurer, the municipality shall use the retained proceeds to secure, repair, or demolish the damaged or destroyed structure and clear the property in question, so that the structure and property are in compliance with local code requirements and applicable ordinances of the municipality. If, before the lapse of the 45 days after the proceeds portion was received by the treasurer, the municipality has secured, repaired, or demolished the damaged or destroyed structure under chapter 299F or 463 or other applicable law or ordinance, once the 45 days lapse, the municipality may release the special assessment placed on the property, if any, and reimburse itself from the retained funds. No more than 15 percent of the policy proceeds used by the municipality under this subdivision may be attributed to the municipality's administrative expenses, which must be directly related to the actions authorized under this subdivision. Any unused portion of the retained proceeds shall be returned to the insured. Subd. 9. Proceeds not included. A final settlement shall not include the payment of policy proceeds for personal property or contents damage or for additional coverage not contained in the fire coverage portion of the fire insurance policy. Subd. 10. Immunity from liability. There shall not be liability on the part of, and a cause of action shall not arise against, an insurer or an agent or employee of an insurer for withholding or transferring money in the course of complying or attempting to comply with this section. Subd. 11. Application of section; amount of settlement. This section applies only to final settlements which exceed 49 percent of the insurance on the insured real property. Subd. 12. Application of section; election; list of electing municipalities. This section applies only to property located in a municipality if the municipality, pursuant to a resolution by the governing body, notifies the commissioner in writing that the municipality has established a trust or escrow account to be used as prescribed in this section and intends to uniformly apply this section with respect to all property located within the municipality following written notification to the commissioner. The commissioner shall prepare and distribute a list of all municipalities which have elected to apply this section to all insurance companies transacting property insurance in this state. Subd. 13. Retention on list. (a) A municipality shall remain on the list until a written request for deletion has been received by the commissioner, or until the municipality has failed to comply with paragraph (b), and the amended list has been prepared pursuant to this subdivision. (b) Municipalities on the list shall report every two years to the commissioner in writing regarding the extent of the municipality's use of this section and the effect of this section on arson fires in that municipality. The report must be filed with the commissioner no later than 90 days after the two-year anniversary of the municipality's placement on the list and thereafter no later than 90 days after each subsequent two-year period. If the commissioner has not received a report required under this paragraph, the commissioner shall promptly provide the municipality a written reminder notice. If the commissioner has not received the report within 30 days after providing the written notice, the municipality shall be treated as having made a written request for deletion under paragraph (a). Subd. 14. Addition to list. A municipality may apply to be added to the list by making a written request for addition to the commissioner. When a written request for addition from a municipality has been received by the commissioner, an amended list shall be prepared and distributed indicating the addition. The addition shall be effective on the date specified by the commissioner in the amendment. The commissioner shall notify the municipality and insurance companies of the effective date of the addition which shall be effective not less than 30 days after receipt of notice by the insurance company. A municipality shall not apply this section with respect to any loss which occurred before the effective date of the addition. Subd. 15. Deletion from list. A municipality may cease to apply this section for a period of not less than six months upon not less than 30 days' written notice to the commissioner. After receipt of request to be deleted from the list, the commissioner shall prepare and distribute an amendment to the list indicating the deletion. The deletion shall be effective on the date specified by the commissioner in the amendment. The commissioner shall notify the municipality and insurance companies of the effective date of the deletion which shall be effective not less than 30 days after receipt of the notice by the insurance company. A municipality shall continue to apply this section with respect to any loss which occurred before the effective date of the deletion, notwithstanding the deletion. Subd. 16. Exceptions to withholding requirements. The withholding requirements of this section do not apply if all of the following occur: (1) within 30 days after agreement on a final settlement between the insured and the insurer, the insured has filed with the insurer evidence of a contract to repair as described in subdivision 7; (2) the insured consents to the payment of funds directly to the contractor performing the repair services. Funds released under this clause may be forwarded only to a contractor performing the repair services on the insured property; and (3) on receipt of the contract to repair, the insurer gives notice to the municipality in which the property is situated that there will not be a withholding under this section because of the repair contract. Subd. 17. Demolition costs or debris removal costs as part of final settlement; withholding. If the insured and the insurer have agreed on the demolition costs or the debris removal costs as part of the final settlement of the real property insured claim, the insurer shall withhold one of the following sums, whichever sum is the largest, and shall pay that sum in accordance with this section: (1) the agreed cost of demolition or debris removal; (2) 25 percent of the actual cash value of the insured real property at the time of loss; or (3) 25 percent of the final settlement of the insured real property claim. History:  1995 c 170 s 1; 1997 c 47 s 1-5; 1997 c 77 s 2
65B.001 DEFINITIONS. Subdivision 1. Application. Unless a different meaning is expressly made applicable, the terms defined in this section shall, for the purposes of this chapter, have the meanings given them. Subd. 2. Private passenger vehicle insurance. "Private passenger vehicle insurance" means a policy insuring a natural person as named insured, and any relative of the named insured who is a resident of the same household, covering private passenger vehicles or utility vehicles owned by the insured. This term does not include a policy insuring more than four vehicles rated on a fleet basis or covering garage, automobiles sales agency, repair shop, service station or public parking place operation hazards. Subd. 3. Private passenger vehicle. "Private passenger vehicle" means a passenger automobile defined in section 168.002, or a jeep type automobile, that is not rented to others or used as a public or livery conveyance for passengers. Subd. 4. Utility vehicle. "Utility vehicle" means any four wheel vehicle, other than a private passenger vehicle, which has a pickup, van, or panel truck type body and is not used primarily in the occupation, profession or business of the insured, other than farming or ranching. Subd. 5. Motorcycle. "Motorcycle" means a self-propelled vehicle designed to travel on fewer than four wheels that has an engine rated at greater than five horsepower, and includes a trailer with one or more wheels, when the trailer is connected to or being towed by a motorcycle. For purposes of this chapter, motorcycle includes a motorized bicycle as defined in section 169.011, subdivision 45, but does not include an electric-assisted bicycle as defined in section 169.011, subdivision 27. History:  1977 c 366 s 1; 1984 c 592 s 52; 1987 c 269 s 1; 1989 c 140 s 1; 1996 c 435 s 1
65B.01 PURPOSES, CONSTRUCTION AND SCOPE. Subdivision 1. Purpose. The purposes of sections 65B.01 to 65B.12 are to provide the guarantee that automobile insurance coverage will be available to any person who is unable to procure such insurance through ordinary methods by providing a facility for the placement of automobile insurance risks with insurers, and to preserve to the public the benefits of price competition by encouraging maximum use of the normal private insurance system. Sections 65B.01 to 65B.12 shall be liberally construed to effect the purposes stated. Subd. 2. Scope and membership. Every insurer authorized to write automobile liability or physical damage insurance in this state, as a condition precedent to being licensed or to retain such license to write such insurance in this state, shall be a member of the facility and shall participate therein under the terms and provisions of sections 65B.01 to 65B.12. History:  1971 c 813 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1992 c 520 s 2
65B.02 DEFINITIONS. Subdivision 1. Application. Unless the language or context clearly indicates a different meaning is intended, the following terms shall, for the purposes of sections 65B.01 to 65B.12, have the meanings ascribed to them. Subd. 2. Qualified applicant. "Qualified applicant" means a person who: (1) is a resident of this state; (2) owns a motor vehicle registered in accordance with the laws of this state, or has a valid driver's license, or is required to file a certificate of insurance with the commissioner of public safety; and (3) has no unpaid premiums with respect to prior automobile insurance. Subd. 3. Facility. "Facility" means the organization formed by insurers to carry out the purposes provided in section 65B.01, subdivision 1, and shall be known as the Minnesota Automobile Insurance Plan. Subd. 4. Member. "Member" means an insurer who is required by sections 65B.01 to 65B.12, to be a member of the facility. Subd. 5. Car years. "Car years" means the number of insurance policies written on automobile or licensed drivers by a given insurer in any calendar year; and "voluntary car years" means the number of such policies written by a given insurer, exclusive of policies written through the facility. Subd. 6. Private passenger nonfleet automobile. "Private passenger nonfleet automobile" means motorized vehicles designed for transporting passengers or goods, subject to specific contemporary definitions for insurance purposes as provided in the plan of operation. Subd. 7. Participation ratio. "Participation ratio" means the ratio of the member's Minnesota premiums, or other measure of business written approved by the commissioner, in relation to the comparable statewide totals for all members. (1) For private passenger nonfleet automobile insurance coverages the participation ratio shall be based on voluntary car years written in this state for the calendar year ending December 31 of the second prior year, as reported by the statistical agent of each member as private passenger nonfleet exposures. (2) For insurance coverages on all other automobiles, including insurance for fleets, commercial vehicles, public vehicles and garages, the ratio shall be based on the total Minnesota gross, direct automobile insurance premiums written, including both policy and membership fees less return premiums and premiums on policies not taken, without including reinsurance assumed and without deducting reinsurance ceded, and less the amount of such premiums reported as received for insurance on private passenger nonfleet vehicles, for the calendar year ending December 31 of the second prior year. (3) For the purpose of determining each member's responsibility for expenses and assessments, the ratio shall be based on each member's total Minnesota car years and gross, direct premiums written, including both policy and membership fees less return premiums and premiums on policies not taken, without including reinsurance assumed and without deducting reinsurance ceded, for the calendar year ending December 31 of the second prior year, provided, however, that the preliminary determination of each member's responsibility for expenses and assessments may use the calendar year ending December 31 of the third prior year. Subd. 8. Commissioner. "Commissioner" means the commissioner of commerce or one properly acting in the capacity of the commissioner of commerce. History:  1971 c 813 s 2; 1974 c 408 s 32 subd 4; 1977 c 276 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1992 c 520 s 3-5; 1999 c 177 s 66
65B.03 GOVERNING COMMITTEE. Subdivision 1. Membership. An election must be held among every insurer subject to sections 65B.01 to 65B.12, for the election of insurer representatives on the facility governing committee. The governing committee shall be made up of nine individuals, five of whom shall be elected by members of the facility and four who shall be public members. Public members may include licensed insurance agents. The public members shall be appointed by the commissioner. The term of office for members of the governing committee is two years. Each member serving on the governing committee shall be represented by a salaried employee of that member, and not more than one member in a group under the same management shall serve on the governing committee at the same time. Subd. 2. Terms of office. The governing committee members shall serve two-year terms. Vacancies shall be filled as provided in the plan of operation. History:  1971 c 813 s 3; 1973 c 756 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1Sp1985 c 10 s 66; 1986 c 444; 1987 c 337 s 96; 1992 c 520 s 6
65B.04 PLAN OF OPERATION. Subdivision 1.  [Repealed, 1992 c 520 s 18] Subd. 1a. Plan. The plan of operation consists of the operation procedures of the facility. Subd. 2.  [Repealed, 1992 c 520 s 18] Subd. 3. Amendments. The plan of operation may be amended by a majority vote of the governing committee and the approval of the commissioner. 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. Subd. 4. Adherence to plan. Every insurer authorized to write automobile bodily injury liability, property damage liability or physical damage insurance in this state, as a condition to maintaining its authorization to transact the business of insurance in this state, shall adhere to the plan of operation. History:  1971 c 813 s 4; 1983 c 247 s 34; 1986 c 444; 1992 c 520 s 7-9; 2001 c 215 s 29
65B.05 POWER OF FACILITY, GOVERNING COMMITTEE. The governing committee shall have the power to direct the operation of the facility in all pursuits consistent with the purposes and terms of sections 65B.01 to 65B.12, including but not limited to the following: (1) To sue and be sued in the name of the facility and to assess each member in accord with its participation ratio to pay any judgment against the facility as an entity, provided, however, that no judgment against the facility shall create any liabilities in one or more members disproportionate to their participation ratio or an individual representing members on the governing committee. (2) To delegate ministerial duties, to hire a manager and to contract for goods and services from others. (3) To assess members on the basis of participation ratios to cover anticipated costs of operation and administration of the facility. (4) To impose limitations on cancellation or nonrenewal by members of insureds covered pursuant to placement through the facility in addition to the limitations imposed by chapter 72A and sections 65B.1311 to 65B.21. History:  1971 c 813 s 5; 1Sp1981 c 4 art 1 s 56; 1992 c 520 s 10; 2001 c 7 s 16
65B.06 DISTRIBUTION OF RISKS; COVERAGE. Subdivision 1. Distribution of private passenger, nonfleet auto risks. 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. Subd. 2. Private passenger; nonfleet auto coverage. With respect to private passenger, nonfleet automobiles, the facility shall provide for the issuance of policies of automobile insurance by members with coverage as follows: (1) bodily injury liability and property damage liability coverage in the minimum amounts specified in section 65B.49, subdivision 3; (2) uninsured and underinsured motorist coverages as required by section 65B.49, subdivisions 3a and 4a; (3) a reasonable selection of higher limits of liability coverage up to $50,000 because of bodily injury to or death of one person in any one accident and, subject to such limit for one person, up to $100,000 because of bodily injury to or death of two or more persons in any one accident, and up to $25,000 because of injury to or destruction of property of others in any one accident, or higher limits of liability coverage as recommended by the governing committee and approved by the commissioner; (4) basic economic loss benefits, as required by section 65B.44, and other optional coverages as recommended by the governing committee and approved by the commissioner; and (5) automobile physical damage coverage, including coverage of loss by collision, subject to deductible options. Subd. 3. Other auto coverage. With respect to all automobiles not included in subdivisions 1 and 2, the facility shall provide: (1) the minimum limits of coverage required by section 65B.49, subdivisions 2, 3, 3a, and 4a, or higher limits of liability coverage as recommended by the governing committee and approved by the commissioner; (2) for the equitable distribution of qualified applicants for this coverage among the members in accord with the applicable participation ratio, or among these insurance companies as selected under the provisions of the plan of operation; and (3) for a school district or contractor transporting school children under contract with a school district, that amount of automobile liability insurance coverage, not to exceed $1,000,000, required by the school district by resolution or contract, or that portion of such $1,000,000 of coverage for which the school district or contractor applies and for which it is eligible under section 65B.10. Subd. 4. Policy and endorsement forms. Coverage made available under this section shall be the 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. History:  1971 c 813 s 6; 1974 c 408 s 32 subds 4,5; 1976 c 2 s 41; 1977 c 276 s 2; 1Sp1981 c 4 art 1 s 57; 1984 c 592 s 53; 1986 c 313 s 9; 1992 c 520 s 11; 1995 c 258 s 47; 2001 c 215 s 30,31
65B.07 OTHER PROVISIONS AND FUNCTIONS. Subdivision 1. Optional deferred payment plan. The facility shall provide one or more optional deferred payment plans, which shall include sufficient advance payment to, at all times, equal at least the pro rata earned premium, and such plans shall include additional charges for deferred payments. Subd. 2.  [Repealed, 1992 c 520 s 18] Subd. 3. Public education. The facility shall provide for publicizing its purposes and developing public understanding of the facility. Subd. 4. Annual financial statement and report. The facility shall provide an annual financial statement on the facility's operation to the commissioner, and shall provide an annual report of operations to the commissioner and to all members so requesting. Subd. 5.  [Repealed, 1995 c 258 s 67] History:  1971 c 813 s 7; 1986 c 444; 1992 c 520 s 12
65B.08 RATES. Subdivision 1. Filing. As agent for members, the facility shall file with the commissioner all manuals of classification, all manuals of rules and rates, all rating plans, and any modifications of same, proposed for use for automobile insurance placed through the facility. The classifications, rules and rates and any amendments thereto shall be subject to prior written approval by the commissioner. Rates, surcharge points, and increased limits factors filed by the facility shall not be excessive, inadequate, or unfairly discriminatory. No other entity, service or organization shall make filings for the facility or the members to apply to insurance placed through the facility. Subd. 2. Use of rates. Every member shall be authorized to use the rates and rules approved by the commissioner for use by the facility on business placed through the facility, and shall use no other rates on automobiles placed through the facility. Subd. 3. Facility exempt. Laws relating to rating organizations or advisory organizations shall not apply to functions provided for under this section. History:  1971 c 813 s 8; 1992 c 520 s 13,14; 1995 c 258 s 48
65B.09 AGENTS. Subdivision 1. Agents' responsibility. Every person licensed under sections 60K.30 to 60K.56 who is authorized to solicit, negotiate or effect automobile insurance on behalf of any member shall: (1) offer to place coverage through the facility for any qualified applicant who is ineligible or unacceptable for coverage in the insurer or insurers for whom the agent is authorized to solicit, negotiate or effect automobile insurance. Provided, that the failure of an agent to make such an offer to a qualified applicant shall not subject the agent to any liability to the applicant; (2) forward to the facility all applications and any deposit premiums which are required by the plan of operation, rules and procedures of the facility, if the qualified applicant accepts the offer to have coverage placed through the facility; (3) be entitled to receive compensation for placing insurance through the facility at the uniform rates of compensation as provided in the plan of operation, and all members shall pay such compensation. Subd. 2. Agents' contracts. A member may not include the premiums and losses incurred from risks insured through the facility in determining the loss ratio of any of its agents, or otherwise use the experience from such risks as cause for altering the relationship between the member and its agent. History:  1971 c 813 s 9; 1986 c 444; 1992 c 520 s 15; 1993 c 13 art 2 s 3; 1995 c 258 s 49; 2001 c 117 art 2 s 14
65B.10 ELIGIBILITY. Subdivision 1. Eligibility for coverage. To be eligible for coverage through the facility an otherwise qualified applicant must have been rejected, canceled or refused renewal with respect to automobile insurance by a member. Subd. 2. Termination of eligibility. Eligibility for placement through the facility will terminate if an insured is offered equivalent coverage in the voluntary market at a rate lower than the facility rate. If the member that is required to provide coverage by the facility makes such an offer after giving 30 days' advance written notice to the agent of record before making the offer, the member shall have no further obligation to the agent of record. Subd. 3. Review of insureds. At least annually, every member shall review every private passenger nonfleet applicant which it insures through the facility and determine whether or not such applicant is acceptable for voluntary insurance at a rate lower than the facility rate. If such applicant is acceptable, the member shall make an offer to insure the applicant under voluntary coverage at such lower rate. History:  1971 c 813 s 10; 1986 c 444; 1992 c 520 s 16; 1995 c 258 s 50
65B.11 USE OF FACILITY BY PUBLIC. If, upon a formal hearing, the commissioner finds that a large proportion of qualified and eligible persons are failing to gain the benefits of the facility, the facility shall provide service to assist the public in making application to the facility for placement. History:   1971 c 813 s 11 
65B.12 RIGHT TO HEARING; CONSTRUCTION OF PLAN OF OPERATION. Subdivision 1. Hearing request. Any member, applicant or person insured under a policy placed through the facility may request a formal hearing and ruling by the governing committee on any alleged violation of the plan of operation or any alleged improper act or ruling of the facility. The request for hearing must be filed within 30 days after the date of the alleged act or decision. Subd. 2. Plan of operation to provide. The plan of operation shall provide for prompt and fair hearings, and shall prescribe the procedure to be followed in the hearings. Subd. 3. Appeal of governing committee ruling. Any formal ruling by the governing committee may be appealed to the commissioner by filing notice of appeal with the facility and the commissioner within 30 days after issuance of the ruling. The hearing shall be governed by the procedures for contested cases. Subd. 4. Appeal hearing. Upon a hearing pursuant to chapter 14, the commissioner shall issue an order approving or disapproving the action or decision of the governing committee or directing the governing committee to reconsider the ruling. Subd. 4a. Judicial review. In lieu of the appeal to the commissioner, a member, applicant, or person may seek judicial review of the governing committee's action. Subd. 5. Plan interpretation. The plan of operation shall be interpreted to conform to the laws of this state with respect to automobile insurance coverage and any changes in the laws, unless the facility is specifically excluded from the applicability of these laws. History:  1971 c 813 s 12; 1987 c 337 s 97; 1992 c 520 s 17
65B.1311 COVERAGE FOR FORMER SPOUSE. Subdivision 1. New policy issued. An insurer must issue a policy of private passenger insurance to the former spouse of a named insured, within the provisions of subdivision 2, if the following conditions are met: (1) the former spouse has been an insured driver under the former policy for at least the six months immediately preceding the entry of a valid decree of dissolution of marriage; (2) the former spouse makes application for a policy before the end of the policy period or within 60 days after the entry of the decree of dissolution of marriage, whichever is later; (3) the appropriate premium is paid; and (4) the former spouse and any person or persons who are to be an insured, as defined in section 65B.43, meets the insurer's eligibility standards for renewal policies. Subd. 2. Named insured. A named insured under a policy of private passenger vehicle insurance shall have the premium determined at the first and any subsequent renewals of the policy after entry of a valid decree of dissolution of the marriage of the named insured only on the basis of the driving record and rating classification applicable to the named insured and any person who is to be an insured, as defined in section 65B.43, under the policy to be renewed. History:  1986 c 455 s 49; 1987 c 337 s 98
65B.132 STUDENT DISCOUNTS; ELIGIBILITY. Any insurance company providing discounts on automobile insurance premiums to eligible persons attending colleges and universities must provide the discount to eligible students enrolled in technical colleges. History:  1975 c 44 s 1; 1987 c 258 s 12; 1989 c 246 s 2; 1Sp1995 c 3 art 16 s 13; 1996 c 412 art 13 s 2
65B.133 SURCHARGE DISCLOSURE. Subdivision 1. Definitions. For the purposes of this section, the terms defined in this section have the meanings given them. (a) "Computed premium" means the rate in effect before the application of a surcharge. (b) "Chargeable accident" means an accident which is taken into consideration in applying a surcharge. (c) "Chargeable traffic violation" means a traffic violation which is taken into consideration in applying a surcharge. (d) "Policy" means a policy providing private passenger vehicle insurance, as defined in section 65B.001, subdivision 2. (e) "Surcharge" means any increase in premium for a policy, including the removal of an accident-free or claim-free discount, based upon an accident or a traffic violation. (f) "Surcharge disclosure statement" means a written statement disclosing the surcharge plan of an insurer, the effective date of the surcharge plan, and the name of the insurer, and any other information which the commissioner may require to be disclosed to assist insureds in comparing surcharge plans among insurers. (g) "Surcharge plan" means the conditions under which an insurer applies a surcharge including but not limited to: (1) the maximum dollar amount which an insurer pays due to an accident without applying a surcharge, (2) accidents which are not chargeable, (3) chargeable traffic violations, (4) the length of time that an accident or a traffic violation is chargeable, and (5) surcharge rates for the first and each successive accident or traffic violation. (h) "Surcharge rate" means the amount of any surcharge expressed as a percentage of the computed premium rate or as a dollar amount surcharge, if a percentage surcharge is not used. Subd. 2. Disclosure to applicants. Before accepting the initial premium payment, an insurer or its agent shall provide a surcharge disclosure statement to any person who applies for a policy which is effective on or after January 1, 1983. If the insurer provides the surcharge disclosure statement on the insurer's website, the insurer or agent may notify the applicant orally or in writing of its availability for review on the insurer's website prior to accepting the initial payment, in lieu of providing a disclosure statement to the applicant in writing, if the insurer so notifies the applicant of the availability of a written version of this statement upon the applicant's request. The insurer shall provide the surcharge disclosure statement in writing if requested by the applicant. An oral notice shall be presumed delivered if the agent or insurer makes a contemporaneous notation in the applicant's record of the notice having been delivered or if the insurer or agent retains an audio recording of the notification provided to the applicant. Subd. 3.  [Repealed, 2010 c 384 s 104] Subd. 4. Notification of change. No insurer may change its surcharge plan unless a surcharge disclosure statement or written website notice is mailed or delivered to the named insured before the change is made. A surcharge disclosure statement disclosing a change applicable on the renewal of a policy, may be mailed with an offer to renew the policy. Surcharges cannot be applied to accidents or traffic violations that occurred prior to a change in a surcharge plan except to the extent provided under the prior plan. Subd. 5. Limitation on chargeable traffic violations. No traffic violation is chargeable to a driver unless the driver is convicted of, or forfeits bail for, the offense, or the driver's license is revoked pursuant to section 169A.52 or 171.177. If a surcharge is applied because bail is forfeited and if the driver is later acquitted of the offense, the insurer shall rebate the surcharge. A violation of section 169.685, subdivision 5, is not chargeable. Subd. 5a. Surcharge prohibition. No surcharge is chargeable to an insured who collects benefits under a policy because the insured is a passenger in a bus, taxi, or commuter van involved in an accident. Subd. 6. Penalty. Failure to comply with this section constitutes a violation of section 70A.04 and is subject to the penalties prescribed in section 70A.21. Subd. 7. Commissioner may promulgate rules. The commissioner may promulgate rules reasonably necessary to carry out and make effective this section. History:  1982 c 541 s 1; 1983 c 261 s 2; 1992 c 564 art 1 s 45; 1997 c 64 s 1; 2000 c 478 art 2 s 7; 2009 c 178 art 1 s 35-37; 2017 c 83 art 3 s 18
65B.134 COMPREHENSIVE COVERAGE; GLASS BREAKAGE. Any policy of automobile insurance, as defined in section 65B.14, subdivision 2, providing comprehensive coverage, whether designated as such or included in a policy providing broader coverage, must provide at the option of the insured complete coverage for repair or replacement of all damaged safety glass without regard to any deductible or minimum amount. History:   1983 c 292 s 2 
65B.135 LIMOUSINE INSURANCE. An insurer who provides insurance for limousines, defined in section 168.002, subdivision 15, shall provide insurance in a minimum aggregate amount of $1,500,000 per accident for each limousine covered. The insurance coverage may be provided by combining an underlying liability policy with an excess or umbrella policy as long as the minimum aggregate amount is met. History:  1989 c 318 s 3; 2014 c 175 s 1
65B.136 MINORS. A minor authorized under section 168.101, subdivision 1, to own a private passenger vehicle, as defined in section 65B.001, subdivision 3, may contract to buy a plan of reparation security, as defined in section 65B.43, subdivision 15, on that vehicle, as a contract that is fully binding on the minor on the same basis as if the minor were an adult. This section does not require an insurer to issue coverage to a minor or limit an insurer's underwriting discretion in regard to any aspect of the coverage. History:   2010 c 278 s 1 
65B.14 DEFINITIONS. Subdivision 1. Application. For the purposes of sections 65B.14 to 65B.21, the terms defined in this section have the meanings given them. Subd. 2. Policy of automobile insurance or policy. "Policy of automobile insurance" or "policy" means a policy of private passenger vehicle insurance as defined in section 65B.001, or a plan of reparation security as defined in section 65B.48 insuring less than five vehicles rated on a commercial or fleet basis, or a policy of insurance covering the use of a motorcycle, delivered or issued for delivery in this state. Subd. 3. Renewal or to renew. "Renewal" or "to renew" means the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer on the same rating plan, or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term; provided, however, that any policy with a policy period or term of less than six months or any policy with no fixed expiration date shall for the purpose of sections 65B.14 to 65B.21 be considered as if written for successive policy periods or terms of six months. Subd. 4. Nonpayment of premium. "Nonpayment of premium" means failure of the named insured to discharge when due any obligations in connection with the payment of premiums on a policy of automobile insurance or any installment of such premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit. Subd. 5. Violations. "Violations" means all moving traffic violations that are recorded by the Department of Public Safety on a household member's motor vehicle record, and violations reported by a similar authority in another state or moving traffic violations reported by the insured. History:  1967 c 463 s 1; 1971 c 813 s 13; 1974 c 56 s 1; 1974 c 408 s 31; 1977 c 366 s 2; 1984 c 592 s 54,56; 1986 c 444; 1996 c 446 art 1 s 56
65B.15 CANCELLATION OR REDUCTION IN LIMITS DURING POLICY PERIOD. Subdivision 1. Grounds and notice. No cancellation or reduction in the limits of liability of coverage during the policy period of any policy shall be effective unless notice thereof is given and unless based on one or more reasons stated in the policy which shall be limited to the following: 1. nonpayment of premium; or 2. the policy was obtained through a material misrepresentation; or 3. any insured made a false or fraudulent claim or knowingly aided or abetted another in the presentation of such a claim; or 4. the named insured failed to disclose fully motor vehicle accidents and moving traffic violations of the named insured for the preceding 36 months if called for in the written application; or 5. the named insured failed to disclose in the written application any requested information necessary for the acceptance or proper rating of the risk; or 6. the named insured knowingly failed to give any required written notice of loss or notice of lawsuit commenced against the named insured, or, when requested, refused to cooperate in the investigation of a claim or defense of a lawsuit; or 7. the named insured or any other operator who either resides in the same household, or customarily operates an automobile insured under such policy, unless the other operator is identified as a named insured in another policy as an insured: (a) has, within the 36 months prior to the notice of cancellation, had that person's driver's license under suspension or revocation because the person committed a moving traffic violation or because the person refused to be tested under section 169A.20, subdivision 1; or (b) is or becomes subject to epilepsy or heart attacks, and such individual does not produce a written opinion from a physician testifying to that person's medical ability to operate a motor vehicle safely, such opinion to be based upon a reasonable medical probability; or (c) has an accident record, conviction record (criminal or traffic), physical condition or mental condition, any one or all of which are such that the person's operation of an automobile might endanger the public safety; or (d) has been convicted, or forfeited bail, during the 24 months immediately preceding the notice of cancellation for criminal negligence in the use or operation of an automobile, or assault arising out of the operation of a motor vehicle, or operating a motor vehicle while in an intoxicated condition or while under the influence of drugs; or leaving the scene of an accident without stopping to report; or making false statements in an application for a driver's license, or theft or unlawful taking of a motor vehicle; or (e) has been convicted of, or forfeited bail for, one or more violations within the 18 months immediately preceding the notice of cancellation, of any law, ordinance, or rule which justify a revocation of a driver's license; or 8. the insured automobile is: (a) so mechanically defective that its operation might endanger public safety; or (b) used in carrying passengers for hire or compensation, provided however that the use of an automobile for a car pool or a private passenger vehicle used by a volunteer driver, as defined under section 65B.472, subdivision 1, paragraph (h), shall not be considered use of an automobile for hire or compensation; or (c) used in the business of transportation of flammables or explosives; or (d) an authorized emergency vehicle; or (e) subject to an inspection law and has not been inspected or, if inspected, has failed to qualify within the period specified under such inspection law; or (f) substantially changed in type or condition during the policy period, increasing the risk substantially, such as conversion to a commercial type vehicle, a dragster, sports car or so as to give clear evidence of a use other than the original use. Subd. 2. Nonapplication. This section shall not apply to any policy of automobile liability insurance which has been in effect less than 60 days at the time notice of cancellation is mailed or delivered by the insurer unless it is a renewal policy. Subd. 3.  [Repealed, 1984 c 592 s 94] History:  1967 c 463 s 2; 1985 c 248 s 70; 1986 c 444; 1987 c 337 s 99; 1989 c 260 s 13; 1996 c 446 art 1 s 57; 2000 c 478 art 2 s 7; 1Sp2021 c 4 art 6 s 12
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' 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. History:  1967 c 463 s 3; 1971 c 696 s 1; 1984 c 592 s 57; 1987 c 337 s 100; 2001 c 215 s 32
65B.161 REFUND OF PREMIUM ON CANCELLATION. Cancellation of a policy of automobile insurance pursuant to sections 65B.15 and 65B.16 shall not be effective unless any unearned premium due the insured is returned to the insured with the notice of cancellation or is delivered or sent by mail to the insured so as to be received by the insured not later than the effective date of cancellation. History:   1977 c 366 s 3 
65B.162 NOTICE OF POSSIBLE CANCELLATION. A written notice shall be provided to all applicants for private passenger insurance, at the time the application is submitted, containing the following language in bold print: "THE INSURER MAY ELECT TO CANCEL COVERAGE AT ANY TIME DURING THE FIRST 59 DAYS FOLLOWING ISSUANCE OF THE COVERAGE FOR ANY REASON WHICH IS NOT SPECIFICALLY PROHIBITED BY STATUTE." History:   1987 c 337 s 101 
65B.17 RENEWAL; NOTICE NOT TO RENEW. Subdivision 1. General regulations. No insurer shall fail to renew an automobile insurance policy unless it shall mail or deliver to the named insured, at the address shown in the policy, at least 60 days' advance notice of its intention not to renew. The notice must contain the specific underwriting or other reason or reasons for the nonrenewal. When the failure to renew is based upon a termination of the agency contract, the notice must so state. This section does not apply: (a) if the insurer has manifested its willingness to renew; or (b) in case of nonpayment of the renewal premium, provided that, notwithstanding the failure of an insurer to comply with this section, the policy terminates on the effective date of any other automobile insurance policy procured by the insured, with respect to any automobile designated in both policies. Renewal of a policy does not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of the renewal. No insurer shall fail to renew an automobile policy solely because of the age of the insured. No insurer shall refuse to renew an automobile insurance policy for reasons which are arbitrary or capricious. No insurer shall refuse to renew an automobile insurance policy in violation of rules adopted pursuant to subdivision 2. An insurer may refuse to renew an automobile insurance policy in case of nonpayment of dues to an association or organization, other than an insurance association or organization, where payment of dues is a prerequisite to obtaining or continuing such insurance; provided, however, that this provision for nonrenewal for failure to pay dues shall not be applicable to persons who are retired at age 62 years of age or older or who are disabled, according to Social Security standards. Subd. 2. Rulemaking. The commissioner may adopt rules pursuant to chapter 14 to specify the grounds for nonrenewal of an automobile policy. The rules must limit the basis for nonrenewal to the following factors: (a) the reasons stated for cancellation in section 65B.15; (b) payments made for collision, bodily injury liability, or property damage liability coverage; (c) moving violations of a driver; and (d) other factors deemed reasonable by the commissioner. The rules must specify the manner in which these factors will be considered and may reflect the severity or recurrence of any moving violation, the amount of any payment made, and the number of vehicles insured. Subd. 2a. Authorization to nonrenew. An insurer withdrawing from the market by nonrenewing a line of business must notify the commissioner in writing at least 90 days before termination of any policy is effective. The notice must contain the effective date of the withdrawal plan, the number of policies affected, the reason for the withdrawal, and the availability of coverage in the market. Subd. 3. Administrative penalty. The rules adopted under this section may provide for imposition of a monetary penalty not greater than $500 per occurrence upon insurers who are found to be in violation of any rule provision. History:  1967 c 463 s 4; 1969 c 845 s 1; 1971 c 696 s 2; 1974 c 56 s 2; 1976 c 175 s 1; 1983 c 203 s 2; 1984 c 592 s 58; 1984 c 640 s 32; 1995 c 233 art 2 s 56; 2007 c 104 s 18
65B.18 PROOF OF MAILING OF NOTICE. Proof of mailing of notice of cancellation, reduction in the limits of liability of coverage, or nonrenewal of a policy and, if required herein, the reason or reasons therefor to the named insured at the address shown in the policy, shall be sufficient proof that notice required herein has been given. History:  1967 c 463 s 5; 1969 c 6 s 16; 1974 c 56 s 3
65B.19 NOTICE OF CANCELLATION OR NONRENEWAL. Subdivision 1. Disclosure. No insurer shall take any action in regard to an automobile insurance policy on the statements or charges of any person made to the insurer concerning alleged unsafe driving habits of an insured unless the insurer shall concurrently disclose to the insured the name and address of the person from which the information was received. 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. History:  1967 c 463 s 6; 1969 c 845 s 2; 1971 c 696 s 3; 1971 c 813 s 14; 1973 c 610 s 1; 1984 c 592 s 59; 1986 c 444; 2001 c 215 s 33
65B.20 IMMUNITY OF INSURER OR COMMISSIONER; USE OF REASONS FOR CANCELLATION. There shall be no liability on the part of and no cause of action of any nature shall arise against the commissioner or against any insurer, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the insurer information as to reasons for nonrenewal or cancellation, for any statement made by them in any written notice of nonrenewal or cancellation, for the providing of information relating thereto, or for statements made or evidence submitted at any hearings conducted in connection therewith. History:  1967 c 463 s 7; 1969 c 845 s 3
65B.21 INSURED'S RIGHT TO OBJECT TO CANCELLATION OR NONRENEWAL. Subdivision 1. Form and manner. Any individual who believes such nonrenewal, cancellation or reduction in the limits of liability of coverage of the individual's policy is arbitrary, capricious or otherwise in violation of this provision, or who believes such notice of nonrenewal and the reason or reasons therefor were not given as provided herein, may, within 30 days after receipt of notice thereof, file in writing an objection to such action with the commissioner. Subd. 2. Investigation and determination by commissioner. Upon receipt of a written objection pursuant to the provisions herein, the commissioner may notify the insurer of receipt of such objection and of the right of the insurer to file a written response thereto within ten days of receipt of such notification. The commissioner may also order an investigation of the objection or complaint, the submission of additional information by the insured or the insurer about the action by the insurer or the objections of the insured, or such other procedure as the commissioner deems appropriate or necessary. Within 23 days of receipt of such written objection by an insured the commissioner shall approve or disapprove the insurer's action and shall notify the insured and insurer of the final decision. Either party may institute proceedings for judicial review of the commissioner's decision; provided, however, that the commissioner's final decision shall be binding pending judicial review. History:  1967 c 463 s 8; 1969 c 845 s 4; 1971 c 696 s 4; 1973 c 610 s 2; 1986 c 444; 1987 c 337 s 102
65B.28 ACCIDENT PREVENTION COURSE PREMIUM REDUCTIONS. Subdivision 1. Required reduction. An insurer must provide an appropriate premium reduction of at least ten percent on its policies of private passenger vehicle insurance, as defined in section 65B.001, subdivision 2, issued, delivered, or renewed in this state, to insureds 55 years old and older who successfully complete an accident prevention course or refresher course established under subdivisions 2 and 3. Subd. 2. Accident prevention course; rules. The commissioner of public safety shall adopt rules establishing and regulating a motor vehicle accident prevention course for persons 55 years old and older. The rules must, at a minimum, include provisions: (1) establishing curriculum requirements; (2) establishing the number of hours required for successful completion of the course; and (3) providing for the issuance of a course completion certification and requiring its submission to an insured as evidence of completion of the course. Subd. 3. Refresher course. The Department of Public Safety, in consultation with other traffic safety and medical professionals, may establish a refresher course for persons who have completed the original course under subdivision 2. The refresher course shall be no more than four hours, and based on the curriculum established under subdivision 2. The Department of Public Safety shall establish criteria for and approve training agencies or organizations authorized to conduct the refresher course. Subd. 4. Completion certificate. A person 55 years old and older may retake the original course or take the refresher course every three years and receive a course completion certificate to remain eligible for the premium reduction in subdivision 1. A person 58 years old and older who successfully completes a retaking of the original course or a refresher course more than three years from the date the person last was eligible for the premium reduction in subdivision 1 is entitled to reinstatement of this eligibility. The Department of Public Safety shall provide criteria for the issuance of the course completion certificates. History:  1984 c 532 s 1; 1987 c 337 s 103; 1994 c 547 s 1; 1997 c 187 art 3 s 18; 2012 c 141 s 1
65B.285 ANTITHEFT PROTECTION DEVICE PREMIUM REDUCTION. Subdivision 1. Definition. For the purposes of this section the term "authorized antitheft protection device" means a device provided by the manufacturer of a vehicle as original equipment or installed in a vehicle by the manufacturer of the vehicle or an authorized dealer of that manufacturer that does one or more of the following when activated unless the vehicle is entered and started by means of a lock system: (1) sound an alarm; (2) cause the vehicle horn to sound; (3) cause the vehicle lights to flash; or (4) cause the vehicle to be rendered inoperable. The device must be self-activating upon the locking of the passenger doors of the vehicle. Subd. 2. Required reduction. An insurer must provide an appropriate premium reduction of at least five percent on the comprehensive coverage on a policy of private passenger vehicle insurance, as defined in section 65B.001, subdivision 2, issued, delivered, or renewed in this state, to an insured whose vehicle is equipped with an authorized antitheft protection device. The premium reduction required by this subdivision applies to every vehicle of an insured that is equipped with an authorized antitheft protection device. History:   1995 c 115 s 1 
65B.286 SNOWMOBILE AUXILIARY LIGHTING SYSTEM DISCOUNT. Subdivision 1. Definition. For the purposes of this section, the term "auxiliary hazard warning lighting system" means a system installed by the manufacturer of a snowmobile as original equipment or installed in a snowmobile by the manufacturer or an authorized dealer of that manufacturer as an aftermarket system that does the following when activated: (1) a yellow light emitting diode (L.E.D.) light on the front of the snowmobile that flashes at least once per second and is visible at least one-half mile in front of the snowmobile; and (2) a red light emitting diode (L.E.D.) light on the rear of the snowmobile that flashes at least once per second and is visible at least one-half mile from behind the snowmobile. Subd. 2. Required reduction. An insurer must provide an appropriate premium reduction of at least five percent on a policy insuring the snowmobile, or on that portion of a policy insuring a snowmobile that is issued, delivered, or renewed in this state, to the insured whose snowmobile is equipped with an authorized auxiliary hazard warning lighting system. The premium reduction required by this subdivision applies to every snowmobile of the insured that is equipped with an auxiliary hazard warning lighting system. History:   2005 c 132 s 20 
65B.41 CITATION. Sections 65B.41 to 65B.71 may be cited as the "Minnesota No-Fault Automobile Insurance Act." History:  1974 c 408 s 1; 1978 c 674 s 57
65B.42 PURPOSE. The detrimental impact of automobile accidents on uncompensated injured persons, upon the orderly and efficient administration of justice in this state, and in various other ways requires that sections 65B.41 to 65B.71 be adopted to effect the following purposes: (1) to relieve the severe economic distress of uncompensated victims of automobile accidents within this state by requiring automobile insurers to offer and automobile owners to maintain automobile insurance policies or other pledges of indemnity which will provide prompt payment of specified basic economic loss benefits to victims of automobile accidents without regard to whose fault caused the accident; (2) to prevent the overcompensation of those automobile accident victims suffering minor injuries by restricting the right to recover general damages to cases of serious injury; (3) to encourage appropriate medical and rehabilitation treatment of the automobile accident victim by assuring prompt payment for such treatment; (4) to speed the administration of justice, to ease the burden of litigation on the courts of this state, and to create a system of small claims arbitration to decrease the expense of and to simplify litigation, and to create a system of mandatory intercompany arbitration to assure a prompt and proper allocation of the costs of insurance benefits between motor vehicle insurers; (5) to correct imbalances and abuses in the operation of the automobile accident tort liability system, to provide offsets to avoid duplicate recovery, to require medical examination and disclosure, and to govern the effect of advance payments prior to final settlement of liability. History:  1974 c 408 s 2; 1978 c 674 s 57
65B.43 DEFINITIONS. Subdivision 1. Scope. The following words and phrases shall, for the purpose of sections 65B.41 to 65B.71, have the meanings ascribed to them, except where the context clearly indicates a different meaning. Subd. 2. Motor vehicle. "Motor vehicle" means every vehicle, other than a motorcycle or other vehicle with fewer than four wheels, which (a) is required to be registered pursuant to chapter 168, and (b) is designed to be self-propelled by an engine or motor for use primarily upon public roads, highways or streets in the transportation of persons or property, and includes a trailer with one or more wheels, when the trailer is connected to or being towed by a motor vehicle. Subd. 3. Maintenance or use of a motor vehicle. "Maintenance or use of a motor vehicle" means maintenance or use of a motor vehicle as a vehicle, including, incident to its maintenance or use as a vehicle, occupying, entering into, and alighting from it. Maintenance or use of a motor vehicle does not include (1) conduct within the course of a business of repairing, servicing, or otherwise maintaining motor vehicles unless the conduct occurs off the business premises, or (2) conduct in the course of loading and unloading the vehicle unless the conduct occurs while occupying, entering into or alighting from it. Subd. 4. Owner. "Owner" means a person, other than a lienholder or secured party, who owns or holds legal title to a motor vehicle or is entitled to the use and possession of a motor vehicle subject to a security interest held by another person. If a motor vehicle is the subject of a lease having an initial term of six months or longer, the lessee shall be deemed the owner for the purposes of sections 65B.41 to 65B.71, and 169.09, subdivision 5a, notwithstanding the fact that the lessor retains title to the vehicle and notwithstanding the fact that the lessee may be the owner for the purposes of chapter 168A. Subd. 5. Insured. "Insured" means an insured under a plan of reparation security as provided by sections 65B.41 to 65B.71, including the named insured and the following persons not identified by name as an insured while (a) residing in the same household with the named insured and (b) not identified by name in any other contract for a plan of reparation security complying with sections 65B.41 to 65B.71 as an insured: (1) a spouse, (2) other relative of a named insured, or (3) a minor in the custody of a named insured or of a relative residing in the same household with a named insured. A person resides in the same household with the named insured if that person's home is usually in the same family unit, even though temporarily living elsewhere. Subd. 6. Income. "Income" means salary, wages, tips, commissions, professional fees, and other earnings from work or tangible things of economic value produced through work in individually owned businesses, farms, ranches or other work. Subd. 7. Loss. "Loss" means economic detriment resulting from the accident causing the injury, consisting only of medical expense, income loss, replacement services loss and, if the injury causes death, funeral expense, survivor's economic loss and survivor's replacement services loss. Noneconomic detriment is not loss; however, economic detriment is loss although caused by pain and suffering or physical or mental impairment. Subd. 8. Noneconomic detriment. "Noneconomic detriment" means all dignitary losses suffered by any person as a result of injury arising out of the ownership, maintenance, or use of a motor vehicle including pain and suffering, loss of consortium, and inconvenience. Subd. 9. Reparation obligor. "Reparation obligor" means an insurer or self-insurer obligated to provide the benefits required by sections 65B.41 to 65B.71, including natural persons, firms, partnerships, associations, corporations, governmental units, trusts and syndicates. Subd. 10. Basic economic loss benefits. "Basic economic loss benefits" means benefits as described in section 65B.44. Subd. 11. Injury. "Injury" means bodily harm to a person and death resulting from such harm. Subd. 12. Commercial vehicle. "Commercial vehicle" means: (a) any motor vehicle used as a common carrier, (b) any motor vehicle, other than a passenger vehicle defined in section 168.002, subdivision 24, which has a curb weight in excess of 5,500 pounds apart from cargo capacity, or (c) any motor vehicle while used in the for-hire transportation of property. Commercial vehicle does not include a "commuter van," which for purposes of this chapter means (1) a motor vehicle having a capacity of seven to 16 persons which is used principally to provide prearranged transportation of persons to or from their place of employment or to or from a transit stop authorized by a local transit authority which vehicle is to be operated by a person who does not drive the vehicle as a principal occupation but is driving it only to or from the principal place of employment, to or from a transit stop authorized by a local transit authority or, for personal use as permitted by the owner of the vehicle, or (2) a private passenger vehicle driven by a volunteer driver. Subd. 13. Motorcycle. "Motorcycle" means a self-propelled vehicle designed to travel on fewer than four wheels which has an engine rated at greater than five horsepower, and includes (1) a trailer with one or more wheels, when the trailer is connected to or being towed by a motorcycle; and (2) a motorized bicycle as defined in section 169.011, subdivision 45, but does not include an electric-assisted bicycle as defined in section 169.011, subdivision 27. Subd. 14. Commissioner. Except where otherwise indicated, "commissioner" means the commissioner of commerce of the state of Minnesota. Subd. 15. Plan of reparation security. "Plan of reparation security" means a contract, self-insurance, or other legal means under which there is an obligation to pay the benefits described in section 65B.49. Subd. 16. Uninsured motor vehicle. "Uninsured motor vehicle" means a motor vehicle or motorcycle for which a plan of reparation security meeting the requirements of sections 65B.41 to 65B.71 is not in effect. Subd. 17. Underinsured motor vehicle. "Underinsured motor vehicle" means a motor vehicle or motorcycle to which a bodily injury liability policy applies at the time of the accident but its limit for bodily injury liability is less than the amount needed to compensate the insured for actual damages. Subd. 18. Uninsured motorist coverage. "Uninsured motorist coverage" means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles. Subd. 19. Underinsured motorist coverage. "Underinsured motorist coverage" means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury from owners or operators of underinsured motor vehicles. Subd. 20. Political subdivision. "Political subdivision" means any statutory or home rule charter city; county; town; school district; or metropolitan council, board or commission operating under chapter 473. History:  1974 c 408 s 3; 1975 c 18 s 1,2; 1976 c 233 s 6; 1978 c 674 s 57; 1979 c 190 s 1; 1983 c 289 s 114 subd 1; 1984 c 592 s 60-62; 1984 c 655 art 1 s 92; 1985 c 168 s 1-5; 1985 c 309 s 1-4; 1986 c 444; 1987 c 269 s 2; 1989 c 140 s 2; 1996 c 435 s 2; 2005 c 163 s 88; 1Sp2021 c 4 art 6 s 13
65B.44 BASIC ECONOMIC LOSS BENEFITS. Subdivision 1. Inclusions. (a) Basic economic loss benefits shall provide reimbursement for all loss suffered through injury arising out of the maintenance or use of a motor vehicle, subject to any applicable deductibles, exclusions, disqualifications, and other conditions, and shall provide a minimum of $40,000 for loss arising out of the injury of any one person, consisting of: (1) $20,000 for medical expense loss arising out of injury to any one person; and (2) a total of $20,000 for income loss, replacement services loss, funeral expense loss, survivor's economic loss, and survivor's replacement services loss arising out of the injury to any one person. (b) Notwithstanding any other law to the contrary, a person entitled to basic economic loss benefits under this chapter is entitled to the full medical expense benefits set forth in subdivision 2, and may not receive medical expense benefits that are in any way less than those provided for in subdivision 2, or that involve any preestablished limitations on the benefits. Medical expenses must be reasonable and must be for necessary medical care as provided in subdivision 2. This paragraph shall not be deemed to alter the obligations of an insured or the rights of a reparation obligor as set forth in section 65B.56. (c) No reparation obligor or health plan company as defined in section 62Q.01, subdivision 4, may enter into or renew any contract that provides, or has the effect of providing, managed care services to no-fault claimants. For the purposes of this section, "managed care services" is defined as any program of medical services that uses health care providers managed, owned, employed by, or under contract with a health plan company. Subd. 2. Medical expense benefits. (a) Medical expense benefits shall reimburse all reasonable expenses for necessary: (1) medical, surgical, x-ray, optical, dental, chiropractic, and rehabilitative services, including prosthetic devices; (2) prescription drugs, provided that: (i) prescription drugs filled and dispensed outside of a licensed pharmacy shall be billed at the average wholesale price (AWP), or its equivalent, for that drug on that date as published in Medispan, Redbook, or Gold Standard Drug Database, as identified by its National Drug Code, plus a dispensing fee of $4.18; (ii) if a prescription drug has been repackaged, the average wholesale price used to determine the maximum reimbursement shall be the average wholesale price for the underlying drug product, as identified by its National Drug Code from the original labeler; and (iii) compound drugs shall be billed by listing each drug and its National Drug Code number included in the compound and calculating the charge for each drug separately. Reimbursement shall be based on the sum of the fee for each ingredient for which there is an assigned National Drug Code number plus a single dispensing fee of $4.18. Compound drugs shall not be dispensed without first obtaining preauthorization from the reparation obligor; (3) ambulance and all other transportation expenses incurred in traveling to receive other covered medical expense benefits; (4) sign interpreting and language translation services, other than such services provided by a family member of the patient, related to the receipt of medical, surgical, x-ray, optical, dental, chiropractic, hospital, extended care, nursing, and rehabilitative services; and (5) hospital, extended care, and nursing services. (b) Hospital room and board benefits may be limited, except for intensive care facilities, to the regular daily semiprivate room rates customarily charged by the institution in which the recipient of benefits is confined. (c) Such benefits shall also include necessary remedial treatment and services recognized and permitted under the laws of this state for an injured person who relies upon spiritual means through prayer alone for healing in accordance with that person's religious beliefs. (d) Medical expense loss includes medical expenses accrued prior to the death of a person notwithstanding the fact that benefits are paid or payable to the decedent's survivors. (e) Medical expense benefits for rehabilitative services shall be subject to the provisions of section 65B.45. Subd. 2a. Person convicted of insurance fraud. (a) A person convicted of insurance fraud under section 609.611 in a case related to this chapter or of employment of runners under section 609.612 may not enforce a contract for payment of services eligible for reimbursement under subdivision 2 against an insured or reparation obligor. (b) After a period of five years from the date of conviction, a person described in paragraph (a) may apply to district court to extinguish the collateral sanction set forth in paragraph (a), which the court may grant in its reasonable discretion. Subd. 3. Disability and income loss benefits. (a) Disability and income loss benefits shall provide compensation for 85 percent of the injured person's loss of present and future gross income from inability to work proximately caused by the nonfatal injury subject to a maximum of $500 per week. Loss of income includes the costs incurred by a self-employed person to hire substitute employees to perform tasks which are necessary to maintain the income of the injured person, which are normally performed by the injured person, and which cannot be performed because of the injury. (b) If the injured person is unemployed at the time of injury and is receiving or is eligible to receive unemployment benefits under chapter 268, but the injured person loses eligibility for those benefits because of inability to work caused by the injury, disability and income loss benefits shall provide compensation for the lost benefits in an amount equal to the unemployment benefits which otherwise would have been payable, subject to a maximum of $500 per week. (c) Compensation under this subdivision shall be reduced by any income from substitute work actually performed by the injured person or by income the injured person would have earned in available appropriate substitute work which the injured person was capable of performing but unreasonably failed to undertake. (d) For the purposes of this section "inability to work" means disability which prevents the injured person from engaging in any substantial gainful occupation or employment on a regular basis, for wage or profit, for which the injured person is or may by training become reasonably qualified. If the injured person returns to employment and is unable by reason of the injury to work continuously, compensation for lost income shall be reduced by the income received while the injured person is actually able to work. The weekly maximums may not be prorated to arrive at a daily maximum, even if the injured person does not incur loss of income for a full week. (e) For the purposes of this section, an injured person who is "unable by reason of the injury to work continuously" includes, but is not limited to, a person who misses time from work, including reasonable travel time, and loses income, vacation, or sick leave benefits, to obtain medical treatment for an injury arising out of the maintenance or use of a motor vehicle. Subd. 3a. Disability and income loss benefits election; senior citizens. A plan of reparation security issued to or renewed with a person who has attained the age of 65 or who has attained the age of 60 years and is retired and receiving a pension, must provide disability and income loss benefits under section 65B.44, subdivision 3, unless the insured elects not to have this coverage. An election by the insured not to have this coverage remains in effect until revoked by the insured. The reparation obligor shall notify a person of the person's rights under this section at the time of the sale or the first renewal of the policy after the insured has attained the age of 60 years and at least annually after that. The rate for any plan for which coverage has been excluded or reduced pursuant to this section must be reduced accordingly. This section does apply to self-insurance. Subd. 4. Funeral and burial expenses. Funeral and burial benefits shall be reasonable expenses not in excess of $5,000, including expenses for cremation or delivery under the Darlene Luther Revised Uniform Anatomical Gift Act, chapter 525A. Subd. 5. Replacement service and loss. Replacement service loss benefits shall reimburse all expenses reasonably incurred by or on behalf of the nonfatally injured person in obtaining usual and necessary substitute services in lieu of those that, had the injured person not been injured, the injured person would have performed not for income but for direct personal benefit or for the benefit of the injured person's household; if the nonfatally injured person normally, as a full time responsibility, provides care and maintenance of a home with or without children, the benefit to be provided under this subdivision shall be the reasonable value of such care and maintenance or the reasonable expenses incurred in obtaining usual and necessary substitute care and maintenance of the home, whichever is greater. These benefits shall be subject to a maximum of $200 per week. All replacement services loss sustained on the date of injury and the first seven days thereafter is excluded in calculating replacement services loss. Subd. 6. Survivors economic loss benefits. Survivors economic loss benefits, in the event of death occurring within one year of the date of the accident, caused by and arising out of injuries received in the accident, are subject to a maximum of $500 per week and shall cover loss accruing after decedent's death of contributions of money or tangible things of economic value, not including services, that surviving dependents would have received from the decedent for their support during their dependency had the decedent not suffered the injury causing death. For the purposes of definition under sections 65B.41 to 65B.71, the following described persons shall be presumed to be dependents of a deceased person: (a) a wife is dependent on a husband with whom she lives at the time of his death; (b) a husband is dependent on a wife with whom he lives at the time of her death; (c) any child while under the age of 18 years, or while over that age but physically or mentally incapacitated from earning, is dependent on the parent with whom the child is living or from whom the child is receiving support regularly at the time of the death of such parent; or (d) an actual dependent who lives with the decedent at the time of the decedent's death. Questions of the existence and the extent of dependency shall be questions of fact, considering the support regularly received from the deceased. Payments shall be made to the dependent, except that benefits to a dependent who is a child or an incapacitated person may be paid to the dependent's surviving parent or guardian. Payments shall be terminated whenever the recipient ceases to maintain a status which if the decedent were alive would be that of dependency. Subd. 7. Survivors replacement services loss. Survivors replacement services loss benefits shall reimburse expenses reasonably incurred by surviving dependents after the date of the decedent's death in obtaining ordinary and necessary services in lieu of those the deceased would have performed for their benefit had the decedent not suffered the injury causing death, minus expenses of the survivors avoided by reason of the decedent's death. These benefits shall be subject to a maximum of $200 per week. Subd. 8. Property damage exclusion. "Basic economic loss benefits" do not include benefits for physical damage done to property including motor vehicles and their contents. History:  1974 c 408 s 4; 1975 c 18 s 3-6; 1976 c 2 s 42; 1977 c 266 s 1; 1978 c 674 s 57; 1979 c 221 s 1,2; 1983 c 345 s 1; 1984 c 602 s 5; 1985 c 168 s 6,7; 1Sp1985 c 10 s 67; 1986 c 444; 1989 c 260 s 14; 1991 c 202 s 1; 1997 c 66 s 80; 1999 c 107 s 66; 1999 c 134 s 1; 1999 c 177 s 67; 1987 c 337 s 107; 2001 c 124 s 1,2; 2002 c 274 s 1; 2006 c 255 s 57; 2014 c 310 s 3-6; 1Sp2015 c 1 art 3 s 11
65B.45 REHABILITATION TREATMENT AND OCCUPATIONAL TRAINING. Subdivision 1. Reparation obligor responsibility. A reparation obligor is responsible for the cost of a procedure or treatment for rehabilitation or a course of rehabilitative occupational training if the procedure, treatment, or training is reasonable and appropriate for the particular case, its cost is reasonable in relation to its probable rehabilitative effects, and it is likely to contribute substantially to medical or occupational rehabilitation. Subd. 2. Notice of treatment or training. An injured person who has undertaken a procedure or treatment for rehabilitation or a course of rehabilitative occupational training, other than medical rehabilitation procedure or treatment, shall give notice to the reparation obligor of having undertaken the procedure, treatment, or training within 60 days after a rehabilitation expense exceeding $1,000 has been incurred for the procedure, treatment, or training, unless the reparation obligor knows or has reason to know of the undertaking. If the injured person does not give the required notice within the prescribed time, the reparation obligor is responsible only for $1,000 or the expense incurred after the notice is given and within the 60 days before the notice, whichever is greater, unless failure to give timely notice is the result of excusable neglect. Subd. 3. Enforcement of reparation obligor responsibility. If the injured person notifies the reparation obligor of a proposed specified procedure or treatment for rehabilitation, or a proposed specified course of rehabilitative occupational training, and the reparation obligor does not promptly thereafter accept responsibility for its cost, the injured person may make a motion in an action to adjudicate the claim, or, if no action is pending, bring an action in the district court, for a determination that the reparation obligor is responsible for its costs. A reparation obligor may make a motion in an action to adjudicate the injured person's claim, or, if no action is pending, bring an action in the district court, for a determination that it is not responsible for the cost of a procedure, treatment, or course of training which the injured person has undertaken or proposes to undertake. A determination by the court that the reparation obligor is not responsible for the cost of a procedure, treatment, or course of training is not res judicata as to the propriety of any other proposal or the injured person's right to other benefits. This subdivision does not preclude an action by the reparation obligor or the injured person for declaratory relief under any other law of this state, nor an action by the injured person to recover basic economic loss benefits. Subd. 4. Insured's refusal to accept treatment or training; adjudication of claim. If an injured person unreasonably refuses to accept a rehabilitative procedure, treatment, or course of occupational training, a reparation obligor may make a motion in an action to adjudicate the injured person's claim, or if no action is pending, may bring an action in the district court, for a determination that future benefits will be reduced or terminated to limit recovery of benefits to an amount equal to benefits that in reasonable probability would be due if the injured person had submitted to the procedure, treatment, or training, and for other reasonable orders. In determining whether an injured person has reasonable ground for refusal to undertake the procedure, treatment, or training, the court shall consider all relevant factors, including the risks to the injured person, the extent of the probable benefit, the place where the procedure, treatment, or training is offered, the extent to which the procedure, treatment, or training is recognized as standard and customary, and whether the imposition of sanctions because of the person's refusal would abridge the right to the free exercise of religion. History:  1974 c 408 s 5; 1986 c 444
65B.46 RIGHT TO BENEFITS. Subdivision 1. Motor vehicle or motorcycle accident in this state. If the accident causing injury occurs in this state, every person suffering loss from injury arising out of maintenance or use of a motor vehicle or as a result of being struck as a pedestrian by a motorcycle has a right to basic economic loss benefits. Subd. 2. Motor vehicle or motorcycle accident outside this state. If the accident causing injury occurs outside this state in the United States, United States possessions, or Canada, the following persons and their surviving dependents suffering loss from injury arising out of maintenance or use of a motor vehicle or as a result of being struck as a pedestrian by a motorcycle have a right to basic economic loss benefits: (1) insureds, and (2) the driver and other occupants of a secured vehicle, other than (a) a vehicle which is regularly used in the course of the business of transporting persons or property and which is one of five or more vehicles under common ownership, or (b) a vehicle owned by a government other than this state, its political subdivisions, municipal corporations, or public agencies. The reparation obligor may, if the policy expressly states, extend the basic economic loss benefits to any stated area beyond the limits of the United States, United States possessions and Canada. Subd. 3. Limitation; motorcycle injuries. For the purposes of sections 65B.41 to 65B.71, injuries suffered by a person while on, mounting or alighting from a motorcycle do not arise out of the maintenance or use of a motor vehicle although a motor vehicle is involved in the accident causing the injury. History:  1974 c 408 s 6; 1978 c 674 s 57; 1980 c 539 s 1; 1987 c 337 s 104
65B.47 PRIORITY OF APPLICABILITY OF SECURITY FOR PAYMENT OF BASIC ECONOMIC LOSS BENEFITS. Subdivision 1. Injury resulting from business use. In case of injury to the driver or other occupant of a motor vehicle, if the accident causing the injury occurs while the vehicle is being used in the business of transporting persons or property, the security for payment of basic economic loss benefits is the security covering the vehicle or, if none, the security under which the injured person is an insured. Subd. 1a. Exemptions. Subdivision 1 does not apply to: (1) a commuter van; (2) a vehicle being used to transport children as part of a family or group family day care program; (3) a vehicle being used to transport children to school or to a school-sponsored activity; (4) a bus while it is in operation within the state of Minnesota as to any Minnesota resident who is an insured as defined in section 65B.43, subdivision 5; (5) a passenger in a taxi; or (6) a taxi driver, provided that this clause applies only to policies issued or renewed on or after September 1, 1996, and prior to September 1, 1997. Subd. 2. Injury resulting from use of vehicle provided by employer. In case of injury to an employee, or to the employee's spouse or other relative residing in the same household, if the accident causing the injury occurs while the injured person is driving or occupying a motor vehicle other than a commuter van furnished by the employer, the security for payment of basic economic loss benefits is the security covering the vehicle or, if none, the security under which the injured person is an insured. Subd. 3. Injury to other persons. In the case of any other person whose injury arises from the maintenance or use of a motor vehicle described in subdivision 1 or 2 who is not a driver or occupant of another involved motor vehicle, the security for the payment of basic economic loss benefits is the security covering the vehicle, or if none, the security under which the injured person is an insured. Subd. 4. Other cases. In all other cases, the following priorities apply: (a) The security for payment of basic economic loss benefits applicable to injury to an insured is the security under which the injured person is an insured. (b) The security for payment of basic economic loss benefits applicable to injury to the driver or other occupant of an involved motor vehicle who is not an insured is the security covering that vehicle. (c) The security for payment of basic economic loss benefits applicable to injury to a person not otherwise covered who is not the driver or other occupant of an involved motor vehicle is the security covering any involved motor vehicle. An unoccupied parked vehicle is not an involved motor vehicle unless it was parked so as to cause unreasonable risk of injury. Subd. 5. Contribution. If two or more obligations to pay basic economic loss benefits are applicable to an injury under the priorities set out in this section, benefits are payable only once and the reparation obligor against whom a claim is asserted shall process and pay the claim as if wholly responsible, but the reparation obligor is thereafter entitled to recover contribution pro rata for the basic economic loss benefits paid and the costs of processing the claim. Where contribution is sought among reparation obligors responsible under subdivision 4, clause (c), proration shall be based on the number of involved motor vehicles. Subd. 6. Subrogation. Where a reparation obligor pays basic economic loss benefits which another reparation obligor is obligated to pay under the priority provided in this section, the reparation obligor that pays is subrogated to all rights of the person to whom benefits are paid. Subd. 7. Adding policies together. Unless a policyholder makes a specific election to have two or more policies added together the limit of liability for basic economic loss benefits for two or more motor vehicles may not be added together to determine the limit of insurance coverage available to an injured person for any one accident. An insurer shall notify policyholders that they may elect to have two or more policies added together. History:  1974 c 408 s 7; 1976 c 180 s 1; 1976 c 233 s 7,8; 1985 c 168 s 8; 1986 c 444; 1986 c 455 s 50; 1990 c 496 s 1,2; 1995 c 227 s 1; 1996 c 446 art 1 s 58
65B.472 TRANSPORTATION NETWORK FINANCIAL RESPONSIBILITY. Subdivision 1. Definitions. (a) Unless a different meaning is expressly made applicable, the terms defined in paragraphs (b) through (g) have the meanings given them for the purposes of this chapter. (b) A "digital network" means any online-enabled application, software, website, or system offered or utilized by a transportation network company that enables the prearrangement of rides with transportation network company drivers. (c) A "personal vehicle" means a vehicle that is used by a transportation network company driver in connection with providing a prearranged ride and is: (1) owned, leased, or otherwise authorized for use by the transportation network company driver; and (2) not a taxicab, limousine, for-hire vehicle, or a private passenger vehicle driven by a volunteer driver. (d) A "prearranged ride" means the provision of transportation by a driver to a rider, beginning when a driver accepts a ride requested by a rider through a digital network controlled by a transportation network company, continuing while the driver transports a requesting rider, and ending when the last requesting rider departs from the personal vehicle. A prearranged ride does not include transportation provided using a taxicab, limousine, or other for-hire vehicle. (e) A "transportation network company" means a corporation, partnership, sole proprietorship, or other entity that is operating in Minnesota that uses a digital network to connect transportation network company riders to transportation network company drivers who provide prearranged rides. (f) A "transportation network company driver" or "driver" means an individual who: (1) receives connections to potential riders and related services from a transportation network company in exchange for payment of a fee to the transportation network company; and (2) uses a personal vehicle to provide a prearranged ride to riders upon connection through a digital network controlled by a transportation network company in return for compensation or payment of a fee. (g) A "transportation network company rider" or "rider" means an individual or persons who use a transportation network company's digital network to connect with a transportation network driver who provides prearranged rides to the rider in the driver's personal vehicle between points chosen by the rider. (h) A "volunteer driver" means an individual who transports persons or goods on behalf of a nonprofit entity or governmental unit in a private passenger vehicle and receives no compensation for services provided other than the reimbursement of actual expenses. Subd. 2. Maintenance of transportation network financial responsibility. (a) A transportation network company driver or transportation network company on the driver's behalf shall maintain primary automobile insurance that recognizes that the driver is a transportation network company driver or otherwise uses a vehicle to transport passengers for compensation and covers the driver: (1) while the driver is logged on to the transportation network company's digital network; or (2) while the driver is engaged in a prearranged ride. (b) The following automobile insurance requirements apply while a participating transportation network company driver is logged on to the transportation network company's digital network and is available to receive transportation requests but is not engaged in a prearranged ride: (1) primary coverage insuring against loss resulting from liability imposed by law for injury and property damage, including the requirements of section 65B.49, subdivision 3, in the amount of not less than $50,000 because of death or bodily injury to one person in any accident, $100,000 because of death or bodily injury to two or more persons in any accident, and $30,000 for injury to or destruction of property of others in any one accident; (2) security for the payment of basic economic loss benefits where required by section 65B.44 pursuant to the priority requirements of section 65B.47. A transportation network company and a transportation network company driver, during the period set forth in this paragraph, are deemed to be in the business of transporting persons for purposes of section 65B.47, subdivision 1, and the insurance required under this subdivision shall be deemed to cover the vehicle during the period set forth in this paragraph; (3) primary uninsured motorist coverage and primary underinsured motorist coverage where required by section 65B.49, subdivisions 3a and 4a; and (4) the coverage requirements of this subdivision may be satisfied by any of the following: (i) automobile insurance maintained by the transportation network company driver; (ii) automobile insurance maintained by the transportation network company; or (iii) any combination of items (i) and (ii). (c) The following automobile insurance requirements apply while a transportation network company driver is engaged in a prearranged ride: (1) primary coverage insuring against loss resulting from liability imposed by law for injury and property damage, including the requirements of section 65B.49, in the amount of not less than $1,500,000 for death, injury, or destruction of property of others; (2) security for the payment of basic economic loss benefits where required by section 65B.44 pursuant to the priority requirements of section 65B.47. A transportation network company and a transportation network company driver, during the period set forth in this paragraph, are deemed to be in the business of transporting persons for purposes of section 65B.47, subdivision 1, and the insurance required under this subdivision shall be deemed to cover the vehicle during the period set forth in this paragraph; (3) primary uninsured motorist coverage and primary underinsured motorist coverage where required by section 65B.49, subdivisions 3a and 4a; and (4) the coverage requirements of this subdivision may be satisfied by any of the following: (i) automobile insurance maintained by the transportation network company driver; (ii) automobile insurance maintained by the transportation network company; or (iii) any combination of items (i) and (ii). (d) If insurance maintained by the driver in paragraph (b) or (c) has lapsed or does not provide the required coverage, insurance maintained by a transportation network company shall provide the coverage required by this subdivision beginning with the first dollar of a claim and have the duty to defend the claim. (e) Coverage under an automobile insurance policy maintained by the transportation network company shall not be dependent on a personal automobile insurer first denying a claim nor shall a personal automobile insurance policy be required to first deny a claim. (f) Insurance required by this subdivision must satisfy the requirements of chapter 60A. (g) Insurance satisfying the requirements of this subdivision shall be deemed to satisfy the financial responsibility requirements under the Minnesota No-Fault Automobile Insurance Act, sections 65B.41 to 65B.71. (h) A transportation network company driver shall carry proof of coverage satisfying paragraphs (b) and (c) at all times during the driver's use of a vehicle in connection with a transportation network company's digital network. In the event of an accident, a transportation network company driver shall provide this insurance coverage information to the directly interested parties, automobile insurers, and investigating police officers upon request pursuant to section 65B.482, subdivision 1. Upon such request, a transportation network company driver shall also disclose to directly interested parties, automobile insurers, and investigating police officers whether the driver was logged on to the transportation network company's digital network or on a prearranged ride at the time of an accident. Subd. 3. Disclosure to transportation network company drivers. The transportation network company shall disclose in writing to transportation network company drivers the following before they are allowed to accept a request for a prearranged ride on the transportation network company's digital network: (1) the insurance coverage, including the types of coverage and the limits for each coverage, that the transportation network company provides while the transportation network company driver uses a personal vehicle in connection with a transportation network company's digital network; (2) that the transportation network company driver's own automobile insurance policy might not provide any coverage while the driver is logged on to the transportation network company's digital network and is available to receive transportation requests or is engaged in a prearranged ride depending on its terms; and (3) that using a vehicle with a lien against the vehicle to provide transportation network services may violate the transportation network driver's contract with the lienholder. Subd. 4. Automobile insurance provisions. (a) Insurers that write automobile insurance in Minnesota may exclude any and all coverage afforded under the owner's insurance policy for any loss or injury that occurs while a driver is logged on to a transportation network company's digital network or while a driver provides a prearranged ride. This right to exclude all coverage may apply to any coverage included in an automobile insurance policy including, but not limited to: (1) liability coverage for bodily injury and property damage; (2) uninsured and underinsured motorist coverage; (3) basic economic loss benefits as defined under section 65B.44; (4) medical payments coverage; (5) comprehensive physical damage coverage; and (6) collision physical damage coverage. These exclusions apply notwithstanding any requirement under the Minnesota No-Fault Automobile Insurance Act, sections 65B.41 to 65B.71. Nothing in this section implies or requires that a personal automobile insurance policy provide coverage while the driver is logged on to the transportation network company's digital network, while the driver is engaged in a prearranged ride, or while the driver otherwise uses a vehicle to transport passengers for compensation. Nothing in this section shall be deemed to preclude an insurer from providing coverage for the transportation network company driver's vehicle, if it so chooses to do so by contract or endorsement. (b) Automobile insurers that exclude coverage as permitted in paragraph (a) shall have no duty to defend or indemnify any claim expressly excluded thereunder. Nothing in this section shall be deemed to invalidate or limit an exclusion contained in a policy, including any policy in use or approved for use in Minnesota prior to May 19, 2015, that excludes coverage for vehicles used to carry persons or property for a charge or available for hire by the public. (c) An automobile insurer that defends or indemnifies a claim against a driver that is excluded under the terms of its policy as permitted in paragraph (a) shall have a right of contribution against other insurers that provide automobile insurance to the same driver in satisfaction of the coverage requirements of subdivision 2 at the time of loss. (d) In a claims coverage investigation, transportation network companies and any insurer potentially providing coverage under subdivision 2 shall cooperate to facilitate the exchange of relevant information with directly involved parties and any insurer of the transportation network company driver if applicable, including the precise times that a transportation network company driver logged on and off of the transportation network company's digital network in the 12-hour period immediately preceding and in the 12-hour period immediately following the accident and disclose to one another a clear description of the coverage, exclusions, and limits provided under any automobile insurance maintained under subdivision 2. History:  2015 c 48 s 1; 1Sp2021 c 4 art 6 s 14
65B.48 REPARATION SECURITY COMPULSORY. Subdivision 1. General requirement and coverages. Every owner of a motor vehicle of a type which is required to be registered or licensed or is principally garaged in this state shall maintain during the period in which operation or use is contemplated a plan of reparation security under provisions approved by the commissioner, insuring against loss resulting from liability imposed by law for injury and property damage sustained by any person arising out of the ownership, maintenance, operation or use of the vehicle. The plan of reparation security shall provide for basic economic loss benefits and residual liability coverage in amounts not less than those specified in section 65B.49, subdivision 3, clauses (1) and (2). The nonresident owner of a motor vehicle which is not required to be registered or licensed, or which is not principally garaged in this state, shall maintain such security in effect continuously throughout the period of the operation, maintenance or use of such motor vehicle within this state with respect to accidents occurring in this state; such security shall include coverage for property damage to a motor vehicle rented or leased within this state by a nonresident. Subd. 2. Types of security. The security required by sections 65B.41 to 65B.71 may be provided by a policy of insurance complying with sections 65B.41 to 65B.71 which is issued by or on behalf of an insurer authorized to transact business in this state or, if the vehicle is registered in another state, by a policy of insurance issued by or on behalf of an insurer authorized to transact business in either this state or the state in which the vehicle is registered or by qualifying as a self-insurer. Subd. 3. Self-insurance. Self-insurance, subject to approval of the commissioner, is effected by filing with the commissioner in satisfactory form: (1) a continuing undertaking by the owner or other appropriate person to pay tort liabilities or basic economic loss benefits, or both, and to perform all other obligations imposed by sections 65B.41 to 65B.71; (2) evidence that appropriate provision exists for prompt administration of all claims, benefits, and obligations provided by sections 65B.41 to 65B.71; (3) evidence that reliable financial arrangements, deposits, or commitments exist providing assurance, substantially equivalent to that afforded by a policy of insurance complying with sections 65B.41 to 65B.71, for payment of tort liabilities, basic economic loss benefits, and all other obligations imposed by sections 65B.41 to 65B.71; and (4) a nonrefundable initial application fee of $2,500 and a renewal fee of $1,200 for political subdivisions and $1,500 for nonpolitical entities every three years. Subd. 3a. Rulemaking. To carry out the purposes of subdivision 3, the commissioner may adopt rules pursuant to chapter 14. These rules may: (a) establish reporting requirements; (b) establish standards or guidelines to assure the adequacy of the financing and administration of self-insurance plans; (c) establish bonding requirements or other provisions assuring the financial integrity of entities that self-insure other than bonding requirements for self-insuring political subdivisions; and (d) establish other reasonable requirements to further the purposes of this section. Subd. 4. State or political subdivisions to provide security. The state of Minnesota or any agency thereof and any political subdivision of the state or agency thereof shall provide security by lawfully obligating itself to pay benefits in accordance with sections 65B.41 to 65B.71, either as a self-insurer pursuant to subdivision 3, or through purchase of a plan of reparation security. Subd. 5. Motorcycle coverage. (a) Every owner of a motorcycle registered or required to be registered in this state or operated in this state by the owner or with the owner's permission shall provide and maintain security for the payment of tort liabilities arising out of the maintenance or use of the motorcycle in this state. Security may be provided by a contract of liability insurance complying with section 65B.49, subdivision 3, or by qualifying as a self insurer in the manner provided in subdivision 3. (b) At the time an application for motorcycle insurance without personal injury protection coverage is completed, there must be attached to the application a separate form containing a written notice in at least 10-point bold type, if printed, or in capital letters, if typewritten that states: "Under Minnesota law, a policy of motorcycle coverage issued in the State of Minnesota must provide liability coverage only, and there is no requirement that the policy provide personal injury protection (PIP) coverage in the case of injury sustained by the insured. No PIP coverage provided by an automobile insurance policy you may have in force will extend to provide coverage in the event of a motorcycle accident." Subd. 6. Self-insurer defined. A person providing security pursuant to subdivision 3 is a "self-insurer." Subd. 7. Security covering vehicle and secured vehicle defined. "Security covering the vehicle" is the insurance or other security so provided. The vehicle for which the security is so provided is the "secured vehicle." Subd. 8.  [Repealed, 1984 c 592 s 94] History:  1974 c 408 s 8; 1975 c 160 s 1; 1978 c 674 s 57; 1983 c 203 s 3,4; 1984 c 640 s 32; 1985 c 168 s 9; 1986 c 444; 1987 c 337 s 105; 1995 c 233 art 2 s 56; 1997 c 200 art 1 s 44; 1999 c 177 s 68; 1999 c 223 art 2 s 8; 2005 c 132 s 21
65B.482 INSURANCE IDENTIFICATION CARDS. Subdivision 1. Issuance of card. Every obligor transacting business in this state shall provide an insurance identification card for each vehicle covered at the time of initiating each policy of automobile insurance, as defined in section 65B.14, subdivision 2, and at the time of policy renewal. The insurance identification card may be provided in an electronic format if the insured agrees. When an insured has five or more vehicles registered in this state, the obligor may use the designation "all owned vehicles" on each identification card in lieu of a specified description. The card must state: (1) the insured's name; (2) the policy number; (3) the policy dates of coverage; (4) the make, model, and year of the vehicle being covered; (5) the vehicle identification number or at least the last three digits of that number; and (6) the name of the obligor providing coverage. Subd. 2. Notice of criminal penalties. Every obligor transacting business in this state shall provide to the insured at the time of issuing an insurance identification card under subdivision 1 a plain-language summary of the criminal penalties imposed by sections 169.791, 169.793, and 169.797. History:  1989 c 321 s 1; 1992 c 571 art 14 s 13; 2012 c 185 s 2
65B.49 INSURERS. Subdivision 1. Mandatory offer of insurance benefits. On and after January 1, 1975, no insurance policy providing benefits for injuries arising out of the maintenance or use of a motor vehicle shall be issued, renewed, continued, delivered, issued for delivery, or executed in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, under provisions approved by the commissioner, requiring the insurer to pay, regardless of the fault of the insured, basic economic loss benefits. A plan of reparation security shall state the name and address of the named insured, the coverage afforded by the policy, the premium charged, the term and limits of liability, and shall contain an agreement or endorsement that insurance is provided thereunder in accordance with and subject to the provisions of sections 65B.41 to 65B.71. Subd. 2. Basic economic loss. Each plan of reparation security shall provide for payment of basic economic loss benefits. Subd. 3. Residual liability insurance. (1) Each plan of reparation security shall also contain stated limits of liability, exclusive of interest and costs, with respect to each vehicle for which coverage is thereby granted, of not less than $30,000 because of bodily injury to one person in any one accident and, subject to said limit for one person, of not less than $60,000 because of injury to two or more persons in any one accident, and, if the accident has resulted in injury to or destruction of property, of not less than $10,000 because of such injury to or destruction of property of others in any one accident. (2) Under residual liability insurance the reparation obligor shall be liable to pay, on behalf of the insured, sums which the insured is legally obligated to pay as damages because of bodily injury and property damage arising out of the ownership, maintenance or use of any motor vehicle, including a motor vehicle permissively operated by an insured as that term is defined in section 65B.43, subdivision 5, if the injury or damage occurs within this state, the United States of America, its territories or possessions, or Canada. A reparation obligor shall also be liable to pay sums which another reparation obligor is entitled to recover under the indemnity provisions of section 65B.53, subdivision 1. (3) Every plan of reparation security shall be subject to the following provisions which need not be contained therein: (a) The liability of the reparation obligor with respect to the residual liability coverage required by this clause shall become absolute whenever injury or damage occurs; such liability may not be canceled or annulled by any agreement between the reparation obligor and the insured after the occurrence of the injury or damage; no statement made by the insured or on the insured's behalf and no violation of said policy shall defeat or void said policy. (b) The satisfaction by the insured of a judgment for such injury or damage shall not be a condition precedent to the right or duty of the reparation obligor to make payment on account of such injury or damage. (c) The reparation obligor shall have the right to settle any claim covered by the residual liability insurance policy, and if such settlement is made in good faith, the amount thereof shall be deductible from the limits of liability for the accident out of which such claim arose. (d) Except as provided in subdivision 5a, a residual liability insurance policy shall be excess of a nonowned vehicle policy whether the nonowned vehicle is borrowed or rented, or used for business or pleasure. A nonowned vehicle is one not used or provided on a regular basis. Subd. 3a. Uninsured and underinsured motorist coverages. (1) No plan of reparation security may be renewed, delivered or issued for delivery, or executed in this state with respect to any motor vehicle registered or principally garaged in this state unless separate uninsured and underinsured motorist coverages are provided therein. Each coverage, at a minimum, must provide limits of $25,000 because of injury to or the death of one person in any accident and $50,000 because of injury to or the death of two or more persons in any accident. In the case of injury to, or the death of, two or more persons in any accident, the amount available to any one person must not exceed the coverage limit provided for injury to, or the death of, one person in any accident. (2) Every owner of a motor vehicle registered or principally garaged in this state shall maintain uninsured and underinsured motorist coverages as provided in this subdivision. (3) No reparation obligor is required to provide limits of uninsured and underinsured motorist coverages in excess of the bodily injury liability limit provided by the applicable plan of reparation security. (4) No recovery shall be permitted under the uninsured and underinsured motorist coverages of this section for basic economic loss benefits paid or payable, or which would be payable but for any applicable deductible. (5) If at the time of the accident the injured person is occupying a motor vehicle, the limit of liability for uninsured and underinsured motorist coverages available to the injured person is the limit specified for that motor vehicle. However, if the injured person is occupying a motor vehicle of which the injured person is not an insured, the injured person may be entitled to excess insurance protection afforded by a policy in which the injured party is otherwise insured. The excess insurance protection is limited to the extent of covered damages sustained, and further is available only to the extent by which the limit of liability for like coverage applicable to any one motor vehicle listed on the automobile insurance policy of which the injured person is an insured exceeds the limit of liability of the coverage available to the injured person from the occupied motor vehicle. If at the time of the accident the injured person is not occupying a motor vehicle or motorcycle, the injured person is entitled to select any one limit of liability for any one vehicle afforded by a policy under which the injured person is insured. (6) Regardless of the number of policies involved, vehicles involved, persons covered, claims made, vehicles or premiums shown on the policy, or premiums paid, in no event shall the limit of liability for uninsured and underinsured motorist coverages for two or more motor vehicles be added together to determine the limit of insurance coverage available to an injured person for any one accident. (7) The uninsured and underinsured motorist coverages required by this subdivision do not apply to bodily injury of the insured while occupying a motor vehicle owned by the insured, unless the occupied vehicle is an insured motor vehicle. (8) The uninsured and underinsured motorist coverages required by this subdivision do not apply to bodily injury of the insured while occupying a motorcycle owned by the insured. Subd. 4.  [Repealed, 1Sp1985 c 10 s 123 subd 5] Subd. 4a. Liability on underinsured motor vehicles. With respect to underinsured motorist coverage, the maximum liability of an insurer is the amount of damages sustained but not recovered from the insurance policy of the driver or owner of any underinsured at fault vehicle. If a person is injured by two or more vehicles, underinsured motorist coverage is payable whenever any one of those vehicles meets the definition of underinsured motor vehicle in section 65B.43, subdivision 17. However, in no event shall the underinsured motorist carrier have to pay more than the amount of its underinsured motorist limits. Subd. 5.  [Repealed, 1980 c 539 s 7] Subd. 5a. Rental vehicles. (a) Every plan of reparation security, wherever issued, insuring a natural person as named insured, covering private passenger vehicles as defined under section 65B.001, subdivision 3, and pickup trucks and vans as defined under section 168.002 must: (1) provide that all of the obligation for damage and loss of use to a rented private passenger vehicle, including pickup trucks and vans as defined under section 168.002, and rented trucks with a registered gross vehicle weight of 26,000 pounds or less would be covered by the property damage liability portion of the plan; and (2) extend the plan's basic economic loss benefits, residual liability insurance, and uninsured and underinsured motorist coverages to the operation or use of the rented motor vehicle. This subdivision does not apply to plans of reparation security covering only motor vehicles registered under section 168.10, subdivision 1a, 1b, 1c, or 1d, or recreational vehicles as defined under section 168.002. The obligation of the plan must not be contingent on fault or negligence. In all cases where the plan's property damage liability coverage is less than $35,000, the coverage available under the subdivision must be $35,000. Other than as described in this paragraph; paragraph (i), clause (2); or paragraph (j), nothing in this section amends or alters the provisions of the plan of reparation security as to primacy of the coverages in this section. (b) A vehicle is rented for purposes of this subdivision: (1) if the rate for the use of the vehicle is determined on a monthly, weekly, or daily basis; or (2) during the time that a vehicle is loaned as a replacement for a vehicle being serviced or repaired regardless of whether the customer is charged a fee for the use of the vehicle. A vehicle is not rented for the purposes of this subdivision if the rate for the vehicle's use is determined on a period longer than one month or if the term of the rental agreement is longer than one month. A vehicle is not rented for purposes of this subdivision if the rental agreement has a purchase or buyout option or otherwise functions as a substitute for purchase of the vehicle. (c) The policy or certificate issued by the plan must inform the insured of the application of the plan to private passenger rental vehicles, including pickup trucks and vans as defined under section 168.002, and that the insured may not need to purchase additional coverage from the rental company. (d) Where an insured has two or more vehicles covered by a plan or plans of reparation security containing the rented motor vehicle coverage required under paragraph (a), the insured may select the plan the insured wishes to collect from and that plan is entitled to a pro rata contribution from the other plan or plans based upon the property damage limits of liability. If the person renting the motor vehicle is also covered by the person's employer's insurance policy or the employer's automobile self-insurance plan, the reparation obligor under the employer's policy or self-insurance plan has primary responsibility to pay claims arising from use of the rented vehicle. (e) A notice advising the insured of rental vehicle coverage must be given by the reparation obligor to each current insured with the first renewal notice after January 1, 1989. The notice must be approved by the commissioner of commerce. The commissioner may specify the form of the notice. (f) When a motor vehicle is rented in this state, there must be attached to the rental contract a separate form containing a written notice in at least 10-point bold type, if printed, or in capital letters, if typewritten, which states: "Under Minnesota law, a personal automobile insurance policy must: (1) cover the rental of this motor vehicle against damage to the vehicle and against loss of use of the vehicle; and (2) extend the policy's basic economic loss benefits, residual liability insurance, and uninsured and underinsured motorist coverages to the operation or use of a rented motor vehicle. Therefore, purchase of any collision damage waiver or similar insurance affected in this rental contract is not necessary. In addition, purchase of any additional liability insurance is not necessary if your policy was issued in Minnesota unless you wish to have coverage for liability that exceeds the amount specified in your personal automobile insurance policy." No collision damage waiver or other insurance offered as part of or in conjunction with a rental of a motor vehicle may be sold unless the person renting the vehicle provides a written acknowledgment that the above consumer protection notice has been read and understood. (g) When damage to a rented vehicle is covered by a plan of reparation security as provided under paragraph (a), the rental contract must state that payment by the reparation obligor within the time limits of section 72A.201 is acceptable, and prior payment by the renter is not required. (h) Compensation for the loss of use of a damaged rented motor vehicle is limited to a period no longer than 14 days. (i)(1) For purposes of this subdivision, "rented motor vehicle" means a rented vehicle described in paragraph (a), using the definition of "rented" provided in paragraph (b). (2) Notwithstanding section 169.09, subdivision 5a, an owner of a rented motor vehicle is not vicariously liable for legal damages resulting from the operation of the rented motor vehicle in an amount greater than $100,000 because of bodily injury to one person in any one accident and, subject to the limit for one person, $300,000 because of injury to two or more persons in any one accident, and $50,000 because of injury to or destruction of property of others in any one accident, if the owner of the rented motor vehicle has in effect, at the time of the accident, a policy of insurance or self-insurance, as provided in section 65B.48, subdivision 3, covering losses up to at least the amounts set forth in this paragraph. Nothing in this paragraph alters or affects the obligations of an owner of a rented motor vehicle to comply with the requirements of compulsory insurance through a policy of insurance as provided in section 65B.48, subdivision 2, or through self-insurance as provided in section 65B.48, subdivision 3, which policy of insurance or self-insurance must apply whenever the operator is not covered by a plan of reparation security as provided under paragraph (a); or with the obligations arising from section 72A.125 for products sold in conjunction with the rental of a motor vehicle. Nothing in this paragraph alters or affects liability, other than vicarious liability, of an owner of a rented motor vehicle. (3) The dollar amounts stated in this paragraph shall be adjusted for inflation based upon the Consumer Price Index for all urban consumers, known as the CPI-U, published by the United States Bureau of Labor Statistics. The dollar amounts stated in this paragraph are based upon the value of that index for July 1995, which is the reference base index for purposes of this paragraph. The dollar amounts in this paragraph shall change effective January 1 of each odd-numbered year based upon the percentage difference between the index for July of the preceding year and the reference base index, calculated to the nearest whole percentage point. The commissioner shall announce and publish, on or before September 30 of the preceding year, the changes in the dollar amounts required by this paragraph to take effect on January 1 of each odd-numbered year. The commissioner shall use the most recent revision of the July index available as of September 1. Changes in the dollar amounts must be in increments of $5,000, and no change shall be made in a dollar amount until the change in the index requires at least a $5,000 change. If the United States Bureau of Labor Statistics changes the base year upon which the CPI-U is based, the commissioner shall make the calculations necessary to convert from the old base year to the new base year. If the CPI-U is discontinued, the commissioner shall use the available index that is most similar to the CPI-U. (j) The plan of reparation security covering the owner of a rented motor vehicle is excess of any residual liability coverage insuring an operator of a rented motor vehicle. [See Note.] Subd. 6.  [Repealed, 1980 c 539 s 7] Subd. 7. Additional benefits and coverage not prohibited. Nothing in sections 65B.41 to 65B.71 shall be construed as preventing the insurer from offering other benefits or coverages in addition to those required to be offered under this section. Subd. 8. Compliance. Any coverage issued by a participating member of the Minnesota automobile insurance plan shall comply with the provisions of this section, any provisions of law or of the contract notwithstanding. Subd. 9. Family or group family day care provider coverage. No plan of reparation security shall exclude coverage for a vehicle when used to transport children as part of a family or group family day care program. History: 1974 c 408 s 9; 1977 c 266 s 2,3; 1977 c 276 s 3; 1978 c 674 s 57; 1985 c 168 s 10-12; 1985 c 309 s 5,6; 1Sp1985 c 10 s 68,123 subd 5; 1Sp1985 c 13 s 191; 1986 c 444; 1987 c 337 s 106; 1988 c 611 s 2; 1989 c 213 s 1,2; 1989 c 260 s 15; 1989 c 356 s 20,41; 1990 c 394 s 1; 1990 c 496 s 3; 1990 c 504 s 1; 1991 c 207 s 6; 1994 c 465 art 3 s 6; 1994 c 485 s 53; 1995 c 140 s 1; 1995 c 225 s 1; 1996 c 446 art 1 s 72; 2000 c 309 s 1; 2002 c 234 s 1; 2005 c 163 s 88; 2006 c 212 art 1 s 23; 2007 c 72 s 1 NOTE: Subdivision 5a, paragraph (i)(2), was preempted by federal law in Meyer v. Nwokedi, 777 N.W.2d 218 (Minn. 2010).
65B.50 INSURERS' CERTIFICATION OF BASIC COVERAGE. Subdivision 1. Filing. Every insurer licensed to write motor vehicle accident reparation and liability insurance in this state shall, on or before January 1, 1975, or as a condition to such licensing, file with the commissioner and thereafter maintain a written certification that it will afford at least the minimum security provided by section 65B.49 to all policyholders, except that in the case of nonresident policyholders it need only certify that security is provided with respect to accidents occurring in this state. Subd. 2. Contacts of liability insurance as security covering the vehicle. Notwithstanding any contrary provision in it, every contract of liability insurance for injury, wherever issued, covering obligations arising from ownership, maintenance, or use of a motor vehicle, except a contract which provides coverage only for liability in excess of required minimum tort liability coverages, includes basic economic loss benefit coverages and residual liability coverages required by sections 65B.41 to 65B.71, while the vehicle is in this state, and qualifies as security covering the vehicle. History:  1974 c 408 s 10; 1978 c 674 s 57
65B.51 DEDUCTION OF COLLATERAL BENEFITS FROM TORT RECOVERY; LIMITATION ON RIGHT TO RECOVER DAMAGES. Subdivision 1. Deduction of basic economic loss benefits. With respect to a cause of action in negligence accruing as a result of injury arising out of the operation, ownership, maintenance or use of a motor vehicle with respect to which security has been provided as required by sections 65B.41 to 65B.71, the court shall deduct from any recovery the value of basic or optional economic loss benefits paid or payable, or which would be payable but for any applicable deductible. In any case where the claimant is found to be at fault under section 604.01, the deduction for basic economic loss benefits must be made before the claimant's damages are reduced under section 604.01, subdivision 1. Subd. 2. Right to recover economic loss not covered in first party benefits. A person may bring a negligence action for economic loss not paid or payable by a reparation obligor or through the assigned claims plan because of any lack of insurance coverage for the economic loss described in section 65B.44, daily or weekly dollar limitations of section 65B.44, the seven-day services exclusion of section 65B.44, the limitations of benefits contained in section 65B.44, subdivision 1, or an exclusion from coverage by sections 65B.58 to 65B.60. Subd. 3. Limitation of damages for noneconomic detriment. In an action described in subdivision 1, no person shall recover damages for noneconomic detriment unless: (a) The sum of the following exceeds $4,000: (1) reasonable medical expense benefits paid, payable or payable but for any applicable deductible, plus (2) the value of free medical or surgical care or ordinary and necessary nursing services performed by a relative of the injured person or a member of the injured person's household, plus (3) the amount by which the value of reimbursable medical services or products exceeds the amount of benefit paid, payable, or payable but for an applicable deductible for those services or products if the injured person was charged less than the average reasonable amount charged in this state for similar services or products, minus (4) the amount of medical expense benefits paid, payable, or payable but for an applicable deductible for diagnostic x-rays and for a procedure or treatment for rehabilitation and not for remedial purposes or a course of rehabilitative occupational training; or (b) the injury results in: (1) permanent disfigurement; (2) permanent injury; (3) death; or (4) disability for 60 days or more. (c) For the purposes of clause (a) evidence of the reasonable value of medical services and products shall be admissible in any action brought in this state. For the purposes of this subdivision disability means the inability to engage in substantially all of the injured person's usual and customary daily activities. Subd. 4. Actions based on certain defects not affected. Nothing in this section shall impair or limit the liability of a person in the business of manufacturing, distributing, retailing, repairing, servicing or maintaining motor vehicles arising from a defect in a motor vehicle caused or not corrected by an act or omission in manufacture, inspection, repair, servicing or maintenance of a vehicle in the course of the business. Subd. 5. Actions based on certain negligent acts or omissions not affected. Nothing in this section shall impair or limit tort liability or limit the damages recoverable from any person for negligent acts or omissions other than those committed in the operation, ownership, maintenance, or use of a motor vehicle. History:  1974 c 408 s 11; 1975 c 18 s 7; 1977 c 266 s 4; 1978 c 711 s 1; 1983 c 243 s 1; 1986 c 444; 1989 c 58 s 1; 1990 c 555 s 6
65B.525 ARBITRATION PROCEDURE; RULES OF COURT. Subdivision 1. Mandatory submission to binding arbitration. 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 binding arbitration of all cases at issue where the claim at the commencement of arbitration is in an amount of $10,000 or less against any insured's reparation obligor for no-fault benefits or comprehensive or collision damage coverage. Subd. 2. Agreement of reference. The rules of court may provide that cases which are not at issue, whether or not suit has been filed, may be referred to arbitration by agreement of reference signed by counsel for both sides, or by the parties themselves. Such agreement of reference shall define the issues to be arbitrated and, shall also contain any stipulations with respect to facts submitted or agreed or defenses waived. In such cases, the agreement of reference shall take the place of the pleadings in the case and be filed of record. History:  1975 c 160 s 2; 1978 c 674 s 57; 1985 c 168 s 13; 1987 c 337 s 108; 1989 c 260 s 16; 1989 c 330 s 26; 1991 c 321 s 1; 2014 c 310 s 7
65B.53 INDEMNITY; ARBITRATION BETWEEN OBLIGORS; SUBROGATION. Subdivision 1. Indemnity from obligor of commercial vehicle. A reparation obligor paying or obligated to pay basic or optional economic loss benefits is entitled to indemnity subject to the limits of the applicable residual liability coverage from a reparation obligor providing residual liability coverage on a commercial vehicle of more than 5,500 pounds curb weight if negligence in the operation, maintenance or use of the commercial vehicle was the direct and proximate cause of the injury for which the basic economic loss benefits were paid or payable to the extent that the insured would have been liable for damages but for the deduction provisions of section 65B.51, subdivision 1. For purposes of this subdivision, a "commercial vehicle of more than 5,500 pounds curb weight" does not include a vehicle listed in section 65B.47, subdivision 1a. Subd. 2. Obligor subrogated to economic loss claim. A reparation obligor paying or obligated to pay basic or optional economic loss benefits is subrogated to the claim for the recovery of damages for economic loss that the person to whom the basic or optional economic loss benefits were paid or payable has against another person whose negligence in another state was the direct and proximate cause of the injury for which the basic economic loss benefits were paid or payable. This right of subrogation exists only to the extent that basic economic loss benefits are paid or payable and only to the extent that recovery on the claim absent subrogation would produce a duplication of benefits or reimbursement of the same loss. Subd. 3. Obligor subrogated to certain tort, liability, or negligence claim. A reparation obligor paying or obligated to pay basic economic loss benefits is subrogated to a claim based on an intentional tort, strict or statutory liability, or negligence other than negligence in the maintenance, use, or operation of a motor vehicle. This right of subrogation exists only to the extent that basic economic loss benefits are paid or payable and only to the extent that recovery on the claim absent subrogation would produce a duplication of benefits or reimbursement of the same loss. Subd. 4. Indemnity enforced through arbitration. The right of indemnity provided in subdivision 1 shall be enforceable only through mandatory good faith and binding arbitration procedures established by rule of the commissioner of commerce. These procedures shall utilize determinations of comparative negligence. No evidence nor the decision in such an arbitration proceeding shall be admissible in any action by any party. Subd. 5. Collision coverage subrogation. Except as provided in this section nothing in sections 65B.41 to 65B.71 shall limit or abridge the subrogation rights of a reparation obligor providing collision coverage to a policyholder. Subd. 6. Other restrictions. No reparation obligor shall include in its contract any provision which would require a person to commence a negligence action as a condition precedent to the payment of basic economic loss benefits or which permits the reparation obligor to determine whether such an action will be commenced. No reparation obligor shall contract for a right of reimbursement or subrogation greater than or in addition to those permitted by this chapter. Subd. 7. Arbitration proceedings and benefit payments. Arbitration proceedings need not await final payment of benefits, and the award, if any, shall include provision for reimbursement of subsequent benefits, but no question of fact decided by a prior award shall be reconsidered in any such subsequent arbitration hearing. Subd. 8. Enforceability of subrogation right. Notwithstanding any law to the contrary, in any action brought for the recovery of damages allegedly caused by the negligent operation, ownership, maintenance or use of a motor vehicle or motorcycle where the right of subrogation is claimed or may be claimed under this section, or in any counterclaim to such an action, the right of an insurer to be subrogated to all or a portion of the claim of an insured, whether the right to subrogation arises from contract, statute or any other source, shall be enforceable against the insured only if the insurer, upon demand by the insured, agrees to pay a share of the attorney fees and costs incurred to prosecute the claim, in such proportion as the insurer's subrogated interest in the claim bears to any eventual recovery on the claim. History:  1974 c 408 s 13; 1976 c 79 s 1; 1977 c 188 s 1,2; 1977 c 266 s 5; 1979 c 190 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1993 c 362 s 1
65B.54 CLAIMS PRACTICES. Subdivision 1. Payment of basic economic loss benefits. Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as income loss, replacement services loss, survivor's economic loss, survivor's replacement services loss, or medical or funeral expense is incurred. Benefits are overdue if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding 31 days and pays them within 15 days after the period of accumulation. If reasonable proof is supplied as to only part of a claim, and the part totals $100 or more, the part is overdue if not paid within the time provided by this section. Medical or funeral expense benefits may be paid by the reparation obligor directly to persons supplying products, services, or accommodations to the claimant. Claims by a health provider defined in section 62J.03, subdivision 8, for medical expense benefits covered by this chapter shall be submitted to the reparation obligor pursuant to the uniform electronic transaction standards required by section 62J.536 and the rules promulgated under that section. Payment of benefits for such claims for medical expense benefits are not due if the claim is not received by the reparation obligor pursuant to those electronic transaction standards and rules. Notwithstanding any such submission, a reparation obligor may require additional reasonable proof regarding the fact and the amount of loss realized regarding such a claim. A health care provider cannot directly bill an insured for the amount of any such claim not remitted pursuant to the transaction standards required by section 62J.536 if the reparation obligor is acting in compliance with these standards in receiving or paying such a claim. Subd. 2. Interest on overdue payments. Overdue payments shall bear simple interest at the rate of 15 percent per annum. Subd. 3. Payment of benefits subject to coordination. A claim for basic economic loss benefits shall be paid without deduction for the benefits which are to be subtracted pursuant to section 65B.61, if these benefits have not been paid to the claimant before the reparation benefits are overdue or the claim is paid. The obligor is entitled to reimbursement from the person obligated to make the payments or from the claimant who actually receives the payments. Subd. 4. Recovery of benefits paid due to intentional misrepresentation. A reparation obligor may bring an action to recover benefits which are not payable, but are in fact paid, because of an intentional misrepresentation of a material fact, upon which the reparation obligor relies, by the claimant or by a person providing products or services for which basic economic loss benefits are payable. The action may be brought only against the person providing the products or services, unless the claimant has intentionally misrepresented the facts or knew of the misrepresentation. A reparation obligor may offset amounts the reparation obligor is entitled to recover from the claimant under this subdivision against any basic economic loss benefits otherwise due the claimant. Subd. 5. Notice of rejection. A reparation obligor who rejects a claim for benefits shall give to the claimant prompt written notice of the rejection, specifying the reason. If a claim is rejected for a reason other than that the person is not entitled to the basic economic loss benefits claimed, the written notice shall inform the claimant that the claimant may file the claim with the assigned claims bureau and shall give the name and address of the bureau. Subd. 6. Unethical practices. (a) A licensed health care provider shall not initiate direct contact, in person, over the telephone, or by other electronic means, with any person who has suffered an injury arising out of the maintenance or use of an automobile, for the purpose of influencing that person to receive treatment or to purchase any good or item from the licensee or anyone associated with the licensee. This subdivision prohibits such direct contact whether initiated by the licensee individually or on behalf of the licensee by any employee, independent contractor, agent, or third party, including a capper, runner, or steerer, as defined in section 609.612, subdivision 1, paragraph (c). This subdivision does not apply when an injured person voluntarily initiates contact with a licensee. (b) This subdivision does not prohibit licensees, or persons acting on their behalf, from mailing advertising literature directly to such persons, so long as: (1) the word "ADVERTISEMENT" appears clearly and conspicuously at the beginning of the written materials; (2) the name of the individual licensee appears clearly and conspicuously within the written materials; (3) the licensee is clearly identified as a licensed health care provider within the written materials; and (4) the licensee does not initiate, individually or through any employee, independent contractor, agent, or third party, direct contact with the person after the written materials are sent. (c) This subdivision does not apply to: (1) advertising that does not involve direct contact with specific prospective patients, in public media such as telephone directories, professional directories, ads in newspapers and other periodicals, radio or television ads, websites, billboards, mailed or electronically transmitted communication, or similar media if such advertisements comply with paragraph (d); (2) general marketing practices, other than those described in clause (1), such as giving lectures; participating in special events, trade shows, or meetings of organizations; or making presentations relative to the benefits of a specific medical treatment; (3) contact with friends or relatives, or statements made in a social setting; (4) direct contact initiated by an ambulance service licensed under chapter 144E, a medical response unit registered under section 144E.275, or by the emergency department of a hospital licensed under chapter 144, for the purpose of rendering emergency care; or (5) a situation in which the injured person: (i) had a prior professional relationship with the licensee; (ii) has selected that licensee as the licensee from whom the injured person receives health care; or (iii) has received treatment related to the accident from the licensee. (d) For purposes of this paragraph, "legal name," for an individual means the name under which an individual is licensed or registered as a health care professional in Minnesota or an adjacent state, and for a business entity, a name under which the entity is registered with the secretary of state in Minnesota or an adjacent state, so long as the name does not include any misleading description of the nature of its health care practice; and "health care provider" means an individual or business entity that provides medical treatment of an injury eligible as a medical expense claim under this chapter. In addition to any laws governing, or rules adopted by, a health care provider licensing board, any solicitation or advertisement for medical treatment, or for referral for medical treatment, of an injury eligible for treatment under this chapter must: (1) be undertaken only by or at the direction of a health care provider; (2) prominently display or reference the legal name of the health care provider; (3) display or reference the license type of the health care provider, or in the case of a health care provider that is a business entity, the license type of all of the owners of the health care provider but need not include the names of the owners; (4) not contain any false, deceptive, or misleading information, or misrepresent the services to be provided; (5) not include any reference to the dollar amounts of the potential benefits under this chapter; and (6) not imply endorsement by any law enforcement personnel or agency. (e) A violation of this subdivision is grounds for the licensing authority to take disciplinary action against the licensee, including revocation in appropriate cases. History:  1974 c 408 s 14; 1979 c 190 s 3; 1986 c 444; 2008 c 214 s 1; 2009 c 178 art 1 s 38; 2012 c 255 s 1
65B.55 APPLICATION FOR BENEFITS UNDER PLAN OF SECURITY. Subdivision 1. Claim notification. A plan of reparation security may prescribe a period of not less than six months after the date of accident within which an insured or any other person entitled to claim basic economic loss benefits, or anyone acting on their behalf, must notify the reparation obligor or its agent, of the accident and the possibility of a claim for economic loss benefits. Failure to provide notice will not render a person ineligible to receive benefits unless actual prejudice is shown by the reparation obligor, and then only to the extent of the prejudice. The notice may be given in any reasonable fashion. Subd. 2. Disability or treatment lapses. A plan of reparation security may provide that in any instance where a lapse occurs in the period of disability or in the medical treatment of a person with respect to whose injury basic economic loss benefits have been paid and a person subsequently claims additional benefits based upon an alleged recurrence of the injury for which the original claim for benefits was made, the obligor may require reasonable medical proof of such alleged recurrence; provided, that in no event shall the aggregate benefits payable to any person exceed the maximum limits specified in the plan of security, and provided further that such coverages may contain a provision terminating eligibility for benefits after a prescribed period of lapse of disability and medical treatment, which period shall not be less than one year. History:  1974 c 408 s 15; 1984 c 592 s 55
65B.56 COOPERATION OF PERSON CLAIMING BENEFITS. Subdivision 1. Medical examinations and discovery of condition of claimant. Any person with respect to whose injury benefits are claimed under a plan of reparation security shall, upon request of the reparation obligor from whom recovery is sought, submit to a physical examination by a physician or physicians selected by the obligor as may reasonably be required. The costs of any examinations requested by the obligor shall be borne entirely by the requesting obligor. Such examinations shall be conducted within the city, town, or statutory city of residence of the injured person. If there is no qualified physician to conduct the examination within the city, town, or statutory city of residence of the injured person, then such examination shall be conducted at another place of the closest proximity to the injured person's residence. Obligors are authorized to include reasonable provisions in policies for mental and physical examination of those injured persons. If requested by the person examined, a party causing an examination to be made shall deliver to the examinee a copy of every written report concerning the examination rendered by an examining physician to that person, at least one of which reports must set out in detail the findings and conclusions of such examining physician. An injured person shall also do all things reasonably necessary to enable the obligor to obtain medical reports and other needed information to assist in determining the nature and extent of the injured person's injuries and loss, and the medical treatment received. If the claimant refuses to cooperate in responding to requests for examination and information as authorized by this section, evidence of such noncooperation shall be admissible in any suit or arbitration filed for damages for such personal injuries or for the benefits provided by sections 65B.41 to 65B.71. The provisions of this section apply before and after the commencement of suit. Subd. 2. Claimant's participation in arbitration between obligors. Any person receiving benefits under sections 65B.41 to 65B.71 shall participate and cooperate, as reasonably required under the coverage, in any and all arbitration proceedings as provided in section 65B.53 by or on behalf of the obligor paying the benefits, and the obligor may require in the furnishing of proof of loss the claimant's statement that the claimant shall so participate and cooperate as consideration for the payment of such benefits. However, no claimant may be required by any obligor which has paid or is obligated to pay benefits as herein provided to personally attend an arbitration proceeding which shall take place more than 50 miles from the usual residence of the claimant; and provided that in no event shall the claimant have to attend such an arbitration proceeding if, at the time scheduled for that meeting, travel thereto by the claimant is not recommended by a physician treating the claimant for injuries. Any claimant required to personally attend an arbitration proceeding shall be compensated by the reparation obligor requiring attendance for actual income loss and expenses reasonably incurred. History:  1974 c 408 s 16; 1975 c 18 s 8; 1978 c 674 s 57; 1986 c 444
65B.57 ECONOMIC LOSS BENEFITS; EXEMPTIONS FROM LEGAL ATTACHMENT. (a) All economic loss benefits provided by sections 65B.41 to 65B.71, whether paid or payable to any claimant shall not be subject to garnishment, sequestration, attachment or execution, or any other legal process which would deny their receipt and use by that person. (b) This section shall not apply to any person who has provided treatment or services, as described in section 65B.44, subdivision 2, to the victim of a motor vehicle accident. (c) Economic loss benefits paid or payable to any claimant, person, or entity who has provided treatment or services under sections 65B.41 to 65B.71 shall not be subject to any legal interest in the payment, whether by contract, lien, or other legal process before a denial of benefits by a reparations obligor. History:  1974 c 408 s 17; 1978 c 674 s 57; 2014 c 310 s 8
65B.58 CONVERTED MOTOR VEHICLES. A person who converts a motor vehicle is disqualified from basic or optional economic loss benefits, including benefits otherwise due as a survivor, from any source other than an insurance contract under which the converter is an insured, for injuries arising from maintenance or use of the converted vehicle. If the converter dies from the injuries, survivors are not entitled to basic or optional economic loss benefits from any source other than an insurance contract under which the converter is a basic economic loss insured. For the purpose of this section, a person is not a converter if that person uses the motor vehicle in the good faith belief that the person is legally entitled to do so. History:  1974 c 408 s 18; 1986 c 444
65B.59 RACES. A person who is injured in the course of an official racing contest, other than a rally held in whole or in part on public roads, or in practice or preparation therefor is disqualified from basic or optional economic loss benefits. Survivors are not entitled to basic or optional economic loss benefits for loss arising from the death. History:  1974 c 408 s 19; 1975 c 18 s 9; 1986 c 444
65B.60 INTENTIONAL INJURIES. A person intentionally causing or attempting to cause injury to self or another person is disqualified from basic or optional economic loss benefits for injury arising from those acts, including benefits otherwise due the person as a survivor. If a person dies as a result of intentionally causing or attempting to cause injury to self, survivors are not entitled to basic or optional economic loss benefits for loss arising from the death. A person intentionally causes or attempts to cause injury if the person acts or fails to act for the purpose of causing injury or with knowledge that injury is substantially certain to follow. A person does not intentionally cause or attempt to cause injury (1) merely because the act or failure to act is intentional or done with the realization that it creates a grave risk of causing injury or (2) if the act or omission causing the injury is for the purpose of averting bodily harm to the person or another person. History:  1974 c 408 s 20; 1986 c 444
65B.61 BENEFITS PRIMARY; SUBTRACTIONS; COORDINATION. Subdivision 1. Generally; exception for workers' compensation benefits. Basic economic loss benefits shall be primary with respect to benefits, except for those paid or payable under a workers' compensation law, which any person receives or is entitled to receive from any other source as a result of injury arising out of the maintenance or use of a motor vehicle. Where workers' compensation benefits paid or payable are primary, the reparation obligor shall make an appropriate rebate or reduction in the premiums of the plan of reparation security. The amount of the rebate or rate reduction shall be not less than the amount of the projected reduction in benefits and claims for which the reparation obligor will be liable on that class of risks. The projected reduction or rebate in benefits and claims shall be based upon sound actuarial principles. Subd. 2. Disability income loss benefits; coordination with workers' compensation benefits. If benefits are paid or payable under a workers' compensation law because of the injury, no disability income loss benefits are payable unless the weekly workers' compensation disability benefits are less than the weekly disability benefit as set out in section 65B.44, subdivision 3, in which case the reparation obligor shall pay to the injured person the amount that the weekly disability and income loss benefits payable under section 65B.44, subdivision 3, exceeds the weekly workers' compensation disability benefits. Subd. 2a. Survivors' economic loss benefits; coordination with workers' compensation death benefits. If benefits are paid or payable under a workers' compensation law because of death, no survivors' economic loss benefits are payable unless the weekly workers' compensation dependency allowance is less than the weekly survivors' economic loss benefit rate as set out in section 65B.44, subdivision 6, in which case the reparation obligor shall pay to the surviving dependents the amount that the weekly survivors' economic loss benefits payable under section 65B.44, subdivision 6, exceed the weekly workers' compensation dependency allowances. Subd. 2b.  [Repealed, 1984 c 420 s 2] Subd. 3. General right to coordinate benefits. Any legal entity, other than a reparation obligor obligated to pay benefits under a plan of reparation security or an insurer or employer obligated to pay benefits under a workers' compensation law, may coordinate any benefits it is obligated to pay for loss incurred as a result of injury arising out of the maintenance or use of a motor vehicle with basic economic loss benefits. No entity may coordinate benefits pursuant to this subdivision, unless it provides an appropriately reduced premium rate. The amount of this rate reduction shall be not less than the amount of the projected reduction in benefits and claims for which the entity will be liable on that class of risks, less the additional reasonable expenses incurred to administer the plan coordinating benefits. The projected reduction in benefits and claims shall be based upon sound actuarial principles. Subd. 4.  [Repealed, 1979 c 57 s 2] History:  1974 c 408 s 21; 1975 c 359 s 23; 1979 c 57 s 1; 1980 c 539 s 2-5; 1984 c 420 s 1; 1995 c 258 s 51
65B.63 ASSIGNED CLAIMS PLAN. Subdivision 1. Requirement. Reparation obligors providing basic economic loss insurance in this state shall organize and maintain, subject to approval and regulation by the commissioner, an assigned claims bureau and an assigned claims plan, and adopt rules for their operation and for the assessment of costs on a fair and equitable basis consistent with sections 65B.41 to 65B.71. The assigned claims bureau shall be managed by a governing committee made up of four individuals selected by the insurer members, one individual selected by the self-insurer members, and two public members appointed by the governor to two-year terms. Public members may include licensed insurance agents. If such obligors do not organize and continuously maintain an assigned claims bureau and an assigned claims plan in a manner considered by the commissioner of commerce to be consistent with sections 65B.41 to 65B.71, the commissioner shall organize and maintain an assigned claims bureau and an assigned claims plan. Each reparation obligor providing basic economic loss insurance in this state shall participate in the assigned claims bureau and the assigned claims plan. Costs incurred shall be allocated fairly and equitably among the reparation obligors. A ruling, action, or decision of the governing committee may be appealed to the commissioner within 30 days. A final action or order of the commissioner is subject to judicial review in the manner provided by chapter 14. In lieu of an appeal to the commissioner, judicial review of the governing committee's ruling, action, or decision may be sought. Subd. 2. Assignment of claims. The assigned claims bureau shall promptly assign each claim and notify the claimant of the identity and address of the assignee-obligor of the claim. Claims shall be assigned so as to minimize inconvenience to claimants. The assignee thereafter has rights and obligations as if the assignee had issued a policy of basic economic loss insurance complying with sections 65B.41 to 65B.71 applicable to the injury or, in case of financial inability of a reparation obligor to perform its obligations, as if the assignee had written the applicable reparation insurance, undertaken the self-insurance, or lawfully obligated itself to pay basic economic loss benefits. History:  1974 c 408 s 23; 1978 c 674 s 57; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1Sp1985 c 10 s 69; 1986 c 444; 1987 c 337 s 109
65B.64 PERSONS ENTITLED TO PARTICIPATE IN ASSIGNED CLAIMS PLAN. Subdivision 1. Qualifications. A person entitled to basic economic loss benefits because of injury covered by sections 65B.41 to 65B.71 may obtain basic economic loss benefits through the assigned claims plan or bureau established pursuant to section 65B.63 and in accordance with the provisions for making assigned claims provided in sections 65B.41 to 65B.71, if: (a) the person is 14 years old or younger and basic economic loss benefits are not applicable to the injury because of section 65B.58; (b) basic economic loss benefits are not applicable to the injury for some reason other than those specified in section 65B.58, 65B.59, or 65B.60; (c) the plan of reparation security applicable to the injury cannot be identified; or (d) a claim for basic economic loss benefits is rejected by a reparation obligor on some ground other than the person is not entitled to basic economic loss benefits under sections 65B.41 to 65B.71. In addition to the requirements for eligibility contained in section 65B.48, a nonresident is not entitled to basic economic loss benefits if the nonresident is the owner of a motor vehicle and does not carry the minimum automobile insurance coverage required by the state in which the vehicle is registered. Subd. 2. Indemnification and subrogation rights. If a claim qualifies for assignment under subdivision 1, the assigned claims bureau or any reparation obligor to whom the claim is assigned shall have the right to seek indemnification from an uninsured tortfeasor. Except as otherwise provided in section 340A.801, subdivision 4, the reparation obligor to whom the claim is assigned shall further be subrogated to all of the rights of the claimant against any person for economic loss benefits provided by the obligor to whom the claim was assigned, including a transportation network company or participating driver required to provide basic economic loss benefits pursuant to section 65B.472. Subd. 3. Disqualification. A person shall not be entitled to basic economic loss benefits through the assigned claims plan with respect to injury which was sustained if at the time of such injury the injured person was the owner of a private passenger motor vehicle for which security is required under sections 65B.41 to 65B.71 and that person failed to have such security in effect. For purposes of determining whether security is required under section 65B.48, an owner of any vehicle is deemed to have contemplated the operation or use of the vehicle at all times unless the owner demonstrates to the contrary by clear and convincing objective evidence. Persons, whether or not related by blood or marriage, who dwell and function together with the owner as a family, other than adults who have been adjudicated as incompetent and minor children, shall also be disqualified from benefits through the assigned claims plan. History:  1974 c 408 s 24; 1978 c 674 s 57; 1979 c 190 s 4; 1980 c 539 s 6; 1986 c 444; 1989 c 58 s 2,3; 1990 c 456 s 1,2; 1996 c 446 art 1 s 59; 2015 c 48 s 2
65B.65 TIME FOR PRESENTING CLAIMS UNDER ASSIGNED CLAIMS PLAN. Subdivision 1. Generally. Except as provided in subdivision 2, a person authorized to obtain basic reparation benefits through the assigned claims plan shall notify the bureau of the claim within the time that would have been allowed for commencing an action for those benefits if there had been identifiable coverage in effect and applicable to the claim. Subd. 2. Discovery of obligor's inability to pay claim; notice to bureau. If timely action for basic reparation benefits is commenced against a reparation obligor who is unable to fulfill obligations because of financial inability, a person authorized to obtain basic reparation benefits through the assigned claims plan shall notify the bureau of the claim within six months after discovery of the financial inability. History:  1974 c 408 s 25; 1975 c 18 s 10; 1986 c 444
65B.66 CLAIMS AGAINST WRONG INSURER. If timely action for economic loss benefits is commenced against a reparation obligor and benefits are denied because of a determination that the obligor's coverage is not applicable to the claimant under the provisions of section 65B.47 on the priority of applicability of security a claim against a proper obligor or assigned claims plan may be made not later than 90 days after such determination becomes final or the last date on which the action could otherwise have been commenced, whichever is later. History:   1974 c 408 s 26 
65B.685 STANDARDIZING COVERAGE. As far as consistent with the requirements of sections 65B.41 to 65B.71, the commissioner may limit by rule the variety of coverages available in order to give insurance purchasers reasonable opportunity to compare the cost of insuring with various insurers. History:   1979 c 190 s 7 
65B.71 COMPLIANCE. Subdivision 1. Definition of qualified applicant. The definition of "qualified applicant" under section 65B.02, subdivision 2, clause (2) shall, upon the repeal of chapter 170 and the enactment of sections 65B.41 to 65B.71, include a person required to prove automobile insurance coverage as required by sections 65B.41 to 65B.71. Subd. 2. Application to Metropolitan Airports Commission. The actions permitted a metropolitan airports commission corporation under section 473.606, subdivision 6 shall, upon the repeal of chapter 170 and the enactment of sections 65B.41 to 65B.71, include acts necessary to bring the corporation, its commissioners and agents within the provisions of sections 65B.41 to 65B.71. Subd. 3. Application to certain county board action. The actions permitted a county board under section 375.32, subdivision 2 shall, upon the repeal of chapter 170 and the enactment of sections 65B.41 to 65B.71, include acts necessary to bring the county, its officers and employees within the provisions of sections 65B.41 to 65B.71. Subd. 4. Transition provisions. The provisions of Minnesota Statutes 1971, chapter 170, as amended by Laws 1973, chapter 35, sections 37 and 38, shall apply to a person who is involved in a motor vehicle accident occurring before January 1, 1975. Money deposited with the commissioner in accordance with Minnesota Statutes 1971, chapter 170, as amended by Laws 1973, chapter 35, sections 37 and 38, shall be retained by the commissioner and disbursed only in accordance with Minnesota Statutes 1971, chapter 170, as amended by Laws 1973, chapter 35, sections 37 and 38. An operator's license suspended in accordance with Minnesota Statutes 1971, chapter 170, as amended by Laws 1973, chapter 35, sections 37 and 38, shall be reinstated only in accordance with Minnesota Statutes 1971, chapter 170, as amended by Laws 1973, chapter 35, sections 37 and 38. History:  1974 c 408 s 32 subds 1-3; 1975 c 18 s 15; 1978 c 674 s 57; 1Sp1981 c 4 art 1 s 58
65B.80 DEFINITIONS. Subdivision 1. Terms. The following terms have the meanings given for purposes of sections 65B.80 to 65B.83. Subd. 2. Authorized person. "Authorized person" means the prosecuting attorney responsible for prosecutions in the county where the motor vehicle theft occurred, the superintendent of the Bureau of Criminal Apprehension, and the sheriff or chief of police responsible for investigation in the county where the motor vehicle theft occurred. Subd. 3. Relevant information. "Relevant information" or evidence means information having a tendency to make the existence of any fact that is of consequence to the investigation or determination of the issue more or less probable than it would be without the evidence. History:   1987 c 254 s 1 
65B.81 DISCLOSURE OF INFORMATION. Subdivision 1. Request. After receiving a written request, an insurance company must release to an authorized person any relevant information in the company's possession that relates to the motor vehicle theft. Relevant information is limited to: (1) pertinent insurance policy information, including the application for a policy, that is relevant to a motor vehicle theft under investigation by the authorized person; (2) policy premium payment records that are available; (3) a history of previous claims made by the insured including, where the insured is a corporation or partnership, a history of previous claims by a subsidiary or any affiliates, and a history of claims of any other business association in which individual officers or partners or their spouses were known to be involved; and (4) material relating to the investigation of the theft, including statements of any person, proof of loss, and any other evidence relevant to the investigation. Subd. 2. Notification by insurer required. If an insurance company has reason to believe that a motor vehicle theft in which it has an interest may be fraudulently claimed, the company shall, in writing, notify an authorized person and provide the person with all relevant information specified in subdivision 1 relating to the motor vehicle theft. It is sufficient for the purpose of this subdivision if an insurance company notifies and provides relevant information to one authorized person. Subd. 3. Release of information. An authorized person provided with information under subdivision 1 or 2 may, to further official purposes, release or provide the information to any other authorized person. Subd. 4. Information from authorized person. An insurance company that provides information to an authorized person may request relevant information in writing from the authorized person and the authorized person must provide the requested information within 30 days. The relevant information provided under this subdivision may not include nonconviction criminal history record information or any other information that is detrimental to an ongoing criminal investigation or would reveal the identity of a confidential source of information. An authorized person who does not furnish the requested information shall notify the insurance company of the reasons why the information cannot be furnished within 30 days of the request. Subd. 5. Immunity from liability. An insurance company or its agent acting in its behalf, or an authorized person who releases information, whether oral or written, acting in good faith, under subdivisions 1 to 3, is immune from any liability, civil or criminal, that might otherwise be incurred or imposed. History:   1987 c 254 s 2 
65B.82 EVIDENCE. Data received under sections 65B.80 to 65B.83 by an authorized person or insurance company is confidential data under section 13.02, subdivision 3, until its release is required in connection with a criminal or civil proceeding. History:   1987 c 254 s 3 
65B.83 ENFORCEMENT. Subdivision 1. Intentional refusal to release. An insurance company or officer may not intentionally refuse to release any information requested under section 65B.81, subdivision 1. Subd. 2. Intentional refusal to notify. An insurance company, or its employee or officer, may not intentionally refuse to provide notice or relevant information to authorized persons under section 65B.81, subdivision 2. Subd. 3. Penalty. Whoever violates the provisions of subdivision 1 or 2 is guilty of a misdemeanor. History:   1987 c 254 s 4 
65B.84 AUTOMOBILE THEFT PREVENTION PROGRAM. Subdivision 1. Program described; commissioner's duties; appropriation. (a) The commissioner of commerce shall: (1) develop and sponsor the implementation of statewide plans, programs, and strategies to combat automobile theft, improve the administration of the automobile theft laws, and provide a forum for identification of critical problems for those persons dealing with automobile theft; (2) coordinate the development, adoption, and implementation of plans, programs, and strategies relating to interagency and intergovernmental cooperation with respect to automobile theft enforcement; (3) annually audit the plans and programs that have been funded in whole or in part to evaluate the effectiveness of the plans and programs and withdraw funding should the commissioner determine that a plan or program is ineffective or is no longer in need of further financial support from the fund; (4) develop a plan of operation including: (i) an assessment of the scope of the problem of automobile theft, including areas of the state where the problem is greatest; (ii) an analysis of various methods of combating the problem of automobile theft; (iii) a plan for providing financial support to combat automobile theft; (iv) a plan for eliminating car hijacking; and (v) an estimate of the funds required to implement the plan; and (5) distribute money, in consultation with the commissioner of public safety, pursuant to subdivision 3 from the automobile theft prevention special revenue account for automobile theft prevention activities, including: (i) paying the administrative costs of the program; (ii) providing financial support to the State Patrol and local law enforcement agencies for automobile theft enforcement teams; (iii) providing financial support to state or local law enforcement agencies for programs designed to reduce the incidence of automobile theft and for improved equipment and techniques for responding to automobile thefts; (iv) providing financial support to local prosecutors for programs designed to reduce the incidence of automobile theft; (v) providing financial support to judicial agencies for programs designed to reduce the incidence of automobile theft; (vi) providing financial support for neighborhood or community organizations or business organizations for programs designed to reduce the incidence of automobile theft and to educate people about the common methods of automobile theft, the models of automobiles most likely to be stolen, and the times and places automobile theft is most likely to occur; and (vii) providing financial support for automobile theft educational and training programs for state and local law enforcement officials, driver and vehicle services exam and inspections staff, and members of the judiciary. (b) The commissioner may not spend in any fiscal year more than ten percent of the money in the fund for the program's administrative and operating costs. The commissioner is annually appropriated and must distribute the amount of the proceeds credited to the automobile theft prevention special revenue account each year, less the transfer of $1,300,000 each year to the insurance fraud prevention account described in section 297I.11, subdivision 2. (c) At the end of each fiscal year, the commissioner may transfer any unobligated balances in the auto theft prevention account to the insurance fraud prevention account under section 45.0135, subdivision 6. (d) The commissioner must establish a library of equipment to combat automobile-related theft offenses. The equipment must be available to all law enforcement agencies upon request to support law enforcement agency efforts to combat automobile theft. Subd. 2. Annual report. By September 30 each year, the commissioner shall report to the governor and the chairs and ranking minority members of the house of representatives and senate committees having jurisdiction over the Departments of Commerce and Public Safety on the activities and expenditures in the preceding year. Subd. 3. Grant criteria; application. (a) A county attorney's office, law enforcement agency, neighborhood organization, community organization, or business organization may apply for a grant under this section. Multiple offices or agencies within a county may apply for a grant under this section. (b) The commissioner, in consultation with the commissioner of public safety, must develop criteria for the fair distribution of grants from the automobile theft prevention account that address the following factors: (1) the number of reported automobile thefts per capita in a city, county, or region, not merely the total number of automobile thefts; (2) the population of the jurisdiction of the applicant office or agency; (3) the total funds distributed within a county or region; and (4) the statewide interest in automobile theft reduction. (c) The commissioner may give priority to: (1) offices and agencies engaged in a collaborative effort to reduce automobile theft; and (2) counties or regions with the greatest rates of automobile theft. (d) The minimum amount of a grant award is $5,000. After considering the automobile theft rate and total population of an applicant's jurisdiction, if a grant award, as determined under the criteria and priorities in this subdivision, would be less than $5,000, it must not be awarded. Subd. 4. Advisory board; creation; membership. An Automobile Theft Prevention Advisory Board is established to advise the commissioner on the distribution of grants under this section. The board must consist of seven members appointed by the commissioner and must include representatives of law enforcement, prosecuting agencies, automobile insurers, and the public. The commissioner must annually select a chair from among its members. Subd. 5. Definition. For purposes of this section, "automobile theft" includes automobile-related theft. History:  2000 c 488 art 6 s 7; 1Sp2001 c 8 art 5 s 6-8; 2002 c 220 art 7 s 12; 2004 c 269 art 2 s 1-3,5; 2013 c 85 art 6 s 3; 2013 c 142 art 5 s 2; 2014 c 286 art 5 s 4; 2017 c 94 art 8 s 4; 2017 c 98 s 4; 2022 c 93 art 2 s 27,28
66A.01 SCOPE OF CHAPTER. This chapter shall apply to mutual insurance companies other than: assessment benefit associations, fraternal benefit societies, township mutual insurance companies and title insurers. Sections 66A.08 to 66A.311 do not apply to mutual life insurance companies. Sections 60A.07, subdivision 1, clauses (1) and (2); 66A.34; 66A.35; 66A.36; 66A.37; 66A.38; and 66A.39, do not apply to mutual property and casualty insurance companies. History:  1967 c 395 art 7 s 1; 1992 c 564 art 1 s 54; 2005 c 69 art 2 s 11,18; 2014 c 198 art 4 s 8
66A.02 APPLICABILITY OF BUSINESS CORPORATION STATUTES. Subdivision 1. General. Chapter 302A shall apply to domestic mutual insurance companies except to the extent inconsistent with any provisions in this chapter or sections 60A.07, 66A.32, and 66A.33, or otherwise in conflict with any provisions in chapters 60A to 79A. Provisions of chapter 302A relating to share certificates, classes of shares, share values, or any other provisions relevant only to stock companies do not apply to mutual insurance companies. Subd. 2. Mutual holding companies. For purposes of sections 66A.01 to 66A.07 and 66A.21, unless the context clearly suggests otherwise, "domestic mutual insurance company" is deemed to include domestic mutual insurance holding companies organized under section 66A.40 and "member" is deemed to include members of a domestic mutual insurance holding company as specified in section 66A.40, subdivision 1, paragraph (b). For purposes of section 60A.07, subdivisions 1, 1a, 1c, 1d, and 1e, a domestic mutual insurance holding company is deemed to be an insurance corporation. Subd. 3. Terms. For purposes of applying chapter 302A to domestic mutual insurance companies, members of a domestic mutual insurance company must be treated in the same manner as shareholders of a stock corporation, except as otherwise provided in this chapter. Every member of the mutual insurance company shall be deemed to hold one share of the company for purposes of applying provisions of chapter 302A relating to voting. Mutual insurance companies are not included in the definitions of "closely held corporation," "publicly held corporation," or "issuing public corporation." The term "distribution" does not include dividends paid on participating policies issued by the mutual insurance company or any reorganized insurance company subsidiary in the case of a mutual insurance holding company. Subd. 4. Exceptions. The following provisions of chapter 302A do not apply to domestic mutual insurance companies: sections 302A.011, subdivisions 2, 6, 6a, 7, 10, 20, 21, 25, 26, 27, 28, 29, 31, 32, and 37 to 59; 302A.105; 302A.137; 302A.161, subdivision 19; 302A.201, subdivision 2; 302A.401 to 302A.429; 302A.433, subdivisions 1, paragraphs (a), (b), (c), and (e), and 2; 302A.437, subdivision 2; 302A.443; 302A.445, subdivisions 3 to 6; 302A.449, subdivision 7; 302A.453 to 302A.457; 302A.461; 302A.463; 302A.471 to 302A.473; 302A.553; 302A.601 to 302A.651; 302A.671 to 302A.675; 302A.682 to 302A.691; and 302A.701 to 302A.791. Those clauses of section 302A.111 that refer to any of the sections previously referenced in this subdivision do not apply to domestic mutual insurance companies. The following sections of chapter 302A are modified in their application to domestic mutual insurance companies in the manner indicated: (1) with regard to section 302A.133, the articles may be amended pursuant to section 302A.171 by the incorporators or by the board before the issuance of any policies by the company; (2) with regard to section 302A.135, subdivision 2, a resolution proposing an amendment to the certificate of authority must be filed with the corporate secretary no less than 30 days before the meeting to consider the proposed amendment; (3) with regard to section 302A.161, subdivision 19 of that section does not apply, except this must not be construed to limit the power of a mutual insurance company from issuing securities other than stock; (4) with regard to section 302A.201, the references in subdivision 1 of that section to "subdivision 2" and "section 302A.457 " do not apply; (5) with regard to section 302A.203, the board shall consist of no less than five directors; (6) with regard to section 302A.215, subdivisions 2 and 3 of that section only apply if the corporation's certificate of incorporation provides cumulative voting; (7) with regard to section 302A.433, subdivision 1 of that section, special meetings of the members may be called for any purpose or purposes at any time by a person or persons authorized in the articles or bylaws to call special meetings, and with regard to subdivision 3 of that section, special meetings must be held on the date and at the time and place fixed by a person or persons authorized by the articles or bylaws to call a meeting; and (8) with regard to section 302A.435, if the company complies substantially and in good faith with the notice requirements of section 302A.435, the company's failure to give any member or members the required notice does not impair the validity of any action taken at the members' meeting. History:  1967 c 395 art 7 s 2; 2005 c 69 art 2 s 12,18; 1Sp2005 c 7 s 2; 2006 c 204 s 10,11; 2008 c 344 s 42; 2015 c 39 s 1
66A.03 INCORPORATION. Domestic mutual insurance companies must be incorporated in accordance with the provisions of section 60A.07, subdivision 1. History:  1967 c 395 art 7 s 3; 1994 c 426 s 13; 2005 c 69 art 2 s 13
66A.06 RENEWAL OF CORPORATE EXISTENCE. Any domestic mutual insurance company, heretofore or hereafter organized and existing under the laws of this state, whose period of duration has expired or is about to expire, may, on or before the date of the expiration, or within six months after the date of expiration, renew its corporate existence from the date of the expiration for any period permitted by the laws of this state, by the adoption of a resolution to that effect by the affirmative vote of three-fourths of the members present, in person or by proxy, at a regular meeting of the members, or at any special meeting called for that expressly stated purpose, and by causing the resolution to be embraced in a certificate duly executed by its president and secretary or other presiding and recording officers, under its corporate seal, and approved, filed, recorded, and published in the manner prescribed by law for the execution, approval, filing, recording, and publishing of an original certificate of incorporation or articles of association. History:  1967 c 395 art 7 s 6; 2005 c 69 art 2 s 14
66A.07 MEMBERSHIP; MEETINGS; NOTICES; VOTING. Subdivision 1. Property/casualty companies. Every policyholder in a mutual insurance company, other than a life insurance company, shall be a member thereof while the policy is in force, entitled to one vote for each policy held, and notified of the time and place of holding its meetings either personally or by imprint upon the front or back of every policy, or in the premium notice, receipt or certificate of renewal, substantially as follows: "NOTICE OF ANNUAL MEETING The policyholder named herein is hereby notified: while this policy is in force you are by virtue thereof a member of the (name of company) and that the annual meeting of said company is held at its home office at (address) on the ..... day of ..... each year at ..... o'clock ...... m." Notice given in this manner is deemed to comply with the requirements of section 302A.435. Subd. 2. Life insurance companies. (a) Unless otherwise approved by the commissioner of commerce, a domestic mutual life insurance company member is any person who is listed on the records of the company as the owner of an in-force policy, and each member is entitled to one vote regardless of the number of policies owned by the member or the amounts of coverage provided to the member. For purposes of this section, "policy" means a policy or contract of insurance, including an annuity contract issued by the company, but excluding individual noncontributory insurance policies for which the premiums are paid by a financial institution, association, employer, or other institutional entity. Except as otherwise provided in the company's certificate or bylaws, a person covered under a group policy is not a member by virtue of such coverage, except that a person insured under a group life insurance policy is a member if: (1) the person is insured under a group life policy under which cash value has accumulated and some cash value is allocated to the insured person; and (2) the group policyholder makes no contribution to the premiums or deposits for the policy. (b) Every member of a mutual life insurance company must be notified of its annual meetings by a written notice mailed to the member's address, or by an imprint on the front or back of the policy, premium notice, receipt, or certificate of renewal, substantially as follows: "The policy owner is hereby notified that by virtue of his or her ownership of this policy, the policy owner is a member of the .......... Insurance Company, and that the annual meetings of said company are held at its home office on the .... day of .... in each year, at .... o'clock." For mutual life insurance holding companies, the notice of the annual meeting may be modified to reflect that the policy owner, by virtue of his or her ownership of a policy issued by a subsidiary insurance company reorganized under section 66A.40, is a member of the mutual insurance holding company. Notice given in this manner is deemed to comply with the requirements of section 302A.435. Subd. 3. Proxies. (a) Except as otherwise provided in paragraphs (b) and (c), proxies for voting at meetings of members of domestic mutual insurance companies are governed by the provisions of section 302A.449, subdivisions 1 to 6 and 8. (b) A member may vote by proxy at any regular or special meeting of the members by filing a written proxy appointment with the secretary of the company at its home office at least five days before the first meeting at which it is to be used, unless a different time period is specified in the company's bylaws. (c) A member may cast or authorize the casting of a vote by telephonic transmission or authenticated electronic communication, in accordance with section 302A.449, if permitted by the bylaws of the company. Subd. 4. Membership interest. A domestic mutual insurance company must keep a list of members as part of its books and records. Membership interest in a domestic mutual insurance company must be uncertificated. A membership interest in a domestic mutual insurance company does not constitute a security as defined in section 80A.41 (30). No member of a mutual insurance company may transfer or pledge membership in the mutual insurance company or any right arising from the membership except as attendant to the valid transfer or assignment of the member's policy issued by the mutual insurance company. A member of a mutual insurance company is not, as a member, personally liable for the acts, debts, liabilities, or obligations of the company. No assessments of any kind may be imposed upon the members of a mutual insurance company by the directors or members, or because of any liability of any company owned or controlled by the mutual insurance company or because of any act, debt, or liability of the mutual insurance company, except as may otherwise be provided in the company's articles or bylaws. A member's interest in the mutual insurance company shall automatically terminate upon cancellation, nonrenewal, expiration, or termination of the member's policy with the insurance company that gave rise to the member's membership interest. Subd. 5. Quorum. The number of members present in person or by proxy at a member meeting are a quorum for the transaction of business, unless a larger proportion or number is provided in the articles or bylaws. If a quorum is present when a duly called or held meeting is convened, the members present may continue to transact business until adjournment, even though the withdrawal of members originally present leaves less than the proportion or number otherwise required for a quorum. History:  1967 c 395 art 7 s 7; 1986 c 444; 2005 c 69 art 2 s 15,18; 2006 c 204 s 12; 2008 c 344 s 43,44; 2009 c 86 art 1 s 12
66A.08 REQUIREMENTS. Subdivision 1. Casualty lines. No mutual insurance company hereafter organized shall be licensed to transact any of the kinds of business specified in section 60A.06, subdivision 1, clause (3), (5), (6), (8), (9), (10), (12), (13), (14), or (15), except upon compliance with the following conditions: (1) It shall have not less than 300 bona fide applications for policies of insurance of each kind sought to be written, signed by at least 300 members, covering at least 300 separate risks, each risk, within the maximum net single risk described in clause (2) and one year's premiums thereon paid in cash, and admitted assets of not less than $100,000, which admitted assets shall not be less than five times the maximum net single risk, and shall have on deposit with the commissioner in accordance with section 60A.10, subdivision 4, as security for all of its policyholders, stock or bonds of this state or of the United States or bonds of any of the municipalities of this state, or personal obligations secured by first mortgage on real estate within this state worth, exclusive of buildings, the amount of the lien, and bearing interest of not less than three percent per annum, to an amount the actual market value of which, exclusive of interest, shall never be less than $100,000; (2) It shall not expose itself to any loss on any one risk or hazard, except as provided in this clause, in an amount exceeding ten percent of its net assets, actual and contingent. For the purposes of this section contingent assets mean the aggregate amount of the contingent liability of its members for the payment of loss and expenses not provided for by its cash funds. Contingent liability, for the purposes of this section, means an amount not to exceed one annual premium as stated in the policy. No portion of any risk or hazard which has been reinsured, as authorized by the laws of this state, shall be included in determining the limitation of risk prescribed by this section. For the purpose of transacting employers' liability and workers' compensation insurance, each employee shall be considered a separate risk for determining the maximum single risk; (3) It shall maintain unearned premiums and other reserves, separately for each kind of business, upon the same basis as that required of domestic stock insurance companies transacting the same kind of business; (4) Except as expressly provided in this chapter, it shall comply with all the provisions of the laws of this state relating to the organization and internal management of mutual fire insurance companies in so far as the same may be applicable and not inconsistent with chapter 66A. Subd. 2. Fire lines. (1) General. No policy shall be issued by a mutual fire insurance company hereafter organized until not less than $750,000 of insurance, in not less than 300 separate risks, upon property located in this state, has been subscribed for and entered upon the books and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $7,500 in cash. (2) Exceptions. When the mutual insurance company is organized to issue policies exclusively upon one of the specified lines of business listed below, it may issue policies insuring such risks by complying with the following requirements: (a) Those organized to insure creamery and cheese factory buildings, their contents and equipments, and the dwelling house and contents, and barn, livestock, and vehicles of the owner of the creamery or factory, may issue policies when not less than $50,000 of insurance, in not less than 25 separate risks, upon these buildings and contents in this state, has been subscribed for and so entered and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $1,000 in cash; and the name of every such company shall include the words "Mutual creamery fire insurance company," and it shall issue no policy except upon the class of risks aforesaid. Any company heretofore organized and doing business under this clause, which for 15 years prior to the passage of Laws 1935, chapter 97, has insured creamery and cheese factory buildings, their contents and equipments, and the dwelling houses and contents and barn, livestock, and vehicles of the owner of the creamery or factory, and which has assets of $100,000, may issue policies in addition thereto to cover farmers' elevators, cooperatively owned warehouses, cooperative filling stations, cooperative oil companies, and all cooperatively owned or organized enterprises; (b) Those organized to insure the stock in trade, tools, and fixtures of retail hardware dealers, the buildings containing the same, and the dwelling house and its contents, barns, livestock, and vehicles owned by these dealers, may issue policies when not less than $500,000 of insurance, in not less than 200 separate risks, upon such property in this state, has been subscribed for and entered upon its books and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $5,000 in cash; and the name of every such company shall include the words "Mutual retail hardware fire insurance company," and it shall issue no policy except as above specified; (c) Those organized to insure dwelling houses, their contents, barns, livestock, and vehicles, exclusively, may issue policies when not less than $250,000 of insurance, in not less than 200 separate risks, upon such property located within this state, has been subscribed for and entered upon their books and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $2,500 in cash; and the name of every such company shall include the words "Mutual dwelling house fire insurance company," and it shall issue no policy except upon the class of risks aforesaid; (d) Those organized to insure printing material, machinery, and stock in trade of newspaper publishers and printers, the buildings containing the same, and the dwelling house and its contents, barns, livestock, and vehicles, when such buildings and contents are owned and occupied by the owner of the printing material, machinery, and stock in trade may issue policies when not less than $200,000 of insurance, in not less than 200 separate risks, upon such property located in this state, has been subscribed for and entered upon such companies' books and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $2,000 in cash; and the name of every such company shall include the words "Mutual publishers' fire insurance company," and it shall issue no policy except upon the class of risks aforesaid; (e) Those organized to insure grain elevators, warehouses and cribs, machinery, grain, sacks, and tools appurtenant to or contained in such elevators, warehouses, and cribs, and dwelling house and contents, barns, livestock, and vehicles when such buildings and contents are owned and occupied by the owner of the grain elevator, may issue such policies when not less than $100,000 of insurance, in not less than 50 separate risks, upon such property in this state, has been subscribed for and entered upon the books of such companies and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $1,000 in cash; and the name of the company shall include the words "Mutual grain dealers' fire insurance company," and it shall issue no policy except upon the class of risks aforesaid; and (f) Those organized to insure exclusively the property of any one church or any one religious denomination, and the church property and equipment and furnishings thereof of any one church or any one religious denomination may issue policies when not less than $100,000, in not less than 50 separate risks, upon these properties, has been subscribed for and so entered, and the premiums thereon for one year paid in cash, which premiums shall aggregate not less than $1,000 in cash; and the name of every such company shall include the words "Mutual denominational fire insurance company," and it shall issue no policy except upon the class of risks aforesaid. This section shall not be construed as a repeal of section 66A.311. Subd. 3. Marine lines. (1) Requirements. Every mutual marine company, before issuing any policy, shall have an agreement duly executed by solvent subscribers to the amount of at least $300,000, substantially as follows: "We, the subscribers, severally agree to pay to the (name of company), on demand, the whole or such part of the amounts set opposite our names, respectively, as may be called, from time to time, for its use, to pay losses and expenses not otherwise provided for"; and this agreement, endorsed with the certificate of the president and a majority of the directors that these subscribers are known to them and that they believe each to be solvent, shall be filed with and approved by the commissioner. When from death or other cause a deficiency exists in the subscription fund, the same shall be made good by new subscriptions certified in the same manner as the original. Subscribers shall be entitled to annual dividends of two percent upon the amount of their subscriptions from the profits of the company and reimbursed from future profits for all money they shall pay to the company for its uses under their agreement, with interest thereon. (2) Dividends and retirement of subscriptions. The net profits or dividend surplus of every such company shall be annually divided among the insured whose policies terminated during the year, in proportion to their contribution thereto. These dividends shall be made only in scrip certificates payable out of the accumulated profits or surplus, and this accumulation shall be kept and invested as a separate fund in trust for the redemption of these certificates and for losses and expenses, as herein provided. Until redeemed, these certificates shall be subject to future losses and expenses and reduced in case the redemption fund is drawn upon for payment of these losses and expenses, but no part of this fund shall be used for payment of losses or expenses, except when and to the extent that the cash assets are insufficient therefor; and when any portion thereof is so used the outstanding certificates shall be reduced proportionately so that the fund shall at all times equal the unredeemed certificates. The net income of the redemption fund shall be divided annually among the holders of its certificates, or it may make such certificates with a special rate of interest payable from the income of its invested funds. As these profits accumulate and are invested, subscriptions of an equal amount shall be canceled. The maximum of accumulations and profits shall be $300,000 and all excess of profits beyond that amount shall be applied annually to the payment of the certificates in the order of their issue. The certificates shall be forthwith payable when the company ceases to issue policies and the fund is no longer liable to be drawn upon for the payment of losses. (3) Government; liability of officers and directors. Every domestic mutual marine company shall be governed by the provisions applicable to mutual fire companies and each subscriber to the subscription fund shall be a member during the term of subscription and entitled to one vote. If a subscriber fails to pay the subscription or any assessment thereon and it is shown that any director or officer knowingly certified falsely as to that subscriber, the person so certifying shall be liable for the amount thereof. If any such company is at any time liable for losses beyond the amount of its net assets, the president and directors shall be personally liable for all losses on insurance effected while the company remains in such condition. Subd. 4. Employers' liability and workers' compensation. (1) Organization. (a) Subscribers and articles of incorporation. Twenty or more persons may form an incorporated mutual employers' liability insurance association for the purpose of insuring themselves and such other persons, firms, or corporations as may become subscribers to the association against liability for compensation payable under the terms of the workers' compensation law and for the purpose of insuring against loss or damage by the sickness, bodily injury, or death by accident of any person employed by the insured or for whose injury or death the insured is responsible. They shall subscribe and acknowledge a certificate specifying: (i) the name, general nature of its business, and the principal place of transacting the same; (such name shall distinguish it from all other corporations, domestic or foreign, authorized to do business in this state and end with "company," "corporation," "association," or the word "incorporated"); (ii) the period of its duration; (iii) the names and places of residence of the incorporators; (iv) in what board its management shall be vested and the names and addresses of those composing the board until the first election, a majority of whom shall always be residents of the state; (v) the highest amount of indebtedness or liability to which the corporation shall at any time be subject; and (vi) the territory within which the association may do business. It may contain any other lawful provisions defining and regulating the powers or business of the corporation, its officers, directors, trustees, and members. The certificate of incorporation of every such corporation shall be submitted to the commissioner for approval and, if approved, one copy thereof shall be filed with the secretary of state and one copy with the commissioner. (b) Bylaws and seal. Such association shall have the power to make bylaws for the government of its officers and the conduct of its affairs, to alter and amend the same, and to adopt a common seal. (c) Annual meeting; voting rights. The annual meeting for the election of directors shall be held at such time as the bylaws of the association may direct. Of the time and place of the meeting at least 30 days previous written or printed notice shall be given to the subscribers, or the notice may be given by publication, not less than three times, in at least two daily or weekly newspapers published in the city or county wherein the association has its principal office and in the legal periodical, if any, designated by the rules of court of the proper county for the publication of legal notices. Subscribers who, during the preceding calendar year, have paid into the treasury of the association premiums amounting to more than one-half of the total premiums received by it during that year, shall constitute a quorum. At this annual meeting the subscribers shall elect, by ballot, from their own number, not less than five directors, a majority of whom shall be residents of this state, to serve for at least one year and until their successors are duly chosen. The association may provide in its bylaws for the division of its board of directors into two, three, or four classes, and for the election thereof at its annual meetings in such manner that the members of one class only shall retire and their successors be chosen each year. Vacancies may be filled by election by the board until the next annual meeting. In the choice of directors and in all meetings of the association, each subscriber shall be entitled to one vote for every $100, or any fraction thereof, paid by the subscriber in premiums into the treasury of the association during the preceding calendar year. Subscribers may vote by proxy and the record of all votes shall be made by the secretary and show whether the same were cast in person or by proxy and shall be evidence of all these elections. Not less than three directors shall constitute a quorum. The directors shall annually choose by ballot a president, who shall be a member of the board; a secretary; a treasurer, who may be either the president or secretary; and such other officers as the bylaws may provide; and fix the salaries of the president and the secretary, as well as the salaries or compensation of such other officers and agents as the bylaws prescribe. Vacancies in any office may be filled by the directors or by the subscribers, as the bylaws shall prescribe. (2) Requirements. (a) Number of risks to qualify. These associations shall not begin to issue policies until a list of subscribers with the number of employees of each which, in the aggregate, must number not less than 5,000, together with such other information as the commissioner may require, shall have been filed at the Department of Commerce, nor until the president and secretary of the association shall have certified under oath that every subscription in the list so filed is genuine and made with an agreement of all the subscribers that they will take the policies subscribed for within 30 days of the granting of a license by the commissioner. In case of associations organized exclusively for the purpose of insuring creameries, cheese factories, and livestock shipping associations, these associations may begin to issue policies when the number of employees insured aggregates 300. Upon the filing of the certificate provided for in this section, the commissioner shall make such investigations as deemed proper and, if the findings warrant it, grant a license to the association to issue policies. (b) Number of risks required to continue in business. If at any time the number of subscribers falls below 20, or the number of subscribers' employees within the state falls below 5,000, no further policies shall be issued until the total number of subscribers amounts to not less than 20, whose employees within the state are not less than 5,000. In case of associations organized for the purpose of insuring creameries, cheese factories, and livestock shipping associations, the number of subscribers must not fall below 200, nor the number of subscribers' employees within the state below 300. (3) Additional powers. (a) May write automobile insurance. Any such company authorized to write workers' compensation or liability insurance under this subdivision, when its articles of incorporation so provide, shall be permitted to insure against loss or damage to automobiles or other vehicles and their contents by collision, fire, burglary, or theft, and other perils of operation, and against liability for damage to persons or property of others by collision with such vehicles, and to insure against any loss or hazard incident to the ownership, operation, or use of motor or other vehicles, as specified in section 60A.06, subdivision 1, clause (12). (b) May write glass insurance. Any company authorized to write workers' compensation or liability insurance under this subdivision when its articles of incorporation so provide shall be permitted to insure against loss or damage by breakage of glass located or in transit. (c) Special powers. Any company organized under this subdivision which, for 15 years prior to the passage of Laws 1935, chapter 136, has exclusively insured creameries, cheese factories, and livestock shipping associations, and which has assets of $100,000 or more, may write public liability and compensation insurance coverage of creameries, cheese factories, shipping associations, farmers' elevators, cooperatively owned warehouses, cooperative filling stations, cooperative oil companies and all cooperatively owned or organized enterprises. (4) Internal operation. (a) Policies. Policies of insurance issued by any such association may be made either with or without the seal thereof and they shall be signed by the president, or such other officers as may be designated by the directors for that purpose, and attested by the secretary. (b) Classification of risks. The board of directors may divide the subscribers into groups in accordance with the nature of their business and the probable risk of injury therein. In such case they shall fix all premiums, make all assessments, and determine and pay all dividends by and for each group in accordance with the experience thereof, but all funds of the association and the contingent liability of all subscribers shall be available for the payment of any claim against the association; provided, that (as between the association and its subscribers) until the whole of the contingent liability of the members of any group shall be exhausted, the general funds of the association and the contingent liability of the members of other groups shall not be available for the payment of losses and expenses incurred by such group in excess of the earned premiums paid by the members thereof. (c) Classification to be filed. A statement of any proposed distribution of subscribers into groups shall be filed with the Department of Commerce. (d) Rates. The board of directors shall determine the amount of premiums which the subscribers of the association shall pay for their insurance in accordance with the nature of the business in which the subscribers are engaged and the probable risk of injury to their employees under existing conditions, and it shall fix premiums at such amounts as in its judgment shall be sufficient to enable the association to pay to its subscribers all sums which may become due and payable to their employees under provisions of law and the expenses of conducting the business of the association. In fixing the premium payable by any subscriber, the board of directors may take into account the condition of the plant, workroom, shop, farm, or premises of the subscriber in respect to the safety of those employed therein as shown by the report of any inspector appointed by the board and it may from time to time change the amount of premiums payable by any of the subscribers as circumstances may require and the condition of the plant, workroom, shop, farm, or premises of the subscribers in respect to the safety of their employees may justify and may increase the premiums of any subscriber neglecting to provide safety devices required by law, or disobeying the rules or regulations made by the board of directors in accordance with the provisions of clause (4)(g). (e) Premiums; contingent liability. Every such company shall charge and collect on each policy a premium equal to one year's premium on the policy issued and state in the policy the estimated annual premium and provide in its bylaws for the determination of the actual premium and for the payment of same when determined. The premium thus determined shall be known as the annual premium on the policy. The company shall provide in its bylaws and specify in its policies the maximum contingent mutual liability of its members for the payment of losses and expenses not provided for by its cash fund. The contingent liability of a member shall not be less than a sum equal and in addition to one annual premium, nor more than a sum equal to five times the amount of the annual premium or, in case of a policy written for less than one year, the contingent liability shall not be less than the proportionate fractional part of the annual premium, nor more than five times the proportionate fractional part of the annual premium. The contingent liability of the policyholder shall be plainly and legibly stated in each policy as follows: "The maximum contingent liability of the policyholder under this policy shall be a sum equal to ..... annual premium (or premiums)." (f) Assessments. When the liabilities, including unearned premiums and such other reserves as are or may be required by law and the commissioner, are in excess of the admitted assets computed on the basis allowed for its annual statement, it shall make an assessment upon its policyholders based upon the amount of one annual premium as written in the policy and not to exceed the amount of five annual premiums. If it becomes necessary to levy the assessment, as provided by this section, no policies shall be issued until the admitted assets of the association are in excess of its liabilities. (g) Power of board of directors. The board of directors shall be entitled to inspect the plant, workroom, shop, farm, or premises of any subscriber and for this purpose to appoint inspectors, who shall have free access to all such premises during regular working hours, and the board of directors shall likewise from time to time be entitled to examine by their auditor or other agent the books, records, and payrolls of any subscribers for the purpose of determining the amount of premium chargeable to the subscriber. The board of directors shall make reasonable rules and regulations for the prevention of injuries upon the premises of subscribers; and may refuse to insure, or may terminate the insurance of, any subscriber who refuses to permit these examinations and disregards such rules or regulations, and forfeit all premiums previously paid, but the termination of the insurance of any subscriber shall not release the subscriber from liability for the payment of assessments then or thereafter made by the board of directors to make up deficiencies existing at the termination of the insurance. (h) Investments. The association shall invest and keep invested all its funds of every description, excepting such cash as may be required in the transaction of its business, in accordance with the laws of this state or relating to the investment of funds of domestic insurance companies. No such association shall purchase, hold, or convey real estate except as provided by section 60A.11, subdivision 6. (i) Withdrawal of subscriber. Any subscriber of the association who has complied with all its rules and regulations may withdraw therefrom by written notice to that effect sent by the subscriber by certified mail to the association and this withdrawal shall become effective on the first day of the month immediately following the tenth day after the receipt of the notice, but the withdrawal shall not release the subscriber from liability for the payment of assessments thereafter made by the board of directors to make up deficiencies existing at the date of withdrawal and the subscriber shall be entitled to the subscriber's share of any dividends earned at the date of withdrawal. (5) Miscellaneous. (a) Perjury by officer. Any officer of the association who shall falsely make oath to any certificate required to be filed with the commissioner shall be guilty of perjury. (b) Foreign mutual employers' liability association. Any mutual employers' liability insurance association of another state, upon compliance with all laws governing such corporations in general and the provisions of this subdivision may be admitted to transact business in this state. These associations shall pay to the Department of Commerce the fees prescribed by section 60A.14, subdivision 1. (c) Winding up affairs. When the contracts of insurance issued by these associations shall cover in the aggregate less than 5,000 employees or, in the case of associations organized for the purpose of insuring creameries, cheese factories, and livestock shipping associations, less than 300 employees, the association shall forthwith notify the commissioner of that fact and if, at the expiration of six months from the notice, the aggregate number of employees covered by the contracts of insurance shall be less than 5,000, or, in the case of associations organized for the purpose of insuring creameries, cheese factories, and livestock shipping associations, less than 300 employees, the commissioner shall proceed under the provisions of chapter 60B. History:  1967 c 395 art 7 s 8; 1969 c 708 s 63; 1974 c 425 s 8; 1975 c 359 s 23; 1976 c 181 s 2; 1978 c 465 s 11; 1978 c 674 s 60; 1983 c 289 s 114 subd 1; 1984 c 618 s 2; 1984 c 655 art 1 s 92; 1985 c 234 s 1; 1986 c 444; 2005 c 69 art 2 s 16,18
66A.09 KINDS OF BUSINESS AUTHORIZED. Nothing in this chapter shall be deemed to authorize or permit mutual insurance companies to engage in any kind of insurance not included in section 60A.06, subdivision 1, clauses (1) to (15) or authorized under section 60A.06, subdivision 2. History:  1967 c 395 art 7 s 9; 1978 c 465 s 12
66A.10 ADDITIONAL REQUIREMENTS. When the articles of incorporation of any mutual insurance company not having a guaranty fund of the amount required by section 66A.16, subdivision 2, provide, it may transact any and all kinds of business as set forth in section 60A.06, subdivision 1, clauses (1) to (15), and as authorized under section 60A.06, subdivision 2, subject to the conditions and restrictions as to the kinds of insurance which may be combined by a like stock insurance company and subject to the restrictions contained in the laws of this state with reference to general writing mutual insurance companies transacting the same kinds of business. Nothing in this section shall be construed as prohibiting a company issuing policies with a contingent liability from creating a guaranty fund as authorized by section 66A.16, subdivision 3. Any mutual company, however organized, may amend its articles to provide for the doing of two or more kinds of business specified in section 60A.06, subdivision 1, clauses (1) to (15) or authorized under section 60A.06, subdivision 2. History:  1967 c 395 art 7 s 10; 1978 c 465 s 13
66A.11 REVOCATION OF LICENSE. In case of the failure of any insurance company to comply with any of the provisions of sections 66A.08, 66A.09, 66A.10, 66A.14, 66A.15, and 66A.16, subdivisions 1 and 2, its right to transact insurance business in this state shall cease and it shall be the duty of the commissioner to immediately proceed under chapter 60B or declare its license revoked and, in case of such revocation, the company shall not be again licensed to transact business in this state for a period of one year from the date of the revocation. History:  1967 c 395 art 7 s 11; 1969 c 708 s 63
66A.12 MUTUAL FIRE COMPANIES; PREMIUMS; CONTINGENT LIABILITY. Every mutual fire company shall charge and collect on each policy a premium, in cash or in notes absolutely payable, or it may accept a deposit of cash equal to one year's premium on the policy issued and while the deposit remains intact collect all future premiums on the policy by assessments thereon, and shall also provide in its bylaws, and specify in its policies, the maximum contingent mutual liability of its members for payment of losses and expenses not provided for by its cash fund. The contingent liability of a member shall not be less than a sum equal to and in addition to one annual premium, nor more than a sum equal to five times the amount of such annual premium or, in case of a policy written for less than one year, the contingent liability shall not exceed the amount of premium written in the policy. The total amount of the liability of the policyholder shall be plainly and legibly stated upon each policy. When any reduction shall be made in the contingent liability of members, such reduction shall apply proportionally to all policies in force. Mutual insurance companies complying with section 66A.16, subdivision 3, may issue policies without a contingent liability; but the fact that there is no contingent liability must be plainly and legibly stated in the policies. History:   1967 c 395 art 7 s 12 
66A.13 MUTUAL FIRE COMPANIES; REQUIREMENTS WHEN NOTE GIVEN. Except as provided in section 66A.12, when a note or other written evidence of indebtedness is given for any premium due, or to become due, upon any insurance of property, except marine, the same shall be full payment therefor and operate to continue the same in full force during the term thereof, except that when any such note or other written evidence of indebtedness is not paid at maturity the policy for which the same was premium, in whole or in part, may be canceled upon notice and in the same manner as though the premium was paid in cash and the surrender of the note or other written evidence of indebtedness shall constitute a return or payment of the unearned portion of premium, and in such event the parties liable on the note or evidence of indebtedness shall be liable for and shall pay the premium earned prior to the cancellation and no more. In case of any cancellation of a policy, any note or notes, or written evidence of indebtedness given for whole or part of the premium thereon may be by insurer returned to the insured in lieu of cash to the extent of the unpaid amount thereof, plus accrued interest. No note given for premiums or deposit for assessment, or both, or for any part of either, shall be negotiable and every assignment thereof shall be subject to all existing defenses. Nor shall any such notes be valid for any purpose unless the words "not negotiable" are plainly and legibly written or printed across the face thereof. History:   1967 c 395 art 7 s 13 
66A.14 DIVIDENDS. The board of directors of any mutual insurance company may from time to time fix and determine the amounts to be paid during the year as dividends or a refund of savings and gains to policyholders; provided, that no dividend or refund shall discriminate between members of the same class and no dividend or refund shall be declared or distributed except out of the net divisible surplus of the company, and no company shall pay or credit a policyholder any sum in anticipation of a future dividend or refund. History:   1967 c 395 art 7 s 14 
66A.15 ASSESSMENTS. Subdivision 1. Mutual fire insurance companies. When the net assets of any mutual insurance company are insufficient for the payment of incurred losses and expenses above its unearned premium reserve, as provided by law, it shall make an assessment for the amount required ratably upon its members liable thereto. The order for assessment shall be duly entered upon its records, with a statement of its condition at the date thereof, including all cash assets, deposit notes, and contingent amount liable to the assessment, the amount of the assessment, and the particular losses or other liabilities for which it is made. This record shall be signed by each director voting for the order before any part of the assessment is collected and any person liable thereto may inspect and take a copy thereof. The commissioner may by written order relieve the company from an assessment or other proceedings to restore the assets during the time fixed in the order, when the deficiency does not exceed ten percent of its admitted assets. When, by reason of depreciation, loss, or otherwise, the net assets, after providing for other debts, are less than the required premium reserve upon policies the deficiency shall be restored by assessment, as provided in this subdivision, notice of which shall be filed with the commissioner. When the board of directors or the commissioner shall be of the opinion that the insolvency of any company is probable, the board or, upon its failure so to do, the commissioner may order two assessments made, the first to determine what each policyholder should equitably pay or receive in case of withdrawal from the company and cancellation of the policy; the second, such further sum as each should pay to reinsure the unexpired term at the same rate as the first insurance. The directors shall forthwith cause written notice and demand of payment to be served personally or by mail upon each policyholder subject thereto. After adjustment of the first assessment, every policy upon which the second assessment shall not be paid shall be canceled; but in no case shall there be credited upon a policy more than if canceled by the board of directors under the bylaws. If, within two months after the last assessment is payable, the amount of the policies whose holders have paid the same is less than $500,000, all other policies shall be void and the company shall continue only for the purpose of adjusting the deficiency or excess of premiums and settling outstanding claims. No assessment shall be valid against a policyholder who has not been duly notified thereof in writing within one year after the expiration or cancellation of the policy. Subd. 2. Casualty companies. All policies issued by such companies shall provide for a premium or premium deposit payable in cash and, except as herein provided, for a contingent liability of the members at least equal to the premium or premium deposit as adjusted by audit, if any. If at any time the admitted assets are less than the reserves and other liabilities, the company shall immediately collect upon policies with a contingent liability a sufficient proportionate part thereof to restore such assets and the commissioner may, when such deficiency does not exceed ten percent of its admitted assets, by written order direct that proceedings to restore such assets be deferred during the period of time fixed in such order. The contingent liabilities, if any, of the policyholders shall be plainly and legibly stated in every policy in terms of either dollars or premiums. History:  1967 c 395 art 7 s 15; 1986 c 444
66A.16 GUARANTY FUNDS. Subdivision 1. Mutual fire insurance companies. A mutual fire insurance company may be formed with, or an existing fire insurance company may establish, a guaranty fund divided into certificates of $10 each, or multiples thereof, and this guaranty fund shall be invested in the same manner as is provided for the investment of capital stock of insurance companies. The certificate holders of the guaranty fund shall be entitled to an annual dividend of not more than ten percent on their respective certificates, if the net profits or unused premiums left after all losses, expenses, or liabilities then incurred, with reserves for reinsurance, are provided for shall be sufficient to pay the same; and, if the dividends in any one year are less than ten percent, the difference may be made up in any subsequent year or years from the net profits. Approval of the commissioner must be obtained before accrual for or payment of the dividend, or any repayment of principal. The guaranty fund shall be applied to the payment of losses and expenses when necessary and, if the guaranty fund be impaired, the directors may make good the whole or any part of the impairment from future profits of the company, but no dividend shall be paid on guaranty fund certificates while the guaranty fund is impaired. The holder of the guaranty fund certificate shall not be liable for any more than the amount of the certificate which has not been paid in and this amount shall be plainly and legibly stated on the face of the certificate. Each certificate holder of record shall be entitled to one vote in person or by proxy in any meeting of the members of the company for each $10 investment in guaranty fund certificates. The guaranty fund may be reduced or retired by vote of the policyholders of the company and the assent of the commissioner, if the net assets of the company above its reinsurance reserve and all other claims and obligations and the amount of its guaranty fund certificates and interest thereon for two years last preceding and including the date of its last annual statement shall not be less than 50 percent of the premiums in force. Due notice of this proposed action on the part of the company shall be mailed to each policyholder of the company not less than 30 days before the meeting when the action may be taken. In mutual fire insurance companies with a guaranty fund, the certificate holders shall be entitled to choose and elect from among their own number or from among the policyholders at least one-half of the total number of directors. If any mutual fire insurance company with a guaranty fund ceases to do business, it shall not divide among its certificate holders any part of its assets or guaranty fund until all its debts and obligations have been paid or canceled. Foreign mutual fire insurance companies having a guaranty fund shall not be required to make their certificate of guaranty fund conform to the provisions of this section, but when the certificates do not conform therewith the amount thereof shall be charged as a liability. Subd. 2. Mutual casualty companies. Any mutual insurance company which establishes and maintains, over and above its liabilities and the reserves required by law of a like stock insurance company, a guaranty fund available for the payment of losses and expenses at least equal to the capital stock required of a like stock insurance company may issue policies of insurance without contingent liability, and when the articles of incorporation of any mutual insurance company having this guaranty fund provide, the company may transact any and all of the kinds of business as set forth in section 60A.06, subdivision 1, clauses (1) to (15), subject to the restrictions and limitations imposed by law on a like stock insurance company, and any domestic mutual company having a guaranty fund equal to the amount of capital stock required of a like stock insurance company may insure the same kinds of property and conduct and carry on its business, subject only to the restrictions and limitations applicable to like domestic stock insurance companies. Subdivision 1 shall not apply to this guaranty fund except that the guaranty fund of the company shall be invested in the same manner as is provided by law for the investment of its other funds. Every such company shall in its annual statement show as separate items the amount of the guaranty fund and the remaining divisible surplus, and the aggregate of these items shall be shown as surplus to policyholders. A guaranty fund may be created, in whole or in part, in either or both of the following ways: (1) where an existing mutual company has a surplus, the members of the company may at any regular or special meeting set aside from and out of its surplus such sum as shall be fixed by resolution to be transferred to and thereafter constitute, in whole or in part, the guaranty fund of the company; or (2) by the issuance of guaranty fund certificates, as specified in this subdivision, the same to be issued upon the conditions and subject to the rights and obligations specified in this subdivision. Any such company establishing a guaranty fund, as provided in this subdivision, may, subject to the restrictions and limitations imposed by law as to a like stock insurance company, amend its articles to provide for the doing by it of one or more of the kinds of insurance business specified in section 60A.06, subdivision 1, clauses (1) to (15). The policy liability of any such mutual company issuing policies without a contingent liability shall, as to these policies, be computed upon the same basis as is applicable to like policies issued by stock insurance companies. Where any such company shall issue five-year term policies, wherein the premiums shall be payable in annual or biennial installments and no premium note is taken by the company as payment of the full term premium, the company then shall be required to maintain a reserve fund on only the portion of premiums actually collected from time to time under these term policies and no company so creating a guaranty fund shall issue policies without a contingent liability after the guaranty fund shall be impaired or reduced below the capital required of a like stock insurance company doing the same kind or kinds of insurance. Any company having a guaranty fund may insure, without a contingent liability, any kind or class of property which a like stock company may insure. Any director, officer, or member of any mutual insurance company, or any other person, may advance to the company any sum of money necessary for the purposes of its business or to enable it to comply with any of the requirements of the law, including the creation, in whole or in part, of a guaranty fund to enable it to do one or more of the kinds of business specified in this subdivision, and for the creation by a company issuing policies with a contingent liability of a guaranty fund, in such amount as the board of directors shall determine, for the protection of policyholders of the company, and the moneys, together with the interest thereon as may have been agreed upon, not exceeding ten percent per annum, shall be repaid only out of the surplus remaining after providing for all reserves, if any, and other liability, and which shall not otherwise be a liability or claim against the company or any of its assets. No commission or promotion expenses shall be paid in connection with the advance of any money to the company, and the amount of the advance remaining unpaid shall be reported in each annual statement. The company shall issue to each person advancing money for the creation of a guaranty fund a certificate or certificates specifying the amount advanced. These certificates may be assigned by the holder and the transfer recorded upon the books of the company. The holders of the guaranty fund certificates shall be entitled to annual interest thereon at the rate agreed upon, if the net profits of the company, after all losses, expenses, liabilities, and legal reserves, if any, have been paid or provided for, are sufficient to pay the same. If the net profits of the company in any year are insufficient to pay the full amount of interest agreed upon, the difference may be paid in any subsequent year from the net profits of the subsequent years, if approval of the commissioner is obtained before accrual for or payment of the interest. The guaranty fund shall be applied to the payment of losses and expenses when necessary and, if the guaranty fund be impaired, the directors may make good the whole or any part of the impairment from future net profits of the company or by the issue and sale of additional guaranty fund certificates, but no interest shall be paid on the guaranty fund certificates while the guaranty fund is impaired. No certificate shall be issued except for money actually paid to the company, which amount shall be plainly and legibly stated therein. The company shall issue certificates only in sums of $10, or multiples thereof; it shall keep a record of the name and address of the person to whom issued and of all assignments thereof. Upon surrender of a certificate duly assigned in writing, the company shall cancel the same and issue a new certificate to the assignee. Each certificate holder of record shall be entitled to one vote in person or by proxy at any meeting of the members of the company, for each $10 investment in the guaranty fund certificates. The guaranty fund may be reduced or retired by vote of the board of directors of the company and the assent of the commissioner, if the net assets of the company, above its legal reserves, if any, and all other claims and obligations are sufficient therefor. The certificate holders shall be entitled to choose and elect from among their own members or from among the policyholders at least one-half of the total number of directors. In case the members of any company by resolution adopted at any regular meeting or special meeting called for that purpose shall determine to wind up and liquidate the business of any such company, the assets thereof shall be applied (1) to the payment of the expense of the liquidation; (2) to the payment of any accrued liability, including losses, if any; (3) to the payment of any unearned premiums on policies in force at the time of the liquidation; (4) to the payment of guaranty fund certificates, if any, together with accrued interest thereon, if any; and (5) the residue shall be distributed according to the provisions of chapter 60B. Subd. 3. All mutual companies except those excluded under section 66A.01. Any mutual company authorized to transact business in this state which establishes and maintains, over and above its liabilities and the reserves required by law of like stock insurance companies, a guaranty fund available for the payment of losses and expenses at least equal to the capital stock required of a like stock insurance company may issue policies of insurance without contingent liability. Subd. 4. Conversion of certain mutuals. (a) Any domestic mutual company qualified to issue policies of insurance without contingent liability as provided by subdivision 3 with surplus of $1,000,000 or less may adopt a plan of conversion to a stock company pursuant to section 60A.07, subdivision 8, clause (4), which authorizes holders of guaranty fund certificates to exchange the certificates for shares of the stock company. Shares of the stock company being formed may be issued during the conversion in exchange for such guaranty fund certificates. (b) The plan of conversion shall establish the price of the shares to be issued in exchange for the guaranty fund certificates. The price shall be established by an appraisal of the mutual company as an operating company. The appraisal shall be made by an independent certified public accountant. The plan, including the price, shall not be unfair or inequitable to the mutual company policyholders and shall not become effective until approved by the commissioner of commerce. History:  1967 c 395 art 7 s 16; 1969 c 7 s 27; 1969 c 708 s 63; 1978 c 465 s 14; 1978 c 582 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 2000 c 350 s 9,10
66A.17 MUTUAL FIRE INSURANCE COMPANIES; PROVISIONS AS TO POLICIES LAPSING. Any mutual company insuring property may provide by its certificate or bylaws that upon failure by any member for 60 days after notification thereof to pay any premium or assessment made upon the member's policy such policy shall lapse and become void without notice or further act by or on behalf of the company. The condition shall be plainly and legibly specified in each policy. Whereupon the company may recover the amount of earned premium or assessment, or both, but no more. Nothing herein contained shall prevent the reinstatement of the lapsed policy by voluntary acceptance of any delinquent assessment before suit. History:  1967 c 395 art 7 s 17; 1986 c 444
66A.18 VOTING AND NOTICE. Required contract provisions concerning voting and notice are contained in section 66A.07. History:   1967 c 395 art 7 s 18 
66A.19 CONTINGENT LIABILITY. Required contract provisions concerning contingent liability of the policyholder are contained in sections 66A.12 and 66A.15, subdivision 2. History:   1967 c 395 art 7 s 19 
66A.21 DOMESTIC MUTUAL INSURANCE COMPANIES, SEPARATION OF ASSESSABLE AND NONASSESSABLE BUSINESSES. Subdivision 1. Choice of methods. Any domestic mutual insurance corporation which transacts its business partly on an assessable basis and partly on a nonassessable basis, may separate one plan from the other by either of the following methods: (1) By transferring its nonassessable policies, and all assets and liabilities attributable thereto to another existing domestic mutual insurance corporation or to a new domestic mutual insurance corporation formed for that specific purpose, provided that in either case, the corporation assuming the risks shall have all its policies on a nonassessable basis; or (2) By transferring its assessable policies, and all assets and liabilities attributable thereto, to another existing domestic mutual insurance corporation or to a new domestic mutual insurance corporation formed for that specific purpose, provided that in either case, the corporation assuming the risks shall have all its policies on the assessable basis. Subd. 2. Existing domestic mutual insurance companies, joint agreement; approval. The separation can be effected only as a result of a joint agreement entered into, approved and filed as follows: (1) The board of directors of the ceding and assuming corporations shall, by majority vote, enter into a joint agreement, prescribing the terms and conditions of the separation and the mode of carrying the same into effect, with such other details and provisions as they deem necessary. The agreement shall provide for an adjustment of final figures as may be necessary after a verifying examination of the corporation by the commissioner of commerce as hereinafter provided. (2) The agreement shall be submitted to the members of the ceding corporation, at a special meeting duly called for the purpose of considering and acting upon the agreement. Notice for such special meeting shall be deemed sufficient if mailed to the policyholders' last known address as shown on the policy records of the corporation. If the holders of two-thirds of the voting power of the members present or represented at the meeting shall vote for the adoption of the agreement, then that fact shall be certified on the agreement by the secretary of the corporation and the agreement so adopted and certified shall be signed and acknowledged by the president and secretary of both the ceding and assuming corporations. (3) The agreement so adopted, certified and acknowledged shall be delivered to the commissioner of commerce. It shall be the duty of the commissioner to determine, after a verifying examination, if the provisions thereof are fair and equitable to all concerned and to verify the reasonableness and accuracy of the apportionment of assets, liabilities, and surplus provided for in the agreement. If the commissioner is satisfied that the agreement is fair and reasonable and that its provisions relating to transfers of assets and assumption of liabilities are equitable to claimants and policyholders, the commissioner shall place a certificate of approval on the agreement and shall file it in the commissioner's office. A copy of the agreement, certified by the commissioner of commerce shall be filed for record in the Office of the Secretary of State and recorded in the office of the county recorder of the counties in this state in which any of the corporate parties to the agreement have their home offices and of any counties in which any of the corporate parties have land, title to which will be transferred under the terms of the agreement. Subd. 3. New domestic mutual companies; joint agreement; approval. (1) If the joint agreement provides for a new domestic mutual insurance corporation to be formed to assume the business ceded, the articles of incorporation for such new corporation shall be prepared and delivered to the commissioner of commerce for approval, together with the agreement as provided in subdivision 2. (2) Such articles shall be prepared, executed, approved, filed and recorded in the form and manner prescribed in, or applicable to, the particular law or laws under which the new insurance corporation is to be formed. (3) The Department of Commerce shall grant and the commissioner of commerce shall issue to such new corporation a certificate of authority immediately upon its assumption of the business ceded and upon its making the deposit of securities with the commissioner of commerce, as required by law. Subd. 4. Effective date. The separation shall be effective on the agreed date stated in the joint agreement, upon filing of the same as herein provided. History:  1967 c 395 art 7 s 21; 1976 c 181 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 2005 c 4 s 12
66A.215 SPECIAL PROVISIONS RELATING TO HAIL, TORNADO, AND CYCLONE COMPANIES. Sections 66A.221 to 66A.31 apply only to hail, tornado, and cyclone companies. History:  2005 c 69 art 2 s 17,18
66A.221 ORGANIZATION. Subdivision 1. Initial requirements. No company for insurance against loss or damage by hail, tornadoes, cyclones, and hurricanes, or any of these causes, shall issue any policy until at least $200,000 of insurance, in not less than 400 separate risks, upon property located in not less than ten counties, and upon not more than 15 risks of 160 acres each in any one township, have been actually subscribed for and entered on its books and each subscriber has paid a membership fee of $3 for which duplicate receipts have been executed, conditioned for the return thereof at the end of one year if the company has not then completed its organization. Immediately thereafter one of these duplicates shall be delivered to the member and the other, together with the fee, deposited in a solvent bank approved by the commissioner, where the fee shall remain until the company has been licensed to do business, not exceeding such year, when it shall be delivered to it; otherwise to the member. The duplicate and a certificate of the deposit shall be filed with the commissioner within 90 days after deposit. Subd. 2. Liability for ratable assessments. In addition to the premium, every policyholder, in its hail department, shall be liable to a ratable assessment for all losses and expenses incurred while a member in a sum equal to such premium but not exceeding in any one year five percent of the policyholder's insurance, if notified thereof within 90 days after the expiration or cancellation of the policy; or if such policy be for more than one year, within 90 days after the expiration of the year in which assessment is made thereunder. History:  1967 c 395 art 7 s 22; 1986 c 444; 2005 c 69 art 2 s 18
66A.23 ASSESSMENTS; NOTICE; PAYMENTS; COLLECTION. When any assessment has been completed the secretary shall immediately notify each member by mail directed to the member's last known address of the purpose and amount of such assessment and of the member's share thereof, and the person to whom and the time when such payment must be made, which shall not be less than 30, nor more than 90, days thereafter; and such person, if the bylaws so provide, may collect a commission of not more than two percent of each amount in addition thereto. History:  1967 c 395 art 7 s 23; 1986 c 444
66A.24 OFFICERS; DUTIES; COMPENSATION; BONDS. The officers shall perform such duties, receive such compensation, and give such bonds as shall be provided in the bylaws or fixed by the directors; but no salary, past or future, shall be increased except by majority vote of all members present and represented at an annual meeting and no officer or director shall receive any commission, except upon business personally solicited and written by the officer. History:   1967 c 395 art 7 s 24 
66A.25 PROXIES; RESTRICTIONS. No proxy shall be received unless dated and actually executed within the preceding 30 days and filed with the secretary at least ten days before the meeting, nor if made to any director or officer. History:   1967 c 395 art 7 s 25 
66A.26 PROPERTY INSURABLE. No such company shall insure any other property than country churches and school houses, farm dwellings, mutual or cooperative creameries, cheese factories, barns, and other buildings, and hay, grain, and other farm products therein, or stored or growing on the premises, bedding, wearing apparel, printed books, pictures and frames, household furniture, family stores and provisions while therein or in the cellar beneath, farm implements, vehicles, and machinery on or off the premises, threshing machines, or livestock thereon or running at large, and any and all property of any kind which may be insured by a township mutual fire insurance company, organized under the provisions of sections 67A.01 and 67A.02. No company, in its hail department, shall insure more than 3,200 acres in any one township; there shall be at least one-half mile between each risk assumed by the company, except that risks may be assumed which cover the growing crops upon not more than 320 acres of contiguous or immediately adjacent lands. History:   1967 c 395 art 7 s 26 
66A.27 LIMITATION ON EXPENSES. No such company shall incur, lay out, or expend, in any one calendar year, as and for the expenses of conducting this business, more than its application or survey fees and 40 percent of its total premiums or assessments actually collected. No company shall be required to limit its annual expenses to less than $1,000. History:   1967 c 395 art 7 s 27 
66A.28 REPORTS; DELINQUENCY; POWERS OF COMMISSIONER. The commissioner shall demand a report of any such company when in the commissioner's judgment the interest of the public or policyholders so require; and the proper officers of the company shall make prompt reply to the demand and answer fully all interrogations regarding its business methods, financial condition, and other matters pertaining to its business. The provisions of chapter 60B shall apply to such companies. History:  1967 c 395 art 7 s 28; 1969 c 708 s 63; 1986 c 444
66A.29 ARBITRATION REQUIRED. Every policy must provide as follows: "In case of loss under this policy and failure of the parties to agree as to the amount of the loss, it is mutually agreed that, on written demand of either party, the company and the insured each shall select a competent appraiser and notify the other of the appraiser selected within ten days of the demand. The appraisers shall first select a competent and disinterested umpire; and, failing for ten days to agree upon the umpire, then, on request of either appraiser, the umpire shall be selected by a judge of a court of record in the state in which the property covered is located. By mutual agreement the two appraisers may agree to have the umpire selected by a judge of a court of record and waive the ten-day provision. The appraisers and the umpire shall then appraise the loss. A written award of any two of these persons determines the amount of loss. The written award of a majority of these referees is final and conclusive upon the parties as to the amount of loss, and this selection, unless waived by the parties, is a condition precedent to any right of action to recover for a loss. No suit for the recovery of any claim by virtue of this policy may be sustained unless commenced within six months after the loss occurred." The policy must also provide the form, manner, and length of notice to be given to the company by the insured of any loss sustained. History:  1967 c 395 art 7 s 29; 1974 c 161 s 5; 1983 c 208 s 3
66A.30 TRANSFER OF RISKS AND REINSURANCE. Every company may transfer its risks to, or reinsure them in, any other domestic or foreign company at the time authorized to do such business in this state, on the mutual or stock plan, by a contract of transfer or reinsurance approved by the commissioner, and by a two-thirds vote of the members present or duly represented and voting at a meeting of the company. History:   1967 c 395 art 7 s 30 
66A.31 MERGER AND CONSOLIDATION. Any such mutual company may at any time merge or consolidate with other companies as provided under section 60A.16. History:   1967 c 395 art 7 s 31 
66A.311 EXEMPTION; FIRE, HAIL, AND TORNADO ASSOCIATIONS MAINTAINED BY MEMBERS OF ONE RELIGIOUS DENOMINATION. The members of any one church, or of any one religious denomination, may maintain for the exclusive benefit of the members thereof an unincorporated association for the mutual insurance of the property of the members against loss or damage by fire, lightning, hail, or tornado, or all of them. The association shall furnish no insurance except upon the property of an actual member of the church or denomination. It may conduct its business upon the plan and method adopted by it and shall not be required to be licensed by or report to the commissioner. History:  1967 c 395 art 7 s 20; 2005 c 69 art 2 s 18
66A.32 PREREQUISITES OF LIFE COMPANIES. No mutual life company shall be qualified to issue any policy until applications for at least $200,000 of insurance, upon lives of at least 200 separate residents, have been actually and in good faith made, accepted, and entered upon its books and at least one full annual premium thereunder, based upon the authorized table of mortality, received in cash or in absolutely payable and collectible notes. A duplicate receipt for each premium, conditioned for the return thereof unless the policy be issued within one year thereafter, shall be issued, and one copy delivered to the applicant and the other filed with the commissioner, together with the certificate of a solvent authorized bank in the state, of the deposit therein of such cash and notes, aggregating the amount aforesaid, specifying the maker, payee, date, maturity, and amount of each. Such cash and notes shall be held by it not longer than one year, and at or before the expiration thereof to be by it paid or delivered, upon the written order of the commissioner, to such company or applicants, respectively. History:  1967 c 395 art 1 s 7; 1969 c 7 s 7-13; 1969 c 598 s 1; 1969 c 708 s 63; 1973 c 634 s 2-4; 1976 c 213 s 1-4; 1978 c 465 s 1,2; 1978 c 674 s 60; 1980 c 516 s 2; 1983 c 216 art 1 s 15; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 313 s 2; 1986 c 444; 1991 c 325 art 10 s 4; art 14 s 1; 1992 c 564 art 1 s 15,16,54; 1995 c 214 s 3; 1996 c 446 art 2 s 1,2; 2005 c 69 art 2 s 1-6, 18
66A.33 TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES. A new mutual life insurance company which has complied with the provisions of section 66A.32 or an existing mutual life insurance company may establish, a temporary capital of, such amount not less than $100,000, as may be approved by the commissioner. Such temporary capital shall be invested by the company in the same manner as is provided for the investment of its other funds. Out of the net surplus of the company the holders of the temporary capital stock may receive a dividend which may be cumulative. This capital stock shall not be a liability of the company but shall be retired within a reasonable time and according to terms approved by the commissioner. At the time for the retirement of this capital stock, the holders shall be entitled to receive from the company the par value thereof and any dividends thereon due and unpaid, and thereupon the stock shall be surrendered and canceled. In the event of the liquidation of the company, the holders of temporary capital stock shall have the same preference in the assets of the company as shareholders have in a stock insurance company. Dividends on this stock are subject to section 60D.20, subdivision 2. Temporary capital stock may be issued with or without voting rights. If issued with voting rights, the holders shall, at all meetings, be entitled to one vote for each $10 of temporary capital stock held. History:  1967 c 395 art 1 s 7; 1969 c 7 s 7-13; 1969 c 598 s 1; 1969 c 708 s 63; 1973 c 634 s 2-4; 1976 c 213 s 1-4; 1978 c 465 s 1,2; 1978 c 674 s 60; 1980 c 516 s 2; 1983 c 216 art 1 s 15; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 313 s 2; 1986 c 444; 1991 c 325 art 10 s 4; art 14 s 1; 1992 c 564 art 1 s 15,16,54; 1995 c 214 s 3; 1996 c 446 art 2 s 1,2; 2005 c 69 art 2 s 1-6, 18
66A.34 DIVIDENDS. Subdivision 1. Annual apportionment and accounting of surplus. Every life insurance company doing business in this state conducted on the mutual plan or in which policyholders are entitled to share in the profits or surplus shall make an annual apportionment and accounting of divisible surplus to each policyholder, beginning not later than the end of the third policy year, on all participating policies hereafter issued; and each such policyholder shall be entitled to and be credited with or paid, in the manner hereinafter provided, such a portion of the entire divisible surplus as has been contributed thereto by that person's policy. Subd. 2. Policyholder to choose. Every policyholder shall, on all participating policies hereafter issued, be permitted, after that person's policy has been in force five years, annually, to select the manner and method of the application of the surplus to be annually apportioned to that person's policy from among those set forth in the policy. All apportioned surplus not actually paid over to the insured, or applied in the reduction of current or future premiums or in the purchase of paid-up insurance or pure endowment additions, shall be credited to the insured and carried as an actual liability and be paid at the maturity of the policy. Subd. 3. Waiver prohibited. No agreement between the company and the policyholder or applicant for insurance shall be held to waive any of the provisions of subdivisions 1 and 2. Subd. 4. Policies issued prior to January 1, 1908. Every life insurance company doing business in this state conducted on the mutual plan, or in which policyholders are entitled to share in the profits or surplus, shall, on all policies of life insurance issued prior to January 1, 1908, under the conditions of which the distribution of surplus is deferred to a fixed or specified time, and contingent upon the policy being in force and the insured living at that time, annually ascertain the amount of surplus to which all such policies as a separate class are entitled, and shall annually apportion to such policies as a class the amount of surplus so ascertained, and carry the amount of such apportioned surplus, plus the actual interest earnings and accretions of such fund, as a distinct and separate liability to such class of policies on and for which the same was accumulated, and no company or any of its officers shall be permitted to use any part of such apportioned surplus fund for any purpose other than the express purpose for which the same was accumulated. This subdivision shall not apply to industrial policies. Subd. 5. Required policy provision. The required policy provision is contained in section 61A.03, subdivision 1, paragraph (f). History:  1967 c 395 art 2 s 26; 1986 c 444; 2005 c 69 art 2 s 18
66A.35 GUARANTY FUNDS. (a) A domestic mutual life insurance company may be formed with, or an existing domestic mutual life insurance company may establish, a guaranty fund divided into certificates of $10 each, or multiples thereof, and this guaranty fund shall be invested in the same manner as is provided for the investment of capital stock of insurance companies. (b) The certificate holders of the guaranty fund are entitled to an annual dividend of not more than ten percent on their respective certificates, if the net profits or unused premiums left after all losses, expenses, or liabilities then incurred, with reserves for reinsurance, are provided for, are sufficient to pay the annual dividend. If the dividends in any one year are less than ten percent, the difference may be made up in any subsequent year or years from the net profits. Approval of the commissioner must be obtained before accrual for or payment of the dividend, or any repayment of principal. (c) The guaranty fund must be applied to the payment of losses and expenses when necessary, and, if the guaranty fund is impaired, the directors may make good the whole or any part of the impairment from future profits of the company, but no dividend shall be paid on guaranty fund certificates while the guaranty fund is impaired. The holder of the guaranty fund certificate is not liable for any more than the amount of the certificate which has not been paid in, and this amount must be plainly and legibly stated on the face of the certificate. (d) Notwithstanding any other provision of law, each certificate holder of record is entitled to one vote in person or by proxy in any meeting of the members of the company for each $10 investment in guaranty fund certificates. (e) The guaranty fund may be reduced or retired by vote of the policyholders of the company and the assent of the commissioner, if the net assets of the company above its reinsurance reserve and all other claims and obligations and the amount of its guaranty fund certificates and interest on the certificates for two years last preceding and including the date of its last annual statement are not less than 50 percent of the premiums in force. Due notice of this proposed action on the part of the company shall be mailed to each policyholder of the company not less than 30 days before the meeting when the action may be taken. (f) In domestic mutual life insurance companies with a guaranty fund, the certificate holders shall be entitled to choose and elect from among their own number or from among the policyholders at least one-half or more of the total number of directors. (g) If any domestic mutual life insurance company with a guaranty fund ceases to do business, it shall not divide among its certificate holders any part of its assets or guaranty fund until all its debts and obligations have been paid or canceled. (h) Foreign mutual life insurance companies having a guaranty fund shall not be required to make their certificate of guaranty fund conform to the provisions of this section, but when the certificates do not conform with this section, the amount of the guaranty fund shall be charged as a liability. History:  2001 c 131 s 15; 2005 c 69 art 2 s 18
66A.36 STOCK AND MUTUAL LIFE INSURANCE COMPANIES. Insurance corporations for the transaction of the kinds of business authorized and permitted by section 60A.06, subdivision 1, clause (4), and subject to these provisions and limitations, may be formed having a capital stock, but which shall be controlled by the votes of both stockholders and participating policyholders. All such companies shall be known as stock and mutual companies. Corporations so formed shall have the right to make any contracts which insurance companies formed to transact the same kinds of business upon the stock plan or upon the mutual plan are authorized by law to make. History:  1967 c 395 art 2 s 33; 2005 c 69 art 2 s 18
66A.37 APPLICATION. All provisions of law relating to stock companies and all such provisions relating to mutual companies shall, so far as applicable, relate to and govern such stock and mutual companies and the rights of stockholders and members thereof. History:  1967 c 395 art 2 s 34; 2005 c 69 art 2 s 18
66A.38 VOTING RIGHTS. Unless otherwise provided in the certificate of incorporation or an amendment thereto adopted as provided by section 60A.07, subdivision 1d, or 66A.39, each stockholder of a stock and mutual life insurance company shall, at all meetings, be entitled to one vote for each share of stock held and, except as otherwise provided by law, each holder of a policy entitled to participate in profits or savings shall be a member and, as such, shall be entitled to the number of votes to which that person would be entitled in a mutual company. History:  1967 c 395 art 2 s 35; 1986 c 444; 2005 c 69 art 2 s 18; art 3 s 11
66A.39 CONVERSION OF EXISTING COMPANIES; AMENDMENT OF CERTIFICATES OF INCORPORATION. Any existing stock or mutual insurance company authorized to do the kinds of business referred to in section 66A.36 may amend its certificate of incorporation so as to become a stock and mutual company; provided, that no such amendment shall deprive any stockholder or member or policyholder of the right, at any and all meetings of stockholders and members or policyholders held thereafter, to cast as many votes for directors as are provided by the certificate of incorporation in force at the time of the adoption of such amendment, or by the law in force at such time. No such amendment shall be construed to change the identity of the corporation and it shall thereafter continue to be governed by the laws applicable thereto at the time of such amendment and as amended hereafter and not inconsistent with sections 66A.36 to 66A.39, as well as those relating to the added characteristic of capital stock or mutuality which it shall have acquired by such amendment. The certificate of incorporation of a stock and mutual life insurance company may be amended in any respect therein provided by section 60A.07, subdivision 1d, in the manner therein provided. The certificate of incorporation of a stock and mutual life insurance company may also be amended in respect to any matter which an original certificate of incorporation of a stock and mutual life insurance company might lawfully have contained, or so as to vest in its board of directors authority to make and alter bylaws subject to the power of the stockholders and members to change or repeal such bylaws, by the affirmative vote, at a regular meeting of stockholders and members or at a special meeting of stockholders and members called for that expressly stated purpose by the board of directors which shall first have proposed the amendment and declared it to be advisable, of (1) a majority of the total number of votes to which all stockholders are entitled, and (2) at least one-fifth of the total number of votes to which all participating policyholder members are entitled, provided the proposed amendment does not receive the negative vote of more than five percent of the total number of votes to which all participating policyholder members are entitled. The certificate of incorporation of a stock and mutual life insurance company may also be amended so as to increase or decrease its capital stock, or so as to change the number and par value of the shares of its capital stock, or so as to limit or deny to stockholders the preemptive right to subscribe to any or all shares of stock which may be authorized to be thereafter issued, by a majority vote of all its shares but without the vote of its members, at a regular meeting or at a special meeting of stockholders called for that expressly stated purpose by the board of directors which shall first have proposed the amendment and declared it to be advisable and not adverse to or in conflict with the rights and interests of the members, provided that if the proposed amendment is to increase or decrease the capital stock or to change the number of the shares of the capital stock, the resolution specifying the proposed amendment and the certificate of amendment shall expressly provide (1) that the stockholders holding all its shares shall, at all meetings, be entitled to the same number of total votes after the amendment is adopted as they were entitled to before the amendment, and (2) that each stockholder shall, at all meetings, be entitled to a fraction of one vote for each share of stock held, the numerator of which fraction shall be the number of shares outstanding before the first such amendment is adopted and the denominator of which fraction shall be the number of shares outstanding. The resolution specifying the amendment shall be embraced in a certificate duly executed by its president and secretary, or other presiding and recording officers, under its corporate seal, and approved, filed, recorded, and published in the manner prescribed for the execution, approval, filing, recording, and publishing of an original certificate of incorporation. History:  1967 c 395 art 2 s 36; 1986 c 444; 2005 c 69 art 2 s 18; art 3 s 12
66A.40 MUTUAL INSURANCE HOLDING COMPANIES. Subdivision 1. Formation. (a) A domestic mutual insurance company, upon approval of the commissioner, may reorganize by forming an insurance holding company based upon a mutual plan and continuing the corporate existence of the reorganizing insurance company as a stock insurance company. The commissioner, if satisfied that the interests of the policyholders are properly protected and that the plan of reorganization is fair and equitable to the policyholders, may approve the proposed plan of reorganization and may require as a condition of approval the modifications of the proposed plan of reorganization as the commissioner finds necessary for the protection of the policyholders' interests. The commissioner shall retain jurisdiction over the mutual insurance holding company according to this section and chapter 60D to assure that policyholder and member interests are protected. (b) All of the initial voting shares of the capital stock of the reorganized insurance company must be issued to the mutual insurance holding company or to an intermediate stock holding company. The membership interests of the policyholders of the reorganized insurance company become membership interests in the mutual insurance holding company. "Membership interests" means those interests described in section 66A.41, subdivision 1, paragraph (m). Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company and their voting rights must be determined in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. Policyholders of any other insurance company subsidiary of a mutual insurance holding company shall not be members of the mutual insurance holding company unless otherwise specified in the articles of incorporation or bylaws of the mutual insurance holding company. For purposes of this paragraph, "other insurance company subsidiary" means an insurance company subsidiary of a mutual insurance holding company that has not reorganized under this chapter or chapter 60A or a comparable statute in another jurisdiction. The mutual insurance holding company shall, at all times, directly or through one or more intermediate stock holding companies, control a majority of the voting shares of the capital stock of the reorganized insurance company, taking into account any potential dilution resulting from convertible securities. (c) A majority of the board of directors of a mutual insurance holding company must be disinterested directors. For purposes of this section, a director is disinterested if (i) the director is not or has not within the past two years been an officer or employee of the mutual insurance holding company or any subsidiary or predecessor corporation, and (ii) the director does not hold, directly or indirectly, a material ownership interest in any subsidiary of the mutual insurance holding company. An ownership interest is material if it represents more than one-half of one percent of the voting securities of the issuer, or a larger percentage as the commissioner may approve. Subd. 2. Merger. (a) A domestic or foreign mutual insurance company, upon the approval of the commissioner, may reorganize by merging its policyholders' membership interests into a mutual insurance holding company formed according to subdivision 1 and continuing the corporate existence of the reorganizing insurance company as a stock insurance company subsidiary of the mutual insurance holding company or of an intermediate stock holding company. "Membership interests" means those interests described in section 66A.41, subdivision 1, paragraph (m). The commissioner, if satisfied that the interests of the policyholders of the reorganizing company and the interests of the existing members of the mutual insurance holding company are properly protected and that the merger is fair and equitable to those parties, may approve the proposed merger and may require as a condition of approval the modifications of the proposed merger as the commissioner finds necessary for the protection of the policyholders' or members' interests. The commissioner shall retain jurisdiction, under chapter 60D, over the mutual insurance holding company organized according to this section to assure that policyholder and member interests are protected. (b) All of the initial voting shares of the capital stock of the reorganized insurance company must be issued to the mutual insurance holding company, or to an intermediate stock holding company. The membership interests of the policyholders of the reorganized insurance company become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company and their voting rights must be determined according to the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall, at all times, directly or through one or more intermediate stock holding companies, control a majority of the voting shares of the capital stock of the reorganized insurance company, taking into account any potential dilution resulting from convertible securities. (c) A domestic mutual insurance holding company may merge with a domestic or foreign mutual insurance holding company in the manner prescribed for the merger of insurance companies set forth in section 60A.16, with any exceptions or modifications the commissioner may approve. Subd. 3. Plan of reorganization; approval by commissioner. (a) A reorganizing or merging insurer or a merging mutual insurance holding company shall, by the affirmative vote of a majority of its board of directors, adopt a plan of reorganization or merger consistent with the requirements of this section and file the plan with the commissioner. At any time before the approval of a plan by the commissioner, the company, by the affirmative vote of a majority of its directors, may amend or withdraw the plan. The plan must provide for the following: (1) in the case of a reorganization under subdivision 1, establishing a mutual insurance holding company with at least one stock insurance company subsidiary, or in the case of a reorganization under subdivision 2, a description of the terms and conditions of the proposed merger; (2) analyzing the benefits and risks attendant to the proposed reorganization, including the rationale for the reorganization and analysis of the comparative benefits and risks of a demutualization under section 66A.41; (3) protecting the immediate and long-term interests of existing policyholders; (4) ensuring immediate membership in the mutual insurance holding company of all existing policyholders of the reorganizing domestic insurance company; (5) describing a plan providing for membership interests of future policyholders; (6) describing the number of members of the board of directors of the mutual insurance holding company required to be policyholders; (7) describing the mutual insurance holding company's plan for distributions to members or other uses of accumulated mutual holding company earnings; (8) describing the nature and content of the annual report and financial statement to be sent or otherwise made available to each member; (9) describing a plan to send or otherwise make available to members the annual report and financial statement; (10) a copy of the proposed mutual insurance holding company's articles of incorporation and bylaws specifying all membership rights; (11) the names, addresses, and occupational information of all corporate officers and members of the proposed mutual insurance holding company board of directors; (12) information sufficient to demonstrate that the financial condition of the reorganizing or merging company will not be materially diminished upon reorganization, including information concerning any subsidiaries of the reorganizing or merging insurers that will become subsidiaries of the mutual insurance holding company or an intermediate holding company as part of the reorganization; (13) a copy of the articles of incorporation and bylaws for any proposed insurance company subsidiary or intermediate holding company subsidiary; (14) describing any plans for an initial sale or subscription of stock or other securities of the reorganized insurance company or any intermediate holding company; and (15) any other information requested by the commissioner or required by rule. (b) The commissioner may approve the plan upon finding that the requirements of this section have been fully met and the plan will protect the immediate and long-term interests of policyholders. (c) The commissioner may retain, at the reorganizing or merging mutual company's expense, any qualified experts not otherwise a part of the commissioner's staff to assist in reviewing the plan. (d) The commissioner may, but need not, conduct a public hearing regarding the proposed plan. The hearing must be held within 30 days after submission of a completed plan of reorganization to the commissioner. The commissioner shall give the reorganizing mutual company at least 20 days' notice of the hearing. At the hearing, the reorganizing mutual company, its policyholders, and any other person whose interest may be affected by the proposed reorganization, may present evidence, examine and cross-examine witnesses, and offer oral and written arguments or comments according to the procedure for contested cases under chapter 14. The persons participating may conduct discovery proceedings in the same manner as prescribed for the district courts of this state. All discovery proceedings must be concluded no later than three days before the scheduled commencement of the public hearing. Subd. 4. Approval by commissioner. The plan by order shall be approved, conditionally approved, or disapproved within the later of 30 days from the date of the commissioner's receipt of all required information or 30 days after the conclusion of the public hearing. An approval or conditional approval of a plan of reorganization expires if the reorganization is not completed within 180 days after the approval or conditional approval unless the time period is extended by the commissioner upon a showing of good cause. Subd. 5. Approval by members. The plan shall be approved as provided in section 66A.41, subdivision 5, by the eligible members described in paragraphs (a) to (c). (a) In the case of a formation under subdivision 1, the plan must be approved by the eligible members of the reorganizing insurance company. (b) In the case of a merger under subdivision 2, paragraph (a), the plan must be approved by the eligible members of the merging insurance company and by the eligible members of the mutual insurance holding company into which the policyholders' membership interests are to be merged. The vote of the eligible members of the mutual insurance holding company is not required if the commissioner determines that the merger would not be material to the financial condition of the mutual insurance holding company. (c) In the case of a merger of two mutual insurance holding companies under subdivision 2, paragraph (c), the plan must be approved by the eligible members of both companies. The vote of the eligible members of the surviving mutual holding company is not required if the commissioner determines that the merger would not be material to the financial condition of the surviving company. Subd. 6. Incorporation. A mutual insurance holding company shall be incorporated pursuant to section 60A.07, subdivision 1, and this chapter. The articles of incorporation and any amendments to the articles of the mutual insurance holding company are subject to approval of the commissioner in the same manner as those of an insurance company. Members of a mutual insurance holding company shall be entitled to vote on all matters required to be submitted to domestic mutual insurance company members in accordance with the requirements of this chapter and chapter 302A. Subd. 7. Applicability of certain provisions. (a) In the event of the insolvency of a mutual insurance holding company, the mutual insurance holding company is considered to be an insurer subject to chapter 60B. A mutual insurance holding company shall not dissolve or liquidate without the approval of the commissioner or as ordered by a court of competent jurisdiction. (b) A mutual insurance holding company is subject to chapter 60D. (c) As a condition to approval of the plan, the commissioner may require the mutual insurance holding company to comply with any provision of the insurance laws necessary to protect the interests of the policyholders as if the mutual insurance holding company were a domestic mutual insurance company. (d) No person or group of persons other than the chief executive officer of a mutual insurance holding company, or the chief executive officer's designee, shall seek to obtain proxies from the members of the mutual insurance holding company for the purposes of affecting a change of control of the mutual insurance holding company unless that person or persons have filed with the commissioner and have sent to the mutual insurance holding company a statement containing the information required by section 60D.17. Section 60D.17, subdivisions 2 to 7, apply in the event of a proxy solicitation regulated by this paragraph. (e) For purposes of this subdivision, the term "control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through membership voting interests, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with, corporate office held by, or court appointment of, the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent or more of the membership voting interests of the mutual insurance holding company. This presumption may be rebutted by a showing made in the manner provided by section 60D.19, subdivision 11, that control does not exist in fact. The commissioner may determine after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect. Subd. 8. Applicability of demutualization provisions. (a) Except as otherwise provided, section 66A.41 is not applicable to a reorganization or merger according to this section. (b) Section 66A.41 is applicable to demutualization of a mutual insurance holding company as if it were a mutual insurance company. (c) Section 66A.41, subdivisions 14 to 16, are applicable to a reorganization or merger under this section. Subd. 9. Membership interests. A membership interest in a domestic mutual insurance holding company does not constitute a security as defined in section 80A.41(30). No member of a mutual insurance holding company may transfer or pledge membership in the mutual insurance holding company or any right arising from the membership except as attendant to the valid transfer or assignment of the member's policy in any reorganized company that gave rise to the member's membership interest. A member of a mutual insurance holding company is not, as a member, personally liable for the acts, debts, liabilities, or obligations of the company. No assessments of any kind may be imposed upon the members of a mutual insurance holding company by the directors or members, or because of any liability of any company owned or controlled by the mutual insurance holding company or because of any act, debt, or liability of the mutual insurance holding company. A member's interest in the mutual insurance holding company shall automatically terminate upon cancellation, nonrenewal, expiration, or termination of the member's policy in any insurance company that gave rise to the member's membership interest. Subd. 10. Financial statement requirements. (a) In addition to any items required under chapter 60D, each mutual insurance holding company shall file with the commissioner, by April 1 of each year, an annual statement consisting of the following: (1) an income statement, balance sheet, and cash flow statement prepared in accordance with generally accepted accounting principles; (2) complete information on the status of any closed block formed as part of a plan of reorganization; (3) an investment plan covering all assets; and (4) a statement disclosing any intention to pledge, borrow against, alienate, hypothecate, or in any way encumber the assets of the mutual insurance holding company or an intermediate stock holding company. (b) The aggregate pledges and encumbrances of a mutual insurance holding company's assets shall not affect more than 49 percent of the stock in ownership of any subsidiary insurance holding company or subsidiary insurance company that resulted from a reorganization or merger. (c) At least 50 percent of the generally accepted accounting principles (GAAP) net worth of a mutual insurance holding company must be invested in insurance company subsidiaries. Subd. 11. Sale of stock and payment of dividends. (a) A reorganized insurance company and an intermediate stock holding company may issue subscription rights and may issue or grant any other securities, rights, options, and similar items to the same extent as any business corporation organized under chapter 302A. However, except as provided in paragraphs (b) to (d), no sale of common or preferred stock of the reorganized insurance company, or of an intermediate stock holding company that directly or indirectly controls a majority of voting shares of the reorganized insurance company, may be made without the commissioner's prior written approval. (b) A registration statement covering securities that has been approved by the commissioner and filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933 pursuant to any provision of that statute or rule that allows registration of securities to be sold on a delayed or continuous basis may be sold without further approval. (c) Unless the commissioner has granted the mutual insurance holding company a written exemption from the requirements of this paragraph, any securities which are regularly traded on the New York Stock Exchange, the American Stock Exchange, or another exchange approved by the commissioner, or designated on the National Association of Securities Dealers automated quotations (NASDAQ) national market system, shall be sold according to the procedure in this paragraph. If the mutual insurance holding company, an intermediate holding company, or a reorganized insurance company intends to offer securities that are governed by this paragraph, that entity shall deliver to the commissioner, not less than ten days before the offering, a notice of the planned offering and information regarding: (1) the approximate number of shares intended to be offered; (2) the target date of sale; (3) evidence the security is regularly traded on one of the public exchanges noted above; and (4) the recent history of the trading price and trading volume of the security. The commissioner is considered to have approved the sale unless within ten days following receipt of the notice, the commissioner issues an objection to the sale. If the commissioner issues an objection to the sale, the security may not be sold until the commissioner issues an order approving the sale. (d) A reorganized insurance company or intermediate holding company that has issued securities that are regularly traded on one of the exchanges or markets described in paragraph (c), may establish stock option, incentive, and share ownership plans customary for publicly traded companies in the same or similar industries. If the reorganized insurance company or intermediate holding company intends to establish a stock option, incentive or share ownership plan, that entity shall deliver to the commissioner, not less than 30 days before the establishment of the plan, a notice of the proposed plan along with any information about the proposed plan the commissioner requires. The commissioner is considered to have approved the plan unless within 30 days following receipt of the notice, the commissioner issues an objection to the proposed plan. If the commissioner issues an objection to the proposed plan, the plan may not be established until the commissioner issues an order approving the plan. If the commissioner approves the establishment of the stock option, incentive, or share ownership plan, the reorganized insurance company or the intermediate holding company that obtained the approval may sell or issue securities according to the approved plan without further approval. (e) The total number of shares of capital stock issued by the reorganized insurance company or an intermediate holding company that may be held by directors and officers of the mutual insurance holding company, any intermediate holding company, and of any reorganized insurance company, and acquired according to subscription rights or stock option, incentive, and share ownership plans, may not exceed the percentage limits set forth in section 66A.41, subdivision 11, paragraph (b). Subject to the requirements of subdivision 1, paragraph (c), nothing in this section prohibits the acquisition of any securities of a reorganized insurance company or intermediate stock holding company through a licensed securities broker-dealer by any officer or director of the reorganized company, an intermediate stock holding company, or the mutual insurance holding company. (f) Dividends and other distributions to the shareholders of the reorganized stock insurance company or of an intermediate stock holding company must comply with section 60D.20. Any dividends and other distributions to the members of the mutual insurance holding company must comply with section 60D.20 and any other approval requirements contained in the mutual insurance holding company's articles of incorporation. (g) Unless previously approved as part of the plan of reorganization, the initial offering of any voting shares to the public by a reorganized company, a stock insurance company subsidiary, or an intermediate holding company which holds a majority of the voting shares of a reorganized insurance company or stock insurance company subsidiary, must be approved by a majority of votes cast at a regular or special meeting of the members of the mutual insurance holding company. Any issuer repurchase program, plan of exchange, recapitalization, or offering of capital securities to the public, shall, in addition to any other approvals required by law or by the issuer's articles of incorporation, be approved by a majority of the board of directors of the mutual insurance holding company and by a majority of the disinterested members of the board of directors of the mutual insurance holding company. Subd. 12. Provisions in the event of insurer insolvency. (a) In the event of any insolvency proceeding involving an insolvent stock subsidiary, the assets of the mutual insurance holding company, together with any assets of any intermediate holding company that directly or indirectly controls the insolvent stock subsidiary, must be available to satisfy the policyholder obligations of the insolvent stock subsidiary in an amount determined by the commissioner, but in no event more than the total amount of nonpolicyholder dividends paid by the insolvent stock subsidiary to the mutual insurance holding company, or any intermediate holding company that controls the insolvent stock subsidiary, during the ten-year period immediately preceding the date of insolvency. (b) In determining the required contribution by the mutual insurance holding company or any intermediate stock holding company which controls the insolvent stock subsidiary, the commissioner shall take into account among other factors: (1) the possible direct or indirect negative effects of any required contribution on any insurance company affiliate of the insolvent stock subsidiary; and (2) the possible direct or indirect, long-term, or short-term negative effects on the members of the mutual insurance holding company, other than those members who, are, or were policyholders of the insolvent stock subsidiary. Nothing in this subdivision limits the powers of the commissioner or the liquidator under chapter 60B. (c) For purposes of this subdivision, the following terms have the meanings given: (1) "date of insolvency" means, as to an insolvent stock subsidiary, the date established in accordance with chapter 60B or comparable statute of another state governing the rehabilitation or liquidation of a foreign insolvent stock subsidiary; (2) "insolvency proceeding" means any proceeding under chapter 60B or comparable statute of another state governing the rehabilitation and liquidation of a foreign insolvent stock subsidiary; (3) "insolvent stock subsidiary" means any stock insurance company subsidiary of a mutual insurance holding company that resulted from the reorganization of a domestic or foreign mutual insurance company according to subdivision 1 or 2, or any other stock insurance company subsidiary that is subject to an insolvency proceeding, which on the date of insolvency has in force policies that have given rise to membership interests in the mutual insurance holding company; (4) "control" has the meaning given in section 60D.15, subdivision 4; and (5) "dividends" include distributions of cash or any other assets. Subd. 13. Conversion. (a) With the approval of the commissioner, a domestic insurance company that previously reorganized under this section into a stock subsidiary of a mutual insurance holding company may convert back into a mutual insurance company. It shall effect the conversion by merging with its parent mutual insurance holding company (a "parent mutual"), but only if the parent mutual owns or controls, directly or indirectly, all of the voting shares of capital stock of the reorganized insurance company. The reorganized subsidiary, as the surviving company, shall continue its corporate existence as a domestic mutual insurance company (a "remutualized company"). A conversion under this subdivision may, but need not, occur in connection with the simultaneous or subsequent merger of the remutualized company with a domestic or foreign mutual insurance company. Section 66A.42 is not applicable to a conversion under this subdivision. (b) The conversion can be effected by the parent mutual pursuant to a plan of conversion adopted as follows: (1) The parent mutual shall, by the affirmative vote of a majority of its board of directors, adopt a plan of conversion consistent with the requirements of this subdivision. (2) The parent mutual, by the affirmative vote of a majority of its board of directors, may amend the plan at any time before approval of the plan by the commissioner and may withdraw the plan at any time before the effective date of the plan. (3) The duties of the board of directors of the parent mutual, in considering or acting upon a proposed plan of conversion or related transaction, shall be as set forth in section 302A.251 and, to the extent not inconsistent with that section, the parent mutual's articles of incorporation and bylaws. (c) The parent mutual shall file with the commissioner an application for approval of, and permission to carry out the reorganization according to, the plan of conversion. The application must include the following: (1) the plan of conversion; (2) the form of notice of meeting for eligible members to vote on the plan; (3) the form of any proxies to be solicited from eligible members; (4) the proposed articles of incorporation and bylaws of the remutualized company; (5) information required under chapter 60D if the plan results in a change of control of the remutualizing company; (6) if required by the commissioner, an independent actuarial opinion on matters affecting the structure or fairness of the plan; and (7) other information or documentation required by the commissioner or required by rule. (d) The commissioner shall determine, within 30 days of submission of the application, whether the application is complete. (e) If the plan of conversion proposes a simultaneous merger of the remutualized company with a foreign or domestic mutual insurance company, the commissioner may conduct concurrent proceedings under this subdivision and section 60A.16. (f) The commissioner may retain, at the parent mutual's expense, qualified experts not otherwise a part of the commissioner's staff, including without limitation, actuaries, accountants, investment bankers, and attorneys, to assist in reviewing the plan and supplemental materials and valuations. (g) The commissioner may, but need not, conduct a public hearing regarding the proposed plan of conversion. If a hearing is to be held, the commissioner shall designate a date for the public hearing promptly upon determining that the application is complete and that the forms of notice are adequate. The public hearing must be held on one or more days, the first beginning within 90 days after the date on which the commissioner determines the application is complete, unless the parent mutual requests, and the commissioner agrees to, a longer period for the purpose of preparing and distributing the notices required by this paragraph and by paragraph (i), clause (1). The hearing shall be in the nature of a legislative hearing and shall not constitute or be considered a contested case under chapter 14. The hearing may be conducted by the commissioner or by a person designated by the commissioner, which designee may be an administrative law judge. The parent mutual shall provide its eligible members with at least 45 days' notice of the hearing, the notice to be in the form, and provided in a manner, approved by the commissioner. The purpose of the hearing is to receive comments and information for the purpose of aiding the commissioner in making a decision on the plan of conversion. Persons wishing to make comments and submit information may submit written statements before the public hearing and may appear and be heard at the hearing. The commissioner's order or determination must be issued within 45 days after the closing of the record of the hearing by the commissioner or the hearing officer, as applicable, which record must not be closed until the record includes certification of the vote on the plan of conversion by the eligible members of the parent mutual. The commissioner shall issue a written decision detailing the reasons why the parent mutual company's plan of conversion is approved or disapproved. (h) The commissioner shall approve the application and permit the conversion according to the plan if the commissioner finds that: (1) the provisions of this subdivision have been fully met; and (2) the plan is not unfair or inequitable to the members of the parent mutual. The commissioner's order approving or disapproving a plan of conversion is a final agency decision subject to appeal according to sections 14.63 to 14.68. (i)(1) No later than 90 days following the date of the public hearing, if any, or the date the commissioner determines the application is complete if no hearing is held, the parent mutual shall give all eligible members notice of a regular or special meeting of the members called for the purpose of considering the plan and any corporate actions that are a part of, or are reasonably attendant to, the accomplishment of the plan, including without limitation, any proposed merger of the remutualizing company with a domestic or foreign mutual insurance company. (2) A copy of the plan or a summary of the plan must accompany the notice. The notice must be mailed to each eligible member's last known address, as shown on the parent mutual's records, not less than 45 days before the date of the meeting, unless the commissioner directs a later date for mailing. If the meeting to vote upon the plan is held coincident with the parent mutual's annual meeting of members, only one combined notice of meeting is required. The notice of the meeting of eligible members may be combined with the notice of hearing described in paragraph (g). (3) If the parent mutual complies substantially and in good faith with the notice requirements of this section, the parent mutual's failure to give any member or members required notice does not impair the validity of an action taken under this section. (j)(1) The plan must be adopted upon receiving the affirmative vote of a majority of the votes cast by eligible members. (2) Eligible members may vote in person or by proxy. The form of any proxy must be filed with and approved by the commissioner. (k)(1) Following approval by the eligible members, the parent mutual shall file a copy of the converting subsidiary's amended or restated articles of incorporation with the commissioner, together with a certified copy of the minutes of the meeting of the members of the parent mutual at which the plan was adopted and a certified copy of the plan. The commissioner shall review and, if appropriate, approve the amended or restated articles. After approval by the commissioner, the parent mutual shall file the articles with the secretary of state as provided by section 60A.07, subdivision 1d, and chapter 302A. (2) The conversion is effective on the date of filing an amendment or restatement of the articles of incorporation with the secretary of state, or on a later date if the plan so specifies. (l) Upon the effective date of the conversion in accordance with this subdivision: (1) The corporate existence of the parent mutual is continued in the converted subsidiary. All the rights, privileges, powers, franchises, and interests of the parent mutual in and to all property and things in action belonging to the parent company are considered transferred to and vested in the converted subsidiary without any deed or transfer. Simultaneously, the converted subsidiary is considered to have assumed all the obligations and liabilities of the parent mutual. (2) The directors and officers of the parent mutual, unless otherwise specified in the plan of conversion, shall serve as directors and officers of the converted subsidiary until new directors and officers of the converted subsidiary are duly elected according to the articles of incorporation and bylaws of the converted subsidiary. (3) All policies issued by the converted subsidiary in force on the effective date of the conversion remain in force subject to the terms of those policies, except that the membership interests in the parent mutual shall become membership interests in the converted subsidiary, and member voting rights in the converted subsidiary shall be exclusively governed by the converted subsidiary's articles and bylaws. (4) Except as otherwise provided in the plan of conversion, the converted subsidiary is no longer subject to the requirements of subdivisions 1 to 12 or to the terms of the original plan of reorganization. (5) At the effective time of the merger, all of the voting shares of capital stock of the converted subsidiary shall be deemed to be redeemed and canceled. (6) Any provisions of the original plan of reorganization pertaining to the protection of reasonable policyholder dividend expectations may be continued, modified, or extinguished as provided under the plan of conversion and approved by the commissioner. (m) No director, officer, agent, employee of the parent mutual or the converting subsidiary, or any other person shall receive a fee, commission, or other valuable consideration, other than the person's usual regular salary and compensation, for in any manner aiding, promoting, or assisting in the conversion except as set forth in the plan approved by the commissioner. This provision does not prohibit the payment of reasonable fees and compensation to attorneys, accountants, investment bankers, and actuaries for services performed in the independent practice of their professions. (n) All the costs and expenses connected with a plan of conversion must be paid for or reimbursed by the parent mutual or converted subsidiary except where the plan provides otherwise. (o)(1) An action challenging the validity of or arising out of acts taken or proposed to be taken according to this section must be commenced within 180 days after the effective date of the conversion. (2) The parent mutual, the converted subsidiary, or any defendant in an action described in clause (1) may petition the court in the action to order a party to give security for the reasonable attorney fees that may be incurred by a party to the action. The amount of security may be increased or decreased in the discretion of the court having jurisdiction if a showing is made that the security provided is or may become inadequate or excessive. (p) For purposes of this subdivision, the following terms have the meanings given. (1) "Eligible member" means a person who is a member of the parent mutual, as defined by the parent mutual's articles of incorporation and bylaws, determined as of the record date. (2) "Membership interests" means all rights as members of the parent mutual, including, but not limited to, the rights to vote. (3) "Plan of conversion" or "plan" means a plan adopted by a parent mutual's board of directors under this section. (4) "Record date" means the date that the parent mutual's board of directors adopts a plan of conversion, unless another date is specified in the plan of conversion and approved by the commissioner. (5) "Converted subsidiary" means a converting subsidiary that has converted into a mutual insurance company under this subdivision. (6) "Converting subsidiary" means a Minnesota domestic insurance company that previously reorganized under this section that is seeking to convert back into a mutual insurance company in accordance with this subdivision. History:  1996 c 446 art 2 s 4; 1997 c 231 art 15 s 4-14; 2005 c 69 art 2 s 8, 18; 2006 c 196 art 2 s 1; 2006 c 204 s 2-4; 2010 c 275 art 1 s 13
66A.41 MUTUAL COMPANY CONVERSION TO STOCK COMPANY. Subdivision 1. Definitions. (a) For the purposes of this section, the terms in this subdivision have the meanings given them. (b) "Converting mutual insurer" means a Minnesota domestic mutual insurance company seeking to reorganize according to this section. (c) "Converting mutual holding company" means a Minnesota domestic mutual insurance holding company seeking to reorganize according to this section. (d) "Converting mutual company" means a converting mutual insurer or a converting mutual holding company seeking to convert according to this section. (e) "Reorganized company" means a converting mutual insurer or a converting mutual holding company, as the case may be, that has reorganized according to this section. (f) "Eligible member" means: (1) for converting mutual insurers, a policyholder whose policy is in force as of the record date. Unless otherwise provided in the plan, a person covered under a group policy is not an eligible member, except that a person insured under a group life insurance policy is an eligible member if, on the record date: (i) the person is insured under a group life policy under which cash value has accumulated and some cash value is allocated to the insured person; and (ii) the group policyholder makes no contribution to the premiums for the group policy; and (2) for converting mutual holding companies, a person who is a member of the converting mutual holding company, as defined by the converting mutual holding company's articles of incorporation and bylaws, determined as of the record date. (g) "Plan of conversion" or "plan" means a plan adopted by a converting mutual company's board of directors under this section. (h) "Policy" means a policy or contract of insurance, including an annuity contract, issued by a converting mutual insurer or issued by a reorganized insurance company subsidiary of a mutual holding company, but excluding individual noncontributory insurance policies for which the premiums are paid by a financial institution, association, employer, or other institutional entity. (i) "Active participating policy" means an individual policy of a converting mutual company or its subsidiary that: (1) is a participating policy; (2) is among a class of similar policies that have been credited with policy dividends at any time within the 12 months preceding the effective date of the conversion or that will, under the then current dividend scale, be credited with policy dividends if in force on a future policy anniversary; (3) gives rise to membership interests in the converting mutual company; and (4) is in force on the effective date or some other reasonable date identified in the plan. (j) "Commissioner" means the commissioner of commerce. (k) "Effective date of a conversion" means the date determined according to subdivision 6. (l) "Record date" means the date that the converting mutual company's board of directors adopts a plan of conversion, unless another date is specified in the plan of conversion and approved by the commissioner. (m) "Membership interests" means all rights as members of the converting mutual company, including, but not limited to, the rights to vote and to participate in any distributions of distributable net worth, whether or not incident to the company's liquidation. (n) "Distributable net worth" means the value of the converting mutual company as of the record date of the conversion, or other date approved by the commissioner, determined as set forth in the plan and approved by the commissioner. The commissioner may approve a valuation method based on any of the following: (1) the surplus as regards policyholders of a converting mutual insurer determined according to statutory accounting principles, which may be adjusted to reflect the current market values of assets and liabilities, together with any other adjustments that are appropriate in the circumstances; (2) the net equity of a converting mutual holding company or a converting mutual insurer determined according to generally accepted accounting principles, which may be adjusted to reflect the current market values of assets and liabilities, together with any other adjustments that are appropriate in the circumstances; (3) the fair market value of the converting mutual company determined by an independent, qualified person; or (4) any other reasonable valuation method. (o) "Permitted issuer" means: (1) a corporation organized and owned by the converting mutual company or by any other insurance company or insurance holding company for the purpose of purchasing and holding securities representing a majority of voting control of the reorganized company; (2) a stock insurance company owned by the converting mutual company or by any other insurance company or insurance holding company into which the converting mutual company will be merged; or (3) any other corporation approved by the commissioner. Subd. 2. Authorization. In accordance with a plan of conversion established and approved in the manner provided by this section: (1) a mutual insurance company may become a stock insurance company; and (2) a mutual insurance holding company may: (i) become a corporation organized under chapter 302A; (ii) reorganize according to a plan in which a majority or all of the common stock of the reorganized company is acquired by another institution, which may include a subsidiary of the converting mutual holding company; (iii) reorganize as a part of a liquidation or dissolution of the converting mutual holding company; or (iv) undertake any other reorganization or combination of the foregoing approved by the commissioner. Subd. 3. Adoption of plan of conversion by board of directors. (a) A converting mutual company shall, by the affirmative vote of a majority of its board of directors, adopt a plan of conversion consistent with the requirements of this section. (b) The converting mutual company, by the affirmative vote of a majority of its board of directors, may amend the plan at any time before approval of the plan by the commissioner and may withdraw the plan at any time before the effective date of the plan. (c) The duties of the board of directors of a converting mutual company, in considering or acting upon a proposed plan of conversion or related transaction, shall be as set forth in section 302A.251 and, to the extent not inconsistent with that section, the converting mutual company's articles of incorporation and bylaws. Subd. 4. Filing of plan of conversion with commissioner. (a)  Documents to be filed. The converting mutual company shall file with the commissioner an application for approval of, and permission to reorganize according to, the plan of conversion. The application must include the following: (1) the plan of conversion; (2) the form of notice of meeting for eligible members to vote on the plan; (3) the form of any proxies to be solicited from eligible members; (4) the proposed articles of incorporation and bylaws of the converted stock company; (5) information required under chapter 60D if the plan results in a change of control of the converting mutual company; (6) a basis for determining the converting mutual company's distributable net worth for use in the plan of conversion; (7) if required by the commissioner, an independent evaluation of the estimated distributable net worth and of the estimated value of any shares to be issued; (8) if required by the commissioner, an independent actuarial opinion on matters affecting the structure or fairness of the plan; and (9) other information or documentation requested by the commissioner or required by rule. (b) Determination of completeness. The commissioner shall determine, within 30 days of submission of the application, whether the application is complete. (c) Consultants. The commissioner may retain, at the converting mutual company's expense, qualified experts not otherwise a part of the commissioner's staff to assist in reviewing the plan and supplemental materials and valuations. (d) Hearing. The commissioner may, but need not, conduct a public hearing regarding the proposed plan of conversion. If a hearing is to be held, the commissioner shall designate a date for the public hearing promptly upon determining that the application is complete and that the forms of notice are adequate. The public hearing must be held on one or more days, the first beginning within 90 days after the date on which the commissioner determines the application is complete, unless the converting mutual company requests, and the commissioner agrees to, a longer period for the purpose of preparing and distributing the notices required by this paragraph and by subdivision 5, paragraph (b). The hearing must be in the nature of a legislative hearing and must not constitute or be considered a contested case under chapter 14. The hearing may be conducted by the commissioner or by a person designated by the commissioner, which designee may be an administrative law judge. The converting mutual company shall provide its eligible members with at least 45 days' notice of the hearing, the notice to be in the form, and provided in a manner, approved by the commissioner. The purpose of the hearing is to receive comments and information for the purpose of aiding the commissioner in making a decision on the plan of conversion. Persons wishing to make comments and submit information may submit written statements before the public hearing and may appear and be heard at the hearing. The commissioner's order or determination must be issued within 45 days after the closing of the record of the hearing by the commissioner or the hearing officer, as applicable, which record must not be closed until the record includes certification of the vote on the plan of reorganization by the eligible members by the converting mutual company. The commissioner shall issue a written decision detailing the reasons why the converting mutual company's plan of conversion is approved or disapproved. (e) The commissioner shall approve the application and permit the reorganization according to the plan of conversion if the commissioner finds that: (1) the provisions of this section have been fully met; and (2) the plan is not unfair or inequitable to the members of the converting mutual company. The commissioner's order approving or disapproving a plan of conversion is a final agency decision subject to appeal according to sections 14.63 to 14.68. Subd. 5. Approval of plan by eligible members. (a) Notice. Within 90 days following the date of the public hearing, if any, or the date the commissioner determines the application is complete if no hearing is held, the converting mutual company shall give all eligible members notice of a regular or special meeting of the members called for the purpose of considering the plan and any corporate actions that are a part of, or are reasonably attendant to, the accomplishment of the plan. (b) Notice requirements. A copy of the plan or a summary of the plan must accompany the notice. The notice must be mailed to each eligible member's last known address, as shown on the converting mutual company's records, not less than 45 days before the date of the meeting, unless the commissioner directs a later date for mailing. If the meeting to vote upon the plan is held coincident with the converting mutual company's annual meeting of members, only one combined notice of meeting is required. The notice of the meeting of eligible members may be combined with the notice of hearing described in subdivision 4, paragraph (d). (c) Failure to give notice. If the converting mutual company complies substantially and in good faith with the notice requirements of this section, the converting mutual company's failure to give any member or members any required notice does not impair the validity of any action taken under this section. (d) Voting. (1) The plan must be adopted upon receiving the affirmative vote of a majority of the votes cast by eligible members. (2) Eligible members may vote in person or by proxy. The form of any proxy must be filed with and approved by the commissioner. (3) The number of votes each eligible member may cast shall be determined by the converting mutual company's bylaws. If the bylaws are silent, or if the commissioner determines that the voting requirements under the bylaws would be unfair or would prejudice the rights of the eligible members, each eligible member may cast one vote. Subd. 6. Conversion. Following approval by the eligible members, the converting mutual company shall file a copy of the company's amended or restated articles of incorporation with the commissioner, together with a certified copy of the minutes of the meeting at which the plan was adopted and a certified copy of the plan. The commissioner shall review and, if appropriate, approve the amended or restated articles. After approval by the commissioner, a converting mutual company shall file the articles with the secretary of state as provided by section 60A.07, subdivision 1d, and chapter 302A. Subd. 7. Plan not unfair or inequitable. A plan of conversion shall not be unfair or inequitable to members. A plan of conversion is not unfair or inequitable if it satisfies the conditions of subdivision 8 or 9. The commissioner may determine that a plan proposed under subdivision 10 or that any other plan proposed under subdivision 12 is not unfair or inequitable to members. Subd. 8. Share conversion. A plan of conversion under this subdivision shall provide for exchange of membership interests in return for shares in the reorganized company or a permitted issuer, according to paragraphs (a) to (c), and shall provide for the reasonable dividend expectations of policyholders of active participating policies as set forth in subdivision 16a. (a) The membership interests of the eligible members shall be exchanged, for all of the common shares of the reorganized company or a permitted issuer, or for a combination of the common shares of the reorganized company or a permitted issuer, or for a combination of: (1) common shares of the reorganized company or a permitted issuer; and (2) consideration equal to the proceeds of the public sale in the market of the common shares by the issuer or by a trust established according to subdivision 11. The consideration must be allocated among the eligible members in a manner that takes into account the estimated proportionate contribution of each class of eligible members to the aggregate consideration being given. (b) Unless the anticipated issuance within a shorter period is disclosed in the plan of conversion, the issuer of common shares shall not, within two years after the effective date of reorganization, issue either of the following: (1) any of its common shares or any securities convertible with or without consideration into the common shares or carrying any warrant to subscribe to or purchase common shares; and (2) any warrant, right, or option to subscribe to or purchase the common shares or other securities described in paragraph (a), except for the issue of common shares to or for the benefit of eligible members according to the plan of conversion and the issue of nontransferable subscription rights for the purchase of common shares being granted to officers, directors, or a tax qualified employee benefit plan of the reorganized company or its parent company, if any, or a permitted issuer, according to subdivision 11. (c) Unless the common shares have a public market when issued, the issuer shall use its best efforts to encourage and assist in the establishment of a public market for the common shares within two years of the effective date of the conversion or a longer period as disclosed in the plan of conversion. Within one year after any offering of stock other than the initial distribution, but no later than six years after the effective date of the conversion, the reorganized company shall offer to make available to eligible members who received and retained shares of common stock or securities described in paragraph (b), clause (1), a procedure to dispose of those shares of stock at market value without brokerage commissions or similar fees. Subd. 9. Distribution of distributable net worth. A plan of conversion under this subdivision shall provide for the exchange of the membership interests of the eligible members in return for a distribution of the converting mutual company's distributable net worth and shall provide for the issuance of new shares of the reorganized company or a permitted issuer, and shall provide for the reasonable expectations of policyholders of active participating policies as set forth in subdivision 16a. (a) Distributions by the converting mutual company under this subdivision shall be distributed to eligible members in a form or forms selected by the converting mutual company. The form of distribution may consist of cash, securities of the reorganized company, securities of another institution, a certificate of contribution, additional life insurance, annuity benefits, increased dividends, reduced premiums, or other equitable consideration or any combination of forms of consideration. The consideration, if any, given to a class or category of eligible members may differ from the consideration given to another class or category of eligible members. A certificate of contribution must be repayable in ten years, be equal to 100 percent of the value of the eligible members' membership interest, and bear interest at the highest rate charged by the reorganized company or its insurance company subsidiary for policy loans on the effective date of the conversion. (b) The consideration must be allocated among the eligible members in a manner that is fair and equitable and that takes into account the estimated proportionate contribution of each class of eligible members to the aggregate consideration being given. (c) The reorganized company or its parent corporation shall issue and sell shares of one or more classes having a total price equal to the estimated value in the market of the shares on the initial offering date. The estimated value must take into account all of the following: (1) the pro forma fair market value of the reorganized company; (2) the consideration to be given to policyholders according to paragraph (a); (3) the proceeds of the sale of the shares; and (4) any additional value attributable to the shares as a result of a purchaser or a group of purchasers who acted in concert to obtain shares in the initial offering, attaining, through such purchase, control of the reorganized company or its parent corporation. (d) If a purchaser or a group of purchasers acting in concert is to attain control in the initial offering, the converting mutual company shall not, directly or indirectly, pay for any of the costs or expenses of conversion of the converting mutual company, whether or not the conversion is effected, except with permission of the commissioner. Subd. 10. Subscription rights. A plan of conversion under this subdivision shall provide for exchange of the eligible members' membership interests in return for the protection of the reasonable dividend expectations of the policyholders of active participating policies, for the creation of a liquidation account to protect the interests of eligible members, for the issuance of subscription rights to eligible members, and shall provide for the issuance of shares by the reorganized company, each according to paragraphs (a) to (j). (a) The plan of conversion shall provide for the protection of the reasonable dividend expectations of policyholders of active participating policies as provided in subdivision 16a. (b) The reorganized company or its parent corporation or a permitted issuer shall issue and sell shares of one or more classes having a total price equal to the estimated value of the shares in the market on the initial offering date taking into account the proceeds of the sale of shares and the consideration given to eligible members. (c) The eligible members shall receive nontransferable preemptive subscription rights to purchase all of the common shares of the issuer according to paragraph (b). (d) The preemptive subscription rights to purchase the common shares must be allocated among the eligible members in whole shares in a fair and equitable manner and as provided in the plan, taking into account the estimated proportionate contribution of each class of eligible members to the total amount of the eligible members' consideration. The plan must provide a fair and equitable means for the allocation of shares in the event of an oversubscription. The plan must further provide that any shares of capital stock not subscribed by eligible members may be sold in a public offering through an underwriter, unless the number of shares unsubscribed is so small in number so as not to warrant the expense of a public offering, in which case the plan may provide for the purchase of the unsubscribed shares by private placement or through any fair and equitable alternative means approved by the commissioner. (e) The number of the common shares that a person, together with any affiliates or group of persons acting in concert, may subscribe or purchase in the reorganization, must be limited to not more than five percent of the common shares. For this purpose, neither the members of the board of directors of the reorganized company nor its parent corporation, if any, are considered to be affiliates or a group of persons acting in concert solely by reason of their board membership. (f) Unless the common shares have a public market when issued, officers and directors of the issuer and their affiliates shall not, for at least three years after the date of conversion, purchase common shares of the issuer, except with the approval of the commissioner. (g) Unless the common shares have a public market when issued, the issuer shall use its best efforts to encourage and assist in the establishment of a public market for the common shares. (h) The issuer shall not, for at least three years following the conversion, repurchase any of its common shares except according to a pro rata tender offer to all shareholders, or with the approval of the commissioner. (i) A liquidation account must be established for the benefit of eligible members in the event of a complete liquidation of the reorganized company. The liquidation account must be equal to the distributable net worth of the converting mutual company as of the effective date of the conversion. The function of the liquidation account is solely to establish a priority on liquidation and its existence does not restrict the use or application of the distributable net worth of the reorganized company except as specified in paragraph (j). The liquidation account must be allocated equitably as of the effective date of conversion among the then eligible members. The amount allocated to an eligible member must not increase and must be reduced to zero when the policy or contract giving rise to the membership interests of the owner terminates. In the event of a complete liquidation of the reorganized company, the eligible members among which the liquidation account is allocated are entitled to receive a liquidation distribution in the amount of the liquidation account before any liquidation distribution is made with respect to shares. (j) Until the liquidation account has been reduced to zero, the reorganized company shall not declare or pay a cash dividend on, or repurchase any of, its common shares (i) in case of a converting mutual insurer, in an amount in excess of its cumulative earned surplus generated after the conversion determined according to statutory accounting principles, or (ii) in the case of a converting mutual holding company, in an amount in excess of its retained earnings, if the effect would be to cause the amount of the distributable net worth of the reorganized company to be reduced below the then amount of the liquidation account. Subd. 11. Optional provisions. A plan under subdivision 8, 9, or 10 may include, with the approval of the commissioner, any of the provisions in paragraphs (a) and (b). (a) A plan may provide that any shares of the stock of the reorganized company or its parent corporation or a permitted issuer included in the eligible members' consideration must be placed on the effective date of the conversion in a trust or other entity existing for the exclusive benefit of the eligible members and established solely for the purposes of effecting the reorganization. Under this option, the shares placed in trust must be sold over a period of not more than 40 years and the proceeds of the shares must be distributed using the distribution priorities prescribed in the plan. Eligible members shall have the option to sell their shares at any time following the date specified in the plan, which date may not be later than two years following the effective date of the plan. (b) A plan may provide that the directors and officers of the converting mutual company may receive warrants, options, or nontransferable subscription rights to purchase capital stock of the reorganized company or its parent or a permitted issuer. (c) A plan may provide that only eligible members whose policies were in force as of a specified date are eligible to receive compensation under the plan, which date must be no earlier than one year before the effective date of the plan. Subd. 12. Alternative plan of conversion. In lieu of selecting a plan of conversion provided for in subdivision 8, 9, or 10, the converting mutual company may convert according to a plan approved by the commissioner if the commissioner finds that the plan does not prejudice the interests of the eligible members, is fair and equitable, and is based upon the fair market value of the converting mutual company, and is a fair and equitable allocation of any consideration to be given eligible members. The commissioner may retain, at the converting mutual company's expense, any qualified expert not otherwise a part of the commissioner's staff to assist in reviewing the fair market value of the company and in determining whether the alternative plan may be approved. Subd. 13. Effect of conversion. (a) Upon the conversion of a converting mutual company to a reorganized company according to this section, the corporate existence of the converting mutual company is continued in the reorganized company. All the rights, franchises, and interests of the converting mutual company in and to all property and things in action belonging to this property, is considered transferred to and vested in the reorganized company without any deed or transfer. Simultaneously, the reorganized company is considered to have assumed all the obligations and liabilities of the converting mutual company. (b) The directors and officers of the converting mutual company, unless otherwise specified in the plan of conversion, shall serve as directors and officers of the reorganized company until new directors and officers of the reorganized company are duly elected according to the articles of incorporation and bylaws of the reorganized company. (c) All policies in force on the effective date of the conversion continue to remain in force under the terms of those policies, except that any voting rights of the members provided for under the policies are extinguished on the effective date of the conversion. (d) All membership interests in the converting mutual company are extinguished on the effective date of a conversion. Subd. 14. Conflict of interest. No director, officer, agent, employee of the converting mutual company, or any other person shall receive a fee, commission, or other valuable consideration, other than the person's usual regular salary and compensation, for in any manner aiding, promoting, or assisting in the conversion except as set forth in the plan approved by the commissioner. This provision does not prohibit the payment of reasonable fees and compensation to attorneys, accountants, investment bankers, and actuaries for services performed in the independent practice of their professions. Subd. 15. Costs and expenses. All the costs and expenses connected with a plan of conversion must be paid for or reimbursed by the converting mutual company or the reorganized company except where the plan provides otherwise. Subd. 16. Limitation of actions. (a) An action challenging the validity of or arising out of acts taken or proposed to be taken according to this section must be commenced within 180 days after the effective date of the conversion. (b) The converting mutual company, the reorganized company, or any defendant in an action described in paragraph (a), may petition the court in the action to order a party to give security for the reasonable attorney fees that may be incurred by a party to the action. The amount of security may be increased or decreased in the discretion of the court having jurisdiction if a showing is made that the security provided is or may become inadequate or excessive. Subd. 16a. Continuance of participating policy dividends. (a) To the extent required by this section, the plan of reorganization of a converting mutual insurer that is a mutual life insurance company or of a converting mutual holding company that has a life insurance company subsidiary shall make adequate provision for the protection of the reasonable dividend expectations of the policyholders of active participating policies, either through the establishment of a closed block or other method acceptable by the commissioner. (b) A closed block must be operated as follows: (1) The converting mutual company's active participating policies may be operated by the reorganized company as a closed block of participating business. (2) Assets must be allocated to the closed block of participating business in an amount that ensures that the assets, together with the anticipated revenue from the closed block, are reasonably expected to be sufficient to permit the closed block to pay all policy benefits, including dividends according to the current dividend scale, and other items as appropriate. The plan must be accompanied by an opinion of an independent qualified actuary who meets the standards set forth in the insurance laws or rules for the submission of actuarial opinions as to the adequacy of reserves or assets. The opinion must relate to the adequacy of the assets allocated to support the closed block of business. The actuarial opinion must be based on methods of analysis considered appropriate for those purposes by the actuarial standards board. (3) The reorganized company shall keep a separate accounting for the closed block and shall make and include in the annual statement to be filed with the commissioner each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block. (4) The closed block must be reviewed periodically by an independent, qualified actuary for compliance with the requirements of the plan and this subdivision and a copy of the report must be provided to the commissioner and the reorganized company. (5) Notwithstanding the establishment of a closed block, the entire assets of the company that issued the policies must be available for the payment of benefits to policyholders. Payment must first be made from the assets supporting the closed block until exhausted, and then from the general assets of the company which issued the policies. Subd. 17. Supervisory conversions. The commissioner may waive or alter any of the requirements of this section to protect the interests of policyholders or members if the converting mutual company is subject to the commissioner's administrative supervision under chapter 60G or rehabilitation under chapter 60B. Subd. 18. Postconversion acquisition. Prior to and for a period of three years following the date when the distribution of consideration to the eligible members in exchange for their membership interests is completed under a plan of conversion according to this section, no person other than the reorganized company shall directly or indirectly acquire or offer to acquire in any manner ownership or beneficial ownership of ten percent or more of any class of voting security of the reorganized company, or of any affiliate of the reorganized company which controls, directly or indirectly, a majority of the voting power of the reorganized company, without the prior approval of the commissioner. For the purposes of this subdivision, the terms "affiliate" and "person" have the meanings given in section 60D.15, and the term "reorganized company" includes any successor of the reorganized company. History:  1996 c 446 art 2 s 3; 1997 c 231 art 15 s 1-3; 1999 c 177 s 7; 2002 c 336 s 1; 2005 c 69 art 2 s 7, 18; 2006 c 204 s 1; 2008 c 344 s 45
66A.42 DOMESTIC INSURANCE CORPORATIONS MAY BECOME MUTUAL CORPORATIONS. Any domestic insurance corporation heretofore or hereafter incorporated for the transaction of the kinds of business authorized and permitted by section 60A.06, subdivision 1, and having capital stock may become a mutual corporation and to that end may formulate and carry out a plan for the acquisition by it of its outstanding capital stock, and for the mutualization of such corporation, as follows: (a) Such plan shall have been adopted by vote of a majority of the directors of such company. (b) Such plan shall have been submitted to the commissioner of commerce and shall have been approved as conforming to the requirements of this section and section 66A.43 and as not prejudicial to the policyholders of such company or to the insuring public. (c) Such plan shall have been approved by a vote of stockholders representing a majority of the outstanding capital stock at a meeting of stockholders called for that purpose. Stockholders may vote in person or by proxy filed with the company at least five days before the meeting at which it is to be used. Notice of such meeting shall be given by mailing such notice from the home office of such company at least 30 days prior to such meeting in a sealed envelope, postage prepaid, directed to each stockholder at the address shown on the stock records of the company. (d) Such plan shall have been approved by a majority of the votes cast by policyholders (whether or not members) who vote at a meeting called for that purpose. Eligibility of policyholders, whether or not members of the company, and the number of votes to which each is entitled, shall be determined by the laws of Minnesota relating to the rights of members of domestic mutual insurance companies to vote at company meetings. Policyholders may vote in person or by proxy filed with the company at least five days before the meeting at which it is to be used. Notice of such meeting shall be given by mailing such notice from the home office of such company at least 30 days prior to such meeting in a sealed envelope, postage prepaid, directed to each policyholder at the address shown on the policy records of the company. Such meeting shall be conducted in such manner as may be provided for in such plan, with the approval of the commissioner. The commissioner shall supervise and direct the methods and procedure of said meeting and appoint an adequate number of inspectors to conduct the voting at said meeting, who shall have power to determine all questions concerning the verification of the ballots, the ascertaining of the validity thereof, the qualifications of the voters and the canvass of the vote. Such inspectors, or any one thereof designated by the commissioner, shall certify to the commissioner and to such company the result of such vote, and with respect thereto shall act under such rules as shall be prescribed by the commissioner. All necessary expenses incurred by the commissioner, or incurred with the commissioner's approval by the inspectors appointed, shall be paid by such company upon the certificate of the commissioner. (e) Approval of the plan by stockholders and policyholders as above provided may be given at a joint meeting thereof. (f) Such plan may specify the purchase price to be paid by such company for shares of its capital stock, and in such case the price so specified shall be adhered to. If such plan does not specify the price to be paid for such shares, such company shall first obtain the approval of the commissioner for every payment made for the acquisition of any shares of its capital stock. (g) Such plan may authorize the board of directors of the company to provide for participation in the surplus of the company by holders of policies which do not by their terms provide for such participation or which provide for a limited participation only, and may include appropriate proceedings to confer upon policyholders the right to vote at meetings of the company. Policyholders upon whom the right to vote is so conferred shall have the same voting rights and shall be entitled to the same notice of annual meeting as members of domestic mutual insurance companies. (h) Before approving any such plan or any such payment, the commissioner shall be satisfied, by making investigation or such evidence as the commissioner may require, that such company, after deducting the aggregate sum appropriated by such plan for the acquisition of any part or all of its capital stock, and in the case of any payment not fixed by such plan and subject to approval as aforesaid, after deducting also the amount of such payment, will be possessed of admitted assets in an amount equal to the sum of (1) and (2) as follows: (1) Its entire liabilities, including the net value of its outstanding contracts computed as provided by law, and (2) the contingency reserve deemed by the commissioner necessary to protect its policyholders and the insuring public, in view of the past experience of such company, the character of its assets, its present management and its probable future earnings. The commissioner's action in refusing to give any approval required by this section shall be subject to review by any court of competent jurisdiction. Such plan may be amended by vote of stockholders representing a majority of the outstanding capital stock and by a majority of the votes cast by policyholders who vote at the meeting, but in such case the plan shall not become effective until approved, as amended, by vote of a majority of the directors of such company and by the commissioner. History:  1967 c 395 art 2 s 37; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 2005 c 69 art 2 s 18; 2010 c 275 art 1 s 14
66A.43 MAY ACQUIRE CAPITAL STOCK. In pursuance of any plan such company shall have power, and shall be privileged, to acquire any shares of its capital stock by gift, bequest, or purchase. Until all of the shares of its outstanding capital stock are acquired, any shares so acquired shall be taken and held in trust for all the policyholders of such company, as hereinafter provided, and shall be assigned and transferred on the books of the company to three trustees, who shall be named in such plan and shall be approved by the commissioner. All shares held by such trustees shall be deemed admitted assets of such company at their par value. Such trustees, who may be directors of the company, shall vote all shares so acquired and held by them at all corporate meetings in accordance with the majority vote of policyholders voting on any question before the meeting. When all of the outstanding capital stock of any such corporation shall have been acquired, the entire capital stock of such corporation shall be retired and canceled and thereupon such corporation shall be and become a mutual life insurance company without capital stock. The plan of conversion formulated pursuant to section 66A.42 shall provide for the method of filling vacancies among such trustees. Before undertaking any of the duties of appointment each trustee shall file with the company a verified acceptance of appointment and a declaration that the person will faithfully discharge the duties of trustee. All dividends and other sums received by such trustees on the shares of stock so acquired by them shall, after paying the necessary expenses of executing the trust, be immediately repaid to such company for the benefit of all who are or may become policyholders of such company and entitled to participate in the profits or savings thereof. History:  1967 c 395 art 2 s 38; 1986 c 444; 2005 c 69 art 2 s 18
67A.01 NUMBER OF MEMBERS REQUIRED, PROPERTY AND TERRITORY. Subdivision 1. Number of members. It shall be lawful for any number of persons, not less than 25, residing in adjoining counties in this state, who shall collectively own property worth at least $50,000, to form themselves into a corporation for mutual insurance against loss or damage by the perils listed in section 67A.13. Subd. 2. Authorized territory. (a) A township mutual fire insurance company may be authorized to write business in up to nine adjoining counties in the aggregate at the same time. If policyholder surplus is at least $500,000 as reported in the company's last annual financial statement filed with the commissioner, the company may, if approval has been granted by the commissioner, be authorized to write business in ten or more counties in the aggregate at the same time, subject to a maximum of 20 adjoining counties, in accordance with the following schedule:      Number of Counties Surplus Requirement   10 $500,000   11 600,000   12 700,000   13 800,000   14 900,000   15 1,000,000   16 1,100,000   17 1,200,000   18 1,300,000   19 1,400,000   20 1,500,000   (b) In the case of a merger of two or more companies having contiguous territories, the surviving company in the merger may transact business in the entire territory of the merged companies; however, the territory of the surviving company in the merger may not be larger than 20 counties. (c) A township mutual fire insurance company may write new and renewal insurance on property in cities within the company's authorized territory having a population less than 25,000. A township mutual fire insurance company may continue to write new and renewal insurance once the population increases to 25,000 or greater provided that amended and restated articles are filed with the commissioner along with a certification that such city's population has increased to 25,000 or greater. (d) A township mutual fire insurance company may write new and renewal insurance on property in cities within the company's authorized territory with a population of 25,000 or greater, but less than 150,000, if approval has been granted by the commissioner. No township mutual fire insurance company shall insure any property in cities with a population of 150,000 or greater. (e) If a township mutual fire insurance company provides evidence to the commissioner that the company had insurance in force on December 31, 2007, in a city within the company's authorized territory with a population of 25,000 or greater, but less than 150,000, the company may write new and renewal insurance on property in that city provided that the company files amended and restated articles by July 31, 2010, naming that city. History:  1967 c 395 art 8 s 1; 1971 c 135 s 1; 1975 c 15 s 1; 1999 c 53 s 1; 2009 c 37 art 3 s 18
67A.02 CERTIFICATE OF INCORPORATION. Subdivision 1. Contents. The persons who desire to form a township mutual fire insurance company, as defined in section 67A.01, shall make, sign, and acknowledge before some officer competent to take acknowledgments of deeds a certificate of incorporation which shall specify: (1) the name; (2) the location of the principal office; (3) the general nature of the business; (4) the territory in which it desires to transact business; (5) who may become members; (6) source from which the corporate funds shall be derived; (7) the class of property it desires to insure; (8) in what board its management shall be vested; (9) the date of its annual meeting; and (10) the corporate existence. It may contain any other lawful provision defining and regulating the powers or business of the corporation, its officers, directors, and members. Subd. 2. Approval of commissioner required; filing. The certificate of every such corporation shall be presented to the commissioner for approval and, on approving the same, the commissioner shall endorse thereon the approval and the certificate shall then be filed in the commissioner's office and recorded in a book kept therein for that purpose. Upon the approval of the certificate and the filing of the same with the commissioner, the corporate organization of the incorporation shall be complete. History:  1967 c 395 art 8 s 2; 1986 c 444
67A.03 CORPORATE EXISTENCE. The corporate existence of any township mutual fire insurance company heretofore or hereafter organized may be made perpetual by so providing in its articles of incorporation. History:  1967 c 395 art 8 s 3; 1975 c 15 s 2
67A.04 AMENDMENTS TO CERTIFICATE OF INCORPORATION. The certificate of incorporation of any township mutual fire insurance company may be amended in respect to any matter which the original certificate of incorporation might lawfully have contained, or which is authorized by the provisions of sections 67A.01 to 67A.26, by the adoption of a resolution, specifying the proposed amendment, at the regular meeting, or a special meeting called for that expressly stated purpose, by a majority vote of its members present and voting; or by a majority vote of its entire board of directors, within one year after having been thereby duly authorized by a specific resolution duly adopted at such meeting of the members, and by causing the resolution to be embraced in a certificate duly executed by its president and secretary under the corporate seal of the company, if it have one, and approved, filed, and recorded in the manner prescribed by such sections for the approval, filing, and recording of the original certificate. History:   1967 c 395 art 8 s 4 
67A.05 BYLAWS. Subdivision 1. Bylaws required. The first board of directors shall adopt bylaws, which shall remain effective until and except as amended by the members at any regular or special meeting called therefor. Subd. 2. Filing of bylaws and amendments. Every township mutual fire insurance company doing business within this state shall be subject to the requirements of section 72A.061, subdivision 2, as to amendments or additions to its bylaws. History:  1967 c 395 art 8 s 5; 1987 c 337 s 110
67A.06 POWERS OF CORPORATION. Every corporation formed under the provisions of sections 67A.01 to 67A.26, shall have power: (1) to have succession by its corporate name for the time stated in its certificate of incorporation; (2) to sue and be sued in any court; (3) to have and use a common seal and alter the same at pleasure; (4) to acquire, by purchase or otherwise, and to hold, enjoy, improve, lease, encumber, and convey all real and personal property necessary for the purpose of its organization, subject to such limitations as may be imposed by law or by its articles of incorporation; (5) to elect or appoint in such manner as it may determine all necessary or proper officers, agents, boards, and committees, fix their compensation, and define their powers and duties; (6) to make and amend consistently with law bylaws providing for the management of its property and the regulation and government of its affairs; (7) to wind up and liquidate its business in the manner provided by chapter 60B; (8) to indemnify certain persons against expenses and liabilities as provided in section 302A.521. In applying section 302A.521 for this purpose, the term "members" shall be substituted for the terms "shareholders" and "stockholders"; and (9) to eliminate or limit a director's personal liability to the company or its members for monetary damages for breach of fiduciary duty as a director. A company shall not eliminate or limit the liability of a director: (i) for breach of loyalty to the company or its members; (ii) for acts or omissions made in bad faith or with intentional misconduct or knowing violation of law; (iii) for transactions from which the director derived an improper personal benefit; or (iv) for acts or omissions occurring before the date that the provisions in the articles eliminating or limiting liability become effective. History:  1967 c 395 art 8 s 6; 1969 c 708 s 63; 1975 c 15 s 3; 1979 c 152 s 1; 1987 c 337 s 111; 1987 c 384 art 2 s 1; 1989 c 209 art 2 s 1; 2005 c 69 art 3 s 14; 2009 c 37 art 3 s 19
67A.07 PRINCIPAL OFFICE. The principal office of a township mutual fire insurance company shall be located in a county in which the company is authorized to do business. History:  1967 c 395 art 8 s 7; 1973 c 123 art 5 s 7; 1975 c 15 s 4; 2009 c 37 art 3 s 20
67A.08 BOARD OF DIRECTORS. Each company shall choose of its members no less than five, and not more than nine, directors to manage the affairs of the company, who shall hold their office for such period as may be fixed by the bylaws of the company, not exceeding three years, and until their successors are elected and qualified. History:   1967 c 395 art 8 s 8 
67A.09 OFFICERS. Subdivision 1. How elected or chosen. The directors shall choose one of their number as president, one as vice-president, and one as secretary; they shall also choose a treasurer, who need not be a member of the board, but must be a member of the company. They may also choose a manager, who need not be a member of the board, and need not be a member of the company. The offices of secretary and treasurer may be held by the same person. The board of directors may appoint other officers as it deems necessary for the conduct of business. Subd. 2. Officers, bond. The officers and employees of the company shall give such bond to the company in such sum as the directors shall determine. History:  1967 c 395 art 8 s 9; 1975 c 15 s 5; 1989 c 130 s 1
67A.10 RIGHTS OF CERTAIN MEMBERS. Nonresidents owning property in the territory where any such company is authorized to do business may become a member with all the rights thereof except eligibility to office. History:  1967 c 395 art 8 s 10; 1975 c 15 s 6
67A.11 ANNUAL MEETING. Subdivision 1. Date and fiscal year. The annual meeting of every such company shall be held before July first in each year, and the fiscal year of the company shall be from the first day of January through the thirty-first day of the following December. Subd. 2. Annual report. A full report of the business of the company for the previous fiscal year shall be presented at the annual meeting. Subd. 3. Annual statement. (a) On or before March first, following the end of each fiscal year, the president and the secretary shall file with the commissioner a verified statement of the entire business and condition of the company, which statement shall contain such data and information in reference to the business of the preceding fiscal year as shall be required by the commissioner. (b) On or before March 1 of each year, the president and secretary shall also file with the commissioner of revenue a copy of the verified statement required by paragraph (a). Failure to file the statement on or before March 1 will subject the company to a penalty of $10 a day up to a maximum of $200. Subd. 4. Other statements may be required by commissioner. The commissioner may at other times require any further statement that the commissioner may deem necessary to be made relating to the business of the company. Subd. 5. Fees. Fees to be paid as listed in section 60A.14. History:  1967 c 395 art 8 s 11; 1975 c 15 s 7,8; 1977 c 244 s 1; 1986 c 444; 1987 c 268 art 2 s 18; 1987 c 329 s 21
67A.12 APPLICATIONS. Subdivision 1. Who may accept. The president, secretary, treasurer, or chosen manager may accept all applications and sign and issue policies, agreeing in the name of the company to pay all losses and damages, not exceeding the sums named in the policies, sustained by reason of the perils named, for the term therein specified. Subd. 2. Binders. Every application for insurance made to any authorized officer or agent, until refused by the proper officer, shall be of the same force and effect as a regularly issued policy and contract of insurance, and from the time of its receipt by an officer or agent, the property specified in the application shall be deemed insured in the same manner and to the same extent as if covered by a regular policy issued according to law and the regulations of the company. Subd. 3.  [Repealed, 1975 c 15 s 22] Subd. 4. Policy fee, premium and assessment. Before the delivery of any policy, the company may collect regular cash premium and policy fee and shall take the written agreement of the insured of even date therewith, which shall be embodied in the application, to pay a pro rata share of losses or damages sustained by any member. Subd. 5. Term of policy. The term of policies issued by township mutual fire insurance companies shall not exceed five years. History:  1967 c 395 art 8 s 12; 1975 c 15 s 9; 1986 c 444; 1989 c 130 s 2
67A.13 TYPES OF INSURANCE AUTHORIZED. A township mutual fire insurance company shall insure only against loss or damage by fire, lightning, explosion, flood, earthquake, theft, vandalism, collapse, upset, overturn, collision, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke, breakage of glass, weight of ice, snow or sleet, freezing, leakage of water or other substance, electrical power interruption or electrical breakdown from any cause, and as to livestock against loss or damage by electrocution by electrical currents artificially generated, attack by dogs or wild animals, drowning, accidental shooting, loading or unloading, or collision or overturn of conveyances, and consequential losses as a result of damage from any of the perils listed except public liability. History:  1967 c 395 art 8 s 13; 1975 c 15 s 10
67A.14 INSURABLE PROPERTY. Subdivision 1. Kinds of property; property outside authorized territory. (a) Township mutual fire insurance companies may insure qualified property. Qualified property means dwellings, household goods, appurtenant structures, farm buildings, farm personal property, churches, church personal property, county fair buildings, community and township meeting halls and their usual contents. (b) Township mutual fire insurance companies may extend coverage to include an insured's secondary property if the township mutual fire insurance company covers qualified property belonging to the insured. Secondary property means any real or personal property that is not considered qualified property for a township mutual fire insurance company to cover under this chapter. The maximum amount of coverage that a township mutual fire insurance company may write for secondary property is 25 percent of the total limit of liability of the policy issued to an insured covering the qualified property. (c) A township mutual fire insurance company may insure any real or personal property, including qualified or secondary property, subject to the limitations in subdivision 1, paragraph (b), located outside the limits of the territory in which the company is authorized by its certificate or articles of incorporation to transact business, if the company is already covering qualified property belonging to the insured, inside the limits of the company's territory. (d) A township mutual fire insurance company may insure property temporarily outside of the authorized territory of the township mutual fire insurance company. Subd. 2.  [Repealed, 1975 c 15 s 22] Subd. 3.  [Repealed, 1975 c 15 s 22] Subd. 4.  [Repealed, 1975 c 15 s 22] Subd. 5.  [Repealed, 2009 c 37 art 3 s 25] Subd. 6.  [Repealed, 1975 c 15 s 22] Subd. 7. Amount of insurable risk. No township mutual fire insurance company shall insure or reinsure a single risk or hazard in a larger sum than the greater of $3,000, or one tenth of its net assets plus two tenths of a mill of its insurance in force; provided that no portion of any such risk or hazard which shall have been reinsured, as authorized by the laws of this state, shall be included in determining the limitation of risk prescribed by this subdivision. History:  1967 c 395 art 8 s 14; 1971 c 133 s 1; 1971 c 187 s 1; 1973 c 123 art 5 s 7; 1975 c 15 s 11,12; 1977 c 244 s 2,3; 1981 c 136 s 1; 1989 c 130 s 3,4; 2006 c 204 s 13; 2009 c 37 art 3 s 21,22
67A.15 CLASSIFICATION OF PROPERTY. Every such company may classify property insured under different rates, corresponding as nearly as possible to the greater or less risk from fire by reason of location or construction, and issue its policies in accordance with these differences. History:   1967 c 395 art 8 s 15 
67A.161 APPRAISAL OF DISPUTED LOSSES. If a township mutual fire insurance company and an insured fail to agree on the actual cash value of an item or amount of a loss, on written demand by either party, the insured and the company shall each, within 20 days of the demand, select a competent and disinterested appraiser and notify the other party of the appraiser's identity. If either party fails to select an appraiser within the time provided, the presiding judge of the district court in the county in which the loss occurred shall appoint an appraiser to represent that party. The appointment shall be made upon application to the court by the party not failing to make the required selection and upon five days' written notice to the other party. The appraisers appointed pursuant to this section shall make a good faith effort to select a competent and disinterested umpire. If the appraisers fail to agree upon an umpire within 15 days of their appointment, the presiding judge of the district court in the county in which the loss occurred shall appoint an umpire upon application by either party and five days' written notice to the other party. The appraisers shall appraise the loss, stating separately actual value and loss to each item. If the appraisers fail to agree, they shall submit their differences to the umpire, whose decision shall control to the extent of the differences between the appraisers. An award in writing, approved by the appraisers or by an appraiser and the umpire, upon being filed with the company shall be conclusive evidence of the actual value and loss to an item. An appraiser shall be paid by the party represented, and the expenses of the appraisal and the umpire shall be paid in equal shares by the two parties. History:  1975 c 15 s 13; 1986 c 444
67A.175 SURPLUS REQUIREMENTS. Subdivision 1. Minimum. Township mutual fire insurance companies shall maintain a minimum policyholders' surplus of $300,000 at all times. Subd. 2. Corrective action plan; filing. A township mutual fire insurance company that falls below the $300,000 minimum surplus requirement must file a corrective action plan with the commissioner. The plan shall state how the company will correct its surplus deficiency. The plan must be submitted within 45 days of the company falling below the minimum surplus level. Subd. 3. Corrective action plan; commissioner's notification. Within 30 days after the submission by a township mutual fire insurance company of a corrective action plan, the commissioner shall notify the insurer whether the plan may be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the plan is unsatisfactory, the notification to the company must set forth the reasons for the determination, and may set forth proposed revisions that will render the plan satisfactory in the judgment of the commissioner. Upon notification from the commissioner, the insurer shall prepare a revised corrective action plan that may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised plan to the commissioner within 45 days. History:   2009 c 37 art 3 s 23 
67A.18 TERMINATION. Subdivision 1. By member. Any member may terminate membership in the company by giving written notice or returning the member's policy to the secretary. Subd. 2. By company. The company may annul and cancel any policy after giving not less than ten days' written notice to the insured by registered or certified mail to the last known address of the insured and to any mortgagee to whom the policy is made payable. Subd. 3.  [Repealed, 1975 c 15 s 22] History:  1967 c 395 art 8 s 18; 1975 c 15 s 15,16; 1986 c 444; 2009 c 37 art 3 s 24
67A.191 COMBINATION POLICIES. Subdivision 1. Qualified risks. A township mutual fire insurance company may issue an insurance policy for qualified and secondary property as defined in section 67A.14, subdivision 1, in combination with a policy issued by an insurer authorized to sell property and casualty insurance in this state. The portions of the combination policy issued by a township mutual insurance company, including those that insure dwellings, whether or not owner occupied, are excluded from all provisions of the insurance laws of this state as provided in section 67A.25, subdivision 2. Subd. 2. Homeowner's risks. A township mutual fire insurance company may market and issue policies known as "homeowner's insurance" as defined in section 65A.27, subdivision 4, only in combination with a policy issued by an insurer authorized to sell property and casualty insurance in this state. All portions of the combination policy providing homeowner's insurance, including those issued by a township mutual insurance company, are subject to the provisions of chapter 65A and sections 72A.20 and 72A.201. History:  1994 c 564 s 1; 1998 c 297 s 1; 2004 c 202 s 2; 2009 c 178 art 1 s 39; 2012 c 162 s 1
67A.20 REINSURANCE. Subdivision 1. Among themselves. Township mutual fire insurance companies may enter into reinsurance agreements with other township mutual fire insurance companies and reinsure a portion of any risk with these companies. In these cases they shall not be confined to the territory in which they are writing direct business. Subd. 2. With reinsurance association. Any township mutual fire insurance company may become a member of a reinsurance association, such as provided for under sections 67A.40 to 67A.44, for the purpose of reinsuring any part or all of any risk or risks written by it. 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. History:  1967 c 395 art 8 s 20; 2001 c 215 s 34
67A.21 CONSOLIDATION, MERGER. Two or more township mutual fire insurance companies which have been or may hereafter be authorized to transact the business of insurance upon insurable property as herein authorized may consolidate or merge as provided herein. To effect this consolidation or merger, it shall be necessary: (1) that the board of directors or managing body of each of the corporations pass a resolution to the effect that the consolidation or merger is advisable and containing the proposed name of the corporation, as consolidated or merged, its principal office, and the names of its first board of directors and officers; (2) that a special meeting of the policyholders of each of the corporations shall be held, a notice of which meeting shall be mailed to each of the policyholders thereof at least 30 days prior to the holding thereof, and which notice shall embody the resolution adopted by the board of directors, as provided in clause (1); (3) that a majority of the policyholders of each of the corporations present or represented at these special meetings shall, by resolution, approve and ratify the action of the directors, as provided for in clause (1); and (4) that the proceedings and resolutions be filed with, and approved of by, the commissioner. When full copies of these proceedings have been filed with the commissioner, which copies shall be certified by the president and secretary of the respective corporations and duly verified by these officers, and approved of by the commissioner, the consolidation or merger of these corporations shall be deemed to be complete, and the company so continuing the business shall be deemed to have fully assumed all of the obligations, liabilities, and risks and to be the owner of all the assets of the companies so consolidating or merging. If this consolidation or merger is made under any new name, the filing of these proceedings and the approval of same by the commissioner shall be sufficient to constitute the consolidated or merged company a corporation, with all the powers and privileges, and subject to all the limitations, of a township mutual fire insurance company under the laws of this state. History:  1967 c 395 art 8 s 21; 1975 c 15 s 18; 1986 c 444
67A.231 DEPOSIT OF FUNDS; INVESTMENT; LIMITATIONS. The directors of any township mutual insurance company may authorize the treasurer to invest any of its funds and accumulations in: (a) Bonds, notes, mortgages, or other obligations guaranteed by the full faith and credit of the United States of America and those for which the credit of the United States is pledged to pay principal, interest or dividends, including United States agency and instrumentality bonds, debentures, or obligations; (b) Bonds, notes, evidence of indebtedness, or other public authority obligations guaranteed by this state; (c) Bonds, notes, evidence of the indebtedness or other obligations guaranteed by the full faith and credit of any county, municipality, school district, or other duly authorized political subdivision of this state; (d) Bonds or other interest bearing obligations, payable from revenues, provided that the bonds or other interest bearing obligations are at the time of purchase rated among the highest four quality categories used by a nationally recognized rating agency for rating the quality of similar bonds or other interest bearing obligations, and are not rated lower by any other such agency; or obligations of a United States agency or instrumentality that have been rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners. A company may not invest more than 20 percent of its admitted assets in the obligations of any one corporation. This is not applicable to bonds or other interest bearing obligations in default as to principal; (e) Investments in the obligations stated in paragraphs (a), (b), (c), and (d), may be made either directly or in the form of securities of, or other interests in, an investment company registered under the federal Investment Company Act of 1940. Investment company shares authorized pursuant to this subdivision shall not exceed 20 percent of the company's surplus. These obligations must be carried at the lower of cost or market on the annual statement filed with the commissioner and adjusted to market on an annual basis; (f) Loans upon improved and unencumbered real property in this state worth at least twice the amount loaned thereon, not including buildings, unless insured by property insurance policies payable to and held by the security holder; (g) Real estate, including land, buildings and fixtures, located in this state and used primarily as home office space for the insurance company; (h) Demand or time deposits or savings accounts in federally insured depositories located in any state to the extent that the deposit or investment is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. An additional deposit not to exceed 50 percent of the township mutual insurance company's policyholder surplus may be located in these depositories if covered by private deposit insurance written by an insurer licensed by the Department of Commerce; (i) Guarantee fund certificates of a mutual insurer which reinsures the business of the township mutual insurance company. The commissioner may by rule limit the amount of guarantee fund certificates which the township mutual insurance company may purchase and this limit may be a function of the size of the township mutual insurance company; (j) Up to $1,500 in stock of an insurer which issues directors and officers liability insurance to township mutual insurance company directors and officers; (k) Up to $10,000 in shares of stock of the National Association of Mutual Insurance Companies bank, subject to the commissioner's approval; and (l) Overnight repurchase agreements with the depository that handles the company's primary accounts under paragraph (h). The repurchase agreements must be collateralized by securities that the company is otherwise authorized to invest in under this section. The securities must have an aggregate market value of at least 105 percent of the total amount invested under the repurchase agreement. History:  1981 c 127 s 1; 1987 c 337 s 112; 1995 c 214 s 16; 1997 c 222 s 8; 1998 c 297 s 2; 1999 c 52 s 1
67A.241 RECORD KEEPING; EXAMINATION; REMEDIES. Subdivision 1. Record keeping. The commissioner may prescribe a basis upon which a township mutual insurance company shall maintain its records which shall reflect the true financial condition of the company. Subd. 2. External examination of company records and accounts. (a) The board of directors of every township mutual insurance company shall, at least once every three years, cause the records and accounts of the company to be examined by an independent public accountant, auditor, or person who has been certified by the society of financial examiners. The examination shall cover the financial and business affairs including the treatment of members and claimants of the company during the previous three years ending December 31. (b) A written summary report of the pertinent results of the examination shall immediately be filed with each member of the board of directors following completion of the examination. A complete examination report shall be filed with the board of directors and the commissioner within 60 days following completion of the examination. (c) The accountant, auditor, or certified financial examiner conducting or supervising the examination must have a minimum of five years' experience in public accounting or examining the financial records or statements of financial institutions and shall not be an officer or employee of the company being examined. The examiner must not be directly involved in maintaining the records being examined, but may advise or counsel management in record keeping, accounting, or management procedures. Subd. 3. Examination by commissioner. The commissioner, with due cause based upon information disclosed in any statement or report or upon information from any examination conducted under this section or when requested by five or more members, shall make an examination of the financial and business affairs of any township mutual fire insurance company doing business within this state. The company examined shall pay the actual expenses of the person or persons making the examination and the fees prescribed in section 60A.03, subdivision 5. Subd. 4. Remedies. When, after examination by the commissioner or independent public accountant, auditor, or certified financial examiner, the commissioner is satisfied that a township mutual insurance company has failed to comply with provisions of sections 67A.01 to 67A.26; is exceeding its power; is not carrying out its contracts in good faith; is transacting business fraudulently; or is in such condition as to render further proceedings hazardous to the public or to its policyholders, the commissioner may take action deemed necessary or proceed under the provisions of chapter 60B. History:  1981 c 127 s 2; 1984 c 592 s 63; 1986 c 444
67A.25 REFERENCE TO LAWS 1909, CHAPTER 411. Subdivision 1. What companies may come under Laws 1909, chapter 411. Any township mutual fire insurance company heretofore organized may exercise, after the passage of Laws 1909, chapter 411, all of the rights conferred thereby that are within the powers and privileges of its certificate or articles of incorporation, or it may be reincorporated thereunder. No such company already organized shall be required to reincorporate thereunder in order to avail itself of the privileges thereof. Every township mutual fire insurance company now doing business in this state shall have the right to continue transacting such business until the first day of March succeeding the passage thereof; and the commissioner, if satisfied that the company is transacting its business in accordance therewith, shall on the first day of each succeeding June issue a license to the company authorizing it to transact business until the May 31 following the date of the license. Subd. 2. Application of Laws 1909, chapter 411. Except as therein provided, all township mutual fire insurance companies heretofore or hereafter organized in this state shall be governed by Laws 1909, chapter 411, as amended, and excluded from all provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose, and no law heretofore or hereafter passed shall apply to the company unless it shall be expressly designated in the law that it is applicable to township mutual fire insurance companies. History:  1967 c 395 art 8 s 25; 1Sp1985 c 10 s 70; 1986 c 444
67A.26 PENALTIES. Subdivision 1. Fraudulent statements. Any person, officer, or member who shall knowingly or willfully make any false or fraudulent statement or representation in reference to any application for membership under sections 67A.01 to 67A.26, or any false or fraudulent statement as to the transactions or condition of the company of which the person is a member or officer, shall be guilty of a misdemeanor. Subd. 2. Noncompliance by officers or employees. Any officer of any such company, or employee thereof, who shall neglect or refuse to comply with, or violates any of the provisions of sections 67A.01 to 67A.26, shall be guilty of a misdemeanor. History:  1967 c 395 art 8 s 26; 1971 c 23 s 8,9; 1986 c 444
67A.40 ORGANIZATION AND POWERS. Subdivision 1. Organization and purpose. Not less than six duly licensed township mutual fire insurance companies may organize a mutual association for the purpose of reinsuring any part or all of any risk or risks, written by any of the member companies. Subd. 2. Articles of incorporation, contents and filing. The incorporation of this association shall be effected by filing with the commissioner and with the secretary of state a certificate of incorporation duly executed and acknowledged by the companies forming the association, these companies having been first duly authorized, by resolution duly adopted at a regular annual meeting, or at a special meeting called for that purpose, which certificate shall state, in substance, such facts as are required to be stated in certificates of incorporation by the general corporation laws of this state and shall have first been approved by the commissioner. Subd. 3. Corporate powers. In addition to the powers conferred by sections 67A.40 to 67A.44, every such association shall have the power to reinsure any part or all of any risk or risks assumed by it, and every such association shall have the corporate powers which are granted to corporations under the general corporation laws of this state. Any such association having a surplus of at least $300,000 may, at any regular meeting or at a special meeting called for that purpose, transform itself into a mutual insurance company by amending its articles of incorporation to provide for the doing of one or more of the kinds of business specified in section 60A.06, subdivision 1, clauses (1) to (14). Such transformed company shall be subject to the general corporation laws contained in chapter 302A, and subject to the conditions and restrictions as to the kinds of insurance which may be combined by a like stock insurance company and to all restrictions contained in the laws of this state with reference to general mutual insurance companies transacting the same kinds of business. The bylaws may also provide for voting rights to be based on one vote for each policyholder, plus one vote for each $100 of premium paid within 12 months prior to the meeting at which the votes are cast. Subd. 4. Perpetual existence. The corporate existence of any such association may be made perpetual by so providing in its articles of incorporation. Subd. 5. Directors. The directors of the association shall be chosen from the officers of its members. Subd. 6. Bylaws. The board of directors at its first meeting shall adopt bylaws, which shall be filed with the commissioner and shall not be effective until approved by the commissioner. History:  1967 c 395 art 8 s 40; 1969 c 7 s 28; 1986 c 444; 2005 c 69 art 3 s 15; 2012 c 187 art 1 s 13
67A.41 PREMIUMS AND ASSESSMENTS. Member companies of any such association shall each year pay to the treasurer thereof such assessments as shall be fixed or authorized by the board of directors of the association, which assessments shall be based upon the amount of insurance of each of its member companies during the calendar year ending December 31st next preceding. The individual members of the member companies shall be subject to assessment in case the funds of the member companies are insufficient to pay any assessment made by the association to the same extent and in the same manner as though the assessment by the association were to cover a loss for which the member company was liable. History:   1967 c 395 art 8 s 41 
67A.42 WITHDRAWAL BY MEMBERS. Any member of the association may withdraw from membership upon giving 90 days' notice of its intention so to do when the withdrawal has been authorized by a majority vote of its members present and voting at a regular meeting or a special meeting called for that purpose. This withdrawal shall not in any way affect its liability to contribute to any losses or expenses which may have been incurred prior to the time of withdrawal. History:   1967 c 395 art 8 s 42 
67A.43 COMMISSIONER'S POWERS AND DUTIES. Subdivision 1. To have supervision. The certificate of incorporation and bylaws, forms of contracts and policies adopted or issued by every such association, and the general conduct of its affairs shall be subject to the general supervision and jurisdiction of the commissioner, and the commissioner, when requested by five or more members of the association, shall make an examination of the affairs thereof at the expense of the association. Farmers and township reinsurance or guaranty associations shall be subject to the provisions of chapter 60B. Subd. 2. Filing of annual statement and license required. Every such association shall file with the commissioner the annual statement and procure the certificate of authority as required by law pertaining to insurance companies. Subd. 3.  [Repealed, 1987 c 337 s 131] History:  1967 c 395 art 8 s 43; 1969 c 708 s 63; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444
67A.44 COMMISSIONER DEFINED. As used in all parts of this chapter the word "commissioner" shall mean the commissioner of commerce of the state of Minnesota and, in the commissioner's absence or disability, a deputy or other person duly designated to act for the commissioner. History:  1967 c 395 art 8 s 44; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444
68A.01 REAL ESTATE TITLE INSURANCE COMPANIES. Subdivision 1.  [Repealed, 1969 c 7 s 30] Subd. 2. Guaranty fund and investment thereof. Before issuing any policy or other contract of guaranty or insurance, every real estate title insurer shall set apart and keep separate a guaranty fund of $100,000 or an amount equal to two-fifths of its capital stock whichever is the greater. The guaranty fund shall be invested according to law. Subd. 3. Deposit of guaranty fund. The securities in which the guaranty fund is invested shall be duly deposited with the commissioner in accordance with section 60A.10, subdivision 4, and the commissioner's certificate thereof procured, as provided by law. This deposit shall be maintained unimpaired and the principal of the fund shall be applied only to the payments of losses and expenses by reason of its guaranty and insurance contracts, with the right to the company to collect the income thereof and to substitute other like securities of equal amount and value from time to time. In the case of a foreign insurer, the deposit may be made with the commissioner of the domicile state of such foreign insurer and that commissioner's certificate thereof shall be accepted by the commissioner. Subd. 4. Investment of other funds. After the investment of such portion of its capital stock as hereinbefore provided and the deposit of the securities in its guaranty fund as aforesaid the remainder of its capital stock and funds may be invested in such securities, records, and equipment as the board of directors or the board of trustees of the company shall determine to be suitable for the transaction of its business, unless otherwise limited by this chapter. Subd. 5. Other powers. In addition to the powers now possessed, these companies are authorized to make abstracts of title to real property for compensation. Subd. 6. Admitted asset standards. An investment in a title plant or plants in an amount equal to the actual cost must be allowed as an admitted asset for title insurers. The aggregate amount of the investment must not exceed the lesser of 20 percent of admitted assets or 40 percent of surplus to policyholders, both as required to be shown on the statutory balance sheet of the insurer for its most recently filed statement with the commissioner. If the amount of the investment exceeds the limits in this subdivision, the excess amount must be recorded as a nonadmitted asset. History:  1967 c 395 art 9 s 1; 1969 c 7 s 29; 1969 c 253 s 1,2; 1974 c 425 s 9; 1986 c 444; 1991 c 325 art 21 s 7; 2000 c 350 s 11,12; 2014 c 198 art 4 s 9
68A.02 HISTORIC STATUTORY PREMIUM RESERVE. Subdivision 1. 1964-2001 premium reserve. Upon issuance of each contract of title insurance issued on or after January 1, 1964, through January 1, 2001, by a domestic real estate title insurer, there shall be reserved initially a sum equal to ten percent of the original premium charged therefor. At the end of each calendar year following the year in which the contract of title insurance is issued, there shall be a reduction in the sum so reserved in the amount of one-twentieth of such sum. On any contract of title insurance issued prior to January 1, 1964, by a domestic real estate title insurer, a reserve shall be set up on January 1, 1964, and thereafter maintained in such sum as would have been required if the foregoing requirements with respect to title insurance reserves had existed at and after the date of the contract of title insurance. Such sums herein required to be reserved shall at all times and for all purposes be considered and constitute unearned portions of the original premiums on such contracts of title insurance, shall be charged as a reserve liability of the real estate title insurer in determining its financial condition, and, for the purpose of applying the provisions of section 60A.23, subdivision 4, shall be deemed to constitute the whole amount of the premiums on the unexpired risks of such real estate title insurer. Subd. 2. 2001-2004 premium reserve. (a) Additions to the reserve after January 1, 2001, and through January 1, 2004, must be made out of total charges for title insurance policies and guarantees written, equal to the sum of the following items, as set forth in the title insurer's most recent annual statement filed with the commissioner: (1) for each title insurance policy on a single risk written or assumed after January 1, 2001, a minimum rate of $0.36 per $1,000 of net retained liability for policies under $500,000 and $0.16 per $1,000 of net retained liability for policies of $500,000 or greater; and (2) a minimum of eight percent of escrow, settlement, and closing fees collected in contemplation of the issuance of title insurance policies or guarantees. (b) The amounts in paragraph (a) must be released from the reserve in accordance with section 68A.03, subdivision 3, paragraph (b). History:  1967 c 395 art 9 s 2; 2000 c 350 s 13; 2004 c 227 s 1; 2014 c 198 art 4 s 10
68A.03 RESERVES. Subdivision 1. Requirements. After January 1, 2001, the financial condition of an insurer doing business under this chapter must be determined by applying the general provisions of the insurance code requiring the establishment of reserves sufficient to cover all known and unknown liabilities including allocated and unallocated loss adjustment expense, except that a title insurer shall also establish and maintain the reserves required by this section. Subd. 2. Claim reserves. A title insurer shall establish and maintain a known claim reserve in an amount estimated to be sufficient to cover all unpaid losses, claims, and allocated loss adjustment expenses arising under title insurance policies, guaranteed certificates of title, guaranteed searches, and guaranteed abstracts of title and all unpaid losses, claims, and allocated loss adjustment expenses for which the title insurer may be liable, and for which the insurer has received notice by or on behalf of the insured, holder of a guarantee, or escrow or security depositor. Subd. 3. Statutory premium reserve. (a) A title insurer shall establish and maintain a statutory premium reserve consisting of: (1) the amount of statutory premium reserve required by the laws of the domiciliary state of the insurer if the insurer is a foreign or non-U.S. title insurer; or (2) if the insurer is a domestic title insurer of this state, a statutory or unearned premium reserve consisting of: (i) the amount of the statutory or unearned premium or reinsurance reserve legally held on January 1, 2004, which balance must be released according to the law in effect at the time the sums were added to the reserve, all as set forth in section 68A.02; and (ii) after January 1, 2004, and until December 31, 2009, a sum equal to a minimum of eight percent of the total of subitems (A) and (B). After January 1, 2010, a sum equal to a minimum of 6.5 percent of the total of subitems (A) and (B): (A) direct risk premiums written; and (B) premiums for reinsurance assumed, plus other income, less premiums for reinsurance ceded as set forth in schedule P of the title insurer's most recent annual statement filed with the commissioner. (b) The aggregate of the amounts set aside in this reserve in any calendar year pursuant to paragraph (a), clause (2), item (ii), must be released from the reserve and restored to net profits over a period of 20 years at an amortization rate not to exceed the following formula: 35 percent of the aggregate sum on July 1 of the year next succeeding the year of addition; 15 percent of the aggregate sum on July 1 of each of the succeeding two years; ten percent of the aggregate sum on July 1 of the next succeeding year; three percent of the aggregate sum on July 1 of each of the next three succeeding years; two percent of the aggregate sum on July 1 of each of the next three succeeding years; and one percent of the aggregate sum on July 1 of each of the next succeeding ten years. (c) The insurer shall calculate an adjusted statutory or unearned premium reserve as of the year of first application of paragraph (a), clause (2), item (ii). The adjusted reserve must be calculated as if paragraph (a), clause (2), item (ii), had been in effect for all years beginning 20 years before the year of first application of paragraph (a), clause (2), item (ii). For purposes of this calculation, the balance of the reserve as of that date is considered to be zero. If the adjusted reserve so calculated exceeds the aggregate amount set aside for statutory or unearned premiums in the insurer's most recent annual statement filed with the commissioner, the insurer shall, out of total charges for policies of title insurance, increase its statutory or unearned premium reserve by an amount equal to one-sixth of that excess in each of the succeeding six years, beginning with the calendar year that includes the year of first application of paragraph (a), clause (2), item (ii), until the entire excess has been added. (d) The aggregate of the amounts set aside in this reserve in any calendar year as adjustments to the insurer's statutory or unearned premium reserve pursuant to paragraph (c) must be released from the reserve and restored to net profits, or equity if the additions required by paragraph (c) reduced equity directly, over a period not exceeding ten years pursuant to the following table:      Year 1* Equally over ten years  Year 2 Equally over nine years  Year 3 Equally over eight years  Year 4 Equally over seven years  Year 5 Equally over six years  Year 6 Equally over five years   *The calendar year following the year of first application of paragraphs (a), clause (2), item (ii), (b), and (c). (e) A supplemental reserve must be established consisting of any other reserves necessary, when taken in combination with the reserves required by this section and section 68A.02, to cover the company's liabilities with respect to all losses, claims, and loss adjusted expenses. (f) Each title insurer subject to the provisions of this chapter shall file with its annual statement, required under section 60A.13, subdivision 1, a certification by a member in good standing of the American Academy of Actuaries. The actuarial certification required of a title insurer must conform to the National Association of Insurance Commissioners' annual statement instructions for title insurers. History:  2000 c 350 s 14; 2004 c 227 s 2; 2011 c 61 s 6
68A.04 DEFINITIONS. Subdivision 1. Direct risk premiums. For purposes of this chapter, "direct risk premiums" means the charge for title insurance made by a title insurer or its agents according to the insurer's rate filing approved by the commissioner of commerce without a deduction for commissions paid to or retained by the agent and is that portion of the fee charged by a title insurer to an insured or an applicant for insurance for the assumption by the title insurer of the risk created by the issuance of the title insurance policy. Direct risk premiums of a title insurer do not include any other charge or fee for abstracting, searching, or examining the title, or for escrow, closing, or other related services. Subd. 2. Title insurance. For purposes of this chapter, "title insurance" means insuring owners of real or personal property, the holders of liens, interests or encumbrances thereon, or others interested therein, against loss or damage suffered by reason of liens, encumbrances upon, defects in, or the unmarketability of the title to the property; the invalidity, impairment, lack of priority, or unenforceability of any liens or encumbrances on the property; or the doing, or proposing to do, any business in substance equivalent to any of the foregoing whether or not designed to evade the provisions of this chapter. History:  2004 c 227 s 3; 2008 c 347 s 2; 2014 c 198 art 4 s 11
70A.01 INTERPRETATION GUIDE. Subdivision 1. Liberal construction. This chapter shall be liberally construed to achieve the purposes stated in subdivision 2, which shall constitute an aid and guide to interpretation but not an independent source of power. Subd. 2. Purposes. The purposes of this chapter are: (a) to protect policyholders and the public against the adverse effects of excessive, inadequate or unfairly discriminatory rates; (b) to encourage, as the most effective way to produce rates that conform to the standards of (a), independent action by and reasonable price competition among insurers; (c) to provide formal regulatory controls for use if independent action and price competition fail; (d) to authorize cooperative action among insurers in the ratemaking process, and to regulate such cooperation in order to prevent practices that tend to bring about monopoly or to lessen or destroy competition; (e) to encourage efficient and economic practices. History:   1969 c 958 s 1 
70A.02 SCOPE OF APPLICATION. Subdivision 1. Forms of insurance to which applicable. This chapter applies to casualty insurance, to fidelity, surety and guaranty bonds, to fire and allied lines of insurance and to inland marine insurance, on risks or operations in this state. Subd. 2. Nonapplication of chapter. This chapter shall not apply to: (1) insurance written by township or farmers' mutual insurance companies subject to the provisions of chapter 67A; insurance written by companies organized pursuant to section 66A.311, or to tornado, cyclone, or hurricane insurance, the consideration for which, except for policy, membership or survey fees, is paid entirely by assessments on policyholders; (2) reinsurance, other than joint reinsurance to the extent stated in section 70A.16; (3) accident and health insurance; (4) insurance against loss of or damage to aircraft, used in scheduled airline operations, including their accessories and equipment, or against liability arising out of the ownership, maintenance, or use of aircraft; (5) insurance of vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine, insurance policies; (6) workers' compensation insurance; (7) insurance covering any of the liability of an employer exempted from insuring the employer's liability for compensation as provided in section 176.181; and (8) disability and double indemnity insurance issued as part of a life insurance contract. Subd. 3. Exemptions. The commissioner may exempt from any or all of the provisions of this chapter, if and to the extent that the commissioner finds their application unnecessary to achieve the purposes of this chapter: (1) any specified person by order, or class of persons by rule; and (2) any specified risk by order, or any line or kind of insurance or subdivision thereof or class of risks or combination of classes by rule. History:  1969 c 958 s 2; 1975 c 359 s 23; 1977 c 365 s 1; 1986 c 444; 2005 c 69 art 2 s 18
70A.03 DEFINITIONS. For the purposes of this chapter, unless a different meaning is manifest from the context: (1) "Casualty insurance," except as excluded by subdivision 2 of section 70A.02, means any of the kinds of insurance enumerated in section 60A.06, subdivision 1, clauses (3), (5), (6), (7), (8), (9), (10), (11), (12), (13), and (14), together with similar kinds of insurance which may be written pursuant to the provisions of section 60A.06, subdivision 2, and, notwithstanding the provisions of section 71A.07, includes insurance effected or exchanged pursuant to the provisions of chapter 71A, and the term "insurers" includes all individuals, partnerships or corporations and their attorneys engaged in effecting or exchanging insurance pursuant to the provisions of those statutes. (2) "Fire and allied lines of insurance," except as excluded by subdivision 2 of section 70A.02, means and includes insurance against the risks of loss specified in section 60A.06, subdivision 1, clause (1), and all other kinds of insurance which fire insurance companies are now, or may hereafter be, authorized to write in this state, and, notwithstanding the provisions of section 71A.07, includes insurance effected or exchanged pursuant to the provisions of chapter 71A, and the term "insurers" includes all individuals, partnerships or corporations and their attorneys engaged in effecting or exchanging insurance pursuant to the provisions of those statutes. (3) "Inland marine insurance" includes insurance now or hereafter defined by statute, or by judicial interpretation thereof, or if not so defined or interpreted, by ruling of the commissioner, or as established by general custom of the business, as inland marine insurance. (4) "Supplementary rate information" includes every manual of classifications, rules and rates, every rating plan and every modification of any of the foregoing, and any other information requested by the commissioner. (5) "Rate service organization" means any person, other than an employee of an insurer, who assists insurers or other rate service organizations in rate making or filing by: (a) collecting, compiling, and furnishing loss or expense statistics; or (b) recommending, making, or filing rates or supplementary rate information. History:   1969 c 958 s 3 
70A.04 RATE STANDARDS. Subdivision 1. Prohibitions. Rates shall not be excessive, inadequate or unfairly discriminatory, nor shall an insurer use rates to engage in unfair price competition. Subd. 2. Excessiveness; market test. (a) Rates are presumed not to be excessive if a reasonable degree of price competition exists at the consumer level with respect to the class of business to which they apply. In determining whether a reasonable degree of price competition exists, the commissioner shall consider all relevant tests. In addition to any other manner of determining whether a reasonable degree of price competition exists with respect to any class of insurance, it is presumed that a reasonable degree of competition does not exist if less than five insurers write more than 75 percent of the direct written premiums. (b) If such competition does not exist, rates are excessive if they are likely to produce a long-run profit that is unreasonably high in relation to the riskiness of the class of business, or if expenses are unreasonably high in relation to the services rendered. In determining whether an excessive rate is being charged by an individual insurer for a class of insurance where a reasonable degree of competition does not exist, the commissioner shall determine whether the rate charged produces a rate of return that is not in excess of a reasonable rate of return. To determine what is a reasonable rate of return, the riskiness of the class of insurance, the profitability of the insurer in that class of business, and other relevant factors shall be considered. Subd. 3. Solidity of insurer. Rates are inadequate only if they will endanger the solidity of an insurer that uses them or if they are insufficient to sustain projected losses and expenses within the state. Rates are conclusively presumed to be adequate if they are sufficient to sustain projected losses and expenses within the state. Subd. 4. Discriminatory rates. One rate is unfairly discriminatory in relation to another if it clearly fails to reflect equitably the differences in expected losses, expenses and the degree of risk. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as the rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if they attempt to spread risk broadly among persons insured under a group, franchise or blanket policy. Subd. 5. Unfair price competition. Unfair price competition exists if an insurer charges any rate for the purpose of securing an unfair competitive advantage, or if the use of the rate has or tends to have or if continued will have or tend to have the effect of destroying competition or creating a monopoly. History:  1969 c 958 s 4; 1986 c 455 s 51
70A.05 RATING METHODS. The compliance of rates with the standards of section 70A.04 shall be determined by considering the following matters: (1) Factors in rates. Due consideration shall be given to past and prospective loss and expense experience within and outside this state, to a reasonable provision for catastrophe hazards and contingencies, to clearly discernible trends within and outside this state, to dividends or savings allowed or returned by insurers to their policyholders, members or subscribers, and to all other relevant factors, including the judgment of underwriters and raters. (2) Classification. Risks may be classified by any reasonable method for the establishment of rates and minimum premiums. Classifications may not be based on race, color, creed or national origin. Rates thus produced may be modified for individual risks in accordance with rating plans or schedules which establish standards for measuring probable variations in hazards, expenses, or both. (3) Profits. The rates may contain an allowance permitting a profit that is not unreasonable. History:   1969 c 958 s 5 
70A.06 FILING REQUIREMENTS. Subdivision 1. Generally. Every licensed insurer and every rate service organization licensed under section 70A.14 shall file with the commissioner all rates and all changes and amendments of rates made by it for use in this state not later than their effective date. No rates contained in a filing shall become effective unless they have been filed with the commissioner. In any filing, the commissioner may require the insurer or rate service organization to file supporting data and explanatory data which shall include: (1) the experience and judgment of the filer, and, to the extent it wishes or the commissioner requires, of other insurers or rate service organizations; (2) its interpretation of any statistical data relied upon; (3) descriptions of the actuarial and statistical methods employed; and (4) any other matters deemed relevant by the commissioner or the filer. Notwithstanding the foregoing, if the supporting data is not filed within 30 days after so requested by the commissioner, the rate is no longer effective and is presumed to be an excessive rate. Subd. 1a. Excessive rate hearings. Whenever an insurer files a change in a rate that will result in a 25 percent or more increase in a 12-month period over existing rates, the commissioner may hold a hearing to determine if the change is excessive. The hearing must be conducted under chapter 14. The commissioner must give notice of intent to hold a hearing within 60 days of the filing of the change. It shall be the responsibility of the insurer to show the rate is not excessive. The rate is effective unless it is determined as a result of the hearing that the rate is excessive. Subd. 2. Policy form filings. No policy form shall be delivered or issued for delivery unless it has been filed with the commissioner and either (i) the commissioner has approved it or (ii) 60 days have elapsed and the commissioner has not disapproved it as misleading or violative of public policy, which period may be extended by the commissioner for an additional period not to exceed 60 days. Subd. 3. Inland marine risk exception. Subdivisions 1 and 2 shall not apply to policies or rates for inland marine risks which by general custom of the business are not written according to manual rates or rating plans, except that subdivisions 1 and 2 shall apply to policies insuring the personal property purchased under a credit transaction or a credit transaction involving a debtor pledging personal property as collateral. For purposes of this subdivision the personal property insured in credit transactions or credit transactions involving a debtor pledging personal property as collateral shall refer only to such personal property of the debtor used for personal use and not used in any business, trade or profession of the debtor. Subd. 4.  [Repealed, 1986 c 455 s 94] Subd. 5.  [Repealed, 1995 c 24 s 2] History:  1969 c 958 s 6; 1977 c 365 s 2; 1983 c 293 s 62; 1986 c 444; 1986 c 455 s 52,53; 1987 c 337 s 113
70A.08 RATE MAKING AND RATE FILING AUTHORITY. Subdivision 1. Delegated rate making permitted. An insurer may itself establish rates and supplementary rate information for any or all kinds or lines of insurance or subdivisions thereof or classes of risks or combinations thereof, based on its own experience, modified by other relevant experience to achieve credibility, or it may use rates and supplementary rate information prepared by a rate service organization, with average expense factors determined by the rate service organization or with such modification for its own expense and loss experience as the credibility of that experience allows. Subd. 2. Delegated rate filing permitted. An insurer may discharge its obligation under section 70A.06 by giving notice to the commissioner that it uses rates and supplementary rate information prepared by a designated rate service organization, with such information about any modifications thereof as are necessary fully to inform the commissioner. The insurer's rates and supplementary rate information shall be those filed from time to time by the rate service organization, including any amendments thereto as filed, subject, however, to any modifications filed by the insurer, until the insurer gives notice to the commissioner changing or terminating the designation. Subd. 3. Approval of claims-made policies. The commissioner may restrict approval on claims-made policies to forms filed by a rate service organization which have been approved. History:  1969 c 958 s 8; 1986 c 455 s 54; 1987 c 337 s 114
70A.09 ASSIGNED RISKS. Agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods and those insurers may agree among themselves on the use of reasonable rate modifications for that insurance, those agreements and rate modifications to be subject to the approval of the commissioner. History:   1969 c 958 s 9 
70A.10 DELAYED EFFECT OF RATES. Subdivision 1. Order instituting delayed effect. If the commissioner finds, after a hearing, that competition is not an effective regulator of the rates charged or that a substantial number of companies are competing irresponsibly through the rates charged, or that there are widespread violations of this chapter, in any kind or line of insurance or subdivision thereof or in any rating class or rating territory, the commissioner may issue an order requiring that in the kind or line of insurance or subdivision thereof or rating class or rating territory comprehended by the finding any subsequent changes in the rates or supplementary rate information be filed at least 60 days before they become effective. The commissioner may extend the waiting period for not to exceed 30 additional days by written notice to the filer before the 60-day period expires. Subd. 2. Supporting data. In the order issued under subdivision 1 or in any supplementary order, the commissioner may require the filing of supporting data as to any or all kinds or lines of insurance or subdivisions thereof or classes of risks or combinations thereof as the commissioner deems necessary for the proper functioning of the rate monitoring and regulating process. The supporting data shall include: (a) the experience and judgment of the filer, and, to the extent it wishes or the commissioner requires, of other insurers or rate service organizations; (b) its interpretation of any statistical data relied upon; (c) descriptions of the actuarial and statistical methods employed; and (d) any other matters deemed relevant by the commissioner or the filer. Subd. 3. Expiration of order. An order issued under subdivision 1 shall expire no more than two years after issue. Subd. 4. Supporting information. Whenever a filing is not accompanied by such information as the commissioner has required under subdivision 2, the commissioner may so inform the insurer and the filing shall be deemed to be made when the information is furnished. History:  1969 c 958 s 10; 1986 c 444; 1986 c 455 s 55
70A.11 DISAPPROVAL OF RATES. Subdivision 1. Order after hearing. If the commissioner finds after a contested case proceeding under chapter 14 that a rate is not in compliance with section 70A.04, the commissioner shall order that its use is to be discontinued and shall order the excess premium plus interest at the rate specified in section 549.09 to be refunded to the policyholder. The amount of the refund, plus interest, must be computed from the commencement date of the contested case hearing on the rate. Interest must be computed as simple interest per annum. Subd. 2. Timing of order. The order under subdivision 1 shall be issued within 60 days after the close of the hearing or within such reasonable time extension as the commissioner may fix. Subd. 3. Approval of substituted rate. No rate replacing a disapproved rate may be used until it has been filed with the commissioner and not disapproved within 60 days thereafter, except that the rate disapproved under subdivision 1, with the consent of the commissioner, or the last previous rate in effect for the insurer may be used for a period of not more than three months pending the approval of a substituted rate. The commissioner's order may include provision for a premium adjustment in a rate charged pending approval of a substituted rate. History:  1969 c 958 s 11; 1986 c 444; 1986 c 455 s 56
70A.12 SPECIAL RESTRICTIONS ON INDIVIDUAL INSURERS. The commissioner may by order require that a particular insurer shall file any or all of its rates and supplementary rate information 30 days prior to their effective date, if and to the extent that the commissioner finds after a hearing that the protection of the interests of its insureds and the public in this state requires closer supervision of its rates because of the insurer's financial condition or rating practices. The commissioner may extend the waiting period for any filing for not to exceed 15 additional days by written notice to the insurer before the 30-day period expires. A filing not disapproved before the expiration of the waiting period shall be deemed to meet the requirements of this chapter, subject to the possibility of subsequent disapproval under section 70A.11. History:  1969 c 958 s 12; 1986 c 444
70A.13 OPERATION AND CONTROL OF RATE SERVICE ORGANIZATIONS. Subdivision 1. License required. No rate service organization shall provide any service relating to the rates of any insurance subject to this chapter, and no insurer shall employ the services of such organization for such purposes unless the organization has obtained a license under section 70A.14. Subd. 2. Availability of services. Every rate service organization shall supply without discrimination any services for which it is licensed in this state to any insurer authorized to do business in this state and offering to pay the fair and usual compensation for the services. History:   1969 c 958 s 13 
70A.14 LICENSING. Subdivision 1. Application. A rate service organization applying for a license as required by section 70A.13, subdivision 1, shall include with its application: (1) a copy of its constitution, charter, articles of organization, agreement, association or incorporation, and a copy of its bylaws, plan of operation and any other rules or regulations governing the conduct of its business; (2) a list of its members and subscribers; (3) the name and address of one or more residents of this state upon whom notices, process affecting it or orders of the commissioner may be served; (4) a statement showing its technical qualifications for acting in the capacity for which it seeks a license; and (5) any other relevant information and documents that the commissioner may require. Subd. 2. Change of circumstances. Every organization which has applied for a license under subdivision 1 shall thereafter promptly notify the commissioner of every material change in the facts or in the documents on which its application was based. Subd. 3. Granting a license. If the commissioner finds that the applicant and the natural persons through whom it acts are competent, trustworthy, and technically qualified to provide the services proposed, and that all requirements of law are met, the commissioner shall issue a license specifying the authorized activity of the applicant. The commissioner shall not issue a license if the proposed activity would tend to create a monopoly or to lessen or destroy price competition. Subd. 4. Duration. Licenses issued pursuant to this section shall remain in effect until the licensee withdraws from the state or until the license is suspended or revoked. The fee for each license shall be $3,000, payable every three years. Subd. 5. Amendments to constitution and bylaws. Any amendment to a document filed under subdivision 1, clause (1), shall be filed within 30 days of its adoption. Failure to comply with this subsection shall be a ground for revocation of the license granted under subdivision 3. History:  1969 c 958 s 14; 1974 c 5 s 2; 1986 c 444; 1987 c 358 s 97; 1999 c 223 art 2 s 9
70A.15 BINDING AGREEMENTS BY INSURERS. No insurer shall assume any obligation to any person other than a policyholder or other companies under common control to use or adhere to certain rates or rules, and no other person shall impose any penalty or other adverse consequence for failure of an insurer to adhere to certain rates or rules. History:   1969 c 958 s 15 
70A.16 JOINT UNDERWRITING OR JOINT REINSURANCE. Subdivision 1. Joint underwriting. Every group, association, or other organization of insurers which engages in joint underwriting shall be subject to all the provisions of this chapter. Subd. 2. Joint reinsurance. Every group, association, or other organization of insurers which engages in joint reinsurance, shall be subject to the provisions of sections 70A.18 and 70A.20 to 70A.22. Subd. 3. Unfair or unreasonable practice. If, after a hearing, the commissioner finds that any activity or practice of any group, association or other organization referred to in subdivision 1 or 2 is unfair, unreasonable, or otherwise inconsistent with the provisions of this chapter, the commissioner shall issue a written order specifying in what respects that activity or practice is unfair, unreasonable or otherwise inconsistent with the provisions of this chapter, and requiring the discontinuance of the activity or practice. History:  1969 c 958 s 16; 1986 c 444
70A.17 RECORDING AND REPORTING OF EXPERIENCE. Subdivision 1. Rules and statistical plans. The commissioner shall promulgate and may modify reasonable rules and statistical plans, reasonably adapted to each of the rating systems used, and which shall thereafter be used by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid in determining whether rates comply with the applicable standards of this chapter. Such rules and plans may also provide for the recording and reporting of expense experience items which are specially applicable to this state and are not susceptible of determination by a prorating of countrywide expense practice. Subd. 2. Uniformity of rules and plans. In promulgating such rules and plans the commissioner shall give due consideration to the rating systems in use in this state and, in order that such rules and plans may be as uniform as is practicable among the several states, to the rules and to the form of the plans used for such rating systems in other states. No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system used by it. Subd. 3. Rating organization assistance. The commissioner may designate one or more rating organizations or other agencies to assist in gathering such experience and making compilations thereof, and such compilations shall be made available, subject to reasonable rules promulgated by the commissioner, to insurers and rating organizations. History:  1969 c 958 s 17; 1986 c 444
70A.18 EXAMINATIONS. Whenever the commissioner deems it necessary in order to become informed about any matter related to the enforcement of this chapter the commissioner may examine or cause to be examined any rate service organization subject to section 70A.13, subdivision 1, any insurer and any group, association or other organization referred to in section 70A.16. The reasonable costs of any such examination shall be paid by the rate service organization, insurer, or group, association or other organization examined, upon presentation to it of a detailed account of such costs. The officers, manager, agents and employees of any such rate service organization, insurer, or group, association or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation. In lieu of any such examination the commissioner may accept the report of an examination made by the insurance supervisory official of another state, pursuant to the laws of such state. History:  1969 c 958 s 18; 1986 c 444
70A.19 INFORMATION TO BE FURNISHED INSUREDS; HEARING AND APPEALS OF INSUREDS. Every rate service organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor, furnish to any insured affected by a rate made by it, or to the authorized representative of that insured, all pertinent information as to that rate. Every rate service organization and every insurer which makes its own rates shall provide within this state reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by an authorized representative, on a written request to review the manner in which that rating system has been applied in connection with the insurance afforded. If the rate service organization or insurer fails to grant or reject any such request within 30 days after it is made, the applicant may proceed in the same manner as if the application had been rejected. Any party affected by the action of a rate service organization or insurer on any such request may, within 30 days after written notice of such action, appeal to the commissioner who, after a hearing held upon not less than ten days' written notice to the appellant and to the rate service organization or insurer, may affirm or reverse its action. History:  1969 c 958 s 19; 1986 c 444
70A.20 FALSE OR MISLEADING INFORMATION. No person or organization shall willfully withhold information from, or knowingly give false or misleading information to the commissioner, any statistical agency designated by the commissioner, any rate service organization, or any insurer, which will affect the rates chargeable under this chapter. History:   1969 c 958 s 20 
70A.21 PENALTIES. Subdivision 1. Violation; willful violation. The commissioner may, if the commissioner finds that any person or organization has violated any provisions of this chapter, impose a penalty of not more than $50 for each violation, and if the commissioner finds such violation to be willful the commissioner may impose a penalty of not more than $500 therefor. Such penalties may be in addition to any other penalty provided by law. Subd. 2. Suspension of license. The commissioner may suspend the license of any rate service organization or insurer which fails to comply with any order within the time limited by such order, or any extension thereof which the commissioner may grant. The commissioner shall not suspend the license of any rate service organization or insurer for failure to comply with an order until the time prescribed for an appeal therefrom has expired or, if an appeal has been taken, until the order has been affirmed. The commissioner may determine when a suspension of license shall become effective and that suspension shall remain in effect for the period fixed, unless the commissioner modifies or rescinds it, or until the order upon which it is based is modified, rescinded or reversed. Subd. 3. Penalty imposed by written order. No penalty shall be imposed, and no license shall be suspended or revoked, except upon a written order of the commissioner, stating the findings made after a hearing held upon not less than ten days' written notice to the person or organization to be affected thereby, specifying the alleged violation or ground of suspension or revocation. History:  1969 c 958 s 21; 1986 c 444
70A.22 HEARINGS, PROCEDURE, AND JUDICIAL REVIEW. Subdivision 1. Request for hearing; hearing; order thereon. Any insurer or rate service organization aggrieved by any order or decision of the commissioner made without a hearing, may, within 30 days after notice of the order to it, make written request to the commissioner for a hearing thereon. The commissioner shall hear the party or parties within 20 days after receipt of the request and shall give not less than ten days' written notice of the time and place of the hearing. Within 15 days after hearing the commissioner shall affirm, reverse or modify the previous action, specifying the reasons therefor. Pending the hearing and decision thereon the commissioner may suspend or postpone the effective date of the previous action. Subd. 2. Formal rules of pleading or evidence not required. Nothing contained in this chapter shall require the observance at any hearing of formal rules of pleading or evidence. Subd. 3. Appeal. Any order or decision of the commissioner shall be subject to appeal in accordance with chapter 14. History:  1969 c 958 s 22; 1983 c 247 s 35; 1986 c 444
70A.23 TRANSITION PROVISIONS. On September 1, 1969, all rates on file with the commissioner and not disapproved may be used without further delay, subject to the provisions of this chapter. History:  1969 c 958 s 23; 1986 c 444
71A.01 POWERS. Subdivision 1. Contracts; excepted risks. Individuals, partnerships, business trusts, and corporations, public or private, of this state, hereby designated subscribers, are hereby authorized to exchange reciprocal or interinsurance contracts with each other, or with individuals, partnerships, business trusts, and corporations, public or private, of other states and countries, providing indemnity among themselves for any loss which may be insured against under other provisions of the laws, excepting life and ocean marine insurance. Subd. 2. Attorney-in-fact. These contracts may be executed by an attorney, agent, or other representative, herein designated attorney, duly authorized and acting for such subscribers. History:  1967 c 395 art 11 s 1; 1980 c 409 s 1
71A.02 REQUIREMENTS; LIMITATIONS. Subdivision 1. Certificate of authority. Each attorney by or through whom are issued any policies of or contracts for indemnity of the character referred to in this chapter shall procure from the commissioner annually a certificate of authority stating that all the requirements of this chapter have been complied with and, upon such compliance and the payment of the fees required, the commissioner shall issue this certificate. Subd. 2. Filing with commissioner. The subscribers so contracting among themselves shall, through their attorney, file with the commissioner a declaration, verified by the oath of the attorney, setting forth: (1) the name or title of the office at which the subscribers propose to exchange these indemnity contracts, which shall not be so similar to any other name or title previously adopted by a similar organization or by any insurance corporation or association as in the opinion of the commissioner is calculated to result in confusion or deception; (2) the kind or kinds of insurance to be effected or exchanged; (3) a copy of the form of policy contract or agreement under or by which the insurance is to be effected or exchanged; (4) a copy of the form of power of attorney or other authority of the attorney under which the insurance is to be effected or exchanged; (5) the location of the office or offices from which these contracts or agreements are to be issued; (6) that applications have been made for indemnity upon at least 100 separate risks aggregating not less than $1,500,000, as represented by executed contracts or bona fide applications, to become concurrently effective, or, in case of liability or compensation insurance covering a total payroll of not less than $1,500,000; (7) that there is on deposit with this attorney and available for the payment of losses an initial sum of not less than the amount of surplus which would be required of a mutual company under section 60A.07, subdivisions 5b and 5c, to become authorized to transact insurance business in this state if it were engaged in those same lines of insurance, provided that after initial authorization has been granted the amount shall thereafter be constantly maintained in an amount equal to that required of a mutual company. In addition, if it is a reciprocal or interinsurance exchange operating on a nonassessable basis, it must establish and maintain a guaranty fund in an amount equal to that which would be required of a mutual company pursuant to section 66A.16, if it were engaged in those same lines of insurance. Subd. 2a. Surplus, application of prior law. Subdivision 2, as amended by Laws 1969, chapter 820, section 1, shall be effective upon enactment, and thereafter all reciprocal insurance associations shall meet the revised requirements of subdivision 2, as amended by Laws 1969, chapter 820, section 1, provided, however, that any reciprocal insurance association authorized to transact a particular kind or kinds of insurance as specified in section 60A.06, may continue to do so without complying with the revised requirements of subdivision 2, as amended by Laws 1969, chapter 820, section 1. After enactment, any reciprocal insurance association which seeks authority to transact an additional kind or kinds of insurance shall, as a condition to the granting of such authority, comply with the revised requirements of subdivision 2, as amended by Laws 1969, chapter 820, section 1, as to such additional kind or kinds of insurance that it is authorized to transact. Subd. 3. Commissioner as agent for service. Concurrently with the filing of the declaration provided for by the terms of subdivision 2, the attorney shall execute and file with the commissioner an instrument in writing for the subscribers, conditioned that upon the issuance of the certificate of authority provided for in subdivision 1, service of process in compliance with section 45.028, subdivision 2, may be had upon the commissioner in all suits in this state arising out of these policies, contracts, or agreements, which service shall be valid and binding upon all subscribers exchanging at any time reciprocal or interinsurance contracts through such attorney. Subd. 4. Maximum indemnity. There shall be filed with the commissioner by such attorney a statement under oath showing the maximum amount of indemnity upon any single risk, and such attorney shall, when and as often as the same shall be required, file with the commissioner a statement verified by oath to the effect that the attorney has examined the commercial rating of these subscribers, as shown by the reference book of a commercial agency having at least 100,000 subscribers, and that from this examination or from other information in the attorney's possession it appears that no subscriber has assumed on any single risk an amount greater than ten percent of the net worth of the subscriber. History:  1967 c 395 art 11 s 2; 1969 c 820 s 1,2; 1986 c 444; 1992 c 564 art 2 s 6
71A.03 UNEARNED PREMIUM RESERVE. Subdivision 1. How calculated. There shall at all times be maintained as a reserve a sum, in cash or convertible securities, equal to 50 percent of the net annual deposits collected and credited to the accounts of the subscriber on policies in force having one year or less to run and pro rata on those for longer periods. Net annual deposits shall be construed to mean the advance payments of subscribers after deducting therefrom the amounts specifically provided in the subscribers' agreements for expenses. Subd. 2. Minimum reserve. These sums shall at no time be less than $25,000 and, if at any time, 50 percent of the deposits, so collected and credited, shall not equal that amount, the subscribers shall make up any deficiency. History:   1967 c 395 art 11 s 3 
71A.04 TAXES. Subdivision 1. Premium tax. The attorney-in-fact shall file with the commissioner of revenue all returns and pay to the commissioner of revenue all amounts required under chapter 297I. Subd. 2.  [Repealed, 2000 c 394 art 2 s 28] History:  1967 c 395 art 11 s 4; 1969 c 1148 s 20; 1986 c 444; 2000 c 394 art 2 s 19; 2008 c 154 art 14 s 2
71A.05 REPORTS; EXAMINATION. Subdivision 1. Annual report. The attorney-in-fact shall make a report to the commissioner for each calendar year on the first day of March showing the financial condition of affairs at the office where the contracts are issued and furnish such additional information and reports as may be required. The attorney-in-fact shall not be required to furnish the names and addresses of any subscribers nor the loss ratio. Subd. 2. Examination. The business affairs and assets of these organizations shall be subject to examination by the commissioner. History:   1967 c 395 art 11 s 5 
71A.06 EXCHANGE OF CONTRACTS. Subdivision 1. Extension of corporate powers. Any corporation now or hereafter organized under the laws of this state shall, in addition to the rights, powers, and franchises specified in its articles of incorporation, have full power and authority to exchange insurance contracts of the kind and character herein mentioned. The right to exchange these contracts is hereby declared to be incidental to the purposes for which the corporations are organized and is as much granted as the rights and powers expressly conferred. Subd. 2. Public corporations. Public corporations may exchange reciprocal or interinsurance contracts only when the issuing exchange has a surplus of $300,000 or more and said contracts are issued without contingent liability. History:   1967 c 395 art 11 s 6 
71A.07 EFFECT OF CHAPTER; EXCLUSIVENESS. Except as herein provided, no law of this state shall apply to the exchange of these indemnity contracts unless such law specifically refers to reciprocals or interinsurance exchanges. History:   1967 c 395 art 11 s 7 
71A.08 VIOLATIONS AND PENALTIES. Subdivision 1. Attorney-in-fact. Any attorney who shall, except for the purpose of applying for a certificate of authority as provided in this chapter, exchange any contracts of indemnity of the kind and character specified in this chapter, or directly or indirectly solicit or negotiate any applications for same without first complying with the provisions of this chapter, is guilty of a misdemeanor; and upon conviction thereof shall be subjected to a fine of not less than $100 nor more than $1,000. Subd. 2. Exchange. In case of the failure of any such reciprocal or interinsurance exchange to comply with any of the provisions of this chapter, it shall be the duty of the commissioner to immediately declare its license revoked, or proceed under chapter 60B or section 60A.052, and, in case of such revocation, the reciprocal or interinsurance exchange shall not be again licensed to transact business in this state for the period of one year from the date of the revocation. History:  1967 c 395 art 11 s 8; 1969 c 708 s 63; 1993 c 13 art 2 s 1
72A.01 SCOPE. This chapter includes certain prohibitions and penalties. Other prohibitions and penalties may be found in other articles of Laws 1967, chapter 395, and other state laws. History:   1967 c 395 art 12 s 1 
72A.02 VIOLATIONS AS TO POLICIES OF INSURANCE. Every company, and every officer and agent of any company, making, issuing, delivering, or tendering any policy of insurance of any kind, or directing any of the same to be done, in willful violation of any of the provisions of law, for a first offense, shall be guilty of a misdemeanor, and for each subsequent offense, of a gross misdemeanor; and, in addition to all other penalties prescribed by law, every company issuing any such policy shall be disqualified from doing any insurance business in this state until the payment of all fines imposed and for one year thereafter. History:   1967 c 395 art 12 s 2 
72A.03 AGENT OF INSURER; PROCURING PREMIUMS BY FRAUD. Every insurance agent who acts for another in negotiating a contract of insurance by an insurance company shall be held to be the company's agent for the purpose of collecting or securing the premiums therefor, whatever conditions or stipulations may be contained in the contract or policy. Any such agent who by fraudulent representations procures payment, or an obligation for the payment, of an insurance premium shall be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. History:  1967 c 395 art 12 s 3; 1986 c 444
72A.04 FALSE STATEMENTS IN APPLICATION. Every solicitor, agent, examining physician, or other person who knowingly or willfully makes a false or fraudulent statement in, or relative to, any application for insurance or membership for any purpose shall be guilty of a gross misdemeanor. History:   1967 c 395 art 12 s 4 
72A.05 FAILURE TO MAKE REPORT OR COMPLY WITH LAW. Every officer and agent of any insurance company required to make any report or perform any act who shall neglect or refuse to comply with such requirement, and every agent, solicitor, or collector of the corporation in this state who fails or neglects to procure from the commissioner a certificate of authority to do such business, or who fails or refuses to comply with, or violates, any provision of the insurance law, shall be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. History:   1967 c 395 art 12 s 5 
72A.061 MANDATORY FILINGS; FAILURE TO COMPLY; PENALTIES. Subdivision 1. Annual statements. Any insurance company licensed to do business in this state, including fraternals, reciprocals and township mutuals, which neglects to file its annual statement in the form prescribed and within the time specified by law shall be subject to a penalty of $100 for each day in default. If, at the end of 45 days, the default has not been corrected, the company shall be given ten days in which to show cause to the commissioner why its license should not be suspended. If the company has not made the requisite showing within the ten-day period, the license and authority of the company may, at the discretion of the commissioner, be suspended during the time the company is in default. Any insurance company, including fraternals, reciprocals, and township mutuals, willfully making a false annual or other required statement shall pay a penalty to the state not to exceed $5,000. Either or both of the monetary penalties imposed by this subdivision may be recovered in a civil action brought by and in the name of the state. Subd. 2. Articles of incorporation; bylaws. Any insurance company licensed to do business in this state, including fraternals and township mutuals, which neglects to file amended bylaws or related amendments within 30 days after date of approval shall be subject to a penalty of $25 for each day in default. Any insurance company licensed to do business in this state, including fraternals and township mutuals, which neglects to file amended articles of incorporation or related amendments within 30 days after date of approval shall be subject to a penalty of $25 for each day in default, provided that foreign insurers shall be allowed 60 days in which to file. If after 90 days the filings required under this subdivision are still in default, the company shall be given ten days in which to show cause why its license should not be suspended. Subd. 3. Other filings. Any insurance company licensed to do business in this state, including fraternals, reciprocals, and township mutuals, which neglects to comply with any other mandatory filing in the form prescribed and within the time specified by law or as specified on the document shall be subject to a penalty of $25 for each day in default. If after 90 days a default has not been corrected, the company shall be given ten days in which to show cause why its license should not be suspended. Subd. 4. Suspension, discretionary powers. Any company which writes new business in this state, including fraternals, reciprocals and township mutuals, while its license is suspended and after it has been notified by the commissioner by a notice mailed to the home office of the company that its license has been suspended shall pay to the state the sum of $25 for each contract of insurance entered into by it after being notified of its license suspension. The notification shall be mailed by registered letter and deemed to have been received by the company at its home office in the usual course of the mails. Subd. 5. Extensions. The commissioner may grant an extension of any filing deadline or requirement specified by this section, on receiving, not less than ten days before the date of default, satisfactory evidence of imminent hardship to the company. Subd. 6. Penalties; deposit to general fund. All penalties recovered pursuant to this section shall be paid into the general fund. History:  1977 c 316 s 1; 1984 c 592 s 71; 1986 c 444; 1991 c 325 art 10 s 10
72A.07 VIOLATIONS OF LAWS RELATING TO AGENTS, PENALTIES. Any person, firm, or corporation violating, or failing to comply with, any of the provisions of sections 60K.30 to 60K.56 and any person who acts in any manner in the negotiation or transaction of unlawful insurance with an insurance company not licensed to do business in the state, or who, as principal or agent, violates any provision of law relating to the negotiation or effecting of contracts of insurance, shall be guilty of a misdemeanor. Upon the filing of a complaint by the commissioner of commerce in a court of competent jurisdiction against any person violating any provisions of this section, the county attorney of the county in which the violation occurred shall prosecute the person. Upon the conviction of any agent of any violation of the provisions of sections 60K.30 to 60K.56, the commissioner shall suspend the authority of the agent to transact any insurance business within the state for a period of not less than three months. Any insurer employing an agent and failing to procure an appointment, as required by sections 60K.30 to 60K.56, or allowing the agent to transact business for it within the state before an appointment has been procured, shall pay the commissioner, for the use of the state, a penalty of $25 for each offense. Each sale of an insurance policy by an agent who is not appointed by an insurance company shall constitute a separate offense, but no insurer shall be required to pay more than $300 in penalties as a result of the activities of a single unappointed agent. In the event of failure to pay a penalty within ten days' after notice from the commissioner, the authority of the insurer to do business in this state shall be revoked by the commissioner until the penalty is paid. No insurer whose authority is revoked shall be readmitted until it shall have complied with all the terms and conditions imposed for admission in the first instance. Any action taken by the commissioner under this section shall be subject to review by the district court of the county in which the office of the commissioner is located. History:  1967 c 395 art 12 s 7; 1977 c 243 s 4; 1983 c 289 s 114 subd 1; 1984 c 592 s 72; 1984 c 655 art 1 s 92; 1992 c 564 art 3 s 25; 2001 c 117 art 2 s 15
72A.071 REBATES. Subdivision 1. Prohibition. Notwithstanding any law to the contrary, insurers and producers are prohibited from knowingly permitting or offering to make or making any life insurance policy or annuity, or policy of accident and sickness insurance, or health plan or other insurance, or agreement as to such contract other than as plainly expressed in the policy issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such policy, any rebate of premiums payable on the policy, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the policy; or giving, or selling, or purchasing or offering to give, sell, or purchase as inducement to such policy or annuity or in connection therewith, any stocks, bonds or other securities of any company or other corporation, association or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the policy. Subd. 2. Practices not considered discrimination or rebates. (a) Nothing in subdivision 1, section 72A.20, subdivision 8 or 9, or section 72A.12, subdivision 3 or 4, shall be construed as including within the definition of discrimination or rebates any of the following practices: (1) in the case of life insurance policies or annuities, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that any such 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 that fairly represents the saving in collection expenses; (3) readjusting the rate of premium for a group insurance policy based on the loss or expense 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) engaging in an arrangement that would not violate United States Code 1972, title 12, section 106, as interpreted by the Board of Governors of the Federal Reserve System, or United States Code, title 12, section 1464(q); or (5) the offer or provision by insurers or producers, by or through employees, affiliates, or third-party representatives, of value-added products or services at no or reduced cost when such products or services are not specified in the policy of insurance if the product or service relates to the insurance coverage and is designed to satisfy one or more of the following: (i) provide loss mitigation or loss control; (ii) reduce claim costs or claim settlement costs; (iii) provide education about liability risks or risk of loss to persons or property; (iv) monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk; (v) enhance health; (vi) enhance financial wellness through items such as education or financial planning services; (vii) provide post-loss services; (viii) incent behavioral changes to improve the health or reduce the risk of death or disability of a customer, a policyholder, potential policyholder, certificate holder, potential certificate holder, insured, potential insured, or applicant; or (ix) assist in the administration of the employee or retiree benefit insurance coverage. (b) The cost to the insurer or producer offering the product or service to a customer must be reasonable in comparison to that customer's premiums or insurance coverage for the policy class. (c) If the insurer or producer is providing the product or service offered, the insurer or producer must ensure that upon request the customer is provided with contact information to assist the customer with questions regarding the product or service. (d) The availability of the value-added product or service must be based on documented objective criteria and offered in a manner that is not unfairly discriminatory. The documented criteria must be maintained by the insurer or producer and produced upon request of the commissioner. (e) If an insurer or producer does not have sufficient evidence but has a good-faith belief that the product or service meets the criteria of paragraph (a), clause (5), items (i) through (ix), the insurer or producer may provide the product or service in a manner that is not unfairly discriminatory as part of a pilot or testing program for no more than one year. An insurer or producer must notify the commissioner of such a pilot or testing program offered to consumers in this state prior to launching and may proceed with the program unless the commissioner objects within 45 days of notice. Subd. 3. Exceptions. (a) An insurer or producer may: (1) offer or give noncash gifts, items, or services, including meals to or charitable donations on behalf of a customer, in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost does not exceed the lesser of five percent of the current or projected policyholder premium or $250 per policy year per term. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase, or renew a policy in exchange for the gift, item, or service; (2) offer or give noncash gifts, items, or services including meals to or charitable donations on behalf of a customer, to commercial or institutional customers in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost is reasonable in comparison to the premium or proposed premium and the cost of the gift or service is not included in any amounts charged to another person or entity. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase, or renew a policy in exchange for the gift, item, or service; and (3) conduct raffles or drawings to the extent permitted by state law, as long as there is no financial cost to entrants to participate, the drawing or raffle does not obligate participants to purchase insurance, the prizes do not exceed the lesser of five percent of the current or projected policyholder premium or $500, and the drawing or raffle is open to the public. The raffle or drawing must be offered in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase, or renew a policy in exchange for the gift, item, or service. (b) An insurer, producer, or representative of either may not offer or provide insurance at no cost as an inducement to the purchase of another policy. History:   2022 c 93 art 2 s 29 
72A.09 VIOLATIONS WHERE OFFENSE IS NOT SPECIFICALLY DESIGNATED. Whoever violates any provision of the insurance law where the nature of the offense is not specifically designated herein shall be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. History:   1967 c 395 art 12 s 9 
72A.10 FAILURE TO APPEAR OR OBSTRUCTING COMMISSIONER. Whoever without justifiable cause neglects, upon due summons, to appear and testify before the commissioner, or obstructs the commissioner, or deputy or assistant commissioner, in an examination of an insurance company, shall be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. History:  1967 c 395 art 12 s 10; 1986 c 444
72A.11 COMPLAINANT ENTITLED TO ONE-HALF OF FINE IN CERTAIN CASES. The person, other than the commissioner, or deputy or assistant commissioner, upon whose complaint a conviction is had for violation of the law prohibiting insurance in or by foreign companies not authorized to do business in this state, shall be entitled to one-half the fine recovered upon sentence therefor. History:   1967 c 395 art 12 s 11 
72A.12 LIFE INSURANCE. Subdivision 1. Issue of prohibited life policies. Every officer or agent of a life insurance company who shall issue any policy in violation of any order or other prohibition by the commissioner made pursuant to law, shall be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. Subd. 2. Misrepresentation by insurer or agent. No life insurance company doing business in this state, and no officer, director or agent thereof, shall issue or circulate, or cause or permit to be issued or circulated, any estimate, illustration, circular or statement of any sort misrepresenting the terms of any policy issued by it or the benefits or advantages promised thereby, or the dividends or shares of surplus to be received thereon, or shall use any name or title of any policy or class of policies misrepresenting the true nature thereof. Any person violating the provisions of this subdivision shall be guilty of a misdemeanor, and the license of any company which shall authorize or permit a violation of this subdivision shall be revoked. Subd. 3. Discrimination in accepting risks. No life insurance company or agent, all other conditions being equal, shall make any discrimination in the acceptance of risks, in rates, premiums, dividends, or benefits of any kind, or by way of rebates, between persons of the same class, or on account of race; and upon request of any person whose application has been rejected, the company shall furnish the rejected applicant, in writing, the reasons therefor, including a certificate of the examining physician that such rejection was not for any racial cause. Every company violating either of the foregoing provisions shall forfeit not less than $500, nor more than $1,000, and every officer, agent, or solicitor violating the same shall be guilty of a gross misdemeanor; and the commissioner shall revoke the license of such company and its agents, and grant no new license within one year thereafter. Subd. 4. Discrimination. (a) No life insurance company doing business in this state shall make or permit any distinction or discrimination in favor of individuals between insurants of the same class and equal expectation of life in the amount or payment of premiums or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company or agent thereof make any contract of insurance or agreement as to such contract other than as plainly expressed in the policy issued thereon. (b) Any violation of the provisions of this subdivision shall be a misdemeanor and punishable as such. Subd. 5.  [Repealed, 2010 c 397 s 20] History:  1967 c 395 art 12 s 12; 1983 c 359 s 1; 1986 c 444; 1992 c 564 art 1 s 54; 2010 c 384 s 30; 2022 c 93 art 2 s 30
72A.125 RENTAL VEHICLE PERSONAL ACCIDENT INSURANCE; SPECIAL REQUIREMENTS. Subdivision 1. Definitions. (a) "Auto rental company" means a corporation, partnership, individual, or other person that is engaged primarily in the renting of motor vehicles at per diem rates. (b) "Rental vehicle personal accident insurance" means accident only insurance providing accidental death benefits, dismemberment benefits and/or reimbursement for medical expenses which is issued by an insurer authorized in this state to issue accident and health insurance. These coverages are nonqualified plans under chapter 62E. (c) "Liability insurance" means insurance that provides coverage, as applicable, to renters and other authorized drivers of rental vehicles for liability arising from the operation of the rental vehicle. At the option of the auto rental company, this coverage may include uninsured or underinsured motorist coverage whether offered separately or in combination with other liability insurance. (d) "Personal effects insurance" means coverage, as applicable, to renters and other rental vehicle occupants for the loss of, or damage to, personal effects which occurs during the rental period. Subd. 2. Sale by auto rental companies. An auto rental company that offers or sells rental vehicle personal accident insurance, personal effects insurance, or liability insurance in this state in conjunction with the rental of a vehicle shall only sell these products if the forms and rates have met the relevant requirements of section 61A.02, 62A.02, or other relevant sections requiring approval of forms and rates taking into account the possible infrequency and severity of loss that may be incurred. An auto rental company offering insurance products for sale shall conduct a training program for its agents or employees, which must be submitted to the commissioner for approval. Sections 60K.30 to 60K.56 do not apply if the persons engaged in the sale of these products are employees of the auto rental company who do not receive commissions or other remuneration for selling the product in addition to their regular compensation. Compensation may not be determined in any part by the sale of insurance products. The auto rental company before engaging in the sale of the product must file with the commissioner the following documents: (1) an appointment of the commissioner as agent for service of process; (2) an agreement that the auto rental company assumes all responsibility for the authorized actions of all unlicensed employees who sell the insurance product on its behalf in conjunction with the rental of its vehicles; (3) an agreement that the auto rental company with respect to itself and its employees will be subject to this chapter regarding the marketing of the insurance products and the conduct of those persons involved in the sale of insurance products in the same manner as if it were a licensed agent. An auto rental company failing to file the documents in clauses (1) to (3) is guilty of an individual violation as to the unlicensed sale of insurance for each sale that occurs after August 1, 1987, until they make the required filings. Each individual sale after August 1, 1987, and prior to the filing required by this section is subject to, in addition to any other penalties allowable by law, up to a $200 per violation fine. Further, the sale of the insurance product by an auto rental company or any employee or agent of the company after August 1, 1987, without having complied with this section shall be deemed to be in acceptance of the provisions of this section. Insurance sold pursuant to this subdivision must be limited in availability to rental vehicle customers though coverage may extend to the customer, other drivers, and passengers using or riding in the rented vehicles; and limited in duration to a period equal to and concurrent with that of the vehicle rental. Persons purchasing rental vehicle personal accident insurance, personal effects insurance, or liability insurance may be provided a certificate summarizing the policy provisions in lieu of a copy of the policy if a copy of the policy is available for inspection at the place of sale and a free copy of the policy may be obtained from the auto rental company's home office. The commissioner may, after a hearing, revoke an auto rental company's right to operate under this section if the company has violated the insurance laws of this state and the revocation is in the public interest. Subd. 3. Collision damage waiver. A "collision damage waiver" is a discharge of the responsibility of the renter or lessee to return the motor vehicle in the same condition as when it was first rented. The waiver is a full and complete discharge of the responsibility to return the vehicle in the same condition as when it was first rented. The waiver may not contain any exclusions except those approved by the commissioner. History:  1987 c 329 s 21; 1987 c 337 s 115; 1988 c 611 s 3; 1992 c 564 art 3 s 26,29; 1999 c 177 s 69; 1999 c 236 s 2,3; 2001 c 117 art 2 s 16
72A.13 ACCIDENT AND HEALTH INSURANCE, VIOLATIONS OF CERTAIN SECTIONS. Subdivision 1. Penalties. Any company, corporation, association, society, or other insurer, or any officer or agent thereof, which or who solicits, issues or delivers to any person in this state any policy in violation of the provisions of sections 60A.06, subdivision 3 or 62A.01 to 62A.10, may be punished by a fine of not more than $200 for each offense, and the commissioner may revoke the license of any company, corporation, association, society, or other insurer of another state or country, or of the agent thereof, which or who willfully violates any provision of sections 60A.06, subdivision 3 or 62A.01 to 62A.10. Subd. 2.  [Repealed, 1989 c 330 s 37] Subd. 3.  [Repealed, 1992 c 564 art 1 s 55] History:  1967 c 395 art 12 s 13; 1980 c 436 s 1; 1982 c 424 s 130; 1986 c 455 s 57; 1987 c 329 s 21
72A.135 FAILURE TO FOLLOW DIVIDEND AND PRICING POLICY; PENALTIES. An insurer failing to file and adhere to the plan required by section 61A.03, subdivision 2, paragraph (h), is subject to a civil penalty of not more than $5,000 for each violation. History:   1983 c 292 s 3 
72A.139 USE OF GENETIC TESTS. Subdivision 1. Name and citation. This section shall be known and may be cited as the "Genetic Discrimination Act." Subd. 2. Definitions. (a) As used in this section, "commissioner" means the commissioner of commerce for health plan companies and other insurers regulated by that commissioner and the commissioner of health for health plan companies regulated by that commissioner. (b) As used in this section, a "genetic test" means a presymptomatic test of a person's genes, gene products, or chromosomes for the purpose of determining the presence or absence of a gene or genes that exhibit abnormalities, defects, or deficiencies, including carrier status, that are known to be the cause of a disease or disorder, or are determined to be associated with a statistically increased risk of development of a disease or disorder. "Genetic test" does not include a cholesterol test or other test not conducted for the purpose of determining the presence or absence of a person's gene or genes. (c) As used in this section, "health plan" has the meaning given in section 62Q.01, subdivision 3. (d) As used in this section, "health plan company" has the meaning given in section 62Q.01, subdivision 4. (e) As used in this section, "individual" means an applicant for coverage or a person already covered by the health plan company or other insurer. Subd. 3. Prohibited acts; health plan companies. A health plan company, in determining eligibility for coverage, establishing premiums, limiting coverage, renewing coverage, or any other underwriting decision, shall not, in connection with the offer, sale, or renewal of a health plan: (1) require or request an individual or a blood relative of the individual to take a genetic test; (2) make any inquiry to determine whether an individual or a blood relative of the individual has taken or refused a genetic test, or what the results of any such test were; (3) take into consideration the fact that a genetic test was taken or refused by an individual or blood relative of the individual; or (4) take into consideration the results of a genetic test taken by an individual or a blood relative of the individual. Subd. 4. Application. Subdivisions 5, 6, and 7 apply only to a life insurance company or fraternal benefit society requiring a genetic test for the purpose of determining insurability under a policy of life insurance. Subd. 5. Informed consent. If an individual agrees to take a genetic test, the life insurance company or fraternal benefit society shall obtain the individual's written informed consent for the test. Written informed consent must include, at a minimum, a description of the specific test to be performed; its purpose, potential uses, and limitations; the meaning of its results; and the right to confidential treatment of the results. The written informed consent must inform the individual that the individual should consider consulting with a genetic counselor prior to taking the test and must state whether the insurer will pay for any such consultation. An informed consent disclosure form must be approved by the commissioner prior to its use. Subd. 6. Notification. The life insurance company or fraternal benefit society shall notify an individual of a genetic test result by notifying the individual or the individual's designated physician. If the individual tested has not given written consent authorizing a physician to receive the test results, the individual must be urged, at the time that the individual is informed of the genetic test result described in this subdivision, to contact a genetic counselor or other health care professional. Subd. 7. Payment for test. A life insurance company or fraternal benefit society shall not require an individual to submit to a genetic test unless the cost of the test is paid by the life insurance company or fraternal benefit society. Subd. 8. Enforcement. A violation of this section is subject to the investigative and enforcement authority of the commissioner, who shall enforce this section. History:   1995 c 251 s 1 
72A.15 PENALTY FOR VIOLATION OF LAW PROVIDING FOR INSURANCE IN UNLICENSED COMPANIES. Every person licensed to procure insurance in an unlicensed foreign company who fails to file the affidavit and statement required in such case or who willfully makes a false affidavit or statement shall forfeit the license and be guilty, for the first offense, of a misdemeanor, and for each subsequent offense, of a gross misdemeanor. History:  1967 c 395 art 12 s 15; 1986 c 444
72A.16 MUTUAL COMPANIES. Subdivision 1. Unlawful procurement or use of proxy. Every officer or agent of a domestic mutual insurance company who shall solicit, receive, procure to be obtained, or use, a proxy vote in violation of any provision of law shall be guilty of a gross misdemeanor. Subd. 2. Guaranty against assessment. Every director, officer, or agent of an insurance company who officially or privately gives a guaranty to a policyholder thereof against an assessment for which the policyholder would otherwise be liable shall be guilty of a misdemeanor. History:  1967 c 395 art 12 s 16; 1986 c 444
72A.17 PURPOSE OF SECTIONS 72A.17 TO 72A.32. The purpose of sections 72A.17 to 72A.32 is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945 (Public Law 15, 79th Congress), by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined. History:   1967 c 395 art 12 s 17 
72A.18 DEFINITIONS. Subdivision 1. General. Unless the context clearly indicates otherwise, the following terms, when used in sections 72A.17 to 72A.32, shall have the meanings respectively ascribed to them in this section. Subd. 2. Person. "Person" means any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, or any other legal entity, engaged in the business of insurance, including an agent, a solicitor, or an adjuster and for the purposes of sections 72A.31 and 72A.32 "person" shall in addition mean any person, firm or corporation even though not engaged in the business of insurance. History:   1967 c 395 art 12 s 18 
72A.19 UNFAIR METHODS AND UNFAIR OR DECEPTIVE ACTS AND PRACTICES. Subdivision 1. Prohibition. No person shall engage in this state in any trade practice which is defined in sections 72A.17 to 72A.32 as or determined pursuant to sections 72A.17 to 72A.32 to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. Subd. 2. Rulemaking. The commissioner may, in accordance with chapter 14, promulgate reasonable rules as the commissioner deems necessary to enforce and administer the provisions of this chapter. History:  1967 c 395 art 12 s 19; 1980 c 436 s 2; 1982 c 424 s 130; 1985 c 248 s 70; 1986 c 444
72A.20 METHODS, ACTS, AND PRACTICES WHICH ARE DEFINED AS UNFAIR OR DECEPTIVE. Subdivision 1. Misrepresentations and false advertising of policy contracts. Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or making any false or misleading statement as to the dividends or share of surplus previously paid on similar policies, or making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or title of any policy or class of policies misrepresenting the true nature thereof, or making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice in the business of insurance. Subd. 2. False information and advertising generally. Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station, or in any other way, an advertisement, announcement, or statement, containing any assertion, representation, or statement with respect to the business of insurance, or with respect to any person in the conduct of the person's insurance business, which is untrue, deceptive, or misleading, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 3. Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 4. Boycott, coercion, and intimidation. Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation, resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 4a.  [Renumbered 72A.201, subd 4a] Subd. 5. False financial statements. Filing with any supervisory or other public official, or making, publishing, disseminating, circulating, or delivering to any person, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of financial condition of an insurer with intent to deceive, shall constitute an unfair method of competition and an unfair and deceptive act or practice in the insurance business. Subd. 6. False entries. Making any false entry in any book, report, or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, willfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report, or statement of such insurer, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 7. Stock operations and advisory board contracts. Issuing or delivering, or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 8. Discrimination. (a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract or in making or permitting the rejection of an individual's application for life insurance coverage, as well as the determination of the rate class for such individual, on the basis of a disability, shall constitute an unfair method of competition and an unfair and deceptive act or practice, unless the claims experience and actuarial projections and other data establish significant and substantial differences in class rates because of the disability. (b) Refusing to insure or refusing to continue to insure the life of a member of a reserve component of the armed forces of the United States, or the National Guard due to that person's status as a member, or duty assignment while a member of any of these military organizations, constitutes an unfair method of competition and an unfair and deceptive act or practice unless the individual has received an order for active duty. (c) Refusing to reinstate coverage for the insured or any covered dependents under an individual or group life or health insurance policy or contract of a member of a reserve component of the armed forces of the United States or the National Guard whose coverage or dependent coverage was terminated, canceled, or nonrenewed while that person was on active duty constitutes an unfair method of competition and an unfair and deceptive act or practice. For purposes of paragraphs (a) to (c), "health insurance policy or contract" means any policy, contract, or certificate providing benefits regulated under chapter 62A, 62C, 62D, or 64B. For purposes of reinstatement of an individual policy, the person shall apply for reinstatement within 90 days after removal from active duty. The reinstated coverage must not contain any new preexisting condition or other exclusion or limitation, except a condition determined by the Veterans Administration to be a disability incurred or aggravated in the line of duty. The remainder of a preexisting condition limitation that was not satisfied before the coverage was terminated may be applied once the person returns and coverage is reinstated. Reinstatement is effective upon the payment of any required premiums. (d) Refusing to offer, sell, or renew coverage; limiting coverage; or charging a rate different from that normally charged for the same coverage under a life insurance policy or health plan because the applicant who is also the proposed insured has been or is a victim of domestic abuse is an unfair method of competition and an unfair and deceptive act or practice. Nothing in this paragraph prevents an insurer from underwriting a risk on the basis of the physical or mental history of an individual if the insurer does not take into consideration whether the individual's condition was caused by an act of domestic abuse. For purposes of this paragraph, "domestic abuse" has the meaning given in section 518B.01, subdivision 2; and "health plan" has the meaning given in section 62Q.01, subdivision 3, and includes the coverages referred to in section 62A.011, subdivision 3, clauses (1), (7), (9), and (10). Subd. 9. Discrimination between individuals of the same class. Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever, or in making or permitting the rejection of an individual's application for accident or health insurance coverage, as well as the determination of the rate class for such individual, on the basis of a disability, shall constitute an unfair method of competition and an unfair and deceptive act or practice, unless the claims experience and actuarial projections and other data establish significant and substantial differences in class rates because of the disability. Subd. 10.  MS 2020 [Repealed, 2022 c 93 art 2 s 43] [See Note.] Subd. 11. Application to certain sections. Violating any provision of the following sections of this chapter not set forth in this section shall constitute an unfair method of competition and an unfair and deceptive act or practice: sections 72A.12, subdivisions 2, 3, and 4, 72A.16, subdivision 2, 72A.03 and 72A.04, 72A.071, 72A.201, and 72A.49 to 72A.505. Subd. 12. Unfair service.  Causing or permitting with such frequency to indicate a general business practice any unfair, deceptive, or fraudulent act concerning any claim or complaint of an insured or claimant including, but not limited to, the following practices: (1) misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; (2) failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies; (3) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; (4) refusing to pay claims without conducting a reasonable investigation based upon all available information; (5) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; (6) not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear; (7) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds; (8) attempting to settle a claim for less than the amount to which reasonable persons would have believed they were entitled by reference to written or printed advertising material accompanying or made part of an application; (9) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured; (10) making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made; (11) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; (12) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; (13) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; (14) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; (15) requiring an insured to provide information or documentation that is or would be dated more than five years prior to or five years after the date of a fire loss, except for proof of ownership of the damaged property; (16) stating or implying to an insured that filing a claim related to the I-35W bridge collapse for no-fault motor vehicle insurance benefits would or may result in cancellation or nonrenewal of the insured's policy or in a surcharge or other future increase in premium rates, when any such consequence of filing the claim would be prohibited by law; (17) failing to promptly inform an insured who files a claim related to the I-35W bridge collapse and described in section 65B.133, subdivision 5a, of the provisions of that law, both orally and in writing. Subd. 12a.  [Renumbered 72A.201] Subd. 13. Refusal to renew. Refusing to renew, declining to offer or write, or charging differential rates for an equivalent amount of homeowner's insurance coverage, as defined by section 65A.27, for property located in a town or statutory or home rule charter city, in which the insurer offers to sell or writes homeowner's insurance, solely because: (a) of the geographic area in which the property is located; (b) of the age of the primary structure sought to be insured; (c) the insured or prospective insured was denied coverage of the property by another insurer, whether by cancellation, nonrenewal or declination to offer coverage, for a reason other than those specified in section 65A.01, subdivision 3a, clauses (a) to (e); (d) the property of the insured or prospective insured has been insured under the Minnesota FAIR Plan Act, shall constitute an unfair method of competition and an unfair and deceptive act or practice; or (e) the insured has inquired about coverage for a hypothetical claim or has made an inquiry to the insured's agent regarding a potential claim. This subdivision prohibits an insurer from filing or charging different rates for different zip code areas within the same town or statutory or home rule charter city. This subdivision shall not prohibit the insurer from applying underwriting or rating standards which the insurer applies generally in all other locations in the state and which are not specifically prohibited by clauses (a) to (e). Such underwriting or rating standards shall specifically include but not be limited to standards based upon the proximity of the insured property to an extraordinary hazard or based upon the quality or availability of fire protection services or based upon the density or concentration of the insurer's risks. Clause (b) shall not prohibit the use of rating standards based upon the age of the insured structure's plumbing, electrical, heating or cooling system or other part of the structure, the age of which affects the risk of loss. Any insurer's failure to comply with section 65A.29, subdivisions 2 to 4, either (1) by failing to give an insured or applicant the required notice or statement or (2) by failing to state specifically a bona fide underwriting or other reason for the refusal to write shall create a presumption that the insurer has violated this subdivision. Subd. 14. Application form refusal. An insurance agent refusing to supply a requested application form for homeowner's insurance with any insurer whom the agent represents or refusing to transmit forthwith any completed application form to the insurer, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 15.  MS 2020 [Repealed, 2022 c 93 art 2 s 43] [See Note.] Subd. 16. Discrimination based on sex or marital status. Refusing to insure, refusing to continue to insure, refusing to offer or submit an application for coverage, or limiting the amount of coverage available to an individual because of the sex or marital status of the individual; however, nothing in this subsection prohibits an insurer from taking marital status into account for the purpose of defining persons eligible for dependents' benefits. Subd. 17. Return of premiums. (a) Refusing, upon surrender of an individual policy of life insurance in the case of the insured's death, or in the case of a surrender prior to death, of an individual insurance policy not covered by the standard nonforfeiture laws under section 61A.24, to refund to the owner all unearned premiums paid on the policy covering the insured as of the time of the insured's death or surrender if the unearned premium is for a period of more than one month. The return of unearned premium must be delivered to the insured within 30 days following receipt by the insurer of the insured's request for cancellation. (b) Refusing, upon termination or cancellation of a policy of automobile insurance under section 65B.14, subdivision 2, or a policy of homeowner's insurance under section 65A.27, subdivision 4, or a policy of accident and sickness insurance under section 62A.01, or a policy of comprehensive health insurance under chapter 62E, to refund to the insured all unearned premiums paid on the policy covering the insured as of the time of the termination or cancellation if the unearned premium is for a period of more than one month. The return of unearned premium must be delivered to the insured within 30 days following receipt by the insurer of the insured's request for cancellation. (c) This subdivision does not apply to policies of insurance providing coverage only for motorcycles or other seasonally rated or limited use vehicles where the rate is reduced to reflect seasonal or limited use. (d) For purposes of this section, a premium is unearned during the period of time the insurer has not been exposed to any risk of loss. Except for premiums for motorcycle coverage or other seasonally rated or limited use vehicles where the rate is reduced to reflect seasonal or limited use, the unearned premium is determined by multiplying the premium by the fraction that results from dividing the period of time from the date of termination to the date the next scheduled premium is due by the period of time for which the premium was paid. (e) The owner may cancel a policy referred to in this section at any time during the policy period. This provision supersedes any inconsistent provision of law or any inconsistent policy provision. Subd. 18. Improper business practices. (a) Improperly withholding, misappropriating, or converting any money belonging to a policyholder, beneficiary, or other person when received in the course of the insurance business; or (b) engaging in fraudulent, coercive, or dishonest practices in connection with the insurance business, shall constitute an unfair method of competition and an unfair and deceptive act or practice. Subd. 19. Support for underwriting standards. No life or health insurance company doing business in this state shall engage in any selection or underwriting process unless the insurance company establishes beforehand substantial data, actuarial projections, or claims experience which support the underwriting standards used by the insurance company. The data, projections, or claims experience used to support the selection or underwriting process is not limited to only that of the company. The experience, projections, or data of other companies or a rate service organization may be used as well. Subd. 20. Contact with government. An insurance company may not terminate or otherwise penalize an insurance agent solely because the agent contacted any government department or agency regarding a problem that the agent or an insured may be having with an insurance company. For purposes of this section, "government department or agency" includes the executive, legislative, and judicial branches of government as stated in article III of the constitution. Subd. 21. Prohibited selection or underwriting practice. No insurance company doing business in this state shall engage in any selection or underwriting practice that is arbitrary, capricious, or unfairly discriminatory. Subd. 22. Limitations on health care providers. (a) No insurer providing benefits under the Minnesota No-Fault Automobile Insurance Act or a plan authorized by sections 471.617 or 471.98 to 471.982 may limit the type of licensed health care provider who may provide treatment for covered conditions under a policy so long as the services provided are within the scope of licensure for the provider. The insurer may not exclude a specific method of treatment for a covered condition if that exclusion has the effect of excluding a specific type of licensed health care provider from treating a covered condition. (b) This subdivision does not limit the right of an insurer to contract with individual members of any type of licensed health care provider to the exclusion of other members of the group, nor shall it limit the right to the insurer to exclude coverage for a type of treatment if the insurer can show the treatment is not medically necessary or is not medically appropriate. Subd. 23. Discrimination in automobile insurance policies. (a) No insurer that offers an automobile insurance policy in this state shall: (1) use the employment status of the applicant as an underwriting standard or guideline; or (2) deny coverage to a policyholder for the same reason. (b) No insurer that offers an automobile insurance policy in this state shall: (1) use the applicant's status as a residential tenant, as the term is defined in section 504B.001, subdivision 12, as an underwriting standard or guideline; or (2) deny coverage to a policyholder for the same reason; or (3) make any discrimination in offering or establishing rates, premiums, dividends, or benefits of any kind, or by way of rebate, for the same reason. (c) No insurer that offers an automobile insurance policy in this state shall: (1) use the failure of the applicant to have an automobile policy in force during any period of time before the application is made as an underwriting standard or guideline; or (2) deny coverage to a policyholder for the same reason. Paragraph (c) does not apply if the applicant was required by law to maintain automobile insurance coverage and failed to do so. An insurer may require reasonable proof that the applicant did not fail to maintain this coverage. The insurer is not required to accept the mere lack of a conviction or citation for failure to maintain this coverage as proof of failure to maintain coverage. The insurer must provide the applicant with information identifying the documentation that is required to establish reasonable proof that the applicant did not fail to maintain the coverage. (d) No insurer that offers an automobile insurance policy in this state shall use an applicant's prior claims for benefits paid under section 65B.44 as an underwriting standard or guideline if the applicant was 50 percent or less negligent in the accident or accidents causing the claims. (e) No insurer shall refuse to issue any standard or preferred policy of motor vehicle insurance or make any discrimination in the acceptance of risks, in rates, premiums, dividends, or benefits of any kind, or by way of rebate: (1) between persons of the same class, or (2) on account of race, or (3) on account of physical disability if the disability is compensated for by special training, equipment, prosthetic device, corrective lenses, or medication and if the physically disabled person: (i) is licensed by the Department of Public Safety to operate a motor vehicle in this state, and (ii) operates only vehicles that are equipped with auxiliary devices and equipment necessary for safe and effective operation by the disabled person, or (4) on account of marital dissolution. Subd. 24. Cancellations and nonrenewals. (a) No insurer shall, within one year after default in the payment of any premium on an individual life insurance policy, declare the individual life insurance policy to be canceled or nonrenewed for nonpayment of premium unless it mails or delivers to the policy owner, at the policy owner's last known address, at least 30 days before lapse, final notice of the cancellation or nonrenewal and the effective date of the cancellation or nonrenewal. For purposes of this subdivision, "individual life insurance policy" includes policies in default on or after August 1, 2011. (b) No insurer on an individual health policy or on an individual nonprofit health service plan corporation subscriber contract shall cancel or fail to renew the policy or contract for nonpayment of premium unless it mails or delivers to the named policy owner or named contract owner, at the policy or subscriber contract owner's last known address, at least 30 days before lapse, final notice of the cancellation or nonrenewal. If the named insured is not the policy or subscriber contract owner of the individual health policy or the individual nonprofit health service plan subscriber contract, the notice required by this subdivision must also be sent to the named insured at the named insured's last known address. (c) Proof of mailing of the notice of lapse under paragraph (a) or (b) 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. (d) This subdivision does not apply to a life or health insurance policy or contract upon which premiums are paid at a monthly interval or less and that contains any grace period required by statute for the payment of premiums during which time the insurance continues in force. Subd. 25. Use of statements of a minor. No statement of a minor or information obtained by an insurer or a representative of an insurer from a minor may be used in any manner in regard to a claim unless the parent or guardian of the minor has granted permission for the minor to be interviewed or the minor's statement to be taken. Subd. 26. Loss experience. An insurer shall without cost to the insured provide an insured with the loss or claims experience of that insured for the current policy period and for the two policy periods preceding the current one for which the insurer has provided coverage, within 30 days of a request for the information by the policyholder. Whenever reporting loss experience data, actual claims paid on behalf of the insured must be reported separately from claims incurred but not paid, pooling charges for catastrophic claim protection, and any other administrative fees or charges that may be charged as an incurred claim expense. Claims experience data must be provided to the insured in accordance with state and federal requirements regarding the confidentiality of medical data. The insurer shall not be responsible for providing information without cost more often than once in a 12-month period. The insurer is not required to provide the information if the policy covers the employee of more than one employer and the information is not maintained separately for each employer and not all employers request the data. An insurer, health maintenance organization, or a third-party administrator may not request more than three years of loss or claims experience as a condition of submitting an application or providing coverage. This subdivision only applies to group life policies and group health policies. Subd. 27. Solicitations and sales of insurance products to borrowers. (a) A loan officer, a loan representative, or other person involved in taking or processing a loan may not solicit an insurance product, except for credit life, credit disability, credit involuntary unemployment, mortgage life, mortgage accidental death, or mortgage disability, and except for life insurance when offered in lieu of credit life insurance, from the completion of the initial loan application, as defined in the federal Equal Credit Opportunity Act, United States Code, title 15, sections 1691 to 1691f, and any regulations adopted under those sections, until after the closing of the loan transaction. (b) This subdivision applies only to loan transactions covered by the federal Truth-in-Lending Act, United States Code, title 15, sections 1601 to 1666j, and any regulations adopted under those sections. (c) This subdivision does not apply to sales of title insurance, homeowner's insurance, a package homeowner's-automobile insurance product, automobile insurance, or a similar insurance product, required to perfect title to, or protect, property for which a security interest will be taken if the product is required as a condition of the loan. (d) Nothing in this subdivision prohibits the solicitation or sale of any insurance product by means of mass communication. Subd. 28. Conversion fees prohibited. An issuer providing health coverage through conversion policies, plans, or contracts shall not impose a fee or charge, other than the premium, for issuing these policies, plans, or contracts. Subd. 29. HIV tests; crime victims and emergency medical service personnel. No insurer regulated under chapter 61A, 62B, or 62S, or providing health, medical, hospitalization, long-term care insurance, or accident and sickness insurance regulated under chapter 62A, or nonprofit health service plan corporation regulated under chapter 62C, health maintenance organization regulated under chapter 62D, or fraternal benefit society regulated under chapter 64B, may: (1) use the results of a test to determine the presence of the human immunodeficiency virus (HIV) antibody performed on an offender under section 611A.19 or performed on a crime victim who was exposed to or had contact with an offender's bodily fluids during commission of a crime that was reported to law enforcement officials, in order to make an underwriting decision, cancel, fail to renew, or take any other action with respect to a policy, plan, certificate, or contract; (2) use the results of a test to determine the presence of a blood-borne pathogen performed on an individual according to sections 144.7401 to 144.7415, 241.33 to 241.342, or 246.71 to 246.722 in order to make an underwriting decision, cancel, fail to renew, or take any other action with respect to a policy, plan, certificate, or contract; or (3) ask an applicant for coverage or a person already covered whether the person has: (i) had a test performed for the reason set forth in clause (1) or (2); or (ii) been the victim of an assault or any other crime which involves bodily contact with the offender. This subdivision does not affect tests conducted for purposes other than those described in clause (1) or (2), including any test to determine the presence of a blood-borne pathogen if such test was performed at the insurer's direction as part of the insurer's normal underwriting requirements. Subd. 29a. HIV tests; vaccine research. (a) No insurer regulated under chapter 61A or 62B, or providing health, medical, hospitalization, or accident and sickness insurance regulated under chapter 62A, or nonprofit health services corporation regulated under chapter 62C, health maintenance organization regulated under chapter 62D, or fraternal benefit society regulated under chapter 64B, may make an underwriting decision, cancel, fail to renew, or take any other action with respect to a policy, plan, certificate, or contract based solely on the fact of a person's participation in a human immunodeficiency virus (HIV) vaccine clinical trial. (b) If a test to determine the presence of the HIV antibody is performed at the insurer's direction, as part of the insurer's normal underwriting requirements or on any other basis, and an applicant or covered person is a participant or former participant in a vaccine clinical trial and tests positive for the HIV antibody in the insurer-directed test, the person shall disclose the person's status as a participant or former participant in a vaccine clinical trial and provide the insurance company with certification from the trial sponsor of the person's participation or former participation in the vaccine trial. Upon that notification, an insurer shall stay any adverse decision or refrain from making an underwriting decision to cancel, fail to renew, or take any other action based solely on the positive test result until the insurer obtains a confidential certificate from the sponsor of the trial verifying the person's HIV status. If the confidential certificate indicates that the person's HIV antibodies are a result of exposure to the vaccine, that the person does not have the HIV virus, and that the person did not test positive for the HIV virus in any test administered by the trial sponsor prior to entering the vaccine clinical trial, the insurer shall ignore the presence of the HIV antibody in the insurer-directed test. (c) This subdivision does not affect any tests to determine the presence of the HIV antibody, except as provided under paragraph (b). (d) This subdivision does not apply to persons who are confirmed as having the HIV virus. (e) For purposes of this subdivision, "vaccine clinical trial" means a clinical trial conducted by a sponsor under an investigational new drug application as provided by Code of Federal Regulations, title 21, section 312. "Sponsor" means the hospital, clinic, or health care professional that is conducting the vaccine clinical trial. Subd. 30. Records retention. An insurer shall retain copies of all underwriting documents, policy forms, and applications for three years from the effective date of the policy. An insurer shall retain all claim files and documentation related to a claim for three years from the date the claim was paid or denied. This subdivision does not relieve the insurer of its obligation to produce these documents to the department after the retention period has expired in connection with an enforcement action or administrative proceeding against the insurer from whom the documents are requested, if the insurer has retained the documents. Records required to be retained by this section may be retained in paper, photograph, microprocess, magnetic, mechanical, or electronic media, or by any process which accurately reproduces or forms a durable medium for the reproduction of a record. Subd. 31. Reasonable, adequate, and not predatory premiums. Premiums charged by a health plan company, as defined in section 62Q.01, shall be reasonable, adequate, and not predatory in relation to the benefits, considering actuarial projection of the cost of providing or paying for the covered health services, considering the costs of administration, and in relation to the reserves and surplus required by law. Subd. 32. Unfair health risk avoidance. No insurer or health plan company may design a network of providers, policies on access to providers, or marketing strategy in such a way as to discourage enrollment by individuals or groups whose health care needs are perceived as likely to be more expensive than the average. This subdivision does not prohibit underwriting and rating practices that comply with Minnesota law. Subd. 33. Prohibition of inappropriate incentives. No insurer or health plan company may give any financial incentive to a health care provider based solely on the number of services denied or referrals not authorized by the provider. This subdivision does not prohibit capitation or other compensation methods that serve to hold health care providers financially accountable for the cost of caring for a patient population. Subd. 34. Suitability of insurance for customer. In recommending or issuing life, endowment, individual accident and sickness, long-term care, annuity, life-endowment, or Medicare supplement insurance to a customer, an insurer, either directly or through its agent, must have reasonable grounds for believing that the recommendation is suitable for the customer. In the case of group insurance marketed on a direct response basis without the use of direct agent contact, this subdivision is satisfied if the insurer has reasonable grounds to believe that the insurance offered is generally suitable for the group to whom the offer is made. Subd. 35. Determination of health plan policy limits. Any health plan under section 62A.011, subdivision 3, that includes a specific policy limit within its insurance policy, certificate, or subscriber agreement shall calculate the policy limit by using the amount actually paid on behalf of the insured, subscriber, or dependents for services covered under the policy, subscriber agreement, or certificate unless the amount paid is greater than the billed charge. This provision does not permit the application of a specific policy limit within a health plan where the limit is prohibited under the Affordable Care Act as defined in section 62A.011, subdivision 1a. Subd. 36. Limitations on use of credit information. (a) No insurer or group of affiliated insurers may reject, cancel, or nonrenew a policy of private passenger motor vehicle insurance as defined under section 65B.01 or a policy of homeowner's insurance as defined under section 65A.27, for any person in whole or in part on the basis of credit information, including a credit reporting product known as a "credit score" or "insurance score," without consideration and inclusion of any other applicable underwriting factor. (b) If credit information, credit scoring, or insurance scoring is to be used in underwriting, the insurer must disclose to the consumer that credit information will be obtained and used as part of the insurance underwriting process. (c) Insurance inquiries and non-consumer-initiated inquiries must not be used as part of the credit scoring or insurance scoring process. (d) If a credit score, insurance score, or other credit information relating to a consumer, with respect to the types of insurance referred to in paragraph (a), is adversely impacted or cannot be generated because of the absence of a credit history, the insurer must exclude the use of credit as a factor in the decision to reject, cancel, or nonrenew. (e) Insurers must upon the request of a policyholder reevaluate the policyholder's score. Any change in premium resulting from the reevaluation must be effective upon the renewal of the policy. An insurer is not required to reevaluate a policyholder's score pursuant to this paragraph more than twice in any given calendar year. (f) Insurers must upon request of the applicant or policyholder provide reasonable underwriting exceptions based upon prior credit histories for persons whose credit information is unduly influenced by expenses related to a catastrophic injury or illness, temporary loss of employment, or the death of an immediate family member. The insurer may require reasonable documentation of these events prior to granting an exception. (g) A credit scoring or insurance scoring methodology must not be used by an insurer if the credit scoring or insurance scoring methodology incorporates the gender, race, nationality, or religion of an insured or applicant. (h) Insurers that employ a credit scoring or insurance scoring system in underwriting of coverage described in paragraph (a) must have on file with the commissioner: (1) the insurer's credit scoring or insurance scoring methodology; and (2) information that supports the insurer's use of a credit score or insurance score as an underwriting criterion. (i) Insurers described in paragraph (h) shall file the required information with the commissioner within 120 days of August 1, 2002, or prior to implementation of a credit scoring or insurance scoring system by the insurer, if that date is later. (j) Information provided by, or on behalf of, an insurer to the commissioner under this subdivision is trade secret information under section 13.37. Subd. 37. Electronic transmission of required information. (a) A health carrier, as defined in section 62A.011, subdivision 2, is not in violation of this chapter for electronically transmitting or electronically making available information otherwise required to be delivered in writing under chapters 62A to 62Q and 72A to an enrollee as defined in section 62Q.01, subdivision 2b, or to a health plan as defined in paragraph (b), and with the requirements of those chapters if the following conditions are met: (1) the health carrier informs the group policyholder or the enrollee or both that electronic transmission or access is available and, at the discretion of the health carrier, the enrollee is given one of the following options: (i) electronic transmission or access will occur only if the group policyholder or the enrollee or both affirmatively requests to the health carrier that the required information be electronically transmitted or available and a record of that request is retained by the health carrier; or (ii) electronic transmission or access will automatically occur if the group policyholder or the enrollee or both has not opted out of that manner of transmission by request to the health carrier and requested that the information be provided in writing. If the group policyholder or the enrollee or both opts out of electronic transmission, a record of that request must be retained by the health carrier; (2) the group policyholder or the enrollee or both is allowed to withdraw the request at any time; (3) if the information transmitted electronically contains individually identifiable data, it must be transmitted to a secured mailbox. If the information made available electronically contains individually identifiable data, it must be made available at a password-protected secured website; (4) the group policyholder or the enrollee or both is provided a customer service number on the enrollee's member card that may be called to request a written copy of the document; and (5) the electronic transmission or electronic availability meets all other requirements of this chapter including, but not limited to, size of the typeface and any required time frames for distribution. (b) For the purpose of this section, "health plan" means a health plan as defined in section 62A.011 or a policy of accident and sickness insurance as defined in section 62A.01. Subd. 38. Unfair claims service; service contracts. No person shall, in connection with a service contract regulated under chapter 59B: (1) attempt to settle claims on the basis of an application or any other material document which was altered without notice to, or knowledge or consent of, the service contract holder; (2) make a material misrepresentation to the service contract holder for the purpose and with the intent of effecting settlement of the claims, loss, or damage under the contract on less favorable terms than those provided in, and contemplated by, the contract; or (3) commit or perform with such frequency as to indicate a general business practice any of the following practices: (i) failure to properly investigate claims; (ii) misrepresentation of pertinent facts or contract provisions relating to coverages at issue; (iii) failure to acknowledge and act upon communications within a reasonable time with respect to claims; (iv) denial of claims without conducting reasonable investigations based upon available information; (v) failure to affirm or deny coverage of claims upon written request of the service contract holder within a reasonable time after proof-of-loss statements have been completed; or (vi) failure to timely provide a reasonable explanation to the service contract holder of the basis in the contract in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement. Subd. 39. Discounted payments by health care providers; effect on use of usual and customary payments. An insurer, including, but not limited to, a health plan company as defined in section 62Q.01, subdivision 4; a reparation obligor as defined in section 65B.43, subdivision 9; and a workers' compensation insurer shall not consider in determining a health care provider's usual and customary payment, standard payment, or allowable payment used as a basis for determining the provider's payment by the insurer, the following discounted payment situations: (1) care provided to relatives of the provider; (2) care for which a discount or free care is given in hardship situations; and (3) care for which a discount is given in exchange for cash payment. For purposes of this subdivision, "health care provider" and "provider" have the meaning given in section 62J.03, subdivision 8. Subd. 40. Prescription for opiate antagonist. When determining whether to issue, renew, cancel, or modify a policy of life insurance, an insurer may not make an underwriting determination based solely on information revealing that a proposed insured has a prescription for an opiate antagonist, as defined in section 604A.04, subdivision 1. Subd. 41. Discrimination based on status as a living organ or bone marrow donor prohibited. A life insurance, long-term care insurance, or disability insurance carrier is prohibited from declining or limiting coverage of an insured or otherwise discriminating in the premium rating, offering, issuance, cancellation, amount of coverage, or any other condition based solely upon the status of an insured as a living organ or bone marrow donor and without additional actuarial risks. History: 1967 c 395 art 12 s 20; 1973 c 474 s 1; 1975 c 139 s 1; 1979 c 207 s 6; 1Sp1981 c 4 art 2 s 7; 1983 c 285 s 1; 1984 c 555 s 1-3; 1984 c 592 s 73; 1Sp1985 c 10 s 71; 1986 c 444; 1987 c 113 s 1; 1987 c 337 s 116-119; 1989 c 170 s 3; 1989 c 260 s 17-20; 1989 c 316 s 1; 1989 c 330 s 27-32; 1990 c 467 s 1; 1991 c 188 s 1; 1992 c 524 s 1; 1992 c 564 art 1 s 46,54; art 4 s 14; 1992 c 569 s 6; 1993 c 343 s 26; 1994 c 475 s 1; 1994 c 485 s 54,55,65; 1994 c 625 art 3 s 20; 1995 c 186 s 17; 1995 c 234 art 8 s 21,22; 1995 c 258 s 52,53; 1996 c 278 s 1; 1996 c 433 s 1; 1996 c 446 art 1 s 61-65; 1997 c 77 s 3; 1999 c 121 s 1; 1999 c 177 s 70; 1999 c 199 art 2 s 1; 2000 c 422 s 3; 2000 c 483 s 21,22; 2001 c 28 s 1; 2002 c 357 s 1; 2004 c 268 s 11; 2004 c 288 art 7 s 4; 2005 c 56 s 1; 2005 c 132 s 22,23; 1Sp2005 c 1 art 5 s 12; 2006 c 255 s 59; 1Sp2007 c 2 art 2 s 3; 2008 c 277 art 1 s 4; 2009 c 178 art 1 s 40,41; 2010 c 384 s 31-33; 2011 c 108 s 38; 2013 c 84 art 1 s 91; 2021 c 10 s 1; 2022 c 93 art 2 s 31; 2022 c 97 s 1 NOTE: The repeals of subdivisions 10 and 15 are effective January 1, 2023. The text may be viewed at MS 2021 in the statutes archives.
72A.201 REGULATION OF CLAIMS PRACTICES. Subdivision 1. Administrative enforcement. The commissioner may, in accordance with chapter 14, adopt rules to ensure the prompt, fair, and honest processing of claims and complaints. The commissioner may, in accordance with sections 72A.22 to 72A.25, seek and impose appropriate administrative remedies, including fines, for (1) a violation of this section or the rules adopted pursuant to this section; or (2) a violation of section 72A.20, subdivision 12. The commissioner need not show a general business practice in taking an administrative action for these violations. No individual violation constitutes an unfair, discriminatory, or unlawful practice in business, commerce, or trade for purposes of section 8.31. Subd. 2. Construction. The policy of the Department of Commerce, in interpreting and enforcing this section, will be to take into consideration all pertinent facts and circumstances in determining the severity and appropriateness of the action to be taken in regard to any violation of this section. The magnitude of the harm to the claimant or insured, and any actions by the insured, claimant, or insurer that mitigate or exacerbate the impact of the violation may be considered. Actions of the claimant or insured which impeded the insurer in processing or settling the claim, and actions of the insurer which increased the detriment to the claimant or insured may also be considered in determining the appropriate administrative action to be taken. Subd. 3. Definitions. For the purposes of this section, the following terms have the meanings given them. (1) Adjuster or adjusters. "Adjuster" or "adjusters" is as defined in section 72B.02. (2) Agent. "Agent" means insurance agents or insurance agencies licensed pursuant to sections 60K.30 to 60K.56, and representatives of these agents or agencies. (3) Claim. "Claim" means a request or demand made with an insurer for the payment of funds or the provision of services under the terms of any policy, certificate, contract of insurance, binder, or other contracts of temporary insurance. The term does not include a claim under a health insurance policy made by a participating provider with an insurer in accordance with the participating provider's service agreement with the insurer which has been filed with the commissioner of commerce prior to its use. (4) Claim settlement. "Claim settlement" means all activities of an insurer related directly or indirectly to the determination of the extent of liabilities due or potentially due under coverages afforded by the policy, and which result in claim payment, claim acceptance, compromise, or other disposition. (5) Claimant. "Claimant" means any individual, corporation, association, partnership, or other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity which is insured under an insurance policy or insurance contract of an insurer. (6) Complaint. "Complaint" means a communication primarily expressing a grievance. (7) Insurance policy. "Insurance policy" means any evidence of coverage issued by an insurer including all policies, contracts, certificates, riders, binders, and endorsements which provide or describe coverage. The term includes any contract issuing coverage under a self-insurance plan, group self-insurance plan, or joint self-insurance employee health plans. (8) Insured. "Insured" means an individual, corporation, association, partnership, or other legal entity asserting a right to payment under their insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by the policy or contract. The term does not apply to a person who acquires rights under a mortgage. (9) Insurer. "Insurer" includes any individual, corporation, association, partnership, reciprocal exchange, Lloyds, fraternal benefits society, self-insurer, surplus line insurer, self-insurance administrator, and nonprofit service plans under the jurisdiction of the Department of Commerce. (10) Investigation. "Investigation" means a reasonable procedure adopted by an insurer to determine whether to accept or reject a claim. (11) Notification of claim. "Notification of claim" means any communication to an insurer by a claimant or an insured which reasonably apprises the insurer of a claim brought under an insurance contract or policy issued by the insurer. Notification of claim to an agent of the insurer is notice to the insurer. (12) Proof of loss. "Proof of loss" means the necessary documentation required from the insured to establish entitlement to payment under a policy. (13) Self-insurance administrator. "Self-insurance administrator" means any vendor of risk management services or entities administering self-insurance plans, licensed pursuant to section 60A.23, subdivision 8. (14) Self-insured or self-insurer. "Self-insured" or "self-insurer" means any entity authorized pursuant to section 65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 2; Laws of Minnesota 1983, chapter 290, section 171; section 471.617; or section 471.981 and includes any entity which, for a fee, employs the services of vendors of risk management services in the administration of a self-insurance plan as defined by section 60A.23, subdivision 8, clause (2), subclauses (a) and (d). Subd. 4. Standards for claim filing and handling. The following acts by an insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair settlement practices: (1) except for claims made under a health insurance policy, after receiving notification of claim from an insured or a claimant, failing to acknowledge receipt of the notification of the claim within ten business days, and failing to promptly provide all necessary claim forms and instructions to process the claim, unless the claim is settled within ten business days. The acknowledgment must include the telephone number of the company representative who can assist the insured or the claimant in providing information and assistance that is reasonable so that the insured or claimant can comply with the policy conditions and the insurer's reasonable requirements. If an acknowledgment is made by means other than writing, an appropriate notation of the acknowledgment must be made in the claim file of the insurer and dated. An appropriate notation must include at least the following information where the acknowledgment is by telephone or oral contact: (i) the telephone number called, if any; (ii) the name of the person making the telephone call or oral contact; (iii) the name of the person who actually received the telephone call or oral contact; (iv) the time of the telephone call or oral contact; and (v) the date of the telephone call or oral contact; (2) failing to reply, within ten business days of receipt, to all other communications about a claim from an insured or a claimant that reasonably indicate a response is requested or needed; (3)(i) unless provided otherwise by clause (ii) or (iii), other law, or in the policy, failing to complete its investigation and inform the insured or claimant of acceptance or denial of a claim within 30 business days after receipt of notification of claim unless the investigation cannot be reasonably completed within that time. In the event that the investigation cannot reasonably be completed within that time, the insurer shall notify the insured or claimant within the time period of the reasons why the investigation is not complete and the expected date the investigation will be complete. For claims made under a health policy the notification of claim must be in writing; (ii) for claims submitted under a health policy, the insurer must comply with all of the requirements of section 62Q.75; (iii) for claims submitted under a health policy that are accepted, the insurer must notify the insured or claimant no less than semiannually of the disposition of claims of the insured or claimant. Notwithstanding the requirements of section 72A.20, subdivision 37, this notification requirement is satisfied if the information related to the acceptance of the claim is made accessible to the insured or claimant on a secured website maintained by the insurer. For purposes of this clause, acceptance of a claim means that there is no additional financial liability for the insured or claimant, either because there is a flat co-payment amount specified in the health plan or because there is no co-payment, deductible, or coinsurance owed; (4) where evidence of suspected fraud is present, the requirement to disclose their reasons for failure to complete the investigation within the time period set forth in clause (3) need not be specific. The insurer must make this evidence available to the Department of Commerce if requested; (5) failing to notify an insured who has made a notification of claim of all available benefits or coverages which the insured may be eligible to receive under the terms of a policy and of the documentation which the insured must supply in order to ascertain eligibility; (6) unless otherwise provided by law or in the policy, requiring an insured to give written notice of loss or proof of loss within a specified time, and thereafter seeking to relieve the insurer of its obligations if the time limit is not complied with, unless the failure to comply with the time limit prejudices the insurer's rights and then only if the insurer gave prior notice to the insured of the potential prejudice; (7) advising an insured or a claimant not to obtain the services of an attorney or an adjuster, or representing that payment will be delayed if an attorney or an adjuster is retained by the insured or the claimant; (8) failing to advise in writing an insured or claimant who has filed a notification of claim known to be unresolved, and who has not retained an attorney, of the expiration of a statute of limitations at least 60 days prior to that expiration. For the purposes of this clause, any claim on which the insurer has received no communication from the insured or claimant for a period of two years preceding the expiration of the applicable statute of limitations shall not be considered to be known to be unresolved and notice need not be sent pursuant to this clause; (9) demanding information which would not affect the settlement of the claim; (10) unless expressly permitted by law or the policy, refusing to settle a claim of an insured on the basis that the responsibility should be assumed by others; (11) failing, within 60 business days after receipt of a properly executed proof of loss, to advise the insured of the acceptance or denial of the claim by the insurer. No insurer shall deny a claim on the grounds of a specific policy provision, condition, or exclusion unless reference to the provision, condition, or exclusion is included in the denial. The denial must be given to the insured in writing with a copy filed in the claim file; (12) denying or reducing a claim on the basis of an application which was altered or falsified by the agent or insurer without the knowledge of the insured; (13) failing to notify the insured of the existence of the additional living expense coverage when an insured under a homeowners policy sustains a loss by reason of a covered occurrence and the damage to the dwelling is such that it is not habitable; (14) failing to inform an insured or a claimant that the insurer will pay for an estimate of repair if the insurer requested the estimate and the insured or claimant had previously submitted two estimates of repair. 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 processed in accordance with section 62M.07. Subd. 5. Standards for fair settlement offers and agreements. The following acts by an insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair settlement practices: (1) making any partial or final payment, settlement, or offer of settlement, which does not include an explanation of what the payment, settlement, or offer of settlement is for; (2) making an offer to an insured of partial or total settlement of one part of a claim contingent upon agreement to settle another part of the claim; (3) refusing to pay one or more elements of a claim by an insured for which there is no good faith dispute; (4) threatening cancellation, rescission, or nonrenewal of a policy as an inducement to settlement of a claim; (5) notwithstanding any inconsistent provision of section 65A.01, subdivision 3, failing to issue payment for any amount finally agreed upon in settlement of all or part of any claim within five business days from the receipt of the agreement by the insurer or from the date of the performance by the claimant of any conditions set by such agreement, whichever is later; (6) failing to inform the insured of the policy provision or provisions under which payment is made; (7) settling or attempting to settle a claim or part of a claim with an insured under actual cash value provisions for less than the value of the property immediately preceding the loss, including all applicable taxes and license fees. In no case may an insurer be required to pay an amount greater than the amount of insurance; (8) except where limited by policy provisions, settling or offering to settle a claim or part of a claim with an insured under replacement value provisions for less than the sum necessary to replace the damaged item with one of like kind and quality, including all applicable taxes, license, and transfer fees; (9) reducing or attempting to reduce for depreciation any settlement or any offer of settlement for items not adversely affected by age, use, or obsolescence; (10) reducing or attempting to reduce for betterment any settlement or any offer of settlement unless the resale value of the item has increased over the preloss value by the repair of the damage. Subd. 6. Standards for automobile insurance claims handling, settlement offers, and agreements. In addition to the acts specified in subdivisions 4, 5, 7, 8, and 9, the following acts by an insurer, adjuster, or a self-insured or self-insurance administrator constitute unfair settlement practices: (1) if an automobile insurance policy provides for the adjustment and settlement of an automobile total loss on the basis of actual cash value or replacement with like kind and quality and the insured is not an automobile dealer, failing to offer one of the following methods of settlement: (a) comparable and available replacement automobile, with all applicable taxes, license fees, at least pro rata for the unexpired term of the replaced automobile's license, and other fees incident to the transfer or evidence of ownership of the automobile paid, at no cost to the insured other than the deductible amount as provided in the policy; (b) a cash settlement based upon the actual cost of purchase of a comparable automobile, including all applicable taxes, license fees, at least pro rata for the unexpired term of the replaced automobile's license, and other fees incident to transfer of evidence of ownership, less the deductible amount as provided in the policy. The costs must be determined by: (i) the cost of a comparable automobile, adjusted for mileage, condition, and options, in the local market area of the insured, if such an automobile is available in that area; or (ii) one of two or more quotations obtained from two or more qualified sources located within the local market area when a comparable automobile is not available in the local market area. The insured shall be provided the information contained in all quotations prior to settlement; or (iii) any settlement or offer of settlement which deviates from the procedure above must be documented and justified in detail. The basis for the settlement or offer of settlement must be explained to the insured; (2) if an automobile insurance policy provides for the adjustment and settlement of an automobile partial loss on the basis of repair or replacement with like kind and quality and the insured is not an automobile dealer, failing to offer one of the following methods of settlement: (a) to assume all costs, including reasonable towing costs, for the satisfactory repair of the motor vehicle. Satisfactory repair includes repair of both obvious and hidden damage as caused by the claim incident. This assumption of cost may be reduced by applicable policy provision; or (b) to offer a cash settlement sufficient to pay for satisfactory repair of the vehicle. Satisfactory repair includes repair of obvious and hidden damage caused by the claim incident, and includes reasonable towing costs; (3) regardless of whether the loss was total or partial, in the event that a damaged vehicle of an insured cannot be safely driven, failing to exercise the right to inspect automobile damage prior to repair within five business days following receipt of notification of claim. In other cases the inspection must be made in 15 days; (4) regardless of whether the loss was total or partial, requiring unreasonable travel of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate, to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made pursuant to policy requirements, or to have the automobile repaired; (5) regardless of whether the loss was total or partial, if loss of use coverage exists under the insurance policy, failing to notify an insured at the time of the insurer's acknowledgment of claim, or sooner if inquiry is made, of the fact of the coverage, including the policy terms and conditions affecting the coverage and the manner in which the insured can apply for this coverage; (6) regardless of whether the loss was total or partial, failing to include the insured's deductible in the insurer's demands under its subrogation rights. Subrogation recovery must be shared at least on a proportionate basis with the insured, unless the deductible amount has been otherwise recovered by the insured, except that when an insurer is recovering directly from an uninsured third party by means of installments, the insured must receive the full deductible share as soon as that amount is collected and before any part of the total recovery is applied to any other use. No deduction for expenses may be made from the deductible recovery unless an attorney is retained to collect the recovery, in which case deduction may be made only for a pro rata share of the cost of retaining the attorney. An insured is not bound by any settlement of its insurer's subrogation claim with respect to the deductible amount, unless the insured receives, as a result of the subrogation settlement, the full amount of the deductible. Recovery by the insurer and receipt by the insured of less than all of the insured's deductible amount does not affect the insured's rights to recover any unreimbursed portion of the deductible from parties liable for the loss; (7) requiring as a condition of payment of a claim that repairs to any damaged vehicle must be made by a particular contractor or repair shop or that parts, other than window glass, must be replaced with parts other than original equipment parts or engaging in any act or practice of intimidation, coercion, threat, incentive, or inducement for or against an insured to use a particular contractor or repair shop. Consumer benefits included within preferred vendor programs must not be considered an incentive or inducement. At the time a claim is reported, the insurer must provide the following advisory to the insured or claimant: "You have the legal right to choose a repair shop to fix your vehicle. Your policy will cover the reasonable costs of repairing your vehicle to its pre-accident condition no matter where you have repairs made. Have you selected a repair shop or would you like a referral?" After an insured has indicated that the insured has selected a repair shop, the insurer must cease all efforts to influence the insured's or claimant's choice of repair shop; (8) where liability is reasonably clear, failing to inform the claimant in an automobile property damage liability claim that the claimant may have a claim for loss of use of the vehicle; (9) failing to make a good faith assignment of comparative negligence percentages in ascertaining the issue of liability; (10) failing to pay any interest required by statute on overdue payment for an automobile personal injury protection claim; (11) if an automobile insurance policy contains either or both of the time limitation provisions as permitted by section 65B.55, subdivisions 1 and 2, failing to notify the insured in writing of those limitations at least 60 days prior to the expiration of that time limitation; (12) if an insurer chooses to have an insured examined as permitted by section 65B.56, subdivision 1, failing to notify the insured of all of the insured's rights and obligations under that statute, including the right to request, in writing, and to receive a copy of the report of the examination; (13) failing to provide, to an insured who has submitted a claim for benefits described in section 65B.44, a complete copy of the insurer's claim file on the insured, excluding internal company memoranda, all materials that relate to any insurance fraud investigation, materials that constitute attorney work product or that qualify for the attorney-client privilege, and medical reviews that are subject to section 145.64, within ten business days of receiving a written request from the insured. The insurer may charge the insured a reasonable copying fee. This clause supersedes any inconsistent provisions of sections 72A.49 to 72A.505; (14) if an automobile policy provides for the adjustment or settlement of an automobile loss due to damaged window glass, failing to provide payment to the insured's chosen vendor based on a competitive price that is fair and reasonable within the local industry at large. Where facts establish that a different rate in a specific geographic area actually served by the vendor is required by that market, that geographic area must be considered. This clause does not prohibit an insurer from recommending a vendor to the insured or from agreeing with a vendor to perform work at an agreed-upon price, provided, however, that before recommending a vendor, the insurer shall offer its insured the opportunity to choose the vendor. If the insurer recommends a vendor, the insurer must also provide the following advisory: "Minnesota law gives you the right to go to any glass vendor you choose, and prohibits me from pressuring you to choose a particular vendor."; (15) requiring that the repair or replacement of motor vehicle glass and related products and services be made in a particular place or shop or by a particular entity, or by otherwise limiting the ability of the insured to select the place, shop, or entity to repair or replace the motor vehicle glass and related products and services; (16) engaging in any act or practice of intimidation, coercion, threat, incentive, or inducement for or against an insured to use a particular company or location to provide the motor vehicle glass repair or replacement services or products. For purposes of this section, a warranty shall not be considered an inducement or incentive; or (17) failing to inform an insured making a claim under collision or comprehensive coverage, that includes rental vehicle reimbursement coverage, of the insured's right to select any rental vehicle company. If the insurer recommends a rental vehicle company to the insured, the insurer must also provide the following advisory: "Minnesota law gives you the right to choose any rental vehicle company, and prohibits me from requiring you to choose a particular vendor." Subd. 7. Standards for releases. The following acts by an insurer, adjuster, or self-insured or self-insurance administrator constitute unfair settlement practices: (1) requesting or requiring an insured or a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment; (2) issuing a check or draft in payment of a claim that contains any language or provision that implies or states that acceptance of the check or draft constitutes a final settlement or release of any or all future obligations arising out of the loss. Subd. 8. Standards for claim denial. The following acts by an insurer, adjuster, or self-insured, or self-insurance administrator constitute unfair settlement practices: (1) denying a claim or any element of a claim on the grounds of a specific policy provision, condition, or exclusion, without informing the insured of the policy provision, condition, or exclusion on which the denial is based; (2) denying a claim without having made a reasonable investigation of the claim; (3) denying a liability claim because the insured has requested that the claim be denied; (4) denying a liability claim because the insured has failed or refused to report the claim, unless an independent evaluation of available information indicates there is no liability; (5) denying a claim without including the following information: (i) the basis for the denial; (ii) the name, address, and telephone number of the insurer's claim service office or the claim representative of the insurer to whom the insured or claimant may take any questions or complaints about the denial; (iii) the claim number and the policy number of the insured; and (iv) if the denied claim is a fire claim, the insured's right to file with the Department of Commerce a complaint regarding the denial, and the address and telephone number of the Department of Commerce; (6) denying a claim because the insured or claimant failed to exhibit the damaged property unless: (i) the insurer, within a reasonable time period, made a written demand upon the insured or claimant to exhibit the property; and (ii) the demand was reasonable under the circumstances in which it was made; (7) denying a claim by an insured or claimant based on the evaluation of a chemical dependency claim reviewer selected by the insurer unless the reviewer meets the qualifications specified under subdivision 8a. An insurer that selects chemical dependency reviewers to conduct claim evaluations must annually file with the commissioner of commerce a report containing the specific evaluation standards and criteria used in these evaluations. The report must be filed at the same time its annual statement is submitted under section 60A.13. Subd. 8a. Chemical dependency claim reviewer qualifications. (a) The personnel file of a chemical dependency claim reviewer must include documentation of the individual's competency in the following areas: (1) knowledge of chemical abuse and dependency; (2) chemical use assessment, including client interviewing and screening; (3) case management, including treatment planning, general knowledge of social services, and appropriate referrals, and record keeping, reporting requirements, and confidentiality rules and regulations that apply to chemical dependency clients; and (4) individual and group counseling, including crisis intervention. (b) The insurer may accept one of the following as adequate documentation that a chemical dependency claim reviewer is competent in the areas required under paragraph (a): (1) the individual has at least a baccalaureate degree with a major or concentration in social work, nursing, sociology, human services, or psychology, is a licensed registered nurse, or is a licensed physician; has successfully completed 30 hours of classroom instruction in each of the areas identified in paragraph (a), clauses (1) and (2); and has successfully completed 480 hours of supervised experience as a chemical dependency counselor, either as a student or as an employee; or (2) the individual has documented the successful completion of the following: (i) 60 hours of classroom training in the subject area identified in paragraph (a), clause (1); (ii) 30 hours of classroom training in the subject area identified in paragraph (a), clause (2); (iii) 160 hours of classroom training in the subject areas identified in paragraph (a), clauses (3) and (4); and (iv) completion of 480 hours of supervised experience as a chemical dependency counselor, either as a student or as an employee; or (3) the individual is certified by the Institute for Chemical Dependency Professionals of Minnesota, Inc., as a chemical dependency counselor or as a chemical dependency counselor reciprocal, through the evaluation process established by the Certification Reciprocity Consortium Alcohol and Other Drug Abuse, Inc., and published in the Case Presentation Method Trainer's Manual, copyright 1986; (4) the individual successfully completed three years of supervised work experience as a chemical dependency counselor before January 1, 1988; or (5) the individual is a licensed physician, who has 480 hours of experience in a licensed chemical dependency program. After January 1, 1993, chemical dependency counselors must document that they meet the requirements of clause (1), (2), or (3) in order to comply with this paragraph. Subd. 9. Standards for communications with department. In addition to the acts specified elsewhere in this section and section 72A.20, the following acts by an insurer, adjuster, or a self-insured or self-insurance administrator constitute unfair settlement practices: (1) failure to respond, within 15 working days after receipt of an inquiry from the commissioner, about a claim, to the commissioner; (2) failure, upon request by the commissioner, to make specific claim files available to the commissioner; (3) failure to include in the claim file all written communications and transactions emanating from, or received by, the insurer, as well as all notes and work papers relating to the claim. All written communications and notes referring to verbal communications must be dated by the insurer; (4) failure to submit to the commissioner, when requested, any summary of complaint data reasonably required; (5) failure to compile and maintain a file on all complaints. If the complaint deals with a loss, the file must contain adequate information so as to permit easy retrieval of the entire file. If the complaint alleges that the company, or agent of the company, or any agent producing business written by the company is engaged in any unfair, false, misleading, dishonest, fraudulent, untrustworthy, coercive, or financially irresponsible practice, or has violated any insurance law or rule, the file must indicate what investigation or action was taken by the company. The complaint file must be maintained for at least four years after the date of the complaint. For purposes of clause (1) the term insurer includes an agent of the insurer. The insurer must have been sent a copy of any communication to an agent to be held in violation of this provision. Subd. 10. Scope. This section does not apply to workers' compensation insurance. Nothing in this section abrogates any policy provisions. Subd. 11. Disclosure mandatory. An insurer must disclose the coverage and limits of an insurance policy within 30 days after the information is requested in writing by a claimant. Subd. 12. Prejudgment interest. If a judgment is entered against an insured, the principal amount of which is within the applicable policy limits, the insurer is responsible for their insured's share of the costs, disbursements, and prejudgment interest, as determined under section 549.09, included in the judgment even if the total amount of the judgment is in excess of the applicable policy limits. Subd. 13. Improper claim of discount. (a) No insurer or community integrated service network shall intentionally provide a health care provider with an explanation of benefits or similar document claiming a right to a discounted fee, price, or other charge, when the insurer or community integrated service network does not have an agreement with the provider for the discount with respect to the patient involved. (b) The insurer or community integrated service network may, notwithstanding paragraph (a), claim the right to a discount based upon a discount agreement between the health care provider and another entity, but only if: (1) that agreement expressly permitted the entity to assign its right to receive the discount; (2) an assignment to the insurer or community integrated service network of the right to receive the discount complies with any relevant requirements for assignments contained in the discount agreement; and (3) the insurer or community integrated service network has complied with any relevant requirements contained in the assignment. (c) When an explanation of benefits or similar document claims a discount permitted under paragraph (b), it shall prominently state that the discount claimed is based upon an assignment and shall state the name of the entity from whom the assignment was received. This paragraph does not apply if the entity that issues the explanation of benefits or similar document has a provider agreement with the provider. (d) No insurer or community integrated service network that has entered into an agreement with a health care provider that involves discounted fees, prices, or other charges shall disclose the discounts to another entity, with the knowledge or expectation that the disclosure will result in claims for discounts prohibited under paragraphs (a) and (b). Subd. 14. Uniform electronic transaction standards. Claims for medical expenses under a property and casualty insurance policy subject to the uniform electronic transaction standards required by section 62J.536 shall be submitted to an insurer by a health care provider subject to that section pursuant to the uniform electronic transaction standards and rules promulgated under that section. The exchange of information related to such claims pursuant to the electronic transaction standards by an insurer shall not be the sole basis for a finding that the insurer is not in compliance with the requirements of this section, section 72A.20, and any rules promulgated under these sections. History:  1984 c 555 s 3; 1987 c 64 s 1; 1989 c 193 s 1; 1989 c 260 s 21-23; 1991 c 115 s 1,2; 1991 c 131 s 2; 1991 c 207 s 7; 1992 c 413 s 1; 1992 c 524 s 2; 1992 c 564 art 1 s 47; art 3 s 27; 1994 c 485 s 56,65; 1995 c 234 art 7 s 27; 1997 c 77 s 4; 1997 c 225 art 2 s 62; 1999 c 239 s 41; 2000 c 342 s 1; 2001 c 117 art 2 s 17; 2002 c 283 s 1; 2005 c 77 s 5; 2005 c 140 s 1; 2006 c 255 s 60; 2008 c 305 s 10; 2009 c 178 art 1 s 42; 2011 c 78 s 1; 2012 c 247 art 1 s 2
72A.203 EXEMPTIONS. Unless otherwise specifically included, sections 72A.203 to 72A.2036 do not apply to annuity transactions involving: (1) direct response marketing of group insurance as provided for in section 72A.20, subdivision 34; (2) contracts used to fund group plans under: (i) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act of 1974 (ERISA), United States Code, title 29, sections 1001 to 1461; (ii) a plan described by section 401(a), 401(k), 403(b), 408(k), or 408(p) of the Internal Revenue Code of 1986, as amended, if established or maintained by an employer; (iii) a government or church plan defined in section 414 of the Internal Revenue Code of 1986, as amended, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax-exempt organization under section 457 of the Internal Revenue Code of 1986, as amended; or (iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor; and (3) contracts used to fund: (i) settlements of or assumptions of liabilities associated with personal injury litigation or a dispute or claim resolution process; or (ii) formal prepaid funeral contracts. History:   2013 c 54 s 1 
72A.2031 DEFINITIONS. Subdivision 1. Definitions. For purposes of sections 72A.203 to 72A.2036, the terms defined in this section have the meanings given them. Subd. 2. Annuity. "Annuity" means an annuity that is an insurance product under state law that is individually solicited, whether the product is classified as an individual or group annuity. Subd. 3.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] Subd. 3a. Cash compensation. "Cash compensation" means any discount, concession fee, service fee, commission, sales charge, loan, override, or cash benefit received by an insurance producer from an insurer, intermediary, or consumer in connection with recommending or selling an annuity. Subd. 3b. Consumer profile information. "Consumer profile information" means information that is reasonably appropriate to determine whether a recommendation addresses the consumer's financial situation, insurance needs, and financial objectives, including at a minimum the following: (1) age; (2) annual income and anticipated material changes in annual income; (3) financial situation and needs, including debts and other obligations, and anticipated material changes in financial situation and needs; (4) financial experience; (5) insurance needs; (6) financial objectives; (7) intended use of the annuity; (8) financial time horizon; (9) existing assets or financial products, including investment, annuity, and insurance holdings, and anticipated material changes in existing assets; (10) liquidity needs and anticipated material changes in liquidity needs; (11) liquid net worth and anticipated material changes in liquid net worth; (12) risk tolerance, including but not limited to willingness to accept nonguaranteed elements in the annuity; (13) financial resources used to fund the annuity; (14) tax status; and (15) whether or not the consumer has a reverse mortgage. Subd. 4. Continuing education credit or CE credit. "Continuing education credit" or "CE credit" means one continuing education credit earned pursuant to section 45.30, subdivision 4. Subd. 5. Continuing education provider or CE provider. "Continuing education provider" or "CE provider" means an approved education provider under chapter 45. Subd. 6. FINRA. "FINRA" means the Financial Industry Regulatory Authority or a succeeding agency. Subd. 7. Insurer. "Insurer" means a company required to be licensed under the laws of this state to provide insurance products, including annuities. Subd. 8. Insurance producer. "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance, including annuities. For purposes of sections 72A.203 to 72A.2036, insurance producer includes an insurer where no insurance producer is involved. Subd. 8a. Intermediary. "Intermediary" means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer's annuities by insurance producers. Subd. 8b. Material conflict of interest. "Material conflict of interest" means a financial interest of the insurance producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. The payment of compensation, including both cash and noncash compensation, does not in and of itself constitute a material conflict of interest. Subd. 8c. Noncash compensation. "Noncash compensation" means any form of compensation that is not cash compensation, including but not limited to health insurance, office rent, office support, and retirement benefits. Subd. 8d. Nonguaranteed elements. "Nonguaranteed elements" means the premiums and credited interest rates, including any bonus, benefits, values, dividends, noninterest-based credits, charges, or elements of formulas used to determine any of the elements in this subdivision, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in the element's calculation. Subd. 8e. Recommendation. "Recommendation" means advice provided by an insurance producer to an individual consumer that was intended to result or does result in a purchase, exchange, or replacement of an annuity in accordance with the advice rendered. Recommendation does not include a general communication to the public, generalized customer services, assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material. Subd. 9.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] Subd. 10. Replacement. "Replacement" means a transaction in which a new annuity is to be purchased and it is known or should be known to the proposing insurance producer or the proposing insurer, whether or not an insurance producer is involved, that by reason of the transaction an existing annuity or other insurance policy has been or is to be any of the following: (1) lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated; (2) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; (3) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; (4) reissued with any reduction in cash value; or (5) used in a financed purchase. Subd. 11.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] History: 2013 c 54 s 2; 2022 c 84 s 1-9 NOTE: The repeals of subdivisions 3, 9, and 11 are effective January 1, 2023. The text may be viewed at MS 2021 in the statutes archives.
72A.2032 DUTIES OF INSURERS AND INSURANCE PRODUCERS. Subdivision 1.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] Subd. 1a. Best interest obligations. An insurance producer, when recommending an annuity, shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made. An insurance producer shall not place the insurance producer's or the insurer's financial interest ahead of the consumer's interest. An insurance producer has acted in the best interest of the consumer if the insurance producer has satisfied obligations regarding care, disclosure, conflict of interest, and documentation specified in subdivisions 1b, 1c, 1d, and 1e. Subd. 1b. Care obligation. (a) The insurance producer, in making a recommendation, shall exercise reasonable diligence, care, and skill to: (1) know the consumer's financial situation, insurance needs, and financial objectives; (2) understand the available recommendation options after making a reasonable inquiry into the options available to the insurance producer; (3) have a reasonable basis to believe the recommended option effectively addresses the consumer's financial situation, insurance needs, and financial objectives over the life of the product, as evaluated in light of the consumer profile information; and (4) communicate the basis or rationale supporting the recommendation. (b) The requirements under paragraph (a) include making reasonable efforts to obtain consumer profile information from the consumer prior to recommending an annuity. (c) The requirements under paragraph (a) require an insurance producer to consider the types of products the insurance producer is authorized and licensed to recommend or sell that address the consumer's financial situation, insurance needs, and financial objectives. This paragraph does not require analysis or consideration of any products outside the insurance producer's authority and license, or other possible alternative products or strategies available in the market at the time of the recommendation. Insurance producers shall be held to standards applicable to insurance producers with similar authority and licensure. (d) The requirements under this subdivision do not create a fiduciary obligation or relationship and only create a statutory obligation under sections 72A.203 to 72A.2036. (e) The consumer profile information; characteristics of the insurer; and product costs, rates, benefits, and features are the factors generally relevant in determining whether an annuity effectively addresses the consumer's financial situation, insurance needs, and financial objectives. The level of importance of each factor under paragraph (a) may vary depending on the facts and circumstances of a particular case. Each factor must not be considered in isolation. (f) The requirements under paragraph (a) include having a reasonable basis to believe the consumer benefits from certain features of the annuity, including but not limited to annuitization, death or living benefit, or other insurance-related features. (g) The requirements under paragraph (a) apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of the purchase or exchange of an annuity, riders, and similar product enhancements, if any. (h) The requirements under paragraph (a) do not require that the annuity with the lowest onetime or multiple-occurrence compensation structure must be recommended. (i) The requirements under paragraph (a) do not require the insurance producer to assume ongoing monitoring obligations. An ongoing monitoring obligation may be separately owed under the terms of a fiduciary, consulting, investment advising, or financial planning agreement between the consumer and the insurance producer. (j) In the case of an exchange or replacement of an annuity, the insurance producer shall consider the whole transaction, which includes considering whether: (1) the consumer incurs a surrender charge; is subject to the commencement of a new surrender period; loses existing benefits such as death, living, or other contractual benefits; or is subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements; (2) the replacing product substantially benefits the consumer in comparison to the replaced product over the life of the product; and (3) the consumer had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 60 months. (k) In the case of a person 65 years of age or older, neither an insurance producer nor an insurer shall recommend replacing or exchanging an annuity that requires the insured to pay a surrender charge for the annuity being replaced or exchanged if the replacement or exchange does not confer a substantial financial benefit over the life of the annuity to the consumer, so that a reasonable person would believe the purchase is unnecessary. (l) Nothing in sections 72A.203 to 72A.2036 requires an insurance producer to obtain any license other than an insurance producer license with the appropriate line of authority to sell, solicit, or negotiate insurance in Minnesota, including but not limited to any securities license in order to fulfill the duties and obligations contained in sections 72A.203 to 72A.2036, provided that the insurance producer does not give advice or provide services that are subject to other securities law or engage in any other activity requiring other professional licenses. Subd. 1c. Disclosure obligation. (a) Prior to recommending and selling an annuity, the insurance producer shall prominently disclose to the consumer the information required under this paragraph on a form prescribed by the commissioner. The form prescribed by the commissioner must contain: (1) a description of (i) the scope and terms of the relationship with the consumer, and (ii) the role of the insurance producer in the transaction; (2) an affirmative statement on whether the insurance producer is licensed and authorized to sell the following products: (i) fixed annuities; (ii) fixed indexed annuities; (iii) variable annuities; (iv) life insurance; (v) mutual funds; (vi) stocks and bonds; and (vii) certificates of deposit; (3) an affirmative statement describing the insurers that the insurance producer is authorized, contracted, appointed, or otherwise able to sell insurance products for, using the following descriptions: (i) from one insurer; (ii) from two or more insurers; or (iii) from two or more insurers, although primarily contracted with one insurer; (4) a description of the sources and types of cash and noncash compensation received by the insurance producer, including whether the insurance producer is (i) compensated for the sale of a recommended annuity by commission as part of a premium, or (ii) receives other remuneration from the insurer, intermediary, or other insurance producer or by fee as a result of a contract for advice or consulting service; and (5) a notice of the consumer's right to request additional information regarding cash compensation. (b) Upon request of the consumer or the consumer's designated representative, the insurance producer shall disclose: (1) a reasonable estimate of the amount of cash compensation to be received by the insurance producer, which may be stated as a range of amounts or percentages; and (2) whether the cash compensation is a onetime or multiple-occurrence amount and, if a multiple-occurrence amount, the frequency and amount of the occurrence, which may be stated as a range of amounts or percentages. (c) Prior to or at the time an annuity is recommended or sold, the insurance producer shall have a reasonable basis to believe the consumer has been reasonably informed of various features of the annuity, including the potential surrender period and surrender charge; potential tax penalty if the consumer sells, exchanges, surrenders, redeems, or annuitizes the annuity; mortality and expense fees; investment advisory fees; annual fees; potential charges for and features of riders or other options of the annuity; limitations on interest returns; potential changes in nonguaranteed elements of the annuity; insurance and investment components; and market risk. Subd. 1d. Conflict of interest obligation. An insurance producer shall identify and avoid or reasonably manage and disclose material conflicts of interest, including a material conflict of interest related to an ownership interest. Subd. 1e. Documentation obligation. An insurance producer shall, at the time of recommendation or sale: (1) make a written record of any recommendation and the basis for the recommendation, subject to sections 72A.203 to 72A.2036; (2) obtain a signed statement, on a form prescribed by the commissioner, that includes: (i) a customer's refusal to provide the consumer profile information, if any; and (ii) a customer's understanding of the ramifications of not providing the customer's consumer profile information or providing insufficient consumer profile information; and (3) a consumer-signed statement, on a form prescribed by the commissioner, that acknowledges the annuity transaction is not recommended if the customer decides to enter into an annuity transaction that is not based on the insurance producer's recommendation. Subd. 1f. Application of best interest obligation. Any requirement applicable to an insurance producer under this section applies to every insurance producer who exercises control or influence in making a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the insurance producer had any direct contact with the consumer. Providing or delivering marketing or educational materials, product wholesaling or other back office product support, and general supervision of an insurance producer do not, in and of themselves, constitute material control or influence. Subd. 2.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] Subd. 3.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] Subd. 4. Transactions not based on recommendation. (a) Except as provided under paragraph (b), an insurance producer or an insurer does not have any obligation to a consumer under subdivision 1a related to an annuity transaction if: (1) no recommendation is made; (2) a recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer; (3) a consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended; or (4) a consumer decides to enter into an annuity transaction that is not based on a recommendation of the insurance producer. (b) An insurer's issuance of an annuity subject to paragraph (a) shall be reasonable under all the circumstances actually known to the insurer or the insurance producer at the time the annuity is issued. Subd. 5.  MS 2020 [Repealed, 2022 c 84 s 24] [See Note.] Subd. 6. Insurer duties. (a) Except as permitted under subdivision 4, an insurer shall not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity effectively addresses the particular consumer's financial situation, insurance needs, and financial objectives based on the consumer's consumer profile information. (b) An insurer shall establish and maintain a supervision system that is reasonably designed to achieve the insurer's and its insurance producers' compliance with sections 72A.203 to 72A.2036, including, but not limited to, all of the following: (1) the insurer shall establish and maintain reasonable procedures to inform its insurance producers of the requirements of sections 72A.203 to 72A.2036 and shall incorporate the requirements of sections 72A.203 to 72A.2036 into relevant insurance producer training programs and manuals; (2) the insurer shall establish and maintain standards for insurance producer product training and shall, by July 1, 2023, establish and maintain reasonable procedures to require its insurance producers to comply with the requirements of section 72A.2033; (3) the insurer shall provide product-specific training and training materials which explain all material features of its annuity products to its insurance producers; (4) the insurer shall establish and maintain procedures for the review of each recommendation before issuance of an annuity that are designed to ensure there is a reasonable basis to determine the recommended annuity effectively addresses the particular consumer's financial situation, insurance needs, and financial objectives. The review procedures shall apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other reasonable means including, but not limited to, physical review. The electronic or other system shall be designed to require an elevated individual review for those transactions involving consumers 65 years of age or older on the basis of the review procedure's thresholds for liquidity, liquid net worth, income, and anticipated material changes in their financial situation and needs and the elevated review shall be conducted by a natural person or persons; (5) the insurer shall establish and maintain reasonable procedures to detect recommendations that are not in compliance with subdivisions 1a to 1f, 4, 7, and 8. This may include, but is not limited to, confirmation of the consumer's profile information, systematic customer surveys, insurance producer and consumer interviews, confirmation letters, insurance producer attestations, and programs of internal monitoring. Nothing in this clause prevents an insurer from complying with this clause by applying sampling procedures, or by confirming consumer profile information or other required information under this subdivision after issuance or delivery of the annuity; (6) the insurer shall establish and maintain reasonable procedures to assess, prior to or upon issuance or delivery of an annuity, whether an insurance producer has provided to the consumer the information required under this subdivision; (7) the insurer shall establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information; (8) the insurer shall establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses, and noncash compensation that are based on the sales of specific annuities within a limited period of time. The requirements of this clause do not prohibit the receipt of health insurance, office rent, office support, retirement benefits, or other employee benefits, as long as the benefits are not based on the volume of sales of a specific annuity within a limited period of time; and (9) the insurer shall annually provide a written report to senior management, including to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any. (c)(1) Nothing in this subdivision restricts an insurer from contracting for performance of a function, including maintenance of procedures, required under paragraph (b). An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to section 72A.2034 regardless of whether the insurer contracts for performance of a function and regardless of the insurer's compliance with clause (2), and an insurer is responsible for the compliance of an insurance producer with the provisions of sections 72A.203 to 72A.2036 regardless of whether the insurer contracts for performance of a function required under this paragraph; and (2) an insurer's supervision system under paragraph (b) must include supervision of contractual performance under this clause. This includes, but is not limited to, the following: (i) monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and (ii) annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed. (d) An insurer is not required to include in its system of supervision an insurance producer's recommendations to consumers of products other than the annuities offered by the insurer, or consideration of or comparison to options available to the insurance producer or compensation relating to the options other than annuities or other products offered by the insurer. Subd. 7. Prohibited practices. An insurance producer or insurer shall not dissuade, or attempt to dissuade, a consumer from: (1) providing consumer profile information to the insurance producer or insurer and truthfully responding to an insurer's request for confirmation of consumer profile information; (2) filing a complaint; or (3) cooperating with the investigation of a complaint. Subd. 8. Comparable standards; compliance. (a) Recommendations and sales of annuities made in compliance with comparable standards satisfy the requirements under sections 72A.203 to 72A.2036. This subdivision applies to recommendations and sales of annuities made by financial professionals in compliance with business rules, controls, and procedures that satisfy a comparable standard even if the standard would not otherwise apply to the product or recommendation at issue. Nothing in this subdivision limits the commissioner's ability to investigate and enforce sections 72A.203 to 72A.2036. (b) For paragraph (a) to apply, an insurer shall: (1) monitor the relevant conduct of the financial professional seeking to rely on paragraph (a) or the entity responsible for supervising the financial professional, including the financial professional's broker-dealer or an investment adviser registered under federal or state securities law using information collected in the normal course of the insurer's business; and (2) provide to the entity responsible for supervising the financial professional seeking to rely on paragraph (a), including the financial professional's broker-dealer or investment adviser registered under federal or state securities law, information and reports that are reasonably appropriate to assist the entity to maintain its supervision system. (c) For purposes of this subdivision, "financial professional" means an insurance producer that is regulated and acting as: (1) a broker-dealer registered under federal or state securities law or a registered representative of a broker-dealer; (2) an investment adviser registered under federal or state securities law, or an investment adviser representative associated with the federal or state registered investment adviser; or (3) a plan fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, section 1001; Code of Federal Regulations, title 29, part 2510.3-21; fiduciary under the Internal Revenue Code, section 4975(e)(3); or any amendments or successor statutes. (d) For purposes of this subdivision, "comparable standards" means: (1) with respect to broker-dealers and registered representatives of broker-dealers, applicable United States Securities and Exchange Commission and FINRA rules pertaining to best interest obligations and supervision of annuity recommendations and sales, including but not limited to regulation best interest and any amendments or successor regulations; (2) with respect to investment advisers registered under federal or state securities law or investment adviser representatives, the fiduciary duties and all other requirements imposed on the investment advisers or investment adviser representatives by contract or under the Investment Advisers Act of 1940 or applicable state securities law, including but not limited to Form ADV and interpretations; and (3) with respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions, and all other requirements attendant to status under ERISA or the Internal Revenue Code and any amendments or successor statutes. History: 2013 c 54 s 3; 2014 c 275 art 1 s 12; 2022 c 84 s 10-19 NOTE: The repeals of subdivisions 1, 2, 3, and 5 are effective January 1, 2023. The text may be viewed at MS 2021 in the statutes archives.
72A.2033 INSURANCE PRODUCER TRAINING. Subdivision 1. Requirement. An insurance producer shall not solicit the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity and the insurance producer is in compliance with the insurer's standards for product training. An insurance producer may rely on insurer-provided product-specific training standards and materials to comply with this section. Subd. 2. Initial training. (a) An insurance producer who is otherwise entitled to engage in the sale of annuity products shall complete a onetime four-credit training course approved by the commissioner and provided by a continuing education provider approved by the commissioner prior to commencing the transaction of annuities. Insurance producers who hold a life insurance line of authority on December 31, 2022, and who desire to sell annuities shall complete the requirements of this subdivision no later than six months after January 1, 2023. Individuals who obtain a life insurance line of authority on or after January 1, 2023, may not engage in the sale of annuities until the annuity training course required under this subdivision has been completed. (b) The length of the training required under this subdivision must be four continuing education hours. (c) The training required under this subdivision must include information on the following topics: (1) the types of annuities and various classifications of annuities; (2) identification of the parties to an annuity; (3) how fixed, variable, and indexed annuity contract provisions affect consumers; (4) the application of income taxation of qualified and nonqualified annuities; (5) the primary uses of annuities; (6) appropriate standard of conduct, sales practices, replacement, and disclosure requirements; and (7) the recognition of indicators that a prospective insured may lack the short-term memory or judgment to knowingly purchase an insurance product. (d) Providers of courses intended to comply with this subdivision shall cover all topics listed in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer's products. (e) A provider of an annuity training course intended to comply with this subdivision must be an approved continuing education provider in this state and comply with the requirements applicable to insurance producer continuing education courses. (f) An insurance producer licensed by December 31, 2022, who holds a life insurance line of authority and has previously completed the training in subdivision 2, paragraph (a), shall complete either: (1) a new four-credit training course approved by the Department of Commerce after July 1, 2022; or (2) an additional onetime one-credit training course approved by the Department of Commerce after July 1, 2022, and provided by a Department of Commerce-approved education provider on appropriate sales practices and replacement and disclosure requirements under sections 72A.203 to 72A.2036.  Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with chapter 45. In order to assist compliance with this section, all courses approved by the commissioner for the purposes of this section shall be given the course title "Best Interest Standards of Conduct for Annuity Sales." Only courses satisfying the requirements of this section shall use this course title after July 1, 2022. (g) Providers of annuity training shall comply with the course completion reporting requirements of chapter 45. (h) The satisfaction of the training requirements of another state that are substantially similar to the provisions of this subdivision satisfies the training requirements of this subdivision in this state. (i) The satisfaction of the components of the training requirements of any course or courses with components substantially similar to the provisions of this subdivision satisfy the training requirements of this subdivision. (j) An insurer shall verify that an insurance producer has completed the annuity training course required under this subdivision before allowing the insurance producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this subdivision by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems, vendors, or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers. If such data collection and reporting arrangements are not in place, an insurer must maintain records verifying that the producer has completed the annuity training course required under this subdivision and make the records available to the commissioner upon request. History:  2013 c 54 s 4; 2022 c 84 s 20
72A.2034 PENALTIES. Subdivision 1. Imposition; mitigation; enforcement. (a) An insurer is responsible for compliance with sections 72A.203 to 72A.2036. If a violation occurs, either because of the action or inaction of the insurer or its insurance producer, the commissioner may order, in addition to any available penalties, remedies, or administrative actions: (1) an insurer to take reasonably appropriate corrective action, including but not limited to canceling a transaction, for any consumer harmed by a failure to comply with sections 72A.203 to 72A.2036 by the insurer, an entity contracted to perform the insurer supervisory duties, or by the insurer's insurance producer; (2) a general agency, independent agency, or the insurance producer to take reasonably appropriate corrective action for any consumer harmed by the insurance producer's violation of sections 72A.203 to 72A.2036; and (3) appropriate penalties and sanctions. (b) Nothing in sections 72A.203 to 72A.2036 shall affect any obligation of an insurer for the acts of its insurance producers, or any consumer remedy or any cause of action that is otherwise provided for under applicable federal or state law, including without limitation chapter 60K. Subd. 2. Aggravation or mitigation. Any applicable penalty for a violation of sections 72A.203 to 72A.2036 may be increased or decreased upon consideration of any aggravating or mitigating circumstances, including if corrective action for the consumer was taken promptly after a violation was discovered, or the violation was not part of a pattern or practice. The authority to enforce compliance with sections 72A.203 to 72A.2036 is vested exclusively with the commissioner. History:  2013 c 54 s 5; 2022 c 84 s 21
72A.2035 RECORD KEEPING. Subdivision 1. Duration. Insurers and insurance producers shall maintain or be able to make available to the commissioner records of the information collected from the consumer, disclosures made to the consumer, including summaries of oral disclosures, and other information used in making the recommendations that were the basis for insurance transactions for ten years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance producer. Subd. 2. Medium. Records required to be maintained by sections 72A.203 to 72A.2036 may be maintained in paper, photographic, microprocess, magnetic, mechanical, or electronic media or by any process that accurately reproduces the actual document. History:  2013 c 54 s 6; 2022 c 84 s 22
72A.2036 RELATIONSHIP TO OTHER LAWS; ENFORCEMENT. (a) Nothing in sections 72A.203 to 72A.2036 limits the commissioner's authority to make any investigation or take any action under chapter 45 or other applicable law with respect to any insurer, insurance producer, broker-dealer, third-party contractor, or other entity engaged in any activity involving the sale of an annuity that is subject to sections 72A.203 to 72A.2036. (b) In addition to any other penalties provided by the laws of this state, a violation of sections 72A.203 to 72A.2036 shall be considered a violation of section 72A.20. History:  2013 c 54 s 7; 2022 c 84 s 23
72A.204 PROHIBITED USES OF SENIOR-SPECIFIC CERTIFICATIONS AND PROFESSIONAL DESIGNATIONS. Subdivision 1. Purpose and scope. The purpose of this section is to set forth standards to protect consumers from misleading and fraudulent marketing practices with respect to the use of senior-specific certifications and professional designations in: (1) the solicitation, sale, or purchase of a life insurance or annuity product; or (2) the provision of advice in connection with the solicitation, sale, or purchase of a life insurance or annuity product. Subd. 2. Insurance producer. For purposes of this section, "insurance producer" means a person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance, including annuities. Subd. 3. Prohibited uses of senior-specific certifications and professional designations. (a) It is an unfair and deceptive act or practice in the business of insurance for an insurance producer to use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a client or prospective client that the insurance producer has special certification or training in advising or servicing seniors in connection with the solicitation, sale, or purchase of a life insurance or annuity product or in the provision of advice as to the value of or the advisability of purchasing or selling a life insurance or annuity product, either directly or indirectly, including the provision of advice through publications or writings or by issuing or promulgating analyses or reports related to a life insurance or annuity product. (b) The prohibited use of senior-specific certifications or professional designations includes, but is not limited to, the following: (1) use of a certification or professional designation by an insurance producer who has not actually earned or is otherwise ineligible to use such certification or designation; (2) use of a nonexistent or self-conferred certification or professional designation; (3) use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the insurance producer using the certification or designation does not have; and (4) use of a certification or professional designation that was obtained from a certifying or designating organization that: (i) is primarily engaged in the business of instruction in sales or marketing; (ii) does not have reasonable standards or procedures for ensuring the competency of its certificants or designees; (iii) does not have reasonable standards or procedures for monitoring and disciplining its certificants or designees for improper or unethical conduct; or (iv) does not have reasonable continuing education requirements for its certificants or designees in order to maintain the certificate or designation. (c) There is a rebuttable presumption that a certifying or designating organization is not disqualified solely for the purposes of paragraph (b), clause (4), when the certification or designation issued from the organization does not primarily apply to sales or marketing and when the organization or the certification or designation in question has been accredited by: (1) the American National Standards Institute (ANSI); (2) the National Commission for Certifying Agencies; or (3) any organization that is on the United States Department of Education list entitled "Accrediting Agencies Recognized for Title IV Purposes." (d) In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing seniors, factors to be considered must include: (1) use of one or more words such as "senior," "retirement," "elder," or like words combined with one or more words such as "certified," "registered," "chartered," "adviser," "specialist," "consultant," "planner," or like words, in the name of the certification or professional designation; and (2) the manner in which those words are combined. (e) For purposes of this section, a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency is not a certification or professional designation, unless it is used in a manner that would confuse or mislead a reasonable consumer, when the job title: (1) indicates seniority or standing within the organization; or (2) specifies an individual's area of specialization within the organization. (f) For purposes of paragraph (e), "financial services regulatory agency" includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940. History:   2009 c 178 art 1 s 43 
72A.207 GRADED DEATH BENEFITS. For the purpose of this section, a graded death benefit is a provision within a life insurance policy in which the death benefit, in the early years of the policy, is less than the face amount of the policy, but which increases with the passage of time. No policy of life insurance paying a graded death benefit may be issued in this state unless the graded death benefit is equal to at least four times the first year premium. This section does not prohibit the return of premiums or premiums plus interest in connection with the voluntary or judicially ordered rescission of the policy, or according to the terms of the exclusions from coverage for suicide, aviation, or war risk. A policy providing preneed insurance as defined in section 61A.258, or designed to cover, in whole or in part, the goods and services described in section 61A.258, subdivision 1, clause (3), is not subject to this section. History:  1996 c 446 art 1 s 66; 2013 c 53 s 2
72A.21 POWER OF COMMISSIONER. The commissioner shall have power to examine and investigate into the affairs of every person engaged in the business of insurance in this state in order to determine whether that person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by section 72A.19. History:   1967 c 395 art 12 s 21 
72A.22 HEARING; WITNESSES; PRODUCTION OF BOOKS. Subdivision 1. Statement of charges and notice of hearing. Whenever the commissioner has reason to believe that any person has been engaged or is engaging in this state in any unfair method of competition or any unfair or deceptive act or practice, defined in section 72A.20, and that a proceeding in respect thereto would be to the interest of the public, the commissioner shall issue and serve upon that person a statement of the charges in that respect and a notice of a hearing thereon to be held at a time and place fixed in the notice, which shall not be less than 20 days after the date of the service thereof. Subd. 2. Appearance; intervention. At the time and place fixed for such hearing said person shall have an opportunity to be heard and to show cause why an order should not be made by the commissioner requiring the person to cease and desist from the acts, methods, or practices so complained of. Upon good cause shown, the commissioner shall permit any person to intervene, appear and be heard at such hearing by counsel or in person. Subd. 3. Formal rules of pleading or evidence not required. Nothing contained in sections 72A.17 to 72A.32 shall require the observance at any such hearing of formal rules of pleading or evidence. Subd. 4. Hearing. The commissioner, upon such a hearing, may administer oaths, examine and cross-examine witnesses, receive oral and documentary evidence, and shall have the power to subpoena witnesses, compel their attendance, and require the production of books, papers, records, correspondence, or other documents which the commissioner deems relevant to the inquiry. The commissioner, upon such a hearing, may, and upon the request of any party shall, cause to be made a stenographic record of all the evidence and all the proceedings had at the hearing. If no stenographic record is made and if a judicial review is sought, the commissioner shall prepare a statement of the evidence and proceeding for use on review. In case of a refusal of any person to comply with any subpoena issued hereunder or to testify with respect to any matter concerning which the person may be lawfully interrogated, the District Court of Ramsey County or of the county where the hearing is being held, on application of the commissioner, may issue an order requiring that person to comply with the subpoena and to testify; and any failure to obey any such order of the court may be punished by the court as a contempt thereof. Subd. 5. Service. Statements of charges, notices, orders, and other processes of the commissioner under sections 72A.17 to 72A.32 may be served by anyone duly authorized by the commissioner, either in the manner provided by law for service of process in civil actions or in compliance with section 45.028, subdivision 2. History:  1967 c 395 art 12 s 22; 1986 c 444; 1992 c 564 art 2 s 7
72A.25 UNFAIR COMPETITION. Subdivision 1. Statement of charges; service; hearing. Whenever the commissioner has reason to believe that any person engaged in the business of insurance is engaged in this state in any method of competition or in any act or practice in the conduct of that business which is not defined in section 72A.20, that said method of competition is unfair or that said act or practice is unfair or deceptive and that a proceeding in respect thereto would be to the interest of the public, the commissioner may issue and serve upon that person a statement of the charges in that respect and a notice of a hearing thereon to be held at a time and place fixed in the notice, which shall not be less than 20 days after the date of the service thereof. Each such hearing shall be conducted in the same manner as the hearings provided for in section 72A.22, and the provisions of that section as to service are made applicable to proceedings under this section. Upon good cause shown, the commissioner shall permit any person to intervene, appear and be heard at such hearing by counsel or in person. The commissioner shall, after the hearing, make a written report which shall include findings as to the facts and shall serve a copy thereof upon the person served with the statement of charges. Subd. 2. Application for injunction. If the report charges a violation of sections 72A.17 to 72A.32 and if the method of competition, act, or practice charged has not been discontinued, the commissioner may, through the attorney general, at any time after 20 days after the service of the report, cause a petition to be filed in the District Court of Ramsey County, to enjoin and restrain that person from engaging in the method, act, or practice charged. A transcript of the proceedings before the commissioner, including all evidence taken and the report and findings, shall be filed with the petition. Upon the filing of the petition and transcript the court shall have jurisdiction of the proceedings and shall have power to make and enter appropriate orders in connection therewith and to issue such writs as are ancillary to its jurisdiction or necessary in its judgment to prevent injury to the public pendente lite. Subd. 3. Order enjoining and restraining. If the court finds that the method of competition complained of is unfair or that the act or practice complained of is unfair and deceptive, and that the proceeding by the commissioner with respect thereto is to the interests of the public, it shall issue its order enjoining and restraining the continuance of that method of competition, act, or practice. The findings of the commissioner shall be given the same effect as those of a referee appointed pursuant to rule 53 of the Rules of Civil Procedure. Subd. 4. Rehearing. If either party shall apply to the court before the entry of its order for leave to adduce additional evidence, and shall show to the satisfaction of the court that said additional evidence is material and that there were reasonable grounds for the failure to adduce it in the proceeding before the commissioner, the court may order said additional evidence to be taken before the commissioner and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The commissioner may modify the findings of fact, or make new findings, by reason of the additional evidence so taken, and shall file those modified or new findings with the return of the additional evidence. Any such additional evidence and modified or new findings shall be considered by the court in making and entering its final order, together with the matters submitted in the original transcript. History:  1967 c 395 art 12 s 25; 1976 c 239 s 18; 1984 c 555 s 5; 1986 c 444
72A.26 INTERVENTION. If the report of the commissioner does not charge a violation of sections 72A.17 to 72A.32, any intervenor in the proceedings may, within 20 days after the service of the report, cause a petition to be filed in the District Court of Ramsey County for a review of that report. Notice of the filing of the intervenor's petition shall be given to the commissioner and to the person upon whom the statement of charges was originally served. The commissioner shall, within 20 days after the service of the notice of filing the petition, file a transcript of the proceedings, including all evidence taken and the report and findings, and the person upon whom the statement of charges was originally served shall have 20 days after the service of notice of filing the petition in which to file an answer. The proceedings before the court shall conform to those provided for by section 72A.25. Upon such a review the court shall have authority to issue appropriate orders and writs in connection therewith, including, if the court finds it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act, or practice which it finds, notwithstanding the report of the commissioner, constitutes a violation of sections 72A.17 to 72A.32. History:  1967 c 395 art 12 s 26; 1986 c 444
72A.27 APPEAL. Any decree or order of a district court made and entered under section 72A.25 is subject to review by appeal as in other civil cases. The appeal must be taken within the time prescribed by law for taking appeals from orders of the district courts. History:  1967 c 395 art 12 s 27; 1983 c 247 s 37; 1987 c 336 s 8
72A.285 CLAIM FOR INSURANCE BENEFITS; RELEASE OF SUMMARY INFORMATION. Notwithstanding section 145.64, when a review organization, as defined in section 145.61, has conducted a review of health services given or proposed to be given to an insured or claimant in connection with or in anticipation of a claim for insurance benefits, a complete summary of the review findings must be furnished by the insurer to the provider who requested the review or to the insured or claimant, upon that person's request. The summary must list the qualifications of the reviewer, including any license, certification, or specialty designation. The summary must also describe the relationship between the insured's or claimant's diagnosis and the review criteria used as a basis for the claim decision, including the specific rationale for the reviewer's decision. Nothing in this section requires the disclosure of the identity of the person conducting the review. History:   1991 c 264 s 3 
72A.29 CONCURRENT REMEDIES. Subdivision 1. Liability under other laws. No order of the commissioner, or order or decree of any district court, under sections 72A.17 to 72A.32 shall in any way relieve or absolve any person affected by such order or decree from any liability under any other laws of this state. Subd. 2. Concurrent powers. The powers vested in the commissioner by sections 72A.17 to 72A.32 shall be additional to any other powers to enforce any penalties, fines, or forfeitures authorized by law with respect to the methods, acts, and practices hereby declared to be unfair or deceptive. History:   1967 c 395 art 12 s 29 
72A.30 EVIDENTIAL PRIVILEGE DENIED; IMMUNITY; WAIVER. A person who asks to be excused from attending and testifying or from producing any books, papers, records, correspondence, or other documents at any hearing on the ground that the testimony or evidence required may tend to incriminate or subject the person to a penalty or forfeiture, who is nevertheless directed to give the testimony or produce the evidence, shall comply with the direction. However, the person shall not subsequently be prosecuted or subjected to any penalty or forfeiture because of any transaction, matter, or thing about which the person testified or produced evidence, and no testimony given or evidence produced shall be received against that person upon any criminal action, investigation, or proceeding. No person testifying is exempt from prosecution or punishment for perjury committed while testifying, and the testimony or evidence given or produced shall be admissible against that person upon any criminal action, investigation, or proceeding concerning the perjury. The person is not exempt from the refusal, revocation, or suspension of any license, permission, or authority conferred, or to be conferred, pursuant to the insurance law of this state. An individual may execute, acknowledge, and file in the office of the commissioner a statement expressly waiving immunity or privilege in respect to any transaction, matter, or thing specified in the statement, and the testimony of that person or any evidence in relation to it may be received or produced before any judge, court, tribunal, grand jury, or otherwise. When it is received or produced, that individual is not entitled to any immunity or privilege on account of any testimony given or evidence produced by that individual. History:  1967 c 395 art 12 s 30; 1983 c 359 s 2; 1986 c 444
72A.31 CERTAIN ACTS DEEMED UNFAIR METHOD OF COMPETITION. Subdivision 1. Real and personal property financing; prohibited acts by businesses. No person, firm or corporation engaged in the business of financing the purchase of real or personal property or of lending money on the security of real or personal property or who acts as agent or broker for one who purchases real property and borrows money on the security thereof, and no trustee, director, officer, agent or other employee of any such person, firm, or corporation shall directly or indirectly: (1) require, as a condition precedent to such purchase or financing the purchase of such property or to loaning money upon the security of a mortgage thereon, or as a condition prerequisite for the renewal or extension of any such loan or mortgage or for the performance of any other act in connection therewith, that the person, firm or corporation making such purchase or for whom such purchase is to be financed or to whom the money is to be loaned or for whom such extension, renewal or other act is to be granted or performed negotiate any policy of insurance or renewal thereof covering such property through a particular agent, or insurer, or (2) refuse to accept any policy of insurance covering such property because it was not negotiated through or with any particular agent, or insurer, or (3) refuse to accept any policy of insurance covering the property issued by an insurer that is a member insurer as defined by section 60C.03, subdivision 6, or (4) require any policy of insurance covering the property to exceed the replacement cost of the buildings on the mortgaged premises. This section shall not prevent the disapproval of the insurer or a policy of insurance by any such person, firm, corporation, trustee, director, officer, agent or employee where there are reasonable grounds for believing that the insurer is insolvent or that such 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 which are based on the nature of the coverage and which are not arbitrary, unreasonable or discriminatory, nor shall this section prevent a mortgage lender or mortgage servicer from requiring that a policy of insurance or renewal thereof be in conformance with standards of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, nor shall this section forbid the securing of insurance or a renewal thereof at the request of the borrower or because of the borrower's failure to furnish the necessary insurance or renewal thereof. For purposes of this section, "insurer" includes a township mutual fire insurance company operating under sections 67A.01 to 67A.26. Upon notice of any such disapproval of or refusal to accept an insurer or a policy of insurance, the commissioner may order the approval of the insurer or the acceptance of the tendered policy of insurance, or both, if the commissioner determines such disapproval or refusal to accept is not in accordance with the foregoing requirements. Failure to comply with such an order of the commissioner of commerce shall be deemed a violation of this section. Subd. 2. Public agency construction insurance or bond; prohibited acts. It shall be unlawful in connection with any contract or subcontract calling for any construction work for a public agency to require, directly or indirectly, that any insurance or bond be purchased or renewed through a particular agent or insurer. History:  1967 c 395 art 12 s 31; 1969 c 229 s 1; 1969 c 433 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 337 s 120; 2011 c 61 s 7
72A.32 VIOLATIONS, PROCEDURE. Any violation of section 72A.31 shall constitute an unfair method of competition and the person, firm or corporation practicing the same shall be proceeded against under the provisions of sections 72A.21 to 72A.25, inclusive. History:   1967 c 395 art 12 s 32 
72A.325 INSURANCE FOR FUNERAL OR BURIAL EXPENSE; FREEDOM OF CHOICE. No insurance company, agent, or other person engaged in the business of providing insurance or other benefits for the payment of any funeral or burial expense, shall designate, endorse, or otherwise promote any particular mortician, funeral director, funeral establishment, cemetery, or any other party offering funeral or burial services or supplies, as the beneficiary or recipient of the benefits, so as to deprive the persons with legal authority to control the disposition of the remains of the deceased policyholder under section 149A.80, subdivision 2, of the right to select the funeral or burial services and supplies of their choice. No owner, director, or employee of a funeral establishment, or entity having a direct equity interest in a funeral establishment, shall receive any fee, commission, or other reimbursement on any insurance sale facilitated through the funeral establishment, except the sale of a preneed funeral insurance contract with a face amount not to exceed $20,000. For purposes of this section, "preneed funeral insurance contract" means an agreement by or for an individual before that individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services. Nothing in this section constitutes a waiver or exception to the requirements of chapter 60K. History:  1981 c 129 s 1; 1987 c 233 s 1; 1999 c 100 s 1
72A.328 AFFINITY GROUP. Subdivision 1. Definitions. (a) For purposes of this section the following terms have the meanings given. (b) "Affinity program" means an organization or group formed around a common interest or specified purpose, or a group of individuals who are members of an entity that offers individuals benefits based on their membership in that entity. Affinity program does not include an entity that obtains group insurance, as defined in section 60A.02, subdivision 28, or risk retention groups as defined in section 60E.02, subdivision 12. (c) "Policy" means an individually underwritten policy of private passenger vehicle insurance, as defined in section 65B.001, subdivision 2, an individually underwritten policy of homeowner's insurance, as defined in section 65A.27, subdivision 4, or an individually underwritten policy issued under section 60A.06, subdivision 1, clause (10). Subd. 2. Discount. An insurance company may offer an individual a discount or other benefit relating to a policy based on the individual's membership in an affinity program if: (1) the benefit or discount is calculated in accordance with section 70A.04; and (2) all members of the affinity program are eligible for the discount or benefit. History:  2017 c 94 art 8 s 5; 2017 c 99 s 11; 2022 c 93 art 2 s 32,33
72A.33 PURPOSE OF ACT, CONSTRUCTION. The purpose of sections 72A.33 to 72A.39 is to subject to the jurisdiction of the commissioner of commerce of this state and to the jurisdiction of the courts of this state insurers not authorized to transact business in this state which place in or send into this state any false advertising designed to induce residents of this state to purchase insurance from insurers not authorized to transact business in this state. The legislature declares it is in the interest of the citizens of this state who purchase insurance from insurers which solicit insurance business in this state in the manner set forth in the preceding sentence that such insurers be subject to the provisions of sections 72A.33 to 72A.39. In furtherance of such state interest, the legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing, it exercises its power to protect its residents and also exercises powers and privileges available to the state by virtue of Public Law 15, 79th Congress of the United States, chapter 20, 1st Session, section 340, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states; the authority provided herein to be in addition to any existing powers of this state. The provisions of sections 72A.33 to 72A.39 shall be liberally construed. History:  1967 c 395 art 12 s 33; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92
72A.34 DEFINITIONS. Subdivision 1. Scope. When used in sections 72A.33 to 72A.39 the terms defined in this section shall have the meanings given them in this section. Subd. 2. Unfair Trade Practice Act. "Unfair Trade Practice Act" shall mean the act relating to regulation of trade practices as defined in sections 72A.17 to 72A.32. Subd. 3. Residents. "Residents" shall mean and include persons, partnerships or corporations, domestic, alien, or foreign. History:   1967 c 395 art 12 s 34 
72A.35 NOTICE TO DOMICILIARY SUPERVISORY OFFICIAL. No unauthorized foreign or alien insurer of the kind described in section 72A.33 shall make, issue, circulate or cause to be made, issued or circulated, to residents of this state any estimate, illustration, circular, pamphlet, or letter, or cause to be made in any newspaper, magazine or other publication or over any radio or television station, any announcement or statement to such residents misrepresenting its financial condition or the terms of any contracts issued or to be issued or the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon in violation of the Unfair Trade Practice Act, and whenever the commissioner shall have reason to believe that any such insurer is engaging in such unlawful advertising, it shall be the commissioner's duty to give notice of such fact by certified mail to such insurer and to the insurance supervisory official of the domiciliary state of such insurer. For the purpose of this section, the domiciliary state of an alien insurer shall be deemed to be the state of entry or the state of the principal office in the United States. History:  1967 c 395 art 12 s 35; 1978 c 674 s 60; 1986 c 444
72A.36 ACTION BY COMMISSIONER. If after 30 days following the giving of the notice mentioned in section 72A.35 such insurer has failed to cease making, issuing, or circulating such false representations or causing the same to be made, issued or circulated in this state, and if the commissioner has reason to believe that a proceeding in respect to such matters would be to the interest of the public, and that such insurer is issuing or delivering contracts of insurance to residents of this state or collecting premiums on such contracts or doing any of the acts enumerated in section 72A.37, the commissioner shall take action against such insurer under the Unfair Trade Practice Act. History:  1967 c 395 art 12 s 36; 1986 c 444
72A.37 SERVICE UPON UNAUTHORIZED INSURER. Subdivision 1. Acts constituting appointment of commissioner as attorney. Any of the following acts in this state, effected by mail or otherwise, by any such unauthorized foreign or alien insurer: (1) The issuance or delivery of contracts of insurance to residents of this state; (2) the solicitation of applications for such contracts; (3) the collection of premiums, membership fees, assessments or other considerations for such contracts; or (4) any other transaction of insurance business; is equivalent to and shall constitute an appointment by such insurer of the commissioner of commerce and a successor or successors in office, to be its true and lawful attorney, upon whom may be served all statements of charges, notices and lawful process in any proceeding instituted in respect to the misrepresentations set forth in section 72A.35 under the provisions of the Unfair Trade Practice Act, or in any action, suit or proceeding for the recovery of any penalty therein provided, and any such act shall be signification of its agreement that such service of statement of charges, notices or process is of the same legal force and validity as personal service of such statement of charges, notices or process in this state, upon such insurer. Subd. 2. Method of service. Service of a statement of charges and notices under said unfair trade practice act shall be made by any deputy or employee of the Department of Commerce upon the commissioner or some person in apparent charge of the office, in compliance with section 45.028. Service of process issued by any court in any action, suit or proceeding to collect any penalty under said act provided, shall be made in compliance with section 45.028, subdivision 2. Subd. 3. Service on agents and certain others. Service of statement of charges, notices and process in any such proceeding, action or suit shall in addition to the manner provided in subdivision 2 be valid if served upon any person within this state who on behalf of such insurer is (1) soliciting insurance, or (2) making, issuing or delivering any contract of insurance, or (3) collecting or receiving in this state any premium for insurance; and a copy of such statement of charges, notices or process is sent within ten days thereafter by certified mail by or on behalf of the commissioner to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is certified, showing the name of the sender of the letter, the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing the same showing a compliance herewith, are filed with the commissioner in the case of any statement of charges or notices, or with the court administrator of the court in which such action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as the court may allow. Subd. 4. Cease or desist order. No cease or desist order under this section shall be entered until the expiration of 30 days from the date of the filing of the affidavit of compliance. Subd. 5. Other methods of service. Service of process and notice under the provisions of sections 72A.33 to 72A.39 shall be in addition to all other methods of service provided by law, and nothing in sections 72A.33 to 72A.39 shall limit or prohibit the right to serve any statement of charges, notices or process upon any insurer in any other manner now or hereafter permitted by law. History:  1967 c 395 art 12 s 37; 1978 c 674 s 60; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 1992 c 564 art 2 s 8
72A.38 SEVERABILITY. If any provision of sections 72A.33 to 72A.39 or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or application of sections 72A.33 to 72A.39 which can be given effect without the invalid provision or application, and to this end the provisions of sections 72A.33 to 72A.39 are declared to be severable. History:   1967 c 395 art 12 s 38 
72A.39 CITATION. Sections 72A.33 to 72A.39 may be cited as the "Unauthorized Insurers False Advertising Process Act." History:   1967 c 395 art 12 s 39 
72A.40 PURPOSE. The legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers not authorized to do insurance business in this state. The legislature further declares that it desires to protect residents of this state against acts by insurers not authorized to do an insurance business in this state, to maintain fair and honest insurance markets, to protect the premium tax revenues of this state, to protect authorized insurers who are subject to strict regulation from unfair competition by unauthorized insurers, and to protect against the evasion of the insurance regulatory laws of this state. In furtherance of the state interest, the legislature herein provides a method for substituted service of process upon unauthorized insurers. The legislature declares that in so doing it exercises its power to protect residents of this state and to define what constitutes doing an insurance business in this state, and also exercises powers and privileges available to this state by virtue of Public Law 79-15, Statutes at Large, volume 59, page 33, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states. History:   1967 c 590 s 1 
72A.41 TRANSACTING BUSINESS WITHOUT CERTIFICATE OF AUTHORITY. Subdivision 1. Prohibition; exception. It is unlawful for any company to enter into a contract of insurance as an insurer or to transact insurance business in this state, as set forth in subdivision 2, without a certificate of authority from the commissioner; provided that this subdivision does not apply to: (a) contracts of insurance procured by agents under the authority of sections 60A.195 to 60A.209; (b) contracts of reinsurance and contracts of ocean or wet marine and transportation insurance; (c) transactions in this state involving a policy lawfully solicited, written and delivered outside of this state covering only subjects of insurance not resident, located, or expressly to be performed in this state at the time of issuance and which transactions are subsequent to the issuance of the policy; (d) transactions in this state involving a policy of insurance or annuity issued prior to July 1, 1967; (e) contract of insurance procured under the authority of section 60A.198, subdivision 8; or (f) transactions in this state involving contracts of insurance covering property or risks not located in this state. Subd. 2. Acts constituting. Any of the following acts in this state, effected by mail or otherwise by an unauthorized insurer, shall be included among those deemed to constitute transacting insurance business in this state: (a) the issuance or delivery of a contract of insurance or annuity to a resident of this state; (b) the solicitation of an application for such a contract; (c) the collection of a premium, membership fee, assessment or other consideration for such a contract; or (d) the transaction of any matter subsequent to the execution of such a contract and arising out of it. Subd. 3. Failure to obtain certificate. The failure of a company to obtain a certificate of authority shall not impair the validity of any act or contract of such company and shall not prevent such company from defending any action in any court of this state, but no company transacting insurance business in this state without a certificate of authority shall be permitted to maintain an action in any court of this state to enforce any right, claim or demand arising out of the transaction of such business until such company shall have obtained a certificate of authority. Nor shall an action be maintained in any court of this state by any successor or assignee of such company on any such right, claim or demand originally held by such company until a certificate of authority shall have been obtained by such company or by a company which has acquired all or substantially all of its assets. History:  1967 c 590 s 2; 1969 c 6 s 17; 1980 c 436 s 3; 1987 c 384 art 2 s 15; 1994 c 485 s 57; 2011 c 108 s 49
72A.42 ENFORCEMENT AUTHORITY. Subdivision 1. Injunctions. Whenever the commissioner believes, from evidence satisfactory to the commissioner, that any company is violating or about to violate the provisions of section 72A.41, the commissioner may, through the attorney general of this state, cause a complaint to be filed in the District Court of Ramsey County to enjoin and restrain such company from continuing such violation or engaging therein or doing any act in furtherance thereof. The court shall have jurisdiction of the proceeding and shall have the power to make and enter an order or judgment awarding such preliminary or final injunctive relief as in its judgment is proper. Subd. 2. Enforcement proceedings. The attorney general may proceed in the courts of this state or any reciprocal state to enforce an order or decision in any court proceeding or in any administrative proceeding before the commissioner of commerce. (a) Definition--In this section: (1) "Reciprocal state" means any state or territory of the United States the laws of which contain procedures substantially similar to those specified in this section for the enforcement of foreign decrees issued by courts located in other states or territories of the United States, against any insurer incorporated or authorized to do business in said state or territory. (2) "Foreign decree" means any decree or order in equity or in law, including without being limited thereto, final money judgments for penalties and fines of a court located in a "reciprocal state," including a court of the United States located therein, against any insurer incorporated or authorized to do business in this state. (3) "Qualified party" means a state regulatory agency acting in its capacity to enforce the insurance laws of its state. (b) List of reciprocal states: The commissioner of commerce of this state shall determine which states and territories qualify as reciprocal states and shall maintain at all times an up-to-date list of such states. (c) Filing and status of foreign decrees: a copy of any foreign decree authenticated in accordance with the statutes of this state may be filed in the Office of the Court Administrator of District Court of Ramsey County of this state. The court administrator, upon verifying with the commissioner of commerce that the decree or order qualifies as a "foreign decree" shall treat the foreign decree in the same manner as a decree of District Court of Ramsey County of this state. A foreign decree so filed has the same effect and shall be deemed as a decree of District Court of Ramsey County of this state, and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a decree of District Court of Ramsey County of this state and may be enforced or satisfied in like manner. (d) Notice of filing: (1) At the time of the filing of the foreign decree, the attorney general shall make and file with the court administrator an affidavit setting forth the name and last known post office address of the defendant. (2) Promptly upon the filing of the foreign decree and the affidavit, the court administrator shall mail notice of the filing of the foreign decree to the defendant at the address given and to the commissioner of commerce of this state and shall make a note of the mailing in the docket. In addition, the attorney general may mail a notice of the filing of the foreign decree to the defendant and to the commissioner of commerce of this state and may file proof of mailing with the court administrator. Lack of mailing notice of filing by the court administrator shall not affect the enforcement proceedings if proof of mailing by the attorney general has been filed. (3) No execution or other process for enforcement of a foreign decree filed hereunder shall issue until 30 days after the date the decree is filed. (e) Stay: (1) If the defendant shows the District Court of Ramsey County that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, the court may stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered. (2) If the defendant shows the District Court of Ramsey County any ground upon which enforcement of a decree of District Court of Ramsey County of this state would be stayed, the court may stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree which is required in this state. (f) Fees: Any person filing a foreign decree shall pay to the court administrator as a fee for docketing, transcription or other enforcement proceedings, the amount provided for decrees of the District Court of Ramsey County. History:  1967 c 590 s 3; 1969 c 459 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1986 c 3 art 1 s 82
72A.43 SERVICE OF PROCESS UPON UNAUTHORIZED COMPANY BY COMMISSIONER. Subdivision 1. Appointment of agent. Any act of entering into a contract of insurance or annuity as an insurer or transacting insurance business in this state as set forth in subdivision 2 of section 72A.41, by an unauthorized company is equivalent to and shall constitute an appointment by such company of the commissioner of commerce and a successor or successors in office to be its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against it, arising out of a violation of section 72A.41, and any of such acts shall be a signification of its agreement that any such process against it which is so served shall be of the same legal force and validity as personal service of process in this state upon such company. Subd. 2. How made. Service of such process shall be made in compliance with section 45.028, subdivision 2. Subd. 3. Postponement of service. The court in any action or proceeding in which service is made in the manner provided in subdivision 2 may, in its discretion, order such postponement as may be necessary to afford such company reasonable opportunity to defend such action or proceeding. Nothing in this section is to be construed to prevent an unauthorized company from filing a motion to quash a writ or to set aside service thereof made in the manner provided in subdivision 2 on the ground that such unauthorized company has not done any of the acts referred to in subdivision 1. Subd. 4. Judgment by default. No judgment by default shall be entered in any such action or proceeding until the expiration of 30 days from the date of the filing of the affidavit of compliance. Subd. 5. Other law. Nothing contained in this section shall limit or affect the right to serve any process, notice or demand required or permitted by law to be served upon any company in any other manner now or hereafter permitted by law. History:  1967 c 590 s 4; 1978 c 674 s 60; 1984 c 618 s 3,4; 1986 c 444; 1Sp1986 c 3 art 1 s 82; 1992 c 564 art 2 s 9
72A.44 PENALTY. Any company that violates subdivision 1 of section 72A.41, shall be required to pay a penalty of not less than $100 nor more than $1,000 for each offense, to be recovered on behalf of the state. History:   1967 c 590 s 5 
72A.49 SHORT TITLE. Sections 72A.49 to 72A.505 may be cited as the "Minnesota Insurance Fair Information Reporting Act." History:   1989 c 316 s 2 
72A.491 DEFINITIONS. Subdivision 1. Application. For the purposes of sections 72A.49 to 72A.505, the following terms have the meanings given them. Subd. 2. Adverse underwriting decision. "Adverse underwriting decision" means any of the following actions with respect to insurance transactions involving insurance coverage that is individually underwritten: (1) denial, in whole or in part, of coverage that was requested in writing to the insurer; (2) termination or reduction of insurance coverage or policy; (3) failure of an insurance agent to apply for coverage with a specific insurer that the agent represents and that is specifically requested by an applicant; (4) placement by an insurer or insurance agent of a risk with a residual market mechanism, an unauthorized insurer, or an insurer that specializes in substandard risks; (5) charging a higher rate on the basis of information that differs from that which the applicant or policyholder furnished for property or casualty coverage; (6) an offer to insure at higher than standard rates for life, health, or disability coverage; or (7) the rescission of a policy. Subd. 3. Affiliate or affiliated. "Affiliate" or "affiliated" means a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another person. Subd. 4. Applicant. "Applicant" means any person who seeks to contract for insurance coverage from an insurer. Subd. 5. Consumer report. "Consumer report" means any written, oral, or other communication of information bearing on a person's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used or expected to be used in connection with an insurance transaction. Subd. 6. Consumer reporting agency. "Consumer reporting agency" means any person who: (1) regularly engages, in whole or in part, in the practice of assembling or preparing consumer reports for a monetary fee; (2) obtains information primarily from sources other than insurers; and (3) furnishes consumer reports to other persons. Subd. 7. Control; controlled by; under common control with. "Control," "controlled by," or "under common control with" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Subd. 8. Health care institution. "Health care institution" means any facility or institution that is licensed to provide health care services to natural persons. Subd. 9. Health professional. "Health professional" means any person licensed or certified to provide health care services to natural persons. Subd. 10. Health record information. "Health record information" means personal information that: (1) relates to an individual's physical or mental condition, health history, or health treatment; and (2) is obtained from a health professional or health care institution, from the individual, or from the individual's spouse, parent, legal guardian, or other person. Subd. 11. Individual. "Individual" means any natural person who: (1) in the case of property or casualty insurance is a past, present, or proposed named insured or certificate holder; (2) in the case of life, health, or disability insurance is a past, present, or proposed principal insured or certificate holder; (3) is a past, present, or proposed policy owner; (4) is a past or present applicant; (5) is a past or present claimant; or (6) derived, derives, or is proposed to derive insurance coverage under an insurance policy or certificate subject to sections 72A.49 to 72A.505. Subd. 12. Insurance-support organization. (a) "Insurance-support organization" means any person who regularly engages, in whole or in part, in the practice of assembling or collecting information about persons for the primary purpose of providing the information to an insurer or insurance agent for insurance transactions, including: (1) the furnishing of consumer reports or investigative consumer reports to an insurer or insurance agent for use in connection with an insurance transaction; and (2) the collection of personal information from insurers, insurance agents, or other insurance-support organizations to detect or prevent fraud, material misrepresentation, or material nondisclosure in connection with insurance underwriting or insurance claim activity. (b) Insurance-support organizations do not include insurance agents, government institutions, insurers, health care institutions, or health professionals. Subd. 13. Insurance transaction. "Insurance transaction" means any transaction that involves: (1) the determination of an individual's eligibility for an insurance coverage, benefit, or payment; or (2) the servicing of an insurance application, policy, contract, or certificate. Subd. 14. Insurer. "Insurer" means any insurance company, risk retention group as defined under section 60E.02, service plan corporation as defined under section 62C.02, health maintenance organization as defined under section 62D.02, fraternal benefit society regulated under chapter 64B, township mutual company regulated under chapter 67A, joint self-insurance plan or multiple employer trust regulated under chapter 60F, 62H, or section 471.617, subdivision 2, and persons administering a self-insurance plan as defined under section 60A.23, subdivision 8, paragraph (2), clauses (a) and (d). Subd. 15. Insurer that specializes in substandard risks. "Insurer that specializes in substandard risks" means an insurer whose rates and market orientation are directed at risks other than preferred or standard risks. Subd. 16. Investigative consumer report. "Investigative consumer report" means all or part of a consumer report in which information about a person's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with the person's neighbors, friends, associates, acquaintances, or others who may have knowledge concerning these items of information. Subd. 17. Personal information. "Personal information" means any individually identifiable information gathered in connection with an insurance transaction from which judgments can be made about an individual's character, habits, avocations, finances, occupation, general reputation, credit, health, or any other personal characteristics. The term includes the individual's name and address and health record information, but does not include privileged information. Personal information does not include health record information maintained by a health maintenance organization as defined under section 62D.02, subdivision 4, in its capacity as a health provider. Subd. 18. Policyholder. "Policyholder" means any individual who is a present named insured, a present policy owner, or a present group certificate holder. Subd. 19. Privileged information. (a) "Privileged information" means any individually identifiable information that: (1) relates to a claim for insurance benefits or a civil or criminal proceeding; or (2) is collected in connection with or in reasonable anticipation of a claim for insurance benefits or civil or criminal proceeding. (b) Information otherwise meeting the definition of privileged information under paragraph (a) must be considered personal information if it is disclosed in violation of section 72A.502. Subd. 20. Residual market mechanism. "Residual market mechanism" means an association, organization, or other entity created under the laws of this state to provide insurance coverage to any person who is unable to obtain coverage through ordinary methods in the normal insurance markets. Subd. 20a. Signed. "Signed" means a written signature or an electronic signature as defined in section 325L.02, paragraph (h). Subd. 21. Termination of insurance coverage or termination of an insurance policy. "Termination of insurance coverage" or "termination of an insurance policy" means either a cancellation or nonrenewal of an insurance policy, in whole or in part, for any reason other than the failure to pay a premium as required by the policy. Subd. 22. Unauthorized insurer. "Unauthorized insurer" means an insurance company that has not been granted a certificate of authority by the commissioner to transact the business of insurance in this state. History:  1989 c 316 s 3; 2000 c 468 s 20; 2011 c 52 s 3
72A.492 SCOPE. Subdivision 1. Covered policies. The obligations imposed by sections 72A.49 to 72A.505 apply to insurers, insurance agents, and insurance-support organizations that: (1) collect, receive, or maintain information in connection with insurance transactions that pertains to persons who are residents of this state; or (2) engage in insurance transactions with applicants, individuals, or policyholders who are residents of this state. Subd. 2. Covered persons. The rights granted by sections 72A.49 to 72A.505 extend to a person who is the subject of information collected, received, or maintained in connection with an insurance transaction and who is a resident of this state. Subd. 3. Exceptions. (a) Sections 72A.49 to 72A.505 do not apply to information collected from the public records of a governmental authority and maintained by an insurance company or its representatives to insure the title to real property located in this state. (b) Nothing in sections 72A.49 to 72A.505 gives a patient access to the health records pertaining to the patient maintained by the patient's health provider, or gives the patient the right to alter or amend those health records, unless otherwise provided by law. (c) Sections 72A.49 to 72A.505 do not apply to any insurance transactions involving property and casualty insurance primarily for business or professional needs. History:  1989 c 316 s 4; 2010 c 384 s 34
72A.493 OBTAINING INFORMATION BY IMPROPER MEANS. An insurer, insurance agent, or insurance-support organization must not obtain information or authorize another person to obtain information in connection with an insurance transaction by: (1) pretending to be someone else; (2) pretending to represent a person; (3) misrepresenting the true purpose of the interview; or (4) refusing to provide identification upon request. History:  1986 c 444; 1989 c 316 s 5
72A.494 NOTICE. Subdivision 1. Required. Each insurer or insurance agent shall provide a notice relating to information practices to each applicant or policyholder in the manner and at the time required by this section. Subd. 2. Exemption. A notice is not required to be provided under this section for: (1) a group policy or contract that is not individually underwritten; or (2) a renewal, reinstatement, or a change in benefits for a policy or contract if no personal information is to be collected other than from the applicant or policyholder, or from public records. Subd. 3. Timing. (a) In the case of an application for insurance coverage, the notice must be provided to the applicant or policyholder no later than the time application is made for the coverage, renewal, reinstatement, or change in benefits. (b) If personal information is to be collected only from the applicant or from public records, the notice may be provided at the time of delivery of the policy or the certificate. Subd. 4. Content of notice. The notice required by this section must be in writing and state: (1) whether personal information may be collected from persons other than the individual or individuals proposed for coverage; (2) the types of personal information that may be collected and the types of sources and investigative techniques that may be used to collect the information; (3) the types of disclosures of personal information that may be made under section 72A.501 and the circumstances under which the disclosures may be made without prior authorization; except that only those circumstances which occur with such frequency as to indicate a general business practice must be described; (4) a description of the rights established under sections 72A.497 and 72A.498 and the manner in which those rights may be exercised; and (5) that information obtained from a report prepared by an insurance-support organization may be retained by the insurance-support organization and disclosed to other persons. Subd. 5. Abbreviated notice. In lieu of the notice required under subdivision 4, the insurer or insurance agent may provide an abbreviated notice informing the applicant or policyholder that: (1) personal information may be collected from persons other than the person or persons proposed for coverage; (2) the information collected by the insurer or insurance agent may in certain circumstances be disclosed to third parties without authorization; (3) the person has a right to see their personal records and correct personal information collected; and (4) the person will be furnished the detailed notice required under subdivision 4 upon request. Subd. 6. Other companies or agencies acting on its behalf. The obligations imposed by this section upon an insurer or insurance agent may be satisfied by another insurer or insurance agent authorized to act on its behalf. History:   1989 c 316 s 6 
72A.495 MARKETING AND RESEARCH SURVEYS. An insurer or insurance agent shall clearly specify any questions designed to obtain information solely for marketing or research purposes from an individual in connection with an insurance transaction, and state that responses to the questions are not required to obtain coverage. History:   1989 c 316 s 7 
72A.496 INVESTIGATIVE CONSUMER REPORTS. Subdivision 1. Notice. An insurer, insurance agent, or insurance-support organization must not prepare or request an investigative consumer report about an individual in connection with an insurance transaction involving an application for insurance, a policy renewal, a policy reinstatement, or a change in insurance benefits, unless the insurer or insurance agent informs the person: (1) that the individual may request to be interviewed in connection with the preparation of the investigative consumer report; and (2) that, upon a request pursuant to section 72A.497, the individual is entitled to receive a copy of the investigative consumer report. Subd. 2. Reports prepared by insurers. If an investigative consumer report is to be prepared by an insurer or insurance agent, the insurer or insurance agent shall institute reasonable procedures to conduct a personal interview requested by an individual. Subd. 3. Reports prepared by insurance-support organizations. If an investigative consumer report is to be prepared by an insurance-support organization, the insurer or insurance agent desiring the report shall inform the insurance-support organization whether a personal interview has been requested by the individual. The insurance-support organization shall institute reasonable procedures for conducting an interview, if requested. History:   1989 c 316 s 8 
72A.497 ACCESS TO PERSONAL INFORMATION. Subdivision 1. Request. (a) If an individual, after proper identification, submits a written request to an insurer, insurance agent, or insurance-support organization for access to personal information about the individual, the insurer, insurance agent, or insurance-support organization shall within 30 business days from the date the request is received: (1) inform the individual of the nature and substance of the personal information that they possess in writing, by telephone, or by other oral communication, whichever the insurer, insurance agent, or insurance-support organization elects; (2) permit the individual to see and copy, in person, the personal information pertaining to that person; (3) permit the individual to obtain by mail a copy of all of the personal information or a reasonably described portion thereof, whichever the individual requests; (4) disclose to the individual the identity of those persons to whom the insurer, insurance agent, or insurance-support organization has disclosed the personal information within two years before the request; and (5) provide the individual with a summary of the procedures by which the person may request correction, amendment, or deletion of personal information, as provided under section 72A.498. (b) If the personal information is in coded form, an accurate translation in plain language must be provided in writing. (c) If credit information is requested that federal law prohibits an insurer to disclose, the insurer must disclose that the individual has the right to receive the credit information from the credit reporting agency. The insurer must disclose the name, address, and telephone number of the credit reporting agency that supplied the insurer with the credit information. Subd. 2. Source. Any personal information collected must specifically identify the source of the information. Subd. 3. Health records. (a) Health record information requested under subdivision 1 that has been supplied by a health care institution or a health professional must provide the identity of the health professional or health care institution that supplied the information. The health record information must be provided either directly to the individual or to a health professional designated by the person who is licensed to provide health care with respect to the condition to which the information relates, whichever the individual elects. If the information is provided to a designated health professional, the insurer, insurance agent, or insurance-support organization shall notify the person, at the time of the disclosure, that the information has been provided to the health professional. (b) If a health professional or a health care institution has provided health information to an insurer, insurance-support organization, or insurance agent that the health professional or health care institution has determined and indicates in writing that the release of the health record information is detrimental to the physical or mental health of the person, or is likely to cause the individual to inflict self-harm or to harm another, the insurer, insurance agent, or insurance-support organization may provide that information directly to the individual only with the approval of the health professional with treatment responsibility for the condition to which the information relates. If approval is not obtained, the information must be provided to the health professional designated by the individual. (c) Nothing in this section may reduce or affect a patient's rights under sections 144.291 to 144.298. Subd. 4. Fee. An insurer, insurance agent, or insurance-support organization may charge a reasonable fee, not to exceed the actual costs, to copy information provided under this section. If an individual is requesting information as a result of an adverse underwriting decision, the insurer, insurance agent, or insurance-support organization must provide the information free of any charge. Subd. 5. Other companies or agents acting on its behalf. The obligations imposed by this section upon an insurer or insurance agent may be satisfied by another insurer or insurance agent authorized to act on its behalf. With respect to the copying and disclosure of personal information under a request under subdivision 1, an insurer, insurance agent, or insurance-support organization may make arrangements with an insurance-support organization or a consumer reporting agency to copy and disclose personal information on its behalf. Subd. 6. Privileged information. The rights granted under this section and section 72A.498 do not extend to privileged information. History:  1989 c 316 s 9; 2007 c 147 art 10 s 15
72A.498 CORRECTION, AMENDMENT, OR DELETION OF PERSONAL INFORMATION. Subdivision 1. Procedure. Within 30 business days from the date of receipt of a written request from an individual to correct, amend, or delete any personal information about the person within its possession, an insurer, insurance agent, or insurance-support organization shall either: (1) correct, amend, or delete the portion of the personal information in dispute; or (2) notify the individual of its refusal to make the correction, amendment, or deletion, the reasons for the refusal, and the person's right to file a statement as provided in subdivision 3, and the individual's right to appeal to the commissioner under subdivision 5. Subd. 2. Notice. If the insurer, insurance agent, or insurance-support organization corrects, amends, or deletes disputed personal information upon request of an individual or as ordered by the commissioner, the insurer, insurance agent, or insurance-support organization shall notify the person in writing and provide the correction, amendment, or fact of deletion to: (1) any person specifically designated by the individual who may have within the preceding two years received the personal information; (2) any insurance-support organization whose primary source of personal information is insurers, if the insurance-support organization has systematically received the personal information from the insurer within the preceding seven years, provided that the correction, amendment, or fact of deletion need not be provided to an insurance-support organization if the insurance-support organization no longer maintains personal information about the individual; and (3) any insurance-support organization that provided the personal information that has been corrected, amended, or deleted. Subd. 3. Statement. If the insurer, insurance agent, or insurance-support organization refuses to correct, amend, or delete disputed personal information, the individual must be permitted to file with the insurer, insurance agent, or insurance-support organization a concise statement setting forth what the person thinks is the correct, relevant, or fair information and stating the reasons why the individual disagrees with the insurer's, insurance agent's, or insurance-support organization's refusal to correct, amend, or delete disputed personal information. Subd. 4. Disputed information. In the event an individual files a statement described in subdivision 3, the insurer, insurance agent, or insurance-support organization shall: (1) file the statement with the disputed personal information and provide a means by which anyone reviewing the disputed personal information will be made aware of the individual's statement and have access to it; (2) in any subsequent disclosure by the insurer, insurance agent, or insurance-support organization of the disputed personal information, clearly identify the matter or matters in dispute and provide the individual's statement along with the personal information being disclosed; and (3) furnish the statement to the persons and in the manner specified in subdivision 2. Subd. 5. Appeal. (a) If an insurer, insurance-support organization, or insurance agent refuses to correct, amend, or delete disputed personal information, the individual may file an appeal with the commissioner. (b) The commissioner may, after providing the insurer, insurance-support organization, or insurance agent an opportunity for a hearing, order the insurer, insurance-support organization, or insurance agent to amend, correct, or delete disputed personal information if the commissioner finds that the personal information kept by the insurer, insurance-support organization, or insurance agent is in error. If the commissioner finds that the disputed personal information maintained by the insurer, insurance agent, or insurance-support organization is correct, the insurer, insurance agent, or insurance-support organization may delete from the individual's records any statement filed with them by that individual relating to the disputed information under subdivision 3. History:   1989 c 316 s 10 
72A.499 REASONS FOR ADVERSE UNDERWRITING DECISIONS. Subdivision 1. Notice and information. (a) In the event of an adverse underwriting decision, the insurer or insurance agent responsible for the decision shall provide in writing to the applicant, policyholder, or individual proposed for coverage: (1) the specific reason or reasons for the adverse underwriting decision, a summary of the person's rights under sections 72A.497 and 72A.498, and that upon request the person may receive the specific items of personal information that support those reasons and the specific sources of the information; or (2) the specific reason or reasons for the adverse underwriting decision, the specific items of personal and privileged information that support those reasons, the names and addresses of the sources that supplied the specific items of information specified, and a summary of the rights established under sections 72A.497 and 72A.498. (b) In addition to the requirements of paragraph (a), if the adverse underwriting decision is either solely or partially based upon a report of creditworthiness, credit standing, or credit capacity that an insurer receives from a consumer reporting agency, the insurer or insurance agent responsible for the decision shall provide in writing to the applicant, policyholder, or individual proposed for coverage the primary reason or reasons for the credit score or other credit based information used by the insurer in the insurer's adverse underwriting decision. Subd. 2. Health reasons. If the specific reason for an adverse underwriting decision is based on health record information, the insurer may, in lieu of providing the specific reason to the individual under subdivision 1, provide the individual with the specific source of the adverse underwriting decision referring to the specific date, page, and line of the information received from a health professional or health care institution. If the insured has been informed of the condition indicated by their health provider and is unable to determine the reason for the adverse underwriting decision, then the insurer must provide the specific reason to the individual. The insurer must provide the specific reason for the adverse underwriting decision to a health professional designated by the individual, if requested either orally or in writing by the individual. Subd. 3. Exemption. (a) This section is not applicable to group policies or contracts, except for group policies that are individually underwritten. For group policies or contracts that are individually underwritten, the notice required under this section must be given to the individual or individuals in the group whose personal information resulted in the adverse underwriting decision. (b) If a policy or contract is terminated on a class or statewide basis, or an insurance coverage is declined solely because the coverage is unavailable on a class or statewide basis, the insurer or agent is not required to provide the notice required under this section provided that the applicant or policyholder is provided with the specific reason for the termination or declination of coverage. Subd. 4. Privileged information. (a) An insurer or insurance agent is not required to provide particular, specific items of privileged information under subdivision 1 if it has a reasonable suspicion, based upon that specific information, that the applicant, policyholder, or person proposed for coverage has engaged in criminal activity, fraud, material misrepresentation, or material nondisclosure. If an insurer or insurance agent does not provide the specific items of information because the information is privileged under this subdivision, the insurer or insurance agent must notify the applicant, policyholder, or individual proposed for coverage that the specific items of information are privileged and of the person's right to appeal to the commissioner under this subdivision. (b) If a person is not provided with the specific items of information relating to an adverse underwriting decision because the information is privileged under this subdivision, the person may request that the commissioner review the information. The commissioner may then order the insurer or insurance agent to supply the privileged information to the commissioner. If the commissioner determines that the information is not privileged under this subdivision, the commissioner shall order the insurer or insurance agent to provide the information to the applicant, policyholder, or person proposed for coverage. Subd. 5. Health records information. Specific items of health record information supplied by a health care institution or health professional, and the identity of the health professional or health care institution that supplied the information, must be disclosed in the manner required under section 72A.497, subdivision 3. Subd. 6. Other companies or agents acting on its behalf. The obligations imposed by this section upon an insurer or insurance agent may be satisfied by another insurer or insurance agent authorized to act on its behalf. History:  1989 c 316 s 11; 2000 c 483 s 23
72A.50 PREVIOUS ADVERSE UNDERWRITING DECISIONS. Subdivision 1. Additional information required. An insurer, insurance agent, or insurance-support organization must not seek information in connection with an insurance transaction concerning any previous adverse underwriting decision experienced by a person, or any previous insurance coverage obtained by a person through a residual market mechanism, unless the inquiry also requests the reasons for the previous adverse underwriting decision or the reasons why insurance coverage was previously obtained through a residual market mechanism. Subd. 2. Prohibitions. An insurer or insurance agent may not base an adverse underwriting decision, in whole or in part, on: (1) the fact of a previous adverse underwriting decision or the fact that a person previously obtained insurance coverage through a residual market mechanism, provided that an insurer or insurance agent may base an adverse underwriting decision on further information obtained from an insurer or insurance agent responsible for a previous adverse underwriting decision; or (2) personal information received from an insurance-support organization whose primary source of information is insurers, provided that an insurer or insurance agent may base an adverse underwriting decision on further personal information obtained as the result of information received from the insurance-support organization. History:   1989 c 316 s 12 
72A.501 DISCLOSURE AUTHORIZATION. Subdivision 1. Requirement; content. An authorization used by an insurer, insurance-support organization, or insurance agent to disclose or collect personal or privileged information is valid if it: (1) is in plain language; (2) is dated; (3) specifies the types of persons authorized to disclose information about the person; (4) specifies the nature of the information authorized to be disclosed; (5) names the insurer or insurance agent and identifies by generic reference representatives of the insurer to whom the person is authorizing information to be disclosed; (6) specifies the purposes for which the information is collected; and (7) specifies the length of time the authorization remains valid. If the insurer, insurance-support organization, or insurance agent determines to disclose or collect a kind of information not specified in a previous authorization, a new authorization specifying that kind of information must be obtained. Subd. 2. Application. (a) If the authorization is signed to collect information in connection with an application for a property and casualty insurance policy, a policy reinstatement, or a request for a change in benefits, the authorization is valid as long as the individual is continually insured with the insurer. At each renewal of the policy, the insurer must notify the insured in writing of the contents of the authorization and that the authorization remains in effect unless revoked. (b) If the authorization is signed to collect information in connection with an application for a life, disability, and health insurance policy or contract, reinstatement, or request for change in benefits, the authorization is valid as long as the individual is continually insured with the insurer. At each renewal of the policy, the insurer must notify the insured in writing of the contents of the authorization and that the authorization remains in effect unless revoked. (c) This section and section 72A.502, subdivisions 1 and 12, do not apply to the collection and use of a numeric product referred to as an insurance score or credit score that is used by a licensed insurance agent or insurer exclusively for the purpose of underwriting or rating an insurance policy, if the agent or insurer informs the policyholder or prospective policyholder requesting the insurance coverage that an insurance score or credit score will be obtained for the purpose of underwriting or rating the policy. Subd. 3. Claims. If the authorization is signed to collect information in connection with a claim for benefits under an insurance policy, the authorization must not remain valid for longer than: (1) the term of coverage of the policy, if the claim is for a health insurance benefit; or (2) the duration of the claim, if the claim is for a claim other than for a health insurance benefit. Subd. 4. Authorization; noninsurers. If an authorization is submitted to an insurer, insurance-support organization, or insurance agent by a person other than an insurer, insurance-support organization, or insurance agent, the authorization must be dated, signed by the person, and obtained one year or less before the date a disclosure is sought. Subd. 5. Verbal authorization in lieu of signed authorization. For purposes of this section, verbal authorization may be given in lieu of a signed authorization, provided that an electronic record of the verbal authorization is retained in compliance with section 325L.12. History:  1989 c 316 s 13; 1990 c 467 s 2; 2003 c 74 s 10; 2005 c 74 s 11,12; 2011 c 52 s 4,5
72A.502 DISCLOSURE OF INFORMATION; LIMITATIONS AND CONDITIONS. Subdivision 1. Requirement. An insurer, insurance agent, or insurance-support organization must not disclose any personal or privileged information about a person collected or received in connection with an insurance transaction without the authorization of that person except as authorized by this section. An insurer, insurance agent, or insurance-support organization must not collect personal information about a policyholder or an applicant not relating to a claim from sources other than public records without an authorization from the person. The authorization to collect personal information must be in writing or in the same medium as the application for insurance. Subd. 2. Prevention of fraud. Personal or privileged information may be disclosed without a written authorization to another person if the information is limited to that which is reasonably necessary to detect or prevent criminal activity, fraud, material misrepresentation, or material nondisclosure in connection with an insurance transaction, and that person agrees not to disclose the information further without the individual written authorization unless the further disclosure is otherwise permitted by this section if made by an insurer, insurance agent, or insurance-support organization. Any insurer, insurance agent, or insurance-support organization making such a disclosure is immune from liability under section 60A.952, subdivision 3. Subd. 3. Health care institutions and professionals. Personal or privileged information may be disclosed without a written authorization to a health care institution or health professional for the purpose of verifying insurance coverage benefits, informing a person of a health problem of which the person must not be aware, or conducting an operations or services audit, if the information is only disclosed that is reasonably necessary to accomplish the purposes under this subdivision. Subd. 4. Regulatory authority. Personal or privileged information may be disclosed without a written authorization to an insurance regulatory authority. Subd. 5. Other governmental authorities. Personal or privileged information may be disclosed without a written authorization to a law enforcement or other governmental authority if: (1) the disclosure is to protect the interests of the insurer, agent, or insurance-support organization in preventing or prosecuting the perpetration of fraud upon it; or (2) the insurer, agent, or insurance-support organization reasonably believes that illegal activities have been conducted by the individual. Subd. 6. Other laws or order. Personal or privileged information may be disclosed without a written authorization if permitted or required by another law or in response to a facially valid administrative or judicial order, including a search warrant or subpoena. Subd. 7. Actuarial and research studies. Personal or privileged information may be disclosed without a written authorization to conduct actuarial or research studies if: (1) no individual may be identified in the actuarial or research report; (2) materials allowing an individual to be identified are returned or destroyed as soon as they are no longer needed; and (3) the actuarial or research organization agrees not to disclose the information unless the disclosure would otherwise be permitted by this section if made by an insurance company, agent, or insurance-support organization. Subd. 8. Affiliate companies. Personal or privileged information may be disclosed without a written authorization to an affiliate whose only use of the information will be in connection with an audit of the insurer or agent or the marketing of an insurance product or service, provided the affiliate agrees to not disclose the information for any other purpose or to unaffiliated persons. Subd. 9. Group policyholder. Personal or privileged information may be disclosed without written authorization to a group policyholder only to report claims experience or conduct an audit of the insurer's or agent's operations or services, if the information disclosed is reasonably necessary for the group policyholder to conduct the review or audit. Subd. 10. Governmental licensing board. Personal or privileged information may be disclosed without a written authorization to a governmental professional licensing or regulatory board to review the service or conduct of a health care institution or health professional that the insurer has reason to believe has violated its licensing act or engaged in the unlawful practice of a licensed professional. Subd. 11. Professional peer review. Subject to the terms of a contract between an insurer and a health professional or health care institution, personal or privileged information may be disclosed without a written authorization to a professional peer review organization to review the service or conduct of a health care institution or health professional. Subd. 11a. Merger or sale. Personal or privileged information may be disclosed to a party or representative of a party to a proposed or consummated sale, transfer, merger, or consolidation of all or part of the business of the insurer, agent, or insurance-support organization, without a written authorization provided: (1) prior to the consummation of the sale, transfer, merger, or consolidation, only such information is disclosed as is reasonably necessary to enable the recipient to make business decisions about the merger, transfer, purchase, or consolidation; and (2) the recipient agrees not to disclose the information unless the disclosure would otherwise be permitted by this section if made by an insurer, agent, or insurance-support organization. Subd. 12. Notice. Whenever an insurer, insurance agent, or insurance-support organization discloses personal or privileged information about a person that requires the written authorization of that person under this section, the insurer, insurance agent, or insurance-support organization shall notify that person in writing within ten days of the date the information was disclosed. The notification must specify the identity of the person to whom information was disclosed and the nature and substance of the information that was disclosed. A notice is not required to be given under this subdivision if an insurer is disclosing personal information for underwriting purposes to another insurer, or to an insurance-support organization if the person had signed an authorization authorizing the disclosure. History:  1989 c 316 s 14; 1990 c 467 s 3,4; 2011 c 52 s 6; 2014 c 310 s 9
72A.503 PRIVATE REMEDIES. Subdivision 1. Liability. Any insurer, insurance agent, or insurance-support organization that violates sections 72A.49 to 72A.505 is liable to the aggrieved person for that violation to the same extent as civil remedies are otherwise allowed in section 13.08, subdivision 1, for violations of chapter 13, by a political subdivision, responsible authority, statewide system, or statewide agency. Subd. 2. Equitable relief. Upon application by an aggrieved person, a court of competent jurisdiction may grant equitable and declaratory relief as necessary to enforce the requirements of sections 72A.49 to 72A.505. History:   1989 c 316 s 15 
72A.504 OBTAINING INFORMATION UNDER IMPROPER MEANS. Any person who knowingly and willfully obtains information about a person in violation of section 72A.493 is subject to a fine not to exceed $3,000 or imprisonment not to exceed one year, or both. History:   1989 c 316 s 16 
72A.505 IMMUNITY. No cause of action in the nature of defamation, invasion of privacy, or negligence may arise against an insurer, insurance agent, or insurance-support organization for disclosing personal or privileged information required to be disclosed under sections 72A.20, subdivision 11, and 72A.49 to 72A.504, provided no immunity exists for disclosing false information with malice or willful intent to injure any person. History:   1989 c 316 s 17 
72A.51 RIGHT TO CANCEL. Subdivision 1. Date of purchase defined. For the purposes of this section and section 72A.52 "date of purchase" means the date on which the purchaser receives a copy of the policy or contract. Subd. 2. Return of policy or contract; notice. Any individual person may cancel an individual policy of insurance against loss or damage by reason of the sickness of the assured or the assured's dependents, a nonprofit health service plan contract providing benefits for hospital, surgical and medical care, a health maintenance organization subscriber contract, or a policy of insurance authorized by section 60A.06, subdivision 1, clause (4), except Medicare-related coverage as defined in section 62A.3099, subdivision 17, and long-term care insurance as defined in section 62S.01, subdivision 18, by returning the policy or contract and by giving written notice of cancellation any time before midnight of the tenth day following the date of purchase. Notice of cancellation may be given personally or by mail. The policy or contract may be returned personally or by mail. If by mail, the notice or return of the policy or contract is effective upon being postmarked, properly addressed and postage prepaid. Subd. 3. Refund of consideration. With the exception of a variable annuity contract issued pursuant to sections 61A.13 to 61A.21, a person's cancellation of an insurance policy or contract under this section and section 72A.52 is without liability and the person is entitled to a refund of the entire consideration paid for the policy or contract within ten days after notice of cancellation and the returned policy or contract are received by the insurer or its agent. Cancellation under this section and section 72A.52 of a variable annuity contract issued pursuant to sections 61A.13 to 61A.21 shall entitle a person to an amount equal to the sum of (a) the difference between the premiums paid including any contract fees or other charges and the amounts allocated to any separate accounts under the contract and (b) the cash value of the contract, or, if the contract does not have a cash value, the reserve for the contract, on the date the returned contract is received by the insurer or its agent. Cancellation of an insurance policy or contract under this section or section 72A.52 makes the policy or contract void from its inception. Subd. 4. Waiver or surrender prohibited. A person may not waive or surrender a right to cancel an insurance policy or contract under this section and section 72A.52. History:  1977 c 178 s 1; 1980 c 354 s 1; 1986 c 444; 2008 c 344 s 47; 2010 c 384 s 35
72A.52 NOTICE REQUIREMENTS. Subdivision 1. Contents. In addition to all other legal requirements a policy or contract of insurance described in section 72A.51 shall show the name and address of the insurer and the seller of the policy or contract and shall include a notice, clearly and conspicuously in boldface type of a minimum size of ten points, which shall include the following elements: (1) a minimum of ten days to cancel the policy beginning on the date the policy is received by the owner; (2) if the policy is a replacement policy, a minimum of 30 days beginning on the date the policy is received by the owner. Pursuant to section 61A.57, this requirement may also be provided in a separate written notice that is delivered with the policy or contract; (3) a requirement for the return of the policy to the company or an agent of the company; (4) a statement that the policy is considered void from the beginning; (5) for policies or contracts other than a variable annuity or a variable life policy, a statement that the insurer will refund all premiums paid, including any fees or charges, if the policy is returned; and (6) a statement describing when the cancellation becomes effective. The insurer must return all payments made for this policy within ten days after it receives notice of cancellation and the returned policy. For variable annuity contracts issued pursuant to sections 61A.13 to 61A.21, this notice shall be suitably modified so as to notify the purchaser that the purchaser is entitled to a refund of the amount calculated in accordance with the provisions of section 72A.51, subdivision 3. For variable life insurance policies, this notice must be suitably modified so as to notify the purchaser that the purchaser is entitled to a refund of: (i) the premiums paid; or (ii) the variable account value plus any amount deducted from the portion of the premium applied to the account. Subd. 2. Noncompliance; cancellation. If a policy or contract of insurance covered by this section is sold without compliance with subdivision 1, the policy or contract may be canceled by the purchaser at any time within one year after the date of purchase by returning the policy or contract and by giving written notice of cancellation to the insurer or its agent. If a purchaser cancels a policy or contract under this subdivision, the insurer must return the entire consideration paid for the policy or contract within ten days after receiving notice of cancellation and the returned policy or contract, except that if the contract is a variable annuity contract issued pursuant to sections 61A.13 to 61A.21, the insurer shall refund to the purchaser an amount calculated in accordance with the provisions of section 72A.51, subdivision 3. History:  1977 c 178 s 2; 1980 c 354 s 2; 1986 c 444; 2007 c 104 s 19; 2008 c 344 s 48
72B.01 PURPOSE AND SCOPE. It is the purpose of sections 72B.01 to 72B.136 to provide high quality service to insureds and insurance claimants in the state of Minnesota by providing for well trained adjusters and persons engaged in soliciting business for adjusters, who are qualified to deal with the public in the interest of a fair resolution of insurance claims. History:  1971 c 704 s 1; 1979 c 141 s 1; 1986 c 444; 2010 c 384 s 36; 2022 c 55 art 1 s 186
72B.02 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 72B.01 to 72B.136 the terms defined in this section have the meanings ascribed to them unless the context otherwise requires. Subd. 2. Person. "Person" means an individual or business entity. Subd. 3. Commissioner. "Commissioner" means the commissioner of commerce or any other person properly acting for the commissioner. Subd. 4. Adjuster. "Adjuster" means a person who on behalf of an insurer or an insured, for compensation as an independent contractor or as an employee of such independent contractor, or as an employee of an insurer, or for a fee or commission, investigates and evaluates claims arising under insurance contracts and negotiates the settlement of such claims. Subd. 5. Independent adjuster. "Independent adjuster" means a person who: (1) is an individual, a business entity, an independent contractor, or an employee of a contractor, who contracts for compensation with insurers or self-insurers; (2) is treated for tax purposes by the insurer or self-insurer in a manner that is consistent with the tax treatment of an independent contractor rather than the tax treatment of an employee, as defined in the Internal Revenue Code, United States Code, title 26, subtitle C; and (3) investigates, negotiates, or settles property, casualty, or workers' compensation claims for insurers or for self-insurers. Subd. 6. Public adjuster. "Public adjuster" means any person who, for compensation or any other thing of value on behalf of the insured: (1) acts or aids, solely in relation to first-party claims arising under insurance contracts that insure the real or personal property of the insured, on behalf of an insured in negotiating for, or effecting the settlement of, a claim for loss or damage covered by an insurance contract; (2) advertises for employment as a public adjuster of insurance claims or solicits business or represents to the public as a public adjuster of first-party insurance claims for losses or damages arising out of policies of insurance that insure real or personal property; or (3) directly or indirectly solicits business, investigates or adjusts losses, or advises an insured about first-party claims for losses or damages arising out of policies of insurance that insure real or personal property for another person engaged in the business of adjusting losses or damages covered by an insurance policy, for the insured. Subd. 7. Staff adjuster. "Staff adjuster" means an adjuster who is a salaried employee of an insurance company or an affiliate of an insurance company and who is engaged in adjusting insured losses solely for that company or other companies under common control or ownership. Subd. 8.  [Repealed, 2014 c 222 art 1 s 58] Subd. 9. Appraiser. "Appraiser" means any person engaged independently, for hire by the public or on the staff of an insurer, in the process of evaluating motor vehicle physical damage, who does not endeavor to determine liability or negotiate the settlement of claims arising under automobile insurance contracts. Subd. 10.  [Repealed, 1979 c 141 s 9] Subd. 11.  [Repealed, 2010 c 384 s 104] Subd. 12.  [Repealed, 2009 c 63 s 77] Subd. 13. Appraiser identification. "Appraiser identification" means a writing including the appraiser's name, place of business, business telephone number, and the name of the insurer or other business entity employing the appraiser, if any. Subd. 14. Crop hail adjuster. "Crop hail adjuster" means a person who for money, commission, or other thing of value acts as an adjuster in regard to insurance policies against crop damage by hail. Subd. 15. Business entity. "Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity. Subd. 16. Fingerprint. "Fingerprint" means an impression of the lines on the finger taken for purpose of identification. Subd. 17. Home state. "Home state" means the District of Columbia and any state or territory of the United States in which an adjuster maintains the adjuster's principal place of residence or business and is licensed to act as a resident adjuster. If the resident state does not license adjusters for the line of authority sought, the adjuster shall designate as the adjuster's home state any state in which the adjuster is licensed and in good standing. Subd. 18. Individual. "Individual" means a natural person. Subd. 19. Insurer. "Insurer" means an insurance company. Subd. 20. Uniform Individual Application. "Uniform Individual Application" means the current version of the National Association of Insurance Commissioners (NAIC) Uniform Individual Application for resident and nonresident individuals. Subd. 21. Uniform Business Entity Application. "Uniform Business Entity Application" means the current version of the National Association of Insurance Commissioners (NAIC) Uniform Business Entity Application for resident and nonresident business entities. Subd. 22. Emergency situation. An "emergency situation" means the occurrence of insured losses of such a number or severity that the ordinary staff adjuster personnel complement of the insurer and the available independent adjusters could not adjust all of the losses resulting from a common cause or related causes in reasonable time. Subd. 23. Automated claims adjudication system. "Automated claims adjudication system" means a preprogrammed computer system designed for the collection, data entry, calculation, and final resolution of portable electronics insurance claims relating to coverage regulated by section 60K.381, which: (1) may be utilized only by a licensed independent adjuster; licensed insurance producer as defined in section 60K.31, subdivision 6; or a supervised individual operating under section 72B.03, subdivision 1, paragraph (a), clause (14); and (2) must comply with all claims payment requirements of the insurance laws of this state. History:  1971 c 704 s 2; 1980 c 456 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1992 c 564 art 1 s 48; 2007 c 104 s 20; 2009 c 63 s 32-43,78; 2011 c 95 s 1; 2022 c 55 art 1 s 186
72B.03 LICENSES. Subdivision 1. Requirement; exceptions. (a) A person shall not act or hold out as an independent adjuster or public adjuster unless the person is licensed as an independent adjuster or public adjuster in accordance with this chapter, or is exempt from licensure as an independent adjuster or public adjuster under this chapter. (b) The definition of adjuster does not include, and a license as an adjuster is not required of, the following: (1) attorneys-at-law admitted to practice in this state, when acting in the attorney's professional capacity as an attorney; (2) a person employed solely to obtain facts surrounding a claim or to furnish technical assistance to a licensed adjuster; (3) an individual who is employed to investigate suspected fraudulent insurance claims but who does not adjust losses or determine claims payments; (4) a person who solely performs executive, administrative, managerial, or clerical duties or any combination of these duties and who does not investigate, negotiate, or settle claims with policyholders, claimants, or their legal representative; (5) a licensed health care provider or its employee who provides managed care services so long as the services do not include the determination of compensability; (6) a managed care organization or any of its employees or an employee of any organization providing managed care services so long as the services do not include the determination of compensability; (7) a person who settles only reinsurance or subrogation claims; (8) an officer, director, manager, or employee of an authorized insurer, a surplus lines insurer, a risk retention group, or an attorney-in-fact of a reciprocal insurer; (9) a United States manager of the United States branch of an alien insurer; (10) a person who investigates, negotiates, or settles life, accident and health, annuity, or disability insurance claims; (11) an individual employee, under a self-insured arrangement, who adjusts claims on behalf of the employee's employer; (12) a licensed insurance producer, attorney-in-fact of a reciprocal insurer, or managing general agent of the insurer to whom claim authority has been granted by the insurer; (13) a person authorized to adjust workers' compensation or disability claims under the authority of a third-party administrator license pursuant to section 60A.23, subdivision 8; or (14) an individual who: (i) collects claim information from, or furnishes claim information to, insureds or claimants; and (ii) conducts data entry including entering data into an automated claims adjudication system, provided that the individual is an employee of a licensed independent adjuster or its affiliate where no more than 25 such persons are under the supervision of one licensed independent adjuster or licensed insurance producer who is exempt from licensure under clause (12). Subd. 2. Classes of licenses. (a) Unless denied licensure pursuant to section 72B.08, persons who have met the requirements of section 72B.041 must be issued an adjuster license. There shall be three classes of licenses, as follows: (1) independent adjuster's license; (2) public adjuster's license; and (3) crop hail adjuster's license. (b) An independent adjuster and a public adjuster may qualify for a license in one or more of the following lines of authority: (1) property and casualty; or (2) workers' compensation; or (3) crop. (c) Any person holding a license pursuant to this section is not required to hold any other independent adjuster, public adjuster, insurance, or self-insurance administrator license in this state pursuant to section 60A.23, subdivision 8, or any other provision, provided that the person does not act as an adjuster with respect to life, health, or annuity insurance, other than disability insurance. (d) An adjuster license remains in effect unless probated, suspended, revoked, or refused as long as the fee set forth in section 72B.041, subdivision 9, is paid and all other requirements for license renewal are met by the due date, otherwise, the license expires. (e) An adjuster whose license expires may, within 12 months of the renewal date, be reissued an adjuster license upon receipt of the renewal request, as prescribed by the commissioner; however, a penalty in the amount of double the unpaid renewal fee is required to reissue the expired license. (f) An adjuster who is unable to comply with license renewal procedures and requirements due to military service, long-term medical disability, or some other extenuating circumstance may request a waiver of same and a waiver of any examination requirement, fine, or other sanction imposed for failure to comply with renewal procedures. (g) An adjuster is subject to sections 72A.17 to 72A.32. (h) The adjuster must inform the commissioner by any means acceptable of any change in resident or business addresses for the home state or in legal name within ten days of the change. (i) The license must contain the licensee's name, address, and personal identification number; the dates of issuance and expiration; and any other information the commissioner deems necessary. (j) In order to assist in the performance of the commissioner's duties, the commissioner may contract with nongovernmental entities, including the National Association of Insurance Commissioners, its affiliates, or its subsidiaries, to perform any ministerial functions related to licensing that the commissioner may deem appropriate, including the collection of fees and data. Subd. 3. Payment for services; unlawful practice. No insurer, agent, or other representative of an insurer nor any adjuster shall pay any fee or other compensation to any person for acting as an adjuster, except to a person duly licensed to so act or to a person not required to be licensed by sections 72B.01 to 72B.136; and it shall be unlawful for any person to act as an independent adjuster or a public adjuster who is not duly licensed, or excluded from the licensing requirement. History:  1971 c 704 s 3; 1975 c 359 s 23; 1979 c 141 s 2; 1986 c 444; 1992 c 564 art 1 s 49; 1994 c 485 s 58; 2009 c 63 s 44,78; 2010 c 384 s 37; 2011 c 95 s 2; 2014 c 222 art 1 s 12; 2019 c 59 s 3; 2022 c 55 art 1 s 186
72B.041 RESIDENT ADJUSTER LICENSE PROCEDURE AND REQUIREMENTS; EXAMINATIONS; FEES. Subdivision 1. Application. (a) An individual applying for a resident adjuster license must make application to the commissioner on the appropriate National Association of Insurance Commissioners (NAIC) Uniform Individual Application in a format prescribed by the commissioner and declare under penalty of suspension, revocation, or refusal of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner must find that the individual: (1) is at least 18 years of age; (2) is eligible to designate this state as the individual's home state; (3) is trustworthy, reliable, and of good reputation, evidence of which must be determined by the commissioner; (4) has not committed any act that is a ground for probation, suspension, revocation, or refusal of an adjuster's license as set forth in section 72B.08; (5) has successfully passed the examination for the lines of authority for which the individual has applied; and (6) has paid the fees set forth in subdivision 9. (b) A business entity applying for a resident adjuster license must make application to the commissioner on the appropriate NAIC Uniform Business Entity Application in a format prescribed by the commissioner and declare under penalty of suspension, revocation, or refusal of the license that the statements made in the application are true, correct, and complete to the best of the business entity's knowledge and belief. Before approving the application, the commissioner shall find that the business entity: (1) is eligible to designate this state as its home state; (2) has designated a licensed independent or public adjuster responsible for the business entity's compliance with the insurance laws, rules, and regulations of this state; (3) has not committed an act that is a ground for probation, suspension, revocation, or refusal of an adjuster's license as set forth in section 72B.08; and (4) has paid the fees set forth in subdivision 9. (c) No resident of Canada may be licensed under this section or may designate Minnesota as the applicant's home state, unless the applicant has successfully passed the adjuster examination and has complied with the other applicable provisions of this section, except that such applicant shall not be subject to paragraph (a), clause (2), and section 270C.72, subdivision 4. Subd. 2. Criminal history record check; fingerprints. (a) An individual applying for a resident independent or public adjuster license must: (1) consent to a criminal history record check; (2) submit a fingerprint card in a form acceptable to the commissioner; and (3) pay the fee required to perform criminal history record checks with the Minnesota Bureau of Criminal Apprehension and the Federal Bureau of Investigation. (b) The commissioner may contract for the collection and transmission of fingerprints required under this chapter and may order the fee for collecting and transmitting fingerprints to be payable directly to the contractor by the applicant. The commissioner may agree to a reasonable fingerprinting fee to be charged by the contractor. (c) The commissioner must treat and maintain an applicant's fingerprints and any criminal history record information obtained under this chapter as confidential and must apply security measures consistent with the standards specified by the Criminal Justice Information Services Division of the Federal Bureau of Investigation for the electronic storage of fingerprints and necessary identifying information. The commissioner must limit the use of records solely to the purposes authorized in this chapter. The fingerprints and any criminal history record information must not be subject to subpoena, other than one issued in a criminal action or investigation. (d) The commissioner may receive criminal history record information from another government agency in lieu of the Minnesota Bureau of Criminal Apprehension. (e) The commissioner may require any documents reasonably necessary to verify the information contained in the application. (f) All applicants for a license as a public adjuster must attach to their application evidence that the bonding requirement in subdivision 3 has been satisfied. (g) All executive officers and directors of a business entity applying for a resident independent adjuster license to adjust claims relating to portable electronics insurance claims relating to coverage regulated by section 60K.381 and all executive officers and directors of entities and any individuals owning, directly or indirectly, more than 50 percent of the outstanding voting securities of that applicant, are subject to the requirements of this subdivision, paragraphs (a) to (e). Subd. 3. Bonding. No initial or renewal public adjuster's license shall be issued to any applicant unless there is on file with the commissioner a good and sufficient surety bond, issued by an insurer authorized to do business in this state. The bond shall be in the amount of $10,000 with the state of Minnesota as obligee, conditioned for the prompt payment to any person entitled thereto, other than a partner or associate of the applicant, of any amounts received by the applicant or to protect any person other than a partner or associate of the applicant from loss resulting from fraud, dishonesty, forgery or theft in connection with the applicant's duties under sections 72B.01 to 72B.136; provided, however, that the aggregate liability of the surety to all persons for all losses shall, in no event, exceed the amount of such bond. The bond shall remain in effect during the term of the license, or until the surety is released from liability by the commissioner, or until canceled by the surety. The surety may cancel a bond, without prejudice to any liability which occurred prior to the cancellation, by giving at least 30 days' written notice to the commissioner. In the event that the required bond is terminated, the public adjuster's license shall automatically be suspended until a new bond is filed with the commissioner. Subd. 4. Examinations. (a) An individual applying for an independent or public adjuster license under this chapter must pass a written examination unless exempt pursuant to subdivision 5. The examination must test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an independent or public adjuster, and the insurance laws and regulations of this state. Examinations required by this subdivision must be developed and conducted under rules and regulations prescribed by the commissioner. (b) The commissioner may make arrangements, including contracting with an outside testing service, for administering examinations. (c) An individual who fails to appear for the examination as scheduled or fails to pass the examination must reapply for an examination and remit all required fees and forms before being rescheduled for another examination. (d) The commissioner may by rule determine the period of time between failure of an examination and reexamination. (e) A person shall not be eligible to take an examination if that person's license as an independent adjuster or public adjuster has been revoked in this or any other state within the three years next preceding the date of the application. (f) No examination shall be required for the timely renewal of a license, unless the license has been revoked. Subd. 5. Exceptions. (a) An individual who applies for an adjuster license in this state who is or was licensed in another state for the same lines of authority based on an adjuster examination is not required to complete a prelicensing examination. This exemption is only available if the person is currently licensed in another state or if that state license has expired and the application is received by this state within 90 days of expiration. The applicant must provide certification from the other state that the applicant's license is currently in good standing or was in good standing at the time of expiration or certification from the other state that its producer database records, maintained by the NAIC, its affiliates, or its subsidiaries, indicate that the applicant or the applicant's company is or was licensed in good standing. The certification must be of a license with the same line of authority for which the individual has applied. (b) A person licensed as an adjuster in another state based on an adjuster examination who establishes legal residency in this state must make application within 90 days to become a resident adjuster licensee pursuant to this section, with the exception that no prelicensing examination is required of this person. (c) A person applying for a license as a crop hail adjuster shall not be required to comply with the requirements of subdivision 4. (d) A person applying for the crop line of authority who has satisfactorily completed the National Crop Insurance Services Crop Adjuster Proficiency Program or the loss adjustment training curriculum and competency testing required by the Federal Crop Insurance Corporation Standard Reinsurance Agreement is exempt from the requirements of subdivision 4. Subd. 6. License term. (a) Initial licenses issued to a business entity under this section are valid for a period not to exceed 24 months. Each initial license must expire on October 31 of the expiration year assigned by the commissioner. Initial licenses issued to an individual adjuster under this chapter before August 1, 2010, are valid for a period not to exceed 24 months and expire on October 31 of the renewal year assigned by the commissioner. Each individual license initially issued or initially renewed on or after August 1, 2010, must expire on the last day of the birth month of the adjuster in the year that will result in the term of the license being at least 12 months, but no more than 24 months. Beginning with the first license expiration on the last day of the birth month of an individual adjuster as set forth in this subdivision, all such licenses must after this date expire biennially on the last day of the birth month of the individual adjuster that is two years subsequent to the preceding expiration date. (b) Licenses issued under this section may be renewed upon the timely filing of an application for renewal. Subd. 7. Renewal. An application for renewal of a license issued under sections 72B.01 to 72B.136 shall be on a form prescribed by the commissioner and shall be filed with the commissioner with payment of the renewal fee prior to the expiration date of the license. Subd. 8. Notice of changes. Each licensee or holder of a temporary permit shall give written notice to the commissioner of any change in name, or residence address not later than ten days after such change. The commissioner may, upon receipt of such notice, issue an amendment to the license incorporating such changes. Subd. 9. Fees. A fee of $50 is imposed for each initial license or temporary permit and $50 for each renewal thereof or amendment thereto. A fee of $20 is imposed for the registration of each nonlicensed adjuster who is required to register under section 72B.06. All fees shall be transmitted to the commissioner and shall be payable to the Department of Commerce. Subd. 10. Business entity. All executive officers and directors of a business entity applying for a nonresident independent adjuster license to adjust claims relating to portable electronics insurance claims relating to coverage regulated by section 60K.381 and all executive officers and directors of entities and any individuals owning, directly or indirectly, more than 50 percent of the outstanding voting securities of that applicant, are subject to the requirements of subdivision 2, paragraphs (a) to (e). A nonresident business entity whose home state subjects the applicant to requirements substantially similar to those under subdivision 2 is not required to comply with subdivision 2. History:  2009 c 63 s 45,78; 2011 c 95 s 3-5; 2011 c 108 s 39; 2014 c 222 art 1 s 13; 2022 c 55 art 1 s 186
72B.045 CONTINUING EDUCATION. Subdivision 1. Requirement. An individual who holds an independent or public adjuster license and who is not exempt under this section must satisfactorily complete a minimum of 24 hours of continuing education courses, of which three hours must be in ethics, reported to the commissioner on a biennial basis in conjunction with the individual's license renewal cycle. Subd. 2. Exceptions. This section does not apply to: (1) a licensee not licensed for one full year prior to the end of the applicable continuing education biennium; or (2) a licensee holding a nonresident adjuster license who has met the continuing education requirements of the licensee's designated home state. History:  2009 c 63 s 46,78; 2010 c 384 s 38
72B.05 NONRESIDENTS. (a) Unless refused licensure pursuant to section 72B.08, a nonresident person shall receive a nonresident adjuster license if: (1) the person is currently licensed in good standing as an adjuster in the person's resident or home state; (2) the person has submitted the proper request for licensure and has paid the fees required by section 72B.041, subdivision 9; (3) the person has submitted or transmitted to the commissioner the appropriate completed application for licensure; and (4) the person's designated home state awards nonresident adjuster licenses to persons of this state on the same basis. (b) The commissioner may verify the adjuster's licensing status through any appropriate database, including the producer database maintained by the National Association of Insurance Commissioners, its affiliates, or its subsidiaries, or may request certification of good standing as described in section 72B.041, subdivision 5. (c) As a condition to the continuation of a nonresident adjuster license, the licensee must maintain a resident adjuster license in the licensee's home state. The nonresident adjuster license issued under this chapter must terminate and be surrendered immediately to the commissioner if the resident adjuster license terminates for any reason, unless the termination is due to the adjuster being issued a new resident adjuster license in the adjuster's new home state. The new state resident adjuster license must have reciprocity with the licensing nonresident states, otherwise, the nonresident adjuster license must terminate. Notice of resident adjuster license termination must be given to any state that issued a nonresident adjuster license. Notice must be given within 30 days of the termination date; if terminated for change in the resident home state, then the notice must include both the previous and current address. Maintaining a resident adjuster license is required for the nonresident adjuster license to remain valid. (d) No resident of Canada may be licensed under this section, unless the applicant is licensed as a resident adjuster under the laws of another state, except that such applicant shall not be subject to section 270C.72, subdivision 4. History:  1971 c 704 s 5; 1986 c 444; 1995 c 258 s 54; 2009 c 63 s 47,78; 2011 c 95 s 6
72B.055 MULTIPLE PERIL CROP INSURANCE ADJUSTMENTS. A licensed crop hail adjuster who has satisfactorily completed the loss adjustment training curriculum and competency testing required by the Federal Crop Insurance Corporation (FCIC) Standard Reinsurance Agreement may act as an adjuster in this state in regard to Multiple Peril Crop Insurance policies regulated by the FCIC. History:   2011 c 108 s 40 
72B.06 CATASTROPHE OR EMERGENCY SITUATIONS. (a) For purposes of this chapter, a catastrophe exists when, due to a specific, infrequent, and sudden natural or man-made disaster or phenomenon, there have arisen losses to property in Minnesota that are covered by insurance, and the losses are so numerous and severe that resolution of claims related to such covered property losses will not occur expeditiously without the licensing of emergency independent adjusters due to the magnitude of the catastrophic damage. A failure of claims to be resolved expeditiously shall exist upon an insurer's filing with the department a written statement that one of the following conditions exists: (1) the insurer expects to incur at least 500 claims as a result of the event; or (2) the magnitude of the event is expected to generate twice the mean number of claims for one month for the affected area. Such written statement may be sent electronically to the commissioner. An insurer must notify the commissioner via registration of each independent adjuster not already licensed in Minnesota, that will act as an emergency independent adjuster on behalf of the insurer pursuant to paragraph (b). (b) A person who is otherwise qualified to adjust claims, but not already licensed in Minnesota, may act as an emergency independent adjuster and adjust claims, if, within five days of deployment to adjust claims arising from the catastrophe, the insurer or the independent adjuster's employer, in the notification required by paragraph (a), notifies the commissioner by providing the following information in a format prescribed by the commissioner: (1) the name of the individual; (2) the Social Security number of the individual; (3) the name of the insurer the independent adjuster will represent; (4) the effective date of the contract between the insurer and independent adjuster or the independent adjuster's employer; (5) the catastrophe loss control number; (6) the catastrophe name; and (7) other information the commissioner deems necessary. (c) An emergency independent adjuster's license or registration remains in force for 180 days; such license or registration shall be effective for all catastrophes described in paragraph (a), clauses (1) and (2). Such license or registration may be extended for 180 days. The commissioner may summarily suspend or revoke the right of any person adjusting in this state under the authority of this section to continue to adjust in this state, if the commissioner finds that that person has engaged in any of the practices forbidden to a licensed adjuster under sections 72B.01 to 72B.136. Notice of such suspension or revocation may be given personally or by mail sent to the temporary address stated in the registration and to the insurer or independent adjusting company who submitted the independent adjuster information. History:  1971 c 704 s 6; 1986 c 444; 2009 c 63 s 48,78; 2010 c 384 s 39; 2022 c 55 art 1 s 186
72B.08 DENIAL, SUSPENSION AND REVOCATION OF LICENSES. Subdivision 1. Causes. The commissioner may place on probation, suspend, revoke, or refuse to issue or renew an adjuster's license or temporary permit or may levy a civil penalty according to section 45.027, subdivision 6, or any combination of the above actions for any of the following causes: (1) failure to pass a required examination; (2) obtaining or attempting to obtain a license through misrepresentation or fraud providing incorrect, misleading, incomplete, or materially untrue information in the license application; (3) violating any insurance laws, rules, subpoena, or order of the commissioner or of another state's insurance commissioner or any provision of sections 72B.01 to 72B.136; (4) improperly withholding, misappropriating, or converting any money or properties received in the course of doing insurance business; (5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance, with intent to deceive, or engaging in, or attempting to engage in, any fraudulent transaction with respect to a claim or loss that the licensee or holder of a temporary permit is adjusting; (6) conviction of a felony under the laws of this state, any other state, the United States, or any foreign country; (7) the licensee or holder of a temporary permit has demonstrated incompetency or untrustworthiness to act as an adjuster; (8) refusal to comply with any lawful order of the commissioner; (9) having admitted or been found to have committed any insurance unfair trade practice or fraud; (10) using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility, in the conduct of insurance business in this state or elsewhere; (11) having an insurance license, or its equivalent, probated, suspended, revoked, or refused in any other state, province, district, or territory; (12) forging another's name to any document related to an insurance transaction; (13) cheating, including improperly using notes or any other reference material, to complete an examination for an insurance license; (14) failing to comply with an administrative or court order imposing a child support obligation; or (15) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax which remains unpaid. Subd. 2. Notice. In the event that the action by the commissioner is to refuse application for licensure or renewal of an existing license, the commissioner must notify the applicant or licensee in writing, advising of the reason for the refusal. Subd. 3. Hearing. Except when an application is rejected for failure to pass a required examination, the person aggrieved by the action of the commissioner shall be entitled to a hearing before the commissioner or the commissioner's delegate, provided that such person files a written request for such hearing with the commissioner prior to the expiration of 30 days from the date of notice specified in subdivision 2. If no hearing is requested within 30 days from the date of the notice, the action taken by the commissioner shall continue in effect until modified or vacated. If a hearing is timely requested, the commissioner shall set a date for such hearing not later than 30 days after the date of receipt of the request for hearing. Pending the hearing or any judicial review of such hearing, the commissioner may modify or vacate the action taken or extend it until final determination. After the hearing, the commissioner shall enter an order either vacating the prior action, confirming the prior action or otherwise disposing of the matter as the facts require. Subd. 4. Suspension or revocation of license or permit. When the commissioner has information, which if true, would be grounds for suspension, revocation, or refusal to issue a renewal license or a temporary permit, the commissioner may order the licensee or holder of the temporary permit to appear for a hearing pursuant to chapter 14, to determine the facts of the case and to determine whether the license or permit should be suspended or revoked, or whether it should not be renewed. The order shall fix the time and place for the hearing. After the hearing, the commissioner shall enter an order either dismissing the matter or suspending or revoking the license or temporary permit, or otherwise disposing of the matter as the facts require. Pending the results of the hearing, the licensee or permit holder may continue to act under the license or permit. The license of a business entity may be probated, suspended, revoked, or refused if the commissioner finds, after a hearing, that: (1) its designated individual licensee's violation occurred while acting on behalf of or representing the business entity; (2) the violation was known or should have been known by one or more of the business entity's partners, officers, or managers; (3) the violation was not reported to the commissioner; and (4) corrective action was not taken. In addition to or in lieu of any applicable probation, suspension, revocation, or refusal, a person may, after a hearing, additionally be subject to a civil fine according to section 45.027, subdivision 6. The commissioner retains the authority to enforce the provisions of and impose any penalty or remedy authorized by this chapter and section 45.027, subdivision 6, against any person who is under investigation for or charged with a violation of this chapter or sections 72A.17 to 72A.32, even if the person's license or registration has been surrendered or has expired by operation of law. Subd. 5. Judicial review. Any final order of the commissioner shall be subject to judicial review. Subd. 6. Procedure. Any hearing or judicial review shall be in accordance with the contested case provisions of chapter 14. Subd. 7. Voluntary action by licensee or holder of permit. The commissioner may request a voluntary revocation or suspension of a license or temporary permit and may enter into stipulations in accordance with the request whereby the licensee or holder of a temporary permit shall waive all further right to a hearing or judicial review. Subd. 8. Bond. In the case of any licensee or permit holder who has had a license or permit suspended or revoked or whose license renewal has been prohibited by a lawful order of the commissioner, the commissioner may condition the issuance of a new license on the filing of a surety bond in an amount not to exceed $10,000, made and conditioned in accordance with the requirements of section 72B.041, subdivision 3, relating to public adjusters' bonds. Nothing in this subdivision shall reduce or alter the bonding requirements for a public adjuster. Subd. 9. Civil and criminal liability. This section shall not relieve a person from civil liability or from criminal prosecution under sections 72B.01 to 72B.136 or any other law of this state. History:  1971 c 704 s 8; 1979 c 141 s 7; 1982 c 424 s 130; 1986 c 444; 2009 c 63 s 49-51,78; 2010 c 384 s 40; 2014 c 222 art 1 s 14; 2022 c 55 art 1 s 186
72B.091 DAMAGE APPRAISALS; ADJUSTMENTS; DUTIES OF APPRAISERS, ADJUSTERS, AND INSURERS. Subdivision 1. Appraiser's identification. Each appraiser while engaged in appraisal duties shall carry appraiser identification and shall display it upon request to an owner whose vehicle is being inspected, to the repair shop representative involved, or to any commissioner of commerce's representative. Subd. 2. Appraisal; copies and content. The appraiser shall provide one legible copy of the appraisal to the vehicle owner and one legible copy of the appraisal to the repair shop designated by the owner if requested by the repair shop. The motor vehicle repair shop shall provide the vehicle owner and the insurance company or companies involved in the loss one legible copy of the appraisal. This appraisal shall include an itemized listing of those parts to be repaired and those parts to be replaced by new, used, rebuilt, reconditioned or replated parts. The appraisal shall contain the name of the insurance company ordering it, if any, the insurance company's address and telephone number, its file number, the appraiser's name, telephone number, and the proper identification of the vehicle being inspected. The appraisal shall indicate all significant old and unrelated damages and shall include an itemized listing of all damages, specifying those parts to be repaired and those parts to be replaced by new, used, rebuilt, reconditioned, or replated parts. The appraisal must disclose to the vehicle owner any parts to be used, other than window glass, which are not original equipment parts or which are not covered by the manufacturer's warranty on such parts. Subd. 3. No specified repairer. No appraiser, adjuster, or that person's employer shall require that repairs be made in any specified repair facility. Subd. 4. Reinspections. Each appraiser shall promptly reinspect damaged vehicles when supplementary allowances are requested by the repair shop or when the amount or extent of damages is in dispute. Reinspection of any damage on a damaged vehicle may be waived if authorized by the insurer by any oral or written communication. Subd. 5. Auto salvage. No appraiser or adjuster for personal gain shall receive or trade in auto salvage if the salvage is obtained as a result of that person's appraisals. History:  1980 c 456 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 64 s 2
72B.092 MOTOR VEHICLE INSURANCE ADJUSTMENTS; PROHIBITIONS. Subdivision 1. Prohibitions on insurer. No adjuster or insurer, director, officer, broker, agent, attorney-in-fact, employee, or other representative of an insurer shall in collision cases: (1) limit the freedom of an insured or claimant to choose the shop; (2) require that an insured or claimant present the claim or the automobile for loss adjustment or inspection at a "drive-in" claim center or any other similar facility solely under the control of the insurer; (3) engage in boycotts, intimidation or coercive tactics in negotiating repairs to damaged motor vehicles which they insure or are liable to claimants to have repaired; (4) attempt to secure, except in an emergency, the insured's or claimant's signature authorizing the party securing the signature to act in behalf of the insured or claimant in selection of a repair shop facility; (5) adjust a damage appraisal of a repair shop when the extent of damage is in dispute without conducting a physical inspection of the vehicle; (6) specify the use of a particular vendor for the procurement of parts or other materials necessary for the satisfactory repair of the vehicle. This clause does not require the insurer to pay more than a reasonable market price for parts of like kind and quality in adjusting a claim; or (7) unilaterally and arbitrarily disregard a repair operation or cost identified by an estimating system, which an insurer and collision repair facility have agreed to utilize in determining the cost of repair. Subd. 2. Boycotts. No motor vehicle repair shop shall in any way coerce, or intimidate a motor vehicle owner to boycott an insurer's "drive-in" claim center or similar facility. Subd. 3. Owner's signature. No motor vehicle repair shop shall attempt to secure, except in an emergency, the vehicle owner's signature authorizing the party securing the signature to act in behalf of the owner in selection of a repair shop. Subd. 4. Access to repair shop. An insurer's representative shall not be unreasonably denied access to a motor vehicle repair shop during normal business hours for the purpose of inspecting or reinspecting damaged vehicles. Subd. 5. Storage and towing charges. When a damaged vehicle is towed to a motor vehicle repair shop, the storage and towing charges shall not exceed the usual and customary charges for the towing and storage of undamaged vehicles in the area except if the vehicle, due to its damaged condition, requires special handling in the towing or storage, an added charge may be made. History:  1980 c 456 s 3; 1986 c 444; 2007 c 80 s 1; 2008 c 284 s 1
72B.10 STAFF ADJUSTERS. A staff adjuster who adjusts losses or claims in this state shall not be subject to the application, licensing, or examination requirements or other qualifications set forth in sections 72B.01 to 72B.136. Such a staff adjuster shall not, however, engage in any of the practices forbidden to a licensee under section 72B.08, subdivision 1, clauses (3) through (15). If the commissioner has information, which if true, would establish that a staff adjuster has engaged or is engaging in any such prohibited practices, the commissioner may issue an order for a hearing to determine the facts involved. The order shall fix the time and place for hearing. The staff adjuster and one or more representatives of the insurer or insurers employing the staff adjuster shall make an appearance at the hearing unless the commissioner expressly waives the appearance of one or more such parties. If, following the hearing, the commissioner determines that the staff adjuster has engaged or is engaging in any prohibited practices, the commissioner may impose a fine, not in excess of $500, on the staff adjuster or on the employing insurer or insurers, or on both such parties. In addition, the commissioner may order the employing insurer to suspend the staff adjuster from all duties for such period as the commissioner may deem appropriate. Any final order of the commissioner shall be subject to judicial review. Any hearing or judicial review under this section shall be in accordance with the contested case provisions of chapter 14. History:  1971 c 704 s 10; 1979 c 141 s 8; 1982 c 424 s 130; 1986 c 444; 2013 c 135 art 1 s 2; 2022 c 55 art 1 s 186
72B.105 RECORDS OF INDEPENDENT ADJUSTERS TO BE RETAINED. An independent adjuster must maintain a copy of each contract between the independent adjuster and the insurer or self-insurer and comply with the record retention policy as agreed to in that contract. History:   2009 c 63 s 52,78 
72B.106 STANDARDS OF CONDUCT OF INDEPENDENT ADJUSTERS. (a) An independent adjuster must be honest and fair in all communications with the insured, the insurer, and the public. (b) An independent adjuster must give policyholders and claimants prompt, knowledgeable service and courteous, fair, and objective treatment at all times. (c) An independent adjuster must not give legal advice and must not deal directly with any policyholder or claimant who is represented by legal counsel without the consent for the legal counsel involved. (d) An independent adjuster must comply with all local, state, and federal privacy and information security laws, if applicable. (e) An independent adjuster must identify as an independent adjuster and, if applicable, identify the independent adjuster's employer when dealing with any policyholder or claimant. (f) An independent adjuster must not have any financial interest in any adjustment or acquire for the independent adjuster or any person any interest or title in salvage, without first receiving written authority from the principal. History:   2009 c 63 s 53,78 
72B.107 REPORTING OF ACTIONS OF ADJUSTER. (a) An adjuster must report to the commissioner any administrative action taken against the adjuster in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. The report must include a copy of the order or consent order and any other relevant legal documents. (b) An adjuster must report to the commissioner any criminal action taken against the adjuster in this or any jurisdiction within 30 days of the final disposition of the criminal matter. The report must include a copy of the initial complaint filed, the final order issued by the court, and any other relevant legal documents. History:  2009 c 63 s 54,78
72B.11 PRODUCTION OF RECORDS. The commissioner may, by order, require any licensee or permit holder to produce any records relating to activities under that person's license or permit, and may examine persons under oath to determine questions arising under a person's status as a licensee or permit holder. History:  1971 c 704 s 11; 1986 c 444
72B.12 RULES. The commissioner may promulgate rules to carry out the purpose of sections 72B.01 to 72B.136, pursuant to chapter 14. History:  1971 c 704 s 12; 1982 c 424 s 130; 1985 c 248 s 70; 2022 c 55 art 1 s 186
72B.13 ACTING WITHIN CONTRACT AND LAW. Every adjuster shall investigate or adjust every claim, damage or loss made or occurring under an insurance contract in accordance with the terms and conditions of the contract and of the applicable laws of this state. History:   1971 c 704 s 13 
72B.135 PUBLIC ADJUSTERS. Subdivision 1. Insured's right to cancel. An insured who has entered into a contract with a public adjuster involving the business for which the person was licensed, has the right to cancel the contract within 72 hours after the contract has been signed. Cancellation is evidenced by the insured giving written notice of cancellation to the public adjuster at the address stated in the contract. Notice of cancellation, if given by mail, is effective upon deposit in a mailbox, properly addressed to the public adjuster and postage prepaid. Notice of cancellation need not take a particular form and is sufficient if it indicates, by any form of written expression, the intention of the insured not to be bound by the contract. Subd. 2. Writing required; notice of right to cancel; notice of cancellation. Before entering a contract referred to in subdivision 1, the public adjuster must: (1) furnish the insured with a statement in boldface type of a minimum size of ten points, in substantially the following form: "You, the insured, may cancel this contract at any time within 72 hours after the contract has been signed between the insured and the public adjuster. See attached notice of cancellation form for an explanation of this right."; and (2) furnish each insured, a fully completed form in duplicate, captioned, "NOTICE OF CANCELLATION," which shall be attached to the contract and easily detachable, and which shall contain in boldface type of a minimum size of ten points the following information and statements: "NOTICE OF CANCELLATION        .      (Enter date of contract)    If you do not want to go forward with the contract with the public adjuster, you may cancel the contract by mailing or delivering a signed and dated copy of this cancellation notice or any other written notice to (Name of Public Adjuster), at (Address of Public Adjuster's Place of Business) not later than midnight of (Date). If you cancel, any payments made by you under the contract will be returned within ten business days following receipt by the public adjuster of your cancellation notice.        I HEREBY CANCEL THIS TRANSACTION.     .      (Date)       .      (Insured's signature)"    Subd. 3.Return of payments; compensation. Within ten days after a contract referred to in subdivision 1 has been canceled, the public adjuster must tender to the insured any payments made by the insured and any note or other evidence of indebtedness. However, if the public adjuster has performed any emergency services within the 72-hour period, the public adjuster is entitled to compensation for such services. Emergency services shall mean the removal of water, boarding up a building, and reconnecting lights and heat. Subd. 4. Prohibited practices. No public adjuster shall: (1) pay money or give anything of value to a person in consideration of a direct or indirect referral of a client or potential client; (2) pay money or give anything of value to a person as an inducement to refer business or clients; (3) rebate to a client a part of a fee specified in an employment contract; (4) initiate contact with a prospective client between the hours of 8 p.m. and 8 a.m.; (5) split the fee received or pay money to a person for services rendered to a client unless the other person is also licensed as a public adjuster; (6) have an interest directly or indirectly in a construction firm, salvage firm, or appraisal firm. "Firm" includes a corporation, partnership, association, or individual firm; (7) in connection with the transaction of business as a public adjuster, make a willful or knowing misrepresentation of facts or advise a person on questions of law; (8) make willful or knowing false statements about an insurance company or its employees, agents, or representatives; (9) solicit employment of a client in connection with a loss that is the subject of an employment contract with another public adjuster; (10) represent both an insurer and insured simultaneously; or (11) advance money to a client pending the settlement of a loss where the amount would be included in a final settlement. Subd. 5. Disclosures. (a) A public adjuster shall disclose in writing to the client any interest the public adjuster has in loss proceeds other than those acquired by the public adjuster's employment contract. (b) A public adjuster in soliciting a client for employment shall display a license and immediately inform the client that the adjuster does not represent an insurance company or insurance company adjusting firm. The adjuster shall inform the client that services are available for a fee to be paid by the client and shall give the client a card identifying the public adjuster. The public adjuster shall disclose in writing to the client the fee charged by the public adjuster. Subd. 6. Records; contracts. (a) A public adjuster shall maintain an office that contains the records of all documents pertaining to the settlement of the claim and files of all clients. The records must be available for inspection by an authorized examiner or employee of the Commerce Department. The records will be kept by the public adjuster for at least five years after the end of the contracted employment period. (b) An employment contract used by a public adjuster is valid only if signed by an insured and the property owner of the property involved, or an authorized agent or representative. History:  1988 c 663 s 1; 1990 c 514 s 1-3; 2009 c 63 s 55-57,78; 2014 c 222 art 1 s 15
72B.136 ESCROW OR TRUST ACCOUNTS. A public adjuster who receives, accepts, or holds any funds on behalf of an insured, towards the settlement of a claim for loss or damage, shall deposit the funds in a non-interest-bearing escrow or trust account in a financial institution that is insured by an agency of the federal government in the public adjuster's home state or where the loss occurred. History:  2009 c 63 s 58,78
72C.01 CITATION. Sections 72C.01 to 72C.13 may be cited as the "Readability of Insurance Policies Act." History:   1977 c 345 s 1 
72C.02 PURPOSE. The purpose of sections 72C.01 to 72C.13 is to provide that insurance policies and contracts be readable and understandable to a person of average intelligence, experience, and education. All insurers shall be required by sections 72C.01 to 72C.13 to use policy and contract forms which are written in simple and commonly used language, which are logically and clearly arranged, which are printed in a legible format, and which are generally understandable. It is not the intent of sections 72C.01 to 72C.13 to mandate, require or allow alteration of the legal effect of any provision of any insurance policy or contract. History:   1977 c 345 s 2 
72C.03 SCOPE. Except as otherwise specifically provided, sections 72C.01 to 72C.13 shall apply to all policies or contracts of direct insurance, issued by persons authorized at any time to transact insurance in this state and including nonprofit health service plan corporations under chapter 62C, health maintenance organizations under chapter 62D, and fraternal benefit societies under chapter 64B. Sections 72C.01 to 72C.13 shall not apply to insurance as described in the master contract for any policy of group insurance when the group consists of ten or more persons. Sections 72C.01 to 72C.13 shall not apply to policies or contracts issued prior to July 1, 1980, under which there is no unilateral right of the insurer to cancel, nonrenew, amend or change in any way, unless the policy or contract is amended or changed by mutual agreement of the parties. Sections 72C.01 to 72C.13 shall not apply to an insurance policy or contract which is a security subject to federal jurisdiction, nor shall they apply to a new policy or contract written in language other than English. History:  1977 c 345 s 3; 1980 c 353 s 1; 1985 c 49 s 41; 1992 c 564 art 1 s 54; 1995 c 186 s 18; 1996 c 305 art 1 s 25
72C.04 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 72C.01 to 72C.13, the following terms shall have the meanings given them. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce or a designated agent. Subd. 3. Flesch scale analysis readability score. "Flesch scale analysis readability score" means a measurement of the ease of readability of a policy or contract made pursuant to the procedures prescribed in section 72C.09. Subd. 4. Insurance policy or contract; policy. "Insurance policy or contract" or "policy" means any written agreement within the scope of sections 72C.01 to 72C.13 whereby one person, for consideration, undertakes to indemnify another person or persons to a specified amount against loss or damages from specified causes, or to do some act of value to the insured in case of specified loss or damage. The agreements specifically include a nonprofit health service plan subscriber contract under chapter 62C, a health maintenance contract under chapter 62D, and a membership certificate in a fraternal benefit society under chapter 64B. Subd. 5. Insurer. "Insurer" means every person entering insurance policies or contracts as a principal. Subd. 6. Legible type. "Legible type" means a type face at least as large as ten-point modern type, one point leaded. Subd. 7. Person. "Person" means any individual, corporation, partnership, association, business trust or voluntary organization. History:  1977 c 345 s 4; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c 49 s 41; 1986 c 444; 1992 c 564 art 1 s 54; 1995 c 186 s 19
72C.05 COVER SHEET. Subdivision 1. Requirement. All insurance policies or contracts described in section 72C.11, clauses (a) and (b) issued, amended or renewed after July 1, 1978 and before the filing requirements of section 72C.10 take effect shall contain as the first page or first page of text, if it is preceded by a title page or pages, a cover sheet or sheets as provided in this section. Subd. 2. Form and content. The cover sheet or sheets shall be printed in legible type and readable language, as provided in section 72C.06, and shall contain at least the following: (a) A brief statement that the policy is a legal contract between the policy owner and the company; (b) The statement "READ YOUR POLICY CAREFULLY. This cover sheet provides only a brief outline of some of the important features of your policy. This is not the insurance contract and only the actual policy provisions will control. The policy itself sets forth, in detail, the rights and obligations of both you and your insurance company. IT IS THEREFORE IMPORTANT THAT YOU READ YOUR POLICY CAREFULLY."; and (c) An index of the major provisions of the policy or contract and the pages on which they are found which may include the following items: (1) the person or persons insured by the policy; (2) the applicable events, occurrences, conditions, losses or damages covered by the policy; (3) the limitations or conditions on the coverage of the policy; (4) definitional sections of the policy; (5) provisions governing the procedure for filing a claim under the policy; (6) provisions governing cancellation, renewal, or amendment of the policy by either the insurer or the policy owner; (7) any options under the policy; and (8) provisions governing the insurer's duties and powers in the event that suit is filed against the insured. Subd. 3. Coverage summary. The cover sheet may include, either as part of the index or as a separate section, a brief summary of the extent and types of coverage in the policy. Subd. 4. Filing and approval. No cover sheet shall be used unless it has been filed with and approved by the commissioner. The cover sheet shall be deemed approved 30 days after filing unless disapproved by the commissioner within the 30-day period, subject to a reasonable extension of time as the commissioner may require by notice given within the 30-day period. The commissioner shall disapprove any cover sheet which does not meet the requirements of this section. Any disapproval shall be delivered to the insurer in writing, stating the grounds therefor. Subd. 5. Alternative compliance. In lieu of the cover sheet required by this section, the insurer may file a policy or contract with the commissioner under the provisions of sections 72C.06 to 72C.08. History:   1977 c 345 s 5 
72C.06 READABILITY. Subdivision 1. Requirement. All insurance policies filed with the commissioner pursuant to section 72C.11 shall be written in language easily readable and understandable by a person of average intelligence and education. Subd. 2. Compliance factors. In determining whether a policy or contract is readable within the meaning of this section the commissioner shall consider, at least, the following factors: (a) the simplicity of the sentence structure and the shortness of the sentences used; (b) the extent to which commonly used and understood words are employed; (c) the extent to which legal terms are avoided; (d) the extent to which references to other sections or provisions of the contract are minimized; (e) the extent to which definitional provisions are incorporated in the text of the policy or contract; and (f) any additional factors relevant to the readability or understandability of an insurance policy or contract which the commissioner may prescribe by rule. History:   1977 c 345 s 6 
72C.07 LEGIBILITY. Subdivision 1. Requirement. All insurance policies covered by section 72C.11 shall be printed in legible type and in a type face style approved by the commissioner. Subd. 2. Compliance factors. In determining whether a policy or contract is legible the commissioner shall consider, in addition to the requirements of subdivision 1 relating to type face size and style, the following factors: (a) margin size; (b) contrast and legibility of the color of the ink and paper; (c) the amount and use of space to separate sections of the policy; (d) the use of contrasting titles or headings for sections or similar aids; and (e) any additional factors relevant to legibility which the commissioner may prescribe by rule. History:  1977 c 345 s 7; 1986 c 444; 1996 c 305 art 2 s 8
72C.08 FORMAT REQUIREMENTS. Subdivision 1. Requirement. All insurance policies and contracts covered by section 72C.11 shall be written in a logical, clear, and understandable order and form and shall contain at least the following items: (a) on the cover or first or an insert page of the policy a statement that the policy is a legal contract between the policy owner and the company and the statement, printed in larger or other contrasting type or color, "Read your policy carefully"; (b) an index of the major provisions of the policy or contract, which may include the following items: (1) the person or persons insured by the policy; (2) the applicable events, occurrences, conditions, losses or damages covered by the policy; (3) the limitations or conditions on the coverage of the policy; (4) definitional sections of the policy; (5) provisions governing the procedure for filing a claim under the policy; (6) provisions governing cancellation, renewal, or amendment of the policy by either the insurer or the policy owner; (7) any options under the policy; and (8) provisions governing the insurer's duties and powers in the event that suit is filed against the insured. Subd. 2. Compliance factors. In determining whether a policy or contract is written in a logical, clear, and understandable order and form the commissioner shall consider the following factors: (a) the extent to which each provision for coverage is stated separately in a self-contained section, including the conditions relating to or limiting that section's effect; (b) the extent to which sections or provisions are set off and clearly identified by titles, headings, or margin notations; (c) the use of a more easily understandable format such as narrative or outline forms; and (d) any additional factors relevant to a logical, clear, and understandable format which the commissioner may prescribe by rule. History:   1977 c 345 s 8 
72C.09 FLESCH SCALE ANALYSIS READABILITY SCORE, PROCEDURES. A Flesch scale analysis readability score shall be measured as provided in this section. (1) For contracts containing 10,000 words or less of text, the entire contract shall be analyzed. For contracts containing more than 10,000 words the readability of two 200 word samples per page may be analyzed in lieu of the entire contract. The samples shall be separated by at least 20 printed lines. For purposes of this clause a word shall be counted as five printed characters or spaces between characters. (2)(a)(i) The number of words and sentences in the text shall be counted and the total number of words divided by the total number of sentences. The figure obtained shall be multiplied by a factor of 1.015. (ii) The total number of syllables shall be counted and divided by the total number of words. The figure obtained shall be multiplied by a factor of 84.6. (iii) The sum of the figures computed under (i) and (ii) subtracted from 206.835 equals the Flesch scale analysis readability score for the policy or contract. (b) For purposes of clause (a) the following procedures shall be used: (i) A contraction, hyphenated word, or numbers and letters, when separated by spaces, shall be counted as one word; (ii) A unit of words ending with a period, semicolon or colon, but excluding headings, captions, and lists, shall be counted as a sentence; and (iii) A syllable means a unit of spoken language consisting of one or more letters of a word as divided by an accepted dictionary. Where the dictionary shows two or more equally acceptable pronunciations of a word, the pronunciation containing fewer syllables may be used. History:  1977 c 345 s 9; 1980 c 353 s 2
72C.10 FILING REQUIREMENTS; DUTIES OF COMMISSIONER. Subdivision 1. Readability compliance; filing and approval. No insurer shall make, issue, amend, or renew any policy or contract after the dates specified in section 72C.11 for the applicable type of policy unless the contract is in compliance with the requirements of sections 72C.06 to 72C.09 and unless the contract is filed with the commissioner for approval. The contract shall be deemed approved 60 days after filing unless disapproved by the commissioner within the 60-day period. When an insurer, service plan corporation, or the Minnesota Comprehensive Health Association fails to respond to an objection or inquiry within 60 days, the filing is automatically disapproved. A resubmission is required if action by the Department of Commerce is subsequently requested. An additional filing fee is required for the resubmission. The commissioner shall not unreasonably withhold approval. Any disapproval shall be delivered to the insurer in writing, stating the grounds therefor. Any policy filed with the commissioner shall be accompanied by a Flesch scale readability analysis and test score and by the insurer's certification that the policy or contract is in its judgment readable based on the factors specified in sections 72C.06 to 72C.08. Subd. 2. Contract or policy disapproval. The commissioner shall disapprove any contract or policy covered by subdivision 1 if the commissioner finds that: (a) it is not accompanied by a certified Flesch scale analysis readability score of more than 40; (b) it is not accompanied by the insurer's certification that the policy or contract is in its judgment readable under the standards of sections 72C.01 to 72C.13; (c) it does not comply with the readability standards established by section 72C.06; (d) it does not comply with the legibility standards established by section 72C.07; or (e) it does not comply with the format requirements established by section 72C.08. History:  1977 c 345 s 10; 1986 c 444; 2006 c 255 s 61
72C.11 APPLICATION OF FILING REQUIREMENTS; DUTIES OF COMMISSIONER. Subdivision 1. Policies and dates specified. The filing requirements of section 72C.10 shall apply as follows: (a) To all policies of private passenger vehicle insurance, as described in chapter 65B, and to all policies of homeowner's insurance as defined in the general custom and usage of the business or by a ruling of the commissioner or a court, which are made, issued, amended or renewed after July 1, 1979; (b) To all policies of life insurance as defined in section 60A.06, subdivision 1, clause (4), to all certificates of a fraternal benefit society, as defined in section 64B.19, to all policies of accident and health insurance, as defined in section 60A.06, subdivision 1, clause (5), paragraph (a), to all subscriber contracts of nonprofit health service corporations as defined in section 62C.02, and to all health maintenance contracts as defined in section 62D.02, which are made, issued, amended or renewed after July 1, 1980; the commissioner may grant delays of not more than one year in full or partial compliance of accident and health policies; and (c) To all policies of any additional line or type of insurance within the scope of sections 72C.01 to 72C.13, as provided by any rule promulgated by the commissioner not later than July 1, 1981. Subd. 2. Commissioner's reports. The commissioner shall make the following reports to the legislature: (a) On or before February 1, 1979 a report detailing and evaluating the efforts made by the commissioner and insurers to implement the provisions of subdivision 1, clause (a), and particularly examining the feasibility and practicality of requiring accident and health and life insurance policies to comply with sections 72C.01 to 72C.13 and in the time prescribed; (b) On or before February 1, 1980 a report detailing and evaluating (1) the operation of and the extent of compliance with sections 72C.01 to 72C.13, (2) the efforts made by the commissioner and insurers to implement the provisions of subdivision 1, clause (b), and (3) the commissioner's intent regarding the extension of the application of sections 72C.01 to 72C.13 to other lines and types of insurance under subdivision 1, clause (c), and the reasons therefor. History:  1977 c 345 s 11; 1980 c 353 s 3; 1Sp1981 c 4 art 1 s 61; 1985 c 49 s 41; 1986 c 444
72C.12 COMMISSIONER'S POWERS AND DUTIES. In addition to the duties and powers enumerated elsewhere in sections 72C.01 to 72C.13 the commissioner shall have the power to promulgate rules consistent with sections 72C.01 to 72C.13 to effectuate its purpose. History:   1977 c 345 s 12 
72C.13 CONSTRUCTION. Subdivision 1. Other insurance law. Sections 72C.01 to 72C.13 shall not operate to relieve any insurer from any provision of law regulating the contents or provisions of insurance policies, except to the extent that the provisions prescribe the use of specific language which is inconsistent with sections 72C.01 to 72C.13. Subd. 2. Standard fire policy and standard provisions in accident and sickness policy; effect of authorized alterations. No alteration in the language of the Minnesota standard fire insurance policy under section 65A.01 or the standard provisions of health insurance policies under section 62A.04, as authorized by sections 72C.01 to 72C.13, shall be construed to limit or reduce an insured's or beneficiary's rights granted under those statutory provisions. History:   1977 c 345 s 13 
79.01 DEFINITIONS. Subdivision 1. Terms. Unless the language or context clearly indicates that a different meaning is intended, the following terms, for the purposes of sections 79.01 to 79.211, shall have the meanings ascribed to them. Subd. 1a. Assigned risk plan. "Assigned risk plan" means: (1) the method to provide workers' compensation coverage to employers unable to obtain coverage through licensed workers' compensation companies; and (2) the procedures established by the commissioner to implement that method of providing coverage including administration of all assigned risk losses and reserves. Subd. 1b. Employer. "Employer" has the meaning given in section 176.011, subdivision 10. Subd. 2. Insurer. The word "insurer" means any insurance carrier authorized by license issued by the commissioner of commerce to transact the business of workers' compensation insurance in this state and includes a political subdivision providing self insurance or establishing a pool under section 471.981, subdivision 3. Subd. 3. Insurance. The word "insurance" means workers' compensation insurance and insurance covering any part of the liability of an employer exempted from insuring liability for compensation, as provided in section 176.181 and includes a program of self insurance, self insurance revolving fund or pool established under section 471.981. Subd. 4.  [Repealed, 1969 c 9 s 10] Subd. 5. Commissioner. The word "commissioner" means the commissioner of commerce. Subd. 6. Association or rating association. "Association" or "rating association" means the Workers' Compensation Insurers Rating Association of Minnesota. Subd. 7. Interested party. "Interested party" means any person or association acting on behalf of its members who is directly affected by a change in the schedule of rates and includes the staff of the Department of Commerce. Subd. 8. Schedule of rates. "Schedule of rates" means the rate level applicable to the various industry groupings or classes, including the risk classifications thereunder upon which the determination of workers' compensation premiums are based, including but not limited to all systems for merit or experience rating, retrospective rating, and premium discounts. History:  (3612) 1921 c 85 s 1; 1931 c 353 s 1; 1957 c 508 s 1; 1969 c 9 s 8; 1973 c 577 s 1,2; 1975 c 359 s 23; Ex1979 c 3 s 1; 1980 c 529 s 3,4; 1981 c 346 s 9,10; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 384 art 2 s 1; 2006 c 255 s 62,63
79.074 DISCRIMINATION. Subdivision 1.  [Repealed, 1981 c 346 s 145; 1983 c 290 s 15] Subd. 2. Dividends. Dividend plans are not unfairly discriminatory where different premiums result for different policyholders with similar loss exposures but different expense factors, or where different premiums result for different policyholders with similar expense factors but different loss exposures, so long as the respective premiums reflect the differences with reasonable accuracy. Every insurer who issues participating policies shall file with the commissioner a true copy or summary as the commissioner shall direct of its participating dividend rates as to policyholders. The commissioner may study the participating dividend rates and make recommendations to the legislature concerning possible bases for unfair discrimination. History:  Ex1979 c 3 s 5; 1995 c 231 art 2 s 3
79.081 MANDATORY DEDUCTIBLES. Subdivision 1. Premium reduction. Each insurer, including the assigned risk plan, issuing a policy of insurance, must make available to an employer, upon request, the option to agree to pay an amount per claim selected by the employer and specified in the policy toward the total of any claim payable under chapter 176. The amount of premium to be paid by an employer who selects a policy with a deductible shall be reduced based upon a rating schedule or rating plan filed with and approved by the commissioner of commerce. Administration of claims shall remain with the insurer as provided in the terms and conditions of the policy. Each insurer shall notify its agents authorized to write workers' compensation insurance about the availability and terms and conditions of deductibles required by this section, using a brochure in a format approved by the commissioner. Subd. 2. Procedure for paying deductible. If an insured employer chooses a deductible, the insured employer is liable for the amount of the deductible. The insurer shall administer the claim as provided in the terms and conditions of the insurance policy and seek reimbursement from the insured employer for the deductible. The payment or nonpayment of deductible amounts by the insured employer to the insurer shall be treated under the policy insuring the liability for workers' compensation in the same manner as payment or nonpayment of premiums. Subd. 3. Credit risk; exception. An insurer is not required to offer a deductible to an employer if, as a result of a credit investigation, the insurer determines that the employer is not sufficiently financially stable to be responsible for the payment of deductible amounts. Subd. 4. Reporting requirement. The existence of an insurance contract with a deductible or the fact of payment as a result of a deductible does not affect the requirement of an employer to report an injury or death to an insurer or the commissioner of labor and industry. Subd. 5. No employee liability. Nothing in this section alters the obligation of the employer to provide the benefits required by this chapter. An employee is not responsible to pay all or a part of the deductible chosen by an employer. History:   1992 c 510 art 3 s 1 
79.085 SAFETY PROGRAMS. All insurers writing workers' compensation insurance in this state shall provide safety and occupational health loss control consultation services to each of their policyholders requesting the services in writing. Insurers must annually notify their policyholders of their right under this section to safety and occupational health loss consultation services. The services must include the conduct of workplace surveys to identify health and safety problems, review of employer injury records with appropriate personnel, and development of plans to improve employer occupational health and safety loss records. Insurers shall notify each policyholder of the availability of those services and the telephone number and address where such services can be requested. The notification may be delivered with the policy of workers' compensation insurance. History:  1992 c 510 art 3 s 2; 1995 c 231 art 2 s 4
79.095 APPOINTMENT OF ACTUARY. The commissioner shall employ the services of a casualty actuary experienced in worker's compensation whose duties shall include but not be limited to investigation of complaints by insured parties relative to rates, rate classifications, or discriminatory practices of an insurer. The salary of the actuary employed pursuant to this section is not subject to the provisions of section 43A.17, subdivision 1. History:  1977 c 342 s 24; Ex1979 c 3 s 8; 1981 c 210 s 54
79.096 ACCESS TO RATE-MAKING DATA. The rating association must make available for inspection on request of any person any data it possesses related to the calculation of indicated pure premium rates. History:   1992 c 510 art 3 s 3 
79.10 REVIEW OF ACTS OF INSURERS. The Department of Commerce staff may investigate on the request of any person or on its own initiative the acts of the rating association, an insurer, or an agent that are subject to provisions of chapter 79 and may make findings and recommendations that the commissioner issue an order requiring compliance with the provisions thereof. The proposed findings and recommended order shall be served on all affected parties at the same time that the staff transmits its findings and recommendations to the commissioner. Any party adversely affected by the proposed findings and recommended order may request that a hearing be held concerning the issues raised therein within 15 days after service of the findings and recommended order. This hearing shall be conducted as a contested case pursuant to sections 14.001 to 14.69. If a hearing is not requested within the time specified in this section, the proposed findings and recommended order may be adopted by the commissioner as a final order. History:  (3621) 1921 c 85 s 10; 1953 c 615 s 3; 1969 c 9 s 9; 1973 c 577 s 2; Ex1979 c 3 s 9; 1982 c 424 s 130; 1983 c 289 s 114 subd 1; 1984 c 592 s 77; 1984 c 655 art 1 s 92; 1987 c 384 art 2 s 1; 1990 c 422 s 10
79.211 CERTAIN PREMIUM DETERMINATION PRACTICES. Subdivision 1. Certain wages included for ratemaking. The rating association or an insurer shall include wages paid for a vacation, holiday, or sick leave in the determination of a workers' compensation insurance premium. An insurer, including the assigned risk plan, shall not include wages paid for work performed in an adjacent state in the determination of a workers' compensation premium if the employer paid a workers' compensation insurance premium to the exclusive state fund of the adjacent state on the wages earned in the adjacent state. Within 30 days of October 1, 1995, a licensed data service organization on behalf of its members shall file an amendment to its charged class premium rates to reflect the inclusion of vacation, holiday, and sick leave wages in the determination of premium. Within 30 days of the filing of those pure premium rates each insurer shall amend its filed schedule of rates to reflect the inclusion of vacation, holiday, and sick leave wages in the determination of premium. Subd. 2. Division of payroll. An insurer shall permit an employer to divide a payroll among the rating classifications most closely fitting the work actually performed by each employee in a four-hour block or more for purposes of premium calculation when the employer's records provide adequate support for a division. Subd. 3. Payroll computations for certain public employees. The commissioner of commerce in setting the assigned risk plan rates or an insurer shall compute a premium for an elected or appointed official of a town based on the actual annual wage received from the town. Subd. 4. Experience modification factor revision for certain closed claims. An insurer or an employer insured under a workers' compensation policy subject to an experience rating plan may request in writing of the data service organization computing the policy's experience modification factor that the most recent factor be revised if each of the following criteria is met: (1) a workers' compensation claim under that policy is closed between the normal valuation date for that claim and the next time that valuation is used in computing the experience modification factor on the policy; (2) the data service organization receives a revised unit statistical report containing data on the closed claim in a form consistent with its filed unit statistical plan; and (3) inclusion of the closed claim in the experience modification factor calculation would impact that factor by five percentage points or more. History:  Ex1979 c 3 s 12; 1980 c 556 s 6; 1981 c 346 s 139; 1983 c 290 s 4; 1986 c 444; 1987 c 301 s 1; 1993 c 194 s 1; 1995 c 231 art 2 s 5; 2005 c 132 s 24
79.251 ADMINISTRATION OF ASSIGNED RISK PLAN. Subdivision 1. General duties of commissioner. (a)(1) The commissioner shall have all the usual powers and authorities necessary for the discharge of the commissioner's duties under this section and may contract with individuals in discharge of those duties. The commissioner shall audit the reserves established (i) for individual cases arising under policies and contracts of coverage issued under subdivision 4 and (ii) for the total book of business issued under subdivision 4. If the commissioner determines on the basis of an audit that there is an excess surplus in the assigned risk plan, the commissioner must notify the commissioner of management and budget who shall transfer assets of the plan equal to the excess surplus to the budget reserve account in the general fund. (2) The commissioner shall monitor the operations of section 79.252 and this section and shall periodically make recommendations to the governor and legislature when appropriate, for improvement in the operation of those sections. (3) All insurers and self-insurance administrators issuing policies or contracts under subdivision 4 shall pay to the commissioner a .25 percent assessment on premiums for policies and contracts of coverage issued under subdivision 4 for the purpose of defraying the costs of performing the duties under clauses (1) and (2). Proceeds of the assessment shall be deposited in the state treasury and credited to the general fund. (4) The assigned risk plan shall not be deemed a state agency. (5) The commissioner shall monitor and have jurisdiction over all reserves maintained for assigned risk plan losses. (b) As used in this subdivision, "excess surplus" means the amount of assigned risk plan assets in excess of the amount needed to pay all current liabilities of the plan, including, but not limited to: (1) administrative expenses; (2) benefit claims; and (3) if the assigned risk plan is dissolved under subdivision 8, the amounts that would be due insurers who have paid assessments to the plan. Subd. 2. Merit rating plan. To assist small businesses with good safety records, the commissioner shall develop a merit rating plan applicable to all employers holding policies issued pursuant to subdivision 4. The plan shall provide that nonexperience rated employers, with no lost time claims for the last three policy years, shall receive 33 percent credit. The credit must be applied directly to the premium charged for the policy. Nonexperience rated employers with two or more lost time claims for the last three policy years may receive a debit. Experience rated employers shall receive a maximum credit or debit of ten percent of premium. The merit rating plan shall be subject to adjustment by the commissioner as necessary to fulfill the commissioner's assigned risk plan responsibilities. Subd. 2a. Assigned risk rating plan. (a) Employers insured through the assigned risk plan are subject to paragraphs (b) and (c). (b) Classifications must be assigned according to a uniform classification system approved by the commissioner. (c) Rates must be modified according to an experience rating plan approved by the commissioner. Any experience rating plan is subject to Minnesota Rules, parts 2705.2800 and 2705.2900. Subd. 3. Rates. Insureds served by the assigned risk plan shall be charged premiums based upon a rating plan, including a merit rating plan adopted by the commissioner by rule. The commissioner shall annually, not later than January 1 of each year, establish the schedule of rates applicable to assigned risk plan business. Assigned risk premiums shall not be lower than rates generally charged by insurers for the business. The commissioner shall fix the compensation received by the agent of record. The establishment of the assigned risk plan rates and agent fees are not subject to chapter 14. Subd. 4. Administration. The commissioner shall enter into service contracts as necessary or beneficial for accomplishing the purposes of the assigned risk plan. Services related to the administration of policies or contracts of coverage shall be performed by one or more qualified insurance companies licensed pursuant to section 60A.06, subdivision 1, clause (5), paragraph (b), or self-insurance administrators licensed pursuant to section 176.181, subdivision 2, paragraph (b). A qualified insurer or self-insurance administrator shall possess sufficient financial, professional, administrative, and personnel resources to provide the services contemplated in the contract. Services related to assignments, data management, assessment collection, and other services shall be performed by a licensed data service organization. The cost of those services is an obligation of the assigned risk plan. Subd. 4a. Medical cost containment. The assigned risk plan must consider utilizing managed care plans certified under section 176.1351 with respect to its covered employees. In addition, the assigned risk plan must implement a medical cost containment program. The program must, at a minimum, include: (1) billings review to determine if claims are compensable under chapter 176; (2) utilization of cost management specialists familiar with billing practice guidelines; (3) review of treatment to determine if it is reasonable and necessary and has a reasonable chance to cure and relieve the employee's injury; (4) a system to reduce billed charges to the maximum permitted by law or rule; (5) review of medical care utilization; and (6) reporting of health care providers suspected of providing unnecessary, inappropriate, or excessive services to the commissioner of labor and industry. Subd. 4b. Groups. The assigned risk plan must create a program that attempts to group employers in the same or similar risk classification for purposes of group premium underwriting and claims management. The assigned risk plan must engage in extensive safety consultation with group members to reduce the extent and severity of injuries of group members. The consultation should include on-site inspections and specific recommendations as to safety improvements. Subd. 5. Assessments. The commissioner shall assess all insurers licensed pursuant to section 60A.06, subdivision 1, clause (5), paragraph (b) an amount sufficient to fully fund the obligations of the assigned risk plan, if the commissioner determines that the assets of the assigned risk plan are insufficient to meet its obligations. The assessment of each insurer shall be in a proportion equal to the proportion which the amount of compensation insurance written in this state during the preceding calendar year by that insurer bears to the total compensation insurance written in this state during the preceding calendar year by all licensed insurers. Amounts assessed under this subdivision are considered a liability of the assigned risk plan, to be repaid upon dissolution of the plan. Subd. 6. Agents. A person licensed under chapter 60K may submit an application for coverage to the assigned risk plan and receive a fee from the assigned risk plan for submitting the application. However, the licensee is not an agent of the assigned risk plan for purposes of state law. All checks or similar instruments submitted in payment of assigned risk plan premiums must be made payable to the assigned risk plan and not the agent. Subd. 7. Investment of assets. The commissioner shall certify and transfer to the state Board of Investment all assigned risk plan assets which in the commissioner's judgment are not required for immediate use. The State Board of Investment shall invest the certified assets, and may invest the assets consistent with the provisions of section 11A.14. All investment income and losses attributable to the investment of assigned risk plan assets must be credited to the assigned risk plan. When the commissioner certifies to the state board that invested assets are required for immediate use, the state board shall sell assets to provide the amount of assets the commissioner certifies. The board shall transfer the sale proceeds to the commissioner. Subd. 8. Dissolution. Upon the dissolution of the assigned risk plan, the commissioner shall proceed to wind up the affairs of the plan, settle its accounts, and dispose of its assets. The assets and property of the assigned risk plan must be applied and distributed in the following order of priority: (1) to the establishment of reserves for claims under policies and contracts of coverage issued by the assigned risk plan before termination; (2) to the payment of all debts and liabilities of the assigned risk plan, including the repayment of loans and assessments; (3) to the establishment of reserves considered necessary by the commissioner for contingent liabilities or obligations of the assigned risk plan other than claims arising under policies and contracts of coverage; and (4) to the state of Minnesota. If the commissioner determines that the assets of the assigned risk plan are insufficient to meet its obligations under clauses (1), (2), and (3), excluding the repayment of assessments, the commissioner shall assess all insurers licensed pursuant to section 60A.06, subdivision 1, clause (5), paragraph (b), an amount sufficient to fully fund these obligations. History:  1981 c 346 s 14; 1983 c 289 s 114 subd 1; 1983 c 290 s 5; 1983 c 293 s 63; 1984 c 655 art 1 s 92; 1989 c 260 s 24; 1990 c 450 s 1; 1992 c 510 art 3 s 4,5; 1993 c 13 art 2 s 4; 1995 c 231 art 2 s 6,7; 1995 c 258 s 55,56; 2002 c 374 art 8 s 2; 2002 c 387 s 5; 2003 c 2 art 1 s 11,45 subd 9; 2006 c 255 s 64,65; 2009 c 101 art 2 s 109; 2019 c 50 art 1 s 18
79.252 ASSIGNED RISK PLAN. Subdivision 1. Purpose. The purpose of the assigned risk plan is to provide workers' compensation coverage to employers rejected by a licensed insurance company pursuant to subdivision 2. Subd. 2. Rejected risks. An insurer that refuses to write insurance for an employer shall furnish the employer a written notice of refusal. The employer shall file a copy of the notice of refusal with the data service organization under contract with the commissioner pursuant to section 79.251, subdivision 4. Subd. 2a. Minimum qualifications. Any employer that (1) is required to carry workers' compensation insurance pursuant to chapter 176 and (2) has a current written notice of refusal to insure pursuant to subdivision 2, is entitled to coverage upon making written application to the assigned risk plan, and paying the applicable premium. Subd. 3. Coverage. (a) Policies and contracts of coverage issued pursuant to section 79.251, subdivision 4, shall contain the usual and customary provisions of workers' compensation insurance policies, and shall be deemed to meet the mandatory workers' compensation insurance requirements of section 176.181, subdivision 2. (b) Policies issued by the assigned risk plan pursuant to this chapter may also provide workers' compensation coverage required under the laws of states other than Minnesota, including coverages commonly known as "all states coverage." The commissioner may apply for and obtain any licensure required in any other state to issue that coverage. Subd. 3a. Disqualifying factors. An employer may be denied or terminated from coverage through the assigned risk plan if the employer: (1) applies for coverage for only a portion of the employer's statutory liability under chapter 176, excluding wrap-up policies; (2) has an outstanding debt due and owing to the assigned risk plan at the time of renewal arising from a prior policy; (3) persistently refuses to permit completion of an adequate payroll audit; (4) repeatedly submits misleading or erroneous payroll information; or (5) flagrantly disregards safety or loss control recommendations. Cancellation for nonpayment of premium may be initiated by the service contractor upon 60 days' written notice to the employer pursuant to section 176.185, subdivision 1. Subd. 3b. Occupational disease exposure. An employer having a significant occupational disease exposure, as determined by the commissioner, to be entitled to coverage shall have physical examinations made: (1) of employees who have not been examined within one year of the date of application for assignment; (2) of new employees before hiring; and (3) of terminated employees. Upon request, the findings and reports of doctors making examinations, together with x-rays and other original exhibits, must be furnished to the assigned risk plan or the Department of Labor and Industry. Subd. 4. Responsibilities. Assigned risk policies and contracts of coverage are subject to taxation under chapter 297I, and special compensation fund assessments under Minnesota Statutes 1990, section 176.131, subdivision 10. The assigned risk plan shall be a member of the reinsurance association for the purposes of sections 79.34 to 79.40 and may select either retention limit provided in section 79.34, subdivision 2. Subd. 5. Rules. The commissioner may adopt rules as may be necessary to implement section 79.251 and this section. History:  1983 c 290 s 6; 1984 c 640 s 32; 1Sp1985 c 10 s 72; 1992 c 510 art 3 s 6,7; 1993 c 13 art 2 s 1; 1993 c 299 s 31; 1995 c 233 art 2 s 56; 2000 c 394 art 2 s 20; 2002 c 387 s 6; 2006 c 255 s 66-68
79.253 ASSIGNED RISK SAFETY ACCOUNT. Subdivision 1. Creation of account. There is created the assigned risk safety account as a separate account in the special compensation fund in the state treasury. Income earned by funds in the account must be credited to the account. Principal and income of the account are annually appropriated to the commissioner of labor and industry to establish and promote workplace safety and health programs. Subd. 2. Use of funds; safety assessments. The assigned risk plan shall, through persons under contract with the plan, perform on-site surveys of employers insured by the assigned risk plan and recommend practices and equipment to employers designed to reduce the risk of injury to employees. The recommendations may include that the employer form a joint labor-management safety committee. The plan shall generally survey employers in the following priority: (1) employers with poor safety records for their industry based on their premium modification factor or other factors; (2) employers whose workers' compensation premium classification assigned to the greatest portion of the payroll for the employer has a premium rate in the top 25 percent of premium rates for all classes; and (3) all other employers. Subd. 2a. Eligible applicants. An employer is eligible to apply for a grant or loan under this section if the employer meets the following requirements: (1) the employer's workers' compensation insurance is provided by the assigned risk plan, is provided by an insurer subject to penalties under chapter 176, or the employer is self-insured; (2) the employer has had an on-site safety survey conducted by a Minnesota occupational safety and health investigator, a Minnesota Department of Labor and Industry workplace safety and health consultant, an in-house employee safety and health committee, a workers' compensation underwriter, a private safety consultant, or a person under contract with the assigned risk plan; and (3) the on-site safety survey recommends specific safety practices or equipment designed to reduce the risk of illness or injury to employees. Subd. 3. Incentives and penalties. The assigned risk plan shall develop a premium rating system subject to approval by the commissioner of commerce that provides a reduction in premium rates for employers that follow safety recommendations made under this section and an increase in rates for employers that do not. The system must be sensitive to the economic ability of an employer to implement particular recommendations. Subd. 4. Grants and loans. The commissioner of labor and industry may make grants or loans to employers for the cost of implementing safety recommendations made under this section. Subd. 5. Rules. The commissioner of labor and industry may adopt rules necessary to implement this section. History:  1992 c 510 art 3 s 8; 1995 c 231 art 2 s 8; 1997 c 200 art 1 s 46
79.255 WORKERS' COMPENSATION INSURANCE; LESSORS OF EMPLOYEES. Subdivision 1. Registration required. A corporation, partnership, sole proprietorship, or other business entity which provides staff, personnel, or employees to be employed in this state to other businesses pursuant to a lease arrangement or agreement shall, before becoming eligible to be issued a policy of workers' compensation insurance or becoming eligible to secure coverage on a multiple coordinated policies basis, register with the commissioner of commerce. The registration shall: (1) identify the name of the lessor; (2) identify the address of the principal place of business of the lessor and the address of each office it maintains within this state; (3) include the lessor's taxpayer or employer identification number; (4) include a list by jurisdiction of each and every name that the lessor has operated under in the preceding five years including any alternative names and names of predecessors and, if known, successor business entities; (5) include a list of each person or entity who owns a five percent or greater interest in the employee leasing business at the time of application and a list of each person who formerly owned a five percent or greater interest in the employee leasing company or its predecessors, successors, or alter egos in the preceding five years; and (6) include a list of each and every cancellation or nonrenewal of workers' compensation insurance which has been issued to the lessor or any predecessor in the preceding five years. The list shall include the policy or certificate number, name of insurer or other provider of coverage, date of cancellation, and reason for cancellation. If coverage has not been canceled or nonrenewed, the registration shall include a sworn affidavit signed by the chief executive officer of the lessor attesting to that fact. Subd. 2. Ineligibility to register. Any lessor of employees whose workers' compensation insurance has been terminated within the past five years in any jurisdiction due to a determination that an employee leasing arrangement was being utilized to avoid premium otherwise payable by lessees shall be ineligible to register with the commissioner or to remain registered, if previously registered. Subd. 3. Notice of change. Persons filing registration statements pursuant to this section shall notify the commissioner as to any changes in any information required to be provided under this section. Subd. 4. List maintained. The commissioner shall maintain a list of those lessors of employees who are registered with the commissioner. Subd. 5. Forms of registration. The commissioner may prescribe forms necessary to promote the efficient administration of this section. Subd. 6. Advertising prohibition. No organization registered under this section shall directly or indirectly reference that registration in any advertisements, marketing material, or publications. Subd. 7. Criminal penalties. Any corporation, partnership, sole proprietorship, or other form of business entity and any officer, director, general partner, agent, representative, or employee of theirs who knowingly utilizes or participates in any employee leasing agreement, arrangement, or mechanism for the purpose of depriving one or more insurers of premium otherwise properly payable is guilty of a misdemeanor. Subd. 8. Application of section. Any lessor of employees that was doing business in this state prior to April 28, 1992, shall register with the commissioner within 30 days of July 1, 1992. Subd. 9. Exemption. A corporation, partnership, sole proprietorship, or other business entity that provides personnel supply arrangements or agreements for the purpose of temporarily supporting or supplementing a client's work force in work situations, such as employee absences, temporary skill shortages, seasonal workloads, and specific functions and projects, may be exempt from the registration requirements of this section, provided that the arrangements or agreements do not involve the lease-back of the client's employees. To qualify for an exemption, an applicant must obtain a certificate of exemption from registration from the commissioner. A certificate of exemption shall be issued upon the applicant's filing of a letter with the commissioner stating that the applicant meets all of the requirements for obtaining an exemption. If a corporation, partnership, sole proprietorship, or other business entity operating under the exemption subsequently fails to meet the requirements for the exemption, the corporation, partnership, sole proprietorship, or other business entity must immediately surrender the exemption certificate and register with the commissioner. Subd. 10. Fee. A registration or exemption certificate fee of $100 shall be paid. History:  1992 c 510 art 3 s 9; 1993 c 194 s 2; 1997 c 200 art 1 s 47; 1999 c 223 art 2 s 11
79.34 CREATION OF REINSURANCE ASSOCIATION. Subdivision 1. Conditions requiring membership. The nonprofit association known as the Workers' Compensation Reinsurance Association may be incorporated under chapter 317A with all the powers of a corporation formed under that chapter, except that if the provisions of that chapter are inconsistent with sections 79.34 to 79.40, sections 79.34 to 79.40 govern. Each insurer as defined by section 79.01, subdivision 2, shall, as a condition of its authority to transact workers' compensation insurance in this state, be a member of the reinsurance association and is bound by the plan of operation of the reinsurance association; provided, that all affiliated insurers within a holding company system as defined in chapter 60D are considered a single entity for purposes of the exercise of all rights and duties of membership in the reinsurance association. Each self-insurer approved under section 176.181 and each political subdivision that self-insures shall, as a condition of its authority to self-insure workers' compensation liability in this state, be a member of the reinsurance association and is bound by its plan of operation; provided that: (1) all affiliated companies within a holding company system, as determined by the commissioner of labor and industry in a manner consistent with the standards and definitions in chapter 60D, are considered a single entity for purposes of the exercise of all rights and duties of membership in the reinsurance association; and (2) all group self-insurers granted authority to self-insure pursuant to section 176.181 are considered single entities for purposes of the exercise of all the rights and duties of membership in the reinsurance association. As a condition of its authority to self-insure workers' compensation liability, and for losses incurred after December 31, 1983, the state is a member of the reinsurance association and is bound by its plan of operation. The commissioner of administration represents the state in the exercise of all the rights and duties of membership in the reinsurance association. The amounts necessary to pay the state's premiums required for coverage by the Workers' Compensation Reinsurance Association are appropriated from the general fund to the commissioner of administration. The University of Minnesota shall pay its portion of workers' compensation reinsurance premiums directly to the Workers' Compensation Reinsurance Association. For the purposes of this section, "state" means the administrative branch of state government, the legislative branch, the judicial branch, the University of Minnesota, and any other entity whose workers' compensation liability is paid from the state revolving fund. The commissioner of management and budget may calculate, prorate, and charge a department or agency the portion of premiums paid to the reinsurance association for employees who are paid wholly or in part by federal funds, dedicated funds, or special revenue funds. The reinsurance association is not a state agency. Actions of the reinsurance association and its board of directors and actions of the commissioner of labor and industry with respect to the reinsurance association are not subject to chapters 13 and 15. All property owned by the association is exempt from taxation. The reinsurance association is not obligated to make any payments or pay any assessments to any funds or pools established pursuant to this chapter or chapter 176 or any other law. Subd. 1a. Gross premiums tax. The direct funded premiums received by the reinsurance association from self-insurers approved under section 176.181 and political subdivisions that self-insure are subject to taxation under chapter 297I. Subd. 2. Losses; retention limits. The reinsurance association shall provide and each member shall accept indemnification for 100 percent of the amount of ultimate loss sustained in each loss occurrence relating to one or more claims arising out of a single compensable event, including aggregate losses related to a single event or occurrence which constitutes a single loss occurrence, under chapter 176 on and after October 1, 1979, in excess of a low, a high, a super, or a jumbo retention limit, at the option of the member. In case of occupational disease causing disablement on and after October 1, 1979, each person suffering disablement due to occupational disease is considered to be involved in a separate loss occurrence. The low retention limit shall be $500,000 in 2016. The board may determine future adjustments to the low retention limit subject to the approval of the commissioner of labor and industry. In determining whether to approve an adjustment to the low retention limit, the commissioner shall consider costs, inflation, the impact on members, and workers' compensation reinsurance markets in other states. The high retention limit shall be two times the low retention limit and shall be adjusted when the low retention limit is adjusted. The super retention limit shall be four times the low retention limit and shall be adjusted when the low retention limit is adjusted. Effective January 1, 2018, the jumbo retention limit shall be ten times the low retention limit and shall be adjusted when the low retention limit is adjusted. Ultimate loss as used in this section means the actual loss amount which a member is obligated to pay and which is paid by the member for workers' compensation benefits payable under chapter 176 and shall not include claim expenses, assessments, damages or penalties. For losses incurred on or after January 1, 1979, any amounts paid by a member pursuant to sections 176.183, 176.221, 176.225, and 176.82 shall not be included in ultimate loss and shall not be indemnified by the reinsurance association. A loss is incurred by the reinsurance association on the date on which the accident or other compensable event giving rise to the loss occurs, and a member is liable for a loss up to its retention limit in effect at the time that the loss was incurred, except that members which are determined by the reinsurance association to be controlled by or under common control with another member, and which are liable for claims from one or more employees entitled to compensation for a single compensable event, including aggregate losses relating to a single loss occurrence, may aggregate their losses and obtain indemnification from the reinsurance association for the aggregate losses in excess of the highest retention limit selected by any of the members in effect at the time the loss was incurred. Each member is liable for payment of its ultimate loss and shall be entitled to indemnification from the reinsurance association for the ultimate loss in excess of the member's retention limit in effect at the time of the loss occurrence. A member that chooses the high, super, or jumbo retention limit shall retain the liability for all losses below the chosen retention limit itself and shall not transfer the liability to any other entity or reinsure or otherwise contract for reimbursement or indemnification for losses below its retention limit, except in the following cases: (a) when the reinsurance or contract is with another member which, directly or indirectly, through one or more intermediaries, control or are controlled by or are under common control with the member; (b) when the reinsurance or contract provides for reimbursement or indemnification of a member if and only if the total of all claims which the member pays or incurs, but which are not reimbursable or subject to indemnification by the reinsurance association for a given period of time, exceeds a dollar value or percentage of premium written or earned and stated in the reinsurance agreement or contract; (c) when the reinsurance or contract is a pooling arrangement with other insurers where liability of the member to pay claims pursuant to chapter 176 is incidental to participation in the pool and not as a result of providing workers' compensation insurance to employers on a direct basis under chapter 176; (d) when the reinsurance or contract is limited to all the claims of a specific insured of a member which are reimbursed or indemnified by a reinsurer which, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the insured of the member so long as any subsequent contract or reinsurance of the reinsurer relating to the claims of the insured of a member is not inconsistent with the bases of exception provided under clauses (a), (b) and (c); or (e) when the reinsurance or contract is limited to all claims of a specific self-insurer member which are reimbursed or indemnified by a reinsurer which, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the self-insurer member so long as any subsequent contract or reinsurance of the reinsurer relating to the claims of the self-insurer member are not inconsistent with the bases for exception provided under clauses (a), (b) and (c). Whenever it appears to the commissioner of labor and industry that any member that chooses the high, super, or jumbo retention limit has participated in the transfer of liability to any other entity or reinsured or otherwise contracted for reimbursement or indemnification of losses below its retention limit in a manner inconsistent with the bases for exception provided under clauses (a), (b), (c), (d), and (e), the commissioner may, after giving notice and an opportunity to be heard, order the member to pay to the state of Minnesota an amount not to exceed twice the difference between the reinsurance premium for the high, super, or jumbo retention limit, as appropriate, and the low retention limit applicable to the member for each year in which the prohibited reinsurance or contract was in effect. Any member subject to this penalty provision shall continue to be bound by its selection of the high, super, or jumbo retention limit for purposes of membership in the reinsurance association. Subd. 2a. Deficiency. If the board determines that a distribution of excess surplus resulted in inadequate funds being available to pay claims that arose during the period upon which that distribution was calculated, the board shall determine the amount of the deficiency. The deficiency shall be made up by imposing an assessment rate against self-insured members and policyholders of insurer members. The board shall notify the commissioner of commerce of the amount of the deficiency and recommend an assessment rate. The commissioner shall order an assessment at a rate and for the time period necessary to eliminate the deficiency. The assessment rate shall be applied to the exposure base of self-insured employers and insured employers. The assessment may not be retroactive and applies only prospectively. The assessment may be spread over a period of time that will cause the least financial hardship to employers. All assessments under this subdivision are payable to the association. The commissioner may issue orders necessary to administer this section. Subd. 3. Withdrawal from association. An insurer may withdraw from the reinsurance association only upon ceasing to be authorized by license issued by the commissioner of commerce to transact workers' compensation insurance in this state and when all workers' compensation insurance policies issued by such insurer have expired; a self-insurer may withdraw from the reinsurance association only upon ceasing to be approved to self-insure workers' compensation liability in this state pursuant to section 176.181. An insurer or self-insurer which withdraws or whose membership in the reinsurance association is terminated shall continue to be bound by the plan of operation. Upon withdrawal or termination, all unpaid premiums which have been charged to the withdrawing or terminated member shall be payable as of the effective date of the withdrawal or termination. Subd. 4. Liabilities of insolvent members. An unsatisfied net liability to the reinsurance association of an insolvent member shall be assumed by and apportioned among the remaining members of the reinsurance association as provided in the plan of operation. The reinsurance association shall have all rights allowed by law on behalf of the remaining members against the estate or funds of the insolvent member for sums due the reinsurance association. Subd. 5. Merger or consolidation. When a member has been merged or consolidated into another insurer or self-insurer, or another insurer, which provides insurance required by chapter 176, has reinsured a member's entire business, the member and successors in interest of the member shall remain liable for the member's obligations. Subd. 6. Identifying losses in report. The commissioner of labor and industry shall require each member to identify the portion of all losses which exceed its retention limit selected under this section in any report filed with the Workers' Compensation Insurers Rating Association of Minnesota or filed with the Department of Labor and Industry for use in reviewing the workers' compensation schedule of rates. Subd. 7. Losses 1984 and after. For losses incurred on or after January 1, 1984, the reinsurance association shall indemnify the member for the ultimate loss, in excess of the retention limit in effect at the time of the loss occurrence, sustained in each loss occurrence relating to one or more claims arising out of a single compensable event in another state provided that: (a) the injured worker is eligible for benefits under section 176.041, subdivision 2 or 3, but elects to receive benefits under the workers' compensation statute of another state in lieu of benefits under chapter 176; and (b) the ultimate loss indemnified by the reinsurance association shall be determined as provided in this chapter, except that the benefits shall be equal to those required to be paid under the workers' compensation statute of the state elected. History:  Ex1979 c 3 s 17; 1980 c 556 s 7; 1981 c 346 s 17,18,139; 1Sp1981 c 4 art 1 s 62; 1982 c 424 s 130; 1983 c 289 s 114 subd 1; 1983 c 290 s 7-9; 1984 c 432 art 1 s 2; 1984 c 655 art 1 s 92; 1985 c 234 s 21; 1987 c 268 art 2 s 26,27; 1988 c 667 s 22; 1989 c 304 s 137; 1991 c 325 art 14 s 17; 1991 c 345 art 1 s 70; 1993 c 361 s 5; 1995 c 231 art 2 s 9; 1995 c 258 s 57; 1997 c 187 art 3 s 19,20; 2000 c 394 art 2 s 21; 1Sp2001 c 10 art 2 s 52; 2008 c 204 s 42; 2009 c 101 art 2 s 109; 2010 c 369 s 7; 2016 c 91 s 1
79.35 DUTIES; RESPONSIBILITIES; POWERS. The reinsurance association shall do the following on behalf of its members: (1) assume 100 percent of the liability as provided in section 79.34; (2) establish procedures by which members shall promptly report to the reinsurance association each claim which, on the basis of the injury sustained, may reasonably be anticipated to involve liability to the reinsurance association if the member is held liable under chapter 176. Solely for the purpose of reporting claims, the member shall in all instances consider itself legally liable for the injury. The member shall advise the reinsurance association of subsequent developments likely to materially affect the interest of the reinsurance association in the claim; (3) maintain relevant loss and expense data relative to all liabilities of the reinsurance association and require each member to furnish statistics in connection with liabilities of the reinsurance association at the times and in the form and detail as may be required by the plan of operation; (4) calculate and charge to members a total premium sufficient to cover the expected liability which the reinsurance association will incur, together with incurred or estimated to be incurred operating and administrative expenses for the period to which this premium applies. Each member shall be charged a premium established by the board as sufficient to cover the reinsurance association's incurred liabilities and expenses in excess of the member's selected retention limit. Each member shall be charged a proportion of the total premium calculated for its selected retention limit in an amount equal to its proportion of the exposure base of all members during the period to which the reinsurance association premium will apply. The exposure base shall be determined by the board and is subject to the approval of the commissioner of labor and industry. In determining the exposure base, the board shall consider, among other things, equity, administrative convenience, records maintained by members, amenability to audit, and degree of risk refinement. Each member shall also be charged a premium determined by the board to equitably distribute excess or deficient premiums from previous periods including any excess or deficient premiums resulting from a retroactive change in the prefunded limit. The premiums charged to members shall not be unfairly discriminatory as defined in section 79.074. All premiums shall be approved by the commissioner of labor and industry; (5) require and accept the payment of premiums from members of the reinsurance association; (6) receive and distribute all sums required by the operation of the reinsurance association; (7) establish procedures for reviewing claims procedures and practices of members of the reinsurance association. If the claims procedures or practices of a member are considered inadequate to properly service the liabilities of the reinsurance association, the reinsurance association may undertake, or may contract with another person, including another member, to adjust or assist in the adjustment of claims which create a potential liability to the association. The reinsurance association may charge the cost of the adjustment under this paragraph to the member, except that any penalties or interest incurred under sections 176.183, 176.221, 176.225, and 176.82 as a result of actions by the reinsurance association after it has undertaken adjustment of the claim shall not be charged to the member but shall be included in the ultimate loss and listed as a separate item; and (8) provide each member of the reinsurance association with an annual report of the operations of the reinsurance association in a form the board of directors may specify. History:  Ex1979 c 3 s 18; 1980 c 556 s 8; 1981 c 346 s 19,139; 1983 c 290 s 10; 1985 c 234 s 21; 1995 c 231 art 2 s 10; 1995 c 258 s 58; 2013 c 15 s 1
79.36 ADDITIONAL POWERS. In addition to the powers granted in section 79.35, the reinsurance association may do the following: (1) sue and be sued. A judgment against the reinsurance association shall not create any direct liability against the individual members of the reinsurance association. The reinsurance association shall provide in the plan of operation for the indemnification, to the extent provided in the plan of operation, of the members, members of the board of directors of the reinsurance association, and officers, employees and other persons lawfully acting on behalf of the reinsurance association; (2) reinsure all or any portion of its potential liability, including potential liability in excess of the prefunded limit, with reinsurers licensed to transact insurance in this state or otherwise approved by the commissioner of labor and industry; (3) provide for appropriate housing, equipment, and personnel as may be necessary to assure the efficient operation of the reinsurance association; (4) contract for goods and services, including but not limited to independent claims management, actuarial, investment, and legal services from others within or without this state to assure the efficient operation of the reinsurance association; (5) adopt operating rules, consistent with the plan of operation, for the administration of the reinsurance association, enforce those operating rules, and delegate authority as necessary to assure the proper administration and operation of the reinsurance association; (6) intervene in or prosecute at any time, including but not limited to intervention or prosecution as subrogee to the member's rights in a third-party action, any proceeding under this chapter or chapter 176 in which liability of the reinsurance association may, in the opinion of the board of directors of the reinsurance association or its designee, be established, or the reinsurance association affected in any other way; (7) the net proceeds derived from intervention or prosecution of any subrogation interest, or other recovery, shall first be used to reimburse the reinsurance association for amounts paid or payable pursuant to this chapter, together with any expenses of recovery, including attorney's fees, and any excess shall be paid to the member or other person entitled thereto, as determined by the board of directors of the reinsurance association, unless otherwise ordered by a court; (8) hear and determine complaints of a company or other interested party concerning the operation of the reinsurance association; and (9) perform other acts not specifically enumerated in this section which are necessary or proper to accomplish the purposes of the reinsurance association and which are not inconsistent with sections 79.34 to 79.40 or the plan of operation. History:  Ex1979 c 3 s 19; 1980 c 556 s 9; 1981 c 346 s 20,139; 1985 c 234 s 21; 1987 c 384 art 2 s 1
79.361 POST-1992 DISTRIBUTION OF WORKERS' COMPENSATION REINSURANCE ASSOCIATION SURPLUS. Subdivision 1. Scope. This section governs the distribution of excess surplus of the Workers' Compensation Reinsurance Association declared after January 1, 1993. A distribution of excess surplus is declared on the date the board votes to make a distribution. No distribution of excess surplus other than that provided by this section may be made. Subd. 2. Self-insured. A self-insurer shall receive a distribution of excess surplus in an amount equal to the self-insurer's share of the premiums paid to the Workers' Compensation Reinsurance Association for the period and for each retention layer for which the distribution is made. Subd. 3. Insured employers. A policyholder, other than a policyholder insured by the assigned risk plan or the State Fund Mutual Insurance Company, shall receive a refund of a share of the distribution equal to the policyholder's share of the annual total earned Minnesota workers' compensation insurance premium, as reported to the commissioner of commerce in the most recent annual statements of insurers, including the assigned risk plan and the State Fund Mutual Insurance Company. Subd. 4. Assigned risk plan. A policyholder of the assigned risk plan shall receive a refund of a share of the distribution equal to the policyholder's share of the annual total earned Minnesota workers' compensation insurance premium, as reported to the commissioner of commerce in the most recent annual statements of insurers, including the assigned risk plan and the State Fund Mutual Insurance Company. Subd. 5. State Fund Mutual Insurance Company. A policyholder of the State Fund Mutual Insurance Company shall receive a refund of a share of the distribution equal to the policyholder's share of the annual total earned Minnesota workers' compensation insurance premium, as reported to the commissioner of commerce in the most recent annual statements of insurers, including the assigned risk plan and the state fund mutual insurance company. Subd. 6. Distribution defined. For the purpose of subdivisions 3 to 5, "distribution" means a distribution described in subdivision 1 minus a distribution to self-insurers under subdivision 2. Subd. 7. Policyholder. For the purpose of this section "policyholder" means a workers' compensation insurance policyholder in the calendar year preceding a declaration of excess surplus by the board of the reinsurance association. Subd. 8. Information required. Insurers and the Workers' Compensation Insurers Rating Association of Minnesota must provide the Workers' Compensation Reinsurance Association with information necessary to administer and calculate the refunds to policyholders governed by this section within 60 days of a request by the association. For the purpose of this subdivision, "insurer" includes the assigned risk plan. Subd. 9. Refund due date. Policyholders must receive the refund within 60 days of the day the reinsurance association receives the information required to be provided by subdivision 8. Subd. 10. Unclaimed refund. Any part of the refund not distributed within one year after the due date of a refund under this section due to the inability to identify or locate policyholders remains with the Workers' Compensation Reinsurance Association. Subd. 11. Costs of distribution. The reinsurance association may pay the actual and reasonable costs of the refunds made under this section from earnings on a declared excess surplus prior to its distribution. History:   1993 c 361 s 4 
79.362 WORKERS' COMPENSATION REINSURANCE ASSOCIATION EXCESS SURPLUS DISTRIBUTION. An order of the commissioner of the Department of Labor and Industry relating to the distribution of excess surplus of the Workers' Compensation Reinsurance Association shall be reviewed by the commissioner of commerce. The commissioner of commerce may amend, approve, or reject an order or issue further orders to accomplish the purposes of section 79.361 and Laws 1993, chapter 361, section 2. The commissioner may not change the amount of the distribution ordered by the commissioner of labor and industry without agreement of the commissioner of labor and industry. History:  1993 c 361 s 6; 1997 c 187 art 3 s 21
79.363 DISTRIBUTION OF EXCESS SURPLUS. The distribution of excess surplus of the Workers' Compensation Reinsurance Association is not a distribution of excess premiums to members. Any excess surplus not refunded according to Laws 1993, chapter 361, section 2, must be returned to the association and must not be distributed to its members. Any excess surplus not distributed or refunded according to section 79.361 must be retained by the association and must not be distributed to members. History:   1993 c 361 s 8 
79.37 BOARD OF DIRECTORS. A board of directors of the reinsurance association is created and is responsible for the operation of the reinsurance association consistent with the plan of operation and sections 79.34 to 79.40. The board consists of 13 directors. Four directors shall represent insurers, two directors shall represent employers, two shall represent self-insurers; two directors shall represent employees; the commissioner of management and budget and the executive director of the state Board of Investment or their designees shall serve as directors; and one director shall represent the public. Insurer members of the reinsurance association shall elect the directors who represent insurers; self-insurer members of the reinsurance association shall elect the directors who represent self-insurers; and the commissioner of labor and industry shall appoint the remaining directors for the terms authorized in the plan of operation. Each director is entitled to one vote. Terms of the directors shall be staggered so that the terms of all the directors do not expire at the same time and so that a director does not serve a term of more than four years. The board shall select a chair and other officers it deems appropriate. A majority of the directors currently holding office constitutes a quorum. Action may be taken by a majority vote of the directors present. The board shall take reasonable and prudent action regarding the management of the reinsurance association including but not limited to determining the entity who shall manage the daily affairs of the reinsurance association. The board shall report to the governor of its actions regarding the entity selected to manage the reinsurance association and the reasons for the selection. History:  Ex1979 c 3 s 20; 1980 c 556 s 10; 1981 c 346 s 139; 1983 c 290 s 11; 1984 c 592 s 78; 1985 c 234 s 2; 1986 c 444; 1987 c 384 art 2 s 1; 2009 c 101 art 2 s 109
79.38 PLAN OF OPERATION. Subdivision 1. Provisions. The plan of operation shall provide for all of the following: (a) the establishment of necessary facilities; (b) the management and operation of the reinsurance association; (c) a preliminary premium, payable by each member in proportion to its total premium in the year preceding the inauguration of the reinsurance association, for initial expenses necessary to commence operation of the reinsurance association; (d) procedures to be utilized in charging premiums, including adjustments from excess or deficient premiums from prior periods; (e) procedures governing the actual payment of premiums to the reinsurance association; (f) reimbursement of each member of the board by the reinsurance association for actual and necessary expenses incurred on reinsurance association business; (g) the composition, terms, compensation and other necessary rules consistent with section 79.37 for boards of directors of the reinsurance association; (h) the investment policy of the reinsurance association; and (i) any other matters required by or necessary to effectively implement sections 79.34 to 79.40. Subd. 2. Validity. If the reinsurance association is incorporated pursuant to chapter 317A, the plan of operation shall be filed with and accepted by the secretary of state as the corporation's articles of incorporation and bylaws. The plan of operation shall be valid as articles of incorporation and bylaws under chapter 317A, notwithstanding that one or more of the required provisions for articles and bylaws under chapter 317A is not included or requirements of form are not followed. Subd. 3. Amendments. (a) Procedure with members' ratification. The plan of operation may be amended, in whole or in part, as follows: proposal of an amendment by a member of the board and adoption by a majority vote of the board at a meeting duly called for that purpose, ratification by a majority vote of the members at any annual meeting or special meeting duly called for that purpose, and approval of the commissioner of labor and industry, provided that an amendment shall be deemed approved 30 days after the day following the date of ratification by the members if not sooner disapproved by written order of the commissioner. (b) Emergency board power to amend with delayed members' ratification. The board shall have emergency powers to amend the plan at a meeting duly called for that purpose, without ratification by the members; provided that a meeting of members shall be scheduled to consider ratification of the amendment within 90 days. (c) Commissioner's power to amend. If the board proposes an amendment which the members decline to ratify, the commissioner of labor and industry is authorized, upon request of the board, to amend the plan as proposed by the board when the commissioner determines that failure to adopt the proposed amendment may seriously impair the ability of the reinsurance association to meet its financial obligations. (d) Delegation of authority to ratify. By a majority vote, the members, voting in person, or by proxy if authorized by the board, at a meeting duly called for that purpose, may authorize the board to exercise the power of amendment of the plan without ratification by the members. When the members have authorized the board to amend the plan without ratification by the members, the board may, by a majority vote of the directors, amend the plan, provided that notice of the meeting and of the proposed amendment shall be given to each director and officer, including the commissioner of labor and industry. By a majority vote, the members, voting in person, or by proxy if authorized by the board, at a meeting duly called for that purpose, may prospectively revoke the authority of the board to amend the plan without ratification by the members. History:  Ex1979 c 3 s 21; 1980 c 556 s 11; 1981 c 346 s 139; 1985 c 234 s 21; 1986 c 444; 1987 c 384 art 2 s 1,16; 1989 c 304 s 137
79.39 APPLICABILITY OF CHAPTER 79. Subdivision 1. Examination by commissioner. The reinsurance association is subject to all the provisions of this chapter. The commissioner of labor and industry or an authorized representative of the commissioner may visit the reinsurance association at any time and examine, audit, or evaluate the reinsurance association's operations, records and practices. For purposes of this section, "authorized representative of the commissioner" includes employees of the Department of Labor and Industry or other parties retained by the commissioner. Subd. 2. Costs and expenses. The commissioner of labor and industry may order and the reinsurance association shall pay the costs and expenses of any examination, audit, or evaluation conducted pursuant to subdivision 1. History:  Ex1979 c 3 s 22; 1984 c 592 s 79; 1985 c 234 s 21
79.40 PREMIUM INCLUSION IN RATEMAKING. Premiums charged members by the reinsurance association shall be recognized in the ratemaking procedures for insurance rates. History:  Ex1979 c 3 s 23; 2005 c 132 s 25
79.50 PURPOSES. The purposes of this chapter are to: (a) promote public welfare by regulating insurance rates so that premiums are not excessive, inadequate, or unfairly discriminatory; (b) promote quality and integrity in the databases used in workers' compensation insurance ratemaking; (c) prohibit price fixing agreements and anticompetitive behavior by insurers; (d) define the function and scope of activities of data service organizations; and (e) encourage insurers to provide alternative innovative methods whereby employers can meet the requirements imposed by section 176.181. History:  1981 c 346 s 21; 1995 c 231 art 1 s 1
79.51 RULES. Subdivision 1. Adoption. The commissioner shall adopt rules to implement provisions of this chapter. Subd. 2.  [Repealed, 1983 c 290 s 173] Subd. 3. Rules; subject matter. (a) The commissioner in issuing rules shall consider: (1) data reporting requirements, including types of data reported, such as loss and expense data; (2) experience rating plans; (3) retrospective rating plans; (4) general expenses and related expense provisions; (5) minimum premiums; (6) classification systems and assignment of risks to classifications; (7) loss development and trend factors; (8) the Workers' Compensation Reinsurance Association; (9) requiring substantial compliance with the rules mandated by this section as a condition of workers' compensation carrier licensure; (10) imposing limitations on the functions of workers' compensation data service organizations consistent with the introduction of competition; (11) the rules contained in the workers' compensation rating manual adopted by the workers' compensation insurers rating association or other licensed data service organizations; (12) the supporting data and information required in filings under section 79.56, including but not limited to, the experience of the filing insurer and the extent to which the filing insurer relies upon data service organization loss information, descriptions of the actuarial and statistical methods employed in setting rates, and the filing insurers interpretation of any statistical data relied upon; and (13) any other factors that the commissioner deems relevant to achieve the purposes of this chapter. (b) The rules shall provide for the following: (1) adequate safeguards against excessive or discriminatory rates in workers' compensation; (2) encouragement of workers' compensation insurance rates which are as low as reasonably necessary, but shall make provision against inadequate rates, insolvencies and unpaid benefits; (3) assurances that employers are not unfairly relegated to the assigned risk pool; (4) requiring all appropriate data and other information from insurers for the purpose of issuing rules, making legislative recommendations pursuant to this section; and (5) preserving a framework for risk classification, data collection, and other appropriate joint insurer services. Subd. 4.  [Repealed, 1999 c 86 art 2 s 6] History:  1981 c 346 s 22; 1983 c 290 s 12; 1988 c 629 s 14; 1993 c 132 s 1; 1995 c 231 art 1 s 2,3
79.52 DEFINITIONS. Subdivision 1. Generally. The following words or phrases shall have the meanings ascribed to them for the purposes of this chapter, unless the context clearly indicates that a different meaning is intended. Subd. 2. Market. "Market" means any reasonable grouping or classification of employers. Subd. 3. Data service organization. "Data service organization" means any entity which has ten or more members or is controlled directly or indirectly by ten or more insurers and is engaged in collecting data for use in insurance ratemaking or other activities permitted by this chapter. Affiliated members or insurers shall be counted as a single unit for the purpose of this definition. The Workers' Compensation Insurers Rating Association of Minnesota shall be considered a data service organization. Subd. 4. Classification plan; classification. "Classification plan" or "classification" means the plan, system, or arrangement for rating insurance policyholders. Subd. 5. Rates. "Rates" means the cost of insurance per exposure base unit. Subd. 6. Base premium. "Base premium" means the amount of premium which an employer would pay for insurance derived by applying rates to an exposure base prior to the application of any merit rating or discount factors. Subd. 7. Premium. "Premium" means the price charged to an insured for insurance for a specified period of time, regardless of the timing of actual payments. Subd. 8. Discount factor. "Discount factor" means any factor which is applied to the base premium and which is based upon insurer expenses or other factors not related to the risk of loss. Subd. 9. Merit rating. "Merit rating" means a system or form of rating by which base premium is modified on the basis of loss experience or other factors which are reasonably related to loss or risk of loss and which may be reasonably affected by the action or activities of the insured. The sensitivity of a merit rating system to loss experience may vary by the size of risk. Merit rating shall include both prospective and retrospective methods for modifying base premium. Subd. 10. Loss development factors. "Loss development factors" means factors applied to recorded incurred losses to estimate the amount of ultimate loss payments that will have been made for losses during the applicable period when all claims are paid. Subd. 11. Trend or trending. "Trend" or "trending" means any procedure employing data for the purpose of projecting or forecasting the future value of that data or other data, or the factors resulting from such a procedure. Subd. 12. Interested party. "Interested party" means any person, or association acting on behalf of its members, directly affected by a change in the schedule of rates and includes the staff of the Department of Commerce. Subd. 13. Insurer. "Insurer" means any insurer licensed to transact the business of workers' compensation insurance in this state. Subd. 14. Insurance. "Insurance" means workers' compensation insurance. Subd. 15. Rating plan. "Rating plan" means every manual, and every other rule including discount factors and merit rating necessary for the calculation of an insured's premium from an insurer's rates. An insurer may choose to adopt for use the rating plan of the data service organization in which it maintains membership. Subd. 16. Attorney fees. No loss adjustment expense used to pay attorney fees or other costs in defense of a workers' compensation claim shall be charged to an insured in a merit rating plan or to a plan under section 79.251, subdivision 2. Subd. 17. Association or rating association. "Association" or "rating association" means the Minnesota Workers' Compensation Insurers Association, Inc. Subd. 18. Rate Oversight Commission. "Rate Oversight Commission" means the Workers' Compensation Advisory Council established in chapter 175. History:  1981 c 346 s 23; 1983 c 289 s 114 subd 1; 1983 c 290 s 13; 1984 c 655 art 1 s 92; 1995 c 231 art 2 s 11,12
79.53 PREMIUM CALCULATION. Subdivision 1. Method of calculation. Each insurer shall establish premiums to be paid by an employer according to its filed rates and rating plan as follows: Rates shall be applied to an exposure base to yield a base premium which may be further modified by merit rating, premium discounts, and other appropriate factors contained in the rating plan of an insurer to produce premium if the increase or decrease is not unfairly discriminatory. Nothing in this chapter shall be deemed to prohibit the use of any premium, provided the premium is not excessive, inadequate or unfairly discriminatory. Subd. 2.  [Repealed, 1995 c 231 art 1 s 36; art 2 s 110] History:  1981 c 346 s 24; 1983 c 289 s 114 subd 1; 1983 c 290 s 14; 1984 c 655 art 1 s 92; 1995 c 231 art 1 s 4; 1996 c 374 s 1
79.531 NEGLIGENTLY PAID CLAIMS. An insurer who has negligently paid benefits under chapter 176 may not charge the payment to the employer's experience rating. History:   1986 c 461 s 1 
79.55 STANDARDS FOR RATES. Subdivision 1. General standards. Premiums shall not be excessive, inadequate, or unfairly discriminatory. Subd. 2. Excessiveness. Rates and rating plans are excessive if the expected underwriting profit, together with expected income from invested reserves, that would accrue to an insurer under the rates and rating plans would be unreasonably high in relation to the risk undertaken by the insurer in transacting the business. The burden is on the insurer to establish that profit is not unreasonably high. Subd. 3. Inadequacy. Premiums are inadequate if, together with the investment income associated with an insurer's Minnesota workers' compensation insurance business, they are clearly insufficient to sustain projected losses and expenses of the insurer and (a) if their continued use could lead to an insolvent situation for the insurer; or (b) if their use destroys or lessens competition or is likely to destroy or lessen competition. Subd. 4. Unfair discrimination. Premiums are unfairly discriminatory if differentials for insureds fail to reasonably reflect the differences in expected losses and expenses to the insurer attributable to the insureds. Rates are not unfairly discriminatory solely because different premiums result for insureds with like loss exposures but different expense factors, or like expense factors but different loss exposures, provided that rates reflect the differences with reasonable accuracy. Subd. 5. Discounts permitted. An insurer may offer a discount from a manual premium if the premium otherwise complies with this section. The commissioner shall not by rule, or otherwise, prohibit a credit or discount from a manual premium solely because it is greater than a certain fixed percentage of the premium. Subd. 6. Rating factors. (a) In determining whether a rate filing complies with this section, separate consideration shall be given to: (1) past and prospective loss experience within this state and outside this state to the extent necessary to develop credible rates; (2) dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers; and (3) a reasonable allowance for expense and profit. (b) An allowance for expense shall be presumed reasonable if it reflects expenses that are 22.5 percent greater or less than the average expense for all insurers writing workers' compensation insurance in this state. (c) An allowance for after-tax profit shall consider anticipated investment income from premium receipts net of disbursements and from allocated surplus, based on the current five-year United States Treasury note yield and an assumed premium to surplus ratio of 2.25 to one. (d) The allowance for after-tax profit shall be presumed reasonable if the corresponding return on equity target is equal to or less than the sum of: (1) the current yield on five-year United States Treasury securities; and (2) an appropriate equity risk premium that reflects the risks of writing workers' compensation insurance. (e) The risk premium shall not be less than the average, since 1926, of the differences in return between: (1) the annual return, including dividend income, for the Standards and Poors 500 common stock index or predecessor index for each year; and (2) the five-year United States Treasury note yield as of the start of the corresponding year. (f) Profit and expense allowances not presumed reasonable under this subdivision, are reasonable if the circumstances of an insurer, the market, or other factors justify them. Subd. 7. External factors. That portion of a rate or rating plan related to assessments from the assigned risk plan, reinsurance association, guarantee fund, special compensation fund, agent commission, premium tax and any other state-mandated surcharges shall not cause the rate or rating plan to be considered excessive, inadequate, or unfairly discriminatory. Subd. 8. Annual filings. Not later than October 1 of each year, the rating association shall file with the commissioner and the Rate Oversight Commission the following information used and related to the calculation and cost of workers' compensation insurance premiums: (1) all statistical plans, including classification definitions used to assign each compensation risk written by its members to its approved classification for reporting purposes; (2) all development factors and alternative derivations; (3) a description and summary of each data reporting and monitoring method used to collect and monitor the database for workers' compensation insurance; (4) trend factors and alternative derivations and applications; (5) pure premium relativities for the approved classification system for which data are reported; (6) an evaluation of the effects of changes in law on loss data; (7) an explicit discussion and explanation of all methodology, alternatives examined, assumptions adopted, and areas of judgment and reasoning supporting judgments entered into, and the effect of various combinations of these elements on indications for modification of an overall pure premium rate level change; and (8) all merit rating plans and the calculation of any variable factors necessary for utilization of the plan. Subd. 9. Analysis by Rate Oversight Commission. Not later than December 1 of each year, the Rate Oversight Commission may submit to the commissioner a report concerning the completeness of the filing and compliance of the filing with the standards for excessiveness, inadequacy, and unfair discrimination set forth in this chapter. Subd. 10. Duties of commissioner; report. (a) By March 1 of each year, the commissioner must issue a report that evaluates the competitiveness of the workers' compensation market in Minnesota in order to evaluate whether the competitive rating law is working. (b) The report under this subdivision must: (1) compare the average rates charged by workers' compensation insurers in Minnesota with the pure premium base rates filed by the association; and (2) provide market information, including but not limited to the number of carriers, market shares, the loss-cost multipliers used by companies, and the residual market and self-insurance. (c) The commissioner must provide the report to the Rate Oversight Commission for review. If after reviewing the report the Rate Oversight Commission concludes that concerns exist regarding the competitiveness of the workers' compensation market in Minnesota, the Rate Oversight Commission must recommend to the legislature appropriate modifications to this chapter. History:  1981 c 346 s 26; 1985 c 219 s 1; 1995 c 231 art 1 s 5-8; art 2 s 13-15; 1996 c 374 s 2; 1997 c 128 s 1,2; 1Sp2021 c 4 art 3 s 17
79.56 FILING RATES AND RATING INFORMATION. Subdivision 1. Prefiling of rates. (a) Each insurer shall file with the commissioner a complete copy of its rates and rating plan, and all changes and amendments thereto, and such supporting data and information that the commissioner may by rule require, at least 60 days prior to its effective date. The commissioner shall advise an insurer within 30 days of the filing if its submission is not accompanied with such supporting data and information that the commissioner by rule may require. The commissioner may extend the filing review period and effective date for an additional 30 days if an insurer, after having been advised of what supporting data and information is necessary to complete its filing, does not provide such information within 15 days of having been so notified. If any rate or rating plan filing or amendment thereto is not disapproved by the commissioner within the filing review period, the insurer may implement it. For the period August 1, 1995, to December 31, 1995, the filing shall be made at least 90 days prior to the effective date and the department shall advise an insurer within 60 days of such filing if the filing is insufficient under this section. (b) A rating plan or rates are not subject to the requirements of paragraph (a), where the insurer files a certification verifying that it will use the mutually agreed-upon rating plan or rates only to write a specific employer that generates $250,000 in annual written workers' compensation premiums before the application of any large deductible rating plan. The certification must be refiled upon each renewal of the employer's policy. The $250,000 threshold includes premiums generated in any state. The designation and certification must be submitted in substantially the following form:  Name and address of insurer: .   Name and address of insured employer: .   Policy period: .  I certify that the employer named above generates $250,000 or more in annual countrywide written workers' compensation premiums, and that the calculation of this threshold is based on the rates and rating plans that have been approved by the appropriate state regulatory authority. The filing of this certification authorizes the use of this rate or rating plan only for the named employer.  Name of responsible officer: .   Title: .   Signature: .  Subd. 2.  [Repealed, 1995 c 231 art 1 s 36; art 2 s 110] Subd. 3. Penalties. Any insurer using a rate or a rating plan which has not been filed or certified under subdivision 1 shall be subject to a fine of up to $100 for each day the failure to file continues. The commissioner may, after a hearing on the record, find that the failure is willful. A willful failure to meet filing requirements shall be punishable by a fine of up to $500 for each day during which a willful failure continues. These penalties shall be in addition to any other penalties provided by law. Subd. 4.  [Repealed, 2009 c 178 art 1 s 69] History:  1981 c 346 s 27; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1995 c 231 art 1 s 9,10; 2001 c 131 s 16; 2002 c 336 s 4; 2005 c 132 s 26,27
79.561 DISAPPROVAL OF RATES OR RATING PLANS. Subdivision 1. Disapproval; time period. The commissioner may disapprove a rate and rating plan or amendment thereto prior to its effective date, as provided under section 79.56, subdivision 1, if the commissioner determines that it is excessive, inadequate, or unfairly discriminatory. If the commissioner disapproves any rate or rating plan filing or amendment thereto, the commissioner shall advise the filing insurer what rate and rating plan the commissioner has reason to believe would be in compliance with section 79.55, and the reasons for that determination. An insurer may not implement a rate and rating plan or amendment thereto which has been disapproved under this subdivision. If the commissioner disapproves any rate and rating plan filing or amendment thereto, an insurer may use its current rate and rating plan for writing any workers' compensation insurance in this state. Following any disapproval, the commissioner and insurer may reach agreement on a rate or rating plan filing or amendment thereto. Notwithstanding any law to the contrary, in such cases, the rate or rating plan filing or amendment thereto may be implemented by the insurer immediately. Subd. 2. Hearing. If an insurer's rate or rating plan filing or amendment thereto is disapproved under subdivision 1, the insurer may request a contested case hearing under chapter 14. The insurer shall have the burden of proof to justify that its rate and rating plan or amendment thereto is in compliance with section 79.55. The hearing must be scheduled promptly and in no case later than three months from the date of disapproval or else the rate and rating plan or amendment thereto shall be considered effective and may be implemented by the insurer. A determination pursuant to chapter 14 must be made within 90 days following the closing of the hearing record. Subd. 3. Consultants and costs. The commissioner may retain consultants, including a consulting actuary or other experts, that the commissioner determines necessary for purposes of this chapter. The salary limit set by section 43A.17 does not apply to a consulting actuary retained under this subdivision. A consulting actuary shall be a fellow in the casualty actuarial society and shall have demonstrated experience in workers' compensation insurance ratemaking. Any individual not so qualified shall not render an opinion or testify on actuarial aspects of a filing, including but not limited to, data quality, loss development, and trending. The commissioner may determine the costs necessary for implementing and conducting a contested case hearing under subdivision 2, including, but not limited to, retaining any consulting actuaries and experts, and those costs shall be reimbursed by the special compensation fund. History:  1995 c 231 art 1 s 11; 1996 c 452 s 28
79.59 INSURERS AND DATA SERVICE ORGANIZATIONS; PROHIBITED ACTIVITIES. Subdivision 1. Monopolization. No insurer or data service organization shall attempt to monopolize or combine or conspire with any other person to monopolize the business of insurance. Subd. 2. Agreement prohibited. No insurer shall agree with any other insurer or with a data service organization to adhere to or to use any rate, rating plan, rating schedule, rating rule, or underwriting rule except as specifically authorized by this chapter or for the purpose of creating experience modifications for employers with employees in more than one state. Subd. 3. Trade restraint. No insurer or data service organization shall make an agreement with any other insurer, data service organization, or other person which has the purpose or the effect of restraining trade or of substantially lessening competition. Subd. 4. Exceptions. The fact that insurers writing not more than 25 percent of the workers' compensation premiums in Minnesota use the same rates, rating plans, rating schedules, rating rules, underwriting rules, or similar materials shall not alone constitute a violation of subdivision 1 or 2. Two or more insurers under common ownership or operating under common management or control may act in concert between or among themselves with respect to matters authorized under this chapter as if they constituted a single insurer, provided that the rating plan of such insurers shall be considered to be a single plan for the purposes of determining unfair discrimination. Subd. 5. Additional prohibition. In addition to other prohibitions contained in this chapter, no data service organization shall: (1) refuse to supply any service for which it is licensed or any data, except for data identifiable to an individual insurer, to any insurer authorized to do business in this state which offers to pay the usual compensation for the service or data; (2) require the purchase of any specific service as a condition to obtaining any other services sought; (3) participate in the development or distribution of rates, rating plans, or rating rules except as specifically authorized by this chapter or by rules adopted pursuant to this chapter; or (4) refuse membership to any licensed insurer. History:   1981 c 346 s 30 
79.60 INSURERS; REQUIRED AND PERMITTED ACTIVITY. Subdivision 1. Required activity. Each insurer shall perform the following activities: (1) maintain membership in and report loss experience data to a licensed data service organization in accordance with the statistical plan and rules of the organization as approved by the commissioner; (2) establish a plan for merit rating which shall be consistently applied to all insureds, provided that members of a data service organization may use merit rating plans developed by that data service organization; (3) provide an annual report to the commissioner containing the information and prepared in the form required by the commissioner; (4) keep a record of the premiums and losses paid under each workers' compensation policy written in Minnesota in the form required by the commissioner; (5) provide to the association, upon request, information about its insurance premiums, losses, and operations which the association shall request in order to prepare and file with the commissioner and the Rate Oversight Commission the filings required by this chapter; and (6) pay to the association its equitable share of the costs of preparing the filing with the commissioner and the Rate Oversight Commission required by this chapter. Subd. 2. Permitted activity. In addition to any other activities not prohibited by this chapter, insurers may: (1) through licensed data service organizations, individually, or with insurers commonly owned, managed, or controlled, conduct research and collect statistics to investigate, identify, and classify information relating to causes or prevention of losses; (2) develop and use classification plans and rates based upon any reasonable factors; and (3) develop rules for the assignment of risks to classifications. History:  1981 c 346 s 31; 1995 c 231 art 2 s 16
79.61 DATA SERVICE ORGANIZATIONS; REQUIRED AND PERMITTED ACTIVITY. Subdivision 1. Required activity. (a) Any data service organization shall perform the following activities: (1) file statistical plans, including classification definitions, amendments to the plans, and definitions, with the commissioner for approval, and assign each compensation risk written by its members to its approved classification for reporting purposes; (2) establish requirements for data reporting and monitoring methods to maintain a high quality database; (3) prepare and distribute a periodic report, in a form prescribed by the commissioner, on ratemaking including but not limited to the following elements: (i) losses developed to their ultimate level; (ii) trended losses; (iii) loss adjustment expenses; (iv) pure premium relativities for the approved classification system for which data are reported, provided that the relativities for insureds engaged in similar occupations and presenting substantially similar risks shall, if different, differ by at least ten percent; and (v) an evaluation of the effects of changes in law on loss data; (4) collect, compile, summarize, and distribute data from members or other sources pursuant to a statistical plan approved by the commissioner; (5) prepare merit rating plan and calculate any variable factors necessary for utilization of the plan. Such a plan may be used by any of its members, at the option of the member provided that the application of a plan shall not result in rates that are unfairly discriminatory; (6) provide loss data specific to an insured to the insured at a reasonable cost; (7) distribute information to an insured or interested party that is filed with the commissioner and is open to public inspection; and (8) assess its members for operating expenses on a fair and equitable basis. (b) The report under paragraph (a), clause (3), shall also include explicit discussion and explanation of methodology, alternatives examined, assumptions adopted, and areas of judgment and reasoning supporting judgments entered into, and the effect of various combinations of these elements on indications for modification of an overall pure premium rate level change. The pure premium relativities and rate level indications shall not include a loading for expenses or profit and no expense or profit data or recommendations relating to expense or profit shall be included in the report or collected by a data service organization. For purposes of this subdivision, "expenses" means expenses other than loss adjustment expenses. Subd. 2. Permitted activity. In addition to any other activities not prohibited by this chapter, any data service organization may: (1) collect and analyze data in order to investigate, identify, and classify information relating to causes or prevention of losses; (2) make inspections for the sole purpose of reporting and maintaining data quality; (3) contract with another data service organization to fulfill any of the above requirements; and (4) prepare and file with the commissioner a rating plan for use by any of its members, provided that no member may be required to use any part of the plan. History:  1981 c 346 s 32; 1Sp2021 c 4 art 3 s 18
79.62 DATA SERVICE ORGANIZATIONS; LICENSING, EXAMINATION. Subdivision 1. License required. No data service organization shall provide any service and no insurer shall use the services of a data service organization unless the organization is licensed by the commissioner. Subd. 2. Procedure; application. A data service organization shall apply for a license in a form and manner prescribed by the commissioner. The application of a data service organization shall include: (1) a copy of its constitution, articles of incorporation, bylaws, and other rules pertaining to the conduct of its business; (2) a plan and narrative describing how it will perform the activities required by section 79.61; (3) a statement showing its technical qualifications; and (4) any other information that the commissioner may reasonably require. Subd. 2a. Employer representation. The commissioner may appoint two representatives of employers to serve on the board of directors of each licensed data service organization. These directors serve for a term of two years and are entitled to vote on all matters under consideration. Subd. 3. Issuance. The commissioner, upon finding that the applicant organization is qualified to provide the services required and proposed, or has contracted with a licensed data service organization to purchase these services which are required by this chapter but are not provided directly by the applicant, and that all requirements of law are met, shall issue a license. Each license is subject to annual renewal effective June 30. Each new or renewal license application must be accompanied by a fee of $1,000. Subd. 4. Suspension; revocation. The commissioner may, after a hearing on the record, revoke or suspend the license of a data service organization if the commissioner finds that the organization is not in compliance with the requirements of this chapter or rules issued thereunder. Subd. 5. Licensee examination. The commissioner may examine any licensed data service organization or applicant for this license to determine whether its activities and practices comply with law. The cost of the examination shall be paid by the examined organization pursuant to section 60A.03. History:  1981 c 346 s 33; 1Sp1985 c 10 s 73; 1986 c 444; 2005 c 132 s 28
79A.01 DEFINITIONS. Subdivision 1. Scope. For the purposes of this chapter, the terms defined in this section have the meanings given them. Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce except where specifically stated otherwise. Subd. 3. Incurred liabilities for the payment of compensation. "Incurred liabilities for the payment of compensation" means the sum of both of the following: (1) an estimate of future workers' compensation benefits, including medical and indemnity; and (2) an amount determined by the commissioner to be reasonably adequate to assure the administration of claims, including legal costs, but not to exceed ten percent of future workers' compensation benefits. Subd. 4. Insolvent self-insurer. "Insolvent self-insurer" means: (1) a member private self-insurer who has failed to pay compensation as a result of a declaration of bankruptcy or insolvency by a court of competent jurisdiction and whose security deposit has been called by the commissioner pursuant to chapter 176; (2) a member self-insurer who has failed to pay compensation and who has been issued a certificate of default by the commissioner and whose security deposit has been called by the commissioner pursuant to chapter 176; or (3) a member or former member private self-insurer who has failed to pay an assessment required by section 79A.12, subdivision 2, and who has been issued a certificate of default by the commissioner and whose security deposit has been called by the commissioner. Subd. 5. Member. "Member" means a private self-insurer which participates in the self-insurers' security fund. Subd. 6. Private self-insurer. "Private self-insurer" means a member private employer which is self-insured or a group which is self-insured against liability for workers' compensation under chapter 176. It does not include the state of Minnesota or its political subdivisions. Subd. 7. Security fund. "Security fund" means the self-insurers' security fund established pursuant to this chapter. Subd. 8. Trustees. "Trustees" means the board of trustees of the self-insurers' security fund. Subd. 9. Certificate of default. "Certificate of default" means a notice issued by the commissioner of commerce based upon information received from the commissioner of labor and industry, that a private self-insurer has failed to pay compensation as required by chapter 176. Subd. 10. Common claims fund. "Common claims fund," with respect to group self-insurers, means the cash, cash equivalents, or investment accounts maintained by the self-insurance group to pay its workers' compensation liabilities. Subd. 11. Diminutive applicants. "Diminutive applicants" to group self-insurance means applicants to existing self-insurance groups whose equity and premium are both less than five percent of the total group's equity and premium. History:  1988 c 674 s 1; 1993 c 13 art 1 s 20; 1995 c 231 art 2 s 17-19; 1995 c 258 s 59; 1999 c 177 s 72,73
79A.02 SELF-INSURERS' ADVISORY COMMITTEE. 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. Subd. 2. Advice to commissioner. At the request of the commissioner, the committee shall meet and shall advise the commissioner with respect to whether or not an applicant to become a private self-insurer in the state of Minnesota has met the statutory requirements to self-insure. The Department of Commerce may furnish the committee with any financial data which it has, but a member of the advisory committee who may have a conflict of interest in reviewing the financial data shall not have access to the data nor participate in the discussions concerning the applicant. Financial data received from the commissioner is nonpublic data. The committee shall advise the commissioner if it has any information that any private self-insurer may become insolvent. Subd. 3. Audit of self-insurance application. (a) The self-insurers' security fund may retain a certified public accountant to perform services for, and report directly to, the commissioner of commerce. When requested by the Workers' Compensation Self-Insurers' Advisory Committee, the certified public accountant shall review an application to self-insure, including the applicant's financial data. The certified public accountant shall provide a report to the commissioner of commerce indicating whether that applicant has met the requirements of section 79A.03, subdivisions 2 and 3. Additionally, the certified public accountant shall provide advice and counsel to the commissioner about relevant facts regarding that applicant's financial condition. (b) If the report of the certified public accountant is used by the commissioner as the basis for the commissioner's determination regarding the applicant's self-insurance status, the certified public accountant shall be made available to the commissioner for any hearings or other proceedings arising from that determination. (c) The commissioner shall provide the advisory committee with the summary report by the certified public accountant and any financial data in possession of the Department of Commerce that is otherwise available to the public. The cost of the review shall be the obligation of the self-insurer's security fund. Subd. 4. Recommendations to commissioner regarding revocation. After each fifth anniversary from the date each individual and group self-insurer becomes certified to self-insure, the committee shall review all relevant financial data filed with the Department of Commerce that is otherwise available to the public and make a recommendation to the commissioner about whether each self-insurer's certificate should be revoked. For group self-insurers who have been in existence for five years or more and have been granted renewal authority, a level of funding in the common claims fund must be maintained at not less than the greater of either: (1) one year's claim losses paid in the most recent year; or (2) one-third of the security deposit posted with the Department of Commerce according to section 79A.04, subdivision 2. History:  1988 c 674 s 2; 1992 c 510 art 5 s 1,2; 1995 c 231 art 2 s 20-22; 1995 c 258 s 60; 1999 c 177 s 74-76; 2001 c 215 s 36; 2003 c 2 art 1 s 12; 2014 c 286 art 8 s 6; 7Sp2020 c 1 art 2 s 1
79A.03 SELF-INSURANCE APPLICATIONS. Subdivision 1. Procedure. Each employer desiring to self-insure individually shall apply to the commissioner on forms available from the commissioner. The commissioner shall grant or deny the application within 60 days after a complete application is filed. The time limit may be extended for another 30 days upon 15 days' prior notice to the applicant. Any grant of authority to self-insure shall continue in effect until revoked by order of the commissioner or until such time as the employer becomes insured. Subd. 2. Certified financial statement. Each application for self-insurance shall be accompanied by a certified financial statement. Certified financial statements for a period ending more than six months prior to the date of the application must be accompanied by an affidavit, signed by a company officer under oath, stating that there has been no material lessening of the net worth nor other adverse changes in its financial condition since the end of the period. The commissioner may require additional financial information necessary to carry out the purpose of this chapter. Subd. 3. Net worth. Each individual self-insurer's net worth, as presented on its audited balance sheet filed with the Department of Commerce, shall equal at least ten percent of the entity's total assets and shall equal at least ten times the retention level selected with the Workers' Compensation Reinsurance Association. Subd. 4. Assets, net worth, and liquidity. (a) Each individual self-insurer shall have and maintain sufficient assets, net worth, and liquidity to promptly and completely meet all of its obligations that may arise under chapter 176 or this chapter. In determining whether a self-insurer meets this requirement, the commissioner shall consider the self-insurer's current ratio; its long-term and short-term debt to equity ratios; its net worth; financial characteristics of the particular industry in which the self-insurer is involved; any recent changes in the management and ownership of the self-insurer; any excess insurance purchased by the self-insurer from a licensed company or an authorized surplus line carrier, other than excess insurance from the Workers' Compensation Reinsurance Association; any other financial data submitted to the commissioner by the self-insurer; and the self-insurer's workers' compensation experience for the last four years. Notwithstanding any other provision of this chapter, the commissioner may deny an application for self-insurance authority or terminate existing self-insurance authority if the applicant or self-insurer does not have sufficient assets, net worth, and liquidity to promptly and completely meet all of its self-insurance obligations. (b) An individual self-insurer must have had positive net income as shown on audited income statements filed with the Department of Commerce during three of the last five years and cumulatively over the five-year period. If the self-insurer has been in existence less than five years, it must have had cumulative net income during the period of existence and in the most recent year. (c) An individual self-insurer must have had cash generated from operations as shown on the audited statements of cash flows filed with the Department of Commerce during three of the last five years and cumulatively over the five-year period. If the self-insurer has been in existence less than five years, it shall have had cumulative cash generated from operations during the period of existence and in the most recent year. (d) No entity shall be admitted as an individual self-insurer, or be allowed to continue its self-insurance authority, if the audit report for the most recent year includes an explanatory paragraph stating that the auditor has concluded that there is substantial doubt about the entity's ability to continue as a going concern. Subd. 4a. Exceptions. Notwithstanding the requirements of subdivisions 3 and 4, the commissioner, pursuant to a review of an existing self-insurer's financial data, may continue a self-insurer's authority to self-insure for one year if, in the commissioner's judgment based on all factors relevant to the self-insurer's financial status, the self-insurer will be able to meet its obligations under this chapter for the following year. The relevant factors to be considered must include, but must not be limited to, the liquidity ratios, leverage ratios, and profitability ratios of the self-insurer. Where a self-insurer's authority to self-insure is continued under this subdivision, the self-insurer may be required to post security in the amount equal to two times the amount of security required under section 79A.04, subdivision 2. Subd. 5. Guarantee by affiliates. Where an employer seeking to self-insure fails to meet the financial requirements set forth in subdivisions 3 and 4, the commissioner shall grant authority to self-insure provided that an affiliated company, whose financial statement is filed with the commissioner and meets the requirements set forth in subdivisions 3 and 4, provides a written guarantee adopted by resolution of its board of directors that it will pay all workers' compensation claims incurred by its affiliate, and that it will not terminate the guarantee under any circumstances without first giving the commissioner and its affiliate 30 days' written notice. If said guarantee is withdrawn or if the guarantor ceases being an affiliate, the affiliate shall give written notice to the commissioner and the self-insured. The self-insured's authority to self-insure shall automatically terminate upon expiration of the 30-day notice period. Subd. 6. Applications for group self-insurance. (a) Two or more employers may apply to the commissioner for the authority to self-insure as a group, using forms available from the commissioner. This initial application shall be accompanied by a copy of the bylaws or plan of operation adopted by the group. Such bylaws or plan of operation shall conform to the conditions prescribed by law or rule. The commissioner shall approve or disapprove the bylaws within 60 days unless a question as to the legality of a specific bylaw or plan provision has been referred to the Attorney General's Office. The commissioner shall make a determination as to the application within 15 days after receipt of the requested response from the Attorney General's Office. (b) After the initial application and the bylaws or plan of operation have been approved by the commissioner or at the time of the initial application, the group shall submit the names of employers that will be members of the group; an indemnity agreement providing for joint and several liability for all group members for any and all workers' compensation claims incurred by any member of the group, as set forth in Minnesota Rules, part 2780.9920, signed by an officer of each member; and an accounting review performed by a certified public accountant. A certified financial audit may be filed in lieu of an accounting review. (c) When a group has obtained its authority to self-insure, additional applicants who wish to join the group must apply for approval by submitting, at least 45 days before joining the group: (1) an application; (2) an indemnity agreement providing for joint and several liability as set forth in Minnesota Rules, part 2780.9920, signed by an officer of the applicant; and (3) a certified financial audit performed by a certified public accountant. An accounting review performed by a certified public accountant may be filed in lieu of a certified audit. New diminutive applicants to the group, as defined in section 79A.01, subdivision 11, applying for membership in groups in existence longer than one year, who have a combined equity of all group members in excess of 15 times the last retention limit selected by the group with the Workers' Compensation Reinsurance Association, and have posted 125 percent of the group's total estimated future liability, must submit the items in this paragraph at least ten days before joining the group. If the cumulative total of premium added to the group by diminutive new members is greater than 50 percent in a fiscal year of the group, all subsequent new members' applications must be submitted at least 45 days before joining the group. In all cases of new membership, evidence that cash premiums equal to not less than 20 percent of the current year's modified premium of each applicant have been paid into a common claims fund, maintained by the group in a designated depository, must be filed with the department at least ten days before joining the group. 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. Subd. 8. Processing application. The commissioner shall grant or deny the group's application to self-insure within 60 days after a complete application has been filed, provided that the time may be extended for an additional 30 days upon 15 days' prior notice to the applicant. The commissioner shall grant approval for self-insurance upon a determination that the financial ability of the self-insurer's group is sufficient to fulfill all joint and several obligations of the member companies that may arise under chapter 176 or this chapter; the gross annual premium of the group members is at least 150 percent of the WCRA minimum retention in effect at the time of the application; the group has established a fund pursuant to Minnesota Rules, parts 2780.4100 to 2780.5000; the group has contracted with a licensed workers' compensation service company to administer its program; and the required securities or surety bond shall be on deposit prior to the effective date of coverage for any member. Approval shall be effective until revoked by order of the commissioner or until the employer members of the group become insured. Subd. 9. Filing reports. (a) Incurred losses, paid and unpaid, specifying indemnity and medical losses by classification, payroll by classification, and current estimated outstanding liability for workers' compensation shall be reported to the commissioner by each self-insurer on a calendar year basis, in a manner and on forms available from the commissioner. Payroll information must be filed by April 1 of the following year. (b) Each self-insurer shall, under oath, attest to the accuracy of each report submitted pursuant to paragraph (a). Upon sufficient cause, the commissioner shall require the self-insurer to submit a certified audit of payroll and claim records conducted by an independent auditor approved by the commissioner, based on generally accepted accounting principles and generally accepted auditing standards, and supported by an actuarial review and opinion of the future contingent liabilities. The basis for sufficient cause shall include the following factors: where the losses reported appear significantly different from similar types of businesses; where major changes in the reports exist from year to year, which are not solely attributable to economic factors; or where the commissioner has reason to believe that the losses and payroll in the report do not accurately reflect the losses and payroll of that employer. If any discrepancy is found, the commissioner shall require changes in the self-insurer's or workers' compensation service company record-keeping practices. (c) An annual status report due August 1 by each self-insurer shall be filed in a manner and on forms prescribed by the commissioner. (d) Each individual self-insurer shall, within four months after the end of its fiscal year, annually file with the commissioner its latest 10K report required by the Securities and Exchange Commission. If an individual self-insurer does not prepare a 10K report, it shall file an annual certified financial statement, together with such other financial information as the commissioner may require to substantiate data in the financial statement. (e) Each member of the group shall, within six months after the end of each fiscal year for that group, submit to a certified public accountant designated by the group, the most recent annual financial statement, reviewed by a certified public accountant in accordance with the Statements on Standards for Accounting and Review Services, Volume 2, the American Institute of Certified Public Accountants Professional Standards, or audited in accordance with generally accepted auditing standards, together with such other financial information the commissioner may require. In addition, the group shall file with the commissioner, within seven months after the end of each fiscal year for that group, combining financial statements of the group members, compiled by a certified public accountant in accordance with the Statements on Standards for Accounting and Review Services, Volume 2, the American Institute of Certified Public Accountants Professional Standards. The combining financial statements shall include, but not be limited to, a balance sheet, income statement, statement of changes in net worth, and statement of cash flow. Each combining financial statement shall include a column for each individual group member along with a total column. Each combined statement shall have a statement from the certified public accountant confirming that each member has submitted the required financial statement as defined in this section. The certified public accountant shall notify the commissioner if any statement is qualified or otherwise conditional. The commissioner may require additional financial information from any group member. Where a group has 50 or more members, the group shall file, in lieu of the combining financial statements, a combined financial statement showing only the total column for the entire group's balance sheet, income statement, statement of changes in net worth, and statement of cash flow. Additionally, the group shall disclose, for each member, the total assets, net worth, revenue, and income for the most recent fiscal year. The combining and combined financial statements may omit all footnote disclosures. (f) In addition to the financial statements required by paragraphs (d) and (e), interim financial statements or 10Q reports required by the Securities and Exchange Commission may be required by the commissioner upon an indication that there has been deterioration in the self-insurer's financial condition, including a worsening of current ratio, lessening of net worth, net loss of income, the downgrading of the company's bond rating, or any other significant change that may adversely affect the self-insurer's ability to pay expected losses. Any self-insurer that files an 8K report with the Securities and Exchange Commission shall also file a copy of the report with the commissioner within 30 days of the filing with the Securities and Exchange Commission. Subd. 10. Annual audit and refunds. (a) The accounts and records of the group self-insurer's fund shall be audited annually. Audits shall be made by certified public accountants, based on generally accepted accounting principles and generally accepted auditing standards, and supported by actuarial review and opinion of the future contingent liabilities, in order to determine the solvency of the self-insurer's fund. All audits required by this subdivision shall be filed with the commissioner 90 days after the close of the fiscal year for the group self-insurer. The commissioner may require a special audit to be made at other times if the financial stability of the fund or the adequacy of its monetary reserves is in question. (b) One hundred percent of any surplus money for a fund year in excess of 125 percent of the amount necessary to fulfill all obligations under chapter 176 for that fund year may be declared refundable to a member at any time after 18 months following the end of such fund year. There can be no more than one refund in any 12-month period. When all claims of any one fund year have been fully paid, as certified by an actuary, all surplus money from that fund year may be declared refundable. Subd. 11. Joint and several liability. All members of a private self-insurer group shall be jointly and severally liable for the obligations incurred by any member of the same group under chapter 176. Subd. 12. Commissioner review. The commissioner shall annually review the documents and reports filed by the private self-insurer. Subd. 13. Annual requirements. The financial requirements set forth in subdivisions 3, 4, 5, and 7 must be met on an annual basis. History:  1988 c 674 s 3; 1992 c 510 art 5 s 3-6; 1995 c 231 art 2 s 23; 1995 c 258 s 61; 1999 c 177 s 77-81; 2001 c 215 s 37; 2005 c 132 s 29; 2010 c 384 s 41
79A.04 PRIVATE SELF-INSURING EMPLOYER; ANNUAL RENEWAL OR DEPOSIT OF NEW SECURITY FOR PAYMENT OF COMPENSATION. Subdivision 1. Annual securing of liability. Each year every private self-insuring employer shall secure incurred liabilities for the payment of compensation and the performance of its obligations and the obligations of all self-insuring employers imposed under chapter 176 by renewing the prior year's security deposit or by making a new deposit of security. If a new deposit is made, it must be posted in the following manner: within 60 days of the filing of the annual report, the security posting for all prior years plus one-third of the posting for the current year; by July 31, one-third of the posting for the current year; by October 31, the final one-third of the posting for the current year. Subd. 2. Minimum deposit. The minimum deposit is 110 percent of the private self-insurer's estimated future liability. The deposit may be used to secure payment of all administrative and legal costs, and unpaid assessments required by section 79A.12, subdivision 2, relating to or arising from its or other employers' self-insuring. As used in this section, "private self-insurer" includes both current and former members of the self-insurers' security fund; and "private self-insurers' estimated future liability" means the private self-insurers' total of estimated future liability as determined by an Associate or Fellow of the Casualty Actuarial Society every year for group member private self-insurers and, for a nongroup member private self-insurer's authority to self-insure, every year for the first five years. After the first five years, the nongroup member's total shall be as determined by an Associate or Fellow of the Casualty Actuarial Society at least every two years, and each such actuarial study shall include a projection of future losses during the period until the next scheduled actuarial study, less payments anticipated to be made during that time. All data and information furnished by a private self-insurer to an Associate or Fellow of the Casualty Actuarial Society for purposes of determining private self-insurers' estimated future liability must be certified by an officer of the private self-insurer to be true and correct with respect to payroll and paid losses, and must be certified, upon information and belief, to be true and correct with respect to reserves. The certification must be made by sworn affidavit. In addition to any other remedies provided by law, the certification of false data or information pursuant to this subdivision may result in a fine imposed by the commissioner of commerce on the private self-insurer up to the amount of $5,000, and termination of the private self-insurers' authority to self-insure. The determination of private self-insurers' estimated future liability by an Associate or Fellow of the Casualty Actuarial Society shall be conducted in accordance with standards and principles for establishing loss and loss adjustment expense reserves by the Actuarial Standards Board, an affiliate of the American Academy of Actuaries. The commissioner may reject an actuarial report that does not meet the standards and principles of the Actuarial Standards Board, and may further disqualify the actuary who prepared the report from submitting any future actuarial reports pursuant to this chapter. Within 30 days after the actuary has been served by the commissioner with a notice of disqualification, an actuary who is aggrieved by the disqualification may request a hearing to be conducted in accordance with chapter 14. Based on a review of the actuarial report, the commissioner of commerce may require an increase in the minimum security deposit in an amount the commissioner considers sufficient. In addition, the Minnesota self-insurers' security fund may, at its sole discretion and cost, undertake an independent actuarial review or an actuarial study of a private self-insurer's estimated future liability as defined in this subdivision. The review or study must be conducted by an associate or fellow of the Casualty Actuarial Society. The actuary has the right to receive and review data and information of the self-insurer necessary for the actuary to complete its review or study. A copy of this report must be filed with the commissioner and a copy must be furnished to the self-insurer. Estimated future liability is determined by first taking the total amount of the self-insured's future liability of workers' compensation claims and then deducting the total amount which is estimated to be returned to the self-insurer from any specific excess insurance coverage, aggregate excess insurance coverage, and any supplementary benefits or second injury benefits which are estimated to be reimbursed by the special compensation fund. However, in the determination of estimated future liability, the actuary for the self-insurer shall not take a credit for any excess insurance or reinsurance which is provided by a captive insurance company which is wholly owned by the self-insurer. The opinion may discount liabilities to present value at a rate up to the lesser of four percent per annum, or the average of the applicable federal midterm rates, based on annual compounding, as published by the United States Secretary of the Treasury under United States Code, title 26, section 1274(d), for the 12 months preceding the valuation date of the report. Supplementary benefits or second injury benefits will not be reimbursed by the special compensation fund unless the special compensation fund assessment pursuant to section 176.129 is paid and the reports required thereunder are filed with the special compensation fund. In the case of surety bonds, bonds shall secure administrative and legal costs in addition to the liability for payment of compensation reflected on the face of the bond. In no event shall the security be less than the last retention limit selected by the self-insurer with the Workers' Compensation Reinsurance Association, provided that the commissioner may allow former members to post less than the Workers' Compensation Reinsurance Association retention level if that amount is adequate to secure payment of the self-insurers' estimated future liability, as defined in this subdivision, including payment of claims, administrative and legal costs, and unpaid assessments required by section 79A.12, subdivision 2. The posting or depositing of security pursuant to this section shall release all previously posted or deposited security from any obligations under the posting or depositing and any surety bond so released shall be returned to the surety. Any other security shall be returned to the depositor or the person posting the bond. As a condition for the granting or renewing of a certificate to self-insure, the commissioner may require a private self-insurer to furnish any additional security the commissioner considers sufficient to insure payment of all claims under chapter 176. Subd. 2a. Exceptions. Notwithstanding the requirements of subdivisions 1 and 2, the commissioner may, until the next annual securing of liability, adjust this required security deposit for the portion attributable to the current year only, if, in the commissioner's judgment, the self-insurer will be able to meet its obligations under this chapter until the next annual securing of liability. Subd. 3. Type of acceptable security. The commissioner may only accept as security, and the employer shall deposit as security, cash, approved government securities, surety bonds, or irrevocable letters of credit in any combination. Interest or dividend income or other income generated by the security shall be paid to the member or, at the member's direction, applied to the member's security requirement. The current deposit shall include within its coverage all amounts covered by terminated surety bonds. As used in this chapter, an irrevocable letter of credit shall be accepted only if it is clean, irrevocable, and contains an evergreen clause. (a) "Clean" means a letter of credit that is not conditioned on the delivery of any other documents or materials. (b) "Irrevocable" means a letter of credit that cannot be modified or revoked without the consent of the beneficiary, once the beneficiary is established. (c) "Evergreen clause" means one which specifically states that expiration of a letter of credit will not take place without a 60-day notice by the insurer and one which allows the issuer to conduct an annual review of the account party's financial condition. If prior notice of expiration is not given by the issuer, the letter of credit is automatically extended for one year. A clean irrevocable letter of credit shall be accepted only if it is in the form prescribed by statute and is issued by a financial institution that is authorized to engage in banking in any of the 50 states or under the laws of the United States and whose business is substantially confined to banking and supervised by the state commissioner of commerce or banking or similar official, and which has a long-term debt rating by a recognized national rating agency of investment grade or better. If no long-term debt rating is available, the financial institution must have the equivalent investment grade financial characteristics. Subd. 3a. Acceptable securities. The following are acceptable securities and surety bonds for the purpose of funding self-insurance plans and group self-insurance plans: (1) direct obligations of the United States government except mortgage-backed securities of the Government National Mortgage Association; (2) bonds, notes, debentures, and other instruments which are obligations of agencies and instrumentalities of the United States including, but not limited to, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Bank, the Student Loan Marketing Association, and the Farm Credit System, and their successors, but not including collateralized mortgage obligations or mortgage pass-through instruments; (3) bonds or securities that are issued by the state of Minnesota and that are secured by the full faith and credit of the state; (4) certificates of deposit which are insured by the Federal Deposit Insurance Corporation and are issued by a Minnesota depository institution; (5) obligations of, or instruments unconditionally guaranteed by, Minnesota depository institutions whose long-term debt rating is at least AA-, Aa3, or their equivalent, by at least two nationally recognized rating agencies; (6) surety bonds issued by a corporate surety authorized by the commissioner of commerce to transact such business in the state; (7) obligations of or instruments unconditionally guaranteed by Minnesota insurance companies, whose long-term debt rating is at least AA-, Aa3, or their equivalent, by at least two nationally recognized rating agencies and whose rating is A+ by A. M. Best, Inc.; and (8) any guarantee from the United States government whereby the payment of the workers' compensation liability of a self-insurer is guaranteed; and bonds which are the general obligation of the Minnesota Housing Finance Agency. Subd. 4. Deposit of security. Surety bonds, irrevocable letters of credit, and documents showing issuance of any irrevocable letter of credit shall be deposited with, and, except where specified by statute, in a form approved by the commissioner. Subd. 5. Deposit with commissioner of management and budget. Securities shall be deposited on behalf of the commissioner by the self-insured employer with the commissioner of management and budget or a financial institution approved by the commissioner. Securities shall be accepted by the commissioner of management and budget for deposit and shall be withdrawn only upon written order of the commissioner. Subd. 6. Cash deposits. Cash shall be deposited in a financial institution approved by the commissioner and in the account assigned to the commissioner of management and budget. Cash shall be withdrawn only upon written order of the commissioner. Subd. 7. Perfection of security. Upon the commissioner sending a request to renew, request to post, or request to increase a security deposit, a perfected security interest is created in the private self-insured's assets in favor of the commissioner to the extent of any then unsecured portion of the self-insured's incurred liabilities. That perfected security interest is transferred to any cash or securities thereafter posted by the private self-insured with the commissioner of management and budget and is released only upon either of the following: (1) the acceptance by the commissioner of a surety bond or irrevocable letter of credit for the full amount of the incurred liabilities for the payment of compensation; or (2) the return of cash or securities by the commissioner. The private self-insured employer loses all right, title, and interest in and any right to control all assets or obligations posted or left on deposit as security. In the event that a private self-insurer is the subject of a voluntary or involuntary petition under the United States Bankruptcy Code, title 11, or a court of competent jurisdiction has declared the private self-insurer to be bankrupt or insolvent, or in the event of the issuance of a certificate of default by the commissioner, the commissioner shall liquidate the deposit as provided in this chapter, and transfer it to the self-insurer's security fund for application to the self-insured employer's incurred liability and other current or future obligations of the self-insurers' security fund. In the event that a private self-insurer is the subject of a voluntary or involuntary petition under the United States Bankruptcy Code, title 11, or a court of competent jurisdiction has declared the private self-insurer to be bankrupt or insolvent, or in the event of the issuance of a certificate of default by the commissioner, all right, title, and interest in and any right to control all assets or obligations which have been posted or deposited as security must be transferred to the self-insurers' security fund. Subd. 8.  [Repealed, 1999 c 177 s 88] Subd. 9. Insolvency, bankruptcy, or default; utilization of security deposit. The commissioner of labor and industry shall notify the commissioner and the security fund if the commissioner of labor and industry has knowledge that any private self-insurer has failed to pay workers' compensation benefits as required by chapter 176. The security deposit shall be used to administer and pay the private self-insurers' workers' compensation or assessment obligations or any other current or future obligations of the self-insurers' security fund if any of the following occurs: (1) the private self-insurer has failed to pay workers' compensation as required by chapter 176 and either: (i) the commissioner determines that a private self-insurer is the subject of a voluntary or involuntary petition under the United States Bankruptcy Code, title 11; or (ii) the commissioner determines that a court of competent jurisdiction has declared the private self-insurer to be bankrupt or insolvent; or (2) the commissioner issues a certificate of default against a private self-insurer for failure to pay workers' compensation as required by chapter 176; or (3) the commissioner issues a certificate of default against a private self-insurer for failure to pay an assessment to the self-insurer's security fund when due. Subd. 10. Notice; obligation of fund. In the event of bankruptcy, insolvency, or certificate of default, the commissioner shall immediately notify by certified mail the commissioner of management and budget, the surety, the issuer of an irrevocable letter of credit, and any custodian of the security required in this chapter. At the time of notification, the commissioner shall also call the security and transfer and assign it to the self-insurers' security fund. The commissioner shall also immediately notify by certified mail the self-insurers' security fund, and order the security fund to assume the insolvent self-insurers' obligations for which it is liable under chapter 176. The security fund shall commence payment of these obligations within 14 days of receipt of this notification and order. Payments shall be made to claimants whose entitlement to benefits can be ascertained by the security fund, with or without proceedings before the Department of Labor and Industry, the Office of Administrative Hearings, the Workers' Compensation Court of Appeals, or the Minnesota Supreme Court. Upon the assumption of obligations by the security fund pursuant to the commissioner's notification and order, the security fund has the right to immediate possession of any posted or deposited security and the custodian, surety, or issuer of any irrevocable letter of credit or the commissioner, if in possession of it, shall turn over the security, proceeds of the surety bond, or letter of credit to the security fund together with the interest that has accrued since the date of the self-insured employer's insolvency. The security fund has the right to the immediate possession of all relevant workers' compensation claim files and data of the self-insurer, and the possessor of the files and data must turn the files and data, or complete copies of them, over to the security fund within five days of the notification provided under this subdivision. If the possessor of the files and data fails to timely turn over the files and data to the security fund, it is liable to the security fund for a penalty of $500 per day for each day after the five-day period has expired. The security fund is entitled to recover its reasonable attorney fees and costs in any action brought to obtain possession of the workers' compensation claim files and data of the self-insurer, and for any action to recover the penalties provided by this subdivision. The self-insurers' security fund may administer payment of benefits or it may retain a third-party administrator to do so. Subd. 11. Priority. Notwithstanding anything in this chapter to the contrary, any cash, securities, irrevocable letter of credit, specific excess or aggregate excess insurance proceeds, or any other security deposited or posted in accordance with this section shall be used first, when due, to pay workers' compensation claims. After that security has been exhausted, the payment of workers' compensation claims from self-insurers' security fund members' assessments may be made. Where the self-insurers' security fund member assessment account is used to pay workers' compensation claims on an emergency or an interim basis, pending receipt by the self-insurers' security fund of security which is due but not yet received, then the member assessment account shall be reimbursed for payment from the security when it is received, and the priorities stated above shall thereafter apply. Subd. 12. Duty to inform. The commissioner shall be provided with any relevant information by the employer, any excess insurer, any third-party administrator, or any issuer of any irrevocable letter of credit, issuer of any surety bond, or custodian of any security necessary for the commissioner to carry out the commissioner's obligations under this chapter. The commissioner shall provide this information to the self-insurers' security fund if necessary for the security fund to carry out its obligations under this chapter. Subd. 13. Discharge and release. The payment of benefits by the self-insurers' security fund from security deposit proceeds shall release and discharge any custodian of the security deposit, surety, any issuer of a letter of credit, and the self-insured employer from liability to fulfill obligations to provide those same benefits as compensation, but does not release any person or entity from any liability to the security fund for full reimbursement. Any decision or determination made or any settlement approved by the commissioner or by an administrative law judge under subdivision 15 shall conclusively be presumed valid and binding as to all known claims arising out of the underlying dispute, unless an appeal is made pursuant to chapter 14. No security shall be exchanged more often than once every 90 days. Subd. 14. Notice to security fund. The commissioner shall advise the self-insurers' security fund promptly after the receipt of information indicating that a private self-insurer may be unable to meet its compensation obligations. The commissioner shall advise the self-insurers' security fund of all determinations and directives and orders made or issued pursuant to this section. Subd. 15. Dispute resolution; appeals. Disputes concerning the posting, renewal, termination, exoneration, or return of all or any portion of the security deposit, or any liability arising out of the posting or failure to post security, or adequacy of the security or reasonableness of administrative costs, including legal fees, and 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, a private self-insurer, or the self-insurers' security fund shall be resolved by the commissioner. An appeal from the commissioner's written decision, determination, or order may be instituted pursuant to the contested case procedures of chapter 14. Payment of claims from the security deposit or by the self-insurers' security fund shall not be stayed pending the resolution of the disputes unless and until the administrative law judge issues a determination staying a payment of claims decision or determination of the commissioner or the self-insurers' security fund. 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. History:  1953 c 755 s 22; 1959 c 265 s 1; 1971 c 863 s 3; 1973 c 388 s 48,49; 1973 c 492 s 14; 1978 c 797 s 4; Ex1979 c 3 s 50,51; 1981 c 346 s 91-93; 1982 c 424 s 130; 1983 c 289 s 114 subd 1; 1983 c 290 s 113; 1984 c 592 s 80,81; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 332 s 46; 1987 c 384 art 2 s 1; 1988 c 674 s 4,18; 1990 c 422 s 10; 1992 c 510 art 3 s 17,18; art 5 s 7; 1992 c 545 art 2 s 1,2; 1993 c 210 s 1; 1994 c 483 s 1; 1994 c 485 s 60; 1995 c 231 art 2 s 24,25,69,70; 1995 c 233 art 2 s 56; 1995 c 258 s 62; 1997 c 200 art 1 s 64; 1999 c 223 art 2 s 33; 2000 c 483 s 24-27; 2001 c 215 s 38; 2002 c 262 s 16; 2002 c 330 s 31; 2003 c 112 art 2 s 25,50; 2004 c 206 s 52; 2005 c 132 s 30,31; 2006 c 255 s 69; 2008 c 250 s 17; 2009 c 101 art 2 s 109; 2009 c 178 art 1 s 44,45; 7Sp2020 c 1 art 2 s 2
79A.05 REVOCATION OF CERTIFICATE TO SELF-INSURE. A certificate to self-insure may be revoked by the commissioner at any time for good cause. After revocation, the self-insurer may request a hearing. Good cause includes, among other things, failure to maintain a security deposit as required by this chapter, failure to pay assessments of the self-insurers' security fund, or the failure or inability of the employer to fulfill obligations under chapter 176 or this chapter. Good cause also includes failure to provide proof of renewal of the security 15 days before its expiration. A self-insured employer must comply with section 176.181 and all applicable rules to operate during the pendency of its appeal of a decision under this section. History:   1988 c 674 s 5 
79A.06 THIRD-PARTY ADMINISTRATOR. Subdivision 1. Certificate to self-insure. No person, firm, or corporation, other than an insurer admitted to transact workers' compensation insurance in this state, shall contract to administer claims of self-insured employers as a third-party administrator unless qualified to do so pursuant to section 60A.23, subdivision 8. Subd. 2. Local office. A third-party administrator who contracts to administer claims of a self-insured employer shall maintain an office in the state of Minnesota and shall be subject to regulation under this chapter and chapters 60A and 72A with respect to the adjustment, administration, and management of workers' compensation claims for any self-insured employer. Subd. 3. Annual estimate of liability. A third-party administrator retained by a self-insured employer to administer the employer's workers' compensation claims shall estimate the total accrued liability of the employer for the payment of compensation for the employer's annual report to the commissioner and shall make the estimate both in good faith and with the exercise of a reasonable degree of care. The use of a third-party administrator does not discharge or alter the employer's responsibilities with respect to the report. Subd. 4. Failure to submit reports or information; penalty. Failure to submit reports to the commissioner as required by this chapter may result in the assessment of a penalty which shall not exceed $3,000 for each month or fraction thereof the report is past due. Failure to submit reports required by statute within 60 days from the due date without written consent of the commissioner shall result in the revocation of the certificate to self-insure. Penalties shall be deposited in the self-insurers' security fund. Subd. 5. Private employers who have ceased to be self-insured. (a) Private employers who have ceased to be private self-insurers shall discharge their continuing obligations to secure the payment of compensation which is accrued during the period of self-insurance, for purposes of Laws 1988, chapter 674, sections 1 to 21, by compliance with all of the following obligations of current certificate holders: (1) Filing reports with the commissioner to carry out the requirements of this chapter; (2) Depositing and maintaining a security deposit for accrued liability for the payment of any compensation which may become due, pursuant to chapter 176. However, if a private employer who has ceased to be a private self-insurer purchases an insurance policy from an insurer authorized to transact workers' compensation insurance in this state which provides coverage of all claims for compensation arising out of injuries occurring during the entire period the employer was self-insured, whether or not reported during that period, the policy will: (i) discharge the obligation of the employer to maintain a security deposit for the payment of the claims covered under the policy; (ii) discharge any obligation which the self-insurers' security fund has or may have for payment of all claims for compensation arising out of injuries occurring during the period the employer was self-insured, whether or not reported during that period; and (iii) discharge the obligations of the employer to pay any future assessments to the self-insurers' security fund; provided, however, that a member that terminates its self-insurance authority on or after August 1, 2010, shall be liable for an assessment under paragraph (b). The actuarial opinion shall not take into consideration any transfer of the member's liabilities to an insurance policy if the member obtains a replacement policy as described in this subdivision within one year of the date of terminating its self-insurance. A private employer who has ceased to be a private self-insurer may instead buy an insurance policy described above, except that it covers only a portion of the period of time during which the private employer was self-insured; purchase of such a policy discharges any obligation that the self-insurers' security fund has or may have for payment of all claims for compensation arising out of injuries occurring during the period for which the policy provides coverage, whether or not reported during that period. A policy described in this clause may not be issued by an insurer unless it has previously been approved as to the insurer, form, and substance by the commissioner; and (3) Paying within 30 days all assessments of which notice is sent by the security fund, for a period of seven years from the last day its certificate of self-insurance was in effect. Thereafter, the private employer who has ceased to be a private self-insurer may either: (i) continue to pay within 30 days all assessments of which notice is sent by the security fund until it has no incurred liabilities for the payment of compensation arising out of injuries during the period of self-insurance; or (ii) pay the security fund a cash payment equal to four percent of the net present value of all remaining incurred liabilities for the payment of compensation under sections 176.101 and 176.111 as certified by a member of the casualty actuarial society. Assessments shall be based on the benefits paid by the employer during the calendar year immediately preceding the calendar year in which the employer's right to self-insure is terminated or withdrawn. (b) With respect to a self-insurer who terminates its self-insurance authority after April 1, 1998, that member shall obtain and file with the commissioner an actuarial opinion of its outstanding liabilities as determined by an associate or fellow of the Casualty Actuarial Society within 120 days of the date of its termination. If the actuarial opinion is not timely filed, the self-insurers' security fund may, at its discretion, engage the services of an actuary for this purpose. The expense of this actuarial opinion must be assessed against and be the obligation of the self-insurer. The commissioner may issue a certificate of default against the self-insurer for failure to pay this assessment to the self-insurers' security fund as provided by section 79A.04, subdivision 9. The actuarial opinion must not apply a present value discount in computing future liabilities. Within 60 days after notification of approval of the actuarial opinion by the commissioner, the exiting member shall pay to the security fund an amount determined as follows: a percentage will be determined by dividing the security fund's members' deficit as determined by the most recent audited financial statement of the security fund by the total actuarial liability of all members of the security fund as calculated by the commissioner within 30 days of the exit date of the member. This quotient will then be multiplied by that exiting member's total future liability as contained in the exiting member's actuarial opinion. If the payment is not made within 30 days of the notification, interest on it at the rate prescribed by section 549.09 must be paid by the former member to the security fund until the principal amount is paid in full. (c) A former member who terminated its self-insurance authority before April 1, 1998, who has paid assessments to the self-insurers' security fund for seven years, and whose annualized assessment is $15,000 or less, may buy out of its outstanding liabilities to the self-insurers' security fund by an amount calculated as follows: 1.35 multiplied by the indemnity case reserves at the time of the calculation, multiplied by the then current self-insurers' security fund annualized assessment rate. (d) A former member who terminated its self-insurance authority before April 1, 1998, and who is paying assessments within the first seven years after ceasing to be self-insured under paragraph (a), clause (3), may elect to buy out its outstanding liabilities to the self-insurers' security fund by obtaining and filing with the commissioner an actuarial opinion of its outstanding liabilities as determined by an associate or fellow of the Casualty Actuarial Society. The opinion must separate liability for indemnity benefits from liability for medical benefits. Within 30 days after notification of approval of the actuarial opinion by the commissioner, the member shall pay to the security fund an amount equal to 120 percent of that discounted outstanding indemnity liability, multiplied by the greater of the average annualized assessment rate since inception of the security fund or the annual rate at the time of the most recent assessment. (e) A former member who has paid the security fund according to paragraphs (b) to (d) and subsequently receives authority from the commissioner to again self-insure shall be assessed under section 79A.12, subdivision 2, only on indemnity benefits paid on injuries that occurred after the former member received authority to self-insure again; provided that the member furnishes verified data regarding those benefits to the security fund. (f) In addition to proceedings to establish liabilities and penalties otherwise provided, a failure to comply may be the subject of a proceeding before the commissioner. An appeal from the commissioner's determination may be taken pursuant to the contested case procedures of chapter 14 within 30 days of the commissioner's written determination. Any current or past member of the self-insurers' security fund is subject to service of process on any claim arising out of chapter 176 or this chapter in the manner provided by section 5.25, or as otherwise provided by law. The issuance of a certificate to self-insure to the private self-insured employer shall be deemed to be the agreement that any process which is served in accordance with this section shall be of the same legal force and effect as if served personally within this state. Subd. 6. Private employers who are self-insured. Private employers who are currently self-insurers may also purchase a policy described in subdivision 5, paragraph (a), clause (2), with the same effect as specified in that clause for the period covered by the policy. Subd. 7. Insolvency of a self-insurance group insurer. In the event of the insolvency of the insurer of a self-insurance group issued a policy under subdivision 5, including a policy covering only a portion of the period of self-insurance, eligibility for chapter 60C coverage under the policy shall be determined by applying the requirements of section 60C.09, subdivision 2, clause (3), to each self-insurance group member, rather than to the net worth of the self-insurance group entity or the aggregate net worth of all members of the self-insurance group entity. History:  1988 c 674 s 6; 1992 c 510 art 5 s 8; 1995 c 128 art 1 s 3; 1998 c 339 s 2; 1999 c 86 art 1 s 17; 1999 c 177 s 82,83; 2005 c 132 s 32; 2008 c 344 s 49; 2009 c 178 art 1 s 46; 2010 c 384 s 42; 2011 c 108 s 41; 7Sp2020 c 1 art 2 s 3
79A.07 PREFERRED SUBROGATION RIGHTS OF SELF-INSURERS' SECURITY FUND OR SURETY. The self-insurers' security fund by making payment of compensation under this chapter has the same preference over the other debts of the principal or the principal's estate as is given by law to the person directly entitled to the compensation. History:   1988 c 674 s 7 
79A.071 CUSTODIAL ACCOUNTS. Subdivision 1. Deposit. All securities shall be deposited with the commissioner of management and budget or in a custodial account with a depository institution acceptable to the commissioner of management and budget. Surety bonds shall be filed with the commissioner. The commissioner and the commissioner of management and budget may sell or collect, in the case of default of the employer or fund, the amount that yields sufficient funds to pay compensation due under the Workers' Compensation Act. Subd. 2. Assignment. Securities in physical form deposited with the commissioner of management and budget must bear the following assignment, which shall be signed by an officer, partner, or owner: "Assigned to the state of Minnesota for the benefit of injured employees of the self-insured employer under the Minnesota Workers' Compensation Act." Any securities held in a custodial account, whether in physical form, book entry, or other form, need not bear the assignment language. The instrument or contract creating and governing any custodial account must contain the following assignment language: "This account is assigned to the commissioner of management and budget by the Company to pay compensation and perform the obligations of employers imposed under Minnesota Statutes, chapter 176. A depositor or other party has no right, title, or interest in the security deposited in the account until released by the state." Subd. 3. Custody. All securities in physical form on deposit with the commissioner of management and budget and surety bonds on deposit shall remain in the custody of the commissioner of management and budget or the commissioner for a period of time dictated by the applicable statute of limitations provided in the Workers' Compensation Act. All original instruments and contracts creating and governing custodial accounts shall remain with the commissioner of management and budget or the commissioner for a period of time dictated by the applicable statute of limitations provided in the Workers' Compensation Act. Subd. 4. Release. No securities in physical form on deposit with the commissioner of management and budget or custodial accounts assigned to the state shall be released without an order from the commissioner. Subd. 5. Exchanging or replacing. Any securities deposited with the commissioner of management and budget or with a custodial account assigned to the commissioner of management and budget or surety bonds held by the commissioner may be exchanged or replaced by the depositor with other acceptable securities or surety bonds of like amount so long as the market value of the securities or amount of the surety bond equals or exceeds the amount of deposit required. If securities are replaced by a surety bond, the self-insurer must maintain securities on deposit in an amount sufficient to meet all outstanding workers' compensation liability arising during the period covered by the deposit of the replaced securities, subject to the limitations on maximum security deposits established in Minnesota Rules. History:  1992 c 510 art 5 s 9; 2003 c 112 art 2 s 50; 2009 c 101 art 2 s 109
79A.08 LEGISLATIVE INTENT. It is the intent of the legislature in enacting sections 79A.08 to 79A.10 to provide for the continuation of workers' compensation benefits delayed due to the failure of a private self-insured employer to meet its compensation obligations, whenever the commissioner of commerce issues a certificate of default or there is a declaration of bankruptcy or insolvency by a court of competent jurisdiction. With respect to the continued liability of a surety for claims that arise under a bond after termination of that bond and to a surety's liability for the cost of administration of claims, it is the intent of the legislature to provide that that liability ceases upon lawful termination of that bond. This applies to all surety bonds which are purchased by the self-insured employer after July 1, 1988. The legislature finds and declares that the establishment of the self-insurers' security fund is a necessary component of a complete system of workers' compensation, required by chapter 176, to have adequate provisions for the comfort, health, safety, and general welfare of any and all workers and their dependents to the extent of relieving the consequences of any industrial injury or death, and full provision for securing the payment of compensation. History:   1988 c 674 s 8 
79A.09 SECURITY FUND. Subdivision 1. Creation. The self-insurers' security fund is established as a nonprofit corporation pursuant to the Minnesota Nonprofit Corporation Act, sections 317A.001 to 317A.909. If any provision of the Minnesota Nonprofit Corporation Act conflicts with any provision of this chapter, the provisions of this chapter apply. Each private self-insurer who is self-insured on July 1, 1988, or who becomes self-insured thereafter, shall participate as a member in the security fund. This participation shall be a condition of maintaining its certificate to self-insure. Subd. 2. Board of trustees. The security fund shall be governed by a nine-member board of trustees. Five of the trustees shall be representatives of private self-insurers who shall be elected by the members of the security fund, other than group self-insurers, each member having one vote. One of the trustees shall be a representative of the private group self-insurers who shall be elected by the members of the security fund who are group self-insurers, each group having one vote. Three of the trustees, including the group self-insurer trustee, initially elected by the members shall serve two-year terms, and three shall serve four-year terms. Thereafter, trustees shall be elected to four-year terms, and shall serve until their successors are elected and assume office pursuant to the bylaws of the security fund. Three additional trustees shall be appointed by the commissioner. Two of these trustees shall serve four-year terms. One of these trustees shall serve a two-year term. Thereafter, the trustees shall be appointed to four-year terms, and shall serve until their successors are appointed and assume office pursuant to the bylaws of the security fund. In addition to the nine trustees elected by the members or appointed by the commissioner, the commissioner of labor and industry or the commissioner's designee shall be an ex officio, nonvoting member of the board of trustees. A member of the board of trustees may designate another person to act in the member's place as though the member were acting and the designee's actions shall be deemed those of the member. Subd. 3. Bylaws. The security fund shall establish bylaws and a plan of operation, subject to the prior approval of the commissioner, necessary to the purposes of this chapter and to carry out the responsibilities of the security fund. The security fund may carry out its responsibilities directly or by contract, and may purchase services and insurance and borrow funds as it deems necessary for the protection of the members and their employees. Subd. 4. Confidential information. The security fund may receive private data concerning the financial condition of private self-insurers whose liabilities to pay compensation have become its responsibility. The data shall become public data upon its receipt by the security fund. Subd. 5. Employees. Security fund employees are not state employees and are not subject to any state civil service regulations. History:  1988 c 674 s 9; 1989 c 304 s 131; 1995 c 231 art 2 s 26
79A.10 ASSUMPTION OF WORKERS' COMPENSATION OBLIGATIONS OF INSOLVENT SELF-INSURER. Subdivision 1. Order of commissioner. Upon order of the commissioner pursuant to section 79A.04, subdivision 10, the security fund shall assume the workers' compensation obligations of an insolvent private self-insurer. Subd. 2. Act or omissions; penalties. Notwithstanding subdivision 1, the security fund shall not be liable for the payment of any penalties assessed for any act or omission on the part of any person other than the security fund or its appointed administrator, including, but not limited to, the penalties provided in chapter 176 unless the security fund or its appointed administrator would be subject to penalties under chapter 176 as the result of the actions of the security fund or its administrator. Subd. 3. Party in interest. The security fund shall be a party in interest in all proceedings involving compensation claims against an insolvent self-insurer whose compensation obligations have been paid or assumed by the security fund. The security fund shall have the same rights and defenses as the insolvent private self-insurer, including, but not limited to, all of the following: (1) to appear, defend, and appeal claims; (2) to receive notice of, investigate, adjust, compromise, settle, and pay claims; and (3) to investigate, handle, and deny claims. Subd. 4. Payments to security fund. Notwithstanding anything in this chapter or chapter 176 to the contrary, in the event that the self-insurers' security fund assumes the obligations of any bankrupt or insolvent private self-insurer pursuant to this section, then the proceeds of any surety bond, Workers' Compensation Reinsurance Association, specific excess insurance or aggregate excess insurance policy, and any special compensation fund payment or second injury fund or supplementary benefit reimbursements shall be paid to the self-insurers' security fund instead of the bankrupt or insolvent private self-insurer or its successor in interest. No special compensation fund reimbursements shall be made to the security fund unless the special compensation fund assessments pursuant to section 176.129 are paid and the reports required thereunder are made to the special compensation fund. History:   1988 c 674 s 10 
79A.11 REIMBURSEMENT FOR OBLIGATIONS PAID AND ASSUMED. Subdivision 1. Insolvent insurer. The security fund shall have the right and obligation to obtain reimbursement from an insolvent private self-insurer up to the amount of the private self-insurer's workers' compensation obligations paid and assumed by the security fund, including reasonable administrative and legal costs. This right includes, but is not limited to, a right to claim for wages and other necessities of life advanced to claimants as subrogee of the claimants in any action to collect against the private self-insurer as debtor. Subd. 2. Security deposits. The security fund shall have the right and obligation to obtain and retain the security deposit of an insolvent private self-insurer to apply to the private self-insurer's current or future compensation obligations, including reasonable administrative and legal costs, paid or assumed by the security fund and to other current or future obligations of the security fund. Reimbursement of administrative costs, including legal costs, shall be subject to approval by a majority of the security fund's voting trustees. The security fund shall be a party in interest in any action to obtain the security deposit for the payment of compensation obligations of an insolvent self-insurer. Subd. 2a. Replacement insurance policy. The insolvent self-insurer may obtain an insurance policy as described in section 79A.06, subdivision 5, to discharge further workers' compensation obligations assumed by the self-insurers' security fund on behalf of the insolvent insurer. At the self-insurers' security fund's option and in its sole discretion, any part of the insolvent self-insurer's security deposit may be used to fund the acquisition of this policy. After the security deposit has been used to: (1) fund the acquisition of this policy; (2) pay all direct and indirect administrative and professional expenses of the fund related to the insolvent self-insurer; and (3) to the extent not covered by the insurance policy, pay the insolvent self-insurer's losses, allocated loss expense and unallocated loss expense, any part of the insolvent self-insurer's security deposit that remains must be promptly returned to the insolvent self-insurer. Subd. 3. Legal actions. The security fund shall have the right to bring an action against any person or entity to recover compensation paid and liability assumed by the security fund, including, but not limited to, any excess insurance carrier of the insolvent private self-insurer, and any person or entity whose negligence or breach of any obligation contributed to any underestimation of the private self-insurer's total accrued liability as reported to the commissioner. Subd. 4. Party in interest. The security fund may be a party in interest in any action brought by any other person seeking damages resulting from the failure of an insolvent private self-insurer to pay workers' compensation required pursuant to this subdivision. History:  1988 c 674 s 11; 2000 c 483 s 28,29
79A.12 MAINTENANCE OF ASSETS OR LINE OF CREDIT TO CONTINUE PAYMENT OF COMPENSATION OBLIGATIONS. Subdivision 1. Assets maintained. The security fund shall maintain cash, readily marketable securities, or other assets, or a line of credit, approved by the commissioner, sufficient to immediately continue the payment of the compensation obligations of an insolvent private self-insurer pending receipt of the security deposit, surety bond proceeds, irrevocable letter of credit, or, if necessary, assessment of the members. The commissioner may establish the minimum amount to be maintained by, or immediately available to, the security fund for this purpose. Subd. 2. Assessment. The security fund may assess each of its members a pro rata share of the funding necessary to carry out its obligation and the purposes of this chapter. Total annual assessments in any calendar year shall not exceed ten percent of paid indemnity losses, as defined in section 176.129, made by the self-insured employer during the preceding calendar year. The annual assessment calculation shall not include supplementary benefits paid which will be reimbursed by the special compensation fund. Funds obtained by assessments pursuant to this subdivision may only be used for the purposes of this chapter. The trustees shall certify to the commissioner the collection and receipt of all money from assessments, noting any delinquencies. The trustees shall take any action deemed appropriate to collect any delinquent assessments. History:  1988 c 674 s 12; 1990 c 450 s 2; 2005 c 132 s 33
79A.13 AUDIT; ANNUAL REPORT. The trustees shall annually contract for an independent certified audit of the financial activities of the fund. An annual report on the financial status of the fund as of June 30 shall be submitted to the commissioner and to each member. The security fund shall be established on July 1, 1988, or 90 days after July 1, 1988, whichever occurs later. All applications for private self-insurers which are made after July 1, 1988, prior to the establishment of the security fund, shall comply with all requirements of this chapter. Applications for private self-insurers which are made after January 1, 1988, but prior to July 1, 1988, shall, prior to the establishment of the security fund, comply with the requirements of this chapter. The security fund shall be liable for payment of benefits only for members where there has been a declaration of bankruptcy or insolvency by a court of competent jurisdiction after the date on which the security fund is established, or where the commissioner has issued a certificate of default which has occurred after the date on which the security fund is established. History:   1988 c 674 s 13 
79A.14 LETTER OF CREDIT FORM. The form for the letter of credit under this chapter shall be: Effective Date State of Minnesota (Beneficiary) (Address) Dear Sirs: By order of ....................(Self-Insurer) we are instructed to open a clean irrevocable Letter of Credit in your favor for United States $.................(Amount). We undertake that drawings under this Letter of Credit will be honored upon presentation of your draft drawn on ...............(issuing bank), at ...............(Address) prior to expiration date. The Letter of Credit expires on ..............., but will automatically extend for an additional one year if you have not received by registered mail notification of intention not to renew 60 days prior to the original expiration date and each subsequent expiration date. Except as expressly stated herein, this undertaking is not subject to any condition or qualification. The obligation of .................(issuing bank) under this letter of credit shall be the individual obligation of .................(issuing bank), in no way contingent upon reimbursement with respect thereto. Very truly yours,  . (Signature)  History:  1988 c 674 s 14; 1990 c 426 art 1 s 11
79A.15 SURETY BOND FORM. The form for the surety bond under this chapter shall be: STATE OF MINNESOTA DEPARTMENT OF COMMERCE SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION      IN THE MATTER OF THE CERTIFICATE OF )     )     ) SURETY BOND    )  NO. .     )  PREMIUM: .     )     Employer, Certificate No: .  )         KNOW ALL PERSONS BY THESE PRESENTS:   That  .     (Employer)    whose address is .     as Principal, and .     (Surety)   a corporation organized under the laws of .................... and authorized to transact a general surety business in the State of Minnesota, as Surety, are held and firmly bound to the State of Minnesota in the penal sum of .................... dollars ($.........) 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 commissioner of management and budget, 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. 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 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 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 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 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. History:  1988 c 674 s 15; 1995 c 231 art 2 s 27; 2001 c 215 s 39; 2003 c 112 art 2 s 50; 2009 c 101 art 2 s 109
79A.16 OPEN MEETING; ADMINISTRATIVE PROCEDURE ACT. The security fund and its board of trustees shall not be subject to (1) the Open Meeting Law, chapter 13D, (2) the Open Appointments Law, (3) the Minnesota Government Data Practices Act, chapter 13, and (4) except where specifically set forth, the Administrative Procedure Act. The Self-Insurers' Advisory Committee shall not be subject to clauses (2) and (4). History:  1988 c 674 s 16; 2012 c 290 s 67
79A.17 RULES. The commissioner may adopt, amend, and repeal rules reasonably necessary to carry out the purposes of sections 79A.01 to 79A.17. This authorization includes, but is not limited to, the adoption of rules to do all of the following: (1) except as otherwise specifically provided by statute, specifying what constitutes ability to self-insure and to pay any compensation which may become due under chapter 176; (2) specifying what constitutes a failure or inability to fulfill an insolvent self-insurer's obligations under this chapter; (3) interpreting and defining the terms used in this chapter; (4) establishing procedures and standards for hearing and determinations and providing for those determinations to be appealed; (5) except where otherwise specifically provided by statute, specifying the standards, forms, and content of agreements, forms, and reports between parties who have obligations pursuant to this chapter; (6) providing for the combinations and relative liabilities of security deposits, assumptions, and guarantees used pursuant to this chapter; and (7) disclosing otherwise private data concerning self-insurers to courts or the self-insurers' security fund and specifying appropriate safeguards for that information. The Self-Insurers' Advisory Committee may make recommendations to the commissioner under this section as it deems appropriate. History:   1988 c 674 s 17 
79A.18 EXISTING RULES. If there is any inconsistency among any rule or statute and Laws 1988, chapter 674, Laws 1988, chapter 674, shall govern. History:   1988 c 674 s 21 
79A.19 COMMERCIAL SELF-INSURANCE GROUPS; DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 79A.19 to 79A.32, the terms defined in this section have the meanings given them. If there is any inconsistency between this section and section 79A.01, the provisions of this section shall govern. Subd. 2. Accountant. "Accountant" means a certified public accountant who is not an employee of any member of the commercial self-insurance group and is not affiliated with any individual or organization providing services other than accounting services to the group. Subd. 3. Actuary. "Actuary" means an individual who has attained the status of associate or fellow of the Casualty Actuarial Society who is not an employee of any member of the commercial self-insurance group and is not affiliated with any individual or organization providing services other than actuarial services to the group. Subd. 4. Common claims fund. "Common claims fund" means the cash, cash equivalents, or investment accounts maintained by the commercial self-insurance group to pay its workers' compensation liabilities. Subd. 5. Member. "Member" means an employer that participates in a commercial self-insurance group. Subd. 6. Commercial self-insurance group. "Commercial self-insurance group" means a group of employers that are self-insured for workers' compensation under chapter 176 and elects to operate under sections 79A.19 to 79A.32 rather than sections 79A.01 to 79A.18. Subd. 7. Commercial self-insurance group security fund. "Commercial self-insurance group security fund" means the commercial self-insurance group security fund established pursuant to this chapter. Subd. 8. Trustees. "Trustees" means the board of trustees of the commercial self-insurance group security fund. History:   1995 c 231 art 2 s 28 
79A.20 ELIGIBILITY REQUIREMENTS FOR COMMERCIAL SELF-INSURANCE GROUPS. Subdivision 1. Group eligibility. A commercial self-insurance group consists of two or more employers in similar industries. The commercial self-insurance group shall not incorporate or form a business trust pursuant to chapter 318. Subd. 2. Membership eligibility. A commercial self-insurance group may only admit employers who meet the eligibility requirements established by the group including financial criteria, underwriting guidelines, risk profile, and any other requirements stated in the commercial self-insurance group's bylaws or plan of operation. History:   1995 c 231 art 2 s 29 
79A.21 COMMERCIAL SELF-INSURANCE GROUP APPLICATION. Subdivision 1. Procedure. (a) Groups proposing to become licensed as commercial self-insurance groups must complete and submit an application on a form or forms prescribed by the commissioner. (b) The commissioner shall grant or deny the group's application to self-insure within 60 days after a complete application has been filed, provided that the time may be extended for an additional 30 days upon 15 days' prior notice to the applicant. Subd. 2. Required documents. All first-year applications must be accompanied by the following: (a) A detailed business plan including the risk profile of the proposed membership, underwriting guidelines, marketing plan, minimum financial criteria for each member, and financial projections for the first year of operation. (b) A plan describing the method in which premiums are to be charged to the employer members. The plan shall be accompanied by copies of the member's workers' compensation insurance policies in force at the time of application. In developing the premium for the group, the commercial self-insurance group shall base its premium on the Minnesota Workers' Compensation Insurers Association's manual of rules, loss costs, and classifications approved for use in Minnesota by the commissioner. Each member applicant shall, on a form approved by the commissioner, complete estimated payrolls for the first 12-month period that the applicant will be self-insured. Premium volume discounts per the plan will be permitted if they can be shown to be consistent with actuarial standards. (c) A schedule indicating actual or anticipated operational expenses of the commercial self-insurance group. 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. For purposes of this calculation, claim and assessment obligations include the cost of allocated loss expenses as well as special compensation fund and commercial self-insurance group security fund assessments but exclude the cost of unallocated loss expenses. (d) An indemnity agreement from each member who will participate in the commercial self-insurance group, signed by an officer of each member, providing for joint and several liability for all claims and expenses of all of the members of the commercial self-insurance group arising in any fund year in which the member was a participant on a form approved by the commissioner. The indemnity agreement shall provide for assessments according to the group's bylaws on an individual and proportionate basis. (e) A copy of the commercial self-insurance group bylaws. (f) Evidence of the security deposit required under section 79A.24, accompanied by the actuarial certification study for the minimum security deposit as required under section 79A.24. (g) Each initial member of the commercial self-insurance group shall submit to the commercial self-insurance group accountant its most recent annual financial statement. Financial statements for a period ending more than six months prior to the date of the application must be accompanied by an affidavit, signed by a company officer under oath, stating that there has been no material lessening of the net worth nor other adverse changes in its financial condition since the end of the period. Individual group members constituting at least 50 percent of the group's annual premium shall submit reviewed or audited financial statements. The remaining members must submit compilation level statements. Statements for a period ending more than 12 months prior to the date of application cannot be accepted. (h) A compiled combined financial statement of all group members prepared by the commercial self-insurance group's accountant and a list of members included in such statements. An "Agreed-Upon Procedures" report, as determined by the commissioner, indicating combined net worth, total assets, cash flow, and net income of the group members may be filed in lieu of the compiled combined financial statement. (i) A copy of each member's accountant's report letter from the reports used in compiling the combined financial statements. (j) A list of all members and the percentage of premium each represents to the total group's annual premium for the policy year. Subd. 3. Approval. The commissioner shall approve an application for self-insurance upon a determination that all of the following conditions are met: (1) a completed application and all required documents have been submitted to the commissioner; (2) the financial ability of the commercial self-insurance group is sufficient to fulfill all obligations that may arise under this chapter or chapter 176; (3) the annual premium of the commercial self-insurance group to be charged to initial members is at least 150 percent of the WCRA minimum retention in effect at the time of the application; (4) the commercial self-insurance group has contracted with a service company to administer its program; and (5) the required securities or surety bond shall be on deposit prior to the effective date of coverage for the commercial self-insurance group. History:  1995 c 231 art 2 s 30; 1999 c 168 s 1,2; 1999 c 177 s 84; 2010 c 384 s 43
79A.22 COMMERCIAL SELF-INSURANCE GROUP OPERATING REQUIREMENTS. Subdivision 1. Board of directors. (a) A commercial self-insurance group shall elect a board of directors who shall have complete authority over and control of the assets of the commercial self-insurance group. The board of directors will also be responsible for all of the operations of the commercial self-insurance group. (b) The majority of the board of directors shall be owners, officers, directors, partners, or employees of members of the commercial self-insurance group. No third-party administrator or vendor of risk management services shall serve as a director of the commercial self-insurance group. (c) The directors shall approve applications for membership in the commercial self-insurance group. Subd. 2. Financial standards. Commercial self-insurance groups shall have and maintain: (1) combined net worth of all of the members in an amount at least equal to ten times the group's selected retention level of the Workers' Compensation Reinsurance Association. For purposes of this clause, the amount of any retained surplus by the group is considered part of the combined net worth of all the members; (2) sufficient assets and liquidity in the group's common claims fund to promptly and completely meet all obligations of its members under this chapter and chapter 176. Subd. 3. New membership. The commercial self-insurance group shall file with the commissioner the name of any new employer that has been accepted in the group within five business days of the initiation date of membership along with the member's signed indemnity agreement and evidence the member has deposited sufficient premiums with the group as required by the commercial self-insurance group's bylaws or plan of operation. The security deposit of the group shall be increased quarterly to an amount equal to 50 percent of the new members' premiums for that quarter. If the total increase of new members' premiums for the first quarter is less than five percent of the total annual premium of the group, no quarterly increase is necessary until the cumulative quarterly increases for that calendar year exceed five percent of the total premium of the group. The commissioner may, at the commissioner's option, review the financial statement of any applicant whose premium equals 25 percent or more of the group's total premium. Subd. 4. Commercial self-insurance group common claims fund. (a) Each commercial self-insurance group shall establish a common claims fund. (b) Each commercial self-insurance group shall, not less than ten days prior to the proposed effective date of the group, collect cash premiums from each member equal to not less than 20 percent of the member's annual workers' compensation premium to be paid into a common claims fund, maintained by the group in a designated depository. The remaining balance of the member's premium shall be paid to the group in a reasonable manner over the remainder of the year. Payments in subsequent years shall be made according to the business plan. (c) Each commercial self-insurance group shall initiate proceedings against a member when that member becomes more than 30 days delinquent in any payment of premium to the fund. (d) There shall be no commingling of any assets of the common claims fund with the assets of any individual member or with any other account of the service company or fiscal agent unrelated to the payment of workers' compensation liabilities incurred by the group. Subd. 5. Joint and several liability. Each member of a commercial self-insurance group shall be jointly and severally liable for the obligations incurred by any member of the same group under chapter 176 for any fund year in which the member was a participant of the commercial self-insurance group. Subd. 6. Annual audit. The accounts and records of the common claims fund shall be audited in the manner required under section 79A.03, subdivision 10. Subd. 7. Investments. (a) Any securities purchased by the common claims fund shall be in such denominations and with dates of maturity to ensure securities may be redeemable at sufficient time and in sufficient amounts to meet the fund's current and long-term liabilities. (b) Cash assets of the self-insurers' fund may be invested as provided in section 60A.11 for a casualty insurance company, provided that investment in real estate of or indebtedness from a member company or affiliates is prohibited. In addition, investment in the following is allowed: (1) savings accounts or certificates of deposit in a duly chartered commercial bank located within the state of Minnesota and insured through the Federal Deposit Insurance Corporation; (2) share accounts or savings certificates in a duly chartered savings association or savings bank located within the state of Minnesota and insured through the Federal Deposit Insurance Corporation; (3) direct obligations of the United States Treasury, such as notes, bonds, or bills; (4) a bond or security issued by the state of Minnesota and backed by the full faith and credit of the state; (5) a credit union where the employees of the self-insurer are members if the credit union is located in Minnesota and insured through the National Credit Union Administration; or (6) real estate, common stock, preferred stock, or corporate bonds listed on the New York, American Stock Exchange or NASDAQ Stock Market, so long as these investments are not issued by any member company or affiliate and the total in all other allowable categories make up at least 75 percent of the total required in the common claims fund. Subd. 8. Administration. (a) The commercial self-insurance group shall be required to secure administrative services through a service company which maintains an office in the state of Minnesota. Services provided by the service company or its subcontractor should at a minimum include claim handling, safety and loss control, and submission of all required regulatory reports. (b) The service company must demonstrate it has the capability to provide, through its employees or by contract, services which are necessary to administer the self-insurance group and it must employ or have under contract a claims adjuster with at least three years of Minnesota specific workers' compensation claim handling experience. (c) The service company retained by a commercial self-insurance group to administer workers' compensation claims shall estimate the total accrued liability of the group for the payment of compensation for the commercial self-insurance group's annual report to the commissioner and shall make the estimate both in good faith and with the exercise of a reasonable degree of care. Subd. 9. Marketing and communications. A commercial self-insurance group's applications, coverage documents, quotations, and all marketing materials must prominently display information indicating that the commercial self-insurance group is a self-insured program, that members are jointly and severally liable for the obligations of the commercial self-insurance group, and that members will be assessed on an individual and proportionate basis for any deficits created by the commercial self-insurance group. Subd. 10. Reinsurance. (a) A commercial self-insurance group shall be required to purchase specific excess coverage with the Workers' Compensation Reinsurance Association at the lower retention level for its first three years of operation. After that time it may select the higher or super retention level with prior notice given to and approval of the commissioner. (b) The commissioner may require a commercial self-insurance group to purchase aggregate excess coverage. Any reinsurance or excess coverage purchased other than that of the Workers' Compensation Reinsurance Association must be secured with an insurance company or reinsurer licensed to underwrite such coverage in Minnesota and maintains at least an "A" rating with the A.M. Best rating organization. Subd. 11. Disbursement of fund surplus. (a) Except as otherwise provided in paragraphs (b) and (c), 100 percent of any surplus money for a fund year in excess of 125 percent of the amount necessary to fulfill all obligations under the Workers' Compensation Act, chapter 176, for that fund year may be declared refundable to eligible members at any time. (b) Except as otherwise provided in paragraph (c), for groups that have been in existence for five years or more, 100 percent of any surplus money for a fund year in excess of 110 percent of the amount necessary to fulfill all obligations under the Workers' Compensation Act, chapter 176, for that fund year may be declared refundable to eligible members at any time. (c) Excess surplus distributions under paragraphs (a) and (b) may not be greater than the combined surplus of the group at the time of the distribution. (d) When all the claims of any one fund year have been fully paid, as certified by an actuary, all surplus money from that fund year may be declared refundable. (e) The commercial self-insurance group shall give ten days' prior notice to the commissioner of any refund. The notice must be accompanied by a statement from the commercial self-insurer group's certified public accountant certifying that the proposed refund is in compliance with this subdivision. Subd. 12. Satisfaction of fund deficit. In the event of a deficit in any fund year, such deficit shall be paid up immediately, either from surplus from a fund year other than the current fund year, or by assessment of the membership. The commissioner shall be notified within ten days of any transfer of surplus funds. The commissioner, upon finding that a deficit in a fund year has not been satisfied by a transfer of surplus from another fund year, shall order an assessment to be levied on a proportionate basis against the members of the commercial self-insurance group during that fund year sufficient to make up any deficit. Subd. 13. Common claims fund; five-year exception. For commercial group self-insurers who have been in existence for five years or more, a level of funding in the common claims fund must be maintained at not less than the greater of either: (1) one year's claim losses paid in the most recent year; or (2) one-third of the security deposit posted with the Department of Commerce according to section 79A.24, subdivision 2. Subd. 14. All states coverage. Policies issued by commercial self-insurance groups pursuant to this chapter may also provide workers' compensation coverage required under the laws of states other than Minnesota, commonly known as "all states coverage." The coverage must be provided to members of the group which are temporarily performing work in another state. History:  1995 c 231 art 2 s 31; 1998 c 339 s 3,4; 1999 c 168 s 3; 2000 c 483 s 30-32; 2005 c 132 s 34,35; 2008 c 344 s 50,51; 7Sp2020 c 1 art 2 s 4
79A.23 COMMERCIAL SELF-INSURANCE GROUP REPORTING REQUIREMENTS. Subdivision 1. Required reports to commissioner. Each commercial self-insurance group shall submit the following documents to the commissioner. (a) An annual report shall be submitted by April 1 showing the incurred losses, paid and unpaid, specifying indemnity and medical losses by classification, payroll by classification, and current estimated outstanding liability for workers' compensation on a calendar year basis, in a manner and on forms available from the commissioner. In addition each group will submit a quarterly interim loss report showing incurred losses for all its membership. (b) Each commercial self-insurance group shall submit within 45 days of the end of each quarter: (1) a schedule showing all the members who participate in the group, their date of inception, and date of withdrawal, if applicable; (2) a separate section identifying which members were added or withdrawn during that quarter; and (3) an internal financial statement and copies of the fiscal agent's statements supporting the balances in the common claims fund. (c) The commercial self-insurance group shall submit an annual certified financial audit report of the commercial self-insurance group fund by April 1 of the following year. The report must be accompanied by an expense schedule showing the commercial self-insurance group's operational costs for the same year including service company charges, accounting and actuarial fees, fund administration charges, reinsurance premiums, commissions, and any other costs associated with the administration of the group program. (d) An officer of the commercial self-insurance group shall, under oath, attest to the accuracy of each report submitted under paragraphs (a), (b), and (c). Upon sufficient cause, the commissioner shall require the commercial self-insurance group to submit a certified audit of payroll and claim records conducted by an independent auditor approved by the commissioner, based on generally accepted accounting principles and generally accepted auditing standards, and supported by an actuarial review and opinion of the future contingent liabilities. The basis for sufficient cause shall include the following factors: (1) where the losses reported appear significantly different from similar types of groups; (2) where major changes in the reports exist from year to year, which are not solely attributable to economic factors; or (3) where the commissioner has reason to believe that the losses and payroll in the report do not accurately reflect the losses and payroll of the commercial self-insurance group. If any discrepancy is found, the commissioner shall require changes in the commercial self-insurance group's business plan or service company record-keeping practices. (e) Each commercial self-insurance group shall submit by September 15 a copy of the group's annual federal and state income tax returns or provide proof that it has received an exemption from these filings. (f) With the annual loss report each commercial self-insurance group shall report to the commissioner any worker's compensation claim where the full, undiscounted value is estimated to exceed $50,000, in a manner and on forms prescribed by the commissioner. (g) Each commercial self-insurance group shall submit by May 1 a list of all members and the percentage of premium each represents to the total group's premium for the previous calendar year. (h) Each commercial self-insurance group shall submit by October 15 the following documents prepared by the group's certified public accountant: (1) a compiled combined financial statement of group members and a list of members included in this statement. An "Agreed-Upon Procedures" report, as determined by the commissioner, indicating combined net worth, total assets, and net income of the group members may be filed in lieu of the compiled combined financial statement; and (2) a report that the statements which were combined have met the requirements of subdivision 2. (i) If any group member comprises over 25 percent of total group premium, that member's financial statement must be reviewed or audited, and, at the commissioner's option, must be filed with the commissioner by October 15 of the following year. (j) Each commercial self-insurance group shall submit a copy of each member's accountant's report letter from the reports used in compiling the combined financial statements. This requirement does not apply to any group that has been in existence for at least three years. Subd. 2. Required reports from members to group. (a) Each member of the commercial self-insurance group shall, by September 15, submit to the group its most recent annual financial statement, together with other financial information the group may require. These financial statements submitted must not have a fiscal year end date older than January 15 of the group's calendar year end. Individual group members constituting at least 25 percent of the group's annual premium shall submit to the group reviewed or audited financial statements. The remaining members must submit compilation level statements. (b) For groups that have been in existence for at least three years, individual group members may satisfy the requirements of paragraph (a) by submitting compiled, reviewed, or audited statements or the most recent federal income tax return filed by the member. (c) Groups that have been in existence for at least five years may satisfy the requirement of paragraph (a) through submissions from members representing at least 50 percent of the group's total earned premium. Of those submissions, those from members representing at least 25 percent of the entire group's total earned premium must be audited or reviewed financial statements. The remainder of the submissions may be compiled, reviewed, or audited financial statements or the most recent tax return filed by the members. Subd. 3. Operational audit. (a) The commissioner may conduct an operational audit of the commercial self-insurance group's claim handling and reserve practices as well as its underwriting procedures to determine if they adhere to the group's business plan and sound business practices. The commissioner may select outside consultants to assist in conducting the audit. After completion of the audit, the commissioner shall either renew or revoke the commercial self-insurance group's authority to self-insure. The commissioner may also order any changes deemed necessary in the claims handling, reserving practices, or underwriting procedures of the group. (b) The cost of the operational audit shall be borne by the commercial self-insurance group. Subd. 4. Unit statistical report. Each commercial self-insurance group will annually file a unit statistical report to the Minnesota Workers' Compensation Insurers Association. History:  1995 c 231 art 2 s 32; 1998 c 339 s 5,6; 1999 c 168 s 4; 1999 c 177 s 85,86; 2000 c 483 s 33-35; 2006 c 255 s 70; 2008 c 344 s 52
79A.24 COMMERCIAL SELF-INSURANCE GROUP SECURITY DEPOSIT. Subdivision 1. Annual securing of liability. Each year every commercial self-insurance group shall secure its estimated future liability for the payment of compensation and the performance of the obligations of its membership imposed under chapter 176. A new deposit must be posted in the following manner: within 30 days of the filing of the annual report, the security posting for all prior years plus one-third of the posting for the current year; by July 31, one-third of the posting for the current year; by October 31, the final one-third of the posting for the current year. Subd. 2. Minimum deposit. The minimum deposit is 125 percent of the commercial self-insurance group's estimated future liability for the payment of compensation as determined by an actuary. If the group has been in existence for three years, this minimum deposit shall be 110 percent of the commercial self-insurance group's estimated future liability for the payment of workers' compensation as determined by an actuary. Each actuarial study shall include a projection of future losses during a one-year period until the next scheduled actuarial study, less payments anticipated to be made during that time. The opinion may discount liabilities to present value at a rate up to the lesser of four percent per annum, or the average of the applicable federal midterm rates, based on annual compounding, as published by the United States Secretary of the Treasury under United States Code, title 26, section 1274(d), for the 12 months preceding the valuation date of the report. Deduction should be made for the total amount which is estimated to be returned to the commercial self-insurance group from any specific excess insurance coverage, aggregate excess insurance coverage, and any supplementary benefits which are estimated to be reimbursed by the special compensation fund. Supplementary benefits will not be reimbursed by the special compensation fund unless the special compensation fund assessment pursuant to section 176.129 is paid and the required reports are filed with the special compensation fund. In the case of surety bonds, bonds shall secure administrative and legal costs in addition to the liability for payment of compensation reflected on the face of the bond. In no event shall the security be less than the group's selected retention limit of the Workers' Compensation Reinsurance Association. The posting or depositing of security under this section shall release all previously posted or deposited security from any obligations under the posting or depositing and any surety bond so released shall be returned to the surety. Any other security shall be returned to the depositor or the person posting the bond. Subd. 2a. Exceptions. Notwithstanding the requirements of subdivisions 1 and 2, the commissioner may, until the next annual securing of liability, adjust this required security deposit for the portion attributable to the current year only, if, in the commissioner's judgment, the self-insurer will be able to meet its obligations under this chapter until the next annual securing of liability. Subd. 3. Type of acceptable security. The commissioner may only accept as security, and the commercial self-insurance group shall deposit as security, cash, approved government securities as set forth in section 79A.04, subdivision 3a, surety bonds or irrevocable letters of credit in any combination in accordance with the requirements under section 79A.04, subdivision 3. Subd. 4. Custodial accounts. (a) All surety bonds, irrevocable letters of credit, and documents showing issuance of any irrevocable letter of credit shall be deposited in accordance with the provisions of section 79A.071. (b) Upon the commissioner sending a request to renew, request to post, or request to increase a security deposit, a perfected security interest is created in the commercial self-insurance group's and member's assets in favor of the commissioner to the extent of any then unsecured portion of the commercial self-insurance group's incurred liabilities. The perfected security interest is transferred to any cash or securities thereafter posted by the commercial self-insurance group with the commissioner of management and budget and is released only upon either of the following: (1) the acceptance by the commissioner of a surety bond or irrevocable letter of credit for the full amount of the incurred liabilities for the payment of compensation; or (2) the return of cash or securities by the commissioner. The commercial self-insurance group loses all right, title, and interest in and any right to control all assets or obligations posted or left on deposit as security. In the event of a declaration of bankruptcy or insolvency by a court of competent jurisdiction, or in the event of the issuance of a certificate of default by the commissioner, the commissioner shall liquidate the deposit as provided in this chapter, and transfer it to the commercial self-insurance group security fund for application to the commercial self-insurance group's incurred liability. (c) No securities in physical form on deposit with the commissioner of management and budget or the commissioner or custodial accounts assigned to the state shall be released or exchanged without an order from the commissioner. No security can be exchanged more than once every 90 days. (d) Any securities deposited with the commissioner of management and budget or with a custodial account assigned to the commissioner of management and budget or letters of credit or surety bonds held by the commissioner may be exchanged or replaced by the depositor with any other acceptable securities or letters of credit or surety bond of like amount so long as the market value of the securities or amount of the surety bonds or letter of credit equals or exceeds the amount of the deposit required. If securities are replaced by surety bond, the commercial self-insurance group must maintain securities on deposit in an amount sufficient to meet all outstanding workers' compensation liability arising during the period covered by the deposit of the replaced securities. Subd. 5. Purchase of insurance policy from an authorized insurer. A commercial self-insurance group may purchase an insurance policy from an insurer authorized to transact workers' compensation insurance in this state which provides coverage of all claims for compensation arising out of injuries occurring during the entire period or during a portion of the period of time in which the commercial self-insurance group has been in existence. While the insurance policy remains in effect, it discharges the obligation of the commercial self-insurance group to maintain a security deposit for the claims covered under the policy. A policy described in this subdivision may not be issued by an insurer unless it has previously been approved as to the insurer, form, and substance by the commissioner. Subd. 6. Insolvency of a commercial self-insurance group insurer. In the event of the insolvency of the insurer that issued a policy under subdivision 5 to a commercial self-insurance group, eligibility for chapter 60C coverage under the policy is determined by applying the requirements of section 60C.09, subdivision 2, clause (3), to each commercial self-insurance group member separately, rather than to the net worth of the commercial self-insurance group entity or aggregate net worth of all members of the commercial self-insurance group. History:  1995 c 231 art 2 s 33; 1998 c 339 s 7-9; 1999 c 168 s 5; 2000 c 483 s 36; 2003 c 112 art 2 s 50; 2008 c 250 s 17; 2009 c 101 art 2 s 109; 2009 c 178 art 1 s 47,48; 2011 c 108 s 42,43; 7Sp2020 c 1 art 2 s 5
79A.25 DEFAULT OF A COMMERCIAL SELF-INSURANCE GROUP. Subdivision 1. Notice of insolvency, bankruptcy, or default. The commissioner of labor and industry shall notify the commissioner and the commercial self-insurance group security fund if the commissioner of labor and industry has knowledge that any commercial self-insurance group has failed to pay workers' compensation benefits as required by chapter 176. If the commissioner determines that a court of competent jurisdiction has declared the commercial self-insurance group to be bankrupt or insolvent and the commercial self-insurance group has failed to pay workers' compensation as required by chapter 176 or if the commissioner issues a certificate of default against a commercial self-insurance group for failure to pay workers' compensation as required by chapter 176, then the security deposit posted by the commercial self-insurance group shall be utilized to administer and pay the commercial self-insurance group's workers' compensation obligation. Subd. 2. Revocation of certificate to self-insure. (a) The commissioner shall revoke the commercial self-insurance group's certificate to self-insure once notified of the commercial self-insurance group's bankruptcy, insolvency, or upon issuance of a certificate of default. The revocation shall be completed as soon as practicable, but no later than 30 days after the commercial self-insurance group's security has been called. (b) The commissioner shall also revoke a commercial self-insurance group's authority to self-insure on the following grounds: (1) failure to comply with any lawful order of the commissioner; (2) failure to comply with any provision of chapter 176; (3) a deterioration of the commercial self-insurance group's financial condition affecting its ability to pay obligations in chapter 176; (4) committing an unfair or deceptive act or practice as defined in section 72A.20; or (5) failure to abide by the plan of operation of the Workers' Compensation Reinsurance Association. Subd. 3. Notice by commissioner. In the event of bankruptcy, insolvency, or certificate of default, the commissioner shall immediately notify by certified mail the commissioner of management and budget, the surety, the issuer of an irrevocable letter of credit, and any custodian of the security. At the time of notification, the commissioner shall also call the security and transfer and assign it to the commercial self-insurance group security fund. The commissioner shall also notify by certified mail the commercial self-insurance group's security fund and order the commercial security fund to assume the insolvent commercial self-insurance group's obligations for which it is liable under chapter 176. History:  1995 c 231 art 2 s 34; 2003 c 112 art 2 s 50; 2009 c 101 art 2 s 109
79A.26 COMMERCIAL SELF-INSURANCE GROUP SECURITY FUND. Subdivision 1. Creation. The commercial self-insurance group security fund is established as a nonprofit corporation pursuant to the Minnesota Nonprofit Corporation Act, sections 317A.001 to 317A.909. If any provision of the Minnesota Nonprofit Corporation Act conflicts with any provision of this chapter, the provisions of this chapter apply. Each commercial self-insurance group that elects to be subject to the terms of sections 79A.19 to 79A.32 rather than sections 79A.01 to 79A.18 shall participate in the commercial self-insurance group security fund. This participation shall be a condition of maintaining its certificate to self-insure. Subd. 2. Board of trustees. The commercial security fund shall be governed by a board consisting of a minimum of three and maximum of five trustees. The trustees shall be representatives of commercial self-insurance groups who shall be elected by the participants of the commercial security fund, each group having one vote. The trustees initially elected by the participants shall serve staggered terms of either two or three years. Thereafter, trustees shall be elected to three-year terms and shall serve until their successors are elected and assume office pursuant to the bylaws of the commercial security fund. Two additional trustees shall be appointed by the commissioner. Initially, one of these trustees shall serve a two-year term. Thereafter, the trustees shall be appointed to four-year terms, and shall serve until their successors are appointed and assume office according to the bylaws of the commercial security fund. In addition to the trustees elected by the participants or appointed by the commissioner, the commissioner of labor and industry or the commissioner's designee shall be an ex officio, nonvoting member of the board of trustees. A member of the board of trustees may designate another person to act in the member's place as though the member were acting and the designee's actions shall be deemed those of the member. Subd. 3. Bylaws. The commercial security fund shall establish bylaws and a plan of operation, subject to the prior approval of the commissioner, necessary to the purposes of this chapter and to carry out the responsibilities of the commercial security fund. The commercial security fund may carry out its responsibilities directly or by contract, and may purchase services and insurance and borrow funds it deems necessary for the protection of the commercial self-insurance group participants and their employees. Subd. 4. Confidential information. The commercial security fund may receive private data concerning the financial condition of commercial self-insurance groups whose liabilities to pay compensation have become its responsibility and shall adopt bylaws to prevent dissemination of that information. Subd. 5. Employees. Commercial security fund employees are not state employees and are not subject to any state civil service regulations. Subd. 6. Assumption of obligations. Upon order of the commissioner under section 79A.25, subdivision 3, the commercial security fund shall assume the workers' compensation obligations of an insolvent commercial self-insurance group. The commissioner shall further order the commercial self-insurance group security fund to commence payment of these obligations within 14 days of the receipt of this notification and order. Subd. 7. Act or omissions; penalties. Notwithstanding subdivision 6, the commercial security fund shall not be liable for the payment of any penalties assessed for any act or omission on the part of any person other than the commercial security fund or its appointed administrator, including, but not limited to, the penalties provided in chapter 176 unless the commercial security fund or its appointed administrator would be subject to penalties under chapter 176 as the result of the actions of the commercial security fund or its administrator. Subd. 8. Party in interest. The commercial security fund shall be a party in interest in all proceedings involving compensation claims against an insolvent commercial self-insurance group whose compensation obligations have been paid or assumed by the commercial security fund. The commercial security fund shall have the same rights and defenses as the insolvent commercial self-insurance group, including, but not limited to, all of the following: (1) to appear, defend, and appeal claims; (2) to receive notice of, investigate, adjust, compromise, settle, and pay claims; and (3) to investigate, handle, and deny claims. Subd. 9. Payments to commercial security fund. Notwithstanding sections 79A.19 to 79A.32 or chapter 176 to the contrary, in the event that the commercial self-insurance group security fund assumes the obligations of any bankrupt or insolvent commercial self-insurance group pursuant to this section, then the proceeds of any surety bond, Workers' Compensation Reinsurance Association, specific excess insurance or aggregate excess insurance policy, and any special compensation fund payment or supplementary benefit reimbursements shall be paid to the commercial self-insurance group security fund instead of the bankrupt or insolvent commercial self-insurance group or its successor in interest. No special compensation fund reimbursements shall be made to the commercial security fund unless the special compensation fund assessments under section 176.129 are paid and the required reports are made to the special compensation fund. Subd. 10. Insolvent commercial self-insurance group. The commercial security fund shall have the right and obligation to obtain reimbursement from an insolvent commercial self-insurance group up to the amount of the commercial self-insurance group's workers' compensation obligations paid and assumed by the commercial security fund, including reasonable administrative and legal costs. This right includes, but is not limited to, a right to claim for wages and other necessities of life advanced to claimants as subrogee of the claimants in any action to collect against the commercial self-insurance group as debtor. Subd. 11. Security deposits. The commercial security fund shall have the right and obligation to obtain from the security deposit of an insolvent commercial self-insurance group the amount of the commercial self-insurance group's compensation obligations, including reasonable administrative and legal costs, paid or assumed by the commercial security fund. Reimbursement of administrative costs, including legal costs, shall be subject to approval by a majority of the commercial security fund's voting trustees. The commercial security fund shall be a party in interest in any action to obtain the security deposit for the payment of compensation obligations of an insolvent commercial self-insurance group. Subd. 12. Legal actions. The commercial security fund shall have the right to bring an action against any person or entity to recover compensation paid and liability assumed by the commercial security fund, including, but not limited to, any excess insurance carrier of the insolvent commercial self-insurance group and any person or entity whose negligence or breach of an obligation contributed to any underestimation of the commercial self-insurance group's accrued liability as reported to the commissioner. Subd. 13. Party in interest. The commercial security fund may be a party in interest in any action brought by any other person seeking damages resulting from the failure of an insolvent commercial self-insurance group to pay workers' compensation required under this subdivision. Subd. 14. Assets maintained. The commercial security fund shall maintain cash, readily marketable securities, or other assets, or a line of credit, approved by the commissioner, sufficient to immediately continue the payment of the compensation obligations of an insolvent commercial self-insurance group pending receipt of the security deposit, surety bond proceeds, irrevocable letter of credit, or, if necessary, assessment of the participants. The commissioner may establish the minimum amount to be maintained by, or immediately available to, the commercial security fund for this purpose. Subd. 15. Assessment. The commercial security fund may assess each of its participants a pro rata share of the funding necessary to carry out its obligation and the purposes of sections 79A.19 to 79A.32. Total annual assessments in any calendar year shall be a percentage of the workers' compensation benefits paid under sections 176.101 and 176.111 during the previous calendar year. The annual assessment calculation shall not include supplementary benefits paid which will be reimbursed by the special compensation fund. Funds obtained by assessments under this subdivision may only be used for the purposes of sections 79A.19 to 79A.32. The trustees shall certify to the commissioner the collection and receipt of all money from assessments, noting any delinquencies. The trustees shall take any action deemed appropriate to collect any delinquent assessments. Subd. 16. Audit of fund. The trustees shall annually contract for an independent certified audit of the financial activities of the fund. An annual report on the financial status of the commercial self-insurance group security fund shall be submitted to the commissioner and to each commercial group participant. History:  1995 c 231 art 2 s 35; 1998 c 339 s 10
79A.27 INDEMNITY AGREEMENT FORM. INDIVIDUAL AND PROPORTIONATE INDEMNITY AGREEMENT WHEREAS, (name of company) has agreed to be and has been accepted as a member of (name of commercial self-insurance group). WHEREAS, (name of company) has agreed to be bound by all of the provisions of the Minnesota Workers' Compensation Act and all rules promulgated thereunder. WHEREAS, that (name of company) has agreed to be bound by bylaws or plan of operation and all amendments thereto of (name of commercial self-insurance group); NOW THEREFORE, IT IS AGREED that: 1. (Name of company) shall be jointly and severally liable for all claims and expenses of all the members of (name of commercial self-insurance group) arising in any fund year in which (name of company) is a member of the commercial self-insurance group. 2. (Name of commercial self-insurance group) shall assess (name of company) on an individual and proportionate basis for its share of the total liability of the commercial self-insurance group. 3. In the event that (name of company) is not a member for the full year, it shall be only liable for a pro rata share of that liability. IN WITNESS WHEREOF, the (name of company) and (name of commercial self-insurance group) have caused this indemnity agreement to be executed by its authorized officers:      Commercial Self-Insurance Group Name  Company Name    By: .    By: .     date: .    date: .    History:   1995 c 231 art 2 s 36 
79A.28 OPEN MEETING; ADMINISTRATIVE PROCEDURE ACT. The commercial self-insurance group security fund and its board of trustees shall not be subject to: (1) the Open Meeting Law, chapter 13D; (2) the Open Appointments Law; (3) the Minnesota Government Data Practices Act, chapter 13; and (4) except where specifically set forth, the Administrative Procedure Act. History:  1995 c 231 art 2 s 37; 2012 c 290 s 68
79A.29 RULES. The commissioner may adopt, amend, and repeal rules reasonably necessary to carry out the purposes of this chapter. Minnesota Rules, chapter 2780, shall apply to commercial self-insurance groups unless otherwise specified by rule. History:   1995 c 231 art 2 s 38 
79A.30 GOVERNING LAW. If there is any inconsistency between sections 79A.19 to 79A.32 and any other statute or rule, the provisions of sections 79A.19 to 79A.32 shall govern with respect to commercial self-insurance groups. History:   1995 c 231 art 2 s 39 
79A.31 COMMERCIAL SELF-INSURANCE GROUP SECURITY FUND MEMBERSHIP; WITHDRAWAL FROM SELF-INSURERS' SECURITY FUND. Subdivision 1. Withdrawal. Any group self-insurer that is a member of the self-insurers' security fund established under section 79A.09, may elect to withdraw from that fund and become a member of the commercial self-insurance group security fund established under section 79A.26. The transferring group shall be subject to the provisions and requirements of sections 79A.19 to 79A.32 as of the date of transfer. Additional security may be required pursuant to section 79A.24. Group self-insurers electing to transfer to the commercial self-insurance group fund shall not be subject to the provisions of section 79A.06, subdivision 5, including, but not limited to, assessments by the self-insurers' security fund. Notice of transfer must be filed by November 1 for all transfers that must be effective at midnight on December 31. Subd. 2. Transfer; notice to commissioner. A group self-insurer shall provide to the commissioner written notice of its intent to transfer membership to the commercial self-insurance group security fund. The notice shall be sent at least 30 days prior to the date the group self-insurer requests membership in the commercial self-insurance group security fund. Subd. 3. Transfer of potential and contingent liabilities. Upon transfer pursuant to subdivision 1, the commercial self-insurance group security fund shall assume all of the past, present, and future potential and contingent workers' compensation liabilities of the transferring group in the event of any bankruptcy or insolvency of that group or its failure to meet its obligations under this chapter and chapter 176. Subd. 4. Election. A group self-insurer established after August 1, 1995, may elect to become a member of either the self-insurers' security fund or the commercial self-insurance group security fund. However, once the election is made, a group may not transfer to the other security fund. History:  1995 c 231 art 2 s 40; 1996 c 305 art 1 s 26; 1998 c 339 s 11
79A.32 REPORTING TO LICENSED DATA SERVICE ORGANIZATIONS. Subdivision 1.  [Repealed by amendment, 2006 c 255 s 71] Subd. 2. Permitted activity. Through data service organizations licensed under chapter 79, self insurers may: (1) individually, or with self-insurers commonly owned, managed, or controlled, conduct research and collect statistics to investigate, identify, and classify information relating to causes or prevention of losses; and (2) at the request of a private self-insurer or self-insurer group, submit and collect data, including payroll and loss data; and perform calculations, including calculations of experience modifications of individual self-insured employers. Subd. 3.  [Repealed by amendment, 2006 c 255 s 71] History:  1995 c 231 art 2 s 41; 2006 c 255 s 71