Commerce finance and policy law funds department, expands consumer protections

The Department of Commerce oversees more than 40 industry areas in Minnesota and licenses more than 250,000 professionals and businesses to ensure their services and products are fair, accessible, and comply with state laws.

To operate those programs in the 2024-25 biennium, the commerce finance and policy law has $68.4 million in new spending, including $62.6 million from the General Fund, a $10 million increase.

Much of the funding will support expanded consumer protections, including requiring health plans to limit patient co-pays to no more than $25 per one-month supply of prescription drugs used to treat chronic diseases, enacting the “Digital Fair Repair Act” to prohibit manufacturers from having exclusive rights to repair their products, and prohibiting lenders from collecting on loans made under coercion by a third party, such as a domestic abuser.

Some 2024-25 biennium appropriations of the law include: $1.8 million for the unclaimed property program; $1.6 million for five additional peace officers in the Commerce Department’s Fraud Bureau; $800,000 for Prepare and Prosper, a financial services program assisting low-income and financially underserved populations to build savings and strengthen credit; and $498,000 for the senior safe fraud prevention program.

Sponsored by Rep. Zack Stephenson (DFL-Coon Rapids) and Sen. Matt Klein (DFL-Mendota Heights), the financial provisions take effect July 1, 2023, and the policy provisions Aug. 1, 2023, unless otherwise noted.

HF2680/SF2744*/CH57

Insurance

The “Family Protection Act” will, for plans of reparation security, a personal excess liability policy, or a personal umbrella policy offered, issued, or renewed effective Jan. 1, 2024, require boat insurance policies sold in the state to offer bodily injury liability coverage for family members of the person buying the insurance. A prospective buyer may decline such coverage, but it must be offered, and the buyer who doesn’t want the family coverage must sign a statement specifically declining it. A boat insurance policy covering a personal injury sustained while using a boat takes effect May 1, 2024.

A provision allowing a life insurance company to deny a death benefit only if the insured dies as result of suicide within one year from the date of the issue of the policy takes effect with policies issued on or after Jan. 1, 2024. This modifies current law that permits a two-year exclusion.

To protect consumers and others from unaffordable costs of prescription drugs, the law appropriates $1.1 million in the 2024-25 biennium to establish a nine-member Prescription Drug Affordability Board and an 18-member Prescription Drug Affordability Advisory Council.

The law prohibits excessive price increases of generic or off-patent drugs sold, dispensed, or delivered to any consumer in the state. Such an increase is 15% or more of the wholesale cost over the immediately preceding calendar year, or 40% or more of the wholesale cost over the immediately preceding three calendar years. The Prescription Drug Affordability Board can report excessive price increases to the attorney general who could bring a court action against the drug maker. A $1.1 million appropriation goes to the attorney general’s office to enforce excessive price violations.

Effective Jan. 1, 2025, the law prohibits health plans from setting patient co-pays greater than $25 per one-month supply of prescription drugs used to treat chronic diseases such as diabetes, asthma, and allergies requiring the use of epinephrine auto-injectors. There is also a $50 per month limit in total for all related medical supplies, such as syringes, insulin pens, insulin pumps, test strips, glucometers, continuous glucose monitors, epinephrine auto-injectors, and asthma inhalers.

The law increases the fines for violations of laws regulating licensed pharmacies and clarifies that drug manufacturers can be disciplined for imposing excessive price increases.

When it comes to dental providers, the law requires a dental provider contract must include a method of payment for dental care services in which no fees associated with the method of payment are incurred by the dentist or dental clinic. The law also permits a dental organization to grant a third party access to a dental provider contract or a provider’s dental care services, or contractual discounts provided pursuant to a dental provider contract under certain conditions. A dentist can opt-out from this arrangement provided the dental organization does not exist solely for the purpose of recruiting dentists for dental provider contracts that establish a network to be leased to third parties.

Effective Jan. 1, 2024, a pharmacy benefit manager or health carrier cannot require a clinician-administered drug or its administration be covered as a pharmacy benefit.

As for homeowner’s insurance, property insurers must provide a premium discount or insurance rate reduction to an owner who retrofits an existing property to meet fortified program standards, including a hail supplement, as designated by the Insurance Institute for Business and Home Safety.

The “Strengthen Minnesota Homes Act” is established to provide grants to retrofit insurable property to resist loss due to common perils, including but not limited to tornadoes or other catastrophic windstorm events.

Effective April 1, 2024, an insurer writing homeowner’s liability insurance for property is prohibited from refusing to issue or renew an insurance policy or contract; or canceling a policy or contract based solely because the homeowner harbors or owns one dog of a specific breed or mixture of breeds.

New, updated offices

A Mental Health Parity and Substance Abuse Accountability Office is established within the Department of Commerce to oversee compliance reviews, review consumer and provider complaints, and serve as a resource for ensuring health plan compliance with mental health and substance abuse requirements. It will be funded with $100,000 in Fiscal Year 2025.

Funded with a $394,000 biennial appropriation, a student loan advocate is designated within the Commerce Department to provide timely assistance to borrowers, plus receive, review, and attempt to resolve complaints from borrowers. The advocate must also establish and maintain a borrower education course.

Financial institutions

Consumer small loan lenders – “payday loan” businesses – will be prohibited beginning Jan. 1, 2024, from charging more than 50% annual interest on the loans they make. The law also identifies – and closes – loopholes that payday lenders sometimes use to conceal high interest rates, such as making loans disguised as a personal property sale and leaseback transaction, and other tactics.

For payday loans with annual percentage rates between 36% and 50%, the law prohibits, effective Jan. 1, 2024, payday lenders from making a payday loan or permitting a borrower to obtain a payday advance unless the lender first determines the borrower can make the payday loan payment when it comes due. To assess the borrower’s ability to repay a loan, the payday lender must obtain a borrower’s consumer credit report or other financial documents, and the determination must be based on the calculation of the borrower’s debt-to-income ratio for the loan period.

By July 30 each year, banking institutions and credit unions with more than $1 billion in assets must submit a completed climate risk disclosure survey to the Department of Commerce.

Forty-seven sections incorporate uniform model legislation developed by the Conference of State Bank Supervisors, including the Model Money Transmission Modernization Act that implements a single set of standards for the licensing and regulation of money transmitters, thus eliminating the inefficiencies state agencies and money transmitters face when seeking licensure in multiple states.

A provision in the law, effective Jan. 1, 2024, prohibits “coerced debt” that is defined as debt incurred through the threat of force, intimidation, undue influence, harassment, fraud, deception, coercion, or economic abuse. A legal process will be created so a debtor can have debt designated as coerced, which can then stop any collection action and allow a creditor to assume collection activity against the person who caused the debtor to incur the coerced debt.

A $100,000 appropriation in Fiscal Year 2024 to the Minnesota Council on Economic Education is to be spent “to provide professional development to Minnesota teachers of courses or content related to personal finance or consumer protection for students in grades nine through 12.”

Commercial regulation, consumer protection

A motor vehicle dealer will need to disclose if a vehicle offered for sale has a remote fuel or ignition “kill switch” installed. Additionally, used motor vehicles sold by a licensed vehicle dealer must come with a written warranty lasting the earlier of 500 miles or 15 days if the vehicle has between 75,000 and 200,000 miles.

Effective Oct. 1, 2023, vehicle manufacturers will be required to reimburse vehicle dealers making warranty repairs at the same rate they use for non-warranty, customer-paid service repairs.

Effective May 25, 2023, the law clarifies what constitutes unlawful gasoline sales so “a retailer who offers gasoline for sale at a price below cost through the use of coupons, loyalty programs, membership-based pricing programs, or promotions or programs of similar import is not in violation” of state law.

The attorney general’s office can, effective May 25, 2023, initiate and pursue civil action against a person or legal entity violating state laws prohibiting machine-generated automated “robocalls.

Effective July 1, 2024, original equipment manufacturers must make tools, parts, and documentation to diagnose, maintain, and repair digital electronic equipment available to independent repair providers and owners. The “Digital Fair Repair Act” also requires tools, parts, and documentation to be offered on fair and reasonable terms. The act applies to equipment sold on or after July 1, 2021. Exceptions are made to protect manufacturers from divulging trade secrets and releasing information that would result in a cybersecurity threat.

Effective May 25, 2023, retailers cannot charge “unconscionably excessive prices” when the governor declares an emergency in the aftermath of a disaster. Some of the essential goods or services to be protected include food, water, fuel, shelter, transportation, health care services, and medical supplies. A price more than 25% above a seller’s average price during the 60-day period before an executive order declared emergency would be deemed an “unconscionably excessive price.” Violators could be fined up to $1,000 per sale or transaction, with a maximum penalty of $25,000 per day.

Other provisions include:

• definitions of fraud, unfair or unconscionable practice, false pretense, false promise, misrepresentation, misleading statement, or deceptive practice are expanded in connection with the sale of any merchandise;

• companies offering consumer genetic testing products or services directly to consumers must provide “complete information regarding the company’s policies and procedures governing the collection, use, maintenance, and disclosure of genetic data”;

• clarifying in person or online sellers must disclose to buyers paying with a credit card if there will be a surcharge added to the sale price; and

• owners of manufactured home park lots who redistribute utility services cannot charge residents a commodity rate that exceeds the commodity rate at which the park owner purchases utility service from a utility provider. This takes effect July 1, 2023.

SF2744* / HF2680 / CH57