Anderson, R., and Clark were excused.

The Chief Clerk proceeded to read the Journal of the preceding day. Van Engen moved that further reading of the Journal be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

The following House Files were introduced:

Huntley, Jaros, Munger, Bakk and Murphy introduced:

H. F. No. 1901, A bill for an act relating to capital improvements; authorizing bonds and appropriating money to build an addition to the St. Louis County Heritage and Arts Center.

The bill was read for the first time and referred to the Committee on Economic Development, Infrastructure and Regulation Finance.

Smith introduced:

H. F. No. 1902, A bill for an act proposing an amendment to the Minnesota Constitution by adding a section to article XI; providing a constitutional limit on public employment.

The bill was read for the first time and referred to the Committee on Labor-Management Relations.

Smith introduced:

H. F. No. 1903, A bill for an act proposing an amendment to the Minnesota Constitution, article XI, section 1; providing that state spending may not increase at a greater rate than increases in the consumer price index.

The bill was read for the first time and referred to the Committee on Governmental Operations.

Carlson, Jefferson, Osthoff and Anderson, I., introduced:

H. F. No. 1904, A bill for an act proposing an amendment to the Minnesota Constitution, article IV, section 12; permitting the legislature to call itself into special session.

The bill was read for the first time and referred to the Committee on Governmental Operations.

The following messages were received from the Senate:

Mr. Speaker:

I hereby announce that the Senate accedes to the request of the House for the appointment of a Conference Committee on the amendments adopted by the Senate to the following House File:

H. F. No. 1207, A bill for an act relating to traffic regulations; increasing maximum length of certain combinations of vehicles from 65 to 70 feet; amending Minnesota Statutes 1994, section 169.81, subdivision 3.

The Senate has appointed as such committee:

Messrs. Murphy, Vickerman and Ms. Lesewski.

Said House File is herewith returned to the House.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate accedes to the request of the House for the appointment of a Conference Committee on the amendments adopted by the Senate to the following House File:

H. F. No. 1700, A bill for an act relating to the organization and operation of state government; appropriating money for the judicial branch, public safety, public defense, corrections, and for other criminal justice agencies and purposes; making changes to various criminal laws and penalties; modifying juvenile justice provisions; amending Minnesota Statutes 1994, sections 2.722, subdivision 1; 3.732, subdivision 1; 16A.285; 43A.18, by adding a subdivision; 120.101, subdivision 1; 120.14; 120.17, subdivisions 5a, 6, and 7; 120.181; 120.73, by adding a subdivision; 124.18, by adding a subdivision; 124.32, subdivision 6; 125.05, by adding a subdivision; 125.09, subdivision 1; 127.20; 127.27, subdivision 10; 145A.05, subdivision 7a; 152.18, subdivision 1; 171.04, subdivision 1; 171.29, subdivision 2; 176.192; 179A.03, subdivision 7; 242.31, subdivision 1; 243.166; 243.23, subdivision 3; 243.51, subdivisions 1 and 3; 243.88, by

adding a subdivision; 260.015, subdivision 21; 260.115, subdivision 1; 260.125; 260.126, subdivision 5; 260.131, subdivision 4, and by adding a subdivision; 260.132, subdivisions 1, 4, and by adding a subdivision; 260.155, subdivisions 2 and 4; 260.161, subdivision 3; 260.181, subdivision 4; 260.185, subdivision 6, and by adding subdivisions; 260.191, subdivision 1; 260.193, subdivision 4; 260.195, subdivision 3, and by adding a subdivision; 260.215, subdivision 1; 260.291, subdivision 1; 271.06, subdivision 4; 299A.33, subdivision 3; 299A.35, subdivision 1; 299A.51, subdivision 2; 299C.065, subdivisions 1a, 3, and 3a; 299C.10, subdivision 1, and by adding a subdivision; 299C.62, subdivision 4; 357.021, subdivision 2; 364.09; 388.24, subdivision 4; 401.065, subdivision 3a; 401.10; 466.03, by adding a subdivision; 480.30; 481.01; 494.03; 518.165, by adding subdivisions; 518B.01, subdivisions 2, 4, 8, 14, and by adding a subdivision; 609.055, subdivision 2; 609.101, subdivisions 1, 2, and 3; 609.115, by adding a subdivision; 609.135, by adding a subdivision; 609.1352, subdivisions 1, 3, and 5; 609.152, subdivision 1; 609.19; 609.3451, subdivision 1; 609.485, subdivisions 2 and 4; 609.605, subdivision 4; 609.746, subdivision 1; 609.748, subdivision 3a; 609.749, subdivision 5; 611.27, subdivision 4; 611A.01; 611A.04, subdivision 1; 611A.19, subdivision 1; 611A.31, subdivision 2; 611A.53, subdivision 2; 611A.71, subdivision 7; 611A.73, subdivision 3; 611A.74; 617.23; 624.22; 624.712, subdivision 5; 626.841; 626.843, subdivision 1; 626.861, subdivisions 1 and 4; 628.26; 629.341, subdivision 1; 629.715, subdivision 1; 629.72, subdivisions 1, 2, and 6; 641.14; and 641.15, subdivision 2; Laws 1993, chapter 255, sections 1, subdivisions 1 and 4; and 2; and Laws 1994, chapter 643, section 79, subdivisions 1, 2, and 4; proposing coding for new law in Minnesota Statutes, chapters 8; 16B; 120; 127; 243; 244; 257; 260; 299A; 299C; 299F; 401; 504; 563; 609; 611A; 626; and 629; proposing coding for new law as Minnesota Statutes, chapter 260A; repealing Minnesota Statutes 1994, sections 121.166; 126.25; and 611A.61, subdivision 3; Laws 1994, chapter 576, section 1.

The Senate has appointed as such committee:

Messrs. Beckman, Spear, Kelly, Laidig and Neuville.

Said House File is herewith returned to the House.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce the passage by the Senate of the following House File, herewith returned, as amended by the Senate, in which amendment the concurrence of the House is respectfully requested:

H. F. No. 2, A bill for an act relating to the environment; automobile emissions; providing that a vehicle need not be inspected until the year of its registration is five years more than its model year; changing the inspection fee; providing a contingent expiration date for the inspection program; amending Minnesota Statutes 1994, sections 116.61, subdivision 1, and by adding a subdivision; 116.64, subdivision 1.

Patrick E. Flahaven, Secretary of the Senate

Johnson, A., moved that the House refuse to concur in the Senate amendments to H. F. No. 2, that the Speaker appoint a Conference Committee of 3 members of the House, and that the House requests that a like committee be appointed by the Senate to confer on the disagreeing votes of the two houses. The motion prevailed.

Mr. Speaker:

I hereby announce that the Senate refuses to concur in the House amendments to the following Senate File:

S. F. No. 734, A bill for an act relating to telecommunications; regulating the 911 system; imposing requirements on private switch telephone service; imposing a civil penalty; amending Minnesota Statutes 1994, sections 403.02, by adding subdivisions; and 403.04.

The Senate respectfully requests that a Conference Committee be appointed thereon. The Senate has appointed as such committee:

Messrs. Chandler, Novak and Ms. Anderson.

Said Senate File is herewith transmitted to the House with the request that the House appoint a like committee.

Patrick E. Flahaven, Secretary of the Senate

Delmont moved that the House accede to the request of the Senate and that the Speaker appoint a Conference Committee of 3 members of the House to meet with a like committee appointed by the Senate on the disagreeing votes of the two houses on S. F. No. 734. The motion prevailed.

Mr. Speaker:

I hereby announce that the Senate refuses to concur in the House amendments to the following Senate File:

S. F. No. 255, A bill for an act relating to elevators; regulating persons who may do elevator work; appropriating money; amending Minnesota Statutes 1994, sections 183.355, subdivision 3; 183.357, subdivisions 1, 2, and 4; and 183.358; proposing coding for new law in Minnesota Statutes, chapter 183.

The Senate respectfully requests that a Conference Committee be appointed thereon. The Senate has appointed as such committee:

Ms. Hanson; Messrs. Murphy and Dille.

Said Senate File is herewith transmitted to the House with the request that the House appoint a like committee.

Patrick E. Flahaven, Secretary of the Senate

Carruthers moved that the House accede to the request of the Senate and that the Speaker appoint a Conference Committee of 3 members of the House to meet with a like committee appointed by the Senate on the disagreeing votes of the two houses on S. F. No. 255. The motion prevailed.

Mr. Speaker:

I hereby announce that the Senate refuses to concur in the House amendments to the following Senate File:

S. F. No. 440, A bill for an act relating to insurance; regulating coverages, notice provisions, enforcement provisions, and licensees; the comprehensive health association; increasing the lifetime benefit limit; making technical changes; providing for certain breast cancer coverage; prohibiting certain rate differentials within the same town or city; amending Minnesota Statutes 1994, sections 60A.06, subdivision 3; 60A.085; 60A.111, subdivision 2; 60A.124; 60A.23, subdivision 8; 60A.26; 60A.951, subdivisions 2 and 5; 60A.954, subdivision 1; 60K.03, subdivision 7; 60K.14, subdivision 1; 61A.03, subdivision 1; 61A.071; 61A.092, subdivisions 3 and 6; 61B.28, subdivisions 8 and 9; 62A.042; 62A.135; 62A.136; 62A.14; 62A.141; 62A.31, subdivisions 1h and 1i; 62A.46, subdivision 2, and by adding a subdivision; 62A.48, subdivisions 1 and 2; 62A.50, subdivision 3; 62C.14, subdivisions 5 and 14; 62E.02, subdivision 7; 62E.12; 62F.02, subdivision 2; 62I.09, subdivision 2; 62L.02, subdivision 16; 62L.03, subdivision 5; 65A.01, by adding a subdivision; 65B.06, subdivision 3; 65B.08, subdivision 1; 65B.09, subdivision 1; 65B.10, subdivision 3; 65B.61, subdivision 1; 72A.20, subdivisions 13, 23, and by adding a subdivision; 72B.05; 79.251, subdivision 5, and by adding a subdivision; 79.34, subdivision 2; 79.35; 79A.01, by adding a subdivision; 79A.02, subdivision 4; 79A.03, by adding a subdivision; 176.181, subdivision 2; 299F.053, subdivision 2; and 515A.3-112; proposing coding for new law in Minnesota Statutes, chapters 60A; and 62A; repealing Minnesota Statutes 1994, sections 61A.072, subdivision 3; and 65B.07, subdivision 5.

The Senate respectfully requests that a Conference Committee be appointed thereon. The Senate has appointed as such committee:

Messrs. Hottinger, Larson and Janezich.

Said Senate File is herewith transmitted to the House with the request that the House appoint a like committee.

Patrick E. Flahaven, Secretary of the Senate

Tomassoni moved that the House accede to the request of the Senate and that the Speaker appoint a Conference Committee of 3 members of the House to meet with a like committee appointed by the Senate on the disagreeing votes of the two houses on S. F. No. 440. The motion prevailed.

Mr. Speaker:

I hereby announce the passage by the Senate of the following Senate Files, herewith transmitted:

S. F. Nos. 371, 1319, 885, 900 and 512.

Patrick E. Flahaven, Secretary of the Senate

S. F. No. 371, A bill for an act relating to transportation; abolishing certain restrictions relating to highway construction; amending Minnesota Statutes 1994, sections 161.1231, subdivision 1; and 473.391; repealing Minnesota Statutes 1994, sections 161.123; and 161.124.

The bill was read for the first time and referred to the Committee on Rules and Legislative Administration.

S. F. No. 1319, A bill for an act relating to taxation; property tax; extending the availability of valuation exclusions for certain improvements made to property in 1992; amending Laws 1993, chapter 375, article 5, section 44.

The bill was read for the first time and referred to the Committee on Taxes.

S. F. No. 885, A bill for an act relating to public nuisance; modifying the grounds and procedure for proving a nuisance; amending Minnesota Statutes 1994, sections 617.80, subdivisions 2, 4, 5, 8, and by adding a subdivision; 617.81, subdivision 2; 617.82; and 617.85.

The bill was read for the first time and referred to the Committee on Judiciary.

S. F. No. 900, A bill for an act relating to human services; defining interpretive guidelines; changing licensing requirements and reconsideration for foster care; assessing fines; adding provisions for drop-in child care programs; changing a definition; adding provisions for the Minnesota family preservation act; expanding eligibility for Indian child welfare grants; amending Minnesota Statutes 1994, sections 14.03, subdivision 3; 245A.02, by adding a subdivision; 245A.03, subdivision 2a; 245A.04, subdivisions 3, 3b, 7, and 9; 245A.06, subdivisions 2 and 4, and by adding a subdivision; 245A.07, subdivision 3; 245A.09, by adding subdivisions; 245A.14, subdivision 6; 256.12, subdivision 14; 256.8711; 256D.02, subdivision 5; 256F.01; 256F.02; 256F.03, subdivision 5, and by adding a subdivision; 256F.04, subdivisions 1 and 2; 256F.05, subdivisions 2, 3, 4, 5, 7, 8, and by adding a subdivision; 256F.06, subdivisions 1, 2, and 4; 257.3571, subdivision 1; 257.3572; and 257.3577, subdivisions 1, 2, and by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 245A; repealing Minnesota Statutes 1994, sections 256F.05, subdivisions 2a and 4a; and 256F.06, subdivision 3.

The bill was read for the first time and referred to the Committee on Health and Human Services.

S. F. No. 512, A bill for an act relating to human services; licensing; administrative hearings; vulnerable adults reporting act; imposing criminal penalties; appropriating money; amending Minnesota Statutes 1994, sections 13.46, subdivision 4; 13.82, subdivision 10, and by adding subdivisions; 13.88; 13.99, subdivision 113; 144.4172, subdivision 8; 144.651, subdivisions 14 and 21; 144A.103, subdivision 1; 144A.612; 144B.13; 148B.68, subdivision 1; 214.10, subdivision 2a; 245A.04, subdivisions 3 and 3b; 253B.02, subdivision 4a; 256.045, subdivisions 1, 3, 4, 5, 6, 7, 8, 9, and by adding a subdivision; 256E.03, subdivision 2; 256E.081, subdivision 4; 268.09, subdivision 1; 325F.692, subdivision 2; 525.703, subdivision 3; 609.224, subdivision 2; 609.268, subdivisions 1 and 2; 609.72, by adding a subdivision; 609.7495, subdivision 1; 626.556, subdivision 12; 626.557, subdivisions 1, 3, 3a, 4, 5, 6, 7, 8, 9, 10, 14, 16, 17, 18, and by adding subdivisions; and 631.40, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 144; 609; and 626; repealing Minnesota Statutes 1994, section 626.557, subdivisions 2, 10a, 11, 11a, 12, 13, 15, and 19.

The bill was read for the first time.

Greenfield moved that S. F. No. 512 and H. F. No. 598, now on Technical General Orders, be referred to the Chief Clerk for comparison. The motion prevailed.

Carruthers moved that the House recess subject to the call of the Chair. The motion prevailed.

The House reconvened and was called to order by the Speaker.

There being no objection, the order of business reverted to Reports of Standing Committees.

Solberg from the Committee on Ways and Means to which was referred:

H. F. No. 966, A bill for an act relating to family law; child support, custody and visitation; providing for motor vehicle liens and driver license suspension for support arrears; creating administrative seek employment orders and an obligor work experience program; creating an employment registry for support enforcement purposes; establishing a child support payment center; providing for child support data collection and publication; changing provisions relating to recognition of parentage; changing provisions relating to administrative process for support and maintenance; providing for child support collection; allowing consideration of interference with visitation in a motion to modify custody; authorizing the noncustodial parent to provide child care while the custodial parent is at work; creating the cooperation for the children program; appropriating money; amending Minnesota Statutes 1994, sections 13.46, subdivision 2; 168A.05, subdivisions 2, 3, 7, and by adding a subdivision; 168A.16; 168A.20, by adding a subdivision; 168A.21; 168A.29, subdivision 1; 214.101, subdivisions 1 and 4; 256.87, subdivision 5; 256.978, subdivision 1; 256H.02; 257.34, by adding a subdivision; 257.55, subdivision 1; 257.57, subdivision 2; 257.60; 257.67, subdivision 1; 257.75, subdivision 3, and by adding a subdivision; 518.171, subdivision 2a; 518.18; 518.24; 518.551, subdivisions 5, 12, and by adding subdivisions; 518.5511, subdivisions 1, 2, 3, 4, 5, 7, and 9; 518.575; 518.611, subdivisions 1, 2, 5, 6, and 8a; 518.613, subdivisions 1 and 2; 518.614, subdivision 1; 518.64, subdivision 4, and by adding a subdivision; 518C.310; 548.15; and 609.375, subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 145; 171; 256; 257; 518; and 548; repealing Minnesota Statutes 1994, sections 214.101, subdivisions 2 and 3; 518.561; 518.611, subdivision 8; and 518.64, subdivision 6.

Reported the same back with the following amendments:

Page 15, line 30, delete "participant" and insert "child support obligor participating"

Page 15, line 33, delete "of $1,000 or less"

Page 15, line 35, delete "if" and insert "whether" and delete "claim is valid and"

Page 15, line 36, delete "if" and insert "claimed injury occurred, whether the claimed medical expenses are reasonable, and whether" and after the period, insert "If insurance coverage is established, the county agency shall submit the claim to the appropriate insurance entity for payment."

Page 16, line 1, after "claims" insert ", in the amount net of any insurance payments,"

Page 16, line 2, after the period, insert:

"(c) The commissioner of human services shall submit all claims for impairment compensation to the commissioner of labor and industry. The commissioner of labor and industry shall review all submitted claims and recommend to the commissioner of human services an amount of compensation comparable to that which would be provided under the impairment compensation schedule of section 176.101, subdivision 3b.

(d) The commissioner of human services shall approve a claim of $1,000 or less for payment if appropriated funds are available, if the county agency responsible for supervising the work has made the determinations required by this section, and if the work program was operated in compliance with the safety provisions of this section."

Page 16, line 3, after "claim" insert "of $1,000 or less"

Page 16, line 7, after "claims" insert "of $1,000 or less"

Page 16, line 8, delete "that are to" and insert "and shall"

Page 16, line 9, after "for" insert "any"

Page 16, line 14, delete everything after the period and insert "On or before February 1, of each year, the commissioner shall submit to the appropriate committees of the senate and the house of representatives a list of claims in excess of $1,000 and a list of claims of $1,000 or less that were submitted to but not paid"

Page 16, line 15, delete "may be presented to," and insert "of human services, together with any recommendations of appropriate compensation. These claims shall be" and after "heard" delete the comma

Page 16, delete lines 19 to 25

Page 16, line 26, delete "(d)" and insert "(e)"

Page 16, line 27, delete "compensation for" and insert "reasonable"

Page 16, line 28, delete "disability as" and delete "or death" and insert "for disability in like amounts as allowed in section 176.101, subdivision 3b. Compensation for injuries resulting in death shall include reasonable medical expenses and burial expenses in addition to payment to the participant's estate in an amount not to exceed the limits set forth in section 466.04"

Page 16, line 29, delete "or" and insert a comma

Page 16, line 30, after "wages" insert ", or other benefits provided in chapter 176"

Page 16, line 36, delete "(e)" and insert "(f)"

Page 17, line 6, delete "(f)" and insert "(g)"

Page 17, line 8, after "verify" insert "to the commissioner of human services"

Page 17, after line 29, insert:

"Subd. 7. [WAIVER.] The commissioner of human services shall seek a waiver from the secretary of the United States Department of Health and Human Services to enable the department of human services to operate the child support obligor community service work experience program."

Page 36, line 36, after "planning" insert ", the commissioner of human services,"

Page 63, after line 34, insert:

"Sec. 13. [PUBLIC EDUCATION CAMPAIGN.]

The commissioner of human services shall contract with the attorney general to continue the public service campaign established in Minnesota Statutes, section 8.35. The terms and conditions of the contract shall be established by the attorney general. If a contract is not executed by August 1, 1995, any amounts appropriated for this activity shall be returned to the general fund."

Page 74, line 4, delete "$......." and insert "$119,000"

Page 74, line 8, after "TITLE" insert "AND LICENSE SUSPENSION" and delete "$......." and insert "$50,000"

Page 74, line 9, after "of" insert "human services, for transfer to the commissioner of"

Page 74, line 15, delete "$......." and insert "$24,000"

Page 74, line 20, delete "$......." and insert "$350,000"

Page 74, line 24, delete "$......." and insert "$150,000"

Page 74, line 25, delete "for"

Page 74, line 26, delete "transfer to the attorney general"

Page 74, line 29, delete "(a)"

Page 74, line 30, delete "$......." and insert "$100,000"

Page 74, line 33, before "to" insert "and for the purpose of providing the requested funding to the office of administrative hearings to develop and implement the cooperation for the children program under article 9, section 1,"

Page 74, delete lines 34 to 36

Page 75, delete lines 1 and 2

Page 75, line 3, delete "$......." and insert "$548,000"

Page 75, line 4, after the first "of" insert "human services, for transfer to the department of"

Page 75, after line 6, insert:

"Subd. 8. [MOTOR VEHICLE LIENS.] $24,000 is appropriated from the general fund to the commissioner of human services to allow the commissioner to memorialize liens on motor vehicle certificates of title under Minnesota Statutes, section 518.551, subdivision 14, to be available until June 30, 1997.

Subd. 9. [OCCUPATIONAL LICENSE SUSPENSION.] $10,000 is appropriated from the general fund to the commissioner of human services to implement the occupational license suspension procedures under Minnesota Statutes, section 518.551, subdivision 12, to be available until June 30, 1997.

Subd. 10. [CHILD SUPPORT PAYMENT CENTER.] $120,000 is appropriated from the general fund to the commissioner of human services to create and maintain the child support payment center under Minnesota Statutes, section 518.5851, to be available until June 30, 1997.

Subd. 11. [PUBLICATION OF NAMES.] $275,000 is appropriated from the general fund to the commissioner of human services to publish the names of delinquent child support obligors under Minnesota Statutes, section 518.575, to be available until June 30, 1997.

Subd. 12. [ADMINISTRATIVE PROCESS.] $1,250,000 is appropriated from the general fund to the commissioner of human services to develop and implement the contested administrative process under Minnesota Statutes, section 518.5511, to be available until June 30, 1997.

Subd. 13. [WAIVERS.] $288,000 is appropriated from the general fund to the commissioner of human services to seek the waivers required by this legislation, to be available until June 30, 1997.

Subd. 14. [INTEREST.] $19,000 is appropriated from the general fund to the commissioner of human services to operate the interest cessation provision of this legislation, to be available until June 30, 1997."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

With the recommendation that when so amended the bill pass.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

H. F. No. 1710, A bill for an act relating to employment; establishing and modifying certain salary limits; amending Minnesota Statutes 1994, sections 3.855, subdivision 3; 15A.083, subdivision 5; and 43A.17, subdivisions 1, 3, and by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 15A; repealing Minnesota Statutes 1994, section 43A.18, subdivision 5.

Reported the same back with the following amendments:

Page 2, after line 12, insert:

"Sec. 2. Minnesota Statutes 1994, section 15A.081, subdivision 8, is amended to read:

Subd. 8. [EXPENSE ALLOWANCE.] Notwithstanding any law to the contrary, positions listed in subdivision 1 section 15A.0815, subdivisions 3 and 4, and constitutional officers, and the commissioner of iron range resources and rehabilitation are authorized an annual expense allowance not to exceed $1,500 for necessary expenses in the normal performance of their duties for which no other reimbursement is provided. The expenditures under this subdivision are subject to any laws and rules relating to budgeting, allotment and encumbrance, preaudit and postaudit. The commissioner of finance may promulgate rules to assure the proper expenditure of these funds, and to provide for reimbursement.

Sec. 3. [15A.0815] [SALARY LIMITS FOR CERTAIN EMPLOYEES.]

Subdivision 1. [SALARY LIMITS.] For purposes of subdivisions 2 to 4, the governor's salary is as established under section 15A.082.

The appointing authority, as defined in section 43A.02, subdivision 5, shall establish salaries for the positions within the prescribed limits as specified in subdivisions 2 to 4. In establishing individual salaries, the appointing authority shall consider the criteria established in section 43A.18, subdivision 8, and the performance of individual incumbents. The performance evaluation must include a review of an incumbent's progress toward attainment of affirmative action goals.

The appointing authority shall set the initial salary of a head of a new agency or a chair of a new metropolitan board or commission whose salary is not specifically prescribed by law after consultation with the commissioner of employee relations, whose recommendation is advisory only. The amount of the new salary must be comparable to the salary of an agency head or commission chair having similar duties and responsibilities.

Subd. 2. [HIGHER EDUCATION SYSTEM LIMITS.] The salaries for the chancellor of the higher education board and the executive director of the higher education coordinating board may not exceed 95 percent of the salary of the governor. For purposes of this subdivision, "salary" does not include:

(1) employee benefits that are also provided for the majority of all other full-time state employees, vacation and sick leave allowances, health and dental insurance, disability insurance, term life insurance, and pension benefits or like benefits the cost of which is borne by the employee or which is not subject to tax as income under the Internal Revenue Code of 1986;

(2) dues paid to organizations that are of a civic, professional, educational, or governmental nature;

(3) reimbursement for actual expenses incurred by the employee that the appointing authority determines to be directly related to the performance of job responsibilities, including any relocation expenses paid during the initial year of employment; or

(4) a housing allowance for the chancellor of the higher education board that is comparable to housing allowances provided to chancellors and university presidents in similar higher education systems nationwide.

Subd. 3. [GROUP I SALARY LIMITS.] The salaries for full-time positions in this subdivision may not exceed 85 percent of the salary of the governor:

Commissioner of administration;

Commissioner of agriculture;

Commissioner of commerce;

Commissioner of corrections;

Commissioner of economic security;

Commissioner of education;

Commissioner of employee relations;

Commissioner of finance;

Commissioner of health;

Commissioner, housing finance agency;

Commissioner of human rights;

Commissioner of human services;

Executive director, state board of investment;

Commissioner of labor and industry;

Commissioner of natural resources;

Commissioner of office of strategic and long-range planning;

Commissioner, pollution control agency;

Commissioner of public safety;

Commissioner, department of public service;

Commissioner of revenue;

Commissioner of trade and economic development;

Commissioner of transportation;

Commissioner of veterans affairs;

Administrator of zoological gardens.

Subd. 4. [GROUP II SALARY LIMITS.] The salaries for full-time positions in this subdivision may not exceed 75 percent of the salary of the governor:

Ombudsman for corrections;

Executive director of gambling control board;

Commissioner of iron range resources and rehabilitation;

Commissioner, bureau of mediation services;

Ombudsman for mental health and retardation;

Chair, metropolitan council;

Executive director of pari-mutuel racing;

Executive director, public employees retirement association;

Commissioner, public utilities commission;

Executive director, state retirement system;

Executive director, teachers retirement association;

Member, transportation regulation board.

Subd. 5. [METROPOLITAN COUNCIL MEMBER SALARIES.] The salary of a member of the metropolitan council is $20,000 per year.

Subd. 6. [LEGISLATIVE APPROVAL REQUIRED.] Before an appointing authority may implement a salary increase for positions in subdivisions 2 to 4, the increase must be reviewed and approved, rejected, or modified by the legislative commission on employee relations and the legislature under section 3.855, subdivisions 2 and 3."

Page 2, line 19, before "The" insert "Notwithstanding the limitations on salaries under section 15A.0815, subdivisions 3 and 4,"

Page 2, line 20, delete "15A.081, subdivision 1, is" and insert "15A.0815, subdivisions 3 and 4 are"

Page 2, line 22, after the period, insert "Salary increases under this section are not subject to approval of the legislative commission on employee relations or the full legislature."

Page 3, line 6, strike "15A.081" and insert "15A.0815"

Page 4, after line 12, insert:

"Sec. 9. Minnesota Statutes 1994, section 85A.02, subdivision 5a, is amended to read:

Subd. 5a. [EMPLOYEES.] (a) The board shall appoint an administrator who shall serve as the executive secretary and principal administrative officer of the board and, subject to its approval, the administrator shall operate the Minnesota zoological garden and enforce all rules and policy decisions of the board. The administrator must be chosen solely on the basis of training, experience, and other qualifications appropriate to the field of zoo management and development. The board shall set the compensation for the administrator within the limits established for the commissioner of agriculture in section 15A.081, subdivision 1. The administrator shall perform duties assigned by the board and shall serve in the unclassified service at the pleasure of the board. The administrator, with the participation of the board, shall appoint a development director in the unclassified service or contract with a development consultant to establish mechanisms to foster community participation in and community support for the Minnesota zoological garden. The board may employ other necessary professional, technical, and clerical personnel. Employees of the zoological garden are eligible for salary supplement in the same manner as employees of other state agencies. The commissioner of finance shall determine the amount of salary supplement based on available funds.

(b) The board may contract with individuals to perform professional services and may contract for the purchases of necessary species exhibits, supplies, services, and equipment. The board may also contract for the construction and operation of entertainment facilities on the zoo grounds that are not directly connected to ordinary functions of the zoological garden. The zoo board shall not enter into any final agreement for construction of any entertainment facility that is not directly connected to the ordinary functions of the zoo until after final construction plans have been submitted to the chairs of the senate finance and house appropriations committees for their recommendations.

The zoo may not contract for entertainment during the period of the Minnesota state fair that would directly compete with entertainment at the Minnesota state fair.

Sec. 10. Minnesota Statutes 1994, section 298.22, subdivision 1, is amended to read:

Subdivision 1. (1) The office of commissioner of iron range resources and rehabilitation is created. The commissioner shall be appointed by the governor under the provisions of section 15.06.

(2) The commissioner may hold such other positions or appointments as are not incompatible with duties as commissioner of iron range resources and rehabilitation. The commissioner may appoint a deputy commissioner. All expenses of the commissioner, including the payment of such assistance as may be necessary, shall be paid out of the amounts appropriated by section 298.28. The compensation of the commissioner shall be set by the legislative coordinating commission and may not exceed the maximum salary set for the commissioner of administration under section 15A.081, subdivision 1.

(3) When the commissioner shall determine that distress and unemployment exists or may exist in the future in any county by reason of the removal of natural resources or a possibly limited use thereof in the future and the decrease in employment resulting therefrom, now or hereafter, the commissioner may use such amounts of the appropriation made to the commissioner of revenue in section 298.28 as are determined to be necessary and proper in the development of the remaining resources of said county and in the vocational training and rehabilitation of its residents, except that the amount needed to cover cost overruns awarded to a contractor by an arbitrator in relation to a contract awarded by the commissioner or in effect after July 1, 1985, is appropriated from the general fund. For the purposes of this section, "development of remaining resources" includes, but is not limited to, the promotion of tourism."

Page 4, line 17, delete everything after "or"

Page 4, delete lines 18 to 24, and insert:

"(2) the average of the across the board increases for the fiscal year ending June 30, 1996, included in collective bargaining agreements and arbitration awards that have been ratified by the full legislature in 1996. On July 1, 1996, the commissioner of employee relations shall calculate and report to the senate finance committee and the house ways and means committee the average across the board increases that have been ratified by the legislature in 1996. The across the board increases must be weighted by the number of full-time equivalent employees covered by the contract or arbitration award for the fiscal year ending June 30, 1996. This calculation must be used to determine the increases provided in this paragraph."

Page 4, line 28, delete everything after "or"

Page 4, delete lines 29 to 35, and insert:

"(2) the average of the across the board increases for the fiscal year ending June 30, 1997, included in collective bargaining agreements and arbitration awards that have been ratified by the full legislature in 1996. On July 1, 1996, the commissioner of employee relations shall calculate and report to the senate finance committee and the house ways and means committee the average across the board increases that have been ratified by the legislature in 1996. The across the board increases must be weighted by the number of full-time equivalent employees covered by the contract or arbitration award for the fiscal year ending June 30, 1996. This calculation will be used to determine the increases provided in this paragraph."

Page 5, after line 23, insert:

"Sec. 12. [REVISOR INSTRUCTION.]

The revisor of statutes shall substitute the reference "section 15A.0815" for each reference to sections 15A.081, subdivisions 1 and 7b; and 43A.18, subdivision 5, wherever they occur in the next edition of Minnesota Statutes and Minnesota Rules."

Page 5, line 25, delete "section" and insert "sections 15A.081, subdivisions 1 and 7b; and" and delete "is" and insert "are"

Page 5, line 28, delete "2" and insert "4"

Page 5, line 31, delete "15A.081,"

Page 5, line 32, delete "subdivision 1," and insert "15A.0815, subdivisions 3 and 4,"

Renumber the sections in sequence

Amend the title as follows:

Page 1, line 4, after the semicolon, insert "15A.081, subdivision 8;"

Page 1, line 5, delete "and"

Page 1, line 6, after the semicolon, insert "85A.02, subdivision 5a; and 298.22, subdivision 1;"

Page 1, line 8, delete "section" and insert "sections 15A.081, subdivisions 1 and 7b; and"

With the recommendation that when so amended the bill pass.

The report was adopted.

Carruthers from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 74, A bill for an act relating to legislative enactments; providing for the correction of miscellaneous oversights, inconsistencies, ambiguities, unintended results, and technical errors of a noncontroversial nature; amending Minnesota Statutes 1994, sections 84.911, subdivision 7; 86B.335, subdivision 13; 115B.42, subdivision 1; 260.185, subdivision 6; 325F.692, subdivision 3; 326.71, subdivision 4; and 340A.503, subdivision 1; Laws 1994, chapter 527, section 7.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 462, A bill for an act relating to the environment; implementing the transfer of solid waste management duties of the metropolitan council to the office of environmental assistance; providing for the management of waste; providing penalties; amending Minnesota Statutes 1992, section 115A.33, as reenacted; Minnesota Statutes 1994, sections 8.31, subdivision 1; 16B.122, subdivision 3; 115.071, subdivision 1; 115A.055; 115A.07, subdivision 3; 115A.072, subdivisions 1, 3, and 4; 115A.12; 115A.14, subdivision 4; 115A.15, subdivision 9; 115A.191, subdivisions 1 and 2; 115A.32; 115A.411; 115A.42; 115A.45; 115A.46, subdivisions 1 and 5; 115A.55, by adding a subdivision; 115A.5501, subdivisions 2, 3, and 4; 115A.5502; 115A.551, subdivisions 2a, 4, 5, 6, and 7; 115A.554; 115A.557, subdivisions 3 and 4; 115A.558; 115A.63, subdivision 3; 115A.84, subdivision 3; 115A.86, subdivision 2; 115A.919, subdivision 3; 115A.921, subdivision 1; 115A.923, subdivision 1; 115A.9302, subdivisions 1 and 2; 115A.951, subdivision 4; 115A.96, subdivision 2; 115A.965, subdivision 1; 115A.9651, subdivision 3; 115A.97, subdivisions 5 and 6; 115A.981, subdivision 3; 116.07, subdivisions 4a and 4j; 116.072; 116.66, subdivisions 2 and 4; 116.92, subdivision 4; 400.16; 400.161; 473.149, subdivisions 1, 2d, 2e, 3, 4, and 6; 473.151; 473.516, subdivision 2; 473.801, subdivision 1, and by adding subdivisions; 473.8011; 473.803, subdivisions 1, 1c, 2, 2a, 3, 4, and 5; 473.804; 473.811, subdivisions 1, 4a, 5, 5c, 7, and 8; 473.813, subdivision 2; 473.823, subdivisions 3, 5, and 6; 473.843, subdivision 1; 473.844, subdivisions 1a and 4; 473.8441, subdivisions 2, 4, and 5; 473.845, subdivision 4; 473.846; and 473.848, subdivisions 2 and 4; Laws 1994, chapters 585, section 51; and 628, article 3, section 209; proposing coding for new law in Minnesota Statutes, chapters 16B; 115A; 116; 325E; and 480; repealing Minnesota Statutes 1994, sections 115A.81, subdivision 3; 115A.90, subdivision 3; 116.94; 383D.71, subdivision 2; 473.149, subdivisions 2, 2a, 2c, 2f, and 5; 473.181, subdivision 4; and 473.803, subdivisions 1b and 1e.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

Section 1. Minnesota Statutes 1994, section 115.071, subdivision 1, is amended to read:

Subdivision 1. [REMEDIES AVAILABLE.] The provisions of sections 103F.701 to 103F.761, this chapter and chapters 115A and 116, and sections 325E.10 to 325E.1251 and 325E.32 and all rules, standards, orders, stipulation

agreements, schedules of compliance, and permits or terms or conditions thereof, including conditions established under section 473.823, subdivision 3, adopted or issued by the agency thereunder or under any other law now in force or hereafter enacted for the prevention, control, or abatement of pollution may be enforced by any one or any combination of the following: criminal prosecution; action to recover civil penalties; injunction; action to compel performance; or other appropriate action, in accordance with the provisions of said chapters and this section.

Sec. 2. Minnesota Statutes 1994, section 115A.03, is amended by adding a subdivision to read:

Subd. 10a. [FOOD WASTE.] "Food waste" means food matter that is collected separately from other waste. Food waste also includes nonrecyclable paper or cardboard product used for packaging, containing, preparing, or consuming food matter that is incidental to the collection of food waste, but does not include plastic or plastic-coated products.

Sec. 3. Minnesota Statutes 1994, section 115A.072, subdivision 3, is amended to read:

Subd. 3. [EDUCATION GRANTS.] (a) The director shall provide grants to persons for the purpose of developing and distributing waste education information.

(b) The director shall provide grants and technical assistance to formal and informal education facilities to develop and implement a model program to incorporate waste reduction, recycling, litter prevention, and proper management of problem materials into educational operations.

(c) The director shall provide grants or awards and technical assistance to formal and informal education facilities to develop or implement ongoing programs for waste reduction, recycling, litter prevention, and proper management of problem materials programs.

Sec. 4. Minnesota Statutes 1994, section 115A.072, subdivision 4, is amended to read:

Subd. 4. [EDUCATION, PROMOTION, AND PROCUREMENT.] The director shall include: (1) waste reduction and reuse, including packaging reduction and reuse; and (2) the hazards of open burning, as defined in section 88.01, of mixed municipal solid waste, especially the hazards of dioxin emissions to children, as an element elements of the director's program of public education on waste management required under this section. The waste reduction and reuse education program must include dissemination of information and may include an award program for model waste reduction and reuse efforts. Waste reduction and reuse educational efforts must also include provision of information about and promotion of the model procurement program developed by the commissioner of administration under section 115A.15, subdivision 7, or any other model procurement program that results in significant waste reduction and reuse.

Sec. 5. Minnesota Statutes 1992, section 115A.33, as reenacted by sections 58 and 59, is amended to read:

115A.33 [ELIGIBILITY; REQUEST FOR REVIEW.]

The following persons shall be eligible to request supplementary review by the board pursuant to sections 115A.32 to 115A.39: (a) a generator of sewage sludge within the state who has been issued permits by the agency for a facility to dispose of sewage sludge or solid waste resulting from sewage treatment; (b) a political subdivision which has been issued permits by the agency, or a political subdivision acting on behalf of a person who has been issued permits by the agency, for a solid waste facility which is no larger than 250 acres, not including any proposed buffer area, and located outside the metropolitan area; (c) a generator of hazardous waste within the state who has been issued permits by the agency for a hazardous waste facility to be owned and operated by the generator, on property owned by the generator, and to be used by the generator for managing the hazardous wastes produced by the generator only; (d) a person who has been issued permits by the agency for a commercial hazardous waste processing facility at a site included in the board's inventory of preferred sites for such facilities adopted pursuant to section 115A.09; (e) a person who has been issued permits by the agency for a disposal facility for the nonhazardous sludge, ash, or other solid waste generated by a permitted hazardous waste processing facility operated by the person. The metropolitan waste control commission shall not be eligible to request review under clause (a) for a sewage sludge disposal facility. The metropolitan waste control commission shall not be eligible to request review under clause (a) for a solid waste facility with a proposed permitted life of longer than four years. The board may require completion of a plan conforming to the requirements of section 115A.46, before granting review under clause (b). A request for supplementary review shall show that the required permits for the facility have been issued by the agency and that a political subdivision has refused to approve the establishment or operation of the facility.

Sec. 6. Minnesota Statutes 1994, section 115A.411, is amended to read:

115A.411 [SOLID WASTE MANAGEMENT POLICY; CONSOLIDATED REPORT.]

Subdivision 1. [AUTHORITY; PURPOSE.] The director with assistance from the commissioner shall prepare and adopt a report on solid waste management policy excluding the metropolitan area. The report must be submitted by the director to the legislative commission on waste management by July 1 of each even-numbered odd-numbered year and may shall include reports required under sections 473.848, subdivision 4; 115A.55, subdivision 4, paragraph (b); 115A.551, subdivision 4, and; 115A.557, subdivision 4; 473.149, subdivision 6; and 473.846.

Subd. 2. [CONTENTS.] (a) The report must also include:

(1) a summary of the current status of solid waste management, including the amount of solid waste generated, the manner in which it is collected, processed, and disposed, the extent of separation, recycling, reuse, and recovery of solid waste, and the facilities available or under development to manage the waste;

(2) a summary of current state solid waste management policies, goals, and objectives, including their statutory, administrative, and regulatory basis and the state agencies and political subdivisions responsible for implementation;

(3) (2) an evaluation of the extent and effectiveness of implementation and an assessment of progress in accomplishing state policies, goals, and objectives, including those listed in paragraph (b);

(4) estimates of the generation of solid waste anticipated for the future, the manner in which the waste is likely to be managed, and the programs and facilities that will be available and needed for proper waste management;

(5) (3) identification of issues requiring further research, study, and action, the appropriate scope of the research, study, or action, the state agency or political subdivision that should implement the research, study, or action, and a schedule for completion of the activity; and

(6) (4) recommendations for establishing or modifying state solid waste management policies, authorities, and programs.

(b) Beginning in 1997, and every sixth year thereafter, the report shall be expanded to include the metropolitan area solid waste policy plan required in section 473.149, subdivision 1, and strategies for the office to advance the goals of this chapter, to manage waste as a resource, to further reduce the need for expenditures on resource recovery and disposal facilities, and to further reduce long-term environmental and financial liabilities. The expanded report must include strategies for:

(1) achieving the maximum feasible reduction in waste generation;

(2) encouraging manufacturers to design products that eliminate or reduce the adverse environmental impacts of resource extraction, manufacturing, use, and waste processing and disposal;

(3) educating businesses, public entities, and other consumers about the need to consider the potential environmental and financial impacts of purchasing products that may create a liability or that may be expensive to recycle or manage as waste, due to the presence of toxic or hazardous components;

(4) eliminating or reducing toxic or hazardous components in compost from municipal solid waste composting facilities, in ash from municipal solid waste incinerators, and in leachate and air emissions from municipal solid waste landfills, in order to reduce the potential liability of waste generators, facility owners and operators, and taxpayers;

(5) encouraging the source separation of materials to the extent practicable, so that the materials are most appropriately managed and to ensure that resources that can be reused or recycled are not disposed of or destroyed; and

(6) maximizing the efficiency of the waste management system by managing waste and recyclables close to the point of generation, taking into account the characteristics of the resources to be recovered from the waste and the type and capacity of local facilities.

Sec. 7. Minnesota Statutes 1994, section 115A.46, subdivision 5, is amended to read:

Subd. 5. [JURISDICTION OF PLAN.] (a) After a county plan has been submitted for approval under subdivision 1, a political subdivision public entity, as defined in section 16B.122, subdivision 1, within the county may not enter into a binding agreement governing a solid waste management activity that is inconsistent with the county plan without the consent of the county.

(b) After a county plan has been approved under subdivision 1, the plan governs all solid waste management in the county and a political subdivision public entity, as defined in section 16B.122, subdivision 1, within the county may not develop or implement a solid waste management activity, other than an activity to reduce waste generation or reuse waste materials, that is inconsistent with the county plan that the county is actively implementing without the consent of the county.

Sec. 8. Minnesota Statutes 1994, section 115A.55, subdivision 3, is amended to read:

Subd. 3. [FINANCIAL ASSISTANCE.] (a) The director shall make loans and grants to any person for the purpose of developing and implementing projects or practices to prevent or reduce the generation of solid waste including those that involve reuse of items in their original form or in manufacturing processes that do not cause the destruction of recyclable materials in a manner that precludes further use, or involve procuring, using, or producing products with long useful lives. Grants may be used to fund studies needed to determine the technical and financial feasibility of a waste reduction project or practice or for the cost of implementation of a waste reduction project or practice that the director has determined is technically and financially feasible.

(b) In making grants or loans, the director shall give priority to waste reduction projects or practices that have broad application in the state and that have the potential for significant reduction of the amount of waste generated.

(c) All information developed as a result of a grant or loan shall be made available to other solid waste generators through the public information program established in subdivision 2.

(d) The director shall adopt rules for the administration of this program and may administer the program in conjunction with the grant program established under section 115D.05. The rules must prescribe the level or levels of matching funds required for grants or loans under this subdivision.

Sec. 9. Minnesota Statutes 1994, section 115A.55, is amended by adding a subdivision to read:

Subd. 4. [STATEWIDE SOURCE REDUCTION GOAL.] (a) It is a goal of the state that there be a minimum ten percent per capita reduction in the amount of mixed municipal solid waste generated in the state by December 31, 2000, based on a reasonable estimate of the amount of mixed municipal solid waste that was generated in calendar year 1993.

(b) As part of the 1997 report required under section 115A.411, the director shall submit to the legislative commission on waste management a proposed strategy for meeting the goal in paragraph (a). The strategy must include a discussion of the different reduction potentials to be found in various sectors and may include recommended interim goals. The director shall report progress on meeting the goal in paragraph (a), as well as recommendations and revisions to the proposed strategy, as part of the 1999 report required under section 115A.411.

Sec. 10. Minnesota Statutes 1994, section 115A.5501, subdivision 4, is amended to read:

Subd. 4. [REPORT.] The director shall apply the statewide percentage determined under subdivision 2 to the aggregate amount of solid waste determined under subdivision 3 to determine the amount of packaging in the waste stream. By July 1, 1996, the director shall submit to the legislative commission on waste management an analysis of the extent to which the waste packaging reduction goal in subdivision 1 has been met. In determining whether the goal has been met, the margin of error must be applied in favor of meeting the goal. The director shall use the statistical mean for the data collected in determining whether the goal has been met and shall include in the analysis a discussion of the margin of error and statistical reliability for the data collected.

Sec. 11. Minnesota Statutes 1994, section 115A.5502, is amended to read:

115A.5502 [PACKAGING PRACTICES; PREFERENCES; GOALS.]

Packaging forms a substantial portion of solid waste and contributes to environmental degradation and the costs of managing solid waste. It is imperative to reduce the amount and toxicity of packaging that must be managed as solid waste. In order to achieve significant reduction of packaging in solid waste and to assist packagers and others

to meet the packaging reduction goal in section 115A.5501, the goal of the state is that items be distributed without any packaging where feasible and, only when necessary to protect health and safety or product integrity, with the minimal amount of packaging possible. The following categories of packaging are listed in order of preference for use by all persons who find it necessary to package items for distribution or use in the state:

(1) minimal packaging that contains no intentionally introduced toxic materials and that is designed to be and actually is reused for its original purpose at least five times;

(2) minimal packaging that contains no intentionally introduced toxic materials and consists of a significant percentage of postconsumer material;

(3) minimal packaging that contains no intentionally introduced toxic materials, that is recyclable, and is regularly collected through recycling collection programs available to at least 75 percent of the residents of the state;

(3) (4) minimal packaging that does not comply with clauses clause (1) and, (2), or (3) because it is required under federal or state law and for which there does not exist a commercially feasible alternative that does comply with clauses clause (1) and, (2), or (3);

(4) (5) packaging that contains no intentionally introduced toxic materials but does not comply with clauses (1) to (3) (4); and

(5) (6) all other packaging.

Sec. 12. Minnesota Statutes 1994, section 115A.551, subdivision 2a, is amended to read:

Subd. 2a. [SUPPLEMENTARY RECYCLING GOALS.] (a) By December 31, 1996, each county will have as a goal to recycle the following amounts:

(1) for a county outside of the metropolitan area, 30 35 percent by weight of total solid waste generation;

(2) for a metropolitan county, 45 50 percent by weight of total solid waste generation.

Each county will develop and implement or require political subdivisions within the county to develop and implement programs, practices, or methods designed to meet its recycling goal. Nothing in this section or in any other law may be construed to prohibit a county from establishing a higher recycling goal. For the purposes of this subdivision "recycle" and "total solid waste generation" have the meanings given them in subdivision 1, except that neither includes yard waste.

(b) For a county that, by January 1, 1995, is implementing a solid waste reduction program that is approved by the director, the director shall apply three percentage points toward achievement of the recycling goals in this subdivision. In addition, the director shall apply demonstrated waste reduction that exceeds three percent reduction toward achievement of the goals in this subdivision.

(c) No more than five percentage points may be applied toward achievement of the recycling goals in this subdivision for management of yard waste. The five percentage points must be applied as provided in this paragraph. The director shall apply three percentage points for a county in which residents are provided, by January 1, 1996, with:

(1) an ongoing comprehensive education program under which residents are informed about how to manage yard waste and are notified of the prohibition in section 115A.931; and

(2) the opportunity to drop off yard waste at specified sites or participate in curbside yard waste collection. The director shall apply up to an additional two percentage points toward achievement of the recycling goals in this subdivision for additional activities approved by the director that are likely to reduce the amount of yard waste generated and to increase the on-site composting of yard waste.

Sec. 13. Minnesota Statutes 1994, section 115A.551, subdivision 4, is amended to read:

Subd. 4. [INTERIM MONITORING.] The director, for counties outside of the metropolitan area, and the metropolitan council, for counties within the metropolitan area, shall monitor the progress of each county toward meeting the recycling goals in subdivisions 2 and 2a. The director shall report to the legislative commission on waste

management on the progress of the counties by July 1 of each odd-numbered year. The metropolitan council shall report to the legislative commission on waste management on the progress of the counties by July 1 of each year. If the director or the council finds that a county is not progressing toward the goals in subdivisions 2 and 2a, it shall negotiate with the county to develop and implement solid waste management techniques designed to assist the county in meeting the goals, such as organized collection, curbside collection of source-separated materials, and volume-based pricing.

In even-numbered years The progress report may shall be included in the solid waste management policy report required under section 115A.411. The metropolitan council's progress report shall be included in the report required by section 473.149.

Sec. 14. Minnesota Statutes 1994, section 115A.551, subdivision 6, is amended to read:

Subd. 6. [COUNTY SOLID WASTE PLANS.] (a) Each county shall include in its solid waste management plan described in section 115A.46, or its solid waste master plan described in section 473.803, a plan recycling implementation strategy for implementing meeting the recycling goal established in subdivision 2 2a along with mechanisms for providing financial incentives to solid waste generators to reduce the amount of waste generated and to separate recyclable materials from the waste stream. The recycling plan must include detailed recycling implementation information to form the basis for the strategy required in subdivision 7.

(b) Each county required to submit its plan to the director under section 115A.46 shall amend its plan to comply with this subdivision within one year after October 4, 1989.

Sec. 15. Minnesota Statutes 1994, section 115A.551, subdivision 7, is amended to read:

Subd. 7. [RECYCLING IMPLEMENTATION STRATEGY.] Within one year of approval of the portion of the plan required in subdivision 6, Each nonmetropolitan county shall submit to the director for approval a local the recycling implementation strategy required in subdivision 6. The local recycling implementation strategy must be submitted by October 31, 1995, and must:

(1) be consistent with the approved county solid waste management plan;

(2) identify the materials that are being and will be recycled in the county to meet the goals under this section and the parties responsible and methods for recycling the material; and

(3) define the need for funds to ensure continuation of local recycling, methods of raising and allocating such funds, and permanent sources and levels of local funding for recycling provide a budget to ensure adequate funding for needed county and local programs and demonstrate an ongoing commitment to spending the money on recycling programs; and

(4) include a schedule for implementing recycling activities needed to meet the goals in subdivision 2a.

Sec. 16. Minnesota Statutes 1994, section 115A.554, is amended to read:

115A.554 [AUTHORITY OF SANITARY DISTRICTS.]

A sanitary district has the authorities and duties of counties within the district's boundary for purposes of sections 115A.46, subdivision 4; 115A.48; 115A.551; 115A.552; 115A.553; 115A.919; 115A.929; 115A.93; 115A.96, subdivision 6; 115A.961; 115A.991; 116.072; 375.18, subdivision 14; 400.08, except subdivision 4, paragraph (b); 400.16; and 400.161.

Sec. 17. Minnesota Statutes 1994, section 115A.557, subdivision 3, is amended to read:

Subd. 3. [ELIGIBILITY TO RECEIVE MONEY.] (a) To be eligible to receive money distributed by the director under this section, a county shall within one year of October 4, 1989:

(1) create a separate account in its general fund to credit the money; and

(2) set up accounting procedures to ensure that money in the separate account is spent only for the purposes in subdivision 2.

(b) In each following year, each county shall also:

(1) have in place an approved solid waste management plan or master plan including a recycling implementation strategy under section 115A.551, subdivision 7, or 473.803, subdivision 1e, and a household hazardous waste management plan under section 115A.96, subdivision 6, by the dates specified in those provisions;

(2) submit a report by April 1 of each year to the director detailing how the money was spent and the resulting gains achieved in solid waste management practices during the previous calendar year; and

(3) provide evidence to the director that local revenue equal to 25 percent of the money sought for distribution under this section will be spent for the purposes in subdivision 2.

(c) The director shall withhold all or part of the funds to be distributed to a county under this section if the county fails to comply with this subdivision and subdivision 2.

Sec. 18. Minnesota Statutes 1994, section 115A.557, subdivision 4, is amended to read:

Subd. 4. [REPORT.] By July 1 of each odd-numbered year, the director shall report on how the money was spent and the resulting statewide improvements in solid waste management to the house of representatives and senate appropriations and finance committees and the legislative commission on waste management. In even-numbered years The report may shall be included in the solid waste management policy report required under section 115A.411.

Sec. 19. Minnesota Statutes 1994, section 115A.919, subdivision 3, is amended to read:

Subd. 3. [EXEMPTIONS.] (a) Waste residue from recycling facilities at which recyclable materials are separated or processed for the purpose of recycling, or from energy and resource recovery facilities at which solid waste is processed for the purpose of extracting, reducing, converting to energy, or otherwise separating and preparing solid waste for reuse shall be exempt from any fee imposed by a county under this section if there is at least an 85 percent volume weight reduction in the solid waste processed. Before any fee is reduced, the verification procedures of section 473.843, subdivision 1, paragraph (c), must be followed and submitted to the appropriate county, except that for facilities operating outside of the metropolitan area the commissioner shall prescribe procedures for verifying the required 85 percent volume weight reduction.

(b) A facility permitted for the disposal of construction debris is exempt from 25 percent of a fee imposed under subdivision 1 if the facility has implemented a recycling program approved by the county and 25 percent if the facility contains a liner and leachate collection system approved by the agency.

Sec. 20. Minnesota Statutes 1994, section 115A.921, subdivision 1, is amended to read:

Subdivision 1. [MIXED MUNICIPAL SOLID WASTE.] A city or town may impose a fee, not to exceed $1 per cubic yard of waste, or its equivalent, on operators of facilities for the disposal of mixed municipal solid waste located within the city or town. The revenue from the fees must be credited to the city or town general fund. Revenue produced by 25 cents of the fee must be used only for purposes of landfill abatement or for purposes of mitigating and compensating for the local risks, costs, and other adverse effects of facilities. Revenue produced by the balance of the fee may be used for any general fund purpose.

Waste residue from recycling facilities at which recyclable materials are separated or processed for the purpose of recycling, or from energy and resource recovery facilities at which solid waste is processed for the purpose of extracting, reducing, converting to energy, or otherwise separating and preparing solid waste for reuse shall be exempt from the fee imposed by a city or town under this section if there is at least an 85 percent volume weight reduction in the solid waste processed. Before any fee is reduced, the verification procedures of section 473.843, subdivision 1, paragraph (c), must be followed and submitted to the appropriate city or town, except that for facilities operating outside of the metropolitan area the commissioner shall prescribe procedures for verifying the required 85 percent volume weight reduction.

Sec. 21. Minnesota Statutes 1994, section 115A.923, subdivision 1, is amended to read:

Subdivision 1. [AMOUNT OF FEE.] (a) The operator of a mixed municipal solid waste disposal facility outside of the metropolitan area shall charge a fee on solid waste accepted and disposed of at the facility as follows:

(1) a facility that weighs the waste that it accepts must charge a fee of $2 per cubic yard based on equivalent cubic yards of waste accepted at the entrance of the facility;

(2) a facility that does not weigh the waste but that measures the volume of the waste that it accepts must charge a fee of $2 per cubic yard of waste accepted at the entrance of the facility; and

(3) waste residue from recycling facilities at which recyclable materials are separated or processed for the purpose of recycling, or from energy and resource recovery facilities at which solid waste is processed for the purpose of extracting, reducing, converting to energy, or otherwise separating and preparing solid waste for reuse is exempt from the fee imposed by this subdivision if there is at least an 85 percent volume weight reduction in the solid waste processed.

(b) To qualify for exemption under paragraph (a), clause (3), waste residue must be brought to a disposal facility separately. The commissioner shall prescribe procedures for determining the amount of waste residue qualifying for exemption.

Sec. 22. Minnesota Statutes 1994, section 115A.9302, subdivision 1, is amended to read:

Subdivision 1. [DISCLOSURE REQUIRED.] (a) By January 1, 1994, and at least annually thereafter between January 1 and March 31, a person that collects construction debris, industrial waste, or mixed municipal solid waste for transportation to a waste facility shall disclose to each waste generator from whom waste is collected the name, location, and type of, and the number of the permit issued by the agency, or its counterpart in another state, if applicable, for the processing or disposal facility or facilities, excluding a transfer station, at which the waste will be deposited. The collector shall note both the approximate percentage of waste deposited at each of the two primary facility at which the collector most often deposits waste facilities used for the type of waste collected from the generator in the county in which the generator generates the waste and any alternative facilities regularly used by the collector. for the type of waste collected from the generator in the county in which the generator generates the waste.

(b) All disclosures, written or oral, must include the following statement: "You, as the generator of mixed municipal solid waste, may be responsible for any liability that results from contamination at a facility where your waste has been deposited. Minnesota believes that depositing waste in a facility that meets Minnesota state rules for waste disposal facilities, or equivalent rules from other states, and that meets the federal rules for new land disposal facilities, will minimize that potential liability."

(c) If each of the primary or alternative disposal facilities identified by the collector in paragraph (a) meets, at the time of the disclosure notice: (1) the environmental and financial standards for new disposal facilities as described in Code of Federal Regulations, title 40, parts 257 and 258, even if those standards are not yet enforced by the federal government; and (2) all state environmental and financial standards for the facility, the disclosure may state "The disposal facilities to which your waste will be sent during the current calendar year meets those state and federal standards."

(d) If any of the primary or alternative disposal facilities identified by the collector in paragraph (a) do not, at the time of the disclosure notice, meet the standards listed in paragraph (c), clauses (1) and (2), the disclosure must state "The disposal facilities to which your waste may be sent during the current calendar year does not meet those state and federal standards."

(e) The agency shall, by January 1, 1996, develop a list of disposal facilities in Minnesota that meet the state and federal standards described in paragraphs (c) and (d), and shall make this list available upon request to collectors subject to this section. The agency shall update this list annually by January 1 of each year.

Sec. 23. Minnesota Statutes 1994, section 115A.9302, subdivision 2, is amended to read:

Subd. 2. [FORM OF DISCLOSURE.] (a) A collector shall make the disclosure to the waste generator in writing at least once per year or between January 1 and March 31 and on any written contract for collection services for that year. The written disclosure must include all of the information described in subdivision 1. The oral disclosure required in paragraphs (b) and (c) need only include the statement required in subdivision 1, paragraph (b), and the statement required in subdivision 1, paragraph (d), if that paragraph applies. If the license issued by the county to the collector for collection within the county does not require the collector to submit a copy of the disclosure to the county, the collector shall submit a copy to the commissioner by March 31 of each year.

(b) A collector must provide the required disclosure orally to a waste generator at the time the generator inquires about beginning regular collection service and must provide written disclosure to the generator within 30 days from the date of request. This oral disclosure is not required if the city or county within which the waste is generated selects the collector that may provide collection services to the generator.

(c) If a collector provides one-time or occasional service to a waste generator, the collector must orally provide the generator with the required disclosure at the time the service is requested. The collector shall then provide written disclosure to the generator within 30 days from the date of request.

(d) If an additional facility becomes either a primary facility or an alternative facility during the year, the collector shall make the disclosure set forth in subdivision 1 within 30 days. A local government unit that collects solid waste without direct charges to waste generators shall make the disclosure on any statement that includes an amount for waste management, provided that, at a minimum, disclosure to waste generators must be made at least twice annually in a form likely to be available to all generators.

(e) The agency may develop standard disclosure forms containing the information that is required in this section. Collectors may use the form developed by the agency.

Sec. 24. Minnesota Statutes 1994, section 115A.965, subdivision 1, is amended to read:

Subdivision 1. [PACKAGING.] (a) As soon as feasible but not later than August 1, 1993, no manufacturer or distributor may sell or offer for sale or for promotional purposes in this state packaging or a product that is contained in packaging if the packaging itself, or any inks, dyes, pigments, adhesives, stabilizers, or any other additives to the packaging contain any lead, cadmium, mercury, or hexavalent chromium that has been intentionally introduced as an element during manufacture or distribution of the packaging. Intentional introduction does not include the incidental presence of any of the prohibited elements.

(b) For the purposes of this section:

(1) "distributor" means a person who imports packaging or causes packaging to be imported into the state; and

(2) until August 15, 1995 1996, "packaging" does not include steel strapping containing a total concentration level of lead, cadmium, mercury, and hexavalent chromium, added together, of less than 100 parts per million by weight.

Sec. 25. Minnesota Statutes 1994, section 115D.03, subdivision 5, is amended to read:

Subd. 5. [ELIGIBLE RECIPIENTS.] "Eligible recipients" means persons who use, generate, or release toxic pollutants, hazardous substances, or hazardous wastes, or individuals or organizations that provide assistance to these persons.

Sec. 26. Minnesota Statutes 1994, section 115D.03, is amended by adding a subdivision to read:

Subd. 6a. [OFFICER OF THE COMPANY.] "Officer of the company" means one of the following:

(1) an owner or sole proprietor;

(2) a partner;

(3) for a corporation incorporated under chapter 300, the president, secretary, treasurer, or other officer as provided for in the corporation's bylaws or certificate of incorporation;

(4) for a corporation incorporated under chapter 302A, an individual exercising the functions of the chief executive officer or the chief financial officer under section 302A.305 or another officer elected or appointed by the directors of the corporation under section 302A.311;

(5) for a corporation incorporated outside this state, an officer of the company as defined by the laws of the state in which the corporation is incorporated; or

(6) for a limited liability company organized under chapter 322B, the chief manager or treasurer.

Sec. 27. Minnesota Statutes 1994, section 115D.05, is amended to read:

115D.05 [POLLUTION PREVENTION GRANTS.]

Subdivision 1. [PURPOSE.] The director may make grants to study or demonstrate the feasibility of applying specific technologies and methods to prevent develop or implement pollution prevention projects or practices.

Subd. 2. [ELIGIBILITY.] (a) Eligible recipients may receive grants under this section.

(b) Grants may be awarded up to a maximum of two-thirds three-quarters of the total cost of the project. Grant money awarded under this section may not be spent for capital improvements or equipment.

Subd. 3. [PROCEDURE FOR AWARDING GRANTS.] (a) In determining whether to award a grant, the director shall consider at least the following:

(1) the potential of the project to prevent pollution;

(2) the likelihood that the project will develop techniques or processes that will minimize the transfer of pollution from one environmental medium to another;

(3) the extent to which information to be developed through the project will be applicable and disseminated to other persons in the state; and

(4) the willingness of the grant applicant to implement feasible methods and technologies developed under the grant;

(5) the willingness of the grant applicant to assist the director in disseminating information about the pollution prevention methods to be developed through the project; and

(6) the extent to which the project will conform to the pollution prevention policy established in section 115D.02.

(b) The director shall adopt rules to administer the grant program and may administer the grant program in conjunction with the grant program established under section 115A.55, subdivision 3. Prior to completion of any new rulemaking, the director may administer the program under the procedures established in rules promulgated under section 115A.154.

Sec. 28. Minnesota Statutes 1994, section 115D.07, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENT TO PREPARE AND MAINTAIN A PLAN.] (a) Persons who operate a facility required by United States Code, title 42, section 11023, or section 299K.08, subdivision 3, to submit a toxic chemical release form shall prepare a toxic pollution prevention plan for that facility. A facility that is required to submit a toxic chemical release form but does not release a toxic chemical is exempt from the requirements of this subdivision. The plan must contain the information listed in subdivision 2.

(b) Except as provided in paragraphs (d) and (e), for facilities that release a total of 10,000 pounds or more of toxic pollutants annually, the plan must be completed as follows:

(1) on or before July 1, 1991, for facilities having a two-digit standard industrial classification of 35 to 39;

(2) by January 1, 1992, for facilities having a two-digit standard industrial classification of 28 to 34; and

(3) by July 1, 1992, for all other persons required to prepare a plan under this subdivision.

(c) Except as provided in paragraphs (d) and (e), facilities that release less than a total of 10,000 pounds of toxic pollutants annually must complete their plans by July 1, 1992.

(d) For the following facilities, the plan must be completed as follows:

(1) by January 1, 1995, for facilities required to report under section 299K.08, subdivision 3, that have a two-digit standard industrial classification of 01 to 50; and

(2) by July 1, 1995 January 1, 1996, for facilities required to report under section 299K.08, subdivision 3, that have a two-digit standard industrial classification of 51 to 99.

(e) For facilities that become subject to this subdivision after July 1, 1993, the plan must be completed by six months after the first submittal for the facility under United States Code, title 42, section 11023, or section 299K.08, subdivision 3.

(f) Each plan must be updated every two years by January 1 of every even-numbered year and must be maintained at the facility to which it pertains.

Sec. 29. Minnesota Statutes 1994, section 115D.07, subdivision 2, is amended to read:

Subd. 2. [CONTENTS OF PLAN.] (a) Each toxic pollution prevention plan must establish a program identifying the specific technically and economically practicable steps that could be taken during at least the three years following the date the plan is due, to eliminate or reduce the generation or release of toxic pollutants reported by the facility. Toxic pollutants resulting solely from research and development activities need not be included in the plan.

(b) At a minimum, each plan must include:

(1) a policy statement articulating upper management support for eliminating or reducing the generation or release of toxic pollutants at the facility;

(2) a description of the current processes generating or releasing toxic pollutants that specifically describes the types, sources, and quantities of toxic pollutants currently being generated or released by the facility;

(3) a description of the current and past practices used to eliminate or reduce the generation or release of toxic pollutants at the facility and an evaluation of the effectiveness of these practices;

(4) an assessment of technically and economically practicable options available to eliminate or reduce the generation or release of toxic pollutants at the facility, including options such as changing the raw materials, operating techniques, equipment and technology, personnel training, and other practices used at the facility. The assessment may include a cost benefit analysis of the available options;

(5) a statement of objectives based on the assessment in clause (4) and a schedule for achieving those objectives. Wherever technically and economically practicable, the objectives for eliminating or reducing the generation or release of each toxic pollutant at the facility must be expressed in numeric terms based on a specified base year that is no earlier than 1987. Otherwise, the objectives must include a clearly stated list of actions designed to lead to the establishment of numeric objectives as soon as practicable;

(6) an explanation of the rationale for each objective established for the facility;

(7) a listing of options that were considered not to be economically and technically practicable; and

(8) a certification, signed and dated by the facility manager and an officer of the company under penalty of section 609.63, attesting to the accuracy of the information in the plan.

Sec. 30. Minnesota Statutes 1994, section 115D.08, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENT TO SUBMIT PROGRESS REPORT.] (a) All persons required to prepare a toxic pollution prevention plan under section 115D.07 shall submit an annual progress report to the commissioner that may be drafted in a manner that does not disclose proprietary information. Progress reports are due on October 1 of each year. The first progress reports are due in 1992.

(b) At a minimum, each progress report must include:

(1) a summary of each objective established in the plan, including the base year for any objective stated in numeric terms, and the schedule for meeting the each objective;

(2) a summary of progress made during the past year, if any, toward meeting each objective established in the plan including the quantity of each toxic pollutant eliminated or reduced;

(3) a statement of the methods through which elimination or reduction has been achieved;

(4) if necessary, an explanation of the reasons objectives were not achieved during the previous year, including identification of any technological, economic, or other impediments the facility faced in its efforts to achieve its objectives; and

(5) a certification, signed and dated by the facility manager and an officer of the company under penalty of section 609.63, attesting that a plan meeting the requirements of section 115D.07 has been prepared and also attesting to the accuracy of the information in the progress report.

Sec. 31. Minnesota Statutes 1994, section 115D.10, is amended to read:

115D.10 [TOXIC POLLUTION PREVENTION EVALUATION REPORT.]

The director, in cooperation with the commissioner and commission, shall report to the environment and natural resources committees of the legislature and the legislative commission on waste management on progress being made in achieving the objectives of sections 115D.01 to 115D.12. The report must be submitted by February 1 of each even-numbered year.

Sec. 32. Minnesota Statutes 1994, section 116.07, subdivision 4a, is amended to read:

Subd. 4a. [PERMITS.] (a) The pollution control agency may issue, continue in effect or deny permits, under such conditions as it may prescribe for the prevention of pollution, for the emission of air contaminants, or for the installation or operation of any emission facility, air contaminant treatment facility, treatment facility, potential air contaminant storage facility, or storage facility, or any part thereof, or for the sources or emissions of noise pollution.

The pollution control agency may also issue, continue in effect or deny permits, under such conditions as it may prescribe for the prevention of pollution, for the storage, collection, transportation, processing, or disposal of waste, or for the installation or operation of any system or facility, or any part thereof, related to the storage, collection, transportation, processing, or disposal of waste.

The pollution control agency may revoke or modify any permit issued under this subdivision and section 116.081 whenever it is necessary, in the opinion of the agency, to prevent or abate pollution.

(b) The pollution control agency has the authority for approval over the siting, expansion, or operation of a solid waste facility with regard to environmental issues. However, the agency's issuance of a permit does not release the permittee from any liability, penalty, or duty imposed by any applicable county ordinances. Nothing in this chapter precludes, or shall be construed to preclude, a county from enforcing land use controls, regulations, and ordinances existing at the time of the permit application and adopted pursuant to sections 366.10 to 366.181, 394.21 to 394.37, or 462.351 to 462.365, with regard to the siting, expansion, or operation of a solid waste facility.

Sec. 33. Minnesota Statutes 1994, section 116.07, subdivision 4d, is amended to read:

Subd. 4d. [PERMIT FEES.] (a) The agency may collect permit fees in amounts not greater than those necessary to cover the reasonable costs of reviewing and acting upon applications for agency permits and implementing and enforcing the conditions of the permits pursuant to agency rules. Permit fees shall not include the costs of litigation. The agency shall adopt rules under section 16A.128 16A.1285 establishing the amounts and methods of collection of any permit fees collected under this subdivision. The fee schedule must reflect reasonable and routine permitting, implementation, and enforcement costs. The agency may impose an additional enforcement fee to be collected for a period of up to two years to cover the reasonable costs of implementing and enforcing the conditions of a permit under the rules of the agency. Any money collected under this paragraph shall be deposited in the special revenue account.

(b) Notwithstanding paragraph (a), and section 16A.128, subdivision 1 16A.1285, subdivision 2, the agency shall collect an annual fee from the owner or operator of all stationary sources, emission facilities, emissions units, air contaminant treatment facilities, treatment facilities, potential air contaminant storage facilities, or storage facilities subject to the requirement to obtain a permit under Title subchapter V of the federal Clean Air Act Amendments of 1990, Public Law Number 101-549, Statutes at Large, volume 104, pages 2399, United States Code, title 42, section 7401 et seq., or section 116.081. The annual fee shall be used to pay for all direct and indirect reasonable costs, including attorney general costs, required to develop and administer the permit program requirements of Title subchapter V of the federal Clean Air Act Amendments of 1990, Public Law Number 101-549, Statutes at Large, volume 104, pages 2399, United States Code, title 42, section 7401 et seq., and sections of this chapter and the rules adopted under this chapter related to air contamination and noise. Those costs include the reasonable costs of reviewing and acting upon an application for a permit; implementing and enforcing statutes, rules, and the terms and conditions of a permit; emissions, ambient, and deposition monitoring; preparing generally applicable regulations; responding to federal guidance; modeling, analyses, and demonstrations; preparing inventories and tracking emissions; providing information to the public about these activities; and, after June 30, 1992, the costs of acid deposition monitoring currently assessed under section 116C.69, subdivision 3.

(c) The agency shall adopt fee rules in accordance with the procedures in section 16A.128, subdivisions 1a and 2a 16A.1285, subdivision 5, that will result in the collection, in the aggregate, from the sources listed in paragraph (b), of the following amounts:

(1) in fiscal years 1992 and 1993, the amount appropriated by the legislature from the air quality account in the environmental fund for the agency's air quality program;

(2) for fiscal year 1994 and thereafter, an amount not less than $25 per ton of each volatile organic compound; pollutant regulated under United States Code, title 42, section 7411 or 7412 (section 111 or 112 of the federal Clean Air Act); and each pollutant, except carbon monoxide, for which a national primary ambient air quality standard has been promulgated; and

(3) for fiscal year 1994 and thereafter, (2) the agency fee rules may also result in the collection, in the aggregate, from the sources listed in paragraph (b), of an amount not less than $25 per ton of each pollutant not listed in clause (2) (1) that is regulated under Minnesota Rules, this chapter 7005, or for which a state primary ambient air quality standard has been adopted or air quality rules adopted under this chapter.

The agency must not include in the calculation of the aggregate amount to be collected under the fee rules any amount in excess of 4,000 tons per year of each air pollutant from a source.

(d) To cover the reasonable costs described in paragraph (b), the agency shall provide in the rules promulgated under paragraph (c) for an increase in the fee collected in each year beginning after fiscal year 1993 by the percentage, if any, by which the Consumer Price Index for the most recent calendar year ending before the beginning of the year the fee is collected exceeds the Consumer Price Index for the calendar year 1989. For purposes of this paragraph the Consumer Price Index for any calendar year is the average of the Consumer Price Index for all-urban consumers published by the United States Department of Labor, as of the close of the 12-month period ending on August 31 of each calendar year. The revision of the Consumer Price Index that is most consistent with the Consumer Price Index for calendar year 1989 shall be used.

(e) Any money collected under paragraphs (b) to (d) must be deposited in an air quality account in the environmental fund and must be used solely for the activities listed in paragraph (b).

(f) Persons who wish to construct or expand an air emission facility may offer to reimburse the agency for the costs of staff overtime or consultant services needed to expedite permit review. The reimbursement shall be in addition to fees imposed by paragraphs (a) to (d). When the agency determines that it needs additional resources to review the permit application in an expedited manner, and that expediting the review would not disrupt air permitting program priorities, the agency may accept the reimbursement. Reimbursements accepted by the agency are appropriated to the agency for the purpose of reviewing the permit application. Reimbursement by a permit applicant shall precede and not be contingent upon issuance of a permit and shall not affect the agency's decision on whether to issue or deny a permit, what conditions are included in a permit, or the application of state and federal statutes and rules governing permit determinations.

Sec. 34. Minnesota Statutes 1994, section 116.072, is amended to read:

116.072 [ADMINISTRATIVE PENALTIES.]

Subdivision 1. [AUTHORITY TO ISSUE PENALTY ORDERS.] (a) The commissioner may issue an order requiring violations to be corrected and administratively assessing monetary penalties for violations of this chapter and chapters 115, 115A, 115D, and 115E, any rules adopted under those chapters, and any standards, limitations, or conditions established in an agency permit, including conditions established under section 473.823, subdivision 3; and for failure to respond to a request for information under section 115B.17, subdivision 3. The order must be issued as provided in this section.

(b) A county board may adopt an ordinance containing procedures for the issuance of administrative penalty orders beginning August 1, 1996. Before adopting ordinances, counties shall work cooperatively with the agency to develop an implementation plan for orders that substantially conforms to a model ordinance developed by the counties and the agency. After adopting the ordinance, the county board may issue orders requiring violations to be corrected and administratively assessing monetary penalties for violations of county ordinances adopted under section 400.16, 400.161, or 473.811 or chapter 115A that regulate solid and hazardous waste and any standards, limitations, or conditions established in a county license issued pursuant to these ordinances. For violations of ordinances relating

to hazardous waste, a county's penalty authority is described in subdivisions 2 to 5. For violations of ordinances relating to solid waste, a county's penalty authority is described in subdivision 5a. Subdivisions 6 to 11 apply to violations of ordinances relating to both solid and hazardous waste.

(c) Monetary penalties collected by a county must be used to manage solid and hazardous waste. A county board's authority is limited to violations described in paragraph (b). Its authority to issue orders under this section expires August 1, 1999.

Subd. 2. [AMOUNT OF PENALTY; CONSIDERATIONS.] (a) The commissioner or county board may issue an order assessing a penalty up to $10,000 for all violations identified during an inspection or other compliance review.

(b) In determining the amount of a penalty the commissioner or county board may consider:

(1) the willfulness of the violation;

(2) the gravity of the violation, including damage to humans, animals, air, water, land, or other natural resources of the state;

(3) the history of past violations;

(4) the number of violations;

(5) the economic benefit gained by the person by allowing or committing the violation; and

(6) other factors as justice may require, if the commissioner or county board specifically identifies the additional factors in the commissioner's or county board's order.

(c) For a violation after an initial violation, the commissioner or county board shall, in determining the amount of a penalty, consider the factors in paragraph (b) and the:

(1) similarity of the most recent previous violation and the violation to be penalized;

(2) time elapsed since the last violation;

(3) number of previous violations; and

(4) response of the person to the most recent previous violation identified.

Subd. 3. [CONTENTS OF ORDER.] An order assessing an administrative penalty under this section shall include:

(1) a concise statement of the facts alleged to constitute a violation;

(2) a reference to the section of the statute, rule, ordinance, variance, order, stipulation agreement, or term or condition of a permit or license that has been violated;

(3) a statement of the amount of the administrative penalty to be imposed and the factors upon which the penalty is based; and

(4) a statement of the person's right to review of the order.

Subd. 4. [CORRECTIVE ORDER.] (a) The commissioner or county board may issue an order assessing a penalty and requiring the violations cited in the order to be corrected within 30 calendar days from the date the order is received.

(b) The person to whom the order was issued shall provide information to the commissioner or county board before the 31st day after the order was received demonstrating that the violation has been corrected or that appropriate steps toward correcting the violation have been taken. The commissioner or county board shall determine whether the violation has been corrected and notify the person subject to the order of the commissioner's or county board's determination.

Subd. 5. [PENALTY.] (a) Except as provided in paragraph (b), if the commissioner or county board determines that the violation has been corrected or appropriate steps have been taken to correct the action, the penalty must be forgiven. Unless the person requests review of the order under subdivision 6 or 7 before the penalty is due, the penalty in the order is due and payable:

(1) on the 31st day after the order was received, if the person subject to the order fails to provide information to the commissioner or county board showing that the violation has been corrected or that appropriate steps have been taken toward correcting the violation; or

(2) on the 20th day after the person receives the commissioner's or county board's determination under subdivision 4, paragraph (b), if the person subject to the order has provided information to the commissioner or county board that the commissioner or county board determines is not sufficient to show the violation has been corrected or that appropriate steps have been taken toward correcting the violation.

(b) For a repeated or serious violation, the commissioner or county board may issue an order with a penalty that will not be forgiven after the corrective action is taken. The penalty is due by 31 days after the order was received unless review of the order under subdivision 6, 7, or 8 has been sought.

(c) Interest at the rate established in section 549.09 begins to accrue on penalties under this subdivision on the 31st day after the order with the penalty was received.

Subd. 5a. [COUNTY PENALTY AUTHORITY FOR SOLID WASTE VIOLATIONS.] (a) A county board's authority to issue a corrective order and assess a penalty for all violations relating to solid waste that are identified during an inspection or other compliance review is as described in this subdivision. The model ordinance described in subdivision 1, paragraph (b), must include provisions for letters or warnings that may be issued following the inspection and before proceeding under paragraph (b).

(b) For all violations described in paragraph (a), a county attorney or county department with responsibility for environmental enforcement may first issue a notice of violation that complies with the requirements of subdivision 4, except that no penalty may be assessed unless, in the opinion of the county board, the gravity of the violation and its potential for damage to, or actual damage to, public health or the environment is such that a penalty under paragraph (c) or (d) is warranted. In that case the county attorney or department may proceed directly to paragraph (c) or (d).

(c) If the violations are not corrected, if appropriate steps have not been taken to correct them, or if the county board has determined that the gravity of the violations are such that action under this paragraph is warranted, a county board may issue a corrective order as described in subdivision 4, except that the penalty may not exceed $2,000.

(d) If the violations are still not corrected, if appropriate steps have not been taken to correct them, or if the county board has determined that the gravity of the violations are such that action under this paragraph is warranted, a county board may issue a corrective order as described in subdivision 4, except that the penalty may not exceed $5,000.

(e) In determining the amount of the penalty in paragraph (c) or (d), the county board shall be governed by subdivision 2, paragraphs (b) and (c). The penalty assessed under paragraph (c) or (d) shall be due and payable, forgiven, or assessed without forgiveness as described in subdivision 5.

Subd. 6. [EXPEDITED ADMINISTRATIVE HEARING.] (a) Within 30 days after receiving an order or within 20 days after receiving notice that the commissioner or county board has determined that a violation has not been corrected or appropriate steps have not been taken, the person subject to an order under this section may request an expedited hearing, utilizing the procedures of Minnesota Rules, parts 1400.8510 to 1400.8612, to review the commissioner's or county board's action. The hearing request must specifically state the reasons for seeking review of the order. The person to whom the order is directed and the commissioner or county board are the parties to the expedited hearing. The commissioner or county board must notify the person to whom the order is directed of the time and place of the hearing at least 20 days before the hearing. The expedited hearing must be held within 30 days after a request for hearing has been filed with the commissioner or county board unless the parties agree to a later date.

(b) All written arguments must be submitted within ten days following the close of the hearing. The hearing shall be conducted under Minnesota Rules, parts 1400.8510 to 1400.8612, as modified by this subdivision. The office of administrative hearings may, in consultation with the agency, adopt rules specifically applicable to cases under this section.

(c) The administrative law judge shall issue a report making recommendations about the commissioner's or county board's action to the commissioner or county board within 30 days following the close of the record. The administrative law judge may not recommend a change in the amount of the proposed penalty unless the administrative law judge determines that, based on the factors in subdivision 2, the amount of the penalty is unreasonable.

(d) If the administrative law judge makes a finding that the hearing was requested solely for purposes of delay or that the hearing request was frivolous, the commissioner or county board may add to the amount of the penalty the costs charged to the agency by the office of administrative hearings for the hearing.

(e) If a hearing has been held, the commissioner or county board may not issue a final order until at least five days after receipt of the report of the administrative law judge. The person to whom an order is issued may, within those five days, comment to the commissioner or county board on the recommendations and the commissioner or county board will consider the comments. The final order may be appealed in the manner provided in sections 14.63 to 14.69.

(f) If a hearing has been held and a final order issued by the commissioner or county board, the penalty shall be paid by 30 days after the date the final order is received unless review of the final order is requested under sections 14.63 to 14.69. If review is not requested or the order is reviewed and upheld, the amount due is the penalty, together with interest accruing from 31 days after the original order was received at the rate established in section 549.09.

Subd. 7. [DISTRICT COURT HEARING.] (a) Within 30 days after the receipt of an order from the commissioner or a county board or within 20 days of receipt of notice that the commissioner or a county board has determined that a violation has not been corrected or appropriate steps have not been taken, the person subject to an order under this section may file a petition in district court for review of the order in lieu of requesting an administrative hearing under subdivision 6. The petition shall be filed with the court administrator with proof of service on the commissioner or county board. The petition shall be captioned in the name of the person making the petition as petitioner and the director commissioner or county board as respondent. The petition shall state with specificity the grounds upon which the petitioner seeks rescission of the order, including the facts upon which each claim is based.

(b) At trial, the commissioner or county board must establish by a preponderance of the evidence that a violation subject to this section occurred, the petitioner is responsible for the violation, a penalty immediately assessed as provided for under subdivision 5, paragraph (b) or (c), is justified by the violation, and the factors listed in subdivision 2 were considered when the penalty amount was determined and the penalty amount is justified by those factors.

Subd. 8. [MEDIATION.] In addition to review under subdivision 6 or 7, the commissioner or county board is authorized to enter into mediation concerning an order issued under this section if the commissioner or county board and the person to whom the order is issued both agree to mediation.

Subd. 9. [ENFORCEMENT.] (a) The attorney general may proceed on behalf of the state, or the county attorney on behalf of the county, may proceed to enforce penalties that are due and payable under this section in any manner provided by law for the collection of debts.

(b) The attorney general or county attorney may petition the district court to file the administrative order as an order of the court. At any court hearing, the only issues parties may contest are procedural and notice issues. Once entered, the administrative order may be enforced in the same manner as a final judgment of the district court.

(c) If a person fails to pay the penalty, the attorney general or county attorney may bring a civil action in district court seeking payment of the penalties, injunctive, or other appropriate relief including monetary damages, attorney fees, costs, and interest.

Subd. 10. [REVOCATION AND SUSPENSION OF PERMIT.] If a person fails to pay a penalty owed under this section, the agency or county board has grounds to revoke or refuse to reissue or renew a permit or license issued by the agency or county board.

Subd. 11. [CUMULATIVE REMEDY.] The authority of the agency or county board to issue a corrective order assessing penalties is in addition to other remedies available under statutory or common law, except that the state or county board may not seek civil penalties under any other provision of law for the violations covered by the administrative penalty order. The payment of a penalty does not preclude the use of other enforcement provisions, under which penalties are not assessed, in connection with the violation for which the penalty was assessed.

Subd. 12. [REPORT; ADMINISTRATIVE PENALTY ORDER.] (a) All counties that have adopted ordinances allowing them to issue administrative penalty orders shall report to the legislative auditor by September 1, 1998, on administrative penalty activity through August 1, 1998. The reports must include at least the following information: the nature and number of orders and penalties issued or forgiven, the nature and outcome of appeals taken, how much revenue was collected from penalties and how it was spent, and any other information a county board finds relevant.

(b) The legislative audit commission is requested to direct the legislative auditor to evaluate the data and report to the legislative commission on waste management by January 1, 1999, on at least the following matters: the degree to which penalties were suitable to the gravity of the violation, compliance with the implementation plan, and any other information the auditor finds relevant. In preparing the report, the auditor shall solicit information from counties and the regulated community and shall make recommendations as to whether the administrative penalty authority should be continued, discontinued, or continued with modifications and make any other recommendations the auditor wishes to propose as a result of the study.

Sec. 35. Minnesota Statutes 1994, section 116.96, subdivision 5, is amended to read:

Subd. 5. [REGULATED POLLUTANT.] "Regulated pollutant" means:

(1) a volatile organic compound that participates in atmospheric photochemical reactions;

(2) a pollutant for which a national ambient air quality standard has been promulgated;

(3) a pollutant that is addressed by a standard promulgated under section 7411 or 7412 of the Clean Air Act; or

(4) any pollutant that is regulated under Minnesota Rules, this chapter 7005, or for which a state ambient air quality standard has been adopted or air quality rules adopted under this chapter.

Sec. 36. [116.991] [SMALL BUSINESS ENVIRONMENTAL LOAN PROGRAM.]

Subdivision 1. [ESTABLISHMENT.] A small business environmental revolving loan program is established to be administered by the commissioner for providing loans to small businesses for purposes of complying with the Clean Air Act, United States Code, title 42, section 7401, et seq.

Subd. 2. [ELIGIBLE BORROWER.] To be eligible for a loan under this section, a borrower must:

(1) be subject to Clean Air Act requirements;

(2) need to make a process change or equipment purchase to comply with the Clean Air Act; and

(3) qualify as a small business as defined in section 645.445.

Subd. 3. [LOAN APPLICATION PROCEDURE.] An eligible borrower may apply for a loan after the commissioner determines the business to be subject to Clean Air Act requirements and approves the process change or equipment needed to achieve compliance. The commissioner shall consider the order in which applications are received for awarding loans and priority may be given to compliance with newly promulgated standards under United States Code, title 42, section 7412 (section 112 of the Clean Air Act). The commissioner shall decide whether to award the loan to an eligible borrower based on:

(1) the applicant's financial needs;

(2) the applicant's ability to repay the loan; and

(3) the expected environmental benefit.

Subd. 4. [LIMITATION ON LOAN OBLIGATION.] A loan made under this section is limited to the money available in the small business environmental loan account.

Subd. 5. [LOAN CONDITIONS.] A loan made under this section must include:

(1) an interest rate that is the lesser of four percent or 50 percent of prime rate;

(2) a term of payment of not more than seven years; and

(3) an amount not less than $1,000 or more than $50,000.

Sec. 37. [116.992] [SMALL BUSINESS ENVIRONMENTAL LOAN ACCOUNT.]

The small business environmental loan account is established in the environmental fund. Loan repayments must be credited to this account.

Sec. 38. Minnesota Statutes 1994, section 116C.69, subdivision 3, is amended to read:

Subd. 3. [FUNDING; ASSESSMENT.] The board shall finance its base line studies, general environmental studies, development of criteria, inventory preparation, monitoring of conditions placed on site certificates and construction permits, and all other work, other than specific site and route designation, from an assessment made quarterly, at least 30 days before the start of each quarter, by the board against all utilities with annual retail kilowatt-hour sales greater than 4,000,000 kilowatt-hours in the previous calendar year.

Until June 30, 1992, the assessment shall also include an amount sufficient to cover 60 percent of the costs to the pollution control agency of achieving, maintaining, and monitoring compliance with the acid deposition control standard adopted under sections 116.42 to 116.45, reprinting informational booklets on acid rain, and costs for additional research on the impacts of acid deposition on sensitive areas published under section 116.44, subdivision 1. The commissioner of the pollution control agency must prepare a work plan and budget and submit them annually by June 30 to the pollution control agency board. The agency board must take public testimony on the budget and work plan. After the agency board approves the work plan and budget they must be submitted annually to the legislative water commission for review and recommendation before an assessment is levied. Each share shall be determined as follows: (1) the ratio that the annual retail kilowatt-hour sales in the state of each utility bears to the annual total retail kilowatt-hour sales in the state of all these utilities, multiplied by 0.667, plus (2) the ratio that the annual gross revenue from retail kilowatt-hour sales in the state of each utility bears to the annual total gross revenues from retail kilowatt-hour sales in the state of all these utilities, multiplied by 0.333, as determined by the board. The assessment shall be credited to the special revenue fund and shall be paid to the state treasury within 30 days after receipt of the bill, which shall constitute notice of said assessment and demand of payment thereof. The total amount which may be assessed to the several utilities under authority of this subdivision shall not exceed the sum of the annual budget of the board for carrying out the purposes of this subdivision plus 60 percent of the annual budget of the pollution control agency for achieving, maintaining, and monitoring compliance with the acid deposition control standard adopted under sections 116.42 to 116.45, for reprinting informational booklets on acid rain, and for costs for additional research on the impacts of acid deposition on sensitive areas published under section 116.44, subdivision 1. The assessment for the second quarter of each fiscal year shall be adjusted to compensate for the amount by which actual expenditures by the board and the pollution control agency for the preceding fiscal year were more or less than the estimated expenditures previously assessed.

Sec. 39. Minnesota Statutes 1994, section 325E.0951, subdivision 5, is amended to read:

Subd. 5. [RULES SUPERSEDED.] This section supersedes Minnesota Rules, part 7005.1190 7023.0120, to the extent the rule is inconsistent with this section.

Sec. 40. Minnesota Statutes 1994, section 400.16, is amended to read:

400.16 [SOLID WASTE AND SEWAGE SLUDGE DISPOSAL MANAGEMENT REGULATIONS.]

The county may by ordinance establish and revise rules, regulations, and standards for solid waste and sewage sludge management and land pollution, relating to (a) the location, sanitary operation, and maintenance of solid waste facilities and sewage sludge disposal facilities by the county and any municipality or other public agency and by private operators; (b) the collection, processing, and disposal of solid waste and sewage sludge; (c) the amount and type of equipment required in relation to the amount and type of material received at any solid waste facility or sewage sludge disposal facility; (d) the control of salvage operations, water or air or land pollution, and rodents at such facilities; (e) the termination or abandonment of the facilities or activities; and (f) other matters relating to the facilities as may be determined necessary for the public health, welfare, and safety. The county may issue permits or licenses for solid waste facilities and may require that the facilities be registered with an appropriate county office. The county shall adopt the ordinances for mixed municipal solid waste management. The county shall make provision for issuing permits or licenses for mixed municipal solid waste facilities and shall require that the facilities

be registered with an appropriate county office. No permit or license shall be issued for a mixed municipal solid waste facility unless the applicant has demonstrated to the satisfaction of the county board the availability of revenues necessary to operate the facility in accordance with applicable state and local laws, ordinances, and rules. No permit shall be issued for a solid waste facility used primarily for resource recovery or a transfer station serving such a facility, if the facility or station is owned or operated by a public agency or if the acquisition or betterment of the facility or station is secured by public funds or obligations issued by a public agency, unless the county finds and determines that adequate markets exist for the products recovered and that any displacement of existing resource recovery facilities and transfer stations serving such facilities that may result from the establishment of the new facility is required in order to achieve the waste management objectives of the county. A county may not require that a vehicle be issued a permit as a transfer station if it is temporarily acting as one solely due to the imposition of seasonal load restrictions under section 169.87. The county ordinance shall require appropriate procedures for termination or abandonment of any mixed municipal solid waste facilities or services, which shall include provision for long term monitoring for possible land pollution, and for the payment by the owners or operators thereof, or both, of any costs incurred by the county in completing the procedures. The county may require the procedures and payments with respect to any facilities or services regulated pursuant to this section. In the event the operators or owners fail to complete the procedures in accordance with the ordinance, the county may recover the costs of completion in a civil action in any court of competent jurisdiction or, in the discretion of the board, the costs may be certified to the county auditor as a special tax against the land to be collected as other taxes are collected. The ordinance may be enforced by injunction, action to compel performance, or other appropriate action in the district court, or administrative penalty order authorized under section 116.072. Any ordinance enacted under this section shall embody minimum standards and requirements established by rule of the agency.

Sec. 41. Minnesota Statutes 1994, section 400.161, is amended to read:

400.161 [HAZARDOUS WASTE REGULATIONS.]

(a) The county may by ordinance establish and revise rules, regulations, and standards relating to (1) identification of hazardous waste, (2) the labeling and classification of hazardous waste, (3) the collection, transportation, processing, disposal, and storage of hazardous waste, and (4) other matters as may be determined necessary for the public health, welfare and safety. The county may issue permits or licenses for hazardous waste generation and may require the generators be registered with a county office. The ordinance may require appropriate procedures for the payment by the generator of any costs incurred by the county in completing such procedures. If the generator fails to complete such procedures, the county may recover the costs of completion in a civil action in any court of competent jurisdiction or, in the discretion of the board, the costs may be certified to the county auditor as a special tax against the land as other taxes are collected. The ordinance may be enforced by injunction, action to compel performance, or other action in district court, or administrative penalty order authorized under section 116.072. County hazardous waste ordinances shall embody and be consistent with agency hazardous waste rules. Counties shall submit adopted ordinances to the agency for review. In the event that agency rules are modified, each county shall modify its ordinances accordingly and shall submit the modification to the agency for review within 120 days. Issuing, denying, modifying, imposing conditions upon, or revoking permits or licenses and county hazardous waste regulations and ordinances shall be subject to review, denial, suspension, modification, and reversal by the pollution control agency. The pollution control agency shall after written notification have 15 days in the case of hazardous waste permits and licenses and 30 days in the case of hazardous waste ordinances to review, deny, suspend, modify, or reverse the action of the county. After this period, the action of the county board shall be final subject to appeal to the district court as provided in section 115.05.

(b) A county may not impose a fee under this section on material that is reused at the facility where the material is generated in a manner that the facility owner or operator can demonstrate does not increase the toxicity of, or the level of hazardous substances or pollutants or contaminants in, products that leave the facility.

Sec. 42. Minnesota Statutes 1994, section 473.149, subdivision 1, is amended to read:

Subdivision 1. [POLICY PLAN; GENERAL REQUIREMENTS.] The metropolitan council shall prepare and by resolution adopt as part of its development guide a director of the office of environmental assistance may revise the metropolitan long range policy plan for solid waste management in the metropolitan area. When adopted, and revised by the metropolitan council prior to the transfer of powers and duties in Laws 1994, chapter 639, article 5, section 2. The plan shall be followed in the metropolitan area. Until the director revises it under subdivision 3, the plan adopted and revised by the council on September 26, 1991, remains in effect. The plan shall address the state policies and purposes expressed in section 115A.02. The plan shall substantially conform to all policy statements, purposes, goals, standards, maps and plans in development guide sections and plans adopted by the council, provided

that no land shall be thereby excluded from consideration as a solid waste facility site except land determined by the agency to be intrinsically unsuitable for such use. The plan shall include goals and policies for solid waste management, including recycling consistent with section 115A.551, and household hazardous waste management consistent with section 115A.96, subdivision 6, in the metropolitan area and, to the extent appropriate, statements and information similar to that required under section 473.146, subdivision 1.

The plan shall include criteria and standards for solid waste facilities and solid waste facility sites respecting the following matters: general location; capacity; operation; processing techniques; environmental impact; effect on existing, planned, or proposed collection services and waste facilities; and economic viability. The plan shall, to the extent practicable and consistent with the achievement of other public policies and purposes, encourage ownership and operation of solid waste facilities by private industry. For solid waste facilities owned or operated by public agencies or supported primarily by public funds or obligations issued by a public agency, the plan shall include additional criteria and standards to protect comparable private and public facilities already existing in the area from displacement unless the displacement is required in order to achieve the waste management objectives identified in the plan. In developing revising the plan, the council director shall consider the orderly and economic development, public and private, of the metropolitan area; the preservation and best and most economical use of land and water resources in the metropolitan area; the protection and enhancement of environmental quality; the conservation and reuse of resources and energy; the preservation and promotion of conditions conducive to efficient, competitive, and adaptable systems of waste management; and the orderly resolution of questions concerning changes in systems of waste management. Criteria and standards for solid waste facilities shall be consistent with rules adopted by the pollution control agency pursuant to chapter 116 and shall be at least as stringent as the guidelines, regulations, and standards of the federal Environmental Protection Agency.

Sec. 43. Minnesota Statutes 1994, section 473.149, subdivision 2d, is amended to read:

Subd. 2d. [LAND DISPOSAL ABATEMENT PLAN.] (a) After considering any county land disposal abatement proposals and waste stream analysis that have been submitted under section 473.803, subdivision 1b, The council director shall amend its include in the policy plan to include specific and quantifiable metropolitan objectives for abating to the greatest feasible and prudent extent the need for and practice of land disposal of mixed municipal solid waste and of specific components of the solid waste stream, including residuals and ash, either by type of waste or class of generator.

(b) The objectives must be stated in annual increments through the year 1990 and thereafter in five-year six-year increments for a period of at least 20 years from the date of adoption of policy plan revisions. The plan must include a reduced estimate of the capacity, based on the council's abatement objectives, needed for the disposal of various types of waste in each five-year six-year increment and the general area of the region where the capacity should be developed.

(c) The plan must include objectives for waste reduction and measurable objectives for local abatement of solid waste through resource recovery, recycling, and source separation programs for each metropolitan county stated in annual increments through the year 1990 and in five-year six-year increments for a period of at least 20 years from the date of adoption of policy plan revisions.

(d) The standards must be based upon and implement the council's metropolitan abatement objectives. The council's plan must include standards and procedures to be used by the council director in determining whether a metropolitan county has implemented the council's metropolitan land disposal abatement plan and has achieved the objectives for local abatement.

Sec. 44. Minnesota Statutes 1994, section 473.149, subdivision 2e, is amended to read:

Subd. 2e. [SOLID WASTE DISPOSAL FACILITIES DEVELOPMENT SCHEDULE CAPACITY NEEDS.] (a) After requesting and considering recommendations from the counties, cities, and towns, the council director as part of its the policy plan shall determine the number of sites and the capacity of sites needed within to serve the metropolitan area for disposal of solid waste disposal facilities.

(b) The council shall adopt a schedule of disposal capacity to be developed within the metropolitan area, including residuals and ash, in five-year six-year increments for a period of at least 20 years from adoption of development schedule policy plan revisions. In making the schedule may not allow capacity in excess of determination, the director must take into account the council's reduced estimate of the disposal capacity needed because of the council's land disposal abatement plan.

(c) The council shall make the implementation of elements of the schedule contingent on actions of each county in adopting and implementing abatement plans pursuant to section 473.803, subdivision 1b. The council may review the development schedule every year and revise the development schedule based on the progress made in the implementation of the council's abatement plans and achievement of metropolitan and local abatement objectives. The council shall review and revise, by resolution following public hearing, the development schedule based on significant changes in the landfill capacity of the metropolitan area. The schedule must include procedures and criteria for making revisions.

(d) The schedule director's determination must include standards and procedures for council certification of need pursuant to section 473.823. The schedule must also include a closure schedule and plans for postclosure management and disposition of facilities, including facilities in existence before the adoption of the development schedule.

Sec. 45. Minnesota Statutes 1994, section 473.149, subdivision 3, is amended to read:

Subd. 3. [PREPARATION AND; ADOPTION; AND REVISION.] (a) The solid waste policy plan shall be prepared, adopted, and amended, revised as necessary in accordance with the rulemaking provisions of chapter 14 and after consultation with the metropolitan counties and the pollution control agency. Any comprehensive plan adopted by the council shall remain in force and effect while new or amended plans are being prepared and adopted by the council. No

(b) The metropolitan council or a metropolitan county, local government unit, commission, or person shall not acquire, construct, improve or operate any solid waste facility in the metropolitan area except in accordance with the council's plan and section 473.823, provided that no solid waste facility in use when a plan is adopted shall be discontinued solely because it is not located in an area designated in the plan as acceptable for the location of such facilities.

Sec. 46. Minnesota Statutes 1994, section 473.149, subdivision 6, is amended to read:

Subd. 6. [REPORT TO LEGISLATURE.] The council director shall report on abatement to the legislative commission on waste management by July 1 of each odd-numbered year. The report must include an assessment of whether the objectives of the metropolitan abatement plan have been met and whether each county and each class of city within each county have achieved the objectives set for it in the council's plan. The report must recommend any legislation that may be required to implement the plan. The report shall include the reports be included in the report required by sections 115A.551, subdivision 4; 473.846; and 473.848, subdivision 4 section 115A.411. If in any year the council director reports that the objectives of the council's abatement plan have not been met, the council director shall evaluate and report on the need to reassign governmental responsibilities among cities, counties, and metropolitan agencies to assure implementation and achievement of the metropolitan and local abatement plans and objectives.

The report in each even-numbered year must include a report on the operating, capital, and debt service costs of solid waste facilities in the metropolitan area; changes in the costs; the methods used to pay the costs; and the resultant allocation of costs among users of the facilities and the general public. The facility costs report must present the cost and financing analysis in the aggregate and broken down by county and by major facility.

Sec. 47. Minnesota Statutes 1994, section 473.803, subdivision 1c, is amended to read:

Subd. 1c. [COUNTY ABATEMENT PLAN.] Each county shall revise its master plan to include a land disposal abatement element to implement the council's metropolitan land disposal abatement plan adopted under section 473.149, subdivision 2d, and shall submit the revised master plan to the council director for review under subdivision 2 within nine months after the adoption of the council's metropolitan abatement plan. The county plan must implement the local abatement objectives for the county and cities within the county as stated in the council's metropolitan abatement plan. The county abatement plan must include specific and quantifiable county objectives, based on the council's objectives in the metropolitan abatement plan, for abating to the greatest feasible and prudent extent the need for and practice of land disposal of mixed municipal solid waste and of specific components of the solid waste stream generated in the county, stated in annual increments through the date specified in section 473.848 and in two five-year six-year increments thereafter for a period of at least 20 years from the date of metropolitan policy plan revisions. The plan must include measurable performance standards for local abatement of solid waste through resource recovery and waste reduction and separation programs and activities for the county as a whole and for statutory or home rule charter cities of the first, second, and third class, respectively, in the county, stated in annual increments through the date specified in section 473.848 and in two five-year six-year increments thereafter

for a period of at least 20 years from the date of metropolitan policy plan revisions. The performance standards must implement the metropolitan and county abatement objectives. The plan must include standards and procedures to be used by the county in determining annually under subdivision 3 whether a city within the county has implemented the plan and has satisfied the performance standards for local abatement. The master plan revision required by this subdivision must be prepared in consultation with the advisory committee established pursuant to subdivision 4.

Sec. 48. Minnesota Statutes 1994, section 473.803, subdivision 2, is amended to read:

Subd. 2. [COUNCIL DIRECTOR REVIEW.] The council director shall review each master plan or revision thereof to determine whether it is consistent with the council's metropolitan policy plan. If it is not consistent, the council director shall disapprove and return the plan with its comments to the county for revision and resubmittal. The county shall have 90 days to revise and resubmit the plan for council the director's approval. Any county solid waste plan or report approved by the council prior to April 9, 1976 July 1, 1994, shall remain in effect until a new master plan is submitted to and approved by the council director in accordance with this section.

The council director shall review the household hazardous waste management portion of each county's plan in cooperation with the agency.

Sec. 49. Minnesota Statutes 1994, section 473.803, subdivision 3, is amended to read:

Subd. 3. [ANNUAL REPORT.] By April 1 of each year, each metropolitan county shall prepare and submit to the council director for its approval a report containing information, as the council may prescribe prescribed in its the metropolitan policy plan, concerning solid waste generation and management within the county. The report shall include a statement of progress in achieving the land disposal abatement objectives for the county and classes of cities in the county as stated in the council's metropolitan policy plan and county master plan. The report must list cities that have not satisfied the county performance standards for local abatement required by subdivision 1c. The report must include a schedule of rates and charges in effect or proposed for the use of any solid waste facility owned or operated by or on its behalf, together with a statement of the basis for such charges.

The report shall contain the recycling development grant report required by section 473.8441 and the annual certification report required by section 473.848.

Sec. 50. Minnesota Statutes 1994, section 473.803, subdivision 4, is amended to read:

Subd. 4. [ADVISORY COMMITTEE.] By July 1, 1984, Each county shall establish a solid waste management advisory committee to aid in the preparation of the county master plan, any revisions thereof, and such additional matters as the county deems appropriate. The committee must consist of citizen representatives, representatives from towns and cities within the county, and representatives from private waste management firms. The committee must include residents of towns or cities within the county containing solid waste disposal facilities. Members of the council's solid waste advisory committee established under section 473.149, subdivision 4, who reside in the county are ex officio members of the county advisory committee. A representative of the metropolitan council The director or the director's appointee is an ex officio member of the committee.

Sec. 51. Minnesota Statutes 1994, section 473.811, subdivision 5, is amended to read:

Subd. 5. [ORDINANCES; SOLID WASTE COLLECTION AND TRANSPORTATION.] (a) Each metropolitan county may adopt ordinances governing the collection of solid waste. A county may adopt, but may not be required to adopt, an ordinance that requires the separation from mixed municipal waste, by generators before collection, of materials that can readily be separated for use or reuse as substitutes for raw materials or for transformation into a usable soil amendment.

(b) Each local unit of government within the metropolitan area shall adopt an ordinance governing the collection of solid waste within its boundaries. If the county within which it is located has adopted a collection ordinance, the local unit shall adopt either the county ordinance by reference or a more strict ordinance. If the county within which it is located has adopted a separation ordinance, the ordinance applies in all local units within the county that have failed to meet the local abatement performance standards, as stated in the most recent annual county report.

(c) Ordinances of counties and local government units may establish reasonable conditions respecting but shall not prevent the transportation of solid waste by a licensed collector through and between counties and local units, except as required for the enforcement of any designation of a facility by a county under chapter 115A or for enforcement of the prohibition on disposal of unprocessed mixed municipal solid waste under sections 473.848 and 473.849.

(d) A licensed collector or a metropolitan county or local government unit may request review by the council of an ordinance adopted under this subdivision. The council shall approve or disapprove the ordinance within 60 days of the submission of a request for review. The ordinance shall remain in effect unless it is disapproved.

(e) Ordinances of counties and local units of government:

(1) shall provide for the enforcement of any designation of facilities by the counties under chapter 115A;

(2) may require waste collectors and transporters to deliver unprocessed mixed municipal waste generated in the county to processing facilities; and

(3) may prohibit waste collectors and transporters from delivering unprocessed mixed municipal solid waste generated in the county to disposal facilities for final disposal.

(f) A county or local unit of government may not require that a vehicle be issued a permit as a transfer station if it is temporarily acting as one solely due to the imposition of seasonal load restrictions under section 169.87.

(g) Nothing in this subdivision limits the authority of the local government unit to regulate and license collectors of solid waste or to require review or approval by the council for ordinances regulating collection.

Sec. 52. Minnesota Statutes 1994, section 473.811, subdivision 5c, is amended to read:

Subd. 5c. [COUNTY ENFORCEMENT.] Each metropolitan county shall be responsible for insuring that waste facilities, solid waste collection operations licensed or regulated by the county and hazardous waste generation and collection operations are brought into conformance with, or terminated and abandoned in accordance with, applicable county ordinances; rules and requirements of the state; and the policy plan of the council. Counties may provide by ordinance that operators or owners or both of such facilities or operations shall be responsible to the county for satisfactorily performing the procedures required. If operators or owners or both fail to perform, the county may recover the costs incurred by the county in completing the procedures in a civil action in any court of competent jurisdiction or, in the discretion of the board, the costs may be certified to the county auditor as a special tax against the land. The ordinances may be enforced by action in district court or administrative penalty order authorized under section 116.072. The county may prescribe a criminal penalty for the violation of any ordinance enacted under this section not exceeding the maximum which may be specified for a misdemeanor.

Sec. 53. Minnesota Statutes 1994, section 473.843, subdivision 1, is amended to read:

Subdivision 1. [AMOUNT OF FEE; APPLICATION.] The operator of a mixed municipal solid waste disposal facility in the metropolitan area shall pay a fee on solid waste accepted and disposed at the facility as follows:

(a) A facility that weighs the waste that it accepts must pay a fee of $6.66 per ton of waste accepted at the entrance of the facility.

(b) A facility that does not weigh the waste but that measures the volume of the waste that it accepts must pay a fee of $2 per cubic yard of waste accepted at the entrance of the facility. This fee and the tipping fee must be calculated on the same basis.

(c) Waste residue, from recycling facilities at which recyclable materials are separated or processed for the purposes of recycling, or from energy and resource recovery facilities at which solid waste is processed for the purpose of extracting, reducing, converting to energy, or otherwise separating and preparing solid waste for reuse, is exempt from the fee imposed by this subdivision if there is at least an 85 percent volume weight reduction in the solid waste processed. To qualify for exemption under this clause, waste residue must be brought to a disposal facility separately. The commissioner of revenue, with the advice and assistance of the council director and the agency, shall prescribe procedures for determining the amount of waste residue qualifying for exemption.

Sec. 54. Minnesota Statutes 1994, section 473.843, is amended by adding a subdivision to read:

Subd. 1a. [EXEMPTION FOR CARPET RECYCLING FACILITIES.] Notwithstanding any provision to the contrary in subdivision 1, a used carpet recycling facility is exempt from the fee imposed by subdivision 1 until August 1, 1996, if there is at least a 50 percent weight reduction in the solid waste processed. For the purposes of this subdivision, "used carpet" means carpet that is no longer suitable for its original intended purpose because of wear, damage, or defect.

Sec. 55. Minnesota Statutes 1994, section 473.846, is amended to read:

473.846 [REPORT TO LEGISLATURE.]

The agency and metropolitan council the director shall submit to the senate finance committee, the house ways and means committee, and the legislative commission on waste management separate reports describing the activities for which money from the landfill abatement account and contingency action trust fund has been spent. The agency shall report by November 1 of each year on expenditures during its previous fiscal year. The council director shall report on expenditures during the previous calendar year and must incorporate its report in the report required by section 473.149 115A.411, due July 1 of each odd-numbered year. The council director shall make recommendations to the legislative commission on waste management on the future management and use of the metropolitan landfill abatement account.

Sec. 56. [480.0515] [PAPERS TO BE SUBMITTED ON RECYCLED PAPER.]

Subdivision 1. [DEFINITIONS.] (a) The definitions in this subdivision apply to this section.

(b) "Attorney" means an attorney at law admitted to practice law in this state.

(c) "Document" means a document that is required or permitted to be filed with a court concerning an action that is to be commenced or is pending before the court.

Subd. 2. [REQUIREMENT.] (a) Except as provided in subdivision 3, a document submitted by an attorney to a court of this state, and all papers appended to the document, must be submitted on paper containing not less than ten percent postconsumer material, as defined in section 115A.03, subdivision 24b.

(b) A court may not refuse a document solely because the document was not submitted on recycled paper.

Subd. 3. [EXCEPTIONS.] (a) Subdivision 1 does not apply to:

(1) a photograph;

(2) an original document that was prepared or printed before January 1, 1996;

(3) a document that was not created at the direction or under the control of the submitting attorney;

(4) a facsimile copy otherwise permitted to be filed with the court in lieu of the original document, provided that if the original is also required to be filed, it must be submitted in compliance with this section; or

(5) nonrecycled paper and preprinted forms acquired or printed before January 1, 1996.

(b) This section does not apply if recycled paper is not readily available.

Sec. 57. [STUDY ON BARRIERS TO INCREASED RECYCLING OF CORRUGATED PAPER PRODUCTS AND USED CARPETING.]

By November 1, 1995, the office of environmental assistance shall conduct an analysis and make recommendations to the legislative commission on waste management regarding measures to remove barriers that prevent increased recycling of corrugated paper products and used carpeting. For purposes of this section, "corrugated paper products" means boxes, containers, liners, sheets, or other products made from corrugated paper. "Used carpeting" means carpeting that is no longer suitable for its original intended purpose because of wear, damage, or defect.

Sec. 58. Laws 1994, chapter 628, article 3, section 209, is amended to read:

Sec. 209. [REPEALER.]

(a) Minnesota Statutes 1992, sections 115A.03, subdivision 20; 115A.33; 174.22, subdivision 4; 473.121, subdivisions 15 and 21; 473.122; 473.146, subdivisions 2, 2a, 2b, and 2c; 473.153; 473.161; 473.163; 473.181, subdivision 3; 473.325, subdivision 5; 473.384, subdivision 9; 473.388, subdivision 6; 473.404, as amended by Laws 1993, chapter 119, section 1; 473.405, subdivisions 2, 6, 7, 8, 11, 13, and 14; 473.417; 473.435; 473.436, subdivision 7; 473.445, subdivisions 1 and 3; 473.501, subdivision 2; 473.503; 473.504, subdivisions 1, 2, 3, 7, and 8; 473.511, subdivision 5; 473.517, subdivision 8; 473.543, subdivision 5; and 473.553, subdivision 4a, are repealed.

(b) Minnesota Statutes 1992, sections 473.121, subdivision 14a; 473.141, as amended by Laws 1993, chapter 314, sections 3 and 4; 473.373, as amended by Laws 1993, chapter 314, section 5; 473.375, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 10, 16, 17, and 18; 473.377; 473.38; Minnesota Statutes 1993 Supplement, section 473.3996, are repealed.

Sec. 59. [REENACTMENT.]

Notwithstanding Minnesota Statutes, section 645.36, Minnesota Statutes 1992, section 115A.33, as repealed by Laws 1994, chapter 628, article 3, section 209, is reenacted.

Sec. 60. [APPLICATION.]

Sections 42 to 55 apply in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

Sec. 61. [INSTRUCTION TO REVISOR.]

The revisor shall recodify Minnesota Statutes, sections 115A.47, subdivision 2, paragraphs (b), (d), and (g), and 115A.931, paragraph (b), as definitions in Minnesota Statutes, section 115A.03, and recast the language as necessary to conform to the other definitions in that section.

Sec. 62. [APPROPRIATION.]

Up to $200,000 in fiscal year 1996 and $200,000 in fiscal year 1997 shall be transferred from the pollution control agency's air quality appropriation to the small business revolving loan account.

Sec. 63. [REPEALER.]

(a) Minnesota Statutes 1994, sections 116.94; 473.149, subdivisions 2, 2a, 2c, and 2f; and 473.803, subdivision 1b, are repealed.

(b) Minnesota Statutes 1994, section 473.803, subdivision 1e, is repealed.

(c) Minnesota Statutes 1994, section 115A.165, is repealed.

Sec. 64. [EFFECTIVE DATE.]

Sections 1, 4, 32, 42 to 45, 47, 48, 50, 61, and 63, paragraph (a), are effective on the day following final enactment.

Sections 7 and 8 are effective on June 15, 1995.

Section 56 is effective January 1, 1996.

Section 1. Minnesota Statutes 1994, section 115A.055, is amended to read:

115A.055 [OFFICE OF ENVIRONMENTAL ASSISTANCE.]

Subdivision 1. [ORGANIZATION OF OFFICE.] The office of environmental assistance is an agency in the executive branch headed by a director appointed by the commissioner of the pollution control agency, with the advice and consent of the senate, to serve in the unclassified service. The director may appoint two assistant directors in the unclassified service and may appoint other employees, as needed, in the classified service. The office is a department of the state only for purposes of section 16B.37, subdivision 2.

Subd. 2. [TRANSFER OF ADDITIONAL POWERS AND DUTIES.] After July 1, 1994, the solid and hazardous waste management powers and duties of the office and director transferred to them from the metropolitan council by Laws 1994, chapter 639, article 5, section 2, are governed by sections 473.149, 473.151, and 473.801 to 473.849.

Sec. 2. Minnesota Statutes 1994, section 115A.07, subdivision 3, is amended to read:

Subd. 3. [UNIFORM WASTE STATISTICS; RULES.] The director, after consulting with the commissioner, the metropolitan council, local government units, and other interested persons, may adopt rules to establish uniform methods for collecting and reporting waste reduction, generation, collection, transportation, storage, recycling, processing, and disposal statistics necessary for proper waste management and for reporting required by law. Prior to publishing proposed rules, the director shall submit draft rules to the legislative commission on waste management for review and comment. Rules adopted under this subdivision apply to all persons and units of government in the state for the purpose of collecting and reporting waste-related statistics requested under or required by law.

Sec. 3. Minnesota Statutes 1994, section 115A.072, subdivision 1, is amended to read:

Subdivision 1. [WASTE EDUCATION COALITION.] (a) The director shall provide for the development and implementation of a program of general public education on waste management in cooperation and coordination with the pollution control agency, metropolitan council, department of education, department of agriculture, environmental quality board, environmental education board, educational institutions, other public agencies with responsibility for waste management or public education, and three other persons who represent private industry and who have knowledge of or expertise in recycling and solid waste management issues. The objectives of the program are to: develop increased public awareness of and interest in environmentally sound waste management methods; encourage better informed decisions on waste management issues by business, industry, local governments, and the public; and disseminate practical information about ways in which households and other institutions and organizations can improve the management of waste.

(b) The director shall appoint an advisory task force, to be called the waste education coalition, of up to 18 members to advise the director in carrying out the director's responsibilities under this section and whose membership represents the agencies and entities listed in this subdivision. The task force expires on June 30, 1997.

Sec. 4. Minnesota Statutes 1994, section 115A.12, is amended to read:

115A.12 [ADVISORY COUNCILS.]

(a) The director shall establish a solid waste management advisory council, a hazardous waste management planning council, and a market development coordinating council, that are broadly representative of the geographic areas and interests of the state.

(b) The solid waste council shall have not less than nine nor more than 21 members. The membership of the solid waste council shall consist of one-third citizen representatives, one-third representatives from local government units, and one-third representatives from private solid waste management firms. The solid waste council shall contain at least three members experienced in the private recycling industry and at least one member experienced in each of the following areas: state and municipal finance; solid waste collection, processing, and disposal; and solid waste reduction and resource recovery.

(c) The hazardous waste council shall have not less than nine nor more than 18 members. The membership of the hazardous waste advisory council shall consist of one-third citizen representatives, one-third representatives from local government units, and one-third representatives of hazardous waste generators and private hazardous waste management firms.

(d) The market development coordinating council shall have not less than nine nor more than 18 members and shall consist of one representative from the department of trade and economic development, the department of administration, the pollution control agency, Minnesota Technology, Inc., the metropolitan council, and the legislative commission on waste management. The other members shall represent local government units, private recycling markets, and private recycling collectors. The market development coordinating council expires June 30, 1997.

(e) The chairs of the advisory councils shall be appointed by the director. The director shall provide administrative and staff services for the advisory councils. The advisory councils shall have such duties as are assigned by law or the director. The solid waste advisory council shall make recommendations to the office on its solid waste management activities. The hazardous waste advisory council shall make recommendations to the office on its activities under sections 115A.08, 115A.09, 115A.10, 115A.11, 115A.20, 115A.21, and 115A.24. Members of the advisory councils shall serve without compensation but shall be reimbursed for their reasonable expenses as determined by the director. The solid waste management advisory council and the hazardous waste management planning council expire June 30, 1997.

Sec. 5. Minnesota Statutes 1994, section 115A.14, subdivision 4, is amended to read:

Subd. 4. [POWERS AND DUTIES.] (a) The commission shall oversee the activities of the office, and agency, and metropolitan council relating to solid and hazardous waste management, and direct such changes or additions in the work plan of the office, and agency, and council relating to solid and hazardous waste management as the commission deems fit.

(b) The commission shall make recommendations to the standing legislative committees on finance and appropriations for appropriations from the environmental response, compensation, and compliance account in the environmental fund under section 115B.20, subdivision 5.

(c) The commission may conduct public hearings and otherwise secure data and expressions of opinion. The commission shall make such recommendations as it deems proper to assist the legislature in formulating legislation. Any data or information compiled by the commission shall be made available to any standing or interim committee of the legislature upon request of the chair of the respective committee.

Sec. 6. Minnesota Statutes 1994, section 115A.15, subdivision 9, is amended to read:

Subd. 9. [RECYCLING GOAL.] By December 31, 1993, the commissioner shall recycle at least 40 percent by weight of the solid waste generated by state offices and other state operations located in the metropolitan area. By March 1 of each year the commissioner shall report to the office and the metropolitan council the estimated recycling rates by county for state offices and other state operations in the metropolitan area for the previous calendar year. The office shall incorporate these figures into the reports submitted by the counties under section 115A.557, subdivision 3, to determine each county's progress toward the goal in section 115A.551, subdivision 2.

Each state agency in the metropolitan area shall work to meet the recycling goal individually. If the goal is not met by an agency, the commissioner shall notify that agency that the goal has not been met and the reasons the goal has not been met and shall provide information to the employees in the agency regarding recycling opportunities and expectations.

Sec. 7. Minnesota Statutes 1994, section 115A.191, subdivision 1, is amended to read:

Subdivision 1. [OFFICE TO SEEK CONTRACTS.] The office of waste management and any eligible county board may enter a contract as provided in this section expressing their voluntary and mutually satisfactory agreement concerning the location and development of a stabilization and containment facility. The director shall negotiate contracts with eligible counties and shall present drafts of the negotiated contracts to the office for its approval. The director shall actively solicit, encourage, and assist counties, together with developers, landowners, the local business community, and other interested parties, in developing resolutions of interest. The county shall provide affected political subdivisions and other interested persons with an opportunity to suggest contract terms.

Sec. 8. Minnesota Statutes 1994, section 115A.191, subdivision 2, is amended to read:

Subd. 2. [RESOLUTION OF INTEREST IN NEGOTIATING; ELIGIBILITY.] A county is eligible to negotiate a contract under this section if the county board files with the office of waste management and the office accepts a resolution adopted by the county board that expresses the county board's interest in negotiations and its willingness to accept the preliminary evaluation of one or more study areas in the county for consideration as a location of a stabilization and containment facility. The county board resolution expressing interest in negotiations must provide for county cooperation with the office, as necessary to facilitate the evaluation of study areas in the county, and for the appointment of a member of the county board or an officer or employee of the county as official liaison with the office with respect to the matters provided in the resolution and future negotiations with the office. A county board by resolution may withdraw a resolution of interest, and the office of waste management may withdraw its acceptance of such a resolution, at any time before the parties execute a contract under this section. A county that is eligible to negotiate a contract shall receive the benefits as provided in section 477A.012.

Sec. 9. Minnesota Statutes 1994, section 115A.32, is amended to read:

115A.32 [RULES.]

The board shall promulgate rules pursuant to chapter 14 to govern its activities under sections 115A.32 to 115A.39. For the purposes of sections 115A.32 to 115A.39, "board" means the environmental quality board established in section 116C.03. In all of its activities and deliberations under sections 115A.32 to 115A.39, the board shall consult with the director of the office of waste management.

Sec. 10. Minnesota Statutes 1994, section 115A.42, is amended to read:

115A.42 [ESTABLISHMENT AND ADMINISTRATION.]

There is established a program to encourage and improve regional and local solid waste management planning activities and efforts and to further the state policies and purposes expressed in section 115A.02. The program under sections 115A.42 to 115A.46 is administered by the office director pursuant to rules promulgated under chapter 14, except in the metropolitan area where the program is administered by the metropolitan council pursuant to chapter 473 director pursuant to section 473.149. The office and the metropolitan council director shall ensure conformance with federal requirements and programs established pursuant to the Resource Conservation and Recovery Act of 1976 and amendments thereto.

Sec. 11. Minnesota Statutes 1994, section 115A.45, is amended to read:

115A.45 [TECHNICAL ASSISTANCE.]

The director and metropolitan council shall provide for technical assistance to encourage and improve solid waste management and to assist political subdivisions in preparing the plans described in section 115A.46. The director and metropolitan council shall provide model plans for regional and local solid waste management. The director and metropolitan council may contract for the delivery of technical assistance by a regional development commission, any state or federal agency, private consultants, or other persons. The director shall prepare and publish an inventory of sources of technical assistance for solid waste planning, including studies, publications, agencies, and persons available.

Sec. 12. Minnesota Statutes 1994, section 115A.46, subdivision 1, is amended to read:

Subdivision 1. [GENERAL.] (a) Plans shall address the state policies and purposes expressed in section 115A.02 and may not be inconsistent with state law.

(b) Plans for the location, establishment, operation, maintenance, and postclosure use of facilities and facility sites, for ordinances, and for licensing, permit, and enforcement activities shall be consistent with the rules adopted by the agency pursuant to chapter 116.

(c) Plans shall address:

(1) the resolution of conflicting, duplicative, or overlapping local management efforts;

(2) the establishment of joint powers management programs or waste management districts where appropriate; and

(3) other matters as the rules of the office may require consistent with the purposes of sections 115A.42 to 115A.46.

(d) Political subdivisions preparing plans under sections 115A.42 to 115A.46 shall consult with persons presently providing solid waste collection, processing, and disposal services.

(e) Plans must be submitted to the director, or the metropolitan council pursuant to section 473.803, for approval. When a county board is ready to have a final plan approved, the county board shall submit a resolution requesting review and approval by the director or the metropolitan council. After receiving the resolution, the director or the metropolitan council shall notify the county within 45 days whether the plan as submitted is complete and, if not complete, the specific items that need to be submitted to make the plan complete. Within 90 days after a complete plan has been submitted, the director or the metropolitan council shall approve or disapprove the plan. If the plan is disapproved, reasons for the disapproval must be provided.

(f) After initial approval, each plan must be updated and submitted for approval every five years. The plan must be revised as necessary so that it is not inconsistent with state law.

Sec. 13. Minnesota Statutes 1994, section 115A.5501, subdivision 2, is amended to read:

Subd. 2. [MEASUREMENT; PROCEDURES.] To measure the overall percentage of packaging in the statewide solid waste stream, the director and the chair of the metropolitan council, in consultation with the commissioner, shall each conduct an annual solid waste composition study studies in the nonmetropolitan and metropolitan areas respectively or shall develop an alternative method that is as statistically reliable as a waste composition study to measure the percentage of packaging in the waste stream.

The chair of the council shall submit the results from the metropolitan area to the director by May 1 of each year. The director shall average the nonmetropolitan and metropolitan results and submit the statewide percentage, along with a statistically reliable margin of error, to the legislative commission on waste management by July 1 of each year. The 1994 report must include a discussion of the reliability of data gathered under this subdivision and the methodology used to determine a statistically reliable margin of error.

Sec. 14. Minnesota Statutes 1994, section 115A.5501, subdivision 3, is amended to read:

Subd. 3. [FACILITY COOPERATION AND REPORTS.] The owner or operator of a facility shall allow access upon reasonable notice to authorized office, or agency, or metropolitan council staff for the purpose of conducting waste composition studies or otherwise assessing the amount of total packaging in the waste delivered to the facility under this section.

Beginning in 1993, by February 1 of each year the owner or operator of a facility governed by this subdivision shall submit a report to the commissioner, on a form prescribed by the commissioner, specifying the total amount of solid waste received by the facility between January 1 and December 31 of the previous year. The commissioner shall calculate the total amount of solid waste delivered to solid waste facilities from the reports received from the facility owners or operators and shall report the aggregate amount to the director by April 1 of each year. The commissioner shall assess a nonforgivable administrative penalty under section 116.072 of $500 plus any forgivable amount necessary to enforce this subdivision on any owner or operator who fails to submit a report required by this subdivision.

Sec. 15. Minnesota Statutes 1994, section 115A.551, subdivision 5, is amended to read:

Subd. 5. [FAILURE TO MEET GOAL.] (a) A county failing to meet the interim goals in subdivision 3 shall, as a minimum:

(1) notify county residents of the failure to achieve the goal and why the goal was not achieved; and

(2) provide county residents with information on recycling programs offered by the county.

(b) If, based on the recycling monitoring described in subdivision 4, the director or the metropolitan council finds that a county will be unable to meet the recycling goals established in subdivisions 2 and 2a, the director or council shall, after consideration of the reasons for the county's inability to meet the goals, recommend legislation for consideration by the legislative commission on waste management to establish mandatory recycling standards and to authorize the director or council to mandate appropriate solid waste management techniques designed to meet the standards in those counties that are unable to meet the goals.

Sec. 16. Minnesota Statutes 1994, section 115A.558, is amended to read:

115A.558 [SAFETY GUIDE.]

The pollution control agency, in cooperation with the office of waste management and the metropolitan council, shall prepare and distribute to all interested persons a guide for operation of a recycling or yard waste composting facility to protect the environment and public health.

Sec. 17. Minnesota Statutes 1994, section 115A.63, subdivision 3, is amended to read:

Subd. 3. [RESTRICTIONS.] No waste district shall be established within the boundaries of the Western Lake Superior Sanitary District established under chapter 458D. No waste district shall be established wholly within one county. The director shall not establish a waste district within or extending into the metropolitan area, nor define or alter the powers or boundaries of a district, without the approval of the metropolitan council. The council shall not approve a district unless the articles of incorporation of the district require that the district will have the same procedural and substantive responsibilities, duties, and relationship to the metropolitan agencies as a metropolitan county. The director shall require the completion of a comprehensive solid waste management plan conforming to the requirements of section 115A.46, by petitioners seeking to establish a district.

Sec. 18. Minnesota Statutes 1994, section 115A.84, subdivision 3, is amended to read:

Subd. 3. [PLAN APPROVAL.] (a) A district or county planning a designation for waste generated wholly within the metropolitan area defined in section 473.121 shall submit its designation plan to the metropolitan council for review and approval or disapproval. Other districts or counties shall submit the designation plan to the director for review and approval or disapproval.

(b) The reviewing authority director shall complete its the review and make its a decision within 120 days following submission of the plan for review. The reviewing authority director shall approve the designation plan if the plan satisfies the requirements of subdivision 2 and, in the case of designation to disposal facilities, if the reviewing authority director finds that the plan has demonstrated that the designation is necessary and is consistent with section 115A.02. The reviewing authority director may attach conditions to its the approval that relate to matters required in a designation ordinance under section 115A.86, subdivision 1, paragraph (a), clauses (1) to (4), and paragraph (b). Amendments to plans must be submitted for review in accordance with this subdivision.

Sec. 19. Minnesota Statutes 1994, section 115A.86, subdivision 2, is amended to read:

Subd. 2. [APPROVAL.] A district or county whose designation applies wholly within the metropolitan area defined in section 473.121 shall submit the designation ordinance, together with any negotiated contracts assuring the delivery of solid waste, to the metropolitan council for review and approval or disapproval. Other districts or counties shall submit the designation ordinance, together with any negotiated contracts assuring the delivery of solid waste, to the director for review and approval or disapproval. The director shall complete the review and make a decision within 90 days following submission of the designation for review. The director shall approve the designation if the director determines that the designation procedure specified in section 115A.85 was followed and that the designation is based on a plan approved under section 115A.84. The director may attach conditions to the approval.

Sec. 20. Minnesota Statutes 1994, section 115A.951, subdivision 4, is amended to read:

Subd. 4. [COLLECTION OF USED DIRECTORIES.] Each publisher or distributor of telephone directories shall:

(1) provide for the collection and delivery to a recycler of waste telephone directories;

(2) inform recipients of directories of the collection system; and

(3) submit a report to the office of waste management by August 1 of each year that specifies the percentage of distributed directories collected as waste directories by distribution area and the locations where the waste directories were delivered for recycling and that verifies that the directories have been recycled.

Sec. 21. Minnesota Statutes 1994, section 115A.97, subdivision 5, is amended to read:

Subd. 5. [PLANS; REPORT.] A county solid waste plan, or revision of a plan, that includes incineration of mixed municipal solid waste must clearly state how the county plans to meet the goals in subdivision 1 of reducing the toxicity and quantity of incinerator ash and of reducing the quantity of processing residuals that require disposal. The director, in cooperation with the agency, and the counties, and the metropolitan council, may develop guidelines for counties to use to identify ways to meet the goals in subdivision 1.

The director, in cooperation with the agency, the counties, and the metropolitan council, shall develop and propose statewide goals and timetables for the reduction of the noncombustible fraction of mixed municipal solid waste prior to incineration or processing into refuse-derived fuel and for the reduction of the toxicity of the incinerator ash. By January 1, 1990, the director shall report to the legislative commission on waste management on the proposal goals and timetables with recommendations for their implementation.

Sec. 22. Minnesota Statutes 1994, section 115A.97, subdivision 6, is amended to read:

Subd. 6. [PERMITS; AGENCY REPORT.] An application for a permit to build or operate a mixed municipal solid waste incinerator, including an application for permit renewal, must clearly state how the applicant will achieve the goals in subdivision 1 of reducing the toxicity and quantity of incinerator ash and of reducing the quantity of processing residuals that require disposal. The agency, in cooperation with the director, and the counties, and the metropolitan council, may develop guidelines for applicants to use to identify ways to meet the goals in subdivision 1.

If, by January 1, 1990, the rules required by subdivision 3 are not in at least final draft form, the agency shall report to the legislative commission on waste management on the status of current incinerator ash management programs with recommendations for specific legislation to meet the goals of subdivision 1.

Sec. 23. Minnesota Statutes 1994, section 115A.981, subdivision 3, is amended to read:

Subd. 3. [REPORT.] (a) The commissioner shall report to the legislative commission on waste management by July 1 of each odd-numbered year on the economic status and outlook of the state's solid waste management sector including an estimate of the extent to which prices for solid waste management paid by consumers reflect costs related to environmental and public health protection, including a discussion of how prices are publicly and privately subsidized and how identified costs of waste management are not reflected in the prices.

(b) In preparing the report, the commissioner shall:

(1) consult with the director; the metropolitan council; local government units; solid waste collectors, transporters, and processors; owners and operators of solid waste facilities; and other interested persons;

(2) consider and analyze information received under subdivision 2 and information available under section 115A.929; and

(3) analyze information gathered and comments received relating to the most recent solid waste management policy report prepared under section 115A.411.

The commissioner shall also recommend any legislation necessary to ensure adequate and reliable information needed for preparation of the report.

(c) The report must also include:

(1) statewide and facility by facility estimates of the total potential costs and liabilities associated with solid waste disposal facilities for closure and postclosure care, response costs under chapter 115B, and any other potential costs, liabilities, or financial responsibilities;

(2) statewide and facility by facility requirements for proof of financial responsibility under section 116.07, subdivision 4h, and how each facility is meeting those requirements.

Sec. 24. Minnesota Statutes 1994, section 116.07, subdivision 4j, is amended to read:

Subd. 4j. [PERMITS; SOLID WASTE FACILITIES.] (a) The agency may not issue a permit for new or additional capacity for a mixed municipal solid waste resource recovery or disposal facility as defined in section 115A.03 unless each county using or projected in the permit to use the facility has in place a solid waste management plan approved under section 115A.46 or 473.803 and amended as required by section 115A.96, subdivision 6. The agency shall issue the permit only if the capacity of the facility is consistent with the needs for resource recovery or disposal capacity identified in the approved plan or plans. Consistency must be determined by the metropolitan council office of environmental assistance for counties in the metropolitan area and by the agency for counties outside the metropolitan area. Plans approved before January 1, 1990, need not be revised if the capacity sought in the permit is consistent with the approved plan or plans.

(b) The agency shall require as part of the permit application for a waste incineration facility identification of preliminary plans for ash management and ash leachate treatment or ash utilization. The permit issued by the agency must include requirements for ash management and ash leachate treatment.

(c) Within 30 days of receipt by the agency of a permit application for a solid waste facility, the commissioner shall notify the applicant in writing whether the application is complete and if not, what items are needed to make it complete, and shall give an estimate of the time it will take to process the application. Within 180 days of receipt of a completed application, the agency shall approve, disapprove, or delay decision on the application, with reasons for the delay, in writing.

Sec. 25. Minnesota Statutes 1994, section 473.149, subdivision 4, is amended to read:

Subd. 4. [ADVISORY COMMITTEE.] The council director shall establish an advisory committee to aid in the preparation of the policy plan, the performance of the council's director's responsibilities under subdivisions 2 to 2d

and 2e, the review of county master plans and reports and applications for permits for waste facilities, under sections 473.151, and 473.801 to 473.823, and 473.831, and other duties determined by the council director. The committee shall consist of one-third citizen representatives, one-third representatives from metropolitan counties and municipalities, and one-third representatives from private waste management firms. A representative from the pollution control agency, one from the office of waste management established under section 115A.055, and one from the Minnesota health department shall serve as ex officio members of the committee.

Sec. 26. Minnesota Statutes 1994, section 473.151, is amended to read:

473.151 [DISCLOSURE.]

For the purpose of the rules, plans, and reports required or authorized by sections 473.149, 473.516, 473.801 to 473.823 and this section, each generator of hazardous waste and each owner or operator of a collection service or waste facility annually shall make the following information available to the agency, council, office of environmental assistance, and metropolitan counties: a schedule of rates and charges in effect or proposed for a collection service or the processing of waste delivered to a waste facility and a description, in aggregate amounts indicating the general character of the solid and hazardous waste collection and processing system, of the types and the quantity, by types, of waste generated, collected, or processed. The county, council, office, and agency shall act in accordance with the provisions of section 116.075, subdivision 2, with respect to information for which confidentiality is claimed.

Sec. 27. Minnesota Statutes 1994, section 473.516, subdivision 2, is amended to read:

Subd. 2. [GENERAL REQUIREMENTS.] With respect to its activities under this section, the council shall be subject to and comply with the applicable provisions of this chapter. Property acquired by the council under this section shall be subject to the provisions of section 473.545. Any site or facility owned or operated for or by the council shall conform to the policy plan adopted by the council under section 473.149. The council shall contract with private persons for the construction, maintenance, and operation of waste facilities, subject to the bidding requirements of section 473.523, where the facilities are adequate and available for use and competitive with other means of providing the same service.

Sec. 28. Minnesota Statutes 1994, section 473.801, subdivision 1, is amended to read:

Subdivision 1. [TERMS.] For the purposes of sections 473.801 to 473.845 and Laws 1985, chapter 274, section 45 473.849, the terms defined in this section have the meanings given them.

Sec. 29. Minnesota Statutes 1994, section 473.801, is amended by adding a subdivision to read:

Subd. 5. [DIRECTOR.] "Director" means the director of the office of environmental assistance.

Sec. 30. Minnesota Statutes 1994, section 473.801, is amended by adding a subdivision to read:

Subd. 6. [OFFICE.] "Office" means the office of environmental assistance.

Sec. 31. Minnesota Statutes 1994, section 473.8011, is amended to read:

473.8011 [METROPOLITAN AGENCY RECYCLING GOAL.]

By December 31, 1993, the metropolitan council, each metropolitan agency as defined in section 473.121, and the metropolitan mosquito control district established in section 473.702 shall recycle at least 40 percent by weight of the solid waste generated by their offices or other operations. The council director shall provide information and technical assistance to the council, agencies, and the district to implement effective recycling programs.

By August 1 of each year, the council, each agency, and the district shall submit to the office of waste management a report for the previous fiscal year describing recycling rates, specified by the county in which the council, agency, or operation is located, and progress toward meeting the recycling goal. The office shall incorporate the recycling rates reported in the respective county's recycling rates for the previous fiscal year.

If the goal is not met, the council, agency, or district must include in its 1994 report reasons for not meeting the goal and a plan for meeting it in the future.

Sec. 32. Minnesota Statutes 1994, section 473.803, subdivision 1, is amended to read:

Subdivision 1. [COUNTY MASTER PLANS; GENERAL REQUIREMENTS.] Each metropolitan county, following adoption or revision of the council's solid waste metropolitan policy plan and in accordance with the dates specified therein, and after consultation with all affected local government units, shall prepare and submit to the council for its the director for approval, a county solid waste master plan to implement the policy plan. The master plan shall be revised and resubmitted at such times as the council's metropolitan policy plan may require. The master plan shall describe county solid waste activities, functions, and facilities; the existing system of solid waste generation, collection, and processing, and disposal within the county; proposed mechanisms for complying with the recycling requirements of section 115A.551, and the household hazardous waste management requirements of section 115A.96, subdivision 6; existing and proposed county and municipal ordinances and license and permit requirements relating to solid waste facilities and solid waste generation, collection, and processing, and disposal; existing or proposed municipal, county, or private solid waste facilities and collection services within the county together with schedules of existing rates and charges to users and statements as to the extent to which such facilities and services will or may be used to implement the policy plan; and any solid waste facility which the county owns or plans to acquire, construct, or improve together with statements as to the planned method, estimated cost and time of acquisition, proposed procedures for operation and maintenance of each facility; an estimate of the annual cost of operation and maintenance of each facility; an estimate of the annual gross revenues which will be received from the operation of each facility; and a proposal for the use of each facility after it is no longer needed or usable as a waste facility. The master plan shall, to the extent practicable and consistent with the achievement of other public policies and purposes, encourage ownership and operation of solid waste facilities by private industry. For solid waste facilities owned or operated by public agencies or supported primarily by public funds or obligations issued by a public agency, the master plan shall contain criteria and standards to protect comparable private and public facilities already existing in the area from displacement unless the displacement is required in order to achieve the waste management objectives identified in the plan.

Sec. 33. Minnesota Statutes 1994, section 473.803, subdivision 2a, is amended to read:

Subd. 2a. [WASTE ABATEMENT.] The council director may require any county that fails to meet the waste abatement objectives contained in the council's metropolitan policy plan to amend its master plan to address methods to achieve the objectives. The master plan amendment is subject to council review and approval as provided in subdivision 2 and must consider at least:

(1) minimum recycling service levels for solid waste generators;

(2) mandatory generator participation in recycling programs including separation of recyclable material from mixed municipal solid waste;

(3) use of organized solid waste collection under section 115A.94; and

(4) waste abatement participation incentives including provision of storage bins, weekly collection of recyclable material, expansion of the types of recyclable material for collection, collection of recyclable material on the same day as collection of solid waste, and financial incentives such as basing charges to generators for waste collection services on the volume of waste generated and discounting collection charges for generators who separate recyclable material for collection separate from their solid waste.

Sec. 34. Minnesota Statutes 1994, section 473.803, subdivision 5, is amended to read:

Subd. 5. [ROLE OF PRIVATE SECTOR; COUNTY OVERSIGHT.] A county may include in its solid waste management master plan and in its plan for county land disposal abatement a determination that the private sector will achieve, either in part or in whole, the goals and requirements of sections 473.149 and 473.803, as long as the county:

(1) retains active oversight over the efforts of the private sector and monitors performance to ensure compliance with the law and the goals and standards of in the council and the county as expressed in the metropolitan solid waste management policy plan and the county master plan;

(2) continues to meet its responsibilities under the law for ensuring proper waste management, including, at a minimum, enforcing waste management law, providing waste education, promoting waste reduction, and providing its residents the opportunity to recycle waste materials; and

(3) continues to provide all required reports on the county's progress in meeting the waste management goals and standards of this chapter and chapter 115A.

Sec. 35. Minnesota Statutes 1994, section 473.804, is amended to read:

473.804 [HOUSEHOLD HAZARDOUS WASTE MANAGEMENT.]

By June 30, 1992, each metropolitan county shall develop and implement a permanent program to manage household hazardous waste. Each program must include at least quarterly collection of wastes. Each program must be consistent with the council's metropolitan policy plan and must be described as part of each county's solid waste master plan revision as required under section 473.803, subdivision 1.

Sec. 36. Minnesota Statutes 1994, section 473.811, subdivision 1, is amended to read:

Subdivision 1. [COUNTY ACQUISITION OF FACILITIES.] To accomplish the purpose specified in section 473.803, each metropolitan county may acquire by purchase, lease, gift or condemnation as provided by law, upon such terms and conditions as it shall determine, including contracts for deed and conditional sales contracts, solid waste facilities or properties or easements for solid waste facilities which are in accordance with rules adopted by the agency, the policy plan adopted by the council and the approved county master plan as approved by the council, and may improve or construct improvements on any property or facility so acquired. No metropolitan city, county or town shall own or operate a hazardous waste facility, except a facility to manage household hazardous waste. Each metropolitan county is authorized to levy a tax in anticipation of need for expenditure for the acquisition and betterment of solid waste facilities. If a tax is levied in anticipation of need, the purpose must be specified in a resolution of the county directing that the levy and the proceeds of the tax may be used only for that purpose. Until so used, the proceeds shall be retained in a separate fund or invested in the same manner as surplus in a sinking fund may be invested under section 475.66. The right of condemnation shall be exercised in accordance with chapter 117.

For the purposes of this section "solid waste facility" includes a facility to manage household hazardous waste.

Sec. 37. Minnesota Statutes 1994, section 473.811, subdivision 4a, is amended to read:

Subd. 4a. [ORDINANCES; GENERAL CONDITIONS; RESTRICTIONS; APPLICATION.] Ordinances of counties and local government units related to or affecting waste management shall embody plans, policies, rules, standards and requirements adopted by any state agency authorized to manage or plan for or regulate the management of waste and the waste management plans adopted by the council under section 473.149 and shall be consistent with approved county master plans approved by the council. Except as provided in this subdivision, a county may establish and operate or contract for the establishment or operation of a solid waste disposal facility without complying with local ordinances if the council director certifies need under section 473.823, subdivision 6. With the approval of the council director, local government units may impose and enforce reasonable conditions respecting the construction, operation, inspection, monitoring, and maintenance of the disposal facilities. No local government unit shall prevent the establishment or operation of any solid waste facility in accordance with the council's director's decision under section 473.823, subdivision 5, except that, with the approval of the council director, the local government unit may impose reasonable conditions respecting the construction, inspection, monitoring, and maintenance of a facility.

Sec. 38. Minnesota Statutes 1994, section 473.811, subdivision 5, is amended to read:

Subd. 5. [ORDINANCES; SOLID WASTE COLLECTION AND TRANSPORTATION.] (a) Each metropolitan county may adopt ordinances governing the collection of solid waste. A county may adopt, but may not be required to adopt, an ordinance that requires the separation from mixed municipal waste, by generators before collection, of materials that can readily be separated for use or reuse as substitutes for raw materials or for transformation into a usable soil amendment.

(b) Each local unit of government within the metropolitan area shall adopt an ordinance governing the collection of solid waste within its boundaries. If the county within which it is located has adopted a collection ordinance, the local unit shall adopt either the county ordinance by reference or a more strict ordinance. If the county within which it is located has adopted a separation ordinance, the ordinance applies in all local units within the county that have failed to meet the local abatement performance standards, as stated in the most recent annual county report.

(c) Ordinances of counties and local government units may establish reasonable conditions respecting but shall not prevent the transportation of solid waste by a licensed collector through and between counties and local units, except as required for the enforcement of any designation of a facility by a county under chapter 115A or for enforcement of the prohibition on disposal of unprocessed mixed municipal solid waste under sections 473.848 and 473.849.

(d) A licensed collector or a metropolitan county or local government unit may request review by the council director of an ordinance adopted under this subdivision. The council director shall approve or disapprove the ordinance within 60 days of the submission of a request for review. The ordinance shall remain in effect unless it is disapproved.

(e) Ordinances of counties and local units of government:

(1) shall provide for the enforcement of any designation of facilities by the counties under chapter 115A;

(2) may require waste collectors and transporters to deliver unprocessed mixed municipal waste generated in the county to processing facilities; and

(3) may prohibit waste collectors and transporters from delivering unprocessed mixed municipal solid waste generated in the county to disposal facilities for final disposal.

(f) Nothing in this subdivision limits the authority of the local government unit to regulate and license collectors of solid waste or to require review or approval by the council director for ordinances regulating collection.

Sec. 39. Minnesota Statutes 1994, section 473.811, subdivision 7, is amended to read:

Subd. 7. [JOINT ACTION.] Any local governmental unit or metropolitan agency may act together with any county, city, or town within or without the metropolitan area, or with the pollution control agency or the office of waste management under the provisions of section 471.59 or any other appropriate law providing for joint or cooperative action between government units, to accomplish any purpose specified in sections 473.149, 473.151, 473.801 to 473.823, 473.834, 116.05 and 115A.06.

Any agreement regarding data processing services relating to the generation, management, identification, labeling, classification, storage, collection, treatment, transportation, processing or disposal of waste and entered into pursuant to section 471.59, or other law authorizing joint or cooperative action may provide that any party to the agreement may agree to defend, indemnify and hold harmless any other party to the agreement providing the services, including its employees, officers or volunteers, against any judgments, expenses, reasonable attorney's fees and amounts paid in settlement actually and reasonably incurred in connection with any third party claim or demand arising out of an alleged act or omission by a party to the agreement, its employees, officers or volunteers occurring in connection with any exchange, retention, storage or processing of data, information or records required by the agreement. Any liability incurred by a party to an agreement under this subdivision shall be subject to the limitations set forth in section 3.736 or 466.04.

Sec. 40. Minnesota Statutes 1994, section 473.811, subdivision 8, is amended to read:

Subd. 8. [COUNTY SALE OR LEASE.] Each metropolitan county may sell or lease any facilities or property or property rights previously used or acquired to accomplish the purposes specified by sections 473.149, 473.151, 473.801 to 473.823, and 473.834. Such property may be sold in the manner provided by section 469.065, or may be sold in the manner and on the terms and conditions determined by the county board. Each metropolitan county may convey to or permit the use of any such property by a local government unit, with or without compensation, without submitting the matter to the voters of the county. No real property or property rights acquired pursuant to this section, may be disposed of in any manner unless and until the county shall have submitted to the agency and the metropolitan council director for review and comment the terms on and the use for which the property will be disposed of. The agency and the council director shall review and comment on the proposed disposition within 60 days after each has received the data relating thereto from the county.

Sec. 41. Minnesota Statutes 1994, section 473.813, subdivision 2, is amended to read:

Subd. 2. Before a city, county, or town enters into any contract pursuant to subdivision 1 for a period of more than five years, the city, county, or town shall submit the proposed contract and a description of the proposed activities under the contract to the council director for review and approval. The council director shall approve the proposed contract if it the director determines that the contract is consistent with the council's metropolitan policy plan, permits issued under section 473.823, and county reports or approved master plans approved by the council. The council director may consolidate its the review of contracts submitted under this section with its the review of related permit applications submitted under section 473.823 and for this purpose may delay the review required by this section.

Sec. 42. Minnesota Statutes 1994, section 473.823, subdivision 3, is amended to read:

Subd. 3. [SOLID WASTE FACILITIES; REVIEW PROCEDURES.] (a) The agency shall request applicants for solid waste facility permits to submit all information deemed relevant by the council to its director for review, including without limitation information relating to the geographic areas and population served, the need, the effect on existing facilities and services, the effectiveness of proposed buffer areas to ensure, at a minimum, protection of surrounding land uses from adverse or incompatible impacts due to landfill operation and related activities, the anticipated public cost and benefit, the anticipated rates and charges, the manner of financing, the effect on metropolitan plans and development programs, the supply of waste, anticipated markets for any product, and alternative means of disposal or energy production.

(b) A permit may not be issued for the operation of a solid waste facility in the metropolitan area which is not in accordance with the metropolitan council's solid waste policy plan. The metropolitan council director shall determine whether a permit is in accordance with the policy plan. In making its this determination, the council director shall consider the areawide need and benefit of the applicant facility and the effectiveness of proposed buffer areas to adequately protect surrounding land uses in accordance with its the policy plan, and may consider, without limitation, the effect of the applicant facility on existing and planned solid waste facilities.

(c) If the council director determines that a permit is in accordance with its the policy plan, the council director shall approve the permit. If the council director determines that a permit is not in accordance with its the policy plan, it the director shall disapprove the permit. The council's Approval of permits may be subject to conditions the director determines are necessary to satisfy criteria and standards in its the policy plan, including conditions respecting the type, character, and quantities of waste to be processed at a solid waste facility used primarily for resource recovery and the geographic territory from which a resource recovery facility or transfer station serving such a facility may draw its waste.

(d) For the purpose of this review and approval by the council, the agency shall send a copy of each permit application and any supporting information furnished by the applicant to the metropolitan council director within 15 days after receipt of the application and all other information requested from the applicant. Within 60 days after the application and supporting information are received by the council director, unless a time extension is authorized by the agency, the council director shall issue to the agency in writing its a determination whether the permit is disapproved, approved, or approved with conditions. If the council director does not issue its a determination to the agency within the 60-day period, unless a time extension is authorized by the agency, the permit shall be deemed to be in accordance with the council's policy plan.

(e) A permit may not be issued in the metropolitan area for a solid waste facility used primarily for resource recovery or a transfer station serving the facility, if the facility or station is owned or operated by a public agency or if the acquisition or betterment of the facility or station is secured by public funds or obligations issued by a public agency, unless the council director finds and determines that adequate markets exist for the products recovered and that establishment of the facility is consistent with the criteria and standards in the metropolitan and county plans respecting the protection of existing resource recovery facilities and transfer stations serving such facilities.

Sec. 43. Minnesota Statutes 1994, section 473.823, subdivision 5, is amended to read:

Subd. 5. [REVIEW OF WASTE PROCESSING FACILITIES.] (a) A metropolitan county may establish a waste processing facility within the county without complying with local ordinances, if the action is approved by the council director in accordance with the review process established by this subdivision. A county requesting review by the council shall show that:

(1) the required permits for the proposed facility have been or will be issued by the agency;

(2) the facility is consistent with the council's metropolitan policy plan and the approved county master plan; and

(3) a local government unit has refused to approve the establishment or operation of the facility, has failed to deny or approve establishment or operation of the facility within the time period required in section 115A.31, or has approved the application or request with conditions that are unreasonable or impossible for the county to meet.

(b) The council director shall meet to commence the review within 90 days of the submission of a request determined by the council director to satisfy the requirements for review under this subdivision. At the meeting Upon commencing the review the chair director shall recommend and the council establish a scope and procedure, including

criteria, for its the review and final decision on the proposed facility. The procedure shall require the council director to make a final decision on the proposed facility within 120 days following the commencement of review. For facilities other than waste incineration and mixed municipal solid waste composting facilities, the council director shall meet to commence the review within 45 days of submission of the request and shall make a final decision within 75 days following commencement of review.

(c) The council director shall conduct at least one public hearing in the city or town within which the proposed facility would be located. Notice of the hearing shall be published in a newspaper or newspapers of general circulation in the area for two successive weeks ending at least 15 days before the date of the hearing. The notice shall describe the proposed facility, its location, the proposed permits, and the council's scope, procedure, and criteria for review. The notice shall identify a location or locations within the local government unit and county where the permit applications and the council's scope, procedure, and criteria for review are available for review and where copies may be obtained.

(d) In its the review and final decision on the proposed facility, the council director shall consider at least the following matters:

(1) the risk and effect of the proposed facility on local residents, units of government, and the local public health, safety, and welfare, and the degree to which the risk or effect may be alleviated;

(2) the consistency of the proposed facility with, and its effect on, existing and planned local land use and development; local laws, ordinances, and permits; and local public facilities and services;

(3) the adverse effects of the facility on agriculture and natural resources and opportunities to mitigate or eliminate such adverse effects by additional stipulations, conditions, and requirements respecting the design and operation of the proposed facility at the proposed site;

(4) the need for the proposed facility and the availability of alternative sites;

(5) the consistency of the proposed facility with the county master plan adopted pursuant to section 473.803 and the council's policy plan adopted pursuant to section 473.149; and

(6) transportation facilities and distance to points of waste generation.

(e) In its final decision in the review, The council director may either approve or disapprove the proposed facility at the proposed site. The council's approval shall embody all terms, conditions, and requirements of the permitting state agencies, provided that the council director may require more stringent permit terms, conditions, and requirements respecting the design, construction, operation, inspection, monitoring, and maintenance of the proposed facility at the proposed site.

Sec. 44. Minnesota Statutes 1994, section 473.823, subdivision 6, is amended to read:

Subd. 6. [COUNCIL; CERTIFICATION OF NEED.] No new mixed municipal solid waste disposal facility or capacity shall be permitted in the metropolitan area without a certificate of need issued by the council director indicating the council's a determination that the additional disposal capacity planned for the facility is needed in the metropolitan area. The council director shall amend its the policy plan, adopted pursuant to section 473.149, to include standards and procedures for certifying need that conform to the certification standards stated in this subdivision. The standards and procedures shall be based on the council's metropolitan disposal abatement plan adopted pursuant to section 473.149, subdivision 2d, the council's solid waste disposal facilities development schedule adopted under section 473.149, subdivision 2e, and the provisions of any master plans of counties that have been approved by the council under section 473.803, subdivision 2, and that are consistent with the council's abatement plan and development schedule. The council director shall certify need only to the extent that there are no feasible and prudent alternatives to the disposal facility, including waste reduction, source separation and resource recovery which would minimize adverse impact upon natural resources. Alternatives that are speculative or conjectural shall not be deemed to be feasible and prudent. Economic considerations alone shall not justify the certification of need or the rejection of alternatives.

Sec. 45. Minnesota Statutes 1994, section 473.844, subdivision 1a, is amended to read:

Subd. 1a. [USE OF FUNDS.] (a) The money in the account may be spent only for the following purposes:

(1) assistance to any person for resource recovery projects funded under subdivision 4 or projects to develop and coordinate markets for reusable or recyclable waste materials, including related public education, planning, and technical assistance;

(2) grants to counties under section 473.8441;

(3) program administration by the metropolitan council;

(4) public education on solid waste reduction and recycling;

(5) solid waste research; and

(6) grants to multicounty groups for regionwide planning for solid waste management system operations and use of management capacity.

(b) The council director shall allocate at least 50 percent of the annual revenue received by the account for grants to counties under section 473.8441.

Sec. 46. Minnesota Statutes 1994, section 473.844, subdivision 4, is amended to read:

Subd. 4. [RESOURCE RECOVERY GRANTS AND LOANS.] The grant and loan program under this subdivision is administered by the metropolitan council director. Grants and loans may be made to any person for resource recovery projects. The grants and loans may include the cost of planning, acquisition of land and equipment, and capital improvements. Grants and loans for planning may not exceed 50 percent of the planning costs. Grants and loans for acquisition of land and equipment and for capital improvements may not exceed 50 percent of the cost of the project. Grants and loans may be made for public education on the need for the resource recovery projects. A grant or loan for land, equipment, or capital improvements may not be made until the metropolitan council director has determined the total estimated capital cost of the project and ascertained that full financing of the project is assured. Grants and loans made to cities, counties, or solid waste management districts must be for projects that are in conformance with approved master plans. A grant or loan to a city or town must be reviewed and approved by the county for conformance with the county master plan. The council director shall require, where practical, cooperative purchase between cities, counties, and districts of capital equipment.

Sec. 47. Minnesota Statutes 1994, section 473.8441, subdivision 2, is amended to read:

Subd. 2. [PROGRAM.] The council director shall encourage the development of permanent local recycling programs throughout the metropolitan area. By January 1, 1988, the council shall develop performance indicators for local recycling that will measure the availability and use of recycling throughout the metropolitan area. The council director shall make grants to qualifying metropolitan counties as provided in this section.

Sec. 48. Minnesota Statutes 1994, section 473.8441, subdivision 4, is amended to read:

Subd. 4. [GRANT CONDITIONS.] The council director shall administer grants so that the following conditions are met:

(a) A county must apply for a grant in the manner determined by the council director. The application must describe the activities for which the grant will be used.

(b) The activities funded must be consistent with the council's metropolitan policy plan and the county master plan.

(c) A grant must be matched by equal county expenditures for the activities for which the grant is made.

(d) All grant funds must be used for new activities or to enhance or increase the effectiveness of existing activities in the county.

(e) Counties shall provide support to maintain effective municipal recycling where it is already established.

Sec. 49. Minnesota Statutes 1994, section 473.8441, subdivision 5, is amended to read:

Subd. 5. [GRANT ALLOCATION PROCEDURE.] (a) The council director shall distribute the funds annually so that each qualifying county receives an equal share of 50 percent of the council's allocation to the program described in this section, plus a proportionate share of the remaining funds available for the program. A county's proportionate share is an amount that has the same proportion to the total remaining funds as the number of households in the county has to the total number of households in all metropolitan counties.

(b) To qualify for distribution of funds, a county, by April 1 of each year, must submit for council to the director for approval a report on expenditures and activities under the program during the preceding fiscal year and any proposed changes in its recycling implementation strategy or performance funding system. The report shall be included in the county report required by section 473.803, subdivision 3.

Sec. 50. Minnesota Statutes 1994, section 473.845, subdivision 4, is amended to read:

Subd. 4. [EXPENDITURE NOTIFICATION.] The commissioner shall notify the chair director of the office and the director of the legislative commission on waste management before making expenditures from the fund.

Sec. 51. Minnesota Statutes 1994, section 473.848, subdivision 2, is amended to read:

Subd. 2. [COUNTY CERTIFICATION; COUNCIL OFFICE APPROVAL.] (a) By April 1 of each year, each county shall submit an annual certification report to the council office detailing:

(1) the quantity of waste generated in the county that was not processed prior to transfer to a disposal facility during the year preceding the report;

(2) the reasons the waste was not processed;

(3) a strategy for development of techniques to ensure processing of waste including a specific timeline for implementation of those techniques; and

(4) any progress made by the county in reducing the amount of unprocessed waste.

The report shall be included in the county report required by section 473.803, subdivision 3.

(b) The council office shall approve a county's certification report if it determines that the county is reducing and will continue to reduce the amount of unprocessed waste, based on the report and the county's progress in development and implementation of techniques to reduce the amount of unprocessed waste transferred to disposal facilities. If the council office does not approve a county's report, it shall negotiate with the county to develop and implement specific techniques to reduce unprocessed waste. If the council office does not approve two or more consecutive reports from any one county, the council office shall develop specific reduction techniques that are designed for the particular needs of the county. The county shall implement those techniques by specific dates to be determined by the council office.

Sec. 52. Minnesota Statutes 1994, section 473.848, subdivision 4, is amended to read:

Subd. 4. [COUNCIL OFFICE REPORT.] The council office shall include, as part of its report to the legislative commission on waste management required under section 473.149, an accounting of the quantity of unprocessed waste transferred to disposal facilities, the reasons the waste was not processed, a strategy for reducing the amount of unprocessed waste, and progress made by counties to reduce the amount of unprocessed waste. The council office may adopt standards for determining when waste is unprocessible and procedures for expediting certification and reporting of unprocessed waste.

Sec. 53. [APPLICATION.]

Sections 25 to 52 apply in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

Sec. 54. [INSTRUCTION TO REVISOR.]

The revisor shall substitute the term "office of environmental assistance" for the term "office of waste management" in Minnesota Statutes, sections 15A.081, 41A.066, 43A.08, 115B.20, 116.07, 116.101, 116.99, and 477A.012.

Sec. 55. [REPEALER.]

Minnesota Statutes 1994, sections 115A.81, subdivision 3; 115A.90, subdivision 3; 383D.71, subdivision 2; 473.149, subdivision 5; and 473.181, subdivision 4, are repealed.

Sec. 56. [EFFECTIVE DATE.]

Sections 1 to 53 and 55 are effective on the day following final enactment."

Delete the title and insert:

"A bill for an act relating to the environment; implementing the transfer of solid waste management duties of the metropolitan council to the office of environmental assistance; providing for the management of waste; providing penalties; appropriating money; amending Minnesota Statutes 1992, section 115A.33, as reenacted; Minnesota Statutes 1994, sections 115.071, subdivision 1; 115A.03, by adding a subdivision; 115A.055; 115A.07, subdivision 3; 115A.072, subdivisions 1, 3, and 4; 115A.12; 115A.14, subdivision 4; 115A.15, subdivision 9; 115A.191, subdivisions 1 and 2; 115A.32; 115A.411; 115A.42; 115A.45; 115A.46, subdivisions 1 and 5; 115A.55, subdivision 3, and by adding a subdivision; 115A.5501, subdivisions 2, 3, and 4; 115A.5502; 115A.551, subdivisions 2a, 4, 5, 6, and 7; 115A.554; 115A.557, subdivisions 3 and 4; 115A.558; 115A.63, subdivision 3; 115A.84, subdivision 3; 115A.86, subdivision 2; 115A.919, subdivision 3; 115A.921, subdivision 1; 115A.923, subdivision 1; 115A.9302, subdivisions 1 and 2; 115A.951, subdivision 4; 115A.965, subdivision 1; 115A.97, subdivisions 5 and 6; 115A.981, subdivision 3; 115D.03, subdivision 5, and by adding a subdivision; 115D.05; 115D.07, subdivisions 1 and 2; 115D.08, subdivision 1; 115D.10; 116.07, subdivisions 4a, 4d, and 4j; 116.072; 116.96, subdivision 5; 116C.69, subdivision 3; 325E.0951, subdivision 5; 400.16; 400.161; 473.149, subdivisions 1, 2d, 2e, 3, 4, and 6; 473.151; 473.516, subdivision 2; 473.801, subdivision 1, and by adding subdivisions; 473.8011; 473.803, subdivisions 1, 1c, 2, 2a, 3, 4, and 5; 473.804; 473.811, subdivisions 1, 4a, 5, 5c, 7, and 8; 473.813, subdivision 2; 473.823, subdivisions 3, 5, and 6; 473.843, subdivision 1, and by adding a subdivision; 473.844, subdivisions 1a and 4; 473.8441, subdivisions 2, 4, and 5; 473.845, subdivision 4; 473.846; and 473.848, subdivisions 2 and 4; Laws 1994, chapter 628, article 3, section 209; proposing coding for new law in Minnesota Statutes, chapters 116; and 480; repealing Minnesota Statutes 1994, sections 115A.165; 115A.81, subdivision 3; 115A.90, subdivision 3; 116.94; 383D.71, subdivision 2; 473.149, subdivisions 2, 2a, 2c, 2f, and 5; 473.181, subdivision 4; and 473.803, subdivisions 1b and 1e."

With the recommendation that when so amended the bill pass.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 507, A bill for an act relating to petroleum tank release cleanup program; providing for payment for a site assessment prior to tank removal; modifying reimbursement provisions; adding requirements for tank monitoring; establishing registration requirements; modifying program and liability provisions; amending Minnesota Statutes 1994, sections 88.171, subdivision 2; 115C.02, subdivision 11, and by adding a subdivision; 115C.03, subdivision 10; 115C.09, subdivisions 1, 2, 3, 3b, and 3c; 115C.11, subdivision 1; 115C.12; 115C.13; 115E.01, by adding subdivisions; 115E.04, subdivision 2; 115E.06; and 115E.061; proposing coding for new law in Minnesota Statutes, chapters 115C; and 116.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 115C.02, is amended by adding a subdivision to read:

Subd. 4a. [COMMISSIONER'S SITE REPORT.] "Commissioner's site report" means the report required under Minnesota Rules, part 2890.0090, subpart 6.

Sec. 2. Minnesota Statutes 1994, section 115C.02, subdivision 11, is amended to read:

Subd. 11. [POLITICAL SUBDIVISION.] "Political subdivision" means a county, a town, or a statutory or home rule charter city, a housing and redevelopment authority, an economic development authority, or a port authority.

Sec. 3. Minnesota Statutes 1994, section 115C.02, is amended by adding a subdivision to read:

Subd. 11a. [PREREMOVAL SITE ASSESSMENT.] "Preremoval site assessment" means actions defined in section 115A.092 which are taken by a registered consultant prior to the removal of a petroleum storage tank in order to determine whether a release has occurred in the area immediately surrounding the tank.

Sec. 4. Minnesota Statutes 1994, section 115C.02, is amended by adding a subdivision to read:

Subd. 12a. [RESIDENTIAL SITE.] "Residential site" means a site upon which is located any dwelling for permanent habitation by one or more persons. A residence may be part of a multidwelling or multipurpose building, but shall not include buildings such as hotels, hospitals, motels, dormitories, sanitariums, nursing homes, schools and other buildings used for educational purposes, or correctional institutions.

Sec. 5. Minnesota Statutes 1994, section 115C.03, subdivision 10, is amended to read:

Subd. 10. [RETENTION OF CORRECTIVE ACTION RECORDS.] A person who applies for reimbursement under this chapter and a contractor or consultant who has billed the applicant for corrective action services that are part of the claim for reimbursement must maintain prepare and retain all records related to the claim for reimbursement corrective action services for a minimum of five seven years from the date the claim for reimbursement is submitted to the board. corrective action services are performed, including, but not limited to, invoices submitted to applicants, subcontractor invoices, receipts for equipment rental, and all other goods rented or purchased, personnel time reports, mileage logs, and expense accounts. An applicant must obtain and retain records necessary to document costs submitted in a claim for reimbursement for corrective action services for seven years from the date the claim is submitted to the board.

Sec. 6. Minnesota Statutes 1994, section 115C.09, subdivision 2, is amended to read:

Subd. 2. [RESPONSIBLE PERSON ELIGIBILITY.] (a) A responsible person who has incurred reimbursable costs after June 4, 1987, in response to a release, may apply to the board for partial reimbursement under subdivision 3 and rules adopted by the board. The board may consider applications for reimbursement at the following stages:

(1) after the commissioner approves a plan for corrective action actions related to soil contamination excavation and treatment or after the commissioner determines that further soil excavation and treatment should not be done;

(2) after the commissioner determines that the corrective action plan actions described in clause (1) has have been fully constructed or, installed, or completed;

(3) after the commissioner approves a comprehensive plan for corrective action that will adequately address the entire release, including groundwater contamination if necessary;

(4) after the commissioner determines that the corrective action necessary to adequately address the release has been fully constructed or installed; and

(5) periodically afterward as the corrective action continues operation, but no more frequently than four times per 12-month period unless the application is for more than $2,000 in reimbursement.

(b) The commissioner shall review a plan, and provide an approval or disapproval to the responsible person and the board, within 60 days in the case of a plan submitted under paragraph (a), clause (1), and within 120 days in the case of a plan submitted under paragraph (a), clause (3), or the commissioner shall explain to the board why additional time is necessary. The board shall consider a complete application within 60 days of submission of the application under paragraph (a), clauses (1) and (2), and within 120 days of submission of the application under paragraph (a), clauses (3) and (4), or the board shall explain for the record why additional time is necessary. For purposes of the preceding sentence, board consideration of an application is timely if it occurs at the regularly scheduled meeting following the deadline. Board staff may review applications submitted to the board simultaneous to the commissioner's consideration of the appropriateness of the corrective action, but the board may not act on the application until after the commissioner's approval is received.

(c) A reimbursement may not be made unless the board determines that the commissioner has determined that the corrective action was appropriate in terms of protecting public health, welfare, and the environment.

Sec. 7. Minnesota Statutes 1994, section 115C.09, subdivision 3, is amended to read:

Subd. 3. [REIMBURSEMENTS; SUBROGATION; APPROPRIATION.] (a) Except as otherwise provided in paragraph (l), the board shall reimburse a responsible person who is eligible under subdivision 2 from the account for 90 percent of the total reimbursable costs on the first $250,000 and 75 percent on any remaining costs in excess of $250,000 on a site.

Not more than $1,000,000 may be reimbursed for costs associated with a single release, regardless of the number of persons eligible for reimbursement, and not more than $2,000,000 may be reimbursed for costs associated with a single tank facility.

(b) A reimbursement may not be made from the account under this subdivision until the board has determined that the costs for which reimbursement is requested were actually incurred and were reasonable.

(c) When an applicant has obtained responsible competitive bids or proposals on forms prescribed by the board, the eligible costs for the tasks, procedures, services, materials, equipment, and tests of the lowest bidder are presumed to be reasonable by the board. Notwithstanding the foregoing, the board may rebut the presumption of reasonableness by showing that the costs in the lowest bid or proposal are substantially in excess of the average costs charged for similar tasks, procedures, services, materials, equipment, and tests in the same geographical area during the relevant time period.

(d) When an applicant has obtained a minimum of three responsible bids or proposals on forms prescribed by the board and where rules promulgated under this chapter designate maximum costs for specific tasks, procedures, services, materials, equipment, and tests, the eligible costs in the lowest responsible bid or proposal are deemed reasonable if the costs are at or below the maximums set forth in the rules.

(e) Costs incurred for change orders executed as prescribed in rules promulgated under this chapter are presumed reasonable if the costs are at or below the maximum set forth in the rules. Notwithstanding the foregoing, the board may rebut the presumption of reasonableness by showing that cost increases in the change order are above those in the original bid or are unsubstantiated and inconsistent with the process and standards required by rules promulgated under this chapter.

(f) A reimbursement may not be made from the account under this subdivision in response to either an initial or supplemental application for costs incurred after June 4, 1987, that are payable under an applicable insurance policy, except that if the board finds that the responsible person has made reasonable efforts to collect from an insurer and failed, the board shall reimburse the responsible person under this subdivision.

(d) (g) If the board reimburses a responsible person for costs for which the responsible person has petroleum tank leakage or spill insurance coverage, the board is subrogated to the rights of the responsible person with respect to that insurance coverage, to the extent of the reimbursement by the board. The board may request the attorney general to bring an action in district court against the insurer to enforce the board's subrogation rights. Acceptance by a responsible person of reimbursement constitutes an assignment by the responsible person to the board of any rights of the responsible person with respect to any insurance coverage applicable to the costs that are reimbursed. Notwithstanding this paragraph, the board may instead request a return of the reimbursement under subdivision 5 and may employ against the responsible party the remedies provided in that subdivision, except where the board has knowingly provided reimbursement because the responsible person was denied coverage by the insurer.

(e) (h) Money in the account is appropriated to the board to make reimbursements under this section. A reimbursement to a state agency must be credited to the appropriation account or accounts from which the reimbursed costs were paid.

(f) (i) The board shall may reduce the amount of reimbursement to be made under this section if it finds that the responsible person has not complied with a provision of this chapter, a rule or order issued under this chapter, or one or more of the following requirements:

(1) at the time of the release the tank was in substantial compliance with state and federal rules and regulations applicable to the tank, including rules or regulations relating to financial responsibility;

(2) (1) the agency was given notice of the release as required by section 115.061;

(3) (2) the responsible person, to the extent possible, fully cooperated with the agency in responding to the release; and

(4) if the responsible person is an operator, the person exercised due care with regard to operation of the tank, including maintaining inventory control procedures.

(3) the state and federal rules and regulations applicable to the condition or operation of the tank when the noncompliance caused or failed to mitigate the release.

(g) (j) The reimbursement shall may be reduced as much as 100 percent for failure by the responsible person to comply with the requirements in paragraph (f) (i), clauses (1) to (4) (3). In determining the amount of the reimbursement reduction, the board shall consider:

(1) the likely reasonable determination by the agency of the environmental impact of the noncompliance;

(2) whether the noncompliance was negligent, knowing, or willful;

(3) the deterrent effect of the award reduction on other tank owners and operators; and

(4) the amount of reimbursement reduction recommended by the commissioner.

(h) (k) A person may assign the right to receive reimbursement to each lender who advanced funds to pay the costs of the corrective action or to each contractor or consultant who provided corrective action services. An assignment must be made by filing with the board a document, in a form prescribed by the board, indicating the identity of the responsible person, the identity of the assignee, the dollar amount of the assignment, and the location of the corrective action. An assignment signed by the responsible person is valid unless terminated by filing a termination with the board, in a form prescribed by the board, which must include the written concurrence of the assignee. The board shall maintain an index of assignments filed under this paragraph. The board shall pay the reimbursement to the responsible person and to one or more assignees by a multiparty check. The board has no liability to a responsible person for a payment under an assignment meeting the requirements of this paragraph.

(l) For corrective actions at residential sites, the board shall reimburse a responsible person who is eligible under subdivision 2 from the account for 100 percent of the total reimbursable costs, minus an amount not to exceed $7,500 which is equal to five percent of the eligible costs.

Sec. 8. Minnesota Statutes 1994, section 115C.09, subdivision 3b, is amended to read:

Subd. 3b. [VOLUNTEER ELIGIBILITY.] (a) Notwithstanding subdivisions 1 to 3, a person may apply to the board for partial reimbursement under subdivision 3 who:

(1) is not a responsible person under section 115C.02;

(2) holds legal or equitable title to the property where a release occurred; and

(3) incurs reimbursable costs on or after May 23, 1989.

(b) A person eligible for reimbursement under this subdivision must, to the maximum extent possible, comply with the same conditions and requirements of reimbursement as those imposed by this section on a responsible person.

(c) The board may reduce the reimbursement to a person eligible under this subdivision if the person acquired legal or equitable title to the property from a responsible person who failed to comply with the provisions of subdivision 3, paragraph (f) (i), except that the board may not reduce the reimbursement to a mortgagee who acquires title to the property through foreclosure or receipt of a deed in lieu of foreclosure.

Sec. 9. Minnesota Statutes 1994, section 115C.09, subdivision 3c, is amended to read:

Subd. 3c. [RELEASE AT REFINERIES AND TANK FACILITIES NOT ELIGIBLE FOR REIMBURSEMENT.] (a) Notwithstanding other provisions of subdivisions 1 to 3b, a reimbursement may not be made under this section for costs associated with a release:

(1) from a tank located at a petroleum refinery; or

(2) from a tank facility, including a pipeline terminal, with more than 1,000,000 gallons of total petroleum storage capacity at the tank facility.

(b) Paragraph (a), clause (2), does not apply to reimbursement for costs associated with a release from a tank facility:

(1) owned or operated by a person engaged in the business of mining iron ore or taconite;

(2) owned by a political subdivision that acquired the tank facility prior to May 23, 1989; or

(3) owned by a person:

(i) who acquired the tank facility prior to May 23, 1989;

(ii) who did not use the tank facility for the bulk storage of petroleum; and

(iii) who is not affiliated with the party who used the tank facility for the bulk storage of petroleum.

Sec. 10. [115C.092] [TANK REMOVALS; PAYMENT FOR PREREMOVAL SITE ASSESSMENT.]

Subdivision 1. [PREREMOVAL SITE ASSESSMENT; REIMBURSEMENT.] (a) Preremoval site assessment costs which are in compliance with the requirements of this chapter and with rules promulgated under this chapter shall be reimbursable. The applicant shall obtain written competitive proposals for the preremoval site assessment on a form prescribed by the board utilizing as appropriate tasks and costs established in rules promulgated under this chapter governing the initial site assessment.

(b) If contamination is found at the site, the board shall reimburse an applicant upon submission of the applicant's first application for reimbursement under section 115C.09, subdivision 2. If no contamination is found at the site, the board shall reimburse the applicant upon provision by the applicant of documentation that the tank or tanks have been removed from the site.

(c) Reimbursement for the preremoval site assessment shall not be subject to reduction by the board for violations set forth in the commissioner's site report.

(d) Notwithstanding any provision in this subdivision to the contrary, the board shall not reimburse for a preremoval site assessment which is done for the purposes of facilitating a property transfer. The board shall presume that a preremoval site assessment is done for the purposes of facilitating a property transfer if the property is transferred within three months of incurring preremoval site assessment costs.

Subd. 2. [REQUIREMENTS OF A PREREMOVAL SITE ASSESSMENT.] The preremoval site assessment shall include a preremoval site assessment report to the tank owner as prescribed in subdivision 3 and (1) three borings if one tank is to be removed, or (2) five borings if more than one tank is to be removed. The placement of the borings shall be based on the tank system location, estimated depth and gradient of groundwater, and the maximum probability of encountering evidence of petroleum contamination.

Subd. 3. [REPORT TO TANK OWNER.] The consultant shall prepare a preremoval site assessment report, which must include the following:

(1) a summary of any unusual site features affecting the preremoval site assessment and subsequent corrective action;

(2) the opinion of the consultant as to the presence and relative magnitude of any petroleum contamination on the site;

(3) the recommendation of the consultant as to whether further corrective action is needed, including groundwater remediation;

(4) the recommendation of the consultant as to whether the contaminated soil, if any, should be excavated and the volume of soil that should be excavated;

(5) a statement as to whether a petroleum tank release was reported to the agency and the date and time of that report, if any; and

(6) the signature of the consultant or contractor, and the date the report was prepared.

If further corrective action is recommended by the consultant, the preremoval site assessment report and any additional information gathered by the consultant during the assessment shall be used for securing competitive bids or proposals on forms prescribed by the board to implement corrective actions at the site, consistent with rules promulgated under this chapter.

Subd. 4. [BID AND INVOICE FORMS; AGENCY FACT SHEETS.] Within 60 days of the effective date of this section, the board shall prescribe a preremoval site assessment bid and invoice form as described in subdivision 1 and the agency shall publish fact sheets applicable to the preremoval site assessment.

Sec. 11. Minnesota Statutes 1994, section 115C.11, subdivision 1, is amended to read:

Subdivision 1. [REGISTRATION.] (a) All consultants and contractors who perform corrective action services must register with the board in order to participate in the petroleum tank release cleanup program. In order to register, consultants and contractors must meet and demonstrate compliance with the following criteria:

(1) provide a signed statement to the board verifying agreement to abide by this chapter and the rules adopted under it and to include a signed statement with each claim that all costs claimed by the consultant or contractor are a true and accurate account of services performed;

(2) provide a signed statement that the consultant or contractor shall make available for inspection and audit records requested by the board for field or financial audits under the scope of this chapter;

(3) certify knowledge of the requirements of this chapter and the rules adopted under it;

(4) obtain and maintain professional liability coverage, including pollution impairment liability, of no less than $1,000,000 per claim, $1,000,000 annual aggregate, and a deductible of no more than $100,000 per claim and that is provided by a firm that has an A.M. Best rating of at least "A-"; and

(5) submit to the board a certificate or certificates verifying the existence of the required insurance coverage for all consultants or contractors who performed work included in a claim along with any request for reimbursement.

(b) The board must maintain a list of all registered consultants and a list of all registered contractors including an identification of the services offered.

(c) An applicant who applies for reimbursement must use a All corrective action services must be performed by registered consultant consultants and contractor in order to be eligible for reimbursement contractors.

(d) The commissioner must inform any person who notifies the agency of a release under section 115.061 that the person must use a registered consultant or contractor to qualify for reimbursement and that a list of registered consultants and contractors is available from the board.

(e) Work Reimbursement for corrective action services performed by an unregistered consultant or contractor is ineligible for reimbursement subject to reduction under section 115C.09, subdivision 3, paragraph (i).

(f) Work (e) Corrective action services performed by a consultant or contractor prior to being removed from the registration list may be reimbursed without reduction by the board.

(g) (f) If the information in an application for registration becomes inaccurate or incomplete in any material respect, the registered consultant or contractor must promptly file a corrected application with the board.

(h) (g) Registration is effective on the date a complete application is received by the board. The board may reimburse without reduction the cost of work performed by an unregistered contractor if the contractor performed the work within 30 days of the effective date of registration.

Sec. 12. Minnesota Statutes 1994, section 115C.12, is amended to read:

115C.12 [APPEAL OF REIMBURSEMENT DETERMINATION.]

Subdivision 1. [APPEAL FROM DETERMINATION OF COMMISSIONER OF COMMERCE.] (a) A person may appeal to the board within 90 days after notice of a reimbursement determination made under section 115C.09 by submitting a written notice setting forth the specific basis for the appeal.

(b) The board shall consider the appeal within 90 days of the notice of appeal. The board shall notify the appealing party of the date of the meeting at which the appeal will be heard at least 30 days before the date of the meeting.

(c) The board's decision must be based on the written record and written arguments and submissions unless the board determines that oral argument is necessary to aid the board in its decision making. Any written submissions must be delivered to the board at least 15 days before the meeting at which the appeal will be heard. Any request for the presentation of oral argument must be in writing and submitted along with the notice of appeal. An applicant for reimbursement may appeal to the board a reimbursement determination made by the commissioner of commerce under authority delegated by the board according to section 115C.09, subdivision 10. The commissioner of commerce shall send written notification of the reimbursement determination by first class United States mail to the applicant for reimbursement at the applicant's last known address. The applicant for reimbursement must file written notice with the board of an appeal of a reimbursement determination made by the commissioner of commerce within 60 days of the date that the commissioner of commerce sends written notice to the applicant of the reimbursement determination. The board shall consider the appeal within 90 days of receipt of the written notice of appeal by the applicant for reimbursement.

Subd. 2. [APPEAL FROM DECISION OF THE BOARD.] (a) An applicant for reimbursement may appeal a reimbursement determination of the board as a contested case under chapter 14. An applicant for reimbursement must provide written notification to the board of a request for a contested case within 30 days of the date that the board makes a reimbursement determination.

(b) This subdivision applies to reimbursement determinations made by the board as a result of an appeal to the board under subdivision 1 and reimbursement determinations made by the board when the board has not delegated its authority to make reimbursement determinations.

Sec. 13. Minnesota Statutes 1994, section 115C.13, is amended to read:

115C.13 [REPEALER.]

Sections 115C.01, 115C.02, 115C.021, 115C.03, 115C.04, 115C.045, 115C.05, 115C.06, 115C.065, 115C.07, 115C.08, 115C.09, 115C.092, 115C.10, 115C.11, and 115C.12, are repealed effective June 30, 2000.

Sec. 14. [116.481] [MONITORING.]

Subdivision 1. [MEASUREMENT OF TANK CAPACITY.] (a) By September 1, 1996, all aboveground tanks of 2,000 gallons or more used for storage and subsequent resale of petroleum products must be equipped with:

(1) a gauge in working order that shows the current level of product in the tank; or

(2) an audible or visual alarm which alerts the person delivering fuel into the tank that the tank is within 100 gallons of capacity.

(b) In lieu of the equipment specified in paragraph (a), the owner or operator of a tank may use a manual method of measurement which accurately determines the amount of product in the tank and the amount of capacity available to be used. This information must be readily available to anyone delivering fuel into the tank prior to delivery. Documentation that a tank has the available capacity for the amount of product to be delivered must be transmitted to the person making the delivery.

Subd. 2. [CONTENTS LABELED.] (a) By December 1, 1995, all aboveground tanks governed by this section must be numbered and labeled as to the tank contents, total capacity, and capacity in volume increments of 500 gallons or less.

(b) Piping connected to the tank must be labeled with the product carried at the point of delivery and at the tank inlet. Manifolded delivery points must have all valves labeled as to product distribution.

Subd. 3. [SITE DIAGRAM.] (a) All tanks at a facility shall be shown on a site diagram which is permanently mounted in an area accessible to delivery personnel. The diagram shall show the number, capacity, and contents of tanks and the location of piping, valves, storm sewers, and other information necessary for emergency response, including the facility owner's or operator's telephone number.

(b) Prior to delivering product into an underground or aboveground tank, delivery personnel shall:

(1) consult the site diagram, where applicable, for proper delivery points, tank and piping locations, and valve settings;

(2) visually inspect the tank, piping, and valve settings to determine that the product being delivered will flow only into the appropriate tank; and

(3) determine, using equipment and information available at the site, that the available capacity of the tank is sufficient to hold the amount being delivered.

Delivery personnel must remain in attendance during delivery.

Subd. 4. [CAPACITY OF TANK.] A tank may not be filled from a transport vehicle compartment containing more than the available capacity of the tank, unless the hose of the transport vehicle is equipped with a manually operated shut-off nozzle.

Subd. 5. [EXEMPTION.] Aboveground and underground tanks located at refineries, pipeline terminals, and river terminals are exempt from this section.

Sec. 15. [EFFECTIVE DATE.]

Section 7, paragraphs (c) to (k), are effective the day following final enactment. Section 7, paragraphs (a) and (l), are effective retroactive to June 4, 1987. All other sections are effective as of August 1, 1995. Sections 1, 3, and 10 apply only to preremoval site assessments begun on or after the effective date."

Delete the title and insert:

"A bill for an act relating to petroleum tank release cleanup fund; providing for payment for a site assessment prior to tank removal; establishing registration requirements for consultants and contractors; modifying reimbursement provisions; adding requirements for tank monitoring; amending Minnesota Statutes 1994, sections 115C.02, subdivision 11, and by adding subdivisions; 115C.03, subdivision 10; 115C.09, subdivisions 2, 3, 3b, and 3c; 115C.11, subdivision 1; 115C.12; and 115C.13; proposing coding for new law in Minnesota Statutes, chapters 115C; and 116."

With the recommendation that when so amended the bill pass.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 979, A bill for an act relating to motor carriers; regulating hazardous material transporters; requiring fingerprints of motor carrier managers for criminal background checks; making technical changes related to calculating proportional mileage under the international registration plan; specifying violations that may result in suspension or revocation of permit; making technical changes relating to hazardous waste transporter licenses; providing for disposition of fees collected for hazardous material registration, licensing, and permitting; amending Minnesota Statutes 1994, section 221.0355, subdivisions 3, 5, 6, 12, 15, and by adding a subdivision.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 221.0355, subdivision 3, is amended to read:

Subd. 3. [GENERAL REQUIREMENTS.] Except as provided in subdivision 17, after October 1, 1994:

(a) No carrier, other than a public entity, may transport a hazardous material by motor vehicle in Minnesota unless it has complied with subdivision 4.

(b) No carrier, other than a public entity, may transport a hazardous waste in Minnesota unless it has complied with subdivisions 4 and 5.

(c) No shipper may offer a designated hazardous material for shipment or cause a designated hazardous material to be transported or shipped in Minnesota unless it has complied with subdivision 7.

(d) No carrier, other than a public entity, may transport a designated hazardous material by rail or water in Minnesota unless it has complied with subdivision 7a.

(e) No public entity may transport a hazardous material or hazardous waste by motor vehicle in Minnesota unless it has complied with subdivision 8.

Sec. 2. Minnesota Statutes 1994, section 221.0355, subdivision 5, is amended to read:

Subd. 5. [HAZARDOUS WASTE TRANSPORTERS.] (a) A carrier with its principal place of business in Minnesota or who designates Minnesota as its base state shall file a disclosure statement with and obtain a permit from the commissioner that specifically authorizes the transportation of hazardous waste before transporting a hazardous waste in Minnesota. A carrier that designates another participating state as its base state shall file a disclosure statement with and obtain a permit from that state that specifically authorizes the transportation of hazardous waste before transporting a hazardous waste in Minnesota. A registration is valid for one year from the date a notice of registration form is issued and a permit is valid for three years from the date issued or until a carrier fails to renew its registration, whichever occurs first.

(b) A disclosure statement must include the information contained in part III of the uniform application. A person who has direct management responsibility for a carrier's hazardous waste transportation operations shall submit a full set of the person's fingerprints, with the carrier's disclosure statement, for identification purposes and to enable the commissioner to determine whether the person has a criminal record. The commissioner shall send the person's fingerprints to the Federal Bureau of Investigation and shall request the bureau to conduct a check of the person's criminal record. The commissioner shall not issue a notice of registration or permit to a hazardous waste transporter who has not made a full and accurate disclosure of the required information or paid the fees required by this subdivision. Making a materially false or misleading statement in a disclosure statement is prohibited.

(c) The commissioner shall assess a carrier the actual costs charged incurred by the commissioner by a person for conducting the uniform program's required investigation of the information contained in a disclosure statement.

(d) A permit under this subdivision becomes a license under section 221.035, subdivision 1, on August 1, 1996, and is subject to the provisions of section 221.035 until it expires.

Sec. 3. Minnesota Statutes 1994, section 221.0355, subdivision 6, is amended to read:

Subd. 6. [APPORTIONED VEHICLE REGISTRATION FEE CALCULATION.] (a) An apportioned vehicle registration fee shall be equal to the percentage of Minnesota transportation multiplied by the percentage of hazardous material transportation multiplied by the total number of vehicles the carrier operates multiplied by a per-vehicle fee of $30.

(b) A carrier shall calculate its percentage of Minnesota transportation and its percentage of hazardous material transportation as follows:

(1) A carrier shall determine its percentage of Minnesota transportation by dividing the number of miles it traveled in Minnesota under the international registration plan, pursuant to section 168.187, during the previous year, by the number of miles it traveled nationwide in the United States and Canada under the international registration plan during the previous year. If a carrier operated only in Minnesota, it must use 100 percent of the miles traveled as its percentage of Minnesota transportation. If a carrier does not register its vehicles through the international registration plan, it must calculate the number of miles traveled in the manner required under the international registration plan. If a carrier operates more than one fleet under the international registration plan the carrier must add all miles traveled by all vehicles in all fleets to calculate its mileage. A Minnesota carrier who operates in an adjacent state under a reciprocal agreement with that state must include the miles operated under the agreement as miles traveled in Minnesota in calculating mileage under this clause.

(2) A carrier shall determine its percentage of hazardous material transportation as follows:

(i) for less-than-truckload shipments, it must divide the weight of the carrier's hazardous material and hazardous waste shipments transported during the previous year by the total weight of all shipments transported during the previous year; or

(ii) for truckload shipments, it must divide the number of shipments transported during the previous year for which placarding, marking, or manifesting, was required by Code of Federal Regulations, title 49, part 172, by the total number of all shipments transported during the previous year.

(c) A carrier that transports both truckload and less-than-truckload shipments of hazardous material or hazardous waste must determine its percentage of hazardous material transportation by calculating the absolute percentage of business that is hazardous material transportation on a proportional basis with the percentage of business that is not hazardous material transportation. If a method of determining a carrier's percentage of hazardous material transportation based on general percentage ranges, instead of actual percentages, becomes allowed under the uniform program, a carrier shall use that method to determine its percentage of hazardous material transportation or by calculating its percentage within the ranges allowed following procedures under the uniform program.

(d) The definitions of "truckload freight" and "less-than-truckload freight" in section 221.011, do not apply to this subdivision.

(e) A carrier may use data from its most recent complete fiscal year or the most recent complete calendar year in calculating the percentages required in this subdivision for transportation conducted during the previous year.

Sec. 4. Minnesota Statutes 1994, section 221.0355, subdivision 12, is amended to read:

Subd. 12. [SUSPENSION, REVOCATION, AND DENIAL.] (a) The commissioner may suspend or revoke a registration and permit issued under this section or order the suspension of the transportation of hazardous material or hazardous waste in Minnesota by a carrier who has obtained a notice of registration and permit from another participating state under the uniform program if the commissioner determines that a carrier made a materially false or misleading statement in a uniform application or that a carrier's conduct constitutes a serious or repeated violation of statutes or rules governing the transportation of hazardous material or hazardous waste.:

(1) committed a violation of Code of Federal Regulations, title 49, parts 100 to 180, 383, 387, or 390 to 397, while engaging in hazardous materials transportation if the violation posed an imminent hazard to the public or the environment;

(2) made a knowing falsification of a material fact in a uniform application;

(3) has received an unsatisfactory safety rating from the state or the United States Department of Transportation; or

(4) has exhibited reckless disregard for the public and the environment.

(b) In determining if a carrier has exhibited reckless disregard for the public and the environment in violation of paragraph (a), clause (4), the commissioner shall consider:

(1) whether the carrier has engaged in a pattern of violations of Code of Federal Regulations, title 49, parts 100 to 180, 383, 387, or 390 to 397, or regulations governing the management of hazardous waste, while engaging in hazardous materials transportation, when the violations are viewed in relation to the number of truck-miles of hazardous material transportation and the number of vehicles in the carrier's fleet;

(2) the actual or potential level of environmental damage resulting from an incident or a violation of the federal regulations described in paragraph (a), clause (1);

(3) the response by the carrier to an incident or a violation of the federal regulations described in paragraph (a), clause (1);

(4) the carrier's history of violations for the past three years;

(5) any mitigating factors; and

(6) other factors as justice requires, if the commissioner specifically identifies the additional factors in the order of suspension or revocation.

(c) The commissioner may not issue a notice of registration and permit to a carrier if the commissioner determines that a carrier's conduct would constitute grounds for suspension or revocation under this subdivision. A carrier who wishes to contest a denial, suspension, or revocation is entitled to a hearing under chapter 14.

Sec. 5. Minnesota Statutes 1994, section 221.0355, subdivision 15, is amended to read:

Subd. 15. [HAZARDOUS WASTE LICENSES.] (a) From October 1, 1994, until August 1, 1996, the commissioner shall not register hazardous material transporters under section 221.0335 or license hazardous waste transporters under section 221.035. A person who is licensed under section 221.035 need not obtain a permit under subdivision 4 or 5 for the transportation of hazardous waste in Minnesota, until the person's license has expired. A carrier wishing to transport hazardous waste in another participating state shall obtain a permit under the uniform program authorizing the transportation.

(b) The commissioner may refund fees paid under section 221.035, minus a proportional amount calculated on a monthly basis for each month that a hazardous waste transporter license was valid, to a person who was issued a hazardous waste transporter license after May 5, 1994, who applied for a permit authorizing the transportation of hazardous waste under subdivisions 4 and 5 before October 1, 1994, and who was subsequently issued that permit under the uniform program.

Sec. 6. Minnesota Statutes 1994, section 221.0355, is amended by adding a subdivision to read:

Subd. 18. [DEPOSIT AND USE OF FEES.] Fees received by the commissioner for administrative processing and investigating information in a disclosure statement must be deposited in the state treasury and credited to the trunk highway fund. Notwithstanding section 221.82, registration fees collected under subdivisions 4, 5, 7, and 7a must be deposited in the state treasury, credited to the general fund, and used to cover the costs of hazardous materials incident response capability under sections 299A.48 to 299A.52 and 299K.095.

Sec. 7. Minnesota Statutes 1994, section 473.408, subdivision 2, is amended to read:

Subd. 2. [FARE POLICY.] (a) Fares and fare collection systems shall be established and administered to accomplish the following purposes:

(1) to encourage and increase transit and paratransit ridership with an emphasis on regular ridership;

(2) to restrain increases in the average operating subsidy per passenger;

(3) to ensure that no riders on any route pay more in fares than the average cost of providing the service on that route;

(4) to ensure that operating revenues are proportioned to the cost of providing the service so as to reduce any disparity in the subsidy per passenger on routes in the transit system; and

(5) to implement the social fares as set forth in subdivision 3 2b.

(b) The plan must contain a statement of the policies that will govern the imposition of user charges for various types of transit service and the policies that will govern decisions by the council to change fare policy.

Sec. 8. Minnesota Statutes 1994, section 473.408, is amended by adding a subdivision to read:

Subd. 2b. [SOCIAL FARES.] For the purposes of raising revenue for improving public safety on transit vehicles and at transit hubs or stops, the council shall review and adjust its social fares as they relate to passengers under the age of 18 during high crime times provided that the increased revenues are dedicated to improving the safety of all passengers.

Sec. 9. [APPROPRIATION.]

$354,000 is appropriated from the general fund to the metropolitan council for the purpose of providing security measures on transit vehicles, including, but not limited to, plexiglass enclosures for drivers and on-bus surveillance cameras. This appropriation is available until expended.

Sec. 10. [APPLICATION.]

Sections 7 and 8 apply in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

Sec. 11. [EFFECTIVE DATE.]

Sections 1 to 6 are effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to motor carriers; regulating hazardous material transporters; requiring fingerprints of motor carrier managers for criminal background checks; making technical changes related to calculating proportional mileage under the international registration plan; specifying violations that may result in suspension or revocation of permit; making technical changes relating to hazardous waste transporter licenses; providing for disposition of fees collected for hazardous material registration, licensing, and permitting; amending Minnesota Statutes 1994, sections 221.0355, subdivisions 3, 5, 6, 12, 15, and by adding a subdivision; and 473.408, subdivision 2, and by adding a subdivision."

With the recommendation that when so amended the bill pass.

The report was adopted.

Carruthers from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 1118, A bill for an act relating to Minnesota Statutes; correcting erroneous, ambiguous, and omitted text and obsolete references; eliminating certain redundant, conflicting, and superseded provisions; making miscellaneous technical corrections to statutes and other laws; amending Minnesota Statutes 1994, sections 3A.01, subdivision 7; 3A.02, subdivision 1; 3A.11, subdivision 4; 3C.10, subdivision 3; 9.071; 11A.18, subdivision 10; 13.99, subdivision 92c; 15.061; 15.56, subdivision 5; 17.1015; 29.021; 31.495, subdivisions 1 and 5; 32.01, subdivision 6; 60B.02; 72A.20, subdivision 29; 72C.03; 72C.04, subdivision 4; 82.34, subdivision 6; 84.025, subdivision 7; 84.0895, subdivision 2; 84.0911, subdivision 2; 85.016; 90.251, subdivision 4; 92.46, subdivision 1; 97A.115, subdivision 2; 103F.516, subdivision 2; 103G.2365; 116.03, subdivision 2; 116C.724, subdivision 2; 116C.98, subdivision 3; 116J.035, subdivision 1; 116J.402; 116J.70, subdivision 2a; 124.916, subdivision 1; 126.25, subdivision 3; 134.341; 136A.40; 144.3831, subdivision 1; 145A.07, subdivision 1; 147.01, subdivision 5; 154.161, subdivision 3; 162.09, subdivision 1; 192.261, subdivision 3; 192.501, subdivision 2; 193.36, subdivision 2; 201.15, subdivision 1; 270.69, subdivision 10; 271.21, subdivision 6; 275.066; 290.01, subdivisions 3a and 19d; 290.05, subdivision 3; 294.03, subdivision 2; 297A.25, subdivision 21; 299F.72, subdivision 1; 299L.05; 299L.07, subdivision 2a; 308A.503, subdivision 3; 317A.733, subdivisions 1 and 2; 340A.503, subdivision 1; 349.12, subdivision 25; 349.17, subdivision 6; 352.01, subdivision 2a; 354.07, subdivision 7; 360.305, subdivisions 1, 2, and 5; 365.125, subdivision 2; 383A.90, subdivision 2; 383D.71, subdivision 2; 462C.12, subdivision 2; 473.121, subdivision 11; 473.149, subdivision 4; 473.192, subdivision 4; 473.3993, subdivision 1; 473.405, subdivisions 1 and 12; 473.598, subdivision 4; 473.599, subdivision 8; 473.811, subdivisions 1a and 5; 473.834, subdivision 2; 474A.061, subdivision 2a; 518.551, subdivision 5; 518C.101; 524.2-210; 525.011, subdivision 1; 554.04, subdivision 2; 609.342, subdivision 1; 609.561, subdivision 3; and 609.66, subdivision 1d; Laws 1993, chapter 273, section 1, as amended; Laws 1994, chapter 628, article 2, section 5; and Laws 1994, chapter 647, article 7, section 19, subdivision 4; repealing Minnesota Statutes 1994, sections 13.99, subdivision 71; 103B.151, subdivision 3; 134.32, subdivision 2; 256B.0925; 297A.25, subdivision 50; 383B.614, subdivision 5; 469.110, subdivision 9; 469.170, subdivision 9; 611A.032; 624.01; and 624.03; Laws 1986, First Special Session chapter 1, article 9, section 18; First Special Session chapter 2, article 3, section 1; Laws 1987, chapter 254, section 8; Laws 1988, chapter 486, section 59; Laws 1990, chapter 562, article 10, section 1; Laws 1993, chapter 146, article 5, section 15; Laws 1994, chapter 485, section 14; chapter 647, article 1, section 4; article 8, section 46, paragraph (b); article 13, sections 3 and 14.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 1551, A bill for an act relating to agricultural economics; providing loans and incentives for agricultural energy resources development for family farms and cooperatives; amending Minnesota Statutes 1994, sections 41B.02, subdivision 19; 41B.046, subdivision 1, and by adding a subdivision; and 216C.41, subdivisions 1, 2, 3, and 4.

Reported the same back with the following amendments:

Page 1, after line 9, insert:

Pages 3 and 4, delete sections 4 to 7

Page 4, after line 25, insert:

Section 1. Minnesota Statutes 1994, section 14.11, is amended by adding a subdivision to read:

Subd. 3. [FARMING OPERATIONS.] Before an agency adopts or repeals rules that affect farming operations, the agency must provide a copy of the proposed rule change to the commissioner of agriculture, no later than 60 days prior to publication of the proposed rule in the State Register.

A rule may not be invalidated for failure to comply with this subdivision if an agency has made a good faith effort to comply.

Sec. 2. Minnesota Statutes 1994, section 14.14, is amended by adding a subdivision to read:

Subd. 1b. [FARMING OPERATIONS.] When a public hearing is conducted on a proposed rule that affects farming operations, at least one public hearing must be conducted in an agricultural area of the state.

Sec. 3. Minnesota Statutes 1994, section 116.07, subdivision 4, is amended to read:

Subd. 4. [RULES AND STANDARDS.] Pursuant and subject to the provisions of chapter 14, and the provisions hereof, the pollution control agency may adopt, amend and rescind rules and standards having the force of law relating to any purpose within the provisions of Laws 1967, chapter 882, for the prevention, abatement, or control of air pollution. Any such rule or standard may be of general application throughout the state, or may be limited as to times, places, circumstances, or conditions in order to make due allowance for variations therein. Without limitation, rules or standards may relate to sources or emissions of air contamination or air pollution, to the quality or composition of such emissions, or to the quality of or composition of the ambient air or outdoor atmosphere or to any other matter relevant to the prevention, abatement, or control of air pollution.

Pursuant and subject to the provisions of chapter 14, and the provisions hereof, the pollution control agency may adopt, amend, and rescind rules and standards having the force of law relating to any purpose within the provisions of Laws 1969, chapter 1046, for the collection, transportation, storage, processing, and disposal of solid waste and the prevention, abatement, or control of water, air, and land pollution which may be related thereto, and the deposit in or on land of any other material that may tend to cause pollution. The agency shall adopt such rules and standards for sewage sludge, addressing the intrinsic suitability of land, the volume and rate of application of sewage sludge of various degrees of intrinsic hazard, design of facilities, and operation of facilities and sites. The agency shall promulgate emergency rules for sewage sludge pursuant to sections 14.29 to 14.36. Notwithstanding the provisions of sections 14.29 to 14.36, the emergency rules shall be effective until permanent rules are promulgated or March 1, 1982, whichever is earlier. Any such rule or standard may be of general application throughout the state or may be limited as to times, places, circumstances, or conditions in order to make due allowance for variations therein. Without limitation, rules or standards may relate to collection, transportation, processing, disposal, equipment, location, procedures, methods, systems or techniques or to any other matter relevant to the prevention, abatement or control of water, air, and land pollution which may be advised through the control of collection, transportation, processing, and disposal of solid waste and sewage sludge, and the deposit in or on land of any other material that may tend to cause pollution. By January 1, 1983, the rules for the management of sewage sludge shall include an analysis of the sewage sludge determined by the commissioner of agriculture to be necessary to meet the soil amendment labeling requirements of section 18C.215.

Pursuant and subject to the provisions of chapter 14, and the provisions hereof, the pollution control agency may adopt, amend and rescind rules and standards having the force of law relating to any purpose within the provisions of Laws 1971, chapter 727, for the prevention, abatement, or control of noise pollution. Any such rule or standard may be of general application throughout the state, or may be limited as to times, places, circumstances or conditions

in order to make due allowances for variations therein. Without limitation, rules or standards may relate to sources or emissions of noise or noise pollution, to the quality or composition of noises in the natural environment, or to any other matter relevant to the prevention, abatement, or control of noise pollution.

As to any matters subject to this chapter, local units of government may set emission regulations with respect to stationary sources which are more stringent than those set by the pollution control agency.

Pursuant to chapter 14, the pollution control agency may adopt, amend, and rescind rules and standards having the force of law relating to any purpose within the provisions of this chapter for generators of hazardous waste, the management, identification, labeling, classification, storage, collection, treatment, transportation, processing, and disposal of hazardous waste and the location of hazardous waste facilities. A rule or standard may be of general application throughout the state or may be limited as to time, places, circumstances, or conditions. In implementing its hazardous waste rules, the pollution control agency shall give high priority to providing planning and technical assistance to hazardous waste generators. The agency shall assist generators in investigating the availability and feasibility of both interim and long-term hazardous waste management methods. The methods shall include waste reduction, waste separation, waste processing, resource recovery, and temporary storage.

The pollution control agency shall give highest priority in the consideration of permits to authorize disposal of diseased shade trees by open burning at designated sites to evidence concerning economic costs of transportation and disposal of diseased shade trees by alternative methods.

In addition to the provisions under section 14.115, before the pollution control agency adopts or repeals rules that affect farming operations, the agency must provide a copy of the proposed rule change and a statement of the effect of the rule change on farming operations to the commissioner of agriculture for review and comment and hold public meetings in agricultural areas of the state.

Sec. 4. [EFFECTIVE DATE.]

Sections 1 and 2 apply to rules for which notice of intent to adopt a rule is published after the effective date of those sections."

Renumber the sections in sequence and correct the internal references

Amend the title as follows:

Page 1, line 4, after the semicolon, insert "providing conditions for administrative rules that affect farming;"

Page 1, line 5, after "sections" insert "14.11, by adding a subdivision; 14.14, by adding a subdivision;"

Page 1, line 7, delete everything after the first "and" and insert "116.07, subdivision 4."

Page 1, delete line 8

With the recommendation that when so amended the bill pass.

The report was adopted.

H. F. Nos. 966 and 1710 were read for the second time.

S. F. Nos. 74, 462, 507, 979, 1118 and 1551 were read for the second time.

Pursuant to rule 1.10, Solberg requested immediate consideration of H. F. No. 642.

H. F. No. 642 was reported to the House.

Winter moved to amend H. F. No. 642, the third engrossment, as follows:

Page 53, after line 17, insert:

"Sec. 9. Minnesota Statutes 1994, section 79.251, is amended by adding a subdivision to read:

Subd. 2a. [SAFETY INCENTIVE.] (a) An insured with an annual plan premium of less than $3,000 must, in addition to any other adjustments, receive a credit or debit based on the number of lost time claims it had in the most recent three years for which data is available as follows:

0 lost time claims - 33 percent credit

1 lost time claim - no credit or debit

2 lost time claims - 15 percent debit

3 lost time claims - 33 percent debit

(b) An insured with an annual plan premium of more than $3,000 and experience rated must, in addition to any other adjustments, receive an additional adjustment based on its experience rating as follows:

Less than 1.00 experience rating - ten percent credit

1.00 to 1.10 experience rating - no credit or debit

Greater than 1.10 experience rating - ten percent debit

For the purpose of this subdivision, a lost time claim is a claim for which either temporary total, temporary partial, permanent partial, or permanent total benefits are paid."

Page 74, line 20, delete "9 and 12 to 33" and insert "7 and 13 to 34"

Page 74, line 21, after the period insert:

"Sections 8 and 9 are effective September 1, 1995, and apply to all policies or contracts of coverage issued or renewed on or after that date."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

Winter moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 96, after line 18, insert:

"Sec. 21. Minnesota Statutes 1994, section 176.132, subdivision 2, is amended to read:

Subd. 2. [AMOUNT.] (a) The supplementary benefit payable under this section shall be the difference between the amount the employee receives on or after January 1, 1976, under section 176.101, subdivision 1 or 4, and 65 percent

of the statewide average weekly wage as computed annually. For injuries that occur on or after October 1, 1995, the supplementary benefit payable under this section shall be the difference between the amount the employee receives under section 176.101, subdivision 4, and 60 percent of the statewide average weekly wage as computed annually. For injuries that occur on or after October 1, 1997, the supplementary benefit payable under this section shall be the difference between the amount the employee receives under section 176.101, subdivision 4, and 55 percent at the statewide average weekly wage as computed annually.

(b) In the event an eligible recipient is currently receiving no compensation or is receiving a reduced level of compensation because of a credit being applied as the result of a third party liability or damages, the employer or insurer shall compute the offset credit as if the individual were entitled to the actual benefit or 65 the percent of the statewide average weekly wage under paragraph (a) as computed annually, whichever is greater. If this results in the use of a higher credit than otherwise would have been applied and the employer or insurer becomes liable for compensation benefits which would otherwise not have been paid, the additional benefits resulting shall be handled according to this section.

(c) In the event an eligible recipient is receiving no compensation or is receiving a reduced level of compensation because of a valid agreement in settlement of a claim, no supplementary benefit shall be payable under this section. Attorney's fees shall be allowed in settlements of claims for supplementary benefits in accordance with this chapter.

(d) In the event an eligible recipient is receiving no compensation or is receiving a reduced level of compensation because of prior limitations in the maximum amount payable for permanent total disability or because of reductions resulting from the simultaneous receipt of old age or disability benefits, the supplementary benefit shall be payable for the difference between the actual amount of compensation currently being paid and 65 the percent of the statewide average weekly wage specified in paragraph (a) as computed annually.

(e) In the event that an eligible recipient is receiving simultaneous benefits from any government disability program, the amount of supplementary benefits payable under this section shall be reduced by five percent. If the individual does not receive the maximum benefits for which the individual is eligible under other governmental disability programs due to the provisions of United States Code, title 42, section 424a(d), this reduction shall not apply.

(f) Notwithstanding any other provision in this subdivision to the contrary, if the individual does not receive the maximum benefits for which the individual is eligible under other governmental disability programs due to the provision of United States Code, title 42, section 424a(d), the calculation of supplementary benefits payable to the individual shall be as provided under this section in Minnesota Statutes 1988."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

On the motion of Johnson, R., and on the demand of 10 members, a call of the House was ordered. The following members answered to their names:

Abrams       Garcia       Kraus        Opatz        Stanek
Anderson, B. Girard       Krinkie      Orenstein    Sviggum
Bakk         Goodno       Larsen       Orfield      Swenson, D.
Bertram      Greenfield   Leighton     Osskopp      Swenson, H.
Bettermann   Greiling     Leppik       Osthoff      Sykora
Bishop       Haas         Lieder       Ostrom       Tomassoni
Boudreau     Hackbarth    Lindner      Otremba      Tompkins
Bradley      Harder       Long         Ozment       Trimble
Broecker     Hasskamp     Lourey       Paulsen      Tuma
Brown        Hausman      Luther       Pawlenty     Tunheim
Carlson      Holsten      Lynch        Pellow       Van Dellen
Carruthers   Hugoson      Macklin      Pelowski     Van Engen
Commers      Huntley      Mahon        Perlt        Vickerman
Cooper       Jaros        Mares        Peterson     Wagenius
Daggett      Jefferson    Mariani      Pugh         Warkentin
Dauner       Jennings     Marko        Rest         Weaver
Davids       Johnson, A.  McCollum     Rhodes       Wejcman
Dawkins      Johnson, R.  McElroy      Rice         Wenzel
Dehler       Johnson, V.  McGuire      Rostberg     Winter
Delmont      Kahn         Molnau       Rukavina     Wolf
Dempsey      Kalis        Mulder       Sarna        Worke
Dorn         Kelley       Munger       Schumacher   Workman
Entenza      Kelso        Murphy       Seagren      Sp.Anderson,I
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3920

Erhardt      Kinkel       Ness         Simoneau     
Farrell      Knight       Olson, E.    Skoglund     
Finseth      Knoblach     Olson, M.    Smith        
Frerichs     Koppendrayer Onnen        Solberg      

Kelso moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 79.50, is amended to read:

79.50 [PURPOSES.]

The purposes of chapter 79 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) Promote price competition and provide rates that are responsive to competitive market conditions;

(e) Provide a means of establishment of proper rates if competition is not effective;

(f) Define the function and scope of activities of data service organizations;

(g) Provide for an orderly transition from regulated rates to competitive market conditions; and

(h) (e) Encourage insurers to provide alternative innovative methods whereby employers can meet the requirements imposed by section 176.181.

Sec. 2. Minnesota Statutes 1994, section 79.51, subdivision 1, is amended to read:

Subdivision 1. [ADOPTION; WHEN.] The commissioner shall adopt rules to implement provisions of this chapter. The rules shall be finally adopted after May 1, 1982. By January 15, 1982, the commissioner shall provide the legislature a description and explanation of the intent and anticipated effect of the rules on the various factors of the rating system.

Sec. 3. Minnesota Statutes 1994, section 79.51, subdivision 3, is amended to read:

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; and

(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) competition in workers' compensation insurance rates in such a way that the advantages of competition are introduced with a minimum of employer hardship;

(2) adequate safeguards against excessive or discriminatory rates in workers' compensation;

(3) (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;

(4) (3) assurances that employers are not unfairly relegated to the assigned risk pool;

(5) (4) requiring all appropriate data and other information from insurers for the purpose of issuing rules, making legislative recommendations pursuant to this section and monitoring the effectiveness of competition; and

(6) (5) preserving a framework for risk classification, data collection, and other appropriate joint insurer services where these will not impede the introduction of competition in premium rates.

Sec. 4. Minnesota Statutes 1994, section 79.53, subdivision 1, is amended to read:

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 increased or decreased up to 25 percent 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.

Sec. 5. Minnesota Statutes 1994, section 79.55, subdivision 2, is amended to read:

Subd. 2. [EXCESSIVENESS.] No premium is excessive in a competitive market. In the absence of a competitive market, premiums Rates and rating plans are excessive if the expected underwriting profit, together with expected income from invested reserves for the market in question, 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.

Sec. 6. Minnesota Statutes 1994, section 79.55, subdivision 5, is amended to read:

Subd. 5. [DISCOUNTS PERMITTED.] An insurer may offer a discount from scheduled credit or debit to a manual premium of up to 25 percent 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.

Sec. 7. Minnesota Statutes 1994, section 79.55, is amended by adding a subdivision to read:

Subd. 6. [RATING FACTORS.] In determining whether a rate filing complies with this section, separate consideration shall be given to: (i) past and prospective loss experience within this state and outside this state to the extent necessary to develop credible rates; (ii) dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers; and (iii) a reasonable allowance for expense and profit. 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. 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. 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: (i) the current yield on five-year United States Treasury securities; and (ii) an appropriate equity risk premium that reflects the risks of writing workers' compensation insurance. The risk premium shall not be less than the average, since 1926, of the differences in return between: (i) the annual return, including dividend income, for the Standards and Poors 500 common stock index or predecessor index for each year; and (ii) the five-year United States Treasury note yield as of the start of the corresponding year. 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.

Sec. 8. Minnesota Statutes 1994, section 79.55, is amended by adding a subdivision to read:

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.

Sec. 9. Minnesota Statutes 1994, section 79.56, subdivision 1, is amended to read:

Subdivision 1. [AFTER EFFECTIVE DATE PREFILING OF RATES.] Each insurer shall file with the commissioner a complete copy of its rates and rating plan, and all changes and amendments thereto, within 15 days after their and such supporting data and information that the commissioner may by rule require, at least 60 days prior to its effective dates date. An insurer need not file a rating plan if it uses a rating plan filed by a data service organization. If an insurer uses a rating plan of a data service organization but deviates from it, then all deviations must be filed by the insurer. 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.

Sec. 10. Minnesota Statutes 1994, section 79.56, subdivision 3, is amended to read:

Subd. 3. [PENALTIES.] Any insurer using a rate or a rating plan which has not been filed 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. Notwithstanding this subdivision, an employer that generates $500,000 in annual written workers' compensation premium under the rates and rating plan of an insurer before the application of any large deductible rating plans, may be written by that insurer using rates or rating plans that are not subject to disapproval but which have been filed. The $500,000 threshold shall be increased on January 1, 1996, and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, to the nearest $1,000. The commissioner shall advise insurers licensed to write workers' compensation insurance in this state of the annual threshold adjustment.

Sec. 11. [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 costs incurred in retaining any consulting actuaries and experts shall be reimbursed by the special compensation fund.

Sec. 12. Minnesota Statutes 1994, section 175.16, is amended to read:

175.16 [DIVISIONS.]

Subdivision 1. [ESTABLISHED.] The department of labor and industry shall consist of the following divisions: division of workers' compensation, division of boiler inspection, division of occupational safety and health, division of statistics, division of steamfitting standards, division of voluntary apprenticeship, division of labor standards, and such other divisions as the commissioner of the department of labor and industry may deem necessary and establish. Each division of the department and persons in charge thereof shall be subject to the supervision of the commissioner of the department of labor and industry and, in addition to such duties as are or may be imposed on them by statute, shall perform such other duties as may be assigned to them by said commissioner.

Subd. 2. [FRAUD INVESTIGATION UNIT.] The department of labor and industry shall contain a fraud investigation unit for the purposes of investigating fraudulent or other illegal practices of health care providers, employers, insurers, attorneys, employees, and others related to workers' compensation and to investigate other matters under the jurisdiction of the department.

Sec. 13. Minnesota Statutes 1994, section 176.011, subdivision 25, is amended to read:

Subd. 25. [MAXIMUM MEDICAL IMPROVEMENT.] "Maximum medical improvement" means the date after which no further significant recovery from or significant lasting improvement to a personal injury can reasonably be anticipated, based upon reasonable medical probability. Once the date of maximum medical improvement has been determined, no further determinations of other dates of maximum medical improvement for that personal injury is permitted. The determination that an employee has reached maximum medical improvement shall not be rendered ineffective by the worsening of the employee's medical condition and recovery therefrom.

Sec. 14. Minnesota Statutes 1994, section 176.021, subdivision 3, is amended to read:

Subd. 3. [COMPENSATION, COMMENCEMENT OF PAYMENT.] All employers shall commence payment of compensation at the time and in the manner prescribed by this chapter without the necessity of any agreement or any order of the division. Except for medical, burial, and other nonperiodic benefits, payments shall be made as nearly

as possible at the intervals when the wage was payable, provided, however, that payments for permanent partial disability shall be governed by section 176.101. If doubt exists as to the eventual permanent partial disability, payment for the economic recovery compensation or impairment compensation, whichever is due, pursuant to section 176.101, shall be then made when due for the minimum permanent partial disability ascertainable, and further payment shall be made upon any later ascertainment of greater permanent partial disability. Prior to or at the time of commencement of the payment of economic recovery compensation or lump sum or periodic payment of impairment permanent partial compensation, the employee and employer shall be furnished with a copy of the medical report upon which the payment is based and all other medical reports which the insurer has that indicate a permanent partial disability rating, together with a statement by the insurer as to whether the tendered payment is for minimum permanent partial disability or final and eventual disability. After receipt of all reports available to the insurer that indicate a permanent partial disability rating, the employee shall make available or permit the insurer to obtain any medical report that the employee has or has knowledge of that contains a permanent partial disability rating which the insurer does not already have. Economic recovery compensation or impairment Permanent partial compensation pursuant to section 176.101 is payable in addition to but not concurrently with compensation for temporary total disability but is payable pursuant to section 176.101. Impairment Permanent partial compensation is payable concurrently and in addition to compensation for permanent total disability pursuant to section 176.101. Economic recovery compensation or impairment compensation Permanent partial compensation pursuant to section 176.101 shall be withheld pending completion of payment for temporary total disability, and no credit shall be taken for payment of economic recovery compensation or impairment permanent partial compensation against liability for temporary total or future permanent total disability. Liability on the part of an employer or the insurer for disability of a temporary total, temporary partial, and permanent total nature shall be considered as a continuing product and part of the employee's inability to earn or reduction in earning capacity due to injury or occupational disease and compensation is payable accordingly, subject to section 176.101. Economic recovery compensation or impairment Permanent partial compensation is payable for functional loss of use or impairment of function, permanent in nature, and payment therefore shall be separate, distinct, and in addition to payment for any other compensation, subject to section 176.101. The right to receive temporary total, temporary partial, or permanent total disability payments vests in the injured employee or the employee's dependents under this chapter or, if none, in the employee's legal heirs at the time the disability can be ascertained and the right is not abrogated by the employee's death prior to the making of the payment.

The right to receive economic recovery permanent partial compensation or impairment compensation vests in an injured employee at the time the disability can be ascertained provided that the employee lives for at least 30 days beyond the date of the injury. Upon the death of an employee who is receiving economic recovery compensation or impairment compensation, further compensation is payable pursuant to section 176.101. Impairment compensation is payable under this paragraph if vesting has occurred, the employee dies prior to reaching maximum medical improvement, and the requirements and conditions under section 176.101, subdivision 3e, are not met.

Disability ratings for permanent partial disability shall be based on objective medical evidence.

Sec. 15. Minnesota Statutes 1994, section 176.021, subdivision 3a, is amended to read:

Subd. 3a. [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments for permanent partial disability as provided in section 176.101, subdivision 3 2a, shall be made in the following manner:

(a) If the employee returns to work, payment shall be made by lump sum at the same intervals as temporary total payments were made;

(b) If temporary total payments have ceased, but the employee has not returned to work, payment shall be made at the same intervals as temporary total payments were made;

(c) If temporary total disability payments cease because the employee is receiving payments for permanent total disability or because the employee is retiring or has retired from the work force, then payment shall be made by lump sum at the same intervals as temporary total payments were made;

(d) If the employee completes a rehabilitation plan pursuant to section 176.102, but the employer does not furnish the employee with work the employee can do in a permanently partially disabled condition, and the employee is unable to procure such work with another employer, then payment shall be made by lump sum at the same intervals as temporary total payments were made.

Sec. 16. Minnesota Statutes 1994, section 176.061, subdivision 10, is amended to read:

Subd. 10. [INDEMNITY.] Notwithstanding the provisions of chapter 65B or any other law to the contrary, an employer has a right of indemnity for any compensation paid or payable pursuant to this chapter, including temporary total compensation, temporary partial compensation, permanent partial disability, economic recovery compensation, impairment compensation, medical compensation, rehabilitation, death, and permanent total compensation.

Sec. 17. Minnesota Statutes 1994, section 176.101, subdivision 1, is amended to read:

Subdivision 1. [TEMPORARY TOTAL DISABILITY.] (a) For injury producing temporary total disability, the compensation is 66-2/3 percent of the weekly wage at the time of injury.

(b) On and after October 1, 1994, the maximum weekly compensation payable shall be as follows:

During the year (1) commencing on October 1, 1992 1995, and each year thereafter, the maximum weekly compensation payable is 105 percent of the statewide average weekly wage for the period ending December 31 of the preceding year $615 per week.

(2) The workers' compensation advisory council may consider adjustment increases and make recommendations to the legislature.

(c) The minimum weekly compensation payable is 20 percent of the statewide average weekly wage for the period ending December 31 of the preceding year or the injured employee's actual weekly wage, whichever is less.

(d) Subject to subdivisions 3a to 3u this Temporary total compensation shall be paid during the period of disability, payment to be made at the intervals when the wage was payable, as nearly as may be. and shall cease whenever any one of the following occurs:

(1) the employee returns to work;

(2) the employee withdraws from the labor market;

(3) the disability ends and the employee fails to diligently search for appropriate work;

(4) the employee refuses an offer of work that is consistent with a plan of rehabilitation filed with the commissioner which meets the requirements of section 176.102, subdivision 4, or, if no plan has been filed, the employee refuses an offer of gainful employment that the employee can do in the employee's physical condition; or

(5) 90 days pass after the employee has reached maximum medical improvement, except as provided in section 176.102, subdivision 11, paragraph (b).

(e) For purposes of this subdivision, the 90-day period after maximum medical improvement commences on the earlier of:

(1) the date that the employee receives a written medical report indicating that the employee has reached maximum medical improvement; or

(2) the date that the employer or insurer serves the report on the employee and the employee's attorney, if any.

(f) Once temporary total disability compensation has ceased under paragraph (d), clause (1), (2), or (3), it may only be recommenced prior to 90 days after maximum medical improvement and only as follows:

(1) if temporary total disability compensation ceased under paragraph (d), clause (1), it may be recommenced if the employee is laid off or terminated within one year of employment for reasons other than misconduct or is medically unable to continue at the job;

(2) if temporary total disability compensation ceased under paragraph (d), clause (2), but the employee subsequently returned to work, it may be recommenced in accordance with clause (1); or

(3) if temporary total disability compensation ceased under paragraph (d), clause (3), it may be recommenced if the employee begins diligently searching for appropriate work. Temporary total disability compensation recommenced under this paragraph (f) is subject to cessation under paragraph (d).

(g) Once temporary total disability compensation has ceased under paragraph (d), clauses (4) and (5), it may not be recommenced at a later date except as provided under section 176.102, subdivision 11, paragraph (b).

Sec. 18. Minnesota Statutes 1994, section 176.101, subdivision 2, is amended to read:

Subd. 2. [TEMPORARY PARTIAL DISABILITY.] (a) In all cases of temporary partial disability the compensation shall be 66-2/3 percent of the difference between the weekly wage of the employee at the time of injury and the wage the employee is able to earn in the employee's partially disabled condition. This compensation shall be paid during the period of disability except as provided in this section, payment to be made at the intervals when the wage was payable, as nearly as may be, and subject to the maximum rate for temporary total compensation.

(b) Except as provided under subdivision 3k, Temporary partial compensation may be paid only while the employee is employed, earning less than the employee's weekly wage at the time of the injury, and the reduced wage the employee is able to earn in the employee's partially disabled condition is due to the injury. Except as provided in section 176.102, subdivision 11, paragraph paragraphs (b) and (c), temporary partial compensation may not be paid for more than 225 weeks, or after 450 weeks after the date of injury, whichever occurs first.

(c) Temporary partial compensation must be reduced to the extent that the wage the employee is able to earn in the employee's partially disabled condition plus the temporary partial disability payment otherwise payable under this subdivision exceeds 500 percent of the statewide average weekly wage.

Sec. 19. Minnesota Statutes 1994, section 176.101, is amended by adding a subdivision to read:

Subd. 2a. [PERMANENT PARTIAL DISABILITY.] (a) Compensation for permanent partial disability is as provided in this subdivision. Permanent partial disability must be rated as a percentage of the whole body in accordance with rules adopted by the commissioner under section 176.105. The percentage determined pursuant to the rules must be multiplied by the corresponding amount in the following table:

Impairment rating Amount

(percent)

0-25 $ 75,000

26-30 80,000

31-35 85,000

36-40 90,000

41-45 95,000

46-50 100,000

51-55 120,000

56-60 140,000

61-65 160,000

66-70 180,000

71-75 200,000

76-80 240,000

81-85 280,000

86-90 320,000

91-95 360,000

96-100 400,000

An employee may not receive compensation for more than a 100 percent disability of the whole body, even if the employee sustains disability to two or more body parts.

(b) Permanent partial disability is payable upon cessation of temporary total disability under subdivision 1. The compensation is payable in installments at the same intervals and in the same amount as the employee's temporary total disability rate on the date of injury. Permanent partial disability is not payable while temporary total compensation is being paid. Permanent partial disability is payable to permanently totally disabled employees in installments at the same intervals and the same amount as the employee's permanent total disability rate on the date of injury commencing at the time the disability can be ascertained.

Sec. 20. Minnesota Statutes 1994, section 176.101, subdivision 4, is amended to read:

Subd. 4. [PERMANENT TOTAL DISABILITY.] For permanent total disability, as defined in subdivision 5, the compensation shall be 66-2/3 percent of the daily wage at the time of the injury, subject to a maximum weekly compensation equal to the maximum weekly compensation for a temporary total disability and a minimum weekly compensation equal to the minimum weekly compensation for a temporary total disability 65 percent of the statewide average weekly wage for the period ending December 31 of the year preceding the time of injury. This compensation shall be paid during the permanent total disability of the injured employee but after a total of $25,000 of weekly compensation has been paid, the amount of the weekly compensation benefits being paid by the employer shall be reduced by the amount of any disability benefits being paid by any government disability benefit program if the disability benefits are occasioned by the same injury or injuries which give rise to payments under this subdivision. This reduction shall also apply to any old age and survivor insurance benefits. Payments shall be made at the intervals when the wage was payable, as nearly as may be. In case an employee who is permanently and totally disabled becomes an inmate of a public institution, no compensation shall be payable during the period of confinement in the institution, unless there is wholly dependent on the employee for support some person named in section 176.111, subdivision 1, 2 or 3, in which case the compensation provided for in section 176.111, during the period of confinement, shall be paid for the benefit of the dependent person during dependency. The dependency of this person shall be determined as though the employee were deceased.

Sec. 21. Minnesota Statutes 1994, section 176.101, subdivision 5, is amended to read:

Subd. 5. [DEFINITION.] (a) For purposes of subdivision 4, permanent total disability means only:

(1) the total and permanent loss of the sight of both eyes, the loss of both arms at the shoulder, the loss of both legs so close to the hips that no effective artificial members can be used, complete and permanent paralysis, total and permanent loss of mental faculties; or

(2) any other injury which totally and permanently incapacitates the employee from working at an occupation which brings the employee an income., provided that the employee must also meet the criteria of one of the following clauses:

(a) the employee has at least a 17 percent permanent partial disability rating of the whole body;

(b) the employee has a permanent partial disability rating of the whole body of at least 15 percent and the employee is at least 50 years old at the time of injury; or

(c) the employee has a permanent partial disability rating of the whole body of at least 13 percent and the employee is at least 55 years old at the time of the injury, and has not completed grade 12 or obtained a GED certificate.

For purposes of this clause, "totally and permanently incapacitated" means that the employee's physical disability in combination with any one of clauses (a), (b), or (c) causes the employee to be unable to secure anything more than sporadic employment resulting in an insubstantial income. Other factors not specified in clause (a), (b), or (c), including the employee's age, education, training and experience, may only be considered in determining whether an employee is totally and permanently incapacitated after the employee meets the threshold criteria of clause (a), (b), or (c). The employee's age, level of physical disability, or education may not be considered to the extent the factor is inconsistent with the disability, age, and education factors specified in clause (a), (b), or (c).

(b) For purposes of paragraph (a), clause (2), "totally and permanently incapacitated" means that the employee's physical disability, in combination with the employee's age, education, training, and experience, causes the employee to be unable to secure anything more than sporadic employment resulting in an insubstantial income.

Sec. 22. Minnesota Statutes 1994, section 176.101, subdivision 6, is amended to read:

Subd. 6. [MINORS; APPRENTICES.] (a) If any employee entitled to the benefits of this chapter is an apprentice of any age and sustains a personal injury arising out of and in the course of employment resulting in permanent total or a compensable permanent partial disability, for the purpose of computing the compensation to which the employee is entitled for the injury, the compensation rate for temporary total, temporary partial, a or permanent total disability or economic recovery compensation shall be the maximum rate for temporary total disability under subdivision 1.

(b) If any employee entitled to the benefits of this chapter is a minor and sustains a personal injury arising out of and in the course of employment resulting in permanent total disability, for the purpose of computing the compensation to which the employee is entitled for the injury, the compensation rate for a permanent total disability shall be the maximum rate for temporary total disability under subdivision 1.

Sec. 23. Minnesota Statutes 1994, section 176.101, subdivision 8, is amended to read:

Subd. 8. [RETIREMENT CESSATION OF BENEFITS.] Temporary total disability payments shall cease at retirement. "Retirement" means that a preponderance of the evidence supports a conclusion that an employee has retired. The subjective statement of an employee that the employee is not retired is not sufficient in itself to rebut objective evidence of retirement but may be considered along with other evidence.

For injuries occurring after January 1, 1984, an employee who receives social security old age and survivors insurance retirement benefits is presumed retired from the labor market. This presumption is rebuttable by a preponderance of the evidence. Permanent total disability benefits shall cease at age 67; provided that the employee is eligible to receive disability benefits being paid by a government disability benefit program if the disability benefits are occasioned by the same injury or injuries which gave rise to payments under this chapter, or if the employee is eligible to receive any old age and survivor insurance benefits. If the employee is not eligible, then permanent total disability benefits may continue after age 67.

Sec. 24. Minnesota Statutes 1994, section 176.105, subdivision 4, is amended to read:

Subd. 4. [LEGISLATIVE INTENT; RULES; LOSS OF MORE THAN ONE BODY PART.] (a) For the purpose of establishing a disability schedule pursuant to clause (b), the legislature declares its intent that the commissioner establish a disability schedule which, assuming the same number and distribution of severity of injuries, the aggregate total of impairment compensation and economic recovery compensation benefits under section 176.101, subdivisions 3a to 3u be approximately equal to the total aggregate amount payable for permanent partial disabilities under section 176.101, subdivision 3, provided, however, that awards for specific injuries under the proposed schedule need not be the same as they were for the same injuries under the schedule pursuant to section 176.101, subdivision 3. The schedule shall be determined by sound actuarial evaluation and shall be based on the benefit level which exists on January 1, 1983.

(b) The commissioner shall by rulemaking adopt procedures setting forth rules for the evaluation and rating of functional disability and the schedule for permanent partial disability and to determine the percentage of loss of function of a part of the body based on the body as a whole, including internal organs, described in section 176.101, subdivision 3, and any other body part not listed in section 176.101, subdivision 3, which the commissioner deems appropriate.

The rules shall promote objectivity and consistency in the evaluation of permanent functional impairment due to personal injury and in the assignment of a numerical rating to the functional impairment.

Prior to adoption of rules the commissioner shall conduct an analysis of the current permanent partial disability schedule for the purpose of determining the number and distribution of permanent partial disabilities and the average compensation for various permanent partial disabilities. The commissioner shall consider setting the compensation under the proposed schedule for the most serious conditions higher in comparison to the current schedule and shall consider decreasing awards for minor conditions in comparison to the current schedule.

The commissioner may consider, among other factors, and shall not be limited to the following factors in developing rules for the evaluation and rating of functional disability and the schedule for permanent partial disability benefits:

(1) the workability and simplicity of the procedures with respect to the evaluation of functional disability;

(2) the consistency of the procedures with accepted medical standards;

(3) rules, guidelines, and schedules that exist in other states that are related to the evaluation of permanent partial disability or to a schedule of benefits for functional disability provided that the commissioner is not bound by the degree of disability in these sources but shall adjust the relative degree of disability to conform to the expressed intent of clause (a) this section;

(4) rules, guidelines, and schedules that have been developed by associations of health care providers or organizations provided that the commissioner is not bound by the degree of disability in these sources but shall adjust the relative degree of disability to conform to the expressed intent of clause (a) this section;

(5) the effect the rules may have on reducing litigation;

(6) the treatment of preexisting disabilities with respect to the evaluation of permanent functional disability provided that any preexisting disabilities must be objectively determined by medical evidence; and

(7) symptomatology and loss of function and use of the injured member.

The factors in paragraphs (1) to (7) shall not be used in any individual or specific workers' compensation claim under this chapter but shall be used only in the adoption of rules pursuant to this section.

Nothing listed in paragraphs (1) to (7) shall be used to dispute or challenge a disability rating given to a part of the body so long as the whole schedule conforms with the expressed intent of clause (a) this section.

(c) If an employee suffers a permanent functional disability of more than one body part due to a personal injury incurred in a single occurrence, the percent of the whole body which is permanently partially disabled shall be determined by the following formula so as to ensure that the percentage for all functional disability combined does not exceed the total for the whole body:

where: A is the greater percentage whole body loss of the first body part; and B is the lesser percentage whole body loss otherwise payable for the second body part. A + B (1-A) is equivalent to A + B - AB.

For permanent partial disabilities to three body parts due to a single occurrence or as the result of an occupational disease, the above formula shall be applied, providing that A equals the result obtained from application of the formula to the first two body parts and B equals the percentage for the third body part. For permanent partial disability to four or more body parts incurred as described above, A equals the result obtained from the prior application of the formula, and B equals the percentage for the fourth body part or more in arithmetic progressions.

Sec. 25. Minnesota Statutes 1994, section 176.178, is amended to read:

176.178 [FRAUD.]

Subdivision 1. [INTENT.] Any person who, with intent to defraud, receives workers' compensation benefits to which the person is not entitled by knowingly misrepresenting, misstating, or failing to disclose any material fact is guilty of theft and shall be sentenced pursuant to section 609.52, subdivision 3.

Subd. 2. [FORMS.] The text of subdivision 1 shall be placed on all forms prescribed by the commissioner for claims or responses to claims for workers' compensation benefits under this chapter. The absence of the text does not constitute a defense against prosecution under subdivision 1.

Sec. 26. Minnesota Statutes 1994, section 176.179, is amended to read:

176.179 [RECOVERY OF OVERPAYMENTS.]

Notwithstanding section 176.521, subdivision 3, or any other provision of this chapter to the contrary, except as provided in this section, no lump sum or weekly payment, or settlement, which is voluntarily paid to an injured employee or the survivors of a deceased employee in apparent or seeming accordance with the provisions of this chapter by an employer or insurer, or is paid pursuant to an order of the workers' compensation division, a compensation judge, or court of appeals relative to a claim by an injured employee or the employee's survivors, and received in good faith by the employee or the employee's survivors shall be refunded to the paying employer or insurer in the event that it is subsequently determined that the payment was made under a mistake in fact or law by the employer or insurer. When the payments have been made to a person who is entitled to receive further payments of compensation for the same injury, the mistaken compensation may be taken as a full credit against future lump sum benefit entitlement and as a partial credit against future weekly periodic benefits. The credit applied against further payments of temporary total disability, temporary partial disability, permanent partial disability, permanent total disability, retraining benefits, death benefits, or weekly payments of economic recovery or impairment compensation shall not exceed 20 percent of the amount that would otherwise be payable.

A credit may not be applied against medical expenses due or payable.

Where the commissioner or compensation judge determines that the mistaken compensation was not received in good faith, the commissioner or compensation judge may order reimbursement of the compensation. For purposes of this section, a payment is not received in good faith if it is obtained through fraud, or if the employee knew that the compensation was paid under mistake of fact or law, and the employee has not refunded the mistaken compensation.

Sec. 27. Minnesota Statutes 1994, section 176.221, subdivision 6a, is amended to read:

Subd. 6a. [MEDICAL, REHABILITATION, ECONOMIC RECOVERY, AND IMPAIRMENT AND PERMANENT PARTIAL COMPENSATION.] The penalties provided by this section apply in cases where payment for treatment under section 176.135, rehabilitation expenses under section 176.102, subdivisions 9 and 11, economic recovery compensation or impairment compensation or permanent partial compensation are not made in a timely manner as required by law or by rule adopted by the commissioner.

Sec. 28. Minnesota Statutes 1994, section 176.645, is amended to read:

176.645 [ADJUSTMENT OF BENEFITS.]

Subdivision 1. [AMOUNT.] For injuries occurring after October 1, 1975 for which benefits are payable under section 176.101, subdivisions 1, 2 and 4, and section 176.111, subdivision 5, the total benefits due the employee or any dependents shall be adjusted in accordance with this section. On October 1, 1981, and thereafter on the anniversary of the date of the employee's injury the total benefits due shall be adjusted by multiplying the total benefits due prior to each adjustment by a fraction, the denominator of which is the statewide average weekly wage for December 31, of the year two years previous to the adjustment and the numerator of which is the statewide average weekly wage for December 31, of the year previous to the adjustment. For injuries occurring after October 1, 1975, all adjustments provided for in this section shall be included in computing any benefit due under this section. Any limitations of amounts due for daily or weekly compensation under this chapter shall not apply to adjustments made under this section. No adjustment increase made on or after October 1, 1977, but prior to October 1, 1992, under this section shall exceed six percent a year; in those instances where the adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be six percent. No adjustment increase made on or after October 1, 1992, but prior to October 1, 1995, under this section shall exceed four percent per year; in those instances where adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be four percent. No adjustment increase made on or after October 1, 1992 1995, under this section shall exceed four two percent a year regardless of the date of injury; in those instances where the adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be four two percent without regard to the date of injury. The workers' compensation advisory council may consider adjustment or other further increases and make recommendations to the legislature.

Subd. 2. [TIME OF FIRST ADJUSTMENT.] For injuries occurring on or after October 1, 1981, the initial adjustment made pursuant to subdivision 1 is deferred until the first anniversary of the date of the injury. For injuries occurring on or after October 1, 1992, the initial adjustment under subdivision 1 is deferred until the second fourth anniversary of the date of the injury. The adjustment made at that time shall be that of the last year only.

Sec. 29. Minnesota Statutes 1994, section 176.66, subdivision 11, is amended to read:

Subd. 11. [AMOUNT OF COMPENSATION.] The compensation for an occupational disease is 66-2/3 percent of the employee's weekly wage on the date of injury subject to a maximum compensation equal to the maximum compensation in effect on the date of last exposure. The employee shall be eligible for supplementary benefits notwithstanding the provisions of section 176.132, after four years have elapsed since the date of last significant exposure to the hazard of the occupational disease if that employee's weekly compensation rate is less than the current supplementary benefit rate.

Sec. 30. Minnesota Statutes 1994, section 176.82, is amended to read:

176.82 [ACTION FOR CIVIL DAMAGES FOR OBSTRUCTING EMPLOYEE SEEKING BENEFITS.]

Subdivision 1. [RETALIATORY DISCHARGE.] Any person discharging or threatening to discharge an employee for seeking workers' compensation benefits or in any manner intentionally obstructing an employee seeking workers' compensation benefits is liable in a civil action for damages incurred by the employee including any diminution in

workers' compensation benefits caused by a violation of this section including costs and reasonable attorney fees, and for punitive damages not to exceed three times the amount of any compensation benefit to which the employee is entitled. Damages awarded under this section shall not be offset by any workers' compensation benefits to which the employee is entitled.

Subd. 2. [REFUSAL TO OFFER CONTINUED EMPLOYMENT.] An employer who, without reasonable cause, refuses to offer continued employment to its employee when employment is available within the employee's physical limitations shall be liable for one year's wages. The wages are payable from the date of the refusal to offer continued employment, and at the same time and at the same rate as the employee's preinjury wage, to continue during the period of the refusal up to a maximum of $15,000. These payments shall be in addition to any other payments provided by this chapter. In determining the availability of employment, the continuance in business of the employer shall be considered and written rules promulgated by the employer with respect to seniority or the provisions of any collective bargaining agreement shall govern. This subdivision shall not apply to employers who employ 15 or fewer full-time equivalent employees.

Sec. 31. [176.861] [DISCLOSURE OF INFORMATION.]

Subdivision 1. [INSURANCE INFORMATION.] The commissioner may, in writing, require an insurance company to release to the commissioner any or all relevant information or evidence the commissioner deems important which the company may have in its possession relating to a workers' compensation claim including material relating to the investigation of the claim; statements of any person, and any other evidence relevant to the investigation. The writing from the commissioner requiring release of the information shall contain a statement that the commissioner has reason to believe a crime or civil fraud has been committed with respect to an insurance claim, payment, or application.

Subd. 2. [INFORMATION RELEASED TO AUTHORIZED PERSONS.] If an insurance company has evidence that a claim may be fraudulent, the company shall, in writing, notify the commissioner and provide the commissioner with all relevant material related to the company's inquiry into the claim.

Subd. 3. [GOOD FAITH IMMUNITY.] An insurance company or its agent acting in its behalf and in good faith who releases oral or written information under subdivisions 1 and 2 is immune from civil or criminal liability that might otherwise be incurred or imposed.

Subd. 4. [SELF-INSURER; ASSIGNED RISK PLAN.] For the purposes of this section "insurance company" includes a self-insurer and the assigned risk plan and their agents.

Sec. 32. Minnesota Statutes 1994, section 268.08, subdivision 3, is amended to read:

Subd. 3. [NOT ELIGIBLE.] An individual shall not be eligible to receive benefits for any week with respect to which the individual is receiving, has received, or has filed a claim for remuneration in an amount equal to or in excess of the individual's weekly benefit amount in the form of:

(1) termination, severance, or dismissal payment or wages in lieu of notice whether legally required or not; provided that if a termination, severance, or dismissal payment is made in a lump sum, such lump sum payment shall be allocated over a period equal to the lump sum divided by the employee's regular pay while employed by such employer; provided such payment shall be applied for a period immediately following the last day of employment but not to exceed 28 calendar days provided that 50 percent of the total of any such payments in excess of eight weeks shall be similarly allocated to the period immediately following the 28 days; or

(2) vacation allowance paid directly by the employer for a period of requested vacation, including vacation periods assigned by the employer under the provisions of a collective bargaining agreement, or uniform vacation shutdown; or

(3) compensation for loss of wages under the workers' compensation law of this state or any other state or under a similar law of the United States, or under other insurance or fund established and paid for by the employer except that this does not apply to an individual who is receiving temporary partial compensation pursuant to section 176.101, subdivision 3k; or

(4) 50 percent of the pension payments from any fund, annuity or insurance maintained or contributed to by a base period employer including the armed forces of the United States if the employee contributed to the fund, annuity or insurance and all of the pension payments if the employee did not contribute to the fund, annuity or insurance; or

(5) 50 percent of a primary insurance benefit under title II of the Social Security Act, as amended, or similar old age benefits under any act of Congress or this state or any other state.

Provided, that if such remuneration is less than the benefits which would otherwise be due under sections 268.03 to 268.231, the individual shall be entitled to receive for such week, if otherwise eligible, benefits reduced by the amount of such remuneration; provided, further, that if the appropriate agency of such other state or the federal government finally determines that the individual is not entitled to such benefits, this provision shall not apply. If the computation of reduced benefits, required by this subdivision, is not a whole dollar amount, it shall be rounded down to the next lower dollar amount.

Sec. 33. [APPROPRIATION.]

$900,000 is appropriated from the special compensation fund for the biennium ending June 30, 1997, to the department of commerce for the purposes of rate regulation. The complement of the department of commerce is increased by 13 positions for the purposes of rate regulation.

Sec. 34. [APPROPRIATION.]

$110,000 is appropriated from the special compensation fund to the department of labor and industry for the biennium ending June 30, 1997, for the purposes of this act.

Sec. 35. [REPEALER.]

Minnesota Statutes 1994, section 176.132, is repealed.

Sec. 36. [REPEALER.]

Minnesota Statutes 1994, sections 79.53, subdivision 2; 79.54; 79.56, subdivision 2; 79.57; 79.58; 176.011, subdivision 26; 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u; and 176.86, are repealed. Laws 1990, chapter 521, section 4, is repealed.

Sec. 37. [EFFECTIVE DATE.]

Sections 13, 19, 21 to 24, 26, and 27 are effective October 1, 1995. Section 31 is effective the day following final enactment. Section 20 is effective April 1, 1996. Sections 20 (176.101, subdivision 4), 29 (176.66, subdivision 11), and 35 (repealer) apply to a personal injury, as defined under Minnesota Statutes, section 176.011, subdivision 16, occurring on or after October 1, 1991."

Amend the title accordingly

A roll call was requested and properly seconded.

Hasskamp; Johnson, R., and Winter moved to amend the Kelso amendment to H. F. No. 642, the third engrossment, as amended, as follows:

Page 28, line 25, delete "1991" and insert "1995"

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment and the roll was called. There were 58 yeas and 74 nays as follows:

Those who voted in the affirmative were:

Bakk         Hasskamp     Lourey       Orfield      Smith
Brown        Hausman      Luther       Osthoff      Solberg
Carlson      Huntley      Mahon        Ostrom       Tomassoni
Carruthers   Jaros        Mariani      Ozment       Trimble
Dawkins      Jefferson    Marko        Perlt        Tunheim
Delmont      Johnson, A.  McCollum     Peterson     Wagenius
Dorn         Johnson, R.  McGuire      Pugh         Wejcman
Entenza      Kahn         Milbert      Rest         Wenzel
Farrell      Kelley       Munger       Rice         Winter
Garcia       Kinkel       Murphy       Rukavina     Sp.Anderson,I
Greenfield   Leighton     Olson, E.    Sarna        
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3933

Greiling     Long         Orenstein    Skoglund     

Abrams       Erhardt      Knoblach     Olson, M.    Sviggum
Anderson, B. Finseth      Koppendrayer Onnen        Swenson, D.
Bertram      Frerichs     Kraus        Opatz        Swenson, H.
Bettermann   Girard       Krinkie      Osskopp      Sykora
Bishop       Goodno       Larsen       Otremba      Tompkins
Boudreau     Haas         Leppik       Paulsen      Tuma
Bradley      Hackbarth    Lieder       Pawlenty     Van Dellen
Broecker     Harder       Lindner      Pellow       Van Engen
Commers      Holsten      Lynch        Pelowski     Vickerman
Cooper       Hugoson      Macklin      Rhodes       Warkentin
Daggett      Jennings     Mares        Rostberg     Weaver
Dauner       Johnson, V.  McElroy      Schumacher   Wolf
Davids       Kalis        Molnau       Seagren      Worke
Dehler       Kelso        Mulder       Simoneau     Workman 
Dempsey      Knight       Ness         Stanek       

Hasskamp and Tomassoni moved to amend the Kelso amendment to H. F. No. 642, the third engrossment, as amended, as follows:

Page 24, line 10, delete "regardless of"

Page 24, line 11, delete the new language

Page 24, line 13, delete "without regard"

Page 24, line 14, delete everything before the period

Page 28, line 19, delete "and" and after "27" insert ", and 28"

The motion did not prevail and the amendment to the amendment was not adopted.

Simoneau moved to amend the Kelso amendment to H. F. No. 642, the third engrossment, as amended, as follows:

Page 1, after line 2, insert:

Page 1, line 3, delete the quotation mark

Pages 8 to 11, delete sections 13 to 15 and insert:

"Sec. 13. Minnesota Statutes 1994, section 176.011, subdivision 25, is amended to read:

Subd. 25. [MAXIMUM MEDICAL IMPROVEMENT.] "Maximum medical improvement" means the date after which no further significant recovery from or significant lasting improvement to a personal injury can reasonably be anticipated, based upon reasonable medical probability., irrespective and regardless of subjective complaints of pain. Except where an employee is medically unable to continue working under section 176.101, subdivision 1, paragraph (e), clause (2), once the date of maximum medical improvement has been determined, no further determinations of other dates of maximum medical improvement for that personal injury is permitted. The determination that an employee has reached maximum medical improvement shall not be rendered ineffective by the worsening of the employee's medical condition and recovery therefrom.

Sec. 14. Minnesota Statutes 1994, section 176.021, subdivision 3, is amended to read:

Subd. 3. [COMPENSATION, COMMENCEMENT OF PAYMENT.] All employers shall commence payment of compensation at the time and in the manner prescribed by this chapter without the necessity of any agreement or any order of the division. Except for medical, burial, and other nonperiodic benefits, payments shall be made as nearly as possible at the intervals when the wage was payable, provided, however, that payments for permanent partial disability shall be governed by section 176.101. If doubt exists as to the eventual permanent partial disability, payment for the economic recovery compensation or impairment compensation, whichever is due, pursuant to section 176.101, shall be then made when due for the minimum permanent partial disability ascertainable, and further payment shall be made upon any later ascertainment of greater permanent partial disability. Prior to or at the time of commencement of the payment of economic recovery compensation or lump sum or periodic payment of impairment permanent partial compensation, the employee and employer shall be furnished with a copy of the medical report upon which the payment is based and all other medical reports which the insurer has that indicate a permanent partial disability rating, together with a statement by the insurer as to whether the tendered payment is for minimum permanent partial disability or final and eventual disability. After receipt of all reports available to the insurer that indicate a permanent partial disability rating, the employee shall make available or permit the insurer to obtain any medical report that the employee has or has knowledge of that contains a permanent partial disability rating which the insurer does not already have. Economic recovery compensation or impairment Permanent partial compensation pursuant to section 176.101 is payable in addition to but not concurrently with compensation for temporary total disability but is payable pursuant to section 176.101. Impairment compensation is payable concurrently and in addition to compensation for permanent total disability pursuant to section 176.101. Economic recovery compensation or impairment compensation Permanent partial compensation pursuant to section 176.101 shall be withheld pending completion of payment for temporary total disability, and no credit shall be taken for payment of economic recovery compensation or impairment permanent partial compensation against liability for temporary total or future permanent total disability. Liability on the part of an employer or the insurer for disability of a temporary total, temporary partial, and permanent total nature shall be considered as a continuing product and part of the employee's inability to earn or reduction in earning capacity due to injury or occupational disease and compensation is payable accordingly, subject to section 176.101. Economic recovery compensation or impairment Permanent partial compensation is payable for functional loss of use or impairment of function, permanent in nature, and payment therefore shall be separate, distinct, and in addition to payment for any other compensation, subject to section 176.101. The right to receive temporary total, temporary partial, or permanent total disability payments vests in the injured employee or the employee's dependents under this chapter or, if none, in the employee's legal heirs at the time the disability can be ascertained and the right is not abrogated by the employee's death prior to the making of the payment.

The right to receive economic recovery permanent partial compensation or impairment compensation vests in an injured employee at the time the disability can be ascertained provided that the employee lives for at least 30 days beyond the date of the injury. Upon the death of an employee who is receiving economic recovery compensation or impairment compensation, further compensation is payable pursuant to section 176.101. Impairment compensation is payable under this paragraph if vesting has occurred, the employee dies prior to reaching maximum medical improvement, and the requirements and conditions under section 176.101, subdivision 3e, are not met.

Disability ratings for permanent partial disability shall be based on objective medical evidence.

Sec. 15. Minnesota Statutes 1994, section 176.021, subdivision 3a, is amended to read:

Subd. 3a. [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments for permanent partial disability as provided in section 176.101, subdivision 3 2a, shall be made in the following manner:

(a) If the employee returns to work, payment shall be made by lump sum at the same intervals as temporary total payments were made;

(b) If temporary total payments have ceased, but the employee has not returned to work, payment shall be made at the same intervals as temporary total payments were made;

(c) If temporary total disability payments cease because the employee is receiving payments for permanent total disability or because the employee is retiring or has retired from the work force, then payment shall be made by lump sum at the same intervals as temporary total payments were made;

(d) If the employee completes a rehabilitation plan pursuant to section 176.102, but the employer does not furnish the employee with work the employee can do in a permanently partially disabled condition, and the employee is unable to procure such work with another employer, then payment shall be made by lump sum at the same intervals as temporary total payments were made."

Pages 12 to 14, delete section 17 and insert:

"Sec. 17. Minnesota Statutes 1994, section 176.101, subdivision 1, is amended to read:

Subdivision 1. [TEMPORARY TOTAL DISABILITY.] (a) For injury producing temporary total disability, the compensation is 66-2/3 percent of the weekly wage at the time of injury.

(b) On and after October 1, 1995, the maximum weekly compensation payable shall be as follows:

During the year (1) commencing on October 1, 1992 1995, and each year thereafter, the maximum weekly compensation payable is 105 percent of the statewide average weekly wage for the period ending December 31 of the preceding year $615 per week.

(2) The workers' compensation advisory council may consider adjustment increases and make recommendations to the legislature.

(c) The minimum weekly compensation payable is 20 percent of the statewide average weekly wage for the period ending December 31 of the preceding year $104 per week or the injured employee's actual weekly wage, whichever is less.

(d) Subject to subdivisions 3a to 3u this Temporary total compensation shall be paid during the period of disability, payment to be made at the intervals when the wage was payable, as nearly as may be subject to the cessation and recommencement conditions in paragraphs (e) to (l).

(e) Temporary total disability compensation shall cease when the employee returns to work. Except as otherwise provided in section 176.102, subdivision 11, temporary total disability compensation may only be recommenced following cessation under this paragraph, paragraph (h), or paragraph (j) prior to payment of 104 weeks of temporary total disability compensation and only as follows:

(1) temporary total disability compensation may be recommenced if the employee is laid off or terminated for reasons other than misconduct within one year after returning to work if the layoff or termination occurs prior to 90 days after the employee has reached maximum medical improvement. Recommenced temporary total disability compensation under this clause ceases when any of the cessation events in paragraphs (e) to (l) occurs; or

(2) temporary total disability compensation may be recommenced if the employee is medically unable to continue at a job due to the injury. Where the employee is medically unable to continue working due to the injury, temporary total disability compensation may continue until any of the cessation events in paragraphs (e) to (l) occurs following recommencement. If an employee who has not yet received temporary total disability compensation becomes medically unable to continue working due to the injury after reaching maximum medical improvement, temporary total disability compensation shall commence and shall continue until any of the events in paragraphs (e) to (l) occurs following commencement. For purposes of commencement or recommencement under this clause only, a new period of maximum medical improvement under paragraph (e) begins when the employee becomes medically unable to continue working due to the injury. Temporary total disability compensation may not be recommenced under this clause and a new period of maximum medical improvement does not begin if the employee is not actively employed when the employee becomes medically unable to work. All periods of initial and recommenced temporary total disability compensation are included in the 104-week limitation specified in paragraph (l).

(f) Temporary total disability compensation shall cease if the employee withdraws from the labor market. Temporary total disability compensation may be recommenced following cessation under this paragraph only if the employee reenters the labor market prior to 90 days after the employee reached maximum medical improvement and prior to payment of 104 weeks of temporary total disability compensation. Once recommenced, temporary total disability ceases when any of the cessation events in paragraphs (e) to (l) occurs.

(g) Temporary total disability compensation shall cease if the total disability ends and the employee fails to diligently search for appropriate work within the employee's physical restrictions. Temporary total disability compensation may be recommenced following cessation under this paragraph only if the employee begins diligently searching for appropriate work within the employee's physical restrictions prior to 90 days after maximum medical improvement and prior to payment of 104 weeks of temporary total disability compensation. Once recommenced, temporary total disability compensation ceases when any of the cessation events in paragraphs (e) to (l) occurs.

(h) Temporary total disability compensation shall cease if the employee has been released to work without any physical restrictions caused by the work injury.

(i) Temporary total disability compensation shall cease if the employee refuses an offer of work that is consistent with a plan of rehabilitation filed with the commissioner which meets the requirements of section 176.102, subdivision 4, or, if no plan has been filed, the employee refuses an offer of gainful employment that the employee can do in the employee's physical condition. Once temporary total disability compensation has ceased under this paragraph, it may not be recommenced.

(j) Temporary total disability compensation shall cease 90 days after the employee has reached maximum medical improvement, except as provided in section 176.102, subdivision 11, paragraph (b). For purposes of this subdivision, the 90-day period after maximum medical improvement commences on the earlier of: (1) the date that the employee receives a written medical report indicating that the employee has reached maximum medical improvement; or (2) the date that the employer or insurer serves the report on the employee and the employee's attorney, if any. Once temporary total disability compensation has ceased under this paragraph, it may not be recommenced except if the employee returns to work and is subsequently medically unable to continue working as provided in paragraph (e), clause (2).

(k) Temporary total disability compensation shall cease entirely when 104 weeks of temporary total disability compensation have been paid, except as provided in section 176.102, subdivision 11, paragraph (b). Notwithstanding anything in this section to the contrary, initial and recommenced temporary total disability compensation combined shall not be paid for more than 104 weeks, regardless of the number of weeks that have elapsed since the injury, except that if the employee is in a retraining plan approved under section 176.102, subdivision 11, the 104 week limitation shall not apply during the retraining, but is subject to the limitation before the plan begins and after the plan ends.

(l) Items (e) to (k) do not limit other grounds under law to suspend or discontinue temporary total disability compensation provided under chapter 176."

Pages 14 to 16, delete sections 19 and 20 and insert:

"Sec. 19. Minnesota Statutes 1994, section 176.101, is amended by adding a subdivision to read:

Subd. 2a. [PERMANENT PARTIAL DISABILITY.] (a) Compensation for permanent partial disability is as provided in this subdivision. Permanent partial disability must be rated as a percentage of the whole body in accordance with rules adopted by the commissioner under section 176.105. The percentage determined pursuant to the rules must be multiplied by the corresponding amount in the following table:

Impairment rating Amount

(percent)

0-25$ 75,000

26-30 80,000

31-35 85,000

36-40 90,000

41-45 95,000

46-50 100,000

51-55 120,000

56-60 140,000

61-65 160,000

66-70 180,000

71-75 200,000

76-80 240,000

81-85 280,000

86-90 320,000

91-95 360,000

96-100 400,000

An employee may not receive compensation for more than a 100 percent disability of the whole body, even if the employee sustains disability to two or more body parts.

(b) Permanent partial disability is payable upon cessation of temporary total disability under subdivision 1. The compensation is payable in installments at the same intervals and in the same amount as the employee's temporary total disability rate on the date of injury. Permanent partial disability is not payable while temporary total compensation is being paid.

Sec. 20. Minnesota Statutes 1994, section 176.101, subdivision 4, is amended to read:

Subd. 4. [PERMANENT TOTAL DISABILITY.] For permanent total disability, as defined in subdivision 5, the compensation shall be 66-2/3 percent of the daily wage at the time of the injury, subject to a maximum weekly compensation equal to the maximum weekly compensation for a temporary total disability and a minimum weekly compensation equal to the minimum weekly compensation for a temporary total disability 65 percent of the statewide average weekly wage. This compensation shall be paid during the permanent total disability of the injured employee but after a total of $25,000 of weekly compensation has been paid, the amount of the weekly compensation benefits being paid by the employer shall be reduced by the amount of any disability benefits being paid by any government disability benefit program if the disability benefits are occasioned by the same injury or injuries which give rise to payments under this subdivision. This reduction shall also apply to any old age and survivor insurance benefits. Payments shall be made at the intervals when the wage was payable, as nearly as may be. In case an employee who is permanently and totally disabled becomes an inmate of a public institution, no compensation shall be payable during the period of confinement in the institution, unless there is wholly dependent on the employee for support some person named in section 176.111, subdivision 1, 2 or 3, in which case the compensation provided for in section 176.111, during the period of confinement, shall be paid for the benefit of the dependent person during dependency. The dependency of this person shall be determined as though the employee were deceased. Permanent total disability ends at retirement. For purposes of this subdivision, retirement means the age at which benefits are payable according to the Social Security Act, Public Law Number 98-21."

Pages 18 and 19, delete section 23 and insert:

"Sec. 23. Minnesota Statutes 1994, section 176.101, subdivision 8, is amended to read:

Subd. 8. [RETIREMENT CESSATION OF BENEFITS.] Temporary total disability payments shall cease at retirement. "Retirement" means that a preponderance of the evidence supports a conclusion that an employee has retired. The subjective statement of an employee that the employee is not retired is not sufficient in itself to rebut objective evidence of retirement but may be considered along with other evidence.

For injuries occurring after January 1, 1984, an employee who receives social security old age and survivors insurance retirement benefits under the Social Security Act, Public Law Number 98-21, is presumed retired from the labor market. This presumption is rebuttable by a preponderance of the evidence."

Page 25, delete section 30 and insert:

"Sec. 30. Minnesota Statutes 1994, section 176.82, is amended to read:

176.82 [ACTION FOR CIVIL DAMAGES FOR OBSTRUCTING EMPLOYEE SEEKING BENEFITS.]

Subdivision 1. [RETALIATORY DISCHARGE.] Any person discharging or threatening to discharge an employee for seeking workers' compensation benefits or in any manner intentionally obstructing an employee seeking workers' compensation benefits is liable in a civil action for damages incurred by the employee including any diminution in workers' compensation benefits caused by a violation of this section including costs and reasonable attorney fees, and for punitive damages not to exceed three times the amount of any compensation benefit to which the employee is entitled. Damages awarded under this section shall not be offset by any workers' compensation benefits to which the employee is entitled.

Subd. 2. [REFUSAL TO OFFER CONTINUED EMPLOYMENT.] An employer who, without reasonable cause, refuses to offer continued employment to its employee when employment is available within the employee's physical limitations shall be liable for one year's wages. The wages are payable from the date of the refusal to offer continued employment, and at the same time and at the same rate as the employee's preinjury wage, to continue during the period of the refusal up to a maximum of $15,000. These payments shall be in addition to any other payments provided by this chapter. In determining the availability of employment, the continuance in business of the employer shall be considered and written rules promulgated by the employer with respect to seniority or the provisions or any collective bargaining agreement shall govern. These payments shall not be covered by a contract of insurance. The employer shall be served directly and be a party to the claim. This subdivision shall not apply to employers who employ 15 or fewer full-time equivalent employees."

Page 28, line 25, delete the quotation mark and insert:

Section 1. Minnesota Statutes 1994, section 13.69, subdivision 1, is amended to read:

Subdivision 1. [CLASSIFICATIONS.] (a) The following government data of the department of public safety are private data:

(1) medical data on driving instructors, licensed drivers, and applicants for parking certificates and special license plates issued to physically handicapped persons; and

(2) social security numbers in driver's license and motor vehicle registration records, except that social security numbers must be provided to the department of revenue for purposes of tax administration and the department of labor and industry for purposes of workers' compensation administration and enforcement.

(b) The following government data of the department of public safety are confidential data: data concerning an individual's driving ability when that data is received from a member of the individual's family.

Sec. 2. Minnesota Statutes 1994, section 13.82, subdivision 1, is amended to read:

Subdivision 1. [APPLICATION.] This section shall apply to agencies which carry on a law enforcement function, including but not limited to municipal police departments, county sheriff departments, fire departments, the bureau of criminal apprehension, the Minnesota state patrol, the board of peace officer standards and training, and the department of commerce, and the department of labor and industry fraud investigation unit.

Sec. 3. Minnesota Statutes 1994, section 79.074, subdivision 2, is amended to read:

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 referred to in section 79.20 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.

Sec. 4. Minnesota Statutes 1994, section 79.085, is amended to read:

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.

Sec. 5. Minnesota Statutes 1994, section 79.211, subdivision 1, is amended to read:

Subdivision 1. [CERTAIN WAGES EXCLUDED INCLUDED FOR RATEMAKING.] The rating association or an insurer shall not 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 the effective date of this section, 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.

Sec. 6. Minnesota Statutes 1994, section 79.251, subdivision 2, is amended to read:

Subd. 2. [APPROPRIATE MERIT RATING PLAN.] The commissioner shall develop an appropriate merit rating plan which shall be applicable to all insureds holding policies or contracts of coverage issued pursuant to subdivision 4 and to the insurers or self-insurance administrators issuing those policies or contracts. The plan shall provide a maximum merit adjustment equal to ten percent of earned premium. The actual adjustment may vary with insured's loss experience. 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 up to 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.

Sec. 7. Minnesota Statutes 1994, section 79.251, is amended by adding a subdivision to read:

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) to (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.

Sec. 8. Minnesota Statutes 1994, section 79.253, is amended by adding a subdivision to read:

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.

Sec. 9. Minnesota Statutes 1994, section 79.34, subdivision 2, is amended to read:

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 $300,000 or $100,000 a low, a high, or a super 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 lower retention limit shall be increased to the nearest $10,000, on January 1, 1982 and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, as determined in accordance with section 176.011, subdivision 20. On January 1, 1982 and on each January 1 thereafter, the higher retention limit shall be increased by the amount necessary to retain a $200,000 difference between the two retention limits. On January 1, 1995, the lower retention limit is $250,000, which shall also be known as the 1995 base retention limit. On each January 1 thereafter, the cumulative annual percentage changes in the statewide average weekly wage after October 1, 1994, as determined in accordance with section 176.011, subdivision 20, shall first be multiplied by the 1995 base retention limit, the result of which shall then be added to the 1995 base retention limit. The resulting figure shall be rounded to the nearest $10,000, yielding the low retention limit for that year, provided that the low retention limit shall not be reduced in any year. 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 period 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 higher 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 higher high or super retention limit shall retain the liability for all losses below the higher 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 higher high or super 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 higher and lower high or super 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 higher high or super retention limit for purposes of membership in the reinsurance association.

Sec. 10. Minnesota Statutes 1994, section 79.35, is amended to read:

79.35 [DUTIES; RESPONSIBILITIES; POWERS.]

The reinsurance association shall do the following on behalf of its members:

(a) Assume 100 percent of the liability as provided in section 79.34;

(b) 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;

(c) 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;

(d) Calculate and charge to members a total premium sufficient to cover the expected liability which the reinsurance association will incur in excess of the higher retention limit but less than the prefunded limit, together with incurred or estimated to be incurred operating and administrative expenses for the period to which this premium applies and actual claim payments to be made by members, during the period to which this premium applies, for claims in excess of the prefunded limit in effect at the time the loss was incurred. Each member shall be charged a premium established by the board as sufficient to cover the reinsurance association's incurred liabilities and expenses between the member's selected retention limit and the prefunded limit. The prefunded limit shall be $2,500,000 on and after October 1, 1979, provided that the prefunded limit shall be increased on January 1, 1983 and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, to the nearest $100,000, as determined in accordance with section 176.011, subdivision 20 times the lower retention limit established in section 79.34, subdivision 2. 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 exercising the lower retention option shall also be charged a premium established by the board as sufficient to cover incurred or estimated to be incurred claims for the liability the reinsurance association is likely to incur between the lower and higher retention limits for the period to which the premium applies. 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;

(e) Require and accept the payment of premiums from members of the reinsurance association;

(f) Receive and distribute all sums required by the operation of the reinsurance association;

(g) 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

(h) 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.

Sec. 11. Minnesota Statutes 1994, section 79.52, is amended by adding a subdivision to read:

Subd. 17. [ASSOCIATION OR RATING ASSOCIATION.] "Association" or "rating association" means the Minnesota Workers' Compensation Insurers Association, Inc.

Sec. 12. Minnesota Statutes 1994, section 79.52, is amended by adding a subdivision to read:

Subd. 18. [RATE OVERSIGHT COMMISSION.] "Rate oversight commission" means the workers' compensation advisory council established in chapter 175.

Sec. 13. Minnesota Statutes 1994, section 79.55, is amended by adding a subdivision to read:

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.

Sec. 14. Minnesota Statutes 1994, section 79.55, is amended by adding a subdivision to read:

Subd. 9. [ANALYSIS BY RATE OVERSIGHT COMMISSION.] Not later than November 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.

Sec. 15. Minnesota Statutes 1994, section 79.55, is amended by adding a subdivision to read:

Subd. 10. [DUTIES OF COMMISSIONER.] The commissioner shall issue a report by January 1, 1996, comparing the average rates charged by workers' compensation insurers in the state to the pure premium base rates filed by the association, as reviewed by the rate oversight commission. The rate oversight commission shall review the commissioner's report and if the experience indicates that rates have not reasonably reflected changes in pure premiums, the rate oversight commission shall recommend to the legislature appropriate legislative changes to this chapter.

Sec. 16. Minnesota Statutes 1994, section 79.60, subdivision 1, is amended to read:

Subdivision 1. [REQUIRED ACTIVITY.] Each insurer shall perform the following activities:

(a) 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;

(b) 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;

(c) Provide an annual report to the commissioner containing the information and prepared in the form required by the commissioner; and

(d) Keep a record of the premiums and losses paid under each workers' compensation policy written in Minnesota in the form required by the commissioner;

(e) 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

(f) 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.

Sec. 17. Minnesota Statutes 1994, section 79A.01, subdivision 1, is amended to read:

Subdivision 1. [SCOPE.] For the purposes of sections 79A.01 to 79A.17 this chapter, the terms defined in this section have the meaning given them.

Sec. 18. Minnesota Statutes 1994, section 79A.01, subdivision 4, is amended to read:

Subd. 4. [INSOLVENT SELF-INSURER.] "Insolvent self-insurer" means either: (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, or; (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.

Sec. 19. Minnesota Statutes 1994, section 79A.01, is amended by adding a subdivision to read:

Subd. 10. [COMMON CLAIMS FUND.] "Common claims fund" means the cash, cash equivalents, or investment accounts maintained by the mutual self-insurance group to pay its workers' compensation liabilities.

Sec. 20. Minnesota Statutes 1994, section 79A.02, subdivision 1, is amended to read:

Subdivision 1. [MEMBERSHIP.] For the purposes of assisting the commissioner, there is established a workers' compensation self-insurers' advisory committee of five members that are employers authorized to self-insure in Minnesota. Three of the members and three alternates shall be elected by the members of the self-insurers' security fund board of trustees and two alternates shall be appointed by the commissioner.

Sec. 21. Minnesota Statutes 1994, section 79A.02, subdivision 2, is amended to read:

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. All members of the advisory committee shall treat financial data received from the commissioner as nonpublic data. The committee shall advise the commissioner if it has any information that any private self-insurer may become insolvent. Disclosure of this data other than for the purposes of this subdivision is a misdemeanor.

Sec. 22. Minnesota Statutes 1994, section 79A.02, subdivision 4, is amended to read:

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.

Sec. 23. Minnesota Statutes 1994, section 79A.03, is amended by adding a subdivision to read:

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.

Sec. 24. Minnesota Statutes 1994, section 79A.04, subdivision 2, is amended to read:

Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 percent of the private self-insurer's estimated future liability. Up to ten percent of that 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 the employer's 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 two-year 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.

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. 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. 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.

Sec. 25. Minnesota Statutes 1994, section 79A.04, subdivision 9, is amended to read:

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. If the commissioner determines that a court of competent jurisdiction has declared the private self-insurer to be bankrupt or insolvent, and the private self-insurer has failed to pay workers' compensation as required by chapter 176 or, if the commissioner issues a certificate of default against a private self-insurer for failure to pay workers' compensation as required by chapter 176, or failure to pay an assessment to the self-insurers' security fund when due, then the security deposit shall be utilized to administer and pay the private self-insurers' workers' compensation or assessment obligations.

Sec. 26. Minnesota Statutes 1994, section 79A.09, subdivision 4, is amended to read:

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 and shall adopt bylaws to prevent dissemination of that information. The data shall become public data upon its receipt by the security fund.

Sec. 27. Minnesota Statutes 1994, section 79A.15, is amended to read:

79A.15 [SURETY BOND FORM.]

The form for the surety bond under this chapter shall be:

IN THE MATTER OF THE CERTIFICATE OF )

)

) SURETY BOND

) NO. . . . . . . .

) PREMIUM: . . . .

)

Employer, Certificate No: . . . . . . . )

KNOW ALL PERSONS BY THESE PRESENTS:

That . . . . . . . . . . . . . . . . . . . . . . . . .

(Employer)

whose address is . . . . . . . . . . . . . . . . . . . . . . . .

as Principal, and . . . . . . . . . . . . . . . . . . . . . . . .

(Surety)

a corporation organized under the laws of . . . . . . . . . . . and authorized to transact a general surety business in the State of Minnesota, as Surety, are held and firmly bound to the State of Minnesota in the penal sum of . . . . . . . . . . . . . dollars ($. . . . . ) for which payment we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents.

WHEREAS in accordance with Minnesota Statutes, chapter 176, the principal elected to self-insure, and made application for, or received from the commissioner of commerce of the state of Minnesota, a certificate to self-insure, upon furnishing of proof satisfactory to the commissioner of commerce of ability to self-insure and to compensate any or all employees of said principal for injury or disability, and their dependents for death incurred or sustained by said employees pursuant to the terms, provisions, and limitations of said statute;

NOW THEREFORE, the conditions of this bond or obligation are such that if principal shall pay and furnish compensation, pursuant to the terms, provisions, and limitations of said statute to its employees for injury or

disability, and to the dependents of its employees, then this bond or obligation shall be null and void; otherwise to remain in full force and effect.

FURTHERMORE, it is understood and agreed that:

1. This bond may be amended, by agreement between the parties hereto and the commissioner of commerce as to the identity of the principal herein named; and, by agreement of the parties hereto, as to the premium or rate of premium. Such amendment must be by endorsement upon, or rider to, this bond, executed by the surety and delivered to or filed with the commissioner.

2. The surety does, by these presents, undertake and agree that the obligation of this bond shall cover and extend to all past, present, existing, and potential liability of said principal, as a self-insurer, to the extent of the penal sum herein named without regard to specific injuries, date or dates of injuries, happenings or events.

3. The penal sum of this bond may be increased or decreased, by agreement between the parties hereto and the commissioner of commerce, without impairing the obligation incurred under this bond for the overall coverage of the said principal, for all past, present, existing, and potential liability, as a self-insurer, without regard to specific injuries, date or dates of injuries, happenings or events, to the extent, in the aggregate, of the penal sum as increased or decreased. Such amendment must be by endorsement.

4. The aggregate liability of the surety hereunder on all claims whatsoever shall not exceed the penal sum of this bond in any event.

5. This bond shall be continuous in form and shall remain in full force and effect unless terminated as follows:

(a) The obligation of this bond shall terminate upon written notice of cancellation from the surety, given by registered or certified mail to the commissioner of commerce, state of Minnesota, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred but not yet reported, as a self-insurer prior to effective date of termination. This termination is effective 60 days after receipt of notice of cancellation by the commissioner of commerce, state of Minnesota.

(b) This bond shall also terminate upon the revocation of the certificate to self-insure, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred but not yet reported, as a self-insurer prior to effective date of termination. The principal and the surety, herein named, shall be immediately notified in writing by said commissioner, in the event of such revocation.

6. Where the principal posts with the commissioner of commerce, state of Minnesota, or the state treasurer, state of Minnesota, a replacement security deposit, in the form of a surety bond, irrevocable letter of credit, cash, securities, or any combination thereof, in the full amount as may be required by the commissioner of commerce, state of Minnesota, to secure all incurred liabilities for the payment of compensation of said principal under Minnesota Statutes, chapter 176, the surety is released from obligations under the surety bond upon the date of acceptance by the commissioner of commerce, state of Minnesota, of said replacement security deposit.

7. If the said principal shall suspend payment of workers' compensation benefits or shall become insolvent or a receiver shall be appointed for its business, or the commissioner of commerce, state of Minnesota, issues a certificate of default, the undersigned surety will become liable for the workers' compensation obligations of the principal on the date benefits are suspended. The surety shall begin payments within 14 days under paragraph 8, or 30 days under paragraph 10, after receipt of written notification by certified mail from the commissioner of commerce, state of Minnesota, to begin payments under the terms of this bond.

8. If the surety exercises its option to administer claims, it shall pay benefits due to the principal's injured workers within 14 days of the receipt of the notification by the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, without a formal award of a compensation judge, the commissioner of labor and industry, any intermediate appellate court, or the Minnesota supreme court and such payment will be a charge against the penal sum of the bond. Administrative and legal costs and payment of assessments incurred by the surety in discharging its obligations and payment of the principal's obligations for administration and legal expenses and payment of assessments under Minnesota Statutes, chapter chapters 79A and 176, and sections 79A.01 to 79A.17 and Laws 1988, chapter 674, section 23, shall also be a charge against the penal sum of the bond; however, the total amount of this surety bond set aside for the payment of said administrative and legal expenses and payment of assessments shall be limited to a maximum ten percent of the total penal sum of the bond unless otherwise authorized by the security fund.

9. If any part or provision of this bond shall be declared unenforceable or held to be invalid by a court of proper jurisdiction, such determination shall not affect the validity or enforceability of the other provisions or parts of this bond.

10. If the surety does not give notice to the (self-insurer's security fund) (commercial self-insurance group security fund) and the commissioner of commerce, state of Minnesota, within two 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. The surety shall pay, within 30 days of the receipt of the notification by the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, to the self-insurer's security fund) (commercial self-insurance group (security fund) as an initial deposit an amount equal to ten 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 had fallen to one percent of the penal sum of the bond, remit to the (self-insurer's security fund) (commercial self-insurance group security fund) an amount equal to the payments made by the (self-insurer's security fund) (commercial self-insurance group security fund) in the three calendar months immediately preceding said notification. All such payments will be a charge against the penal sum 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-insurers' (self-insurer's security fund) (commercial self-insurance group security fund) shall be resolved by the commissioner of commerce pursuant to Minnesota Statutes, chapter chapters 79A and 176 and sections 79A.01 to 79A.17 and Laws 1988, chapter 674, section 23.

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.

Sec. 28. [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.

Sec. 29. [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.

Sec. 30. [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 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 75 percent of the group's annual premium shall submit reviewed or audited financial statements. The remaining members may 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.

(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 $500,000;

(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.

Sec. 31. [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 15 times the group's selected retention level of the workers' compensation reinsurance association;

(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 or 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 prior to 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 will be increased to an amount equal to 50 percent of the new member's premium. The department of commerce may, at its 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 15 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 common claims fund may be invested in the following securities:

(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-, or Aa3, or their equivalent by at least two nationally recognized rating agencies.

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) 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 the workers' compensation act, chapter 176, for that fund year may be declared refundable to a member at any time. The date shall be no earlier than 18 months following the end of such fund year. The first disbursement of fund surplus may not be made prior to the completion of an operational audit by the commissioner. There can be no more than one refund made in any 12-month period. 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.

(b) The commercial self-insurance group shall give notice to the commissioner of any refund. Said notice shall be accompanied by a statement from the commercial self-insurer group's certified public accountant certifying that the proposed refund is in compliance with paragraph (a).

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.

Sec. 32. [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 recordkeeping practices.

(e) Each commercial self-insurance group shall submit by August 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 May 1 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; 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 statement must be reviewed or audited and must be submitted to the commissioner by May 1 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.

Subd. 2. [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each member of the commercial self-insurance group shall, by April 1, 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 75 percent of the group's annual premium shall submit to the group reviewed or audited financial statements. The remaining members may submit compilation level statements.

Subd. 3. [OPERATIONAL AUDIT.] (a) The commissioner, prior to authorizing surplus distribution of a commercial self-insurance group's first fund year or no later than after the third anniversary of the group's authority to self-insure, shall 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. 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.

Sec. 33. [79A.24] [COMMERCIAL SELF-INSURANCE GROUP SECURITY DEPOSIT.]

Subdivision 1. [ANNUAL SECURING OF LIABILITY.] Each year every commercial self-insurance group shall secure future incurred liabilities for the payment of compensation and the performance of the obligations of its membership imposed under chapter 176. A new deposit must be posted within 30 days of the filing of the commercial self-insurance group's annual actuarial report with the commissioner.

Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 150 percent of the commercial self-insurance group's future incurred liabilities for the payment of compensation as determined by an actuary. If all the members of the commercial self-insurance group have submitted reviewed or audited financial statements to the group's accountant, this minimum deposit shall be 110 percent of the commercial self-insurance group's future incurred liabilities for the payment of workers' compensation as determined by an actuary. The group must file a letter with the commissioner from the group's accountant which confirms that the compiled combined financial statements were prepared from members reviewed or audited financial statements only before the lower security deposit is allowed. 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. 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. 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 176.181, subdivision 2b, 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 state treasurer 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 state treasurer 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 state treasurer or with a custodial account assigned to the state treasurer 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.

(e) The commissioner shall return on an annual basis to the commercial self-insurance group all amounts of security determined by the commissioner to be in excess of the statutory requirements for the group to self-insure, including that necessary for administrative costs, legal fees, and the payment of any future workers' compensation claims.

Sec. 34. [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 THE COMMISSIONER.] In the event of bankruptcy, insolvency, or certificate of default, the commissioner shall immediately notify by certified mail the state treasurer, 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.

Sec. 35. [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. 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 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.

Sec. 36. [79A.27] [INDEMNITY AGREEMENT FORM.]

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 NameCompany Name

By: . . . . . . . . . . . . . . . . . . . . . . . . . By: . . . . . . . . . . . . . . . . . . . . . . . . .

date: . . . . . . . . . . . . . . . . . . . . . . . . date: . . . . . . . . . . . . . . . . . . . . . . . .

Sec. 37. [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;

(2) the open appointments law;

(3) the data privacy law; and

(4) except where specifically set forth, the administrative procedure act.

Sec. 38. [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.

Sec. 39. [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.

Sec. 40. [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 as of August 1, 1995, of the self-insurers' security fund established under section 79A.09, may until January 1, 1996, 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.34 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.

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.

Sec. 41. [79A.32] [REPORTING TO MINNESOTA WORKERS' COMPENSATION INSURERS' ASSOCIATION.]

Subdivision 1. [REQUIRED ACTIVITY.] Each self-insurer shall perform the following activities:

(1) maintain membership in and report loss experience data to the Minnesota workers' compensation insurers association, or 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; and

(4) keep a record of the losses paid by the self-insurers and premiums for the group self-insurers.

Subd. 2. [PERMITTED ACTIVITY.] In addition to any other activities not prohibited by this chapter, self-insurers may:

(1) through licensed data service organizations, 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;

(2) develop and use classification plans and rates based upon any reasonable factors; and

(3) develop rules for the assignment of risks to classifications.

Subd. 3. [DELAYED REPORTING.] Private self-insurers established under sections 79A.01 to 79A.18 prior to August 1, 1995, need not begin filing the reports required under subdivision 1 until January 1, 1998.

Sec. 42. Minnesota Statutes 1994, section 168.012, subdivision 1, is amended to read:

Subdivision 1. (a) The following vehicles are exempt from the provisions of this chapter requiring payment of tax and registration fees, except as provided in subdivision 1c:

(1) vehicles owned and used solely in the transaction of official business by representatives of foreign powers, by the federal government, the state, or any political subdivision;

(2) vehicles owned and used exclusively by educational institutions and used solely in the transportation of pupils to and from such institutions;

(3) vehicles used solely in driver education programs at nonpublic high schools;

(4) vehicles owned by nonprofit charities and used exclusively to transport disabled persons for educational purposes;

(5) vehicles owned and used by honorary consul or consul general of foreign governments; and

(6) ambulances owned by ambulance services licensed under section 144.802, the general appearance of which is unmistakable.

(b) Vehicles owned by the federal government, municipal fire apparatus, police patrols and ambulances, the general appearance of which is unmistakable, shall not be required to register or display number plates.

(c) Unmarked vehicles used in general police work, liquor investigations, arson investigations, and passenger automobiles, pickup trucks, and buses owned or operated by the department of corrections shall be registered and shall display appropriate license number plates which shall be furnished by the registrar at cost. Original and renewal applications for these license plates authorized for use in general police work and for use by the department of corrections must be accompanied by a certification signed by the appropriate chief of police if issued to a police vehicle, the appropriate sheriff if issued to a sheriff's vehicle, the commissioner of corrections if issued to a department of corrections vehicle, or the appropriate officer in charge if issued to a vehicle of any other law enforcement agency. The certification must be on a form prescribed by the commissioner and state that the vehicle will be used exclusively for a purpose authorized by this section.

(d) Unmarked vehicles used by the department departments of revenue and labor and industry, fraud unit, in conducting seizures or criminal investigations must be registered and must display passenger vehicle classification license number plates which shall be furnished at cost by the registrar. Original and renewal applications for these passenger vehicle license plates must be accompanied by a certification signed by the commissioner of revenue or the commissioner of labor and industry. The certification must be on a form prescribed by the commissioner and state that the vehicles will be used exclusively for the purposes authorized by this section.

(e) All other motor vehicles shall be registered and display tax-exempt number plates which shall be furnished by the registrar at cost, except as provided in subdivision 1c. All vehicles required to display tax-exempt number plates shall have the name of the state department or political subdivision, or the nonpublic high school operating a driver education program, on the vehicle plainly displayed on both sides thereof in letters not less than 2-1/2 inches high and one-half inch wide; except that each state hospital and institution for the mentally ill and mentally retarded may

have one vehicle without the required identification on the sides of the vehicle, and county social service agencies may have vehicles used for child and vulnerable adult protective services without the required identification on the sides of the vehicle. Such identification shall be in a color giving contrast with that of the part of the vehicle on which it is placed and shall endure throughout the term of the registration. The identification must not be on a removable plate or placard and shall be kept clean and visible at all times; except that a removable plate or placard may be utilized on vehicles leased or loaned to a political subdivision or to a nonpublic high school driver education program.

Sec. 43. [175.0071] [WORKERS' COMPENSATION ADVISORY COUNCIL.]

Subdivision 1. [COUNCIL ON WORKERS' COMPENSATION.] There is created in the department of labor and industry a council on workers' compensation to consist of the commissioner of the department of labor and industry as the nonvoting chair, five representatives of employers, and five representatives of employees. The governor, the senate majority leader, the senate minority leader, the speaker of the house, and the house minority leader shall each appoint one member representing employers and one member representing employees. Members shall serve until June 30 following the expiration of the appointing authority's term. If an appointing authority has not appointed a member by the second Monday in June, the governor shall make the appointment. A recommendation may not be made by the council unless it is supported by a majority of the employer members and a majority of the employee members. The governor shall also appoint three representatives of insurers authorized to do a workers' compensation insurance business in this state as nonvoting members of the council.

Subd. 2. [MEETINGS; VOTING.] (a) The council shall meet as frequently as necessary to carry out its duties and responsibilities. Meetings of the council shall be scheduled with at least seven days written notice. Meetings may be held with less notice with the unanimous consent of the council. The council may also conduct public hearings throughout the state as may be necessary to give interested persons an opportunity to comment and make suggestions on the operation of the state's workers' compensation law.

(b) The meetings of the council are subject to the state's open meeting law, section 471.705; except that the five employer voting members and the five employee voting members may meet in separate closed caucuses for the purpose of deliberating on matters before the council. All votes of the council must be public and recorded.

Subd. 3. [COUNCIL RECOMMENDATIONS.] The council on workers' compensation shall advise the department in carrying out the purposes of chapter 176. The council shall submit its recommendations with respect to amendments to chapter 176 to each session of the legislature and report its views upon any pending bill relating to chapter 176 to the proper legislative committee. The council shall from time to time evaluate the statutory maximum compensation rate in section 176.101, subdivision 1.

Sec. 44. Minnesota Statutes 1994, section 175.16, is amended to read:

175.16 [DIVISIONS.]

The department of labor and industry shall consist of the following divisions: division of workers' compensation, division of boiler inspection, division of occupational safety and health, division of statistics, division of steamfitting standards, division of voluntary apprenticeship, division of labor standards, and such other divisions as the commissioner of the department of labor and industry may deem necessary and establish. Each division of the department and persons in charge thereof shall be subject to the supervision of the commissioner of the department of labor and industry and, in addition to such duties as are or may be imposed on them by statute, shall perform such other duties as may be assigned to them by said commissioner. Notwithstanding any other law to the contrary, the commissioner shall delegate dispute resolution functions and personnel pursuant to this section to implement the department's funding and statutory obligations.

Sec. 45. Minnesota Statutes 1994, section 176.011, subdivision 16, is amended to read:

Subd. 16. [PERSONAL INJURY.] "Personal injury" means injury arising out of and in the course of employment and includes personal injury caused by occupational disease; but does not cover an employee except while engaged in, on, or about the premises where the employee's services require the employee's presence as a part of such that service at the time of the injury and during the hours of such that service. Where the employer regularly furnished transportation to employees to and from the place of employment such, those employees are subject to this chapter while being so transported, but shall. Personal injury does not include an injury caused by the act of a third person or fellow employee intended to injure the employee because of personal reasons, and not directed against the employee as an employee, or because of the employment.

Sec. 46. Minnesota Statutes 1994, section 176.081, subdivision 1, is amended to read:

Subdivision 1. [APPROVAL LIMITATION OF FEES.] (a) A fee for legal services of 25 percent of the first $4,000 of compensation awarded to the employee and 20 percent of the next $60,000 of compensation awarded to the employee is the maximum permissible fee and does not require approval by the commissioner, compensation judge, or any other party except as provided in paragraph (d). All fees, including fees for obtaining medical or rehabilitation benefits, must be calculated according to the formula under this subdivision, or earned in hourly fees for representation at discontinuance conferences under section 176.239, or earned in hourly fees for representation on rehabilitation or medical issues under section 176.102, 176.135, or 176.136. Attorney fees for recovery of medical or rehabilitation benefits or services shall be assessed against the employer or insurer if these fees exceed the contingent fee under this section in connection with benefits currently in dispute. The amount of the fee that the employer or insurer is liable for is the amount determined under subdivision 5, minus the contingent fee except as otherwise provided in clause (1) or (2).

(1) the contingent attorney fee for recovery of monetary benefits according to the formula in this section is presumed to be adequate to cover recovery of medical and rehabilitation benefit or services concurrently in dispute. Attorney fees for recovery of medical or rehabilitation benefits or services shall be assessed against the employer or insurer only if the attorney establishes that the contingent fee is inadequate to reasonably compensate the attorney for representing the employee in the medical or rehabilitation dispute. In cases where the contingent fee is inadequate the employer or insurer is liable for attorney fees based on the formula in this subdivision or in clause (2).

For the purposes of applying the formula, the amount of compensation awarded for obtaining disputed medical and rehabilitation benefits under sections 176.102, 176.135, and 176.136 shall be the dollar value of the medical or rehabilitation benefit awarded, where ascertainable.

(2) The maximum attorney fee for obtaining a change of doctor or qualified rehabilitation consultant, or any other disputed medical or rehabilitation benefit for which a dollar value is not reasonably ascertainable, is the amount charged in hourly fees for the representation or $500, whichever is less, to be paid by the employer or insurer.

(3) The fees for obtaining disputed medical or rehabilitation benefits are included in the $13,000 limit in paragraph (b). An attorney must concurrently file all outstanding disputed issues. An attorney is not entitled to attorney fees for representation in any issue which could reasonably have been addressed during the pendency of other issues for the same injury.

(b) All fees for legal services related to the same injury are cumulative and may not exceed $13,000, except as provided by subdivision 2. If multiple injuries are the subject of a dispute, the commissioner, compensation judge, or court of appeals shall specify the attorney fee attributable to each injury. The $13,000 limitation applies to fee awards on and after July 1, 1992.

(c) If the employer or the insurer or the defendant is given written notice of claims for legal services or disbursements, the claim shall be a lien against the amount paid or payable as compensation. Subject to the foregoing maximum amount for attorney fees, up to 25 percent of the first $4,000 of periodic compensation awarded to the employee and 20 percent of the next $60,000 of periodic compensation awarded to the employee may be withheld from the periodic payments for attorney fees or disbursements if the payor of the funds clearly indicates on the check or draft issued to the employee for payment the purpose of the withholding, the name of the attorney, the amount withheld, and the gross amount of the compensation payment before withholding. In no case shall fees be calculated on the basis of any undisputed portion of compensation awards. Allowable fees under this chapter shall be based solely upon genuinely disputed claims or portions of claims, including disputes related to the payment of rehabilitation benefits or to other aspects of a rehabilitation plan. Fees for administrative conferences under section 176.239 shall be determined on an hourly basis, according to the criteria in subdivision 5. The existence of a dispute is dependent upon a disagreement after the employer or insurer has had adequate time and information to take a position on liability. Neither the holding of a hearing nor the filing of an application for a hearing alone may determine the existence of a dispute. Except where the employee is represented by an attorney in other litigation pending at the department or at the office of administrative hearings, a fee may not be charged after June 1, 1996, for services with respect to a medical or rehabilitation issue arising under section 176.102, 176.135, or 176.136 performed before the employee has consulted with the department and the department certifies that there is a dispute and that it has tried to resolve the dispute.

(d) An attorney who is claiming legal fees for representing an employee in a workers' compensation matter shall file a statement of attorney fees with the commissioner, compensation judge before whom the matter was heard, or workers' compensation court of appeals on cases before the court. A copy of the signed retainer agreement shall also

be filed. The employee and insurer shall receive a copy of the statement. The statement shall be on a form prescribed by the commissioner, and shall report the number of hours spent on the case, and shall clearly and conspicuously state that the employee or insurer has ten calendar days to object to the attorney fees requested. If no objection is timely made by the employee or insurer, the amount requested shall be conclusively presumed reasonable providing the amount does not exceed the limitation in subdivision 1. The commissioner, compensation judge, or court of appeals shall issue an order granting the fees and the amount requested shall be awarded to the party requesting the fee.

If a timely objection is filed, or the fee is determined on an hourly basis, the commissioner, compensation judge, or court of appeals shall review the matter and make a determination based on the criteria in subdivision 5.

If no timely objection is made by an employer or insurer, reimbursement under subdivision 7 shall be made if the statement of fees requested this reimbursement.

(e) Employers and insurers may not pay attorney fees or wages for legal services of more than $13,000 per case unless the additional fees or wages are approved under subdivision 2.

(f) Each insurer and self-insured employer shall file annual statements with the commissioner detailing the total amount of legal fees and other legal costs incurred by the insurer or employer during the year. The statement shall include the amount paid for outside and in-house counsel, deposition and other witness fees, and all other costs relating to litigation.

Sec. 47. Minnesota Statutes 1994, section 176.081, subdivision 7, is amended to read:

Subd. 7. [AWARD; ADDITIONAL AMOUNT.] If the employer or insurer files a denial of liability, notice of discontinuance, or fails to make payment of compensation or medical expenses within the statutory period after notice of injury or occupational disease, or otherwise unsuccessfully resists the payment of compensation or medical expenses, or unsuccessfully disputes the payment of rehabilitation benefits or other aspects of a rehabilitation plan, and the injured person has employed an attorney at law, who successfully procures payment on behalf of the employee or who enables the resolution of a dispute with respect to a rehabilitation plan, the compensation judge, commissioner, or the workers' compensation court of appeals upon appeal, upon application, shall award to the employee against the insurer or self-insured employer or uninsured employer, in addition to the compensation benefits paid or awarded to the employee, an amount equal to 25 30 percent of that portion of the attorney's fee which has been awarded pursuant to this section that is in excess of $250.

Sec. 48. Minnesota Statutes 1994, section 176.081, subdivision 7a, is amended to read:

Subd. 7a. [SETTLEMENT OFFER.] At any time prior to one day before a matter is to be heard, a party litigating a claim made pursuant to this chapter may serve upon the adverse party a reasonable offer of settlement of the claim, with provision for costs and disbursements then accrued. If before the hearing the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance, together with the proof of service thereof, and thereupon judgment shall be entered.

If an offer by an employer or insurer is not accepted by the employee, it shall be deemed withdrawn and evidence thereof is not admissible, except in a proceeding to determine attorney's fees. Notwithstanding the provisions of subdivision 7, if the judgment finally obtained by the employee is less favorable than the offer, the employer shall not be liable for any part of the attorney's fees awarded pursuant to this section.

If an offer by an employee is not accepted by the employer or insurer, it shall be deemed withdrawn and evidence thereof is not admissible, except in a proceeding to determine attorney's fees. Notwithstanding the provisions of subdivision 7, if the judgment finally obtained by the employee is at least as favorable as the offer, the employer shall pay an additional 25 percent, over the amount provided in subdivision 7, of that portion of the attorney's fee which has been awarded pursuant to this section that is in excess of $250.

The fact that an offer is made but not accepted does not preclude a subsequent offer.

Sec. 49. Minnesota Statutes 1994, section 176.081, subdivision 9, is amended to read:

Subd. 9. [RETAINER AGREEMENT.] An attorney who is hired by an employee to provide legal services with respect to a claim for compensation made pursuant to this chapter shall prepare a retainer agreement in which the provisions of this section are specifically set out and provide a copy of this agreement to the employee. The retainer

agreement shall provide a space for the signature of the employee. A signed agreement shall raise a conclusive presumption that the employee has read and understands the statutory fee provisions. No fee shall be awarded pursuant to this section in the absence of a signed retainer agreement.

The retainer agreement shall contain a notice to the employee regarding the maximum fee allowed under this section in ten-point type, which shall read:

The maximum fee allowed by law for legal services is 25 percent of the first $4,000 of compensation awarded to the employee and 20 percent of the next $60,000 of compensation awarded to the employee subject to a cumulative maximum fee of $13,000 for fees related to the same injury.

The employee shall take notice that the employee is under no legal or moral obligation to pay any fee for legal services in excess of the foregoing maximum fee.

Sec. 50. Minnesota Statutes 1994, section 176.081, is amended by adding a subdivision to read:

Subd. 12. [SANCTIONS; FAILURE TO PREPARE, APPEAR, OR PARTICIPATE.] If a party or party's attorney fails to appear at any conference or hearing scheduled under this chapter, is substantially unprepared to participate in the conference or hearing, or fails to participate in good faith, the commissioner or compensation judge, upon motion or upon its own initiative, shall require the party or the party's attorney or both to pay the reasonable expenses including attorney fees, incurred by the other party due to the failure to appear, prepare, or participate. Attorney fees or other expenses may not be awarded if the commissioner or compensation judge finds that the noncompliance was substantially justified or that other circumstances would make the sanction unjust. The department of labor and industry, and the office of administrative hearings may by rule establish additional sanctions for failure of a party or the party's attorney to appear, prepare for, or participate in a conference or hearing.

Sec. 51. Minnesota Statutes 1994, section 176.102, subdivision 3a, is amended to read:

Subd. 3a. [DISCIPLINARY ACTIONS.] The panel has authority to discipline qualified rehabilitation consultants and vendors and may impose a penalty of up to $1,000 $3,000 per violation, payable to the special compensation fund, and may suspend or revoke certification. Complaints against registered qualified rehabilitation consultants and vendors shall be made to the commissioner who shall investigate all complaints. If the investigation indicates a violation of this chapter or rules adopted under this chapter, the commissioner may initiate a contested case proceeding under the provisions of chapter 14. In these cases, the rehabilitation review panel shall make the final decision following receipt of the report of an administrative law judge. The decision of the panel is appealable to the workers' compensation court of appeals in the manner provided by section 176.421. The panel shall continuously study rehabilitation services and delivery, develop and recommend rehabilitation rules to the commissioner, and assist the commissioner in accomplishing public education.

The commissioner may appoint alternates for one-year terms to serve as a member when a member is unavailable. The number of alternates shall not exceed one labor member, one employer or insurer member, and one member representing medicine, chiropractic, or rehabilitation.

Sec. 52. Minnesota Statutes 1994, section 176.102, subdivision 11, is amended to read:

Subd. 11. [RETRAINING; COMPENSATION.] (a) Retraining is limited to 156 weeks. An employee who has been approved for retraining may petition the commissioner or compensation judge for additional compensation not to exceed 25 percent of the compensation otherwise payable. If the commissioner or compensation judge determines that this additional compensation is warranted due to unusual or unique circumstances of the employee's retraining plan, the commissioner may award additional compensation in an amount not to exceed the employee's request. This additional compensation shall cease at any time the commissioner or compensation judge determines the special circumstances are no longer present.

(b) If the employee is not employed during a retraining plan that has been specifically approved under this section, temporary total compensation is payable for up to 90 days after the end of the retraining plan; except that, payment during the 90-day period is subject to cessation in accordance with section 176.101. If the employee is employed during the retraining plan but earning less than at the time of injury, temporary partial compensation is payable at the rate of 66-2/3 percent of the difference between the employee's weekly wage at the time of injury and the weekly

wage the employee is able to earn in the employee's partially disabled condition, subject to the maximum rate for temporary total compensation. Temporary partial compensation is not subject to the 225-week or 450-week limitations provided by section 176.101, subdivision 2, during the retraining plan, but is subject to those limitations before and after the plan.

(c) Any request for retraining shall be filed with the commissioner before 104 weeks of any combination of temporary total or temporary partial compensation have been paid. Retraining shall not be available after 104 weeks of any combination of temporary total or temporary partial compensation benefits have been paid unless the request for the retraining has been filed with the commissioner prior to the time the 104 weeks of compensation have been paid.

(d) The employer or insurer must notify the employee in writing of the 104 week limitation for filing a request for retraining with the commissioner. This notice must be given before 80 weeks of temporary total disability or temporary partial disability compensation have been paid, regardless of the number of weeks that have elapsed since the date of injury. If the notice is not given before the 80 weeks, the period of time within which to file a request for retraining is extended by the number of days the notice is late, but in no event may a request be filed later than 225 weeks after any combination of temporary total disability or temporary partial disability compensation have been paid. The commissioner may assess a penalty of $25 per day that the notice is late, up to a maximum penalty of $2,000, against an employer or insurer for failure to provide the notice. The penalty is payable to the assigned risk safety account.

Sec. 53. Minnesota Statutes 1994, section 176.103, subdivision 2, is amended to read:

Subd. 2. [SCOPE.] The commissioner shall monitor the medical and surgical treatment provided to injured employees, the services of other health care providers and shall also monitor hospital utilization as it relates to the treatment of injured employees. This monitoring shall include determinations concerning the appropriateness of the service, whether the treatment is necessary and effective, the proper cost of services, the quality of the treatment, the right of providers to receive payment under this chapter for services rendered or the right to receive payment under this chapter for future services. Insurers and self-insurers must assist the commissioner in this monitoring by reporting to the commissioner cases of suspected excessive, inappropriate, or unnecessary treatment. The commissioner shall report specific cases of suspected inappropriate, unnecessary, and excessive treatment to the medical services review board. The medical services review board shall review those cases and make a determination of whether there is inappropriate, unnecessary, or excessive treatment based on rules adopted by the commissioner in consultation with the medical services review board. The determination of the board is not subject to the contested case provisions of the administrative procedure act in chapter 14. An affected provider shall be given notice and an opportunity to be heard before the board prior to the board reporting its findings and conclusions. The board shall report its findings and conclusions to the commissioner. The findings and conclusions of the board are binding on the commissioner. The commissioner shall order a sanction if the board has concluded there was inappropriate, unnecessary, or excessive treatment. The commissioner in consultation with the medical services review board shall adopt rules defining standards of treatment including inappropriate, unnecessary, or excessive treatment and the sanctions to be imposed for inappropriate, unnecessary, or excessive treatment. The sanctions imposed may include, without limitation, a warning, a restriction on providing treatment, requiring preauthorization by the board for a plan of treatment, and suspension from receiving compensation for the provision of treatment under chapter 176. The commissioner's authority under this section also includes the authority to make determinations regarding any other activity involving the questions of utilization of medical services, and any other determination the commissioner deems necessary for the proper administration of this section, but does not include the authority to make the initial determination of primary liability, except as provided by section 176.305.

Sec. 54. Minnesota Statutes 1994, section 176.103, subdivision 3, is amended to read:

Subd. 3. [MEDICAL SERVICES REVIEW BOARD; SELECTION; POWERS.] (a) There is created a medical services review board composed of the commissioner or the commissioner's designee as an ex officio member, two persons representing chiropractic, one person representing hospital administrators, one physical therapist, and six physicians representing different specialties which the commissioner determines are the most frequently utilized by injured employees. The board shall also have one person representing employees, one person representing employers or insurers, and one person representing the general public. The members shall be appointed by the commissioner and shall be governed by section 15.0575. Terms of the board's members may be renewed. The board may appoint from its members whatever subcommittees it deems appropriate.

The commissioner may appoint alternates for one-year terms to serve as a member when a member is unavailable. The number of alternates shall not exceed one chiropractor, one physical therapist, one hospital administrator, three physicians, one employee representative, one employer or insurer representative, and one representative of the general public.

The board shall review clinical results for adequacy and recommend to the commissioner scales for disabilities and apportionment.

The board shall review and recommend to the commissioner rates for individual clinical procedures and aggregate costs. The board shall assist the commissioner in accomplishing public education.

In evaluating the clinical consequences of the services provided to an employee by a clinical health care provider, the board shall consider the following factors in the priority listed:

(1) the clinical effectiveness of the treatment;

(2) the clinical cost of the treatment; and

(3) the length of time of treatment.

The board shall advise the commissioner on the adoption of rules regarding all aspects of medical care and services provided to injured employees.

(b) The medical services review board may upon petition from the commissioner and after hearing, issue a warning, a penalty of $200 per violation, a restriction on providing treatment that requires preauthorization by the board, commissioner, or compensation judge for a plan of treatment, disqualify, or suspend a provider from receiving payment for services rendered under this chapter if a provider has violated any part of this chapter or rule adopted under this chapter, or where there has been a pattern of, or an egregious case of, inappropriate, unnecessary, or excessive treatment by a provider. The hearings are initiated by the commissioner under the contested case procedures of chapter 14. The board shall make the final decision following receipt of the recommendation of the administrative law judge. The board's decision is appealable to the workers' compensation court of appeals in the manner provided by section 176.421.

(c) The board may adopt rules of procedure. The rules may be joint rules with the rehabilitation review panel.

Sec. 55. Minnesota Statutes 1994, section 176.104, subdivision 1, is amended to read:

Subdivision 1. [DISPUTE.] If there exists a dispute regarding medical causation or whether an injury arose out of and in the course and scope of employment and an employee has been disabled for the requisite time under section 176.102, subdivision 4, is otherwise eligible for rehabilitation services under section 176.102 prior to determination of liability, the employee shall be referred by the commissioner to the department's vocational rehabilitation unit which shall provide rehabilitation consultation if appropriate. The services provided by the department's vocational rehabilitation unit and the scope and term of the rehabilitation are governed by section 176.102 and rules adopted pursuant to that section. Rehabilitation costs and services under this subdivision shall be monitored by the commissioner.

Sec. 56. Minnesota Statutes 1994, section 176.106, is amended to read:

176.106 [ADMINISTRATIVE CONFERENCE.]

Subdivision 1. [SCOPE.] All determinations by the commissioner or the commissioner's designee pursuant to section 176.102, 176.103, 176.135, or 176.136 shall be in accordance with the procedures contained in this section.

Subd. 2. [REQUEST FOR CONFERENCE.] Any party may request an administrative conference by filing a request on a form prescribed by the commissioner.

Subd. 3. [CONFERENCE.] The matter shall be scheduled for an administrative conference within 60 days after receipt of the request for a conference. Notice of the conference shall be served on all parties no later than 14 days prior to the conference, unless the commissioner determines that a conference shall not be held. The commissioner may order an administrative conference before the commissioner's designee whether or not a request for conference is filed.

The commissioner may refuse to hold an administrative conference and refer the matter for a settlement or pretrial conference or may certify the matter to the office of administrative hearings for a full hearing before a compensation judge.

Subd. 4. [APPEARANCES.] All parties shall appear either personally, by telephone, by representative, or by written submission. The commissioner commissioner's designee shall determine the issues in dispute based upon the information available at the conference.

Subd. 5. [DECISION.] A written decision shall be issued by the commissioner or an authorized representative commissioner's designee determining all issues considered at the conference or if a conference was not held, based on the written submissions. Disputed issues of fact shall be determined by a preponderance of the evidence. The decision must be issued within 30 days after the close of the conference or if no conference was held, within 60 days after receipt of the request for conference. The decision must include a statement indicating the right to request a de novo hearing before a compensation judge and how to initiate the request.

Subd. 6. [PENALTY.] At a conference, if the insurer does not provide a specific reason for nonpayment of the items in dispute, the commissioner commissioner's designee may assess a penalty of $300 payable to the assigned risk safety account, unless it is determined that the reason for the lack of specificity was the failure of the insurer, upon timely request, to receive information necessary to remedy the lack of specificity. This penalty is in addition to any penalty that may be applicable for nonpayment.

Subd. 7. [REQUEST FOR HEARING.] Any party aggrieved by the decision of the commissioner commissioner's designee may request a formal hearing by filing the request with the commissioner and serving the request on all parties no later than 30 days after the decision; provided, however, that the commissioner shall review a decision of the commissioner's designee regarding a claim for a medical benefit of $1500 or less and the commissioner's decision shall be final. The request Requests on other issues shall be referred to the office of administrative hearings for a de novo hearing before a compensation judge. Except where the only issues to be determined pursuant to this section involve liability for past treatment or services that will not affect entitlement to ongoing or future proposed treatment or services under section 176.102 or 176.135, the commissioner shall refer a timely request to the office of administrative hearings within five working days after filing of the request and the hearing at the office of administrative hearings must be held on the first date that all parties are available but not later than 60 days after the office of administrative hearings receives the matter. Following the hearing, the compensation judge must issue the decision within 30 days. The decision of the compensation judge is appealable pursuant to section 176.421.

Subd. 8. [DENIAL OF PRIMARY LIABILITY.] The commissioner does not have authority to make determinations relating to medical or rehabilitation benefits when there is a genuine dispute over whether the injury initially arose out of and in the course of employment, except as provided by section 176.305.

Subd. 9. [SUBSEQUENT CAUSATION ISSUES.] If initial liability for an injury has been admitted or established and an issue subsequently arises regarding causation between the employee's condition and the work injury, the commissioner may make the subsequent causation determination subject to de novo hearing by a compensation judge with a right to review by the court of appeals, as provided in this chapter.

Sec. 57. [176.107] [TELECONFERENCES.]

The division, department, office, or the court of appeals may, at its discretion, conduct mediation sessions, administrative conferences, settlement conferences, or hearings as provided in this chapter in person, by telephone, or by visual or audio teleconferencing methods.

Sec. 58. [176.108] [LIGHT-DUTY WORK POOLS.]

Employers may form light-duty work pools for the purpose of encouraging the return to work of injured employees. The commissioner may adopt emergency and permanent rules necessary to implement this section.

Sec. 59. Minnesota Statutes 1994, section 176.129, subdivision 9, is amended to read:

Subd. 9. [POWERS OF FUND.] In addition to powers granted to the special compensation fund by this chapter the fund may do the following:

(a) sue and be sued in its own name;

(b) intervene in or commence an action under this chapter or any other law, including, but not limited to, intervention or action as a subrogee to the division's right in a third-party action, any proceeding under this chapter in which liability of the special compensation fund is an issue, or any proceeding which may result in other liability of the fund or to protect the legal right of the fund;

(c) enter into settlements including but not limited to structured, annuity purchase agreements with appropriate parties under this chapter;. Notwithstanding any other provision of this chapter, any settlement may provide that the fund partially or totally denies liability for payment of benefits, and no determination of employer insurance status and liability under section 176.183, subdivision 2, shall be required for approval of the stipulation for a settlement;

(d) contract with another party to administer the special compensation fund;

(e) take any other action which an insurer is permitted by law to take in operating within this chapter; and

(f) conduct a financial audit of indemnity claim payments and assessments reported to the fund. This may be contracted by the fund to a private auditing firm.

Sec. 60. Minnesota Statutes 1994, section 176.129, subdivision 10, is amended to read:

Subd. 10. [PENALTY.] Sums paid to the commissioner pursuant to this section shall be in the manner prescribed by the commissioner. The commissioner may impose a penalty payable to the assigned risk safety account of up to 15 percent of the amount due under this section but not less than $500 $1,000 in the event payment is not made in the manner prescribed.

Sec. 61. Minnesota Statutes 1994, section 176.130, subdivision 9, is amended to read:

Subd. 9. [FALSE REPORTS.] Any person or entity that, for the purpose of evading payment of the assessment or avoiding the reimbursement, or any part of it, makes a false report under this section shall pay to the assigned risk safety account, in addition to the assessment, a penalty of 50 75 percent of the amount of the assessment. A person who knowingly makes or signs a false report, or who knowingly submits other false information, is guilty of a misdemeanor.

Sec. 62. Minnesota Statutes 1994, section 176.135, subdivision 1, is amended to read:

Subdivision 1. [MEDICAL, PSYCHOLOGICAL, CHIROPRACTIC, PODIATRIC, SURGICAL, HOSPITAL.] (a) The employer shall furnish any medical, psychological, chiropractic, podiatric, surgical and hospital treatment, including nursing, medicines, medical, chiropractic, podiatric, and surgical supplies, crutches and apparatus, including artificial members, or, at the option of the employee, if the employer has not filed notice as hereinafter provided, Christian Science treatment in lieu of medical treatment, chiropractic medicine and medical supplies, as may reasonably be required at the time of the injury and any time thereafter to cure and relieve from the effects of the injury. This treatment shall include treatments necessary to physical rehabilitation.

(b) The employer shall pay for the reasonable value of nursing services provided by a member of the employee's family in cases of permanent total disability.

(c) Exposure to rabies is an injury and an employer shall furnish preventative treatment to employees exposed to rabies.

(d) The employer shall furnish replacement or repair for artificial members, glasses, or spectacles, artificial eyes, podiatric orthotics, dental bridge work, dentures or artificial teeth, hearing aids, canes, crutches, or wheel chairs damaged by reason of an injury arising out of and in the course of the employment. For the purpose of this paragraph, "injury" includes damage wholly or in part to an artificial member. In case of the employer's inability or refusal seasonably to provide the items required to be provided under this paragraph, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing the same, including costs of copies of any medical records or medical reports that are in existence, obtained from health care providers, and that directly relate to the items for which payment is sought under this chapter, limited to the charges allowed by subdivision 7, and attorney fees incurred by the employee. Attorney's fees shall be determined on an hourly basis according to the criteria in section 176.081, subdivision 5.

(e) Both the commissioner and the compensation judges have authority to make determinations under this section in accordance with sections 176.106 and 176.305.

(f) An employer may require that the treatment and supplies required to be provided by an employer by this section be received in whole or in part from a managed care plan certified under section 176.1351 except as otherwise provided by that section.

Sec. 63. Minnesota Statutes 1994, section 176.1351, subdivision 1, is amended to read:

Subdivision 1. [APPLICATION.] Any person or entity, other than a workers' compensation insurer or an employer for its own employees, may make written application to the commissioner to have a plan certified that provides management of quality treatment to injured workers for injuries and diseases compensable under this chapter. Specifically, and without limitation, an entity licensed under chapter 62C or 62D or a preferred provider organization that is subject to chapter 72A is eligible for certification under this section. Each application for certification shall be accompanied by a reasonable fee prescribed by the commissioner which shall be deposited in the special compensation fund. A plan may be certified to provide services in a limited geographic area. A certificate is valid for the period the commissioner prescribes unless revoked or suspended. Application for certification shall be made in the form and manner and shall set forth information regarding the proposed plan for providing services as the commissioner may prescribe. The information shall include, but not be limited to:

(1) a list of the names of all health care providers who will provide services under the managed care plan, together with appropriate evidence of compliance with any licensing or certification requirements for those providers to practice in this state; and

(2) a description of the places and manner of providing services under the plan.

Sec. 64. Minnesota Statutes 1994, section 176.1351, subdivision 5, is amended to read:

Subd. 5. [REVOCATION, SUSPENSION, AND REFUSAL TO CERTIFY; PENALTIES AND ENFORCEMENT.] (a) The commissioner shall refuse to certify or shall revoke or suspend the certification of a managed care plan if the commissioner finds that the plan for providing medical or health care services fails to meet the requirements of this section, or service under the plan is not being provided in accordance with the terms of a certified plan.

(b) In lieu of or in addition to suspension or revocation under paragraph (a), the commissioner may, for any noncompliance with the managed care plan as certified or any violation of a statute or rule applicable to a managed care plan, assess an administrative penalty payable to the special compensation fund in an amount up to $25,000 for each violation or incidence of noncompliance. The commissioner may adopt emergency or permanent rules necessary to implement this subdivision. In determining the level of an administrative penalty, the commissioner shall consider the following factors:

(1) the number of workers affected or potentially affected by the violation or noncompliance;

(2) the effect or potential effect of the violation or noncompliance on workers' health, access to health services, or workers' compensation benefits;

(3) the effect or potential effect of the violation or noncompliance on workers' understanding of their rights and obligations under the workers' compensation law and rules;

(4) whether the violation or noncompliance is an isolated incident or part of a pattern of violations; and

(5) the potential or actual economic benefits derived by the managed care plan or a participating provider by virtue of the violation or noncompliance.

The commissioner shall give written notice to the managed care plan of the penalty assessment and the reasons for the penalty. The managed care plan has 30 days from the date the penalty notice is issued within which to file a written request for an administrative hearing and review of the commissioner's determination pursuant to section 176.85, subdivision 1.

(c) If the commissioner, for any reason, has cause to believe that a managed care plan has or may violate a statute or rule or a provision of the managed care plan as certified, the commissioner may, before commencing action under paragraph (a) or (b), call a conference with the managed care plan and other persons who may be involved in the suspected violation or noncompliance for the purpose of ascertaining the facts relating to the suspected violation or noncompliance and arriving at an adequate and effective means of correcting or preventing the violation or

noncompliance. The commissioner may enter into stipulated consent agreements with the managed care plan for corrective or preventive action or the amount of the penalty to be paid. Proceedings under this paragraph shall not be governed by any formal procedural requirements, and may be conducted in a manner the commissioner deems appropriate under the circumstances.

(d) The commissioner may issue an order directing a managed care plan or a representative of a managed care plan to cease and desist from engaging in any act or practice that is not in compliance with the managed care plan as certified, or that it is in violation of an applicable statute or rule. Within 30 days of service of the order, the managed care plan may request review of the cease and desist order by an administrative law judge pursuant to chapter 14. The decision of the administrative law judge shall include findings of fact, conclusions of law and appropriate orders, which shall be the final decision of the commissioner. In the event of noncompliance with a cease and desist order, the commissioner may institute a proceeding in district court to obtain injunctive or other appropriate relief.

(e) A managed care plan, participating health care provider, or an employer or insurer that receives services from the managed care plan, shall cooperate fully with an investigation by the commissioner. For purposes of this section, cooperation includes, but is not limited to, attending a conference called by the commissioner under paragraph (c), responding fully and promptly to any questions relating to the subject of the investigation, and providing copies of records, reports, logs, data, and other information requested by the commissioner to assist in the investigation.

(f) Any person acting on behalf of a managed care plan who violates or knowingly submits false information in any report required to be filed by a managed care plan is guilty of a misdemeanor.

Sec. 65. Minnesota Statutes 1994, section 176.136, subdivision 1a, is amended to read:

Subd. 1a. [RELATIVE VALUE FEE SCHEDULE.] The liability of an employer for services included in the medical fee schedule is limited to the maximum fee allowed by the schedule in effect on the date of the medical service, or the provider's actual fee, whichever is lower. The medical fee schedule effective on October 1, 1991, shall remain in effect until the commissioner adopts a new schedule by permanent rule. The commissioner shall adopt permanent rules regulating fees allowable for medical, chiropractic, podiatric, surgical, and other health care provider treatment or service, including those provided to hospital outpatients, by implementing a relative value fee schedule to be effective on October 1, 1993. The commissioner may adopt by reference the relative value fee schedule adopted for the federal Medicare program or a relative value fee schedule adopted by other federal or state agencies. The relative value fee schedule shall contain reasonable classifications including, but not limited to, classifications that differentiate among health care provider disciplines. The conversion factors for the original relative value fee schedule must reasonably reflect a 15 percent overall reduction from the medical fee schedule most recently in effect. The reduction need not be applied equally to all treatment or services, but must represent a gross 15 percent reduction.

After permanent rules have been adopted to implement this section, the conversion factors must be adjusted annually on October 1 by no more than the percentage change computed under section 176.645, but without the annual cap provided by that section. The commissioner shall annually give notice in the State Register of the adjusted conversion factors and may also give annual notice of any additions, deletions, or changes to the relative value units or service codes adopted by the federal Medicare program. The relative value units may be statistically adjusted in the same manner as for the original workers' compensation relative value fee schedule. This notice The notices of the adjusted conversion factors and additions, deletions, or changes to the relative value units and service codes shall be in lieu of the requirements of chapter 14.

Sec. 66. Minnesota Statutes 1994, section 176.136, subdivision 1b, is amended to read:

Subd. 1b. [LIMITATION OF LIABILITY.] (a) The liability of the employer for treatment, articles, and supplies provided to an employee while an inpatient or outpatient at a small hospital shall be the hospital's usual and customary charge, unless the charge is determined by the commissioner or a compensation judge to be unreasonably excessive. A "small hospital," for purposes of this paragraph, is a hospital which has 100 or fewer licensed beds.

(b) The liability of the employer for the treatment, articles, and supplies that are not limited by subdivision 1a or 1c or paragraph (a) shall be limited to 85 percent of the provider's usual and customary charge, or 85 percent of the prevailing charges for similar treatment, articles, and supplies furnished to an injured person when paid for by the injured person, whichever is lower. On this basis, the commissioner or compensation judge may determine the reasonable value of all treatment, services, and supplies, and the liability of the employer is limited to that amount. The commissioner may by rule establish the reasonable value of a service, article, or supply in lieu of the 85 percent limitation in this paragraph.

(c) The limitation of liability for charges provided by paragraph (b) does not apply to a nursing home that participates in the medical assistance program and whose rates are established by the commissioner of human services.

Sec. 67. Minnesota Statutes 1994, section 176.136, subdivision 2, is amended to read:

Subd. 2. [EXCESSIVE FEES.] If the employer or insurer determines that the charge for a health service or medical service is excessive, no payment in excess of the reasonable charge for that service shall be made under this chapter nor may the provider collect or attempt to collect from the injured employee or any other insurer or government amounts in excess of the amount payable under this chapter unless the commissioner, compensation judge, or court of appeals determines otherwise. In such a case, the health care provider may initiate an action under this chapter for recovery of the amounts deemed excessive by the employer or insurer, but the employer or insurer shall have the burden of proving excessiveness.

A charge for a health service or medical service is excessive if it:

(1) exceeds the maximum permissible charge pursuant to subdivision 1, 1a, 1b, or 1c;

(2) is for a service provided at a level, duration, or frequency that is excessive, based upon accepted medical standards for quality health care and accepted rehabilitation standards;

(3) is for a service that is outside the scope of practice of the particular provider or is not generally recognized within the particular profession of the provider as of therapeutic value for the specific injury or condition treated; or

(4) is otherwise deemed excessive or inappropriate pursuant to rules adopted pursuant to this chapter.

Sec. 68. Minnesota Statutes 1994, section 176.138, is amended to read:

176.138 [MEDICAL DATA; ACCESS.]

(a) Notwithstanding any other state laws related to the privacy of medical data or any private agreements to the contrary, the release in writing, by telephone discussion, or otherwise of medical data related to a current claim for compensation under this chapter to the employee, employer, or insurer who are parties to the claim, or to the department of labor and industry, shall not require prior approval of any party to the claim. This section does not preclude the release of medical data under section 175.10 or 176.231, subdivision 9. Requests for pertinent data shall be made, and the date of discussions with medical providers about medical data shall be confirmed, in writing to the person or organization that collected or currently possesses the data. Written medical data that exists at the time the request is made shall be provided by the collector or possessor within seven working days of receiving the request. Nonwritten medical data may be provided, but is not required to be provided, by the collector or possessor. In all cases of a request for the data or discussion with a medical provider about the data, except when it is the employee who is making the request, the employee shall be sent written notification of the request by the party requesting the data at the same time the request is made or a written confirmation of the discussion. This data shall be treated as private data by the party who requests or receives the data and the party receiving the data shall provide the employee or the employee's attorney with a copy of all data requested by the requester.

(b) Medical data which is not directly related to a current injury or disability shall not be released without prior authorization of the employee.

(c) The commissioner may impose a penalty of up to $200 $600 payable to the assigned risk safety account against a party who does not timely release data as required in this section. A party who does not treat this data as private pursuant to this section is guilty of a misdemeanor. This paragraph applies only to written medical data which exists at the time the request is made.

(d) Workers' compensation insurers and self-insured employers may, for the sole purpose of identifying duplicate billings submitted to more than one insurer, disclose to health insurers, including all insurers writing insurance described in section 60A.06, subdivision 1, clause (5)(a), nonprofit health service plan corporations subject to chapter 62C, health maintenance organizations subject to chapter 62D, and joint self-insurance employee health plans subject to chapter 62H, computerized information about dates, coded items, and charges for medical treatment of employees and other medical billing information submitted to them by an employee, employer, health care provider, or other insurer in connection with a current claim for compensation under this chapter, without prior approval of any party

to the claim. The data may not be used by the health insurer for any other purpose whatsoever and must be destroyed after verification that there has been no duplicative billing. Any person who is the subject of the data which is used in a manner not allowed by this section paragraph has a cause of action for actual damages and punitive damages for a minimum of $5,000.

Sec. 69. Minnesota Statutes 1994, section 176.139, subdivision 2, is amended to read:

Subd. 2. [FAILURE TO POST; PENALTY.] The commissioner may assess a penalty of $300 $500 against the employer payable to the assigned risk safety account if, after notice from the commissioner, the employer violates the posting requirement of this section.

Sec. 70. Minnesota Statutes 1994, section 176.181, subdivision 7, is amended to read:

Subd. 7. [PENALTY.] Any entity that is self-insured pursuant to subdivision 2, and that knowingly violates any provision of subdivision 2 or any rule adopted pursuant thereto is subject to a civil penalty of not more than $5,000 $10,000 for each offense.

Sec. 71. Minnesota Statutes 1994, section 176.181, subdivision 8, is amended to read:

Subd. 8. [DATA SHARING.] (a) The departments of labor and industry, economic security, human services, agriculture, transportation, and revenue are authorized to share information regarding the employment status of individuals, including but not limited to payroll and withholding and income tax information, and may use that information for purposes consistent with this section and regarding the employment or employer status of individuals, partnerships, limited liability companies, corporations, or employers, including, but not limited to, general contractors, intermediate contractors, and subcontractors. The commissioner shall request data in writing and the responding department shall respond to the request by producing the requested data within 30 days.

(b) The commissioner is authorized to inspect and to order the production of all payroll and other business records and documents of any alleged employer in order to determine the employment status of persons and compliance with this section. If any person or employer refuses to comply with such an order, the commissioner may apply to the district court of the county where the person or employer is located for an order compelling production of the documents.

Sec. 72. [176.1812] [COLLECTIVE BARGAINING AGREEMENTS.]

Subdivision 1. [REQUIREMENTS.] Upon appropriate filing, the commissioner, compensation judge, workers' compensation court of appeals, and courts shall recognize as valid and binding a provision in a collective bargaining agreement between a qualified employer or qualified groups of employers engaged in construction, construction maintenance, and related activities and the certified and exclusive representative of its employees to establish certain obligations and procedures relating to workers' compensation. For purposes of this section, "qualified employer" means any self-insured employer, any employer, through itself or any affiliate as defined in section 60D.15, subdivision 2, who is responsible for the first $100,000 or more of any claim, or a private employer developing or projecting an annual workers' compensation premium, in Minnesota, of $250,000 or more. For purposes of this section, a "qualified group of employers" means a group of private employers engaged in workers' compensation group self-insurance complying with section 79A.03, subdivision 6, which develops or projects annual workers' compensation insurance premiums of $2,000,000 or more. This agreement must be limited to, but need not include, all of the following:

(a) an alternative dispute resolution system to supplement, modify, or replace the procedural or dispute resolution provisions of this chapter. The system may include mediation, arbitration, or other dispute resolution proceedings, the results of which may be final and binding upon the parties. A system of arbitration shall provide that the decision of the arbiter is subject to review either by the workers' compensation court of appeals in the same manner as an award or order of a compensation judge or, in lieu of review by the workers' compensation court of appeals, by the office of administrative hearings, by the district court, by the Minnesota court of appeals, or by the supreme court in the same manner as the workers' compensation court of appeals and may provide that any arbiter's award disapproved by a court be referred back to the arbiter for reconsideration and possible modification;

(b) an agreed list of providers of medical treatment that may be the exclusive source of all medical and related treatment provided under this chapter which need not be certified under section 176.1351;

(c) the use of a limited list of impartial physicians to conduct independent medical examinations;

(d) the creation of a light duty, modified job, or return to work program;

(e) the use of a limited list of individuals and companies for the establishment of vocational rehabilitation or retraining programs which list is not subject to the requirements of section 176.102;

(f) the establishment of safety committees and safety procedures; or

(g) the adoption of a 24-hour health care coverage plan if a 24-hour plan pilot project is authorized by law, according to the terms and conditions authorized by that law.

Subd. 2. [FILING AND REVIEW.] A copy of the agreement and the approximate number of employees who will be covered under it must be filed with the commissioner. Within 21 days of receipt of an agreement, the commissioner shall review the agreement for compliance with this section and the benefit provisions of this chapter and notify the parties of any additional information required or any recommended modification that would bring the agreement into compliance. Upon receipt of any requested information or modification, the commissioner must notify the parties within 21 days whether the agreement is in compliance with this section and the benefit provisions of this chapter.

In order for any agreement to remain in effect, it must provide for a timely and accurate method of reporting to the commissioner necessary information regarding service cost and utilization to enable the commissioner to annually report to the legislature. The information provided to the commissioner must include aggregate data on the:

(i) person hours and payroll covered by agreements filed;

(ii) number of claims filed;

(iii) average cost per claim;

(iv) number of litigated claims, including the number of claims submitted to arbitration, the workers' compensation court of appeals, the office of administrative hearings, the district court, the Minnesota court of appeals or the supreme court;

(v) number of contested claims resolved prior to arbitration;

(vi) projected incurred costs and actual costs of claims;

(vii) employer's safety history;

(viii) number of workers participating in vocational rehabilitation; and

(ix) number of workers participating in light-duty programs.

Subd. 3. [REFUSAL TO RECOGNIZE.] A person aggrieved by the commissioner's decision concerning an agreement may request in writing, within 30 days of the date the notice is issued, the initiation of a contested case proceeding under chapter 14. The request to initiate a contested case must be received by the department by the 30th day after the commissioner's decision. An appeal from the commissioner's final decision and order may be taken to the workers' compensation court of appeals pursuant to sections 176.421 and 176.442.

Subd. 4. [VOID AGREEMENTS.] Nothing in this section shall allow any agreement that diminishes an employee's entitlement to benefits as otherwise set forth in this chapter. For the purposes of this section, the procedural rights and dispute resolution agreements under subdivision 1, clauses (a) to (g), are not agreements which diminish an employee's entitlement to benefits. Any agreement that diminishes an employee's entitlement to benefits as set forth in this chapter is null and void.

Subd. 5. [NOTICE TO INSURANCE CARRIER.] If the employer is insured under this chapter, the collective bargaining agreement provision shall not be recognized by the commissioner, compensation judge, workers' compensation court of appeals, and other courts unless the employer has given notice to the employer's insurance carrier, in the manner provided in the insurance contract, of intent to enter into an agreement with its employees as provided in this section.

Subd. 6. [PILOT PROGRAM.] The commissioner shall establish a pilot program ending December 31, 1997, in which up to ten private and up to ten public employers shall be authorized to enter into valid agreements under this section with their employees. The agreements shall be recognized and enforced as provided by this section. Employers shall participate in the pilot program through collectively bargained agreements with the certified and exclusive representatives of their employees and without regard to the dollar insurance premium limitations in subdivision 1.

Subd. 7. [RULES.] The commissioner may adopt emergency or permanent rules necessary to implement this section.

Sec. 73. Minnesota Statutes 1994, section 176.182, is amended to read:

176.182 [BUSINESS LICENSES OR PERMITS; COVERAGE REQUIRED.]

Every state or local licensing agency shall withhold the issuance or renewal of a license or permit to operate a business in Minnesota until the applicant presents acceptable evidence of compliance with the workers' compensation insurance coverage requirement of section 176.181, subdivision 2, by providing the name of the insurance company, the policy number, and dates of coverage or the permit to self-insure. The commissioner shall assess a penalty to the employer of $1,000 $2,000 payable to the assigned risk safety account, if the information is not reported or is falsely reported.

Neither the state nor any governmental subdivision of the state shall enter into any contract for the doing of any public work before receiving from all other contracting parties acceptable evidence of compliance with the workers' compensation insurance coverage requirement of section 176.181, subdivision 2.

This section shall not be construed to create any liability on the part of the state or any governmental subdivision to pay workers' compensation benefits or to indemnify the special compensation fund, an employer, or insurer who pays workers' compensation benefits.

Sec. 74. Minnesota Statutes 1994, section 176.183, subdivision 1, is amended to read:

Subdivision 1. When any employee sustains an injury arising out of and in the course of employment while in the employ of an employer, other than the state or its political subdivisions, not insured or self-insured as provided for in this chapter, the employee or the employee's dependents shall nevertheless receive benefits as provided for in this chapter from the special compensation fund. As used in subdivision 1 or 2, "employer" includes any owners or officers of a corporation who direct and control the activities of employees. In any petition for benefits under this chapter, the naming of an employer corporation not insured or self-insured as provided for in this chapter, as a defendant, shall constitute without more the naming of the owners or officers as defendants, and service of notice of proceeding under this chapter on the corporation shall constitute service upon the owners or officers. An action to recover benefits paid shall be instituted unless the commissioner determines that no recovery is possible. There shall be no payment from the special compensation fund if there is liability for the injury under the provisions of section 176.215, by an insurer or self-insurer.

Sec. 75. Minnesota Statutes 1994, section 176.183, subdivision 2, is amended to read:

Subd. 2. After a hearing on a petition for benefits and prior to issuing an order against the special compensation fund to pay compensation benefits to an employee, a compensation judge shall first make findings regarding the insurance status of the employer and its liability. The special compensation fund shall not be found liable in the absence of a finding of liability against the employer. Where the liable employer is found after the hearing to be not insured or self-insured as provided for in this chapter, the compensation judge shall assess and order the employer to pay all compensation benefits to which the employee is entitled, the amount for actual and necessary disbursements expended by the special compensation fund, and a penalty in the amount of 60 65 percent of all compensation benefits ordered to be paid. An The award issued against an employer after the hearing shall constitute a lien for government services pursuant to section 514.67 on all property of the employer and shall be subject to the provisions of the revenue recapture act in chapter 270A. The special compensation fund may enforce the terms of that award in the same manner as a district court judgment. The commissioner of labor and industry, in accordance with the terms of the order awarding compensation, shall pay compensation to the employee or the employee's dependent from the special compensation fund. The commissioner of labor and industry shall certify to the commissioner of finance and to the legislature annually the total amount of compensation paid from the special compensation fund under subdivision 1. The commissioner of finance shall upon proper certification reimburse the special compensation fund from the general fund appropriation provided for this purpose. The amount reimbursed shall be limited to the

certified amount paid under this section or the appropriation made for this purpose, whichever is the lesser amount. Compensation paid under this section which is not reimbursed by the general fund shall remain a liability of the special compensation fund and shall be financed by the percentage assessed under section 176.129.

Sec. 76. Minnesota Statutes 1994, section 176.185, subdivision 5a, is amended to read:

Subd. 5a. [PENALTY FOR IMPROPER WITHHOLDING.] An employer who violates subdivision 5 after notice from the commissioner is subject to a penalty of 200 400 percent of the amount withheld from or charged the employee. The penalty shall be imposed by the commissioner. Fifty Forty percent of this penalty is payable to the assigned risk safety account and 50 60 percent is payable to the employee.

Sec. 77. Minnesota Statutes 1994, section 176.191, subdivision 1, is amended to read:

Subdivision 1. [ORDER; EMPLOYER, INSURER, OR SPECIAL COMPENSATION FUND PAYMENT.] Where compensation benefits are payable under this chapter, and a dispute exists between two or more employers or two or more insurers or the special compensation fund as to which is liable for payment, the commissioner, compensation judge, or court of appeals upon appeal shall direct, unless action is taken under subdivision 2, that one or more of the employers or insurers or the special compensation fund make payment of the benefits pending a determination of which has liability. The special compensation fund may be ordered to make payment only if it has been made a party to the claim because the petitioner has alleged that one or more of the employers is uninsured for workers' compensation under section 176.183. A temporary order may be issued under this subdivision whether or not the employers or, insurers, or special compensation fund agree to pay under the order.

When liability has been determined, the party held liable for the benefits shall be ordered to reimburse any other party for payments which the latter has made, including interest at the rate of 12 percent a year. The claimant shall also be awarded a reasonable attorney fee, to be paid by the party held liable for the benefits.

An order directing payment of benefits pending a determination of liability may not be used as evidence before a compensation judge, the workers' compensation court of appeals, or court in which the dispute is pending.

Sec. 78. Minnesota Statutes 1994, section 176.191, is amended by adding a subdivision to read:

Subd. 1a. [EQUITABLE APPORTIONMENT.] Equitable apportionment of liability for an injury under this chapter is not allowed except that apportionment among employers and insurers is allowed in a settlement agreement filed pursuant to section 176.521, and an employer or insurer may request equitable apportionment of liability for workers' compensation benefits among employer and insurers by arbitration pursuant to subdivision 5. For purposes of this subdivision, the term "equitable apportionment of liability" shall include all attempts to obtain contribution and/or reimbursement from other employers or insurers. To the same extent limited by this subdivision, contribution and reimbursement actions based on equitable apportionment are not allowed under this chapter. If the insurers choose to arbitrate apportionment, contribution, or reimbursement issues pursuant to subdivision 5, the arbitration proceeding is for the limited purpose of apportioning liability for workers' compensation benefits payable among employers and insurers. This subdivision applies without regard to whether one or more of the injuries results from cumulative trauma or a specific injury, but does not apply to an occupational disease. In the case of an occupational disease, section 176.66 applies. In the arbitration of equitable apportionment under subdivision 5, the parties and the arbitrator must be guided by general rules of arbitrator selection and presumptive apportionment among employers and insurers that are developed and approved by the commissioner of the department of labor and industry. Apportionment against preexisting disability is allowed only for permanent partial disability as provided in section 176.101, subdivision 4a. Nothing in this subdivision shall be interpreted to repeal or in any way affect the law with respect to special compensation fund statutory liability or benefits.

Sec. 79. Minnesota Statutes 1994, section 176.191, subdivision 5, is amended to read:

Subd. 5. [ARBITRATION.] Where a dispute exists between an employer, insurer, the special compensation fund, the reopened case fund, or the workers' compensation reinsurance association, regarding apportionment of liability for benefits payable under this chapter, the dispute and the requesting party has expended over $10,000 in medical or 52 weeks worth of indemnity benefits and made the request within one year thereafter, a party may be submitted with consent of all interested parties require submission of the dispute as to apportionment of liability among employers and insurers to binding arbitration. The decision of the arbitrator shall be conclusive with respect to all issues presented except as provided in subdivisions 6 and 7 on the issue of apportionment among employers and insurers. Consent of the employee is not required for submission of a dispute to arbitration pursuant to this section and the employee is not bound by the results of the arbitration. An arbitration award shall not be admissible in any other proceeding under this chapter. Notice of the proceeding shall be given to the employee.

The employee, or any person with material information to the facts to be arbitrated, shall attend the arbitration proceeding if any party to the proceeding deems it necessary. Nothing said by an employee in connection with any arbitration proceeding may be used against the employee in any other proceeding under this chapter. Reasonable expenses of meals, lost wages, and travel of the employee or witnesses in attending shall be reimbursed on a pro rata basis. Arbitration costs shall be paid by the parties, except the employee, on a pro rata basis.

Sec. 80. Minnesota Statutes 1994, section 176.191, subdivision 8, is amended to read:

Subd. 8. [ATTORNEY FEES.] No attorney's fees shall be awarded under either section 176.081, subdivision 8, or 176.191 against any employer or insurer in connection with any arbitration proceeding unless the employee chooses to retain an attorney to represent the employee's interests during arbitration.

Sec. 81. Minnesota Statutes 1994, section 176.194, subdivision 4, is amended to read:

Subd. 4. [PENALTIES.] The penalties for violations of subdivision 3, clauses (1) through (6), are as follows:

1st through 5th violation of each paragraphwritten warning

6th through 10th violation of each paragraph$2,500 $3,000 per violation in excess of five

11th through 30th violation$5,000 per violation

11 or more violations of each paragraph$6,000 per violation in excess of ten

For violations of subdivision 3, clauses (7) and (8), the penalties are:

1st through 5th violation of each paragraph$2,500 $3,000 per violation

6th through 30th violation$5,000 per violation

6 or more violations of each paragraph$6,000 per violation in excess of five

The penalties under this section may be imposed in addition to other penalties under this chapter that might apply for the same violation. The penalties under this section are assessed by the commissioner and are payable to the assigned risk safety account. A party may object to the penalty and request a formal hearing under section 176.85. If an entity has more than 30 violations within any 12-month period, in addition to the monetary penalties provided, the commissioner may refer the matter to the commissioner of commerce with recommendation for suspension or revocation of the entity's (a) license to write workers' compensation insurance; (b) license to administer claims on behalf of a self-insured, the assigned risk plan, or the Minnesota insurance guaranty association; (c) authority to self-insure; or (d) license to adjust claims. The commissioner of commerce shall follow the procedures specified in section 176.195.

Sec. 82. Minnesota Statutes 1994, section 176.215, is amended by adding a subdivision to read:

Subd. 1a. [ENFORCEMENT OF ORDER.] If the compensation judge orders the general contractor, intermediate contractor, or subcontractor to pay compensation benefits, the award issued against the general contractor, intermediate contractor, or subcontractor constitutes a lien for government services under section 514.67 on all property of the general contractor, intermediate contractor, or subcontractor and is subject to the provisions of the revenue recapture act under chapter 270A. The special compensation fund may enforce the terms of the award in the same manner as a district court judgment.

Sec. 83. Minnesota Statutes 1994, section 176.221, subdivision 1, is amended to read:

Subdivision 1. [COMMENCEMENT OF PAYMENT.] Within 14 days of notice to or knowledge by the employer of an injury compensable under this chapter the payment of temporary total compensation shall commence. Within 14 days of notice to or knowledge by an employer of a new period of temporary total disability which is caused by an old injury compensable under this chapter, the payment of temporary total compensation shall commence; provided that the employer or insurer may file for an extension with the commissioner within this 14-day period, in which case the compensation need not commence within the 14-day period but shall commence no later than 30 days from the date of the notice to or knowledge by the employer of the new period of disability. Commencement of payment by an employer or insurer does not waive any rights to any defense the employer has on any claim or incident either with respect to the compensability of the claim under this chapter or the amount of the compensation due. Where there are multiple employers, the first employer shall pay, unless it is shown that the injury has arisen out of employment with the second or subsequent employer. Liability for compensation under this chapter may be denied by the employer or insurer by giving the employee written notice of the denial of liability. If liability is denied

for an injury which is required to be reported to the commissioner under section 176.231, subdivision 1, the denial of liability must be filed with the commissioner within 14 days after notice to or knowledge by the employer of an injury which is alleged to be compensable under this chapter. If the employer or insurer has commenced payment of compensation under this subdivision but determines within 30 60 days of notice to or knowledge by the employer of the injury that the disability is not a result of a personal injury, payment of compensation may be terminated upon the filing of a notice of denial of liability within 30 60 days of notice or knowledge. After the 30-day 60-day period, payment may be terminated only by the filing of a notice as provided under section 176.239. Upon the termination, payments made may be recovered by the employer if the commissioner or compensation judge finds that the employee's claim of work related disability was not made in good faith. A notice of denial of liability must state in detail the facts forming the basis for the denial and specific reasons explaining why the claimed injury or occupational disease was determined not to be within the scope and course of employment and shall include the name and telephone number of the person making this determination.

Sec. 84. Minnesota Statutes 1994, section 176.221, subdivision 3, is amended to read:

Subd. 3. [PENALTY.] If the employer or insurer does not begin payment of compensation within the time limit prescribed under subdivision 1 or 8, the commissioner may assess a penalty, payable to the assigned risk safety account, which shall be a percentage of the amount of compensation to which the employee is entitled to receive up to the date compensation payment is made.

The amount of penalty shall be determined as follows:

Numbers of days late Penalty

1 - 15 25 30 percent of compensation due,

not to exceed $375 $500,

16 - 30 50 55 percent of compensation due,

not to exceed $1,140 $1,500,

31 - 60 75 80 percent of compensation due,

not to exceed$2,878 $3,500,

61 or more 100 105 percent of compensation due,

not to exceed $3,838 $5,000.

The penalty under this section is in addition to any penalty otherwise provided by statute.

Sec. 85. Minnesota Statutes 1994, section 176.221, subdivision 3a, is amended to read:

Subd. 3a. [PENALTY.] In lieu of any other penalty under this section, the commissioner may assess a penalty of up to $1,000 $2,000 payable to the assigned risk safety account for each instance in which an employer or insurer does not pay benefits or file a notice of denial of liability within the time limits prescribed under this section.

Sec. 86. Minnesota Statutes 1994, section 176.221, subdivision 7, is amended to read:

Subd. 7. [INTEREST.] Any payment of compensation, charges for treatment under section 176.135, rehabilitation expenses under section 176.102, subdivision 9, or penalties assessed under this chapter not made when due shall bear interest at the rate of eight percent a year from the due date to the date the payment is made or at the rate set by section 549.09, subdivision 1, whichever is greater.

For the purposes of this subdivision, permanent partial disability payment is due 14 days after receipt of the first medical report which contains a disability rating if such payment is otherwise due under this chapter, and charges for treatment under section 176.135 are due 30 calendar days after receiving the bill and necessary medical data.

If the claim of the employee or dependent for compensation is contested in a proceeding before a compensation judge or the commissioner, the decision of the judge or commissioner shall provide for the payment of unpaid interest on all compensation awarded, including interest accruing both before and after the filing of the decision.

Sec. 87. [176.223] [PROMPT PAYMENT REPORT.]

The department shall publish an annual report providing data on the promptness of all insurers and self-insurers in making first payments on a claim for injury. The report shall identify all insurers and self-insurers and state the percentage of first payments made within 14 days from the last date worked for each of the insurers and self-insurers.

The report shall also list the total number of claims and the number of claims paid within the 14-day standard. Each report shall contain the required information for each of the last four years the report has been compiled so that a total of five years is included. The department shall make the report available to employers and shall provide a copy to each insurer and self-insurer listed in the report for the current year.

Sec. 88. Minnesota Statutes 1994, section 176.225, subdivision 1, is amended to read:

Subdivision 1. [GROUNDS.] Upon reasonable notice and hearing or opportunity to be heard, the commissioner, a compensation judge, or upon appeal, the court of appeals or the supreme court may shall award compensation, in addition to the total amount of compensation award, of up to 25 30 percent of that total amount where an employer or insurer has:

(a) instituted a proceeding or interposed a defense which does not present a real controversy but which is frivolous or for the purpose of delay; or,

(b) unreasonably or vexatiously delayed payment; or,

(c) neglected or refused to pay compensation; or,

(d) intentionally underpaid compensation; or

(e) frivolously denied a claim; or

(f) unreasonably or vexatiously discontinued compensation in violation of sections 176.238 and 176.239.

For the purpose of this section, "frivolously" means without a good faith investigation of the facts or on a basis that is clearly contrary to fact or law.

Sec. 89. Minnesota Statutes 1994, section 176.225, subdivision 5, is amended to read:

Subd. 5. [PENALTY.] Where the employer is guilty of inexcusable delay in making payments, the payments which are found to be delayed shall be increased by ten 25 percent. Withholding amounts unquestionably due because the injured employee refuses to execute a release of the employee's right to claim further benefits will be regarded as inexcusable delay in the making of compensation payments. If any sum ordered by the department to be paid is not paid when due, and no appeal of the order is made, the sum shall bear interest at the rate of 12 percent per annum. Any penalties paid pursuant to this section shall not be considered as a loss or expense item for purposes of a petition for a rate increase made pursuant to chapter 79.

Sec. 90. Minnesota Statutes 1994, section 176.231, subdivision 10, is amended to read:

Subd. 10. [FAILURE TO FILE REQUIRED REPORT, PENALTY.] If an employer, insurer, physician, chiropractor, or other health provider fails to file with the commissioner any report required by this section in the manner and within the time limitations prescribed, or otherwise fails to provide a report required by this section in the manner provided by this section, the commissioner may impose a penalty of up to $200 $500 for each failure.

The imposition of a penalty may be appealed to a compensation judge within 30 days of notice of the penalty.

Penalties collected by the state under this subdivision shall be paid into the assigned risk safety account.

Sec. 91. Minnesota Statutes 1994, section 176.238, subdivision 6, is amended to read:

Subd. 6. [EXPEDITED HEARING BEFORE A COMPENSATION JUDGE.] A hearing before a compensation judge shall be held within 30 60 calendar days after the office receives the file from the commissioner if:

(a) an objection to discontinuance has been filed under subdivision 4 within 60 calendar days after the notice of discontinuance was filed and where no administrative conference has been held;

(b) an objection to discontinuance has been filed under subdivision 4 within 60 calendar days after the commissioner's decision under this section has been issued;

(c) a petition to discontinue has been filed by the insurer in lieu of filing a notice of discontinuance; or

(d) a petition to discontinue has been filed within 60 calendar days after the commissioner's decision under this section has been issued.

If the petition or objection is filed later than the deadlines listed above, the expedited procedures in this section apply only where the employee is unemployed at the time of filing the objection and shows, to the satisfaction of the chief administrative judge, by sworn affidavit, that the failure to file the objection within the deadlines was due to some infirmity or incapacity of the employee or to circumstances beyond the employee's control. The hearing shall be limited to the issues raised by the notice or petition unless all parties agree to expanding the issues. If the issues are expanded, the time limits for hearing and issuance of a decision by the compensation judge under this subdivision shall not apply.

Once a hearing date has been set, a continuance of the hearing date will be granted only under the following circumstances:

(a) the employer has agreed, in writing, to a continuation of the payment of benefits pending the outcome of the hearing; or

(b) the employee has agreed, in a document signed by the employee, that benefits may be discontinued pending the outcome of the hearing.

Absent a clear showing of surprise at the hearing or the unexpected unavailability of a crucial witness, all evidence must be introduced at the hearing. If it is necessary to accept additional evidence or testimony after the scheduled hearing date, it must be submitted no later than 14 days following the hearing, unless the compensation judge, for good cause, determines otherwise.

The compensation judge shall issue a decision pursuant to this subdivision within 30 days following the close of the hearing record.

Sec. 92. Minnesota Statutes 1994, section 176.238, subdivision 10, is amended to read:

Subd. 10. [FINES; VIOLATION.] An employer who violates requirements set forth in this section or section 176.239 is subject to a fine of up to $500 $1,000 for each violation payable to the special compensation fund.

Sec. 93. Minnesota Statutes 1994, section 176.261, is amended to read:

176.261 [EMPLOYEE OF COMMISSIONER OF THE DEPARTMENT OF LABOR AND INDUSTRY MAY ACT FOR AND ADVISE A PARTY TO A PROCEEDING.]

When requested by an employer or an employee or an employee's dependent, the commissioner of the department of labor and industry may designate one or more of the division employees to advise that party of rights under this chapter, and as far as possible to assist in adjusting differences between the parties. The person so designated may appear in person in any proceedings under this chapter as the representative or adviser of the party. In such case, the party need not be represented by an attorney at law.

Prior to advising an employee or employer to seek assistance outside of the department, the department must refer employers and employees seeking advice or requesting assistance in resolving a dispute to an attorney or rehabilitation and medical specialist employed by the department, whichever is appropriate.

The department must make efforts to settle problems of employees and employers by contacting third parties, including attorneys, insurers, and health care providers, on behalf of employers and employees and using the department's persuasion to settle issues quickly and cooperatively. The obligation to make efforts to settle problems exists whether or not a formal claim has been filed with the department.

Sec. 94. Minnesota Statutes 1994, section 176.2615, subdivision 7, is amended to read:

Subd. 7. [DETERMINATION.] If the parties do not agree to a settlement, the settlement judge shall summarily hear and determine the issues and issue an order in accordance with section 176.305, subdivision 1a., except that there is no appeal or request for a formal de novo hearing from the order. Any determination by a settlement judge may not be considered as evidence in any other proceeding and the issues decided are not res judicata in any other proceeding shall be res judicata in subsequent proceeding concerning issues determined under this section.

Sec. 95. Minnesota Statutes 1994, section 176.275, subdivision 1, is amended to read:

Subdivision 1. [FILING.] If a document is required to be filed by this chapter or any rules adopted pursuant to authority granted by this chapter, the filing shall be completed by the receipt of the document at the division, department, office, or the court of appeals. The division, department, office, and the court of appeals shall accept any document which has been delivered to it for legal filing immediately upon its receipt, but may refuse to accept any form or document that lacks the name of the injured employee, employer, or insurer, the date of injury, or the injured employee's social security number. If the injured employee has fewer than three days of lost time from work, the party submitting the required document must attach to it, at the time of filing, a copy of the first report of injury.

A notice or other document required to be served or filed at either the department, the office, or the court of appeals which is inadvertently served or filed at the wrong one of these agencies shall be deemed to have been served or filed with the proper agency. The receiving agency shall note the date of receipt of a document and shall forward the documents to the proper agency no later than two working days following receipt.

Sec. 96. Minnesota Statutes 1994, section 176.281, is amended to read:

176.281 [ORDERS, DECISIONS, AND AWARDS; FILING; SERVICE.]

When the commissioner or compensation judge or office of administrative hearings or the workers' compensation court of appeals has rendered a final order, decision, or award, or amendment to an order, decision, or award, it shall be filed immediately with the commissioner. If the commissioner, compensation judge, office of administrative hearings, or workers' compensation court of appeals has rendered a final order, decision, or award, or amendment thereto, the commissioner or the office of administrative hearings or the workers' compensation court of appeals shall immediately serve a copy upon every party in interest, together with a notification of the date the order was filed.

On all orders, decisions, awards, and other documents, the commissioner or compensation judge or office of administrative hearings or the workers' compensation court of appeals may digitize the signatures of all officials, including judges, for the use of electronic data interchange and clerical automation. These signatures shall have the same legal authority of an original signature, provided that proper security is used to safeguard the use of the digitized signatures and each digitized signature has been certified by the division, department, office, or court of appeals before its use, in accordance with rules adopted by that agency or court.

Sec. 97. Minnesota Statutes 1994, section 176.285, is amended to read:

176.285 [SERVICE OF PAPERS AND NOTICES.]

Service of papers and notices shall be by mail or otherwise as the commissioner or the chief administrative law judge may by rule direct. Where service is by mail, service is effected at the time mailed if properly addressed and stamped. If it is so mailed, it is presumed the paper or notice reached the party to be served. However, a party may show by competent evidence that that party did not receive it or that it had been delayed in transit for an unusual or unreasonable period of time. In case of nonreceipt or delay, an allowance shall be made for the party's failure to assert a right within the prescribed time.

Where service to the division, department, office, or court of appeals is by electronic filing, digitized signatures may be used provided that the signature has been certified by the department no later than five business days after filing. The department or court may adopt rules for the certification of signatures.

When the electronic filing of a legal document with the department marks the beginning of a prescribed time for another party to assert a right, the prescribed time for another party to assert a right shall be lengthened by two calendar days when it can be shown that service to the other party was by mail.

The commissioner and the chief administrative law judge shall ensure that proof of service of all papers and notices served by their respective agencies is placed in the official file of the case.

Sec. 98. Minnesota Statutes 1994, section 176.291, is amended to read:

176.291 [DISPUTES; PETITIONS; PROCEDURE.]

Where there is a dispute as to a question of law or fact in connection with a claim for compensation, a party may serve on all other parties and file a notarized petition with the commissioner stating the matter in dispute. The petition shall be on a form prescribed by the commissioner and shall be signed by the petitioner.

The petition shall also state and include, where applicable:

(1) names and residence or business address of parties;

(2) facts relating to the employment at the time of injury, including amount of wages received;

(3) extent and character of injury;

(4) notice to or knowledge by employer of injury;

(5) copies of written medical reports or other information in support of the claim;

(6) names and addresses of all known witnesses intended to be called in support of the claim;

(7) the desired location of any hearing and estimated time needed to present evidence at the hearing;

(8) any requests for a prehearing or settlement conference;

(9) a list of all known third parties, including the departments of human services and economic security, who may have paid any medical bills or other benefits to the employee for the injuries or disease alleged in the petition or for the time the employee was unable to work due to the injuries or disease, together with a listing of the amounts paid by each;

(10) the nature and extent of the claim; and

(11) a request for an expedited hearing which must include an attached affidavit of significant financial hardship which complies with the requirements of section 176.341, subdivision 6.

Incomplete petitions may be stricken from the calendar as provided by section 176.305, subdivision 4. Within 30 days of a request by a party, an employee who has filed a claim petition pursuant to section 176.271 or this section shall furnish a list of physicians and health care providers from whom the employee has received treatment for the same or a similar condition as well as authorizations to release relevant information, data, and records to the requester. The petition may be stricken from the calendar upon motion of a party for failure to timely provide the required list of health care providers or authorizations.

Sec. 99. Minnesota Statutes 1994, section 176.305, subdivision 1a, is amended to read:

Subd. 1a. [SETTLEMENT AND PRETRIAL CONFERENCES; SUMMARY DECISION.] The commissioner shall schedule a settlement conference, if appropriate, within 60 days after receiving the petition. All parties must appear at the conference, either personally or by representative, must be prepared to discuss settlement of all issues, and must be prepared to discuss or present the information required by the joint rules of the division and the office. If a representative appears on behalf of a party, the representative must have authority to fully settle the matter.

If settlement is not reached, the presiding officer may require the parties to present copies of all documentary evidence not previously filed and a summary of the evidence they will present at a formal hearing. If appropriate, a written summary decision shall be issued within ten days after the conference stating the issues and a determination of each issue. If a party fails to appear at the conference, all issues may be determined contrary to the absent party's interest, provided the party in attendance presents a prima facie case.

The summary decision is final unless a written request for a formal hearing is served on all parties and filed with the commissioner within 30 days after the date of service and filing of the summary decision. Within ten days after receipt of the request, the commissioner shall certify the matter to the office for a de novo hearing. In proceedings under section 176.2615, the summary decision is final and not subject to appeal or de novo proceedings.

Sec. 100. Minnesota Statutes 1994, section 176.83, subdivision 5, is amended to read:

Subd. 5. [TREATMENT STANDARDS FOR MEDICAL SERVICES.] In consultation with the medical services review board or the rehabilitation review panel, the commissioner shall adopt emergency and permanent rules establishing standards and procedures for health care provider treatment. The rules shall apply uniformly to all providers including those providing managed care under section 176.1351. The rules shall be used to determine whether a

provider of health care services and rehabilitation services, including a provider of medical, chiropractic, podiatric, surgical, hospital, or other services, is performing procedures or providing services at a level or with a frequency that is excessive, unnecessary, or inappropriate under section 176.135, subdivision 1, based upon accepted medical standards for quality health care and accepted rehabilitation standards.

The rules shall include, but are not limited to, the following:

(1) criteria for diagnosis and treatment of the most common work-related injuries including, but not limited to, low back injuries and upper extremity repetitive trauma injuries;

(2) criteria for surgical procedures including, but not limited to, diagnosis, prior conservative treatment, supporting diagnostic imaging and testing, and anticipated outcome criteria;

(3) criteria for use of appliances, adoptive adaptive equipment, and use of health clubs or other exercise facilities;

(4) criteria for diagnostic imaging procedures;

(5) criteria for inpatient hospitalization; and

(6) criteria for treatment of chronic pain.

If it is determined by the payer that the level, frequency or cost of a procedure or service of a provider is excessive, unnecessary, or inappropriate according to the standards established by the rules, the provider shall not be paid for the procedure, service, or cost by an insurer, self-insurer, or group self-insurer, and the provider shall not be reimbursed or attempt to collect reimbursement for the procedure, service, or cost from any other source, including the employee, another insurer, the special compensation fund, or any government program unless the commissioner or compensation judge determines at a hearing or administrative conference that the level, frequency, or cost was not excessive under the rules in which case the insurer, self-insurer, or group self-insurer shall make the payment deemed reasonable.

A rehabilitation provider who is determined by the rehabilitation review panel board, after hearing, to be consistently performing procedures or providing services at an excessive level or cost may be prohibited from receiving any further reimbursement for procedures or services provided under this chapter. A prohibition imposed on a provider under this subdivision may be grounds for revocation or suspension of the provider's license or certificate of registration to provide health care or rehabilitation service in Minnesota by the appropriate licensing or certifying body. The commissioner and medical services review board shall review excessive, inappropriate, or unnecessary health care provider treatment under section 176.103, subdivision 2.

Sec. 101. Minnesota Statutes 1994, section 176.84, subdivision 2, is amended to read:

Subd. 2. [PENALTY.] The commissioner or compensation judge may impose a penalty of $300 $500 for each violation of subdivision 1.

Sec. 102. [182.676] [SAFETY COMMITTEES.]

Every public or private employer of more than 25 employees shall establish and administer a joint labor-management safety committee.

Every public or private employer of 25 or fewer employees shall establish and administer a safety committee if:

(1) the employer has a lost workday cases incidence rate in the top ten percent of all rates for employers in the same industry; or

(2) the workers' compensation premium classification assigned to the greatest portion of the payroll for the employer has a pure premium rate as reported by the workers' compensation rating association in the top 25 percent of premium rates for all classes.

A safety committee must hold regularly scheduled meetings unless otherwise provided in a collective bargaining agreement.

Employee safety committee members must be selected by employees. An employer that fails to establish or administer a safety committee as required by this section may be cited by the commissioner. A citation is punishable as a serious violation under section 182.666.

The commissioner may adopt emergency or permanent rules necessary to implement this section.

Sec. 103. Minnesota Statutes 1994, section 299C.46, subdivision 2, is amended to read:

Subd. 2. [CRIMINAL JUSTICE AGENCY DEFINED.] For the purposes of sections 299C.46 to 299C.49, "criminal justice agency" shall mean an agency of the state, including the fraud investigation unit of the department of labor and industry, or an agency of a political subdivision charged with detection, enforcement, prosecution, adjudication or incarceration in respect to the criminal or traffic laws of this state.

Sec. 104. Minnesota Statutes 1994, section 626.05, subdivision 2, is amended to read:

Subd. 2. [PEACE OFFICER.] The term "peace officer," as used in sections 626.04 to 626.17, means a person who is licensed as a peace officer in accordance with section 626.84, subdivision 1, and who serves as a sheriff, deputy sheriff, police officer, constable, conservation officer, agent of the bureau of criminal apprehension, agent of the division of gambling enforcement, University of Minnesota peace officer, investigator of the fraud investigation unit of the department of labor or industry with peace officer standards and training certification, or state patrol trooper as authorized by section 299D.03.

Sec. 105. Minnesota Statutes 1994, section 626.11, is amended to read:

626.11 [ISSUANCE OF WARRANT.]

If the judge is satisfied of the existence of the grounds of the application, or that there is probable cause to believe their existence, the judge must issue a signed search warrant, naming the judge's judicial office, to a peace officer in the judge's county or, to an agent of the bureau of criminal apprehension, or to an investigator of the fraud investigation unit of the department of labor and industry with peace officer standards and training certification. The warrant shall direct the officer or agent to search the person or place named for the property or things specified, and to retain the property or things in the officer's or agent's custody subject to order of the court issuing the warrant.

Sec. 106. Minnesota Statutes 1994, section 626.13, is amended to read:

626.13 [SERVICE; PERSONS MAKING.]

A search warrant may in all cases be served by any of the officers mentioned in its directions, but by no other person, except in aid of the officer on the officer's requiring it, the officer being present and acting in its execution. If the warrant is to be served by an agent of the bureau of criminal apprehension, an agent of the division of gambling enforcement, an investigator of the fraud investigation unit of the department of labor and industry with peace officer standards and training certification, a state patrol trooper, or a conservation officer, the agent, investigator, state patrol trooper, or conservation officer shall notify the chief of police of an organized full-time police department of the municipality or, if there is no such local chief of police, the sheriff or a deputy sheriff of the county in which service is to be made prior to execution.

Sec. 107. Minnesota Statutes 1994, section 626.84, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For purposes of sections 626.84 to 626.863, the following terms have the meanings given them:

(a) "Board" means the board of peace officer standards and training.

(b) "Director" means the executive director of the board.

(c) "Peace officer" means an employee or an elected or appointed official of a political subdivision or law enforcement agency who is licensed by the board, charged with the prevention and detection of crime and the enforcement of the general criminal laws of the state and who has the full power of arrest, and shall also include the Minnesota state patrol, agents of the division of gambling enforcement, investigators of the fraud investigation unit of the department of labor and industry with peace officer standards and certification training, and state conservation officers.

(d) "Constable" has the meaning assigned to it in section 367.40.

(e) "Deputy constable" has the meaning assigned to it in section 367.40.

(f) "Part-time peace officer" means an individual licensed by the board whose services are utilized by law enforcement agencies no more than an average of 20 hours per week, not including time spent on call when no call to active duty is received, calculated on an annual basis, who has either full powers of arrest or authorization to carry a firearm while on active duty. The term shall apply even though the individual receives no compensation for time spent on active duty, and shall apply irrespective of the title conferred upon the individual by any law enforcement agency. The limitation on the average number of hours in which the services of a part-time peace officer may be utilized shall not apply to a part-time peace officer who has formally notified the board pursuant to rules adopted by the board of the part-time peace officer's intention to pursue the specialized training for part-time peace officers who desire to become peace officers pursuant to sections 626.843, subdivision 1, clause (g), and 626.845, subdivision 1, clause (g).

(g) "Reserve officer" means an individual whose services are utilized by a law enforcement agency to provide supplementary assistance at special events, traffic or crowd control, and administrative or clerical assistance. A reserve officer's duties do not include enforcement of the general criminal laws of the state, and the officer does not have full powers of arrest or authorization to carry a firearm on duty.

(h) "Law enforcement agency" means a unit of state or local government that is authorized by law to grant full powers of arrest and to charge a person with the duties of preventing and detecting crime and enforcing the general criminal laws of the state.

(i) "Professional peace officer education" means a post-secondary degree program, or a nondegree program for persons who already have a college degree, that is offered by a college or university in Minnesota, designed for persons seeking licensure as a peace officer, and approved by the board.

Sec. 108. Laws 1994, chapter 625, article 5, section 7, is amended to read:

Sec. 7. [24-HOUR COVERAGE.]

As part of the implementation report submitted on January 1, 1996, as required under Minnesota Statutes, section 62Q.41, The commissioners of commerce, health, and labor and industry shall develop a 24-hour coverage plan incorporating and on a pilot project basis, coordinating the health component medical benefits of workers' compensation with health care coverage benefits to be offered by an integrated service network, health maintenance organization, or an insurer or self-insured employer under Minnesota Statutes, chapters 62A, 62C, 62D, 62H, 62N, 79, and 79A, and Minnesota Statutes, section 176.181. The commissioners shall also make provide the plan and recommendations of any legislative changes that may be needed to implement this plan, to the legislature by January 1, 1996.

Sec. 109. [SMALL BUSINESS WORKERS' COMPENSATION SAFETY PILOT PROJECT.]

The commissioner of commerce shall by January 1, 1996, contract with the division of environmental and occupational health of the school of public health of the University of Minnesota for a pilot injury prevention project. The contract shall require the department of environmental and occupational health to consult and provide assistance about ergonomic problems to small employers insured by the state assigned risk plan. The consultative and assistance services shall focus on employers having employees that can most benefit from the consultation and assistance. The contract shall be for the period January 1, 1996 to December 31, 1997. For the purpose of this section, small employer means an employer with less than 500 employees.

Sec. 110. [SMALL BUSINESS INJURY AND ILLNESS PREVENTION SURVEY.]

The division of environmental and occupational health of the school of public health of the University of Minnesota shall evaluate injury and illness prevention activities of small business by surveying small businesses to assess the following:

(1) current use of occupational safety and health services by small businesses;

(2) specific areas in which small business needs assistance;

(3) in what form is desired assistance most helpful;

(4) what services are sponsored by public and public sector programs;

(5) what measures exist to assess the effectiveness of these programs; and

(6) how can these programs be best adapted by Minnesota.

The division shall provide technical assistance and advice to small businesses as part of the survey process.

For the purpose of this section, small employer means a employer with less than 500 employees.

The survey shall be completed by January 1, 1996. The division shall report the survey results and any recommendations to the legislature and the commissioner of labor and industry by February 1, 1996.

Sec. 111. [APPROPRIATION; SURVEY.]

$150,000 is appropriated from the assigned risk safety account in the special compensation fund to the commissioner of commerce for the biennium ending June 30, 1997, for the purpose of the small business injury and illness prevention survey.

Sec. 112. [APPROPRIATION; SURVEY.]

$200,000 is appropriated for the biennium ending June 30, 1997, from the assigned risk safety account in the special compensation fund to the board of regents of the University of Minnesota for the purpose of section the small business workers' compensation safety pilot project.

Sec. 113. [APPROPRIATION.]

$960,000 is appropriated from the special compensation fund to the department of labor and industry for the biennium ending June 30, 1997, for the purposes of this act.

Sec. 114. [REPEALER.]

Minnesota Statutes 1994, sections 79.53, subdivision 2; 79.54; 79.56, subdivision 2; 79.57; 79.58; 175.007; 176.011, subdivision 26; 176.081, subdivisions 2, 5, 7, and 8; 176.103, subdivisions 2 and 21; 176.132; 176.133; 176.191, subdivision 2; and 176.232, are repealed.

Sec. 115. [EFFECTIVE DATE; TRANSITION.]

Sections 11 to 16 (79.52 to 79.60) are effective on January 1, 1995. Rates and rating plans in use as of January 1, 1995, may continue to be used until such time as an amendment thereto or a new rate or rating plan is filed, at which time such submission shall be subject to this article.

Sec. 116. [EFFECTIVE DATE.]

Sections 44 (175.16), 59 (176.129, subd. 9), and 64 (176.1351, subd. 5) are effective the day following final enactment. Sections 4 (79.085), 5 (79.211, subd. 1), 45 to 48 (176.011, subd. 16 to 176.081, subd. 7a), 58 (176.108), 80 (176.191, subd. 8), 83 to 93 (176.221, subd. 1 to 176.261), and 95 (176.275, subd. 1) are effective October 1, 1995. Sections 9 and 10 (79.34 and 79.35) are effective January 1, 1996. Section 69 (176.139, subd. 2) applies to a personal injury, as defined under Minnesota Statutes, section 176.011, subdivision 16, occurring on or after October 1, 1991. Sections 28 to 41 (79A.19 to 79A.32) are effective August 1, 1995."

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment and the roll was called. There were 78 yeas and 54 nays as follows:

Those who voted in the affirmative were:

Abrams       Erhardt      Koppendrayer Opatz        Sviggum
Anderson, B. Finseth      Kraus        Osskopp      Swenson, D.
Bertram      Frerichs     Krinkie      Ostrom       Swenson, H.
Bettermann   Girard       Larsen       Otremba      Sykora
Bishop       Goodno       Leppik       Paulsen      Tompkins
Boudreau     Haas         Lieder       Pawlenty     Tuma
Bradley      Hackbarth    Lindner      Pellow       Van Dellen
Broecker     Harder       Lynch        Pelowski     Van Engen
Commers      Holsten      Mares        Peterson     Vickerman
Cooper       Hugoson      McElroy      Rhodes       Warkentin
Daggett      Jennings     Molnau       Rostberg     Weaver
Dauner       Johnson, V.  Mulder       Schumacher   Wolf
Davids       Kalis        Ness         Seagren      Worke
Dehler       Kelso        Olson, E.    Simoneau     Workman 
Dempsey      Knight       Olson, M.    Smith        
Dorn         Knoblach     Onnen        Stanek       

Bakk         Hasskamp     Long         Murphy       Skoglund
Brown        Hausman      Lourey       Orenstein    Solberg
Carlson      Huntley      Luther       Orfield      Tomassoni
Carruthers   Jaros        Macklin      Osthoff      Trimble
Dawkins      Jefferson    Mahon        Ozment       Tunheim
Delmont      Johnson, A.  Mariani      Perlt        Wagenius
Entenza      Johnson, R.  Marko        Pugh         Wejcman
Farrell      Kahn         McCollum     Rest         Wenzel
Garcia       Kelley       McGuire      Rice         Winter
Greenfield   Kinkel       Milbert      Rukavina     Sp.Anderson,I
Greiling     Leighton     Munger       Sarna        

The Speaker called Trimble to the Chair.

Hasskamp, Peterson and Johnson, R., moved to amend the Kelso amendment, as amended by the Simoneau amendment, to H. F. No. 642, the third engrossment, as amended, as follows:

In the Simoneau amendment to the Kelso amendment on page 1, line 13, reinstate the stricken language and delete the new language

Page 1, line 14, delete everything before "Except"

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment, as amended, and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 54 yeas and 77 nays as follows:

Those who voted in the affirmative were:

Bakk         Hasskamp     Long         Olson, E.    Skoglund
Brown        Hausman      Lourey       Orenstein    Solberg
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3986

Carlson      Huntley      Luther       Osthoff      Tomassoni
Carruthers   Jaros        Mahon        Ozment       Trimble
Dawkins      Jefferson    Mariani      Perlt        Tunheim
Delmont      Johnson, A.  Marko        Peterson     Wagenius
Entenza      Johnson, R.  McCollum     Pugh         Wejcman
Farrell      Kahn         McGuire      Rest         Wenzel
Garcia       Kelley       Milbert      Rice         Winter
Greenfield   Kinkel       Munger       Rukavina     Sp.Anderson,I
Greiling     Leighton     Murphy       Sarna        

Abrams       Erhardt      Koppendrayer Opatz        Swenson, D.
Anderson, B. Finseth      Kraus        Osskopp      Swenson, H.
Bertram      Frerichs     Krinkie      Ostrom       Sykora
Bettermann   Girard       Larsen       Otremba      Tompkins
Bishop       Goodno       Leppik       Paulsen      Tuma
Boudreau     Haas         Lieder       Pawlenty     Van Dellen
Bradley      Hackbarth    Lindner      Pellow       Van Engen
Broecker     Harder       Lynch        Pelowski     Vickerman
Commers      Holsten      Macklin      Rhodes       Warkentin
Cooper       Hugoson      Mares        Rostberg     Weaver
Daggett      Jennings     McElroy      Schumacher   Wolf
Dauner       Johnson, V.  Molnau       Seagren      Worke
Davids       Kalis        Mulder       Simoneau     Workman 
Dehler       Kelso        Ness         Smith        
Dempsey      Knight       Olson, M.    Stanek       
Dorn         Knoblach     Onnen        Sviggum      

Rukavina moved to amend the Kelso amendment, as amended by the Simoneau amendment, to H. F. No. 642, the third engrossment, as amended, as follows:

In the Simoneau amendment to the Kelso amendment on page 65, line 10, reinstate the stricken language

Page 65, line 11, reinstate "wages for legal services of more than $13,000 per case"

Page 65, line 12, reinstate the stricken period

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment, as amended, and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 60 yeas and 71 nays as follows:

Those who voted in the affirmative were:

Bakk         Hasskamp     Lourey       Ostrom       Tomassoni
Brown        Hausman      Luther       Otremba      Trimble
Carlson      Huntley      Mahon        Ozment       Tunheim
Carruthers   Jaros        Mariani      Perlt        Wagenius
Cooper       Jefferson    Marko        Peterson     Wejcman
Dawkins      Jennings     McCollum     Pugh         Wenzel
Delmont      Johnson, A.  McGuire      Rest         Winter
Dorn         Johnson, R.  Milbert      Rice         Sp.Anderson,I
Entenza      Kahn         Munger       Rukavina     
Farrell      Kelley       Murphy       Sarna        
Garcia       Kinkel       Olson, E.    Skoglund     
Greenfield   Leighton     Orenstein    Smith        
Greiling     Long         Osthoff      Solberg      

Abrams       Finseth      Kraus        Opatz        Sykora
Anderson, B. Frerichs     Krinkie      Osskopp      Tompkins
Bertram      Girard       Larsen       Paulsen      Tuma
Bettermann   Goodno       Leppik       Pawlenty     Van Dellen
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3987

Bishop       Haas         Lieder       Pellow       Van Engen
Boudreau     Hackbarth    Lindner      Pelowski     Vickerman
Bradley      Harder       Lynch        Rhodes       Warkentin
Broecker     Holsten      Macklin      Rostberg     Weaver
Commers      Hugoson      Mares        Schumacher   Wolf
Daggett      Johnson, V.  McElroy      Seagren      Worke
Dauner       Kalis        Molnau       Simoneau     Workman 
Davids       Kelso        Mulder       Stanek       
Dehler       Knight       Ness         Sviggum      
Dempsey      Knoblach     Olson, M.    Swenson, D.  
Erhardt      Koppendrayer Onnen        Swenson, H.  

Tuma, Hasskamp and Bettermann moved to amend the Kelso amendment, as amended by the Simoneau amendment, to H. F. No. 642, the third engrossment, as amended, as follows:

In the Kelso amendment on page 28, line 21, delete "Section 20 is effective April 1, 1996."

Page 28, line 25, delete "1991" and insert "1995"

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment, as amended, and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 128 yeas and 3 nays as follows:

Those who voted in the affirmative were:

Abrams       Garcia       Koppendrayer Olson, E.    Solberg
Anderson, B. Girard       Kraus        Olson, M.    Stanek
Bakk         Goodno       Krinkie      Onnen        Sviggum
Bertram      Greenfield   Larsen       Opatz        Swenson, D.
Bettermann   Greiling     Leighton     Orenstein    Swenson, H.
Bishop       Haas         Leppik       Orfield      Sykora
Boudreau     Hackbarth    Lieder       Osskopp      Tomassoni
Bradley      Harder       Lindner      Ostrom       Tompkins
Broecker     Hasskamp     Long         Otremba      Trimble
Brown        Hausman      Lourey       Ozment       Tuma
Carlson      Holsten      Luther       Paulsen      Tunheim
Carruthers   Hugoson      Lynch        Pawlenty     Van Dellen
Commers      Huntley      Macklin      Pellow       Van Engen
Cooper       Jaros        Mahon        Pelowski     Vickerman
Daggett      Jefferson    Mares        Peterson     Wagenius
Dauner       Jennings     Mariani      Pugh         Warkentin
Davids       Johnson, A.  Marko        Rest         Weaver
Dehler       Johnson, R.  McCollum     Rhodes       Wejcman
Delmont      Johnson, V.  McElroy      Rostberg     Wenzel
Dempsey      Kahn         McGuire      Rukavina     Winter
Dorn         Kalis        Milbert      Sarna        Wolf
Entenza      Kelley       Molnau       Schumacher   Worke
Erhardt      Kelso        Mulder       Seagren      Workman
Farrell      Kinkel       Munger       Simoneau     Sp.Anderson,I
Finseth      Knight       Murphy       Skoglund     
Frerichs     Knoblach     Ness         Smith        

Dawkins      Perlt        Rice         

Rukavina moved to amend the Kelso amendment, as amended by the Simoneau amendment, to H. F. No. 642, the third engrossment, as amended, as follows:

In the Kelso amendment on page 8, line 32, after the period, insert "The fraud investigation unit shall spend at least 50 percent of its time investigating employers, insurers, and other providers."

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment, as amended, and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 56 yeas and 75 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Mahon        Ostrom       Tomassoni
Brown        Huntley      Mariani      Ozment       Trimble
Carlson      Jaros        Marko        Perlt        Tunheim
Carruthers   Jefferson    McCollum     Peterson     Wagenius
Dawkins      Johnson, A.  McGuire      Pugh         Wejcman
Delmont      Johnson, R.  Milbert      Rest         Wenzel
Dorn         Kahn         Munger       Rice         Winter
Entenza      Kelley       Murphy       Rukavina     Sp.Anderson,I
Farrell      Kinkel       Olson, E.    Sarna        
Garcia       Long         Orenstein    Skoglund     
Greenfield   Lourey       Orfield      Smith        
Hasskamp     Luther       Osthoff      Solberg      

Abrams       Erhardt      Knight       Ness         Stanek
Anderson, B. Finseth      Knoblach     Olson, M.    Sviggum
Bertram      Frerichs     Koppendrayer Onnen        Swenson, D.
Bettermann   Girard       Kraus        Opatz        Swenson, H.
Bishop       Goodno       Krinkie      Osskopp      Sykora
Boudreau     Greiling     Larsen       Otremba      Tompkins
Bradley      Haas         Leppik       Paulsen      Tuma
Broecker     Hackbarth    Lieder       Pawlenty     Van Dellen
Commers      Harder       Lindner      Pellow       Van Engen
Cooper       Holsten      Lynch        Pelowski     Vickerman
Daggett      Hugoson      Macklin      Rhodes       Warkentin
Dauner       Jennings     Mares        Rostberg     Weaver
Davids       Johnson, V.  McElroy      Schumacher   Wolf
Dehler       Kalis        Molnau       Seagren      Worke
Dempsey      Kelso        Mulder       Simoneau     Workman 

Farrell moved to amend the Kelso amendment, as amended by the Simoneau amendment, to H. F. No. 642, the third engrossment, as amended, as follows:

In the Kelso amendment on page 21, after line 26, insert:

"Sec. 25. Minnesota Statutes 1994, section 176.136, subdivision 1a, is amended to read:

Subd. 1a. [MEDICARE OR RELATIVE VALUE FEE SCHEDULE.] (a) The liability of an employer for services included in the medical fee schedule is limited to the maximum fee allowed by the schedule in effect on the date of the medical service, or the provider's actual fee, whichever is lower. The medical fee schedule effective on October 1, 1991, shall remain in effect until the commissioner adopts a new schedule by permanent rule. The commissioner shall adopt permanent rules regulating fees allowable for medical, chiropractic, podiatric, surgical, and other health care provider treatment or service, including those provided to hospital outpatients, by implementing a relative value fee schedule to be effective on October 1, 1993. The commissioner may adopt by reference the relative value fee schedule adopted for the federal Medicare program or a relative value fee schedule adopted by other federal or state agencies. The relative value fee schedule shall contain reasonable classifications including, but not limited to, classifications that differentiate among health care provider disciplines. The conversion factors for the original relative value fee schedule must reasonably reflect a 15 percent overall reduction from the medical fee schedule most recently in effect. The reduction need not be applied equally to all treatment or services, but must represent a gross 15 percent reduction.

(b) After permanent rules have been adopted to implement this section, the conversion factors must be adjusted annually on October 1 by no more than the percentage change computed under section 176.645, but without the annual cap provided by that section. The commissioner shall annually give notice in the State Register of the adjusted conversion factors. This notice shall be in lieu of the requirements of chapter 14.

(c) For treatment provided on or after October 1, 1995, the maximum allowable fee is the lesser of the amount allowed under the Medicare relative value fee schedule plus ten percent or the amount under paragraphs (a) and (b) of this subdivision."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment, as amended, and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 53 yeas and 79 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Orenstein    Skoglund
Brown        Huntley      Luther       Orfield      Solberg
Carlson      Jaros        Mahon        Osthoff      Tomassoni
Dawkins      Jefferson    Mariani      Ostrom       Trimble
Delmont      Johnson, A.  Marko        Ozment       Wagenius
Entenza      Johnson, R.  McCollum     Perlt        Wejcman
Farrell      Kahn         McGuire      Pugh         Wenzel
Garcia       Kelley       Milbert      Rest         Winter
Greenfield   Kinkel       Munger       Rice         Sp.Anderson,I
Greiling     Leighton     Murphy       Rukavina     
Hasskamp     Long         Olson, E.    Sarna        

Abrams       Dorn         Knoblach     Onnen        Sviggum
Anderson, B. Erhardt      Koppendrayer Opatz        Swenson, D.
Bertram      Finseth      Kraus        Osskopp      Swenson, H.
Bettermann   Frerichs     Krinkie      Otremba      Sykora
Bishop       Girard       Larsen       Paulsen      Tompkins
Boudreau     Goodno       Leppik       Pawlenty     Tuma
Bradley      Haas         Lieder       Pellow       Tunheim
Broecker     Hackbarth    Lindner      Pelowski     Van Dellen
Carruthers   Harder       Lynch        Peterson     Van Engen
Commers      Holsten      Macklin      Rhodes       Vickerman
Cooper       Hugoson      Mares        Rostberg     Warkentin
Daggett      Jennings     McElroy      Schumacher   Weaver
Dauner       Johnson, V.  Molnau       Seagren      Wolf
Davids       Kalis        Mulder       Simoneau     Worke
Dehler       Kelso        Ness         Smith        Workman 
Dempsey      Knight       Olson, M.    Stanek       

Farrell moved to amend the Kelso amendment, as amended by the Simoneau amendment, to H. F. No. 642, the third engrossment, as amended, as follows:

In the Kelso amendment on page 4, after line 2, insert:

"Sec. 5. [79.532] [PREMIUM REDUCTIONS.] An insurer that reduces workers' compensation base premiums as a result of this act shall distribute at least 50 percent of the reduction to employers paying base premiums in excess of ten percent of payroll in calendar year 1994. For purposes of this section insurer includes the assigned risk plan."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the amendment to the amendment, as amended, and the roll was called. There were 57 yeas and 75 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Orfield      Solberg
Brown        Huntley      Luther       Osthoff      Tomassoni
Carlson      Jaros        Mahon        Ostrom       Trimble
Carruthers   Jefferson    Mariani      Ozment       Tunheim
Dawkins      Jennings     Marko        Perlt        Wagenius
Delmont      Johnson, A.  McCollum     Peterson     Wejcman
Dorn         Johnson, R.  McGuire      Pugh         Wenzel
Entenza      Kahn         Milbert      Rest         Winter
Farrell      Kinkel       Munger       Rice         Sp.Anderson,I
Garcia       Leighton     Murphy       Rukavina     
Greenfield   Lieder       Olson, E.    Sarna        
Hasskamp     Long         Orenstein    Skoglund     

Abrams       Erhardt      Knight       Olson, M.    Stanek
Anderson, B. Finseth      Knoblach     Onnen        Sviggum
Bertram      Frerichs     Koppendrayer Opatz        Swenson, D.
Bettermann   Girard       Kraus        Osskopp      Swenson, H.
Bishop       Goodno       Krinkie      Otremba      Sykora
Boudreau     Greiling     Larsen       Paulsen      Tompkins
Bradley      Haas         Leppik       Pawlenty     Tuma
Broecker     Hackbarth    Lindner      Pellow       Van Dellen
Commers      Harder       Lynch        Pelowski     Van Engen
Cooper       Holsten      Macklin      Rhodes       Vickerman
Daggett      Hugoson      Mares        Rostberg     Warkentin
Dauner       Johnson, V.  McElroy      Schumacher   Weaver
Davids       Kalis        Molnau       Seagren      Wolf
Dehler       Kelley       Mulder       Simoneau     Worke
Dempsey      Kelso        Ness         Smith        Workman 

The question recurred on the Kelso amendment, as amended, and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 80 yeas and 52 nays as follows:

Those who voted in the affirmative were:

Abrams       Erhardt      Koppendrayer Onnen        Stanek
Anderson, B. Finseth      Kraus        Opatz        Sviggum
Bertram      Frerichs     Krinkie      Osskopp      Swenson, D.
Bettermann   Girard       Larsen       Ostrom       Swenson, H.
Bishop       Goodno       Leppik       Otremba      Sykora
Boudreau     Haas         Lieder       Paulsen      Tompkins
Bradley      Hackbarth    Lindner      Pawlenty     Tuma
Broecker     Harder       Lynch        Pellow       Tunheim
Commers      Holsten      Macklin      Pelowski     Van Dellen
Cooper       Hugoson      Mares        Peterson     Van Engen
Daggett      Jennings     McElroy      Rhodes       Vickerman
Dauner       Johnson, V.  Molnau       Rostberg     Warkentin
Davids       Kalis        Mulder       Schumacher   Weaver
Dehler       Kelso        Ness         Seagren      Wolf
Dempsey      Knight       Olson, E.    Simoneau     Worke
Dorn         Knoblach     Olson, M.    Smith        Workman 

Bakk         Hasskamp     Long         Orenstein    Solberg
Brown        Hausman      Lourey       Orfield      Tomassoni
Carlson      Huntley      Luther       Osthoff      Trimble
Carruthers   Jaros        Mahon        Ozment       Wagenius
Dawkins      Jefferson    Mariani      Perlt        Wejcman
Delmont      Johnson, A.  Marko        Pugh         Wenzel
Entenza      Johnson, R.  McCollum     Rest         Winter
Farrell      Kahn         McGuire      Rice         Sp.Anderson,I
Garcia       Kelley       Milbert      Rukavina     
Greenfield   Kinkel       Munger       Sarna        
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3991

Greiling     Leighton     Murphy       Skoglund     

Perlt moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 11, after line 34, insert:

"Sec. 16. [176.043] [INDEPENDENT CONTRACTORS.]

Subdivision 1. [GENERAL RULE; ARE EMPLOYEES.] Except as provided in subdivision 2, every independent contractor doing commercial or residential building construction or improvements in the public or private sector is, for the purpose of this chapter, an employee of any employer under this chapter for whom the independent contractor is performing service in the course of the trade, business, profession, or occupation of that employer at the time of the injury.

Subd. 2. [EXCEPTION.] An independent contractor is not an employee of an employer for whom the independent contractor performs work or services if the independent contractor meets all of the following conditions:

(1) maintains a separate business with the independent contractor's own office, equipment, materials, and other facilities;

(2) holds or has applied for a federal employer identification number;

(3) operates under contracts to perform specific services or work for specific amounts of money and under which the independent contractor controls the means of performing the services or work;

(4) incurs the main expenses related to the service or work that the independent contractor performs under contract;

(5) is responsible for the satisfactory completion of work or services that the independent contractor contracts to perform and is liable for a failure to complete the work or service;

(6) receives compensation for work or service performed under a contract on a commission or per-job or competitive bid basis and not on any other basis;

(7) may realize a profit or suffer a loss under contracts to perform work or service;

(8) has continuing or recurring business liabilities or obligations; and

(9) the success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Perlt amendment and the roll was called. There were 57 yeas and 75 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Orfield      Solberg
Brown        Huntley      Luther       Osthoff      Tomassoni
Carlson      Jaros        Mahon        Ozment       Trimble
Carruthers   Jefferson    Mariani      Perlt        Tunheim
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3992

Dawkins      Jennings     Marko        Peterson     Wagenius
Delmont      Johnson, A.  McCollum     Pugh         Wejcman
Dorn         Johnson, R.  McGuire      Rest         Wenzel
Entenza      Kahn         Milbert      Rice         Winter
Farrell      Kelley       Munger       Rukavina     Sp.Anderson,I
Garcia       Leighton     Murphy       Sarna        
Greenfield   Lieder       Olson, E.    Skoglund     
Greiling     Long         Orenstein    Smith        

Abrams       Erhardt      Knight       Olson, M.    Stanek
Anderson, B. Finseth      Knoblach     Onnen        Sviggum
Bertram      Frerichs     Koppendrayer Opatz        Swenson, D.
Bettermann   Girard       Kraus        Osskopp      Swenson, H.
Bishop       Goodno       Krinkie      Ostrom       Sykora
Boudreau     Haas         Larsen       Otremba      Tompkins
Bradley      Hackbarth    Leppik       Paulsen      Tuma
Broecker     Harder       Lindner      Pawlenty     Van Dellen
Commers      Hasskamp     Lynch        Pellow       Van Engen
Cooper       Holsten      Macklin      Pelowski     Vickerman
Daggett      Hugoson      Mares        Rhodes       Warkentin
Dauner       Johnson, V.  McElroy      Rostberg     Weaver
Davids       Kalis        Molnau       Schumacher   Wolf
Dehler       Kelso        Mulder       Seagren      Worke
Dempsey      Kinkel       Ness         Simoneau     Workman 

The Speaker resumed the Chair.

Marko moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 5, after line 17, insert:

"No rating plan increases may be filed between May 1, 1995 and January 1, 1997. Any rating plan increase filed after May 1, 1995 and before the day following final enactment is unenforceable. After December 31, 1996, no rating plan increase may exceed the annual percentage increase in the consumer price index for urban consumers, as prepared by the United States bureau of labor statistics for the year prior to the date the request for an increase is filed."

The motion did not prevail and the amendment was not adopted.

Pugh; Johnson, R., and Entenza moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 21, after line 26, insert:

"Sec. 25. Minnesota Statutes 1994, section 176.136, subdivision 1a, is amended to read:

Subd. 1a. [RELATIVE VALUE FEE SCHEDULE.] The liability of an employer for services included in the medical fee schedule is limited to the maximum fee allowed by the schedule in effect on the date of the medical service, or the provider's actual fee, whichever is lower. The medical fee schedule effective on October 1, 1991, shall remain in effect until the commissioner adopts a new schedule by permanent rule. The commissioner shall adopt permanent rules regulating fees allowable for medical, chiropractic, podiatric, surgical, and other health care provider treatment or service, including those provided to hospital outpatients, by implementing a relative value fee schedule to be effective on October 1, 1993. The commissioner may adopt by reference the relative value fee schedule adopted for the federal Medicare program or a relative value fee schedule adopted by other federal or state agencies. The relative value fee schedule shall contain reasonable classifications including, but not limited to, classifications that differentiate among health care provider disciplines. The conversion factors for the original relative value fee schedule must reasonably reflect a 15 percent overall reduction from the medical fee schedule most recently in effect. The reduction need not be applied equally to all treatment or services, but must represent a gross 15 percent reduction.

After permanent rules have been adopted to implement this section, the conversion factors must be adjusted annually on October 1 by no more than the percentage change computed under section 176.645, but without the annual cap provided by that section. The commissioner shall annually give notice in the State Register of the adjusted conversion factors. This notice shall be in lieu of the requirements of chapter 14."

Page 23, delete lines 18 to 36

Page 24, delete lines 1 to 16 and insert:

"Subdivision 1. [AMOUNT.] For injuries occurring after October 1, 1975 for which benefits are payable under section 176.101, subdivisions 1, 2 and 4, and section 176.111, subdivision 5, the total benefits due the employee or any dependents shall be adjusted in accordance with this section. On October 1, 1981, and thereafter on the anniversary of the date of the employee's injury the total benefits due shall be adjusted by multiplying the total benefits due prior to each adjustment by a fraction, the denominator of which is the statewide average weekly wage for December 31, of the year two years previous to the adjustment and the numerator of which is the statewide average weekly wage for December 31, of the year previous to the adjustment. For injuries occurring after October 1, 1975, all adjustments provided for in this section shall be included in computing any benefit due under this section. Any limitations of amounts due for daily or weekly compensation under this chapter shall not apply to adjustments made under this section. No adjustment increase made on or after October 1, 1977, but prior to October 1, 1992, under this section shall exceed six percent a year; in those instances where the adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be six percent. No adjustment increase made on or after October 1, 1992, under this section shall exceed four percent a year; in those instances where the adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be four percent. For injuries occurring on or after October 1, 1995, the adjustment made under this section shall be the annual adjustment in the consumer price index for urban consumers, as prepared by the United States bureau of labor statistics."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Pugh et al amendment and the roll was called. There were 58 yeas and 74 nays as follows:

Those who voted in the affirmative were:

Bakk         Hasskamp     Lourey       Orfield      Solberg
Brown        Hausman      Luther       Osthoff      Tomassoni
Carlson      Huntley      Mahon        Ostrom       Trimble
Carruthers   Jaros        Mariani      Ozment       Tuma
Dawkins      Jefferson    Marko        Perlt        Tunheim
Delmont      Johnson, A.  McCollum     Pugh         Wagenius
Dorn         Johnson, R.  McGuire      Rest         Wejcman
Entenza      Kahn         Milbert      Rice         Wenzel
Farrell      Kelley       Munger       Rukavina     Winter
Garcia       Kinkel       Murphy       Sarna        Sp.Anderson,I
Greenfield   Leighton     Olson, E.    Skoglund     
Greiling     Long         Orenstein    Smith        

Abrams       Erhardt      Knoblach     Olson, M.    Stanek
Anderson, B. Finseth      Koppendrayer Onnen        Sviggum
Bertram      Frerichs     Kraus        Opatz        Swenson, D.
Bettermann   Girard       Krinkie      Osskopp      Swenson, H.
Bishop       Goodno       Larsen       Otremba      Sykora
Boudreau     Haas         Leppik       Paulsen      Tompkins
Bradley      Hackbarth    Lieder       Pawlenty     Van Dellen
Broecker     Harder       Lindner      Pellow       Van Engen
Commers      Holsten      Lynch        Pelowski     Vickerman
Cooper       Hugoson      Macklin      Peterson     Warkentin
Daggett      Jennings     Mares        Rhodes       Weaver
Dauner       Johnson, V.  McElroy      Rostberg     Wolf
Davids       Kalis        Molnau       Schumacher   Worke
Dehler       Kelso        Mulder       Seagren      Workman 
Dempsey      Knight       Ness         Simoneau     

Murphy moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 23, after line 14, insert:

"Sec. 28. Minnesota Statutes 1994, section 176.225, is amended by adding a subdivision to read:

Subd. 6. [VIOLATIONS OF SAFETY PROVISIONS; PENALTY.] If injury is caused by the failure of the employer to comply with any statute or any lawful order of the department, compensation and death benefits provided in this chapter shall be increased 15 percent but the total increase may not exceed $15,000. Failure of an employer reasonably to enforce compliance by employees with that statute or order of the department constitutes failure by the employer to comply with that statute or order."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Murphy amendment and the roll was called. There were 55 yeas and 77 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Orfield      Tomassoni
Brown        Huntley      Luther       Osthoff      Trimble
Carlson      Jaros        Mahon        Perlt        Tunheim
Carruthers   Jefferson    Mariani      Peterson     Wejcman
Cooper       Jennings     Marko        Pugh         Wenzel
Dawkins      Johnson, A.  McCollum     Rest         Winter
Delmont      Johnson, R.  McGuire      Rice         Sp.Anderson,I
Entenza      Kahn         Milbert      Rukavina     
Farrell      Kelley       Munger       Sarna        
Garcia       Kinkel       Murphy       Skoglund     
Greenfield   Leighton     Olson, E.    Smith        
Hasskamp     Long         Orenstein    Solberg      

Abrams       Finseth      Kraus        Osskopp      Swenson, H.
Anderson, B. Frerichs     Krinkie      Ostrom       Sykora
Bertram      Girard       Larsen       Otremba      Tompkins
Bettermann   Goodno       Leppik       Ozment       Tuma
Bishop       Greiling     Lieder       Paulsen      Van Dellen
Boudreau     Haas         Lindner      Pawlenty     Van Engen
Bradley      Hackbarth    Lynch        Pellow       Vickerman
Broecker     Harder       Macklin      Pelowski     Wagenius
Commers      Holsten      Mares        Rhodes       Warkentin
Daggett      Hugoson      McElroy      Rostberg     Weaver
Dauner       Johnson, V.  Molnau       Schumacher   Wolf
Davids       Kalis        Mulder       Seagren      Worke
Dehler       Kelso        Ness         Simoneau     Workman 
Dempsey      Knight       Olson, M.    Stanek       
Dorn         Knoblach     Onnen        Sviggum      
Erhardt      Koppendrayer Opatz        Swenson, D.  

Rukavina; Jaros; Lourey; Jefferson; Entenza; Ozment; Winter; Farrell; Bakk; Mahon; Dawkins; Marko; McCollum; Rest; Johnson, R.; Murphy; Mariani; Tuma; Hausman; Trimble; Pugh; Rice; Sarna; Kinkel; Wejcman; Hasskamp; Knight; Garcia and Tomassoni moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 23, after line 10, insert:

"(g) The workers' compensation law changes in this act will result in savings to insurers. Therefore, every employer shall receive a 20 percent premium reduction from the premiums paid in 1994.

An insurer may not adjust its filed rating plan, nor may it reassign an insured to a different risk classification to recoup any part of any mandated premium reduction under this section. For purposes of this section, "insurer" includes the assigned risk plan. The reduction mandated by this section must also be applied to all workers' compensation policies purchased after October 1, 1995. An insurer shall provide a written notice by August 1, 1995, to all workers' compensation policyholders having an unexpired policy with the insurer as of July 1, 1995, that reads as follows: "As a result of the changes in the workers' compensation system enacted by the 1995 legislature, you are entitled to a reduction of 20 percent on your policy premium from 1994 premiums for all policies purchased from October 1, 1995, to October 1, 1998."

(h) No premium increases are permitted between October 1, 1995, and October 1, 1998."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Rukavina et al amendment and the roll was called. There were 62 yeas and 70 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Osskopp      Solberg
Brown        Huntley      Luther       Osthoff      Tomassoni
Carlson      Jaros        Mahon        Ostrom       Trimble
Carruthers   Jefferson    Mariani      Ozment       Tuma
Dawkins      Johnson, A.  Marko        Perlt        Tunheim
Delmont      Johnson, R.  McCollum     Peterson     Wagenius
Dorn         Kahn         McGuire      Pugh         Wejcman
Entenza      Kelley       Milbert      Rest         Wenzel
Farrell      Kinkel       Munger       Rice         Winter
Garcia       Knight       Murphy       Rukavina     Sp.Anderson,I
Greenfield   Leighton     Olson, E.    Sarna        
Greiling     Lieder       Orenstein    Skoglund     
Hasskamp     Long         Orfield      Smith        

Abrams       Dempsey      Kelso        Ness         Stanek
Anderson, B. Erhardt      Knoblach     Olson, M.    Sviggum
Bertram      Finseth      Koppendrayer Onnen        Swenson, D.
Bettermann   Frerichs     Kraus        Opatz        Swenson, H.
Bishop       Girard       Krinkie      Otremba      Sykora
Boudreau     Goodno       Larsen       Paulsen      Tompkins
Bradley      Haas         Leppik       Pawlenty     Van Dellen
Broecker     Hackbarth    Lindner      Pellow       Van Engen
Commers      Harder       Lynch        Pelowski     Vickerman
Cooper       Holsten      Macklin      Rhodes       Warkentin
Daggett      Hugoson      Mares        Rostberg     Weaver
Dauner       Jennings     McElroy      Schumacher   Wolf
Davids       Johnson, V.  Molnau       Seagren      Worke
Dehler       Kalis        Mulder       Simoneau     Workman 

Carruthers moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 8, after line 9, insert:

"Subd. 4. [RATE FREEZE.] No rating plan increases may be filed between May 1, 1995 and October 1, 1996. Any rating plan increase filed after May 1, 1995 and before the day following final enactment is unenforceable. After September 30, 1996, no rating plan increase may exceed the annual percentage increase in the consumer price index for urban consumers, as prepared by the United States bureau of labor statistics for the year prior to the date the request for an increase is filed."

A roll call was requested and properly seconded.

The question was taken on the Carruthers amendment and the roll was called. There were 63 yeas and 69 nays as follows:

Those who voted in the affirmative were:

Bakk         Hasskamp     Lourey       Osthoff      Smith
Bishop       Hausman      Luther       Ostrom       Solberg
Brown        Huntley      Mahon        Ozment       Tomassoni
Carlson      Jaros        Mariani      Pelowski     Trimble
Carruthers   Jefferson    Marko        Perlt        Tuma
Dawkins      Jennings     McCollum     Peterson     Tunheim
Delmont      Johnson, A.  McGuire      Pugh         Wagenius
Dorn         Johnson, R.  Milbert      Rest         Wejcman
Entenza      Kahn         Munger       Rice         Wenzel
Farrell      Kelley       Murphy       Rukavina     Winter
Garcia       Kinkel       Olson, E.    Sarna        Sp.Anderson,I
Greenfield   Leighton     Orenstein    Schumacher   
Greiling     Long         Orfield      Skoglund     

Abrams       Erhardt      Knoblach     Ness         Sviggum
Anderson, B. Finseth      Koppendrayer Olson, M.    Swenson, D.
Bertram      Frerichs     Kraus        Onnen        Swenson, H.
Bettermann   Girard       Krinkie      Opatz        Sykora
Boudreau     Goodno       Larsen       Osskopp      Tompkins
Bradley      Haas         Leppik       Otremba      Van Dellen
Broecker     Hackbarth    Lieder       Paulsen      Van Engen
Commers      Harder       Lindner      Pawlenty     Vickerman
Cooper       Holsten      Lynch        Pellow       Warkentin
Daggett      Hugoson      Macklin      Rhodes       Weaver
Dauner       Johnson, V.  Mares        Rostberg     Wolf
Davids       Kalis        McElroy      Seagren      Worke
Dehler       Kelso        Molnau       Simoneau     Workman 
Dempsey      Knight       Mulder       Stanek       

Johnson, R., moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 1, after line 3, insert "ARTICLE 1"

Page 28, after line 25, insert:

Section 1. Minnesota Statutes 1994, section 176.021, subdivision 7, is amended to read:

Subd. 7. [PUBLIC OFFICER.] If an employee who is a public officer of the state or governmental subdivision continues to receive the compensation of office during a period when receiving benefits under the workers' compensation law for temporary total or temporary partial disability or permanent total disability and the compensation of office exceeds $100 a year, the amount of that compensation attributable to the period for which benefits under the workers' compensation law are paid shall must be deducted from such benefits. If an employee covered by the Minnesota state retirement system receives total and permanent disability benefits pursuant to section 352.113 or disability benefits pursuant to under sections 352.95, and 352B.10, 353.33, 353.656, 353C.08, or 422A.18, the amount of disability benefits shall be deducted from workers' compensation benefits otherwise payable. If an employee covered by the teachers retirement fund or a teachers retirement fund in a city of the first class receives total and permanent disability benefits pursuant to section under sections 354.48, 354A.36, or under the respective association articles and bylaws the amount of disability benefits must be deducted from workers' compensation benefits otherwise payable. Notwithstanding the provisions of section 176.132, a deduction under this subdivision does not entitle an employee to supplemental benefits under section 176.132.

Sec. 2. Minnesota Statutes 1994, section 353.33, subdivision 5, is amended to read:

Subd. 5. [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] Disability benefits paid shall be coordinated with any amounts received or receivable under workers' compensation law, such as temporary total, permanent total, temporary partial, permanent partial, or economic recovery compensation benefits, in either periodic

or lump sum payments from the employer under applicable workers' compensation laws, after deduction of amount of attorney fees, authorized under applicable workers' compensation laws, paid by a disabilitant. If the total of the single life annuity actuarial equivalent disability benefit and the workers' compensation benefit exceeds: (1) the salary the disabled member received as of the date of the disability or (2) the salary currently payable for the same employment position or an employment position substantially similar to the one the person held as of the date of the disability, whichever is greater, the disability benefit must be reduced to that amount which, when added to the workers' compensation benefits, does not exceed the greater of the salaries described in clauses (1) and (2). Disability benefits must not be reduced by any periodic or lump sum amounts received or receivable under workers' compensation laws. A disabilitant who is eligible to receive a disability benefit after June 30, 1995 whose disability benefit amount was reduced prior to July 1, 1995, as a result of the receipt of workers' compensation benefits, must have the disability benefit payment amount restored, as of July 1, 1995, and calculated under subdivision 3. A disabilitant is not entitled to retroactive payment of the reduction amounts applied to disability benefits before July 1, 1995, because of receipt of workers' compensation benefits.

A disability benefit overpayment made before July 1, 1995, because a reduction had not been made for receipt of workers' compensation benefits, must be collected by the association. The overpaid amounts may be obtained through the reduction by the association of disability benefits or annuity payments made after June 30, 1995, until the overpayment is fully recovered.

Sec. 3. Minnesota Statutes 1994, section 353.33, subdivision 7, is amended to read:

Subd. 7. [PARTIAL REEMPLOYMENT.] If, following a work or non-work-related injury or illness, A disabled person resumes a gainful occupation from which earnings are less than the salary at the date of disability or the salary currently paid for similar positions, at the date of disability increased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, the board shall continue the disability benefit in an amount that, when the normal disability is added to the earnings and workers' compensation benefit, does not exceed the salary at the date of disability or the salary currently paid for similar positions, at the date of disability increased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, whichever is higher, provided the disability benefit does not exceed the disability benefit originally allowed, plus any postretirement adjustments payable after December 31, 1988, in accordance with section 11A.18, subdivision 10. No deductions for the retirement fund may be taken from the salary of a disabled person who is receiving a disability benefit as provided in this subdivision.

Sec. 4. Minnesota Statutes 1994, section 353.656, subdivision 2, is amended to read:

Subd. 2. [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] If a member, as described in subdivision 1, is injured under circumstances which entitle the member to receive benefits under the workers' compensation law, the member shall receive the same benefits as provided in subdivision 1, with disability benefits paid reimbursed and future benefits reduced by all periodic or lump sum amounts paid to the member under the workers' compensation law, after deduction of amount of attorney fees, authorized under applicable workers' compensation laws, paid by a disabilitant if the total of the single life annuity actuarial equivalent disability benefit and the workers' compensation benefit exceeds: (1) the salary the disabled member received as of the date of the disability or (2) the salary currently payable for the same employment position or an employment position substantially similar to the one the person held as of the date of the disability, whichever is greater. The disability benefit must be reduced to that amount which, when added to the workers' compensation benefits, does not exceed the greater of the salaries described in clauses (1) and (2). Disability benefits must not be reduced by any periodic or lump sum amounts received or receivable under workers compensation laws. A disabilitant who is eligible to receive a disability benefit after June 30, 1995, whose disability benefit amount was reduced before July 1, 1995, as a result of the receipt of workers' compensation benefits, must have the disability benefit payment amount restored, as of July 1, 1995, and calculated under subdivisions 1 or 3. A disabilitant is not entitled to retroactive payment of the reduction amounts applied to disability benefits before July 1, 1995, because of receipt of workers' compensation benefits.

A disability benefit overpayment made before July 1, 1995, because a reduction had not been made for receipt of workers' compensation benefits must be collected by the association. The overpaid amounts may be obtained through the reduction by the association of disability benefits or annuity payments made after June 30, 1995, until the overpayment is fully recovered.

Sec. 5. Minnesota Statutes 1994, section 353.656, subdivision 4, is amended to read:

Subd. 4. [LIMITATION ON DISABILITY BENEFIT PAYMENTS.] (a) No member is entitled to receive a disability benefit payment when there remains to the member's credit unused annual leave or sick leave or under any other

circumstances when, during the period of disability, there has been no impairment of the person's salary as a police officer or a firefighter, whichever applies.

(b) If a disabled member resumes a gainful occupation with earnings less than, which when added to the normal disability benefit exceed the disabilitant reemployment earnings limit, the amount of the disability benefit must be reduced as provided in this paragraph. The disabilitant reemployment earnings limit is the greater of:

(1) the salary earned at the date of disability; or

(2) 125 percent of the salary currently paid by the employing governmental subdivision for similar positions earned at the date of disability increased by the same increase in the United States' average wages used by social security in calculating average indexed monthly earnings.

The disability benefit must be reduced by one dollar for each three dollars by which the total amount of the current disability benefit, any workers' compensation benefits, and actual earnings exceed the greater disabilitant reemployment earnings limit. In no event may the disability benefit as adjusted under this subdivision exceed the disability benefit originally allowed.

Sec. 6. Minnesota Statutes 1994, section 353C.08, subdivision 6, is amended to read:

Subd. 6. [RESUMPTION OF EMPLOYMENT.] Should a disabled employee resume a gainful occupation from which earnings are less than salary received at the date of disability or the salary currently paid for similar positions, or should the employee be entitled to receive workers' compensation benefits received at the date of disability creased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, the disability benefit must be continued in an amount that, when added to such earnings and workers' compensation benefits, does not exceed the salary received at the date of disability or the salary currently payable for the same employment position or an employment position substantially similar to the one the person held as of the date of the disability increased by the same increase in the United States' average wages as used by Social Security in calculating average indexed monthly earnings, whichever is greater.

Sec. 7. Minnesota Statutes 1994, section 422A.18, subdivision 3, is amended to read:

Subd. 3. Payment of any disability allowance authorized by sections 422A.01 to 422A.25, shall commence three months after date of application provided that the applicant has not been restored to duty. Such payment shall be retroactive to date of application and shall continue throughout the full period of the disability subject to the same optional selections as are provided for service allowances; provided that when a disability beneficiary shall have attained the minimum age for retirement on a service allowance the disability allowance shall be discontinued only as provided by the terms of the option selected. Any employee eligible for a disability allowance who is also entitled to an allowance under a workers' compensation act and/or resumes a gainful occupation shall be entitled to receive during the period of such compensation only that portion of the retirement allowance provided by this act which when added to such additional compensation does not exceed the salary of the employee at the time of disability.

Sec. 8. [EFFECTIVE DATE.]

Sections 1 through 7 are effective July 1, 1995."

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Johnson, R., amendment and the roll was called. There were 55 yeas and 77 nays as follows:

Those who voted in the affirmative were:

Bakk         Huntley      Luther       Osthoff      Trimble
Brown        Jaros        Mahon        Ozment       Tunheim
Carlson      Jefferson    Mariani      Perlt        Wagenius
Carruthers   Jennings     Marko        Pugh         Wejcman
Dawkins      Johnson, A.  McCollum     Rest         Wenzel
Delmont      Johnson, R.  McGuire      Rice         Winter
Entenza      Kahn         Milbert      Rukavina     Sp.Anderson,I
Farrell      Kelley       Munger       Sarna        
Garcia       Kinkel       Murphy       Skoglund     
JOURNAL OF THE HOUSE - 56th Day - Top of Page 3999

Greenfield   Leighton     Olson, E.    Smith        
Hasskamp     Long         Orenstein    Solberg      
Hausman      Lourey       Orfield      Tomassoni    

Abrams       Erhardt      Koppendrayer Opatz        Swenson, D.
Anderson, B. Finseth      Kraus        Osskopp      Swenson, H.
Bertram      Frerichs     Krinkie      Ostrom       Sykora
Bettermann   Girard       Larsen       Otremba      Tompkins
Bishop       Goodno       Leppik       Paulsen      Tuma
Boudreau     Greiling     Lieder       Pawlenty     Van Dellen
Bradley      Haas         Lindner      Pellow       Van Engen
Broecker     Hackbarth    Lynch        Pelowski     Vickerman
Commers      Harder       Macklin      Peterson     Warkentin
Cooper       Holsten      Mares        Rhodes       Weaver
Daggett      Hugoson      McElroy      Rostberg     Wolf
Dauner       Johnson, V.  Molnau       Schumacher   Worke
Davids       Kalis        Mulder       Seagren      Workman 
Dehler       Kelso        Ness         Simoneau     
Dempsey      Knight       Olson, M.    Stanek       
Dorn         Knoblach     Onnen        Sviggum      

Tomassoni moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 17, after line 26, insert:

"If permanent total disability benefits are denied due to the permanent partial disability rating threshold requirement, and the employee is not eligible for temporary total disability benefits under subdivision 1, the employer must provide the employee work the employee can do that pays at least the preinjury wage of the employee. The employee is eligible for employee benefits on the same basis as employees that have not been injured."

A roll call was requested and properly seconded.

The question was taken on the Tomassoni amendment and the roll was called. There were 58 yeas and 74 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Orfield      Smith
Brown        Huntley      Luther       Osthoff      Solberg
Carlson      Jaros        Mahon        Ostrom       Tomassoni
Carruthers   Jefferson    Mariani      Ozment       Trimble
Dawkins      Johnson, A.  Marko        Perlt        Tunheim
Delmont      Johnson, R.  McCollum     Peterson     Wagenius
Entenza      Kahn         McGuire      Pugh         Wejcman
Farrell      Kelley       Milbert      Rest         Wenzel
Garcia       Kinkel       Munger       Rice         Winter
Greenfield   Leighton     Murphy       Rukavina     Sp.Anderson,I
Greiling     Lieder       Olson, E.    Sarna        
Hasskamp     Long         Orenstein    Skoglund     

Abrams       Dorn         Knight       Olson, M.    Sviggum
Anderson, B. Erhardt      Knoblach     Onnen        Swenson, D.
Bertram      Finseth      Koppendrayer Opatz        Swenson, H.
Bettermann   Frerichs     Kraus        Osskopp      Sykora
Bishop       Girard       Krinkie      Otremba      Tompkins
Boudreau     Goodno       Larsen       Paulsen      Tuma
Bradley      Haas         Leppik       Pawlenty     Van Dellen
Broecker     Hackbarth    Lindner      Pellow       Van Engen
Commers      Harder       Lynch        Pelowski     Vickerman
Cooper       Holsten      Macklin      Rhodes       Warkentin
Daggett      Hugoson      Mares        Rostberg     Weaver
JOURNAL OF THE HOUSE - 56th Day - Top of Page 4000

Dauner       Jennings     McElroy      Schumacher   Wolf
Davids       Johnson, V.  Molnau       Seagren      Worke
Dehler       Kalis        Mulder       Simoneau     Workman 
Dempsey      Kelso        Ness         Stanek       

Tomassoni, Luther and Jefferson moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 82, after line 34, insert:

"Sec. 66. Minnesota Statutes 1994, section 176.136, subdivision 1a, is amended to read:

Subd. 1a. [RELATIVE VALUE FEE SCHEDULE.] The liability of an employer for services included in the medical fee schedule is limited to the maximum fee allowed by the schedule in effect on the date of the medical service, or the provider's actual fee, whichever is lower. The medical fee schedule effective on October 1, 1991, shall remain in effect until the commissioner adopts a new schedule by permanent rule. The commissioner shall adopt permanent rules regulating fees allowable for medical, chiropractic, podiatric, surgical, and other health care provider treatment or service, including those provided to hospital outpatients, by implementing a relative value fee schedule to be effective on October 1, 1993. The commissioner may adopt by reference the relative value fee schedule adopted for the federal Medicare program or a relative value fee schedule adopted by other federal or state agencies. The relative value fee schedule shall contain reasonable classifications including, but not limited to, classifications that differentiate among health care provider disciplines. The commissioner shall require all health care providers to only utilize the codes and descriptions described in the Current Procedural Terminology (CPT) book of the current year. The conversion factors for the original relative value fee schedule must reasonably reflect a 15 percent overall reduction from the medical fee schedule most recently in effect. The reduction need not be applied equally to all treatment or services, but must represent a gross 15 percent reduction.

After permanent rules have been adopted to implement this section, the conversion factors must be adjusted annually on October 1 by no more than the percentage change computed under section 176.645, but without the annual cap provided by that section. The commissioner shall annually give notice in the State Register of the adjusted conversion factors. This notice shall be in lieu of the requirements of chapter 14."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Tomassoni et al amendment and the roll was called. There were 60 yeas and 72 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Luther       Ostrom       Tomassoni
Brown        Huntley      Mahon        Ozment       Trimble
Carlson      Jaros        Mariani      Perlt        Tunheim
Carruthers   Jefferson    Marko        Peterson     Wagenius
Dawkins      Johnson, A.  McCollum     Pugh         Wejcman
Delmont      Johnson, R.  McGuire      Rest         Wenzel
Dorn         Kahn         Milbert      Rice         Winter
Entenza      Kelley       Munger       Rukavina     Sp.Anderson,I
Farrell      Kinkel       Murphy       Sarna        
Garcia       Leighton     Olson, E.    Skoglund     
Greenfield   Lieder       Orenstein    Smith        
Greiling     Long         Orfield      Solberg      
Hasskamp     Lourey       Osthoff      Swenson, D.  

Abrams       Erhardt      Knoblach     Onnen        Swenson, H.
Anderson, B. Finseth      Koppendrayer Opatz        Sykora
Bertram      Frerichs     Kraus        Osskopp      Tompkins
Bettermann   Girard       Krinkie      Otremba      Tuma
Bishop       Goodno       Larsen       Paulsen      Van Dellen
Boudreau     Haas         Leppik       Pawlenty     Van Engen
JOURNAL OF THE HOUSE - 56th Day - Top of Page 4001

Bradley      Hackbarth    Lindner      Pellow       Vickerman
Broecker     Harder       Lynch        Pelowski     Warkentin
Commers      Holsten      Macklin      Rhodes       Weaver
Cooper       Hugoson      Mares        Rostberg     Wolf
Daggett      Jennings     McElroy      Schumacher   Worke
Dauner       Johnson, V.  Molnau       Seagren      Workman
Davids       Kalis        Mulder       Simoneau     
Dehler       Kelso        Ness         Stanek       
Dempsey      Knight       Olson, M.    Sviggum      

Dawkins moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 108, after line 19, insert:

"Sec. 100. Minnesota Statutes 1994, section 176.421, is amended by adding a subdivision to read:

Subd. 8. [STAY PROHIBITED.] An appeal to the workers' compensation court of appeals under this section shall not stay a decision awarding weekly benefits to an injured employee.

Sec. 101. Minnesota Statutes 1994, section 176.491, is amended to read:

176.491 [STAY OF PROCEEDINGS PENDING DISPOSITION OF CASE.]

Where a writ of certiorari has been perfected under this chapter, it stays all proceedings for the enforcement of the order being reviewed until the case has been finally disposed of either in the supreme court or, where the cause has been remanded for a new hearing before a compensation judge or further proceedings before the workers' compensation court of appeals. Notwithstanding this section or any other law, an award of weekly benefits shall not be stayed pending final disposition."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Dawkins amendment and the roll was called. There were 52 yeas and 80 nays as follows:

Those who voted in the affirmative were:

Bakk         Hasskamp     Luther       Osthoff      Tomassoni
Brown        Hausman      Mariani      Ostrom       Trimble
Carlson      Huntley      Marko        Ozment       Tuma
Carruthers   Jaros        McCollum     Perlt        Tunheim
Dawkins      Jefferson    McGuire      Pugh         Wejcman
Delmont      Johnson, A.  Milbert      Rice         Wenzel
Dorn         Johnson, R.  Munger       Rukavina     Winter
Entenza      Kahn         Murphy       Sarna        Sp.Anderson,I
Farrell      Kinkel       Olson, E.    Skoglund     
Garcia       Leighton     Orenstein    Smith        
Greenfield   Lourey       Orfield      Solberg      

Abrams       Frerichs     Kraus        Opatz        Swenson, H.
JOURNAL OF THE HOUSE - 56th Day - Top of Page 4002

Anderson, B. Girard       Krinkie      Osskopp      Sykora
Bertram      Goodno       Larsen       Otremba      Tompkins
Bettermann   Greiling     Leppik       Paulsen      Van Dellen
Bishop       Haas         Lieder       Pawlenty     Van Engen
Boudreau     Hackbarth    Lindner      Pellow       Vickerman
Bradley      Harder       Long         Pelowski     Wagenius
Broecker     Holsten      Lynch        Peterson     Warkentin
Commers      Hugoson      Macklin      Rest         Weaver
Cooper       Jennings     Mahon        Rhodes       Wolf
Daggett      Johnson, V.  Mares        Rostberg     Worke
Dauner       Kalis        McElroy      Schumacher   Workman 
Davids       Kelley       Molnau       Seagren      
Dehler       Kelso        Mulder       Simoneau     
Dempsey      Knight       Ness         Stanek       
Erhardt      Knoblach     Olson, M.    Sviggum      
Finseth      Koppendrayer Onnen        Swenson, D.  

Entenza moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 27, after line 35, insert:

"Sec. 33. Minnesota Statutes 1994, section 480A.06, subdivision 3, is amended to read:

Subd. 3. [CERTIORARI REVIEW.] The court of appeals shall have jurisdiction to issue writs of certiorari to all agencies, public corporations and public officials, except the tax court and the workers' compensation court of appeals. The court of appeals shall have jurisdiction to review decisions of the commissioner of economic security, pursuant to section 268.10.

Sec. 34. Minnesota Statutes 1994, section 480A.06, subdivision 4, is amended to read:

Subd. 4. [ADMINISTRATIVE REVIEW.] The court of appeals shall have jurisdiction to review on the record: the validity of administrative rules, as provided in sections 14.44 and 14.45, and; the decisions of administrative agencies in contested cases, as provided in sections 14.63 to 14.69; and workers' compensation cases and peace officer death benefits cases, as provided under chapters 176 and 299A.

Sec. 35. [TRANSFER OF JURISDICTION AND PERSONNEL.]

The jurisdiction of the workers' compensation court of appeals, as provided under Minnesota Statutes, section 175A.01, subdivision 5, is transferred to the court of appeals. All contracts, books, plans, papers, records, and property of every description of the workers' compensation court of appeals relating to its transferred responsibilities and within its jurisdiction or control are transferred to the court of appeals, except that all case files are transferred to the clerk of the appellate courts. All classified employees and staff attorneys of the workers' compensation court of appeals must be given preference in the employment of personnel required to staff the increased caseload of the court of appeals as a result of the transfer of jurisdiction under this section. The workers' compensation court of appeals is abolished.

Sec. 36. [INSTRUCTION TO REVISOR.]

In every instance in Minnesota Statutes in which the term "workers' compensation court of appeals" appears, the revisor of statutes shall change that reference to the "court of appeals." "

Page 28, after line 10, insert:

"Minnesota Statutes 1994, section 175A.01; 175A.02; 175A.03; 175A.04; 175A.05; 175A.06; 175A.07; 175A.08; 175A.09; and 175A.10, are repealed, effective July 1, 1995."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Entenza amendment and the roll was called. There were 49 yeas and 83 nays as follows:

Those who voted in the affirmative were:

Bakk         Greiling     Leighton     Munger       Skoglund
JOURNAL OF THE HOUSE - 56th Day - Top of Page 4003

Brown        Hausman      Long         Olson, E.    Solberg
Carlson      Huntley      Lourey       Orfield      Tomassoni
Carruthers   Jaros        Luther       Ozment       Trimble
Dawkins      Jefferson    Mahon        Perlt        Tunheim
Delmont      Johnson, A.  Mariani      Pugh         Wejcman
Entenza      Johnson, R.  Marko        Rest         Wenzel
Farrell      Kahn         McCollum     Rice         Winter
Garcia       Kelley       McGuire      Rukavina     Sp.Anderson,I
Greenfield   Kinkel       Milbert      Sarna        

Abrams       Finseth      Kraus        Orenstein    Sviggum
Anderson, B. Frerichs     Krinkie      Osskopp      Swenson, D.
Bertram      Girard       Larsen       Osthoff      Swenson, H.
Bettermann   Goodno       Leppik       Ostrom       Sykora
Bishop       Haas         Lieder       Otremba      Tompkins
Boudreau     Hackbarth    Lindner      Paulsen      Tuma
Bradley      Harder       Lynch        Pawlenty     Van Dellen
Broecker     Hasskamp     Macklin      Pellow       Van Engen
Commers      Holsten      Mares        Pelowski     Vickerman
Cooper       Hugoson      McElroy      Peterson     Wagenius
Daggett      Jennings     Molnau       Rhodes       Warkentin
Dauner       Johnson, V.  Mulder       Rostberg     Weaver
Davids       Kalis        Murphy       Schumacher   Wolf
Dehler       Kelso        Ness         Seagren      Worke
Dempsey      Knight       Olson, M.    Simoneau     Workman 
Dorn         Knoblach     Onnen        Smith        
Erhardt      Koppendrayer Opatz        Stanek       

Skoglund, Winter and Simoneau moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 8 of the Kelso amendment, after line 32, insert:

"An investigator of the fraud investigation unit of the department of labor and industry has the inspection authority of the commissioner provided under section 182.659 and may apply this authority to subjects of investigations under this subdivision."

Page 110, line 34 to page 114, line 1, of the Simoneau amendment, delete sections 103 to 107

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Skoglund et al amendment and the roll was called. There were 130 yeas and 2 nays as follows:

Those who voted in the affirmative were:

Abrams       Garcia       Krinkie      Opatz        Sviggum
Anderson, B. Girard       Larsen       Orenstein    Swenson, D.
Bakk         Goodno       Leighton     Orfield      Swenson, H.
Bertram      Greenfield   Leppik       Osskopp      Sykora
JOURNAL OF THE HOUSE - 56th Day - Top of Page 4004

Bettermann   Greiling     Lieder       Osthoff      Tomassoni
Bishop       Haas         Lindner      Ostrom       Tompkins
Boudreau     Hackbarth    Long         Otremba      Trimble
Bradley      Harder       Lourey       Ozment       Tuma
Broecker     Hasskamp     Luther       Paulsen      Tunheim
Brown        Hausman      Lynch        Pawlenty     Van Dellen
Carlson      Holsten      Macklin      Pellow       Van Engen
Carruthers   Hugoson      Mahon        Pelowski     Vickerman
Commers      Huntley      Mares        Perlt        Wagenius
Cooper       Jefferson    Mariani      Peterson     Warkentin
Daggett      Jennings     Marko        Pugh         Weaver
Dauner       Johnson, A.  McCollum     Rest         Wejcman
Davids       Johnson, R.  McElroy      Rhodes       Wenzel
Dawkins      Johnson, V.  McGuire      Rice         Winter
Dehler       Kahn         Milbert      Rostberg     Wolf
Delmont      Kalis        Molnau       Rukavina     Worke
Dempsey      Kelley       Mulder       Sarna        Workman
Dorn         Kelso        Munger       Schumacher   Sp.Anderson,I
Entenza      Kinkel       Murphy       Seagren      
Erhardt      Knight       Ness         Simoneau     
Farrell      Knoblach     Olson, E.    Skoglund     
Finseth      Koppendrayer Olson, M.    Solberg      
Frerichs     Kraus        Onnen        Stanek       

Jaros        Smith                     

Orfield moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 83, after line 24, insert:

"Sec. 67. Minnesota Statutes 1994, section 176.136, subdivision 1c, is amended to read:

Subd. 1c. [CHARGES FOR INDEPENDENT MEDICAL EXAMINATIONS.] The commissioner shall adopt rules that reasonably limit amounts which may be charged for, or in connection with, independent or adverse medical examinations requested by any party, including the amount that may be charged for depositions, witness fees, or other expenses. The scheduled amount for the examination itself may not exceed the scheduled amount for complex consultations by treating physicians, although additional reasonable charges may be permitted to reflect additional duties or activities. No party may pay fees above the amount in the schedule."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Orfield amendment and the roll was called. There were 58 yeas and 74 nays as follows:

Those who voted in the affirmative were:

Bakk         Greiling     Lieder       Olson, E.    Skoglund
Brown        Hasskamp     Long         Orenstein    Solberg
Carlson      Hausman      Lourey       Orfield      Tomassoni
Carruthers   Huntley      Luther       Osthoff      Trimble
Cooper       Jaros        Mahon        Ostrom       Tunheim
Dawkins      Jefferson    Mariani      Ozment       Wagenius
Delmont      Johnson, A.  Marko        Perlt        Wejcman
Dorn         Johnson, R.  McCollum     Pugh         Wenzel
Entenza      Kahn         McGuire      Rest         Winter
Farrell      Kelley       Milbert      Rice         Sp.Anderson,I
Garcia       Kinkel       Munger       Rukavina     
Greenfield   Leighton     Murphy       Sarna        

Abrams       Finseth      Koppendrayer Opatz        Sviggum
Anderson, B. Frerichs     Kraus        Osskopp      Swenson, D.
Bertram      Girard       Krinkie      Otremba      Swenson, H.
Bettermann   Goodno       Larsen       Paulsen      Sykora
Bishop       Haas         Leppik       Pawlenty     Tompkins
Boudreau     Hackbarth    Lindner      Pellow       Tuma
Bradley      Harder       Lynch        Pelowski     Van Dellen
Broecker     Holsten      Macklin      Peterson     Van Engen
Commers      Hugoson      Mares        Rhodes       Vickerman
Daggett      Jennings     McElroy      Rostberg     Warkentin
Dauner       Johnson, V.  Molnau       Schumacher   Weaver
JOURNAL OF THE HOUSE - 56th Day - Top of Page 4005

Davids       Kalis        Mulder       Seagren      Wolf
Dehler       Kelso        Ness         Simoneau     Worke
Dempsey      Knight       Olson, M.    Smith        Workman 
Erhardt      Knoblach     Onnen        Stanek       

Entenza moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 26, after line 22, insert:

"Sec. 32. [176.87] [INJURY OF AN EMPLOYEE; CRIMINAL PENALTIES.]

Subdivision 1. [CRIME.] An employer that causes substantial bodily harm, great bodily harm, or death of an employee or independent contractor by intentionally failing to comply with a statute, rule, or order of the commissioner is guilty of a crime and shall be sentenced as provided in subdivision 2.

Subd. 2. [SENTENCE; FINE.] A person that violates subdivision 1 may be sentenced as follows:

(1) to imprisonment for not more than 25 years or payment of a fine of not more than $40,000, or both, if the violation caused the death of an employee; or

(2) to imprisonment for not more than one year or payment of a fine of not more than $3,000, or both, if the violation caused the great bodily harm, as that term is defined in section 609.02, subdivision 8, of an employee; or

(3) to imprisonment for not more than 90 days or payment of a fine of not more than $700, or both, if the violation caused the substantial bodily harm, as that term is defined in section 609.02, subdivision 7a, of an employee.

Subd. 3. [REFERRAL.] If the commissioner has reason to believe an employer has violated this section the commissioner shall refer the matter to the appropriate prosecuting authority.

Subd. 4. [EFFECTIVE DATE; APPLICABILITY.] This section is effective August 1, 1995, and applies to crimes committed on or after that date."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Entenza amendment and the roll was called.

Carruthers moved that those not voting be excused from voting. The motion prevailed.

There were 27 yeas and 101 nays as follows:

Those who voted in the affirmative were:

Bakk         Greenfield   Luther       Osthoff      Tunheim
Carruthers   Jaros        Mariani      Perlt        Wejcman
Delmont      Jefferson    Munger       Rest         Sp.Anderson,I
Entenza      Johnson, A.  Murphy       Rukavina     
Farrell      Kahn         Olson, E.    Tomassoni    
Garcia       Lourey       Orfield      Trimble      

Abrams       Girard       Krinkie      Opatz        Sviggum
Anderson, B. Goodno       Larsen       Orenstein    Swenson, D.
Bertram      Greiling     Leighton     Osskopp      Swenson, H.
Bettermann   Haas         Leppik       Ostrom       Sykora
Bishop       Hackbarth    Lieder       Otremba      Tompkins
Boudreau     Harder       Lindner      Ozment       Tuma
Bradley      Hasskamp     Long         Paulsen      Van Dellen
Broecker     Hausman      Lynch        Pawlenty     Van Engen
Brown        Holsten      Macklin      Pellow       Vickerman
Commers      Hugoson      Mahon        Pelowski     Wagenius
Cooper       Huntley      Mares        Peterson     Warkentin
Daggett      Jennings     Marko        Pugh         Weaver
Dauner       Johnson, V.  McCollum     Rhodes       Wenzel
Davids       Kalis        McElroy      Rostberg     Winter
Dawkins      Kelley       McGuire      Sarna        Wolf
Dehler       Kelso        Milbert      Schumacher   Worke
Dempsey      Kinkel       Molnau       Seagren      Workman 
Dorn         Knight       Mulder       Simoneau     
Erhardt      Knoblach     Ness         Skoglund     
Finseth      Koppendrayer Olson, M.    Smith        
Frerichs     Kraus        Onnen        Stanek       

Winter moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 116, after line 23, insert:

Section 1. Minnesota Statutes 1994, section 60A.951, subdivision 2, is amended to read:

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 commissioner of labor and industry; the attorney general; or any duly constituted criminal investigative department or agency of the United States.

Sec. 2. Minnesota Statutes 1994, section 60A.951, subdivision 5, is amended to read:

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, 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, and 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.

Sec. 3. Minnesota Statutes 1994, section 60A.954, subdivision 1, is amended to read:

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 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.

Sec. 4. Minnesota Statutes 1994, section 79.01, subdivision 1, is amended to read:

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 this chapter, shall have the meanings ascribed to given them.

Sec. 5. Minnesota Statutes 1994, section 79.074, is amended by adding a subdivision to read:

Subd. 3. [UNFAIRLY DISCRIMINATORY.] A rate, rating plan, or schedule of rates 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, rating plans, or schedules of 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, rating plan, or schedule of rates reflect the differences with reasonable accuracy.

Sec. 6. Minnesota Statutes 1994, section 79.074, is amended by adding a subdivision to read:

Subd. 4. [EXCESSIVENESS.] Rates, rating plans, or schedules of rates are not excessive if the expected underwriting profit, together with expected income from invested reserves for the market in question, that would accrue to an insurer would be reasonable in relation to the risk undertaken by the insurer in transacting the business or if expenses are reasonable in relation to the services rendered.

The commissioner shall monitor the income and profit actually earned. If it is in excess of the expected profit and return, the commissioner shall provide appropriate adjustments in future rates or provide other appropriate relief.

Sec. 7. Minnesota Statutes 1994, section 79.074, is amended by adding a subdivision to read:

Subd. 5. [FLEXIBLE RANGE OF RATES.] An insurer may write insurance at rates that are lower than the rates approved by the commissioner if the rates are not unfairly discriminatory.

Sec. 8. [79.082] [SAFETY PREMIUM CREDIT.]

An insurer must provide a ten percent credit against the premium otherwise payable by an employer if the employer has had no accidents for which benefits were paid under section 176.101 in the immediately preceding three calendar years. This section applies only to an employer that is a "small business" as defined in section 645.445, subdivision 2. For the purpose of this section, insurer includes the assigned risk plan.

Sec. 9. [79.254] [PRIOR RATES.]

Subdivision 1. [PRESUMPTION.] Rates, schedules of rates, and rating plans that have been filed with the commissioner before January 1, 1995, are conclusively presumed to satisfy the requirements of this article until the initial schedule of rates has been approved by order of the commissioner.

Subd. 2. [FILING.] If a rate was not filed by an insurer before the effective date of this section, an insurer may file a rate for any classification for which a rate was not previously filed. The rate shall not be used until it is approved by the commissioner. The commissioner may approve a rate up to the rate level approved for use by the assigned risk plan for that rate class. The rates may remain in force until the commissioner has approved a schedule of rates under section 79.71. If the commissioner disapproves of any rate or rating plan pursuant to authority granted in this subdivision, the disapproval shall not be subject to chapter 14 and the decision shall be final.

Subd. 3. [APPROVAL.] Until the commissioner issues an order approving a schedule of rates under section 79.71, an insurer may not, through the use of any rating plan, charge a rate higher than the rates applicable to the insurer under subdivision 1 or 2. This subdivision does not prohibit the use of approved experience rate plans or retrospective rating plans that have been adopted in the filed rates by insurers, the assigned risk plan, or a data service organization. This section does not prohibit the adjustment of a schedule of rates to reflect adjustments in the assessment rate for the special compensation fund, any adjustment in the assessment for the assigned risk plan pursuant to section 79.251, subdivision 5, any adjustment in the assessment for the Minnesota insurance guaranty association pursuant to section 60C.05, or any other assessment required by law.

Subd. 4. [INTERIM RATES.] Rates, schedules of rates, and rating plans filed after December 31, 1994, may not be used after the effective date of this article and the rates, schedules of rates, and rating plans in effect prior to January 1, 1995, are reinstated.

Subd. 5. [COMPLIANCE.] No insurer may avoid the application of this section by limiting or denying the use of credits or other adjustments to the rates that were available and used before January 1, 1995. The commissioner shall monitor the activities of insurers to ensure that the requirements of this section are satisfied.

Subd. 6. [EFFECTIVE DATE.] This section shall apply only to policies issued or renewed to be effective after the effective date of this section.

Sec. 10. Minnesota Statutes 1994, section 79.34, subdivision 2, is amended to read:

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 $300,000 or $100,000 a low, a high, or a super 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 lower retention limit shall be increased to the nearest $10,000, on January 1, 1982 and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, as determined in accordance with section 176.011, subdivision 20. On January 1, 1982 and on each January 1 thereafter, the higher retention limit shall be increased by the amount necessary to retain a $200,000 difference between the two retention limits. On January 1, 1995, the lower retention limit is $250,000, which shall also be known as the 1995 base retention limit. On each January 1 thereafter, the cumulative annual percentage changes in the statewide average weekly wage after October 1, 1994, as determined in accordance with section 176.011, subdivision 20, shall first be multiplied by the 1995 base retention limit, the result of which shall then be added to the 1995 base retention limit. The resulting figure shall be rounded to the nearest $10,000, yielding the low retention limit for that year, provided that the low retention limit shall not be reduced in any year. 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. 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 higher 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 higher high or super retention limit shall retain the liability for all losses below the higher 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 higher high or super 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 higher and lower high or super 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 higher high or super retention limit for purposes of membership in the reinsurance association.

Sec. 11. Minnesota Statutes 1994, section 79.35, is amended to read:

79.35 [DUTIES; RESPONSIBILITIES; POWERS.]

The reinsurance association shall do the following on behalf of its members:

(a) Assume 100 percent of the liability as provided in section 79.34;

(b) 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;

(c) 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;

(d) Calculate and charge to members a total premium sufficient to cover the expected liability which the reinsurance association will incur in excess of the higher retention limit but less than the prefunded limit, together with incurred or estimated to be incurred operating and administrative expenses for the period to which this premium applies and actual claim payments to be made by members, during the period to which this premium applies, for claims in excess of the prefunded limit in effect at the time the loss was incurred. Each member shall be charged a premium established by the board as sufficient to cover the reinsurance association's incurred liabilities and expenses between the member's selected retention limit and the prefunded limit. The prefunded limit shall be $2,500,000 on and after October 1, 1979, provided that the prefunded limit shall be increased on January 1, 1983 and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, to the nearest $100,000, as determined in accordance with section 176.011, subdivision 20 times the lower retention limit established in section 79.34, subdivision 2. 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 exercising the lower retention option shall also be charged a premium established by the board as sufficient to cover incurred or estimated to be incurred claims for the liability the reinsurance association is likely to incur between the lower and higher retention limits for the period to which the premium applies. 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;

(e) Require and accept the payment of premiums from members of the reinsurance association;

(f) Receive and distribute all sums required by the operation of the reinsurance association;

(g) 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

(h) 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.

Sec. 12. Minnesota Statutes 1994, section 79.50, is amended to read:

79.50 [PURPOSES.]

The purposes of chapter 79 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; and

(d) Promote price competition and provide rates that are responsive to competitive market conditions;

(e) Provide a means of establishment of proper rates if competition is not effective;

(f) Define the function and scope of activities of data service organizations;

(g) Provide for an orderly transition from regulated rates to competitive market conditions; and

(h) Encourage insurers to provide alternative innovative methods whereby employers can meet the requirements imposed by section 176.181.

Sec. 13. Minnesota Statutes 1994, section 79.59, subdivision 4, is amended to read:

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.

Sec. 14. [79.71] [RATES; HEARINGS.]

Subdivision 1. [PETITION FOR ADOPTION OF RATE SCHEDULE.] (a) The commissioner shall adopt a schedule of workers' compensation insurance rates for use in this state for each classification under which business is written. The schedule of rates shall not be excessive, inadequate, or unfairly discriminatory.

For purposes of this section, "association" means association of insurers.

(b) In adopting a schedule of rates, the commissioner may act on the written petition of an association, the department of labor and industry, or any other interested party who requests that a hearing be held to adopt a schedule of rates. Upon receipt of a petition requesting a hearing for adoption of a schedule of rates, the commissioner shall determine whether the petition sufficiently sets forth facts that show that the existing schedule of rates is excessive, inadequate, unfairly discriminatory, or otherwise in need of modification so as to indicate the need to hold a hearing. If an association is the petitioner, the commissioner may decline to grant a hearing if the association has failed to provide information requested by previous orders that modify the schedule of rates, if the request was reasonable. The commissioner may accept or reject the petition for a hearing and shall give notice of a determination to the petitioning party. If the commissioner rejects the petition, the commissioner shall notify the petitioning party of the reasons for the rejection.

Subd. 2. [HEARING.] (a) The commissioner shall determine, within 90 days of receipt of the petition, whether to accept or reject the petition. If the commissioner accepts the petition for hearing, the commissioner shall order a hearing on matters set forth in the petition. Each insurer shall notify their insureds that a hearing on a rate increase will be held. The form of the notice to be sent to each insured shall be prescribed by the commissioner. The hearing shall be held pursuant to the contested case procedures in chapter 14. The burden of proof is on the petitioning party.

(b) The commissioner shall forward a copy of the order for hearing to the chief administrative law judge. The chief administrative law judge must, within 30 days of the receipt of the order, 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 commissioner shall publish notice of the hearing in the State Register at least 20 days before the hearing date. Approval of the notice before publication by the administrative law judge is not required.

(c) The administrative law judge may admit without the traditional evidentiary foundation documentary and statistical evidence accepted and relied on by an expert whose expertise is related to workers' compensation rate matters. An employer, person representing a group of employers, or other person that will be directly affected by a change in an insurer's existing rate level or rating plan, and the commissioner of labor and industry, must be allowed to intervene and participate in any hearing to challenge the rate level or rating plan as being excessive, inadequate, or unfairly discriminatory.

(d) The report of the administrative law judge must be issued within 180 days from the date of receipt of the order by the chief administrative law judge. Within 60 days of the completion of the hearing, the administrative law judge must submit a report to the commissioner. The parties, or the administrative law judge if the parties cannot agree, shall adjust all time requirements under the contested case procedures to conform with the time requirements set forth in this subdivision. After the close of the hearing record, the administrative law judge shall transmit to the commissioner the entire record of the hearing, including the transcript, exhibits, and all other material properly accepted into evidence, together with the finding of facts, conclusions, and recommended order made by the administrative law judge. The time for submitting the report may be extended by the chief administrative law judge for good cause.

Subd. 3. [HEARING DETERMINATION.] The commissioner may accept, reject, or modify, in whole or in part, matters raised in the petition for adoption of the schedule of rates or matters raised in the findings and recommendations of the administrative law judge. The commissioner's determination shall be based upon substantial evidence. The commissioner of commerce is an interested party if the commissioner's decision is appealed.

Subd. 4. [DEADLINE FOR DETERMINATION.] The commissioner shall make a final determination with respect to adoption of a schedule of rates within 90 days after receipt of the administrative law judge's report. If the commissioner fails to act within the 90-day period, the findings, conclusions, and recommended order of the administrative law judge become the final order of the commissioner on the 91st day after receipt.

Subd. 5. [CONSULTANTS; COMMISSIONER OF COMMERCE.] The commissioner of commerce may hire consultants, including a consulting actuary and other experts, deemed necessary to assist in the establishment or modification of the schedule of rates. A sum sufficient to pay the costs of conducting the hearing provided under subdivision 2, appeals therefrom, or the establishment or modification of the schedule of rates, including the costs of consultants and related costs, is appropriated from the special compensation fund to the commissioner of commerce and assessed against the rating association and its members by the special compensation fund.

Subd. 6. [CONSULTANTS; ADMINISTRATIVE LAW JUDGES.] The office of administrative hearings, upon approval of the chief administrative law judge, may hire consultants necessary to assist the administrative law judge assigned to a workers' compensation rate proceeding. A sum sufficient to pay the costs of the commissioner of labor and industry in regard to the hearing provided under subdivision 2 and appeals therefrom, including the costs of consultants and related costs, is appropriated from the special compensation fund to the commissioner of labor and industry and assessed against the association and its members by the special compensation fund.

Subd. 7. [APPOINTMENT OF ACTUARY.] The commissioner of commerce shall employ the services of a casualty actuary experienced in workers' compensation whose duties shall include but not be limited to investigation of complaints by insured parties about rates, rate classifications, or the 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.

Sec. 15. [79.72] [PETITION FOR REHEARING.]

Subdivision 1. [PETITION CONTENTS.] Any party may petition the commissioner for rehearing and reconsideration of a determination made under section 79.71. The petition for rehearing and reconsideration shall be served on the commissioner and all parties to the rate hearing within 30 days after service of the commissioner's final order. The petition shall set forth factual grounds in support of the petition. Any party adversely affected by a petition for review and reconsideration has 15 days to respond to factual matters alleged in the petition.

Subd. 2. [GRANT OF REHEARING.] The commissioner may grant a rehearing upon the filing of a petition under subdivision 1. On rehearing, the commissioner may limit the scope of factual matters that are subject to rehearing and reconsideration. The rehearing is subject to the provisions of this section.

Subd. 3. [MODIFICATION OF ORDER.] Following rehearing, the commissioner may modify the terms of the initial order adopting a change in the schedule of rates upon a determination that adequate factual grounds exist to support modification. Adequate factual grounds include, but are not limited to, erroneous testimony by any witness or party to the hearing, a material change in Minnesota loss or expense data that occurs after a petition for adoption of the schedule of rates has been filed, or any other mistake of fact that has a substantial effect upon the schedule of rates adopted in prior orders of the commissioner.

Sec. 16. [79.73] [JUDICIAL REVIEW.]

Final orders of the commissioner pursuant to sections 79.71 and 79.72 are subject to judicial review pursuant to sections 14.63 to 14.69 but shall remain in effect during the pendency of any appeal.

Sec. 17. [79.74] [INTERIM SCHEDULE OF RATES.]

(a) An association, the commissioner of labor and industry, or any interested party may file a petition for an adjustment in the schedule of rates when there has been a law change in the benefit payable under chapter 176. "Law change" means only statutory changes or supreme court decisions. When a petition for a change in the schedule of rates due to a law change is received by the commissioner, the commissioner shall review the petition for up to 30 days to determine if it presents facts that warrant a hearing. If the commissioner accepts a petition for hearing, it shall be conducted pursuant to the contested case procedures in chapter 14.

(b) The chief administrative law judge shall assign an administrative law judge to hear a petition for a change in the schedule of rates within 30 days. The administrative law judge shall conclude the hearing within 60 days of assignment by the chief administrative law judge and file findings of fact, conclusions of law, and a proposed order with the commissioner within 30 days of concluding the hearing. The administrative law judge shall, after the close of the record, file a report with recommendations in the same manner as in section 79.71. The time for holding the hearing and filing the report with the commissioner may be extended by the chief administrative law judge upon a showing of good cause for an additional 30 days.

(c) The commissioner's order may affirm, reverse, or modify the findings and order of the administrative law judge. The petitioning party shall have the burden of proof in any hearing held pursuant to this subdivision. Interim rate hearings are available only for changes in the schedule of workers' compensation rates that result from law changes. All evidentiary, procedural, and review standards in section 79.71 shall apply to interim rate hearings, except the time requirements in this subdivision.

(d) Interim rate hearings are subject to judicial review pursuant to chapter 14, except that the commissioner's interim rate order shall remain in effect during the pendency of any appeal by any party. The commissioner is an interested party if the commissioner's decision is appealed pursuant to chapter 14.

(e) Interim rate hearings may only be held after an initial schedule of rates has been approved by the commissioner unless requested by the commissioner of labor and industry.

Sec. 18. [79.75] [AUTOMATIC ADJUSTMENT OF RATES.]

(a) The commissioner shall adopt a rule to establish a mechanism to automatically adjust a schedule of rates to reflect benefit changes mandated by operation of law after the most recent change in the schedule of rates, an adjustment in the assessment rate for the special compensation fund, any adjustment in the assessment for the assigned risk plan pursuant to section 79.251, subdivision 5, any adjustment in the assessment for the Minnesota insurance guaranty association pursuant to section 60C.05, or any other assessment required by law.

(b) At each rate hearing held pursuant to section 79.71 or rehearing pursuant to section 79.72, following an automatic adjustment, the commissioner shall review the rate adjustment to assure that the schedule of rates adopted after the adjustment are not excessive, inadequate, or unfairly discriminatory. If the commissioner finds that the schedule of rates adopted after the adjustment are excessive, inadequate, or unfairly discriminatory, the commissioner shall order appropriate remedial action.

Sec. 19. [79.76] [MANUALS.]

Subdivision 1. [INITIAL FILING REQUIRED.] (a) On or before October 1, 1995, a rate service association licensed in Minnesota must file with the commissioner all underwriting and rating manuals that are used in the classification of risks and the calculation of rating plans, rates, and fees. The association must provide the commissioner with at least six copies of each manual. A copy of each manual filed shall also be provided to the commissioner of labor and industry.

(b) The commissioner shall review the manuals and on or before January 1, 1996, approve or disapprove all or part of the manuals. The evidentiary, procedural, and review standards of section 79.71 shall apply to the review of the manuals. Until the commissioner has approved or disapproved the manuals, they shall remain in force. The association may contest the disapproval of a manual or part of a manual pursuant to the contested case procedures of chapter 14. Until the conclusion of the contested case proceeding, the portions of the manuals that were not approved shall remain in force.

Subd. 2. [NEW MANUALS AND AMENDMENTS.] If the association adopts or amends a manual, the manual or the amendment to the manual shall not be effective until approved by the commissioner. The association must provide the commissioner with at least six copies of each manual or amendment. A copy of each manual or amendment filed shall also be provided to the commissioner of labor and industry. The commissioner shall approve or disapprove any manual or amendment within 90 days of filing. The evidentiary, procedural, and review standards of section 79.71 shall apply to the review of the manuals. Any manual or amendment not approved within 90 days shall be deemed to be disapproved. As to a disapproved manual or amendment, the association may contest the disapproval pursuant to the contested case procedures of chapter 14.

Subd. 3. [BURDEN OF PROOF.] The burden of proof in a proceeding under this section shall be upon the party requesting the adoption of a manual or an amendment of a manual.

Subd. 4. [COSTS.] The costs of the commissioner and the commissioner of labor and industry in regard to a contested case proceeding under this section, including the costs of consultants, staff, related costs, and costs billed by the attorney general's office shall be paid from the special compensation fund.

Subd. 5. [PUBLIC ACCESS.] Copies of all approved manuals must be made available to the public for inspection during regular business hours at the office of the association. Proposed manuals and amendments to manuals must be made available in the same manner.

Sec. 20. [79.77] [INFORMATION.]

(a) In addition to other information that the commissioner requests pursuant to section 79.71, a rate service organization shall file with the commissioner, the following information on its Minnesota experience:

(1) reserves for incurred but not reported losses of its members;

(2) paid claims;

(3) reserves for open claims;

(4) a schedule of claims in which its members have established a reserve in excess of $50,000;

(5) the income on invested reserves of its members;

(6) an itemized list of policies written at other than the filed rates;

(7) loss adjustment expenses;

(8) subrogation recoveries;

(9) administrative expenses; and

(10) commission and lobbying expenses.

The filing of the information of Minnesota experience must be based on separate records containing only Minnesota information separately maintained by the association. The commissioner may request and the association must provide the separate records to the commissioner.

(b) Losses and reserves shall be reported separately as to medical and indemnity expenses. The rating association shall file an itemized breakdown of its lobbying expenses.

(c) The commissioner shall consider this information in an appropriate manner in adopting a schedule of rates and shall decline to grant a hearing pursuant to section 79.71 for purposes of considering a rate increase if the association fails to provide the information.

(d) The rating association shall be domiciled, chartered, and principally located in the state of Minnesota. Except with the approval of the commissioner, the rating association may not contract for its data collection responsibilities with data service organizations domiciled, chartered, or principally located outside the state of Minnesota.

Sec. 21. [79.78] [DEPARTMENT AS RATE SERVICE ORGANIZATION.]

The department of commerce shall assume the functions of all rate service organizations authorized by sections 79.61 and 79.62. Copies of all records and data maintained by rate service organizations must be provided to the department upon request.

An insurer, as a condition of doing business in this state, shall provide to the department all information on claims experience, administrative costs, investment income, loss reserves, adjustment expenses, and other pertinent information the department requests. The information must be provided in a form the department prescribes, at the time the insurer files its annual statement. The costs of this activity by the department shall be paid on an equitable and nondiscriminatory basis by the insurers as determined by the commissioner.

An insurer that fails to comply with this section is subject to a civil penalty, not to exceed $10,000 and is subject to other penalties, including revocation of its authority to do business in the state. These penalties are in addition to other penalties authorized by law. This section does not preclude the continued activities of any rate service organization. Rate service organizations or other persons may contract with the department to obtain the information collected by the department.

Sec. 22. [79.79] [RECORD; DATA SERVICE ORGANIZATION SHALL FURNISH INFORMATION.]

A data service organization shall keep a record of its proceedings. It shall furnish, upon demand, to any employer whose workers' compensation risk has been surveyed, full information about the survey, including the method of the computation and a detailed description and location of all items producing charges or credits. The organization shall provide a means, approved by the commissioner, for hearing any member or employer whose risk has been inspected, either in person or by a representative, before the governing or rating committee or other proper representatives with reference to any matter affecting the risk. Any insurer or employer may appeal from a decision of the organization to the commissioner. The organization shall make rules governing appeals to be filed with and approved by the commissioner. The commissioner may require the organization to file any information connected with its activities.

Sec. 23. [79.80] [RATES FILED.]

Every insurer writing workers' compensation insurance in this state, except as ordered by the commissioner, must file with the commissioner its rates for compensation insurance and all additions or changes. All rates so filed must comply with the requirements of law and are not effective until approved by the commissioner.

Sec. 24. [79.81] [RATES UNIFORM; EXCEPTIONS.]

No insurer may write insurance at a rate above that approved by the commissioner. The insurer may reduce or increase a rate by the application to individual risks of the system of merit or experience rating which has been

approved by the commissioner. This reduction or increase shall be set forth in the policy or by endorsement. Upon written request, an insurer shall furnish a written explanation to the insured of how and why the individual rate was adjusted by application of a system of merit or experience rating. This explanation shall be mailed to the insured within 30 days of the request.

Sec. 25. [79.82] [DUTIES OF COMMISSIONER.]

The commissioner of commerce shall require compensation insurers, or their agents, to file the necessary reports for the purposes of this chapter for use by the commissioner including but not limited to report as a supplement to the annual report required by licensed property casualty insurers under section 60A.13 that satisfies this section.

The supplemental reports must include the following data for the previous year ending on the 31st day of December:

(1) direct premiums written;

(2) direct premiums earned;

(3) net investment income, including net realized capital gains and losses, using appropriate estimates where necessary;

(4) incurred claims, listed individually, together with the date each claim was incurred, and with figures provided for, of the following:

(a) dollar amount of claims closed with payment, plus

(b) reserves for reported claims at the end of the current year, minus

(c) reserves for reported claims at the end of the previous year, plus

(d) reserves for incurred but not reported claims at the end of the current year, minus

(e) reserves for incurred but not reported claims at the end of the previous year, plus

(f) reserves for loss adjustment expense at the end of the current year, minus

(g) reserves for loss adjustment expense at the end of the previous year;

(5) actual incurred expenses allocated separately to loss adjustment, commissions, other acquisition costs, general office expenses, taxes, licenses and fees, and all other expenses;

(6) net underwriting gain or loss; and

(7) net operation gain or loss, including net investment income.

This report is due by the first of May of each year. The commissioner shall annually audit, compile, and review all reports submitted by insurers pursuant to this section. The audit must verify that each item required by this subdivision on each line of business covered is accurate and complete. The department of commerce shall perform the audit on a domestic insurer, and may either personally audit a foreign insurer, or contract with the domiciliary state of the foreign insurer to have them perform the audit. In either case, each insurer audited shall pay the audit fees and expenses of the department, including per diem salary fees of persons who participated in or conducted the audit. These fees and expenses must be paid into the department of commerce revolving fund. These filings must be published and made available to any interested insured or citizen.

A rate, or a change or an amendment of a rate, that will result in an increase of an existing rate, filed by an insurer subject to this subdivision is not effective unless the insurer has complied with all of the requirements of this section.

The initial report required by this section is due May 1, 1996.

Sec. 26. [79.83] [VIOLATIONS; PENALTIES.]

Any insurer, data service organization, agent, or other representative or employee of any insurer or data service organization that fails to comply with or violates any of the provisions of this chapter, or any order or ruling of the commissioner, shall be punished by a fine of not less than $100 nor more than $25,000. In addition, the license of any insurer, agent, or broker guilty of the violation may be revoked or suspended by the commissioner.

Sec. 27. [79.85] [LIABILITY UNDER OTHER LAW.]

The regulatory scheme established by this chapter does not relieve any person from liability under sections 325D.49 to 325D.66, or United States Code, title 15, sections 1 to 38.

Sec. 28. [TRANSITION PROVISIONS; EMPLOYEES.]

Until January 1, 1999, initial appointment to the professional positions authorized by Minnesota Statutes, section 79.71, shall be deemed to be provisional or exceptional appointments as defined by Minnesota Statutes, section 43A.15, subdivisions 4 and 8, and the commissioner of employee relations must authorize those appointments as requested by the commissioner of commerce or labor and industry. Upon request of the commissioner of commerce or labor and industry, the appointments under this section shall be considered an unusual employment condition as defined by Minnesota Statutes, section 43A.17, subdivision 3, and salaries may be set accordingly.

Sec. 29. [LEGISLATIVE INTENT.]

It is the intent of the legislature in enacting this article to reinstate the prior state workers' compensation insurance rate regulatory system that was repealed effective January 1, 1984. Judicial and administrative decisions regarding the prior law shall be deemed to be applicable to this article in the same manner as to the prior law.

Sec. 30. [RATE, CLASSIFICATION, AND CREDIT FREEZE.]

Until January 1, 1996, no insurer, data service organization, association, or the assigned risk plan may increase the workers' compensation rates of an employer, reclassify the operation of an employer or reduce a premium credit previously offered an employer. This section does not prohibit adjustment of an employer's experience rating in accordance with the rating plan of an insurer, data service organization, association or the assigned risk plan filed with the commissioner of commerce on or before December 31, 1994.

Sec. 31. [REPORT; REINSURANCE REFUND.]

By July 1, 1995, every insurer must report to the commissioner on its use of the surplus received from the reinsurance association from 1992 to date. The reports shall be nonpublic data. By February 1, 1996, the commissioner must provide a summary report to the labor management relations committee of the house of representatives and the jobs, energy, and community development committee of the senate of the information provided by insurers, including the approximate percentage of the total surplus that was returned by insurers to employers. The commissioner's report must disclose the use of the surplus by the assigned risk plan.

Sec. 32. [APPROPRIATION.]

$1,300,000 is appropriated from the special compensation fund to the department of commerce for the purpose of this article. The appropriation is available immediately and is available until expended. The complement of the department of commerce is increased by a maximum of ten positions.

Sec. 33. [REPEALER.]

Minnesota Statutes 1994, sections 79.51; 79.52; 79.53; 79.54; 79.55; 79.56; 79.57; 79.58; 79.59, subdivisions 1, 2, 3, and 5; 79.60; 79.61; and 79.62, are repealed.

Sec. 34. [EFFECTIVE DATE.]

Sections 4 to 9 and 12 to 33 are effective the day following final enactment. Section 10 is effective January 1, 1996."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

Sviggum raised a point of order pursuant to section 414, paragraph 3, of "Mason's Manual of Legislative Procedure" relating to amendments by striking out or inserting paragraphs. The Speaker ruled the point of order not well taken.

Sviggum raised a point of order pursuant to section 413, paragraph 1, of "Mason's Manual of Legislative Procedure" relating to amendments striking out and inserting words. The Speaker ruled the point of order not well taken.

The question recurred on the Winter amendment and the roll was called. There were 60 yeas and 72 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Osthoff      Tomassoni
Brown        Huntley      Luther       Ostrom       Trimble
Carlson      Jaros        Mahon        Ozment       Tunheim
Carruthers   Jefferson    Mariani      Perlt        Wagenius
Dawkins      Jennings     Marko        Peterson     Wejcman
Delmont      Johnson, A.  McCollum     Pugh         Wenzel
Dorn         Johnson, R.  McGuire      Rest         Winter
Entenza      Kahn         Milbert      Rice         Sp.Anderson,I
Farrell      Kelley       Munger       Rukavina     
Garcia       Kinkel       Murphy       Sarna        
Greenfield   Leighton     Olson, E.    Schumacher   
Greiling     Lieder       Orenstein    Skoglund     
Hasskamp     Long         Orfield      Solberg      

Abrams       Erhardt      Koppendrayer Opatz        Swenson, H.
Anderson, B. Finseth      Kraus        Osskopp      Sykora
Bertram      Frerichs     Krinkie      Otremba      Tompkins
Bettermann   Girard       Larsen       Paulsen      Tuma
Bishop       Goodno       Leppik       Pawlenty     Van Dellen
Boudreau     Haas         Lindner      Pellow       Van Engen
Bradley      Hackbarth    Lynch        Pelowski     Vickerman
Broecker     Harder       Macklin      Rhodes       Warkentin
Commers      Holsten      Mares        Rostberg     Weaver
Cooper       Hugoson      McElroy      Seagren      Wolf
Daggett      Johnson, V.  Molnau       Simoneau     Worke
Dauner       Kalis        Mulder       Smith        Workman 
Davids       Kelso        Ness         Stanek       
Dehler       Knight       Olson, M.    Sviggum      
Dempsey      Knoblach     Onnen        Swenson, D.  

Winter moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 116, after line 23, insert:

Section 1. Minnesota Statutes 1994, section 60A.23, subdivision 8, is amended to read:

Subd. 8. [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1) [SCOPE.] This subdivision applies to any vendor of risk management services and to any entity which administers, for compensation, a self-insurance or insurance plan. This subdivision does not apply (a) to an insurance company authorized to transact insurance in this state, as defined by section 60A.06, subdivision 1,

clauses (4) and (5); (b) to a service plan corporation, as defined by section 62C.02, subdivision 6; (c) to a health maintenance organization, as defined by section 62D.02, subdivision 4; (d) to an employer directly operating a self-insurance plan for its employees' benefits; or (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.

(2) [DEFINITIONS.] For purposes of this subdivision the following terms have the meanings given them.

(a) "Administering a self-insurance or insurance plan" means (i) processing, reviewing or paying claims, (ii) establishing or operating funds and accounts, or (iii) otherwise providing necessary administrative services in connection with the operation of a self-insurance or insurance plan.

(b) "Employer" means an employer, as defined by section 62E.02, subdivision 2.

(c) "Entity" means any association, corporation, partnership, sole proprietorship, trust, or other business entity engaged in or transacting business in this state.

(d) "Self-insurance or insurance plan" means a plan providing life, medical or hospital care, accident, sickness or disability insurance, as an employee fringe benefit, 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 $100 $250. All licenses are for a period of two years.

(4) [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] To assure that self-insurance or insurance plans are financially solvent, are administered in a fair and equitable fashion, and are processing claims and paying benefits in a prompt, fair, and honest manner, vendors of risk management services and entities administering insurance or self-insurance plans are subject to the supervision and examination by the commissioner. Vendors of risk management services, entities administering insurance or self-insurance plans, and insurance or self-insurance plans established or operated by them are subject to the trade practice requirements of sections 72A.19 to 72A.30. In lieu of an unlimited guarantee from a parent corporation for a vendor of risk management services or an entity administering insurance or self-insurance plans, the commissioner may accept a fidelity 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.

(5) [RULEMAKING AUTHORITY.] To carry out the purposes of this subdivision, the commissioner may adopt rules, including emergency 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.

Sec. 2. Minnesota Statutes 1994, section 79A.01, subdivision 4, is amended to read:

Subd. 4. [INSOLVENT SELF-INSURER.] "Insolvent self-insurer" means either: (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, or; (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.

Sec. 3. Minnesota Statutes 1994, section 79A.01, is amended by adding a subdivision to read:

Subd. 10. [COMMON CLAIMS FUND.] "Common claims fund," with respect to group self-insurers, are the cash, cash equivalents, or investment accounts maintained by the group to pay its workers' compensation liabilities.

Sec. 4. Minnesota Statutes 1994, section 79A.02, subdivision 1, is amended to read:

Subdivision 1. [MEMBERSHIP.] For the purposes of assisting the commissioner, there is established a workers' compensation self-insurers' advisory committee of five members that are employers authorized to self-insure in Minnesota. Three of the members shall be elected by the members of the self-insurers' security fund board of trustees and two shall be appointed by the commissioner. In addition, one alternate member shall be elected by the members of the self-insurers' security fund board of trustees and one alternate member shall be appointed by the commissioner.

Sec. 5. Minnesota Statutes 1994, section 79A.02, subdivision 2, is amended to read:

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 workers' compensation self-insurance data under section 13.71, subdivision 3, 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. The 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.

Sec. 6. Minnesota Statutes 1994, section 79A.02, subdivision 4, is amended to read:

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.

Sec. 7. Minnesota Statutes 1994, section 79A.03, is amended by adding a subdivision to read:

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.

Sec. 8. Minnesota Statutes 1994, section 79A.04, subdivision 2, is amended to read:

Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 percent of the private self-insurer's estimated future liability. Up to ten percent of that 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 the employer's 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 two-year 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.

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. 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. 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 renewal 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.

Sec. 9. Minnesota Statutes 1994, section 79A.04, subdivision 9, is amended to read:

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. If the commissioner determines that a court of competent jurisdiction has declared the private self-insurer to be bankrupt or insolvent, and the private self-insurer has failed to pay workers' compensation as required by chapter 176 or, if the commissioner issues a certificate of default against a private self-insurer for failure to pay workers' compensation as required by chapter 176, or failure to pay an assessment to the self-insurers' security fund when due, then the security deposit shall be utilized to administer and pay the private self-insurers' workers' compensation or assessment obligations.

Sec. 10. Minnesota Statutes 1994, section 79A.15, is amended to read:

79A.15 [SURETY BOND FORM.]

The form for the surety bond under this chapter shall be:

IN THE MATTER OF THE CERTIFICATE OF )

)

) SURETY BOND

) NO. . . . . . . . . . . . . .

) PREMIUM: . . . . . . . .

)

Employer, Certificate No: . . . . . . . .

KNOW ALL PERSONS BY THESE PRESENTS:

That . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Employer)

whose address is . . . . . . . . . . . . . . . . . . . . . .

as Principal, and . . . . . . . . . . . . . . . . . . . . . .

(Surety)

a corporation organized under the laws of . . . . . . . . . . . . . . . . . and authorized to transact a general surety business in the State of Minnesota, as Surety, are held and firmly bound to the State of Minnesota in the penal sum of . . . . . . . . . . . . . . dollars ($. . . . . . . .) for which payment we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents.

WHEREAS in accordance with Minnesota Statutes, chapter 176, the principal elected to self-insure, and made application for, or received from the commissioner of commerce of the state of Minnesota, a certificate to self-insure, upon furnishing of proof satisfactory to the commissioner of commerce of ability to self-insure and to compensate any or all employees of said principal for injury or disability, and their dependents for death incurred or sustained by said employees pursuant to the terms, provisions, and limitations of said statute;

NOW THEREFORE, the conditions of this bond or obligation are such that if principal shall pay and furnish compensation, pursuant to the terms, provisions, and limitations of said statute to its employees for injury or disability, and to the dependents of its employees, then this bond or obligation shall be null and void; otherwise to remain in full force and effect.

FURTHERMORE, it is understood and agreed that:

1. This bond may be amended, by agreement between the parties hereto and the commissioner of commerce as to the identity of the principal herein named; and, by agreement of the parties hereto, as to the premium or rate of premium. Such amendment must be by endorsement upon, or rider to, this bond, executed by the surety and delivered to or filed with the commissioner.

2. The surety does, by these presents, undertake and agree that the obligation of this bond shall cover and extend to all past, present, existing, and potential liability of said principal, as a self-insurer, to the extent of the penal sum herein named without regard to specific injuries, date or dates of injuries, happenings or events.

3. The penal sum of this bond may be increased or decreased, by agreement between the parties hereto and the commissioner of commerce, without impairing the obligation incurred under this bond for the overall coverage of the said principal, for all past, present, existing, and potential liability, as a self-insurer, without regard to specific injuries, date or dates of injuries, happenings or events, to the extent, in the aggregate, of the penal sum as increased or decreased. Such amendment must be by endorsement.

4. The aggregate liability of the surety hereunder on all claims whatsoever shall not exceed the penal sum of this bond in any event.

5. This bond shall be continuous in form and shall remain in full force and effect unless terminated as follows:

(a) The obligation of this bond shall terminate upon written notice of cancellation from the surety, given by registered or certified mail to the commissioner of commerce, state of Minnesota, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred but not yet reported, as a self-insurer prior to effective date of termination. This termination is effective 60 days after receipt of notice of cancellation by the commissioner of commerce, state of Minnesota.

(b) This bond shall also terminate upon the revocation of the certificate to self-insure, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred but not yet reported, as a self-insurer prior to effective date of termination. The principal and the surety, herein named, shall be immediately notified in writing by said commissioner, in the event of such revocation.

6. Where the principal posts with the commissioner of commerce, state of Minnesota, or the state treasurer, state of Minnesota, a replacement security deposit, in the form of a surety bond, irrevocable letter of credit, cash, securities, or any combination thereof, in the full amount as may be required by the commissioner of commerce, state of Minnesota, to secure all incurred liabilities for the payment of compensation of said principal under Minnesota Statutes, chapter 176, the surety is released from obligations under the surety bond upon the date of acceptance by the commissioner of commerce, state of Minnesota, of said replacement security deposit.

7. If the said principal shall suspend payment of workers' compensation benefits or shall become insolvent or a receiver shall be appointed for its business, or the commissioner of commerce, state of Minnesota, issues a certificate of default, the undersigned surety will become liable for the workers' compensation obligations of the principal on the date benefits are suspended. The surety shall begin payments within 14 days under paragraph 8, or 30 days under paragraph 10, after receipt of written notification by certified mail from the commissioner of commerce, state of Minnesota, to begin payments under the terms of this bond.

8. If the surety exercises its option to administer claims, it shall pay benefits due to the principal's injured workers within 14 days of the receipt of the notification by the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, without a formal award of a compensation judge, the commissioner of labor and industry, any intermediate appellate court, or the Minnesota supreme court and such payment will be a charge against the penal sum of the bond. Administrative and legal costs and payment of assessments incurred by the surety in discharging its obligations and payment of the principal's obligations for administration and legal expenses and payment of assessments under Minnesota Statutes, chapter 176, and sections 79A.01 to 79A.17 and Laws 1988, chapter 674, section 23, shall also be a charge against the penal sum of the bond; however, the total amount of this surety bond set aside for the payment of said administrative and legal expenses and payment of assessments shall be limited to a maximum ten percent of the total penal sum of the bond unless otherwise authorized by the security fund.

9. If any part or provision of this bond shall be declared unenforceable or held to be invalid by a court of proper jurisdiction, such determination shall not affect the validity or enforceability of the other provisions or parts of this bond.

10. If the surety does not give notice to the security fund and the commissioner of commerce, state of Minnesota, within two 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 will assume the payments of the workers' compensation obligations of the principal pursuant to Minnesota Statutes, chapter 176. 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 as an initial deposit an amount equal to ten percent of the penal sum of the bond, and shall thereafter, upon notification from the security fund that the balance of the initial deposit had fallen to one percent of the penal sum of the bond, remit to the security fund an amount equal to the payments made by the security fund in the three calendar months immediately preceding said notification. All such payments will be a charge against the penal sum 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-insurers' security fund shall be resolved by the commissioner of commerce pursuant to Minnesota Statutes, chapter 176 and sections 79A.01 to 79A.17 and Laws 1988, chapter 674, section 23.

12. Written notification to the surety required by this bond shall be sent to:

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Name of Surety

. . . . . . . . . . . . . . . . . . . . . . . . .

To the attention of Person or Position

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Address

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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

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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.

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Name of Surety

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Address

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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.

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Date Signature of Attorney-In-Fact

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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.

Sec. 11. [79B.01] [DEFINITIONS.]

Subdivision 1. [SCOPE.] For the purposes of this chapter, the terms defined in this section have the meanings given them.

Subd. 2. [ACCOUNTANT.] "Accountant" means a certified public accountant who is not an employee of any member of the mutual 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 mutual self-insurance group and is not affiliated with any individual or organization providing services other than actuarial services to the group.

Subd. 4. [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 mutual self-insurance group has failed to pay compensation as required by chapter 176.

Subd. 5. [COMMISSIONER.] "Commissioner" means the commissioner of commerce except where specifically stated otherwise.

Subd. 6. [COMMON CLAIMS FUND.] "Common claims fund" means the cash, cash equivalents, or investment accounts maintained by the mutual self-insurance group to pay its workers' compensation liabilities.

Subd. 7. [DEFICIT.] "Deficit" as regards the mutual group self-insurance fund means the excess of the amount necessary to fulfill all obligations under chapter 176, for all fund years that the group has been in operation over all assets of the group. For purposes of this definition, provision must be made for the estimated liability for future special compensation fund assessments on claims incurred prior to the determination of the deficit. No discounting of any liabilities of the mutual self-insurance group shall be permitted in the determination of the deficit of the group.

Subd. 8. [DIRECTORS.] "Directors" means the board of directors of a mutual self-insurance group.

Subd. 9. [FISCAL AGENT.] "Fiscal agent" means an individual or organization appointed and under the direction of the board of directors to maintain and administer the mutual self-insurance groups' common claims fund.

Subd. 10. [FUND YEAR.] "Fund year" for mutual self-insurance groups means that period of time for purposes of determining any deficit or surplus. A separate fund year shall be designated for each calendar year in which the mutual self-insurance group operates. Premiums earned during the fund year and any claim arising within the accident year upon which the fund year is based shall be included in that fund year.

Subd. 11. [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. 12. [INSOLVENT MUTUAL SELF-INSURER.] "Insolvent mutual self-insurer" means a mutual self-insurance group that: (1) 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 under chapter 176; or (2) failed to pay compensation and has been issued a certificate of default by the commissioner and whose security deposit has been called by the commissioner pursuant to chapter 176.

Subd. 13. [MEMBER.] "Member" means an employer that participates in a mutual self-insurance group.

Subd. 14. [MUTUAL SELF-INSURANCE GROUP.] "Mutual self-insurance group" means a group of employers that are self-insured for workers' compensation under chapter 176 and elects to operate under this chapter rather than chapter 79A.

Subd. 15. [MUTUAL SELF-INSURANCE GROUP SECURITY FUND.] "Mutual self-insurance group security fund" means the mutual self-insurance group security fund established pursuant to this chapter.

Subd. 16. [SERVICE COMPANY.] "Service company" means a vendor of risk management services or a licensed third-party administrator pursuant to section 60A.23, subdivision 8.

Subd. 17. [SPECIAL COMPENSATION FUND ASSESSMENT.] "Special compensation fund assessment" are those sums payable as set forth in section 176.129, subdivisions 3 and 4a.

Subd. 18. [SURPLUS.] "Surplus" as regards the mutual self-insurance group fund means the excess of all group assets over the amount necessary to fulfill all obligations under chapter 176, for all fund years that the group has been in operation. For purposes of this definition, provision must be made for the estimated liability for future special compensation fund assessments on claims incurred prior to the determination of surplus. No discounting of any liabilities of the mutual self-insurance group shall be permitted in the determination of the surplus of the group.

Subd. 19. [TRUSTEES.] "Trustees" means the board of trustees of the mutual self-insurance group security fund.

Subd. 20. [WORKERS' COMPENSATION REINSURANCE ASSOCIATION; WCRA.] "Workers' compensation reinsurance association" or "WCRA" means that association governed by sections 79.34 to 79.40.

Sec. 12. [79B.02] [ELIGIBILITY REQUIREMENTS FOR MUTUAL SELF-INSURANCE GROUPS.]

Subdivision 1. [GROUP ELIGIBILITY.] A mutual self-insurance group shall consist of employers in the same industry, trade, civic, cooperative, or professional group or employers having a common geographic location or any other reasonable basis to self-insure.

Subd. 2. [MEMBERSHIP ELIGIBILITY.] A mutual 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 mutual self-insurance group's bylaws or plan of operation.

Sec. 13. [79B.03] [MUTUAL SELF-INSURANCE GROUP APPLICATION.]

Subdivision 1. [PROCEDURE.] (a) Groups proposing to become licensed as mutual self-insurance groups must complete and submit an application on a form or forms prescribed by the commissioner and pay a $1,000 nonrefundable application fee.

(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 applications must be accompanied by the following:

(a) A detailed business plan including names of employers that will be members of the group, 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. Financial projections shall include balance sheet, income statement, statement of cash flows, and any other such items as the commissioner may require.

(b) A rating plan indicating the method in which premiums are to be charged to members including manual rates to be used for each relevant payroll classification code.

(c) A schedule indicating actual or anticipated operational expenses of the mutual self-insurance group. No authority to self-insure will be granted unless at least 65 percent of total revenues from all sources for any year of the mutual self-insurance group's operation 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 mutual 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 mutual 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 mutual self-insurance group arising in any fund year in which the member was a participant on a form as specified in section 79B.11.

(e) Compilation level financial statements for each member and sworn affidavit of officer of each member as to litigation and potential litigation.

(f) A copy of the mutual self-insurance group bylaws as specified in section 79B.04, subdivision 2.

(g) A statement from the accountant of the mutual self-insurance group showing that the combined net worth of all of the initial members which shall be at least equal to $1,500,000 or ten times the group's retention level with the workers' compensation reinsurance association whichever is more.

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 mutual self-insurance group is sufficient to fulfill all obligations that may arise under this chapter or chapter 176;

(3) the annual premium of the mutual self-insurance group to be charged to initial members is at least $300,000;

(4) no individual member's premium comprises more than 20 percent of the entire mutual self-insurance group's annual premium;

(5) the mutual self-insurance group has contracted with a service company to administer its program; and

(6) the required securities or surety bond shall be on deposit prior to the effective date of coverage for the mutual self-insurance group.

Sec. 14. [79B.04] [MUTUAL SELF-INSURANCE GROUP OPERATING REQUIREMENTS.]

Subdivision 1. [BOARD OF DIRECTORS.] (a) A mutual self-insurance group shall elect a board of directors who shall have complete authority over and control of the assets of the mutual self-insurance group. The board of directors will also be responsible for all of the operations of the mutual self-insurance group.

(b) The composition of the board of directors shall be owners, officers, directors, partners, or employees of members of the mutual self-insurance group.

(c) The directors shall approve applications for membership in the mutual self-insurance group.

Subd. 2. [BYLAWS.] (a) The directors of each mutual self-insurance group shall cause to be adopted a set of bylaws that shall govern the operation of the group. These bylaws must specifically state the mutual self-insurance group's intention to operate under the provisions of this statute rather than the provisions of chapter 79A. All bylaws or amendments to the bylaws are subject to prior approval by the commissioner.

(b) These bylaws shall contain the following subjects:

(1) qualifications for mutual self-insurance group membership, including underwriting considerations;

(2) the method for selecting the board of directors including the directors' terms of office and the positions of chairperson, secretary, and treasurer;

(3) a requirement of active involvement and oversight by the board or committees of members appointed by the board, in the operation, risk management, member selection, and financial condition of the group;

(4) the procedure for amending the bylaws;

(5) investment of all assets of the fund;

(6) frequency and extent of loss control or safety engineering services provided to members;

(7) a schedule for payment and collection of premiums;

(8) expulsion procedures, including expulsion for nonpayment of premiums and expulsion for excessive losses;

(9) delineation of authority granted to the fiscal agent;

(10) delineation of authority granted to the service company;

(11) basis for determining rating plan and premium contributions by members, including any experience rating program, schedule rating plan, or premium discount plan;

(12) procedures for resolving disputes between members of the group, which shall not include submitting them to the commissioner; and

(13) basis for determining distribution of any surplus to the members or assessing the membership to make up any deficit.

(c) All mutual self-insurance groups shall file copies of its current bylaws with the commissioner. Any changes in the bylaws shall be filed with the commissioner at least 30 days prior to their taking effect. The commissioner reserves the right to order the mutual self-insurance group to rescind, revoke, or amend any bylaw.

Subd. 3. [ANNUAL REVIEW.] The directors shall review at least annually the following items for the purpose of determining whether these areas of concern are being adequately provided for:

(1) service company performance;

(2) loss control and safety engineering;

(3) investment policies;

(4) collection of delinquent debts;

(5) expulsion procedures;

(6) initial member review;

(7) fiscal agent performance; and

(8) claims handling and reporting.

Subd. 4. [FINANCIAL STANDARDS.] Mutual self-insurance groups shall have and maintain:

(1) combined net worth of all of the members in an amount at least equal to $1,500,000 or ten times the group's selected retention level of the workers' compensation reinsurance association, whichever is more;

(2) sufficient assets, net worth, and liquidity in the group's common claims fund to promptly and completely meet all obligations of its members under this chapter or chapter 176.

Subd. 5. [RATES.] (a) The mutual self-insurance group shall not vary its rating practices from the rating plan most recently approved for use by the commissioner. The group shall be permitted to replace its rating plan with another upon approval by the commissioner. The group shall be allowed to change its rating plan no more than once per year.

(b) A rating plan must indicate the method in which premiums are to be charged to members including manual rates to be used for each relevant payroll classification code. The rating plan shall be reviewed by an actuary and shall include an analysis of the actuarial soundness of the plan and the effect of the plan on fund solvency and liquidity. Premium volume discounts and a schedule rating plan will be permitted if they can be shown to be actuarially sound and a description of how they will be used is included with the application.

(c) In developing its rating plan, the mutual self-insurance group shall base its plan on the Minnesota workers' compensation insurers association's manual of rules, rates, and classifications approved for use in Minnesota by the commissioner.

Subd. 6. [NEW MEMBERSHIP.] (a) The mutual self-insurance group shall file with the commissioner the name of any new employer that has been accepted in the group prior to 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 mutual self-insurance group's bylaws or plan of operation. The security deposit of the group will be increased to an amount equal to 50 percent of the new member's premium.

(b) An employer must belong to the mutual self-insurance group for at least one year. If a member voluntarily terminates its membership in a group during the second or third year of membership, the mutual self-insurance group shall assess the member at least the following penalties: 25 percent of the premium due from that member for that year if termination occurs within the second year of membership, and 15 percent of the premium due from that member for that year if termination occurs within the third year. No penalty shall be required if an employer's withdrawal is due to merger, dissolution, sale of the company, or change in the type of business. Following the completion of three consecutive years of membership in the group, withdrawal from the group shall be allowed without penalty, provided that 30 days' advance written notice is given to the board of directors of the group, and the group's plan of operation or bylaws allow such withdrawal without a penalty. Any penalty assessed pursuant to this subdivision shall be paid to the common claims fund.

Subd. 7. [WITHDRAWAL OR EXPULSION.] Upon receipt of any notice of a member to withdraw or a decision by the board of directors to expel a member, the mutual self-insurance group shall give immediate notice to the commissioner. If the combined net worth or financial condition of the mutual self-insurance group members, excluding the terminating or expelled member, fails to meet the requirements specified in subdivision 4, the group shall so notify the commissioner within 15 days.

Subd. 8. [MUTUAL SELF-INSURANCE GROUP COMMON CLAIMS FUND.] (a) Each mutual self-insurance group shall establish a common claims fund.

(b) Each mutual 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 schedule in the business plan, classifications, and rates approved for use by the commissioner.

(c) Each mutual self-insurance group shall initiate proceedings against a member when that member becomes more than 15 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. 9. [FISCAL AGENT.] (a) The mutual self-insurance group shall designate a fiscal agent to administer the financial affairs of the fund. The fiscal agent shall furnish a fidelity bond issued by a licensed and admitted insurer, with the mutual self-insurance group as obligee, in an amount sufficient to protect the fund against the misappropriation or misuse of any money or securities. Such fiscal agent shall not be an owner, officer, or employee of either the service company or an affiliate of the service company.

(b) All funds shall remain in the control of the mutual self-insurance group or its fiscal agent. One or more revolving funds for payment of compensation benefits due may be established for the use by the service company. The service company shall furnish a fidelity bond issued by a licensed and admitted insurer, covering its employees, with the mutual self-insurance group as obligee, in an amount sufficient to protect all money placed in such revolving fund. Should the fidelity bond of the fiscal agent also cover the money in the revolving fund, the service company shall not be required to furnish a fidelity bond.

(c) No director, fiscal agent, or service company of the mutual self-insurance group shall utilize any of the money collected as premiums for any purpose unrelated to the operation of the mutual self-insurance group. No director, fiscal agent, or service company of the mutual self-insurance group shall borrow any money from the mutual self-insurance group's fund.

Subd. 10. [JOINT AND SEVERAL LIABILITY.] Each member of a mutual self-insurance group is 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 mutual self-insurance group.

Subd. 11. [ANNUAL AUDIT.] The accounts and records of the common claims fund shall be audited annually. Audits shall be made by an accountant, based on generally accepted accounting principles and generally accepted auditing standards, and supported by actuarial review and opinion of future contingent liabilities. The accountant shall determine the amount of deficit or surplus of the common claims fund. All audits required by this section shall be filed with the commissioner 120 days after the close of the fiscal year of the mutual self-insurance group. 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 reserves is in question.

Subd. 12. [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 common claims fund may be invested in the following securities:

(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-," or "AA3," or their equivalent by at least two nationally recognized rating agencies.

Subd. 13. [ADMINISTRATION.] (a) The mutual self-insurance group shall be required to secure administrative services from a service company which maintains an office in the state of Minnesota. Services provided by the service company must at a minimum include claim handling, safety and loss control, and preparation of all required regulatory reports.

(b) The service company retained by a mutual self-insurance group to administer workers' compensation claims shall estimate the total accrued liability of the group for the payment of compensation for the mutual 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. 14. [MARKETING AND COMMUNICATIONS.] A mutual self-insurance group's applications, coverage documents, quotations, and all marketing materials must prominently display information indicating that the mutual self-insurance group is a self-insured program, that members are jointly and severally liable for the obligations of the mutual self-insurance group, and that members will be assessed for any deficits created by the mutual self-insurance group.

Subd. 15. [REINSURANCE.] (a) A mutual self-insurance group must purchase specific excess coverage with the workers' compensation reinsurance association at either the mutual self-insurance group retention level of $100,000 or the lower retention level for its first three years of operation. After that time it may select the higher retention level with prior notice given to and approval of the commissioner.

(b) The commissioner may require a mutual 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. 16. [DISBURSEMENT OF FUND SURPLUS.] (a) Fifty 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 a member at any time. The date shall be no earlier than 18 months following the end of such fund year. The first disbursement of fund surplus may not be made prior to the completion of an operational audit by the commissioner. There can be no more than one refund made in any 12-month period. When all the claims of any one fund year have been fully paid, as certified by an actuary, 50 percent of the surplus money from that fund year may be declared refundable.

(b) The mutual self-insurance group shall give notice to the commissioner of any refund. Said notice shall be accompanied by a statement from the mutual self-insurer's certified public accountant certifying that the proposed refund is in compliance with paragraph (a).

Subd. 17. [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 mutual self-insurance group during that fund year sufficient to make up any deficit.

Sec. 15. [79B.05] [MUTUAL SELF-INSURANCE GROUP REPORTING REQUIREMENTS.]

Subdivision 1. [REQUIRED REPORTS.] Each mutual self-insurance group shall submit to the commissioner reports in the form and manner required in section 79A.03, subdivision 9, and pay an annual fee of $500.

In addition, each mutual self-insurance group shall submit on a quarterly basis a schedule showing all the members who participate in the group, their date of inception, and date of withdrawal, if applicable.

Each mutual self-insurance group shall annually submit, in the manner required, and on forms available from the commissioner, a report specifying the audited premium of the most recent fiscal year. The report must be accompanied by an expense schedule showing the mutual self-insurance group's operational costs for the same fiscal year including service company charges, accounting and actuarial fees, fund administration charges, reinsurance premiums, royalties, commissions, and any other costs associated with the administration of the group program.

Each mutual self-insurance group shall submit a copy of the group's annual federal and state income tax returns or provide evidence that it has received an exemption from filing returns.

Subd. 2. [OPERATIONAL AUDIT.] (a) The commissioner, prior to authorizing surplus distribution of a mutual group's first fund year or no later than after the third anniversary of the group's authority to self-insure, shall conduct an operational audit of the mutual 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. 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 mutual 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 mutual self-insurance group.

(c) In the first three years of each group's operation, the commissioner shall provide increased oversight.

Subd. 3. [UNIT STATISTICAL REPORT.] Each mutual self-insurance group will annually file a unit statistical report to the Minnesota workers' compensation insurers association.

Sec. 16. [79B.06] [MUTUAL SELF-INSURANCE GROUP SECURITY DEPOSIT.]

Subdivision 1. [ANNUAL SECURING OF LIABILITY.] Each year every mutual self-insurance group shall secure future incurred liabilities for the payment of compensation and the performance of the obligations of its membership imposed under chapter 176. A new deposit must be posted within 30 days of the filing of the mutual self-insurance group's annual actuarial report with the commissioner.

Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 percent of the mutual self-insurance group's future incurred liabilities for the payment of 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. Deduction should be made for the total amount which is estimated to be returned to the mutual 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. 3. [TYPE OF ACCEPTABLE SECURITY.] The commissioner may only accept as security, and the mutual self-insurance group shall deposit as security, cash, approved government securities as set forth in section 176.181, subdivision 2, 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 group or, at the group's direction, applied to the group's security requirement. The current deposit shall include within its coverage all amounts covered by terminated surety bonds. As used in this section, 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 issuer 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. 4. [CUSTODIAL ACCOUNTS.] (a) All 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. All securities shall be deposited with the state treasurer or in a custodial account with a depository institution acceptable to the commissioner. The commissioner and the state treasurer may sell or collect, in the case of default of the mutual self-insurance group, the amounts that yield sufficient funds to pay workers' compensation due under chapter 176.

(b) All securities in physical form on deposit with the state treasurer and surety bonds on deposit shall remain in the custody of the state treasurer or the commissioner for a period of time dictated by the applicable statute of limitations provided in chapter 176. All original instruments and contracts creating and governing custodial accounts shall remain with the state treasurer or the commissioner for a period of time dictated by the applicable statute of limitations provided in chapter 176.

(c) Securities in physical form deposited with the state treasurer must bear the following assignment, which shall be signed by an officer of the mutual self-insurance group, "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 state treasurer by the mutual self-insurance group 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."

(d) 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 mutual self-insurance group's assets in favor of the commissioner to the extent of any then unsecured portion of the mutual self-insurance group's incurred liabilities. The perfected security interest is transferred to any cash or securities thereafter posted by the mutual self-insurance group with the state treasurer 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 mutual 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 transferred to the mutual self-insurance group security fund for application to the mutual self-insurance group's incurred liability.

(e) No securities in physical form on deposit with the state treasurer 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.

(f) Any securities deposited with the state treasurer or with a custodial account assigned to the state treasurer 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 mutual 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.

(g) The commissioner shall return on an annual basis to the mutual self-insurance group all amounts of security determined by the commissioner to be in excess of the statutory requirements for the group to self-insure, including that necessary for administrative costs, legal fees, and the payment of any future workers' compensation claims.

Sec. 17. [79B.07] [DEFAULT OF A MUTUAL SELF-INSURANCE GROUP.]

Subdivision 1. [NOTICE OF INSOLVENCY, BANKRUPTCY, OR DEFAULT.] The commissioner of labor and industry shall notify the commissioner and the mutual self-insurance group security fund if the commissioner of labor and industry has knowledge that any mutual 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 mutual self-insurance group to be bankrupt or insolvent and the mutual 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 mutual self-insurance group for failure to pay workers' compensation as required by chapter 176, then the security deposit posted by the mutual self-insurance group shall be utilized to administer and pay the mutual self-insurance group's workers' compensation obligation.

Subd. 2. [REVOCATION OF CERTIFICATE TO SELF-INSURE.] (a) The commissioner shall revoke the mutual self-insurance group's certificate to self-insure once notified of the mutual 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 mutual self-insurance group's security has been called.

(b) The commissioner shall also revoke a mutual 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 mutual 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 THE COMMISSIONER.] In the event of bankruptcy, insolvency, or certificate of default, the commissioner shall immediately notify by certified mail the state treasurer, 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 mutual self-insurance group security fund. The commissioner shall also notify by certified mail the mutual self-insurance group's security fund and order the security fund to assume the insolvent mutual self-insurance group's obligations for which it is liable under chapter 176.

Sec. 18. [79B.08] [MUTUAL SELF-INSURANCE GROUP SECURITY FUND.]

Subdivision 1. [CREATION.] The mutual 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 self-insurance group that elects to be or is governed by this chapter shall participate in the mutual self-insurance group security fund. This participation is a condition of maintaining its certificate to self-insure.

Subd. 2. [BOARD OF TRUSTEES.] The security fund is governed by a board consisting of a minimum of three and a maximum of five trustees. The trustees shall be representatives of mutual self-insurance groups who shall be elected by the participants of the 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 security fund. Two additional trustees shall be appointed by the commissioner. 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 according to the bylaws of the 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 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 it deems necessary for the protection of the mutual self-insurance group participants and their employees.

Subd. 4. [CONFIDENTIAL INFORMATION.] The security fund may receive private data concerning the financial condition of mutual 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.] 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 79B.07, subdivision 3, the security fund shall assume the workers' compensation obligations of an insolvent mutual self-insurance group. The commissioner shall further order the mutual 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 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. 8. [PARTY IN INTEREST.] The security fund shall be a party in interest in all proceedings involving compensation claims against an insolvent mutual self-insurance group 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 mutual 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 SECURITY FUND.] Notwithstanding anything in this chapter or chapter 176 to the contrary, in the event that the mutual self-insurance group security fund assumes the obligations of any bankrupt or insolvent mutual 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 mutual self-insurance group security fund instead of the bankrupt or insolvent mutual self-insurance group or its successor in interest. No special compensation fund reimbursements shall be made to the 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 MUTUAL SELF-INSURANCE GROUP.] The security fund shall have the right and obligation to obtain reimbursement from an insolvent mutual self-insurance group up to the amount of the mutual self-insurance group'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 mutual self-insurance group as debtor.

Subd. 11. [SECURITY DEPOSITS.] The security fund shall have the right and obligation to obtain from the security deposit of an insolvent mutual self-insurance group the amount of the mutual self-insurance group's compensation obligations, including reasonable administrative and legal costs, paid or assumed by 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 mutual self-insurance group.

Subd. 12. [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 mutual self-insurance group and any person or entity whose negligence or breach of an obligation contributed to any underestimation of the mutual self-insurance group's accrued liability as reported to the commissioner.

Subd. 13. [FUND 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 mutual self-insurance group to pay workers' compensation required under this subdivision.

Subd. 14. [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 mutual 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 security fund for this purpose.

Subd. 15. [ASSESSMENT.] The 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 this chapter. Total annual assessments in any calendar year shall be no more than ten percent 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 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.

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 mutual self-insurance group security fund shall be submitted to the commissioner and to each group participant.

Sec. 19. [79B.09] [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)

Sec. 20. [79B.10] [SURETY BOND FORM.]

The form for the surety bond under this chapter shall be:

IN THE MATTER OF THE CERTIFICATE OF )

)SURETY BOND

)NO. . . . . . . .

)PREMIUM

)

Employer, Certificate No:. . . . . . . . . .

KNOW ALL PERSONS BY THESE PRESENTS:

That . . . . . . . . . . .

(Mutual Self-Insurance Group.)

Whose address is . . . . . . . . . . . . . .

as Principal, and . . . . . . . . . . . . . .

(Surety)

a corporation organized under the laws of . . . . . . . . . . . . . . . . and authorized to transact a general surety business in the State of Minnesota, as Surety, are held and firmly bound to the State of Minnesota in the penal sum of . . . . . . . . . dollars ($. . . . . . . .) for which payment we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents.

WHEREAS, in accordance with Minnesota Statutes, chapter 176, the principal elected to self-insure, and made application for, or received from the commissioner of commerce of the state of Minnesota, a certificate to self-insure, upon furnishing of proof satisfactory to the commissioner of commerce of ability to self-insure and to compensate any or all employees of said principal for injury or disability, and their dependents for death incurred or sustained by said employees pursuant to the terms, provisions, and limitations of said statute;

NOW THEREFORE, the conditions of this bond or obligation are such that if principal shall pay and furnish compensation, pursuant to the terms, provisions, and limitations of said statute to its employees for injury or disability, and to the dependents of its employees, then this bond or obligation shall be null and void; otherwise to remain in full force and effect.

FURTHERMORE, it is understood and agreed that:

1. This bond may be amended, by agreement between the parties hereto and the commissioner of commerce as to the identity of the principal herein named; and, by agreement of the parties hereto, as to the premium or rate of premium. Such amendment must be by endorsement upon, or rider to, this bond, executed by the surety and delivered to or filed with the commissioner.

2. The surety does, by these presents, undertake and agree that the obligation of this bond shall cover and extend to all past, present, existing, and potential liability of said principal, as a self-insurer, to the extent of the penal sum herein named without regard to specific injuries, date or dates of injuries, happenings, or events.

3. The penal sum of this bond may be increased or decreased, by agreement between the parties hereto and the commissioner of commerce, without impairing the obligation incurred under this bond for the overall coverage of the said principal, for all past, present, existing, and potential liability, as a self-insurer, without regard to specific injuries, date or dates of injuries, happenings, or events, to the extent, in the aggregate, of the penal sum as increased or decreased. Such amendment must be by endorsement.

4. The aggregate liability of the surety hereunder on all claims whatsoever shall not exceed the penal sum of this bond in any event.

5. This bond shall be continuous in form and shall remain in full force and effect unless terminated as follows:

(a) The obligation of this bond shall terminate upon written notice of cancellation from the surety, given by registered or certified mail to the commissioner of commerce, state of Minnesota, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred but not yet reported, as a self-insurer prior to effective date of termination. This termination is effective 60 days after receipt of notice of cancellation by the commissioner of commerce, state of Minnesota.

(b) This bond shall also terminate upon the revocation of the certificate to self-insure, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred, but not yet reported, as a self-insurer prior to effective date of termination. The principal and the surety, herein named, shall be immediately notified in writing by said commissioner, in the event of such revocation.

6. Where the principal posts with the commissioner of commerce, state of Minnesota, or the state treasurer, state of Minnesota, a replacement security deposit, in the form of a surety bond, irrevocable letter of credit, cash, securities, or any combination thereof, in the full amount as may be required by the commissioner of commerce, state of Minnesota, to secure all incurred liabilities for the payment of compensation of said principal under Minnesota Statutes, chapter 176, the surety is released from obligations under the surety bond upon the date of acceptance by the commissioner of commerce, state of Minnesota, of said replacement security deposit.

7. If the said principal shall suspend payment of workers' compensation benefits or shall become insolvent or a receiver shall be appointed for its business, or the commissioner of commerce, state of Minnesota, issues a certificate of default, the undersigned surety will become liable for the workers' compensation obligations of the principal on the date benefits are suspended. The surety shall begin payments within 14 days under paragraph 8, or 30 days under paragraph 10, after receipt of written notification by certified mail from the commissioner of commerce, state of Minnesota, to begin payments under the terms of this bond.

8. If the surety exercises its option to administer claims, it shall pay benefits due to the principal's injured workers within 14 days of the receipt of the notification by the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, without a formal award of a compensation judge, the commissioner of labor and industry, any intermediate appellate court, or the Minnesota supreme court and such payment will be a charge against the penal sum of the bond. Administrative and legal costs incurred by the surety in discharging its obligations and payment of the principal's obligations for administration and legal expenses under Minnesota Statutes, chapters 79B and 176, shall also be a charge against the penal sum of the bond; however, the total amount of this surety bond set aside for the payment of said administrative and legal expenses shall be limited to a maximum ten percent of the total penal sum of the bond unless otherwise authorized by the security fund.

9. If any part or provision of this bond shall be declared unenforceable or held to be invalid by a court of proper jurisdiction, such determination shall not affect the validity or enforceability of the other provisions or parts of this bond.

10. If the surety does not give notice to the security fund and the commissioner of commerce, state of Minnesota, within two 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 will assume the payments of the workers' compensation obligations of the principal pursuant to Minnesota Statutes, chapter 176. 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 as an initial deposit an amount equal to ten percent of the penal sum of the bond, and shall thereafter, upon notification from the security fund that the balance of the initial deposit had fallen to one percent of the penal sum of the bond, remit to the security fund an amount equal to the payments made by the security fund in the three calendar months immediately preceding said notification. All such payments will be a charge against the penal sum 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 shall be resolved by the commissioner of commerce under Minnesota Statutes, chapters 79B 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.

Sec. 21. [79B.11] [INDEMNITY AGREEMENT FORM.]

1. Whereas, (name of company) has agreed to be and has been accepted as a member of (name of mutual self-insurance group).

2. 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.

3. Whereas, that (name of company) has agreed to be bound by bylaws or plan of operation and all amendments thereto of (name of mutual self-insurance group).

4. Whereas, that (name of company) has agreed to be jointly and severally liable for all claims and expenses of all the members of (name of mutual self-insurance group) arising in any fund year in which (name of company) is a member of the group. Provided that if (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 mutual self-insurance group) have caused this indemnity agreement to be executed by its authorized agreement to be executed by its authorized officers:

Mutual Self-Insurance Group NameCompany Name

By: . . . . . . . . . . . . . . . .By: . . . . . . . .

date: . . . . . . . . . . . . . . . date: . . . . . . . .

Sec. 22. [79B.12] [OPEN MEETING; ADMINISTRATIVE PROCEDURE ACT.]

The mutual self-insurance group security fund and its board of trustees shall not be subject to:

(1) the open meeting law;

(2) the open appointments law;

(3) the data privacy law; and

(4) except where specifically set forth, the administrative procedure act.

Sec. 23. [79B.14] [GOVERNING LAW.]

If there is any inconsistency among any rule or statute and law, chapter 79B shall govern.

Sec. 24. Minnesota Statutes 1994, section 176.181, subdivision 2, is amended to read:

Subd. 2. [COMPULSORY INSURANCE; SELF-INSURERS.] (1) Every employer, except the state and its municipal subdivisions, liable under this chapter to pay compensation shall insure payment of compensation with some insurance carrier authorized to insure workers' compensation liability in this state, or obtain a written order from the commissioner of commerce exempting the employer from insuring liability for compensation and permitting self-insurance of the liability. The terms, conditions and requirements governing self-insurance shall be established by the commissioner pursuant to chapter 14. The commissioner of commerce shall also adopt, pursuant to clause (2)(c), rules permitting two or more employers, whether or not they are in the same industry, to enter into agreements to pool their liabilities under this chapter for the purpose of qualifying as group self-insurers. With the approval of the commissioner of commerce, any employer may exclude medical, chiropractic and hospital benefits as required by this chapter. An employer conducting distinct operations at different locations may either insure or self-insure the other portion of operations as a distinct and separate risk. An employer desiring to be exempted from insuring liability for compensation shall make application to the commissioner of commerce, showing financial ability to pay the compensation, whereupon by written order the commissioner of commerce, on deeming it proper, may make an exemption. An employer may establish financial ability to pay compensation by providing financial statements of the employer to the commissioner of commerce. Upon ten days' written notice the commissioner of commerce may revoke the order granting an exemption, in which event the employer shall immediately insure the liability. As a condition for the granting of an exemption the commissioner of commerce may require the employer to furnish security the commissioner of commerce considers sufficient to insure payment of all claims under this chapter, consistent with subdivision 2b. If the required security is in the form of currency or negotiable bonds, the commissioner of commerce shall deposit it with the state treasurer. In the event of any default upon the part of a self-insurer to abide by any final order or decision of the commissioner of labor and industry directing and awarding payment of compensation and benefits to any employee or the dependents of any deceased employee, then upon at least ten days notice to the self-insurer, the commissioner of commerce may by written order to the state treasurer require the treasurer to sell the pledged and assigned securities or a part thereof necessary to pay the full amount of any such claim or award with interest thereon. This authority to sell may be exercised from time to time to satisfy any order or award of the commissioner of labor and industry or any judgment obtained thereon. When securities are sold the money obtained shall be deposited in the state treasury to the credit of the commissioner of commerce and awards made against any such self-insurer by the commissioner of commerce shall be paid to the persons entitled thereto by the state treasurer upon warrants prepared by the commissioner of commerce and approved by the commissioner of finance out of the proceeds of the sale of securities. Where the security is in the form of a surety bond or personal guaranty the commissioner of commerce, at any time, upon at least ten days notice and opportunity to be heard, may require the surety to pay the amount of the award, the payments to be enforced in like manner as the award may be enforced.

(2)(a) No association, corporation, partnership, sole proprietorship, trust or other business entity shall provide services in the design, establishment or administration of a group self-insurance plan under rules adopted pursuant to this subdivision unless it is licensed, or exempt from licensure, pursuant to section 60A.23, subdivision 8, to do so by the commissioner of commerce. 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 shall be granted only when the commissioner of commerce is satisfied that the entity possesses the necessary organization, background, expertise, and financial integrity to supply the services sought to be offered. The commissioner of commerce may issue a license subject to restrictions or limitations, including restrictions or limitations on the type of services which may be supplied or the activities which may be engaged in. The license is for a two-year period.

(b) To assure that group self-insurance plans are financially solvent, administered in a fair and capable fashion, and able to process claims and pay benefits in a prompt, fair and equitable manner, entities licensed to engage in such business are subject to supervision and examination by the commissioner of commerce.

(c) To carry out the purposes of this subdivision, the commissioner of commerce may promulgate administrative rules, including emergency rules, pursuant to sections 14.001 to 14.69. These rules may:

(i) establish reporting requirements for administrators of group self-insurance plans;

(ii) establish standards and guidelines consistent with subdivision 2b to assure the adequacy of the financing and administration of group self-insurance plans;

(iii) establish bonding requirements or other provisions assuring the financial integrity of entities administering group self-insurance plans;

(iv) establish standards, including but not limited to minimum terms of membership in self-insurance plans, as necessary to provide stability for those plans;

(v) establish standards or guidelines governing the formation, operation, administration, and dissolution of self-insurance plans; and

(vi) establish other reasonable requirements to further the purposes of this subdivision. The rules may not require excessive cash payments to a common claims fund by group self-insurers. However, a level of funding in the common claims fund must always be maintained at not less than one year's claim losses paid in the most recent year.

Sec. 25. Minnesota Statutes 1994, section 176.181, subdivision 2a, is amended to read:

Subd. 2a. [APPLICATION FEE.] Every initial application filed pursuant to subdivision 2 requesting authority to self-insure shall be accompanied by a fee of $1,000 $1,500. The fee is not refundable.

Sec. 26. [COMMISSIONER OF COMMERCE; REVIEW OF GROUP INSURANCE POOLS.]

The commissioner shall review all other requirements for group insurance and determine which provide barriers to formation of mutual groups. The commissioner shall consider which of these requirements may be waived or reduced and replaced by simple alternative tests that protect members, including but not limited to, increased audits and review by the department of commerce. The commissioner shall propose legislative amendments and rule amendments as are necessary to effect these changes. The commissioner has the authority until July 1, 1996, to waive any financial or other requirement for the formation of mutual self-insurance pools which the commissioner considers to be a hindrance to their formation and for which adequate alternative safeguards are available. The commissioner may impose other alternative requirements the commissioner considers appropriate.

Sec. 27. [MUTUAL SELF-INSURERS' INDEMNITY ASSOCIATION MEMBERSHIP; WITHDRAWAL FROM SELF-INSURERS' SECURITY FUND.]

Any group self-insurer that is a member of the self-insurers' security fund on January 1, 1996, may until January 1, 1997, elect to withdraw from that fund and become a member of the mutual group self-insurers' indemnity association. This does not relieve them of any obligation to that fund that they would be responsible for during the period of their membership in the self-insurers' security fund. Group self-insurers electing to transfer to the mutual group self-insurers' indemnity association shall not be subject to the provisions of Minnesota Statutes, section 79A.06, subdivision 5.

All group self-insurers established after January 1, 1996, shall be members of the mutual self-insurers' indemnity association. Notwithstanding Minnesota Statutes, section 79.34, subdivision 2, the workers' compensation reinsurance association shall by July 1, 1995, establish a retention limit for mutual self-insurance pools of $100,000 which shall not be increased by annual adjustments. This does not preclude the use of higher retention limits if the members of a self-insurance pool agree to those higher limits and those limits are approved by the commissioner of commerce.

Sec. 28. [APPROPRIATION.]

$736,000 is appropriated from the special compensation fund to the commissioner of commerce for the purposes of implementing this article. The appropriation is available for fiscal year 1996."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

Sviggum raised a point of order pursuant to rule 3.10 that the Winter amendment was not in order. The Speaker ruled the point of order not well taken and the amendment in order.

The question recurred on the Winter amendment and the roll was called. There were 60 yeas and 72 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Lourey       Osthoff      Trimble
Brown        Huntley      Luther       Ostrom       Tuma
Carlson      Jaros        Mahon        Ozment       Tunheim
Carruthers   Jefferson    Mariani      Perlt        Wagenius
Dawkins      Jennings     Marko        Peterson     Wejcman
Delmont      Johnson, A.  McCollum     Pugh         Wenzel
Dorn         Johnson, R.  McGuire      Rest         Winter
Entenza      Kahn         Milbert      Rice         Sp.Anderson,I
Farrell      Kelley       Munger       Rukavina     
Garcia       Kinkel       Murphy       Sarna        
Greenfield   Leighton     Olson, E.    Skoglund     
Greiling     Lieder       Orenstein    Solberg      
Hasskamp     Long         Orfield      Tomassoni    

Abrams       Erhardt      Koppendrayer Opatz        Swenson, D.
Anderson, B. Finseth      Kraus        Osskopp      Swenson, H.
Bertram      Frerichs     Krinkie      Otremba      Sykora
Bettermann   Girard       Larsen       Paulsen      Tompkins
Bishop       Goodno       Leppik       Pawlenty     Van Dellen
Boudreau     Haas         Lindner      Pellow       Van Engen
Bradley      Hackbarth    Lynch        Pelowski     Vickerman
Broecker     Harder       Macklin      Rhodes       Warkentin
Commers      Holsten      Mares        Rostberg     Weaver
Cooper       Hugoson      McElroy      Schumacher   Wolf
Daggett      Johnson, V.  Molnau       Seagren      Worke
Dauner       Kalis        Mulder       Simoneau     Workman 
Davids       Kelso        Ness         Smith        
Dehler       Knight       Olson, M.    Stanek       
Dempsey      Knoblach     Onnen        Sviggum      

Winter moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Page 116, after line 23, insert:

Section 1. Minnesota Statutes 1994, section 175.007, subdivision 1, is amended to read:

Subdivision 1. [CREATION; COMPOSITION.] (a) There is created a permanent council on workers' compensation consisting of 12 voting members as follows: the presidents of the largest statewide Minnesota business and organized labor organizations as measured by the number of employees of its business members and in its affiliated labor organizations in Minnesota on July 1, 1992, and every five years thereafter, who shall serve as co-chairs of the council; five additional members representing business, and five additional members representing organized labor. The commissioner of labor and industry shall serve as chair of the council and shall be a nonvoting member.

(b) The governor, the majority leader of the senate, the speaker of the house of representatives, the minority leader of the senate, and the minority leader of the house of representatives shall each select a business and a labor representative. At least four of the labor representatives shall be chosen from the affiliated membership of the Minnesota AFL-CIO. At least two of the business representatives shall be representatives of small employers as defined in section 177.24, subdivision 1, paragraph (a), clause (2). None of the council members shall represent attorneys, health care providers, qualified rehabilitation consultants, or insurance companies. If the appointing officials cannot agree on a method of appointing the required number of Minnesota AFL-CIO and small business representatives by the second Monday in June of the year in which appointments are made, they shall notify the secretary of state. The distribution of appointments shall then be determined publicly by lot by the secretary of state or a designee in the presence of the appointing officials or their designees on the third Monday in June.

(c) Each council member shall appoint an alternate. Alternates shall serve in the absence of the member they replace.

(d) The ten appointed voting members shall serve for terms of five years and may be reappointed.

(e) The council shall designate liaisons to the council representing workers' compensation insurers; medical, hospital, and rehabilitation providers; and the legal profession. The speaker and minority leader of the house of representatives shall each appoint a caucus member as a liaison to the council. The majority and minority leaders of the senate shall each appoint a caucus member to serve as a liaison to the council.

(f) The compensation and removal of members shall be as provided in section 15.059.

Section 1. Minnesota Statutes 1994, section 175.007, subdivision 3, is amended to read:

Subd. 3. [MEETINGS; VOTING.] (a) The council shall meet as frequently as necessary to carry out its duties and responsibilities. Meetings of the council shall be scheduled with at least seven days written notice. Meetings may be held with less notice with the unanimous consent of the council. The council may also conduct public hearings throughout the state as may be necessary to give interested persons an opportunity to comment and make suggestions on the operation of the state's workers' compensation law.

(b) The meetings of the council are subject to the state's open meeting law, section 471.705; except that the six employer voting members and the six labor voting members may meet in separate closed caucuses for the purpose of deliberating on matters before the council. All votes of the council must be public and recorded. No business of the council may be conducted in the absence of the quorum of the employer and labor caucus members.

Sec. 2. Minnesota Statutes 1994, section 176.011, subdivision 15, is amended to read:

Subd. 15. [OCCUPATIONAL DISEASE.] (a) "Occupational disease" means a disease arising out of and in the course of employment peculiar to the occupation in which the employee is engaged and due to causes in excess of the hazards ordinary of employment and shall include undulant fever. Ordinary diseases of life to which the general public is equally exposed outside of employment are not compensable, except where the diseases follow as an incident of an occupational disease, or where the exposure peculiar to the occupation makes the disease an occupational disease hazard. A disease arises out of the employment only if there be a direct causal connection between the conditions under which the work is performed and if the occupational disease follows as a natural incident of the work as a result of the exposure occasioned by the nature of the employment. An employer is not liable for compensation for any occupational disease which cannot be traced to the employment as a direct and proximate cause and is not recognized as a hazard characteristic of and peculiar to the trade, occupation, process, or employment or which results from a hazard to which the worker would have been equally exposed outside of the employment.

(b) If immediately preceding the date of disablement or death, an employee was employed on active duty with an organized fire or police department of any municipality, as a member of the Minnesota state patrol, conservation officer service, state crime bureau, as a forest officer by the department of natural resources, or sheriff or full-time deputy sheriff of any county, or emergency medical services personnel as defined in section 144.761, subdivision 5, clauses (1) and (3), and the disease is that of myocarditis, coronary sclerosis, pneumonia or its sequel, and at the time of employment such employee was given a thorough physical examination by a licensed doctor of medicine, and a written report thereof has been made and filed with such organized fire or police department, with the Minnesota state patrol, conservation officer service, state crime bureau, department of natural resources, or sheriff's department of any county, or the employer of the emergency medical services personnel as defined in section 144.761, subdivision 5, clauses (1) and (3), which examination and report negatived any evidence of myocarditis, coronary sclerosis, pneumonia or its sequel, the disease is presumptively an occupational disease and shall be presumed to have been due to the nature of employment. If immediately preceding the date of disablement or death, any individual who by nature of their position provides emergency medical care, or an employee who was employed as a licensed police officer under section 626.84, subdivision 1; firefighter; paramedic; emergency medical technician; or licensed nurse providing emergency medical care; and who contracts an infectious or communicable disease to which the employee was exposed in the course of employment outside of a hospital, then the disease is presumptively an occupational disease and shall be presumed to have been due to the nature of employment and the presumption may be rebutted by substantial factors brought by the employer or insurer.

(c) A firefighter on active duty with an organized fire department who is unable to perform duties in the department by reason of a disabling cancer of a type caused by exposure to heat, radiation, or a known or suspected carcinogen, as defined by the International Agency for Research on Cancer, and the carcinogen is reasonably linked to the disabling cancer, is presumed to have an occupational disease under paragraph (a). If a firefighter who enters the service after August 1, 1988, is examined by a physician prior to being hired and the examination discloses the existence of a cancer of a type described in this paragraph, the firefighter is not entitled to the presumption unless a subsequent medical determination is made that the firefighter no longer has the cancer.

Sec. 3. Minnesota Statutes 1994, section 176.011, subdivision 18, is amended to read:

Subd. 18. [WEEKLY WAGE.] "Weekly wage" is arrived at by multiplying the daily wage by the number of days and fractional days normally worked in the business of the employer for the employment involved. If the employee normally works less than five days per week or works an irregular number of days per week, the number of days normally worked shall be computed by dividing the total number of days in which the employee actually performed any of the duties of employment in the last 26 weeks by the number of weeks in which the employee actually performed such duties, provided that the weekly wage for part time employment during a period of seasonal or temporary layoff shall be computed on the number of days and fractional days normally worked in the business of the employer for the employment involved. If, at the time of the injury, the employee was regularly employed by two or more employers, the employee's days of work for all such employments shall be included in the computation of weekly wage. Occasional overtime is not to be considered in computing the weekly wage, but if overtime is regular or frequent throughout the year it shall be taken into consideration. The maximum weekly compensation payable to an employee, or to the employee's dependents in the event of death, shall not exceed 66-2/3 percent of the product of the daily wage times the number of days normally worked, provided that the compensation payable for permanent partial disability under section 176.101, subdivision 3 3w, and for permanent total disability under section 176.101, subdivision 4, or death under section 176.111, shall not be computed on less than the number of hours normally worked in the employment or industry in which the injury was sustained, subject also to such maximums as are specifically otherwise provided.

Sec. 4. Minnesota Statutes 1994, section 176.021, subdivision 3, is amended to read:

Subd. 3. [COMPENSATION, COMMENCEMENT OF PAYMENT.] All employers shall commence payment of compensation at the time and in the manner prescribed by this chapter without the necessity of any agreement or any order of the division. Except for medical, burial, and other nonperiodic benefits, payments shall be made as nearly as possible at the intervals when the wage was payable, provided, however, that payments for permanent partial disability shall be governed by section 176.101. If doubt exists as to the eventual permanent partial disability, payment for the economic recovery compensation or impairment compensation, whichever is due, pursuant to section 176.101, shall be then made when due for the minimum permanent partial disability ascertainable, and further payment shall be made upon any later ascertainment of greater permanent partial disability. Prior to or at the time of commencement of the payment of economic recovery compensation or lump sum or periodic payment of impairment compensation, permanent partial disability the employee and employer shall be furnished with a copy of the medical report upon which the payment is based and all other medical reports which the insurer has that indicate a permanent partial disability rating, together with a statement by the insurer as to whether the tendered payment is for minimum permanent partial disability or final and eventual disability. After receipt of all reports available to the insurer that indicate a permanent partial disability rating, the employee shall make available or permit the insurer to obtain any medical report that the employee has or has knowledge of that contains a permanent partial disability rating which the insurer does not already have. Economic recovery compensation or impairment compensation Permanent partial disability compensation pursuant to section 176.101, subdivision 3w, is payable in addition to but not concurrently with compensation for temporary total disability but is payable pursuant to section 176.101. Impairment compensation Permanent partial disability is payable concurrently and in addition to compensation for permanent total disability pursuant to section 176.101. Economic recovery compensation or impairment compensation pursuant to section 176.101 shall be withheld pending completion of payment for temporary total disability, and No credit shall be taken for payment of economic recovery compensation or impairment compensation permanent partial disability compensation against liability for temporary total or future permanent total disability. Liability on the part of an employer or the insurer for disability of a temporary total, temporary partial, and permanent total nature shall be considered as a continuing product and part of the employee's inability to earn or reduction in earning capacity due to injury or occupational disease and compensation is payable accordingly, subject to section 176.101. Economic recovery compensation or impairment compensation Permanent partial disability compensation is payable for functional loss of use or impairment of function, permanent in nature, and payment therefore shall be separate, distinct, and in addition to payment for any other compensation, subject to section 176.101. The right to receive temporary total, temporary partial, or permanent total disability payments vests in the injured employee or the employee's dependents under this chapter or, if none, in the employee's legal heirs at the time the disability can be ascertained and the right is not abrogated by the employee's death prior to the making of the payment.

The right to receive economic recovery compensation or impairment compensation permanent partial disability compensation vests in an injured employee at the time the disability can be ascertained provided that the employee lives for at least 30 days beyond the date of the injury. Upon the death of an employee who is receiving economic recovery compensation or impairment compensation, further compensation is payable pursuant to section 176.101.

Impairment compensation is payable under this paragraph if vesting has occurred, the employee dies prior to reaching maximum medical improvement, and the requirements and conditions under section 176.101, subdivision 3e, are not met. from causes unrelated to the injury, further permanent partial disability is payable to the employee's dependents. If the employee has no dependents, permanent partial disability is payable to the employee's adult children. If an employee dies without dependents or adult children, no further permanent partial disability is payable. Upon the death of an employee from causes related to the injury when permanent partial disability compensation is payable, no further permanent partial disability compensation is due and benefits are determined under section 176.111.

Disability ratings for permanent partial disability shall be based on objective medical evidence.

Sec. 5. Minnesota Statutes 1994, section 176.021, subdivision 3a, is amended to read:

Subd. 3a. [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments for permanent partial disability as provided in section 176.101, subdivision 3 3w, shall be made in the following manner:

(a) If the employee returns to work, payment shall be made by lump sum;

(b) If begin after temporary total payments have ceased, but the employee has not returned to work, payment and shall be made at the same intervals as temporary total payments were made;.

(c) If temporary total disability payments cease because the employee is receiving payments for permanent total disability or because the employee is retiring or has retired from the work force, then payment shall be made by lump sum;

(d) If the employee completes a rehabilitation plan pursuant to section 176.102, but the employer does not furnish the employee with work the employee can do in a permanently partially disabled condition, and the employee is unable to procure such work with another employer, then payment shall be made by lump sum.

Sec. 6. Minnesota Statutes 1994, section 176.061, subdivision 10, is amended to read:

Subd. 10. [INDEMNITY.] Notwithstanding the provisions of chapter 65B or any other law to the contrary, an employer has a right of indemnity for any compensation paid or payable pursuant to this chapter, including temporary total compensation, temporary partial compensation, permanent partial disability, economic recovery compensation, impairment compensation permanent partial disability compensation, medical compensation, rehabilitation, death, and permanent total compensation.

Sec. 7. Minnesota Statutes 1994, section 176.101, subdivision 1, is amended to read:

Subdivision 1. [TEMPORARY TOTAL DISABILITY.] (a) For injury producing temporary total disability, the compensation is 66-2/3 percent of the weekly wage at the time of injury.

(b) During the year commencing on October 1, 1992, and each year thereafter, the maximum weekly compensation payable is 105 percent of the statewide average weekly wage for the period ending December 31 of the preceding year.

(c) The minimum weekly compensation payable is 20 percent of the statewide average weekly wage for the period ending December 31 of the preceding year or the injured employee's actual weekly wage, whichever is less.

(d) Subject to subdivisions 3a to 3u This compensation shall be paid during the period of disability, except as provided in this section, payment to be made at the intervals when the wage was payable, as nearly as may be.

(e) Except as provided in section 176.102, subdivision 11, paragraph (b), temporary total disability compensation may be paid during the period of disability, for up to a maximum of 100 weeks of actual payment, regardless of when payment is made. Temporary total disability compensation may be extended and paid beyond 100 weeks to an employee who is medically disabled because of the injury. Each week of temporary total disability compensation extended beyond 100 weeks reduces the number of weeks of temporary partial disability compensation available under subdivision 2, by an equivalent amount. In no event may an employee receive more than 450 weeks of a combination of temporary total disability and temporary partial disability.

Sec. 8. Minnesota Statutes 1994, section 176.101, subdivision 2, is amended to read:

Subd. 2. [TEMPORARY PARTIAL DISABILITY.] (a) In all cases of temporary partial disability the compensation shall be 66-2/3 percent of the difference between the weekly wage of the employee at the time of injury and the wage the employee is able to earn in the employee's partially disabled condition. This compensation shall be paid during the period of disability except as provided in this section, payment to be made at the intervals when the wage was payable, as nearly as may be, and subject to the maximum rate for temporary total compensation.

(b) Except as provided under subdivision 3k in paragraph (e), temporary partial compensation may be paid only while the employee is employed, earning less than the employee's weekly wage at the time of the injury, and the reduced wage the employee is able to earn in the employee's partially disabled condition is due to the injury. An employer may establish that an employee's ability to earn exceeds the employee's actual wages.

(c) Except as provided in subdivision 1, paragraph (e), and section 176.102, subdivision 11, paragraph (b), temporary partial compensation may not be paid for more than 225 for up to a maximum of 350 weeks, or after 450 weeks after the date of injury, whichever occurs first of actual payment, regardless of when payment is made.

(c) (d) Temporary partial compensation must be reduced to the extent that the wage the employee is able to earn in the employee's partially disabled condition plus the temporary partial disability payment otherwise payable under this subdivision exceeds 500 percent of the statewide average weekly wage.

(e) An employee may receive temporary partial disability based on the wage the employee is able to earn if the employee is not eligible for temporary total disability because of the 100-week limitation of subdivision 1, paragraph (e); and the employee is not earning a wage because the employer has not furnished the employee with work the employee can perform in the employee's partially disabled condition and the employee is unable to find work after a reasonably diligent effort.

Sec. 9. Minnesota Statutes 1994, section 176.101, is amended by adding a subdivision to read:

Subd. 3w. [PERMANENT PARTIAL DISABILITY COMPENSATION.] An employee who suffers a permanent partial disability due to a personal injury shall receive permanent partial disability compensation in an amount provided by this subdivision. The amount shall be equal to the proportion that the loss of function of the disabled part bears to the whole body multiplied by $110,000. This $110,000 amount shall be adjusted on January 1, 1996, and each January 1 thereafter by up to the percentage change computed under section 176.645, except that no increase under this subdivision may exceed three percent a year. In any instance where the increase would exceed this maximum, the increase shall be deemed to be three percent.

Payments for permanent disability of more than one body part due to a personal injury in a single occurrence may not exceed 100 percent of the whole body. The percentage loss of function of a part of the body must be determined according to the rules adopted by the commissioner pursuant to section 176.105, subdivision 4, effective November 11, 1985, as amended to include disability categories omitted from the schedule.

Sec. 10. Minnesota Statutes 1994, section 176.101, subdivision 5, is amended to read:

Subd. 5. [DEFINITION.] (a) For purposes of subdivision 4, permanent total disability means only:

(1) the total and permanent loss of the sight of both eyes, the loss of both arms at the shoulder, the loss of both legs so close to the hips that no effective artificial members can be used, complete and permanent paralysis, total and permanent loss of mental faculties; or

(2) any other injury which totally and permanently incapacitates the employee from working at an occupation which brings the employee an income.

(b) For purposes of paragraph (a), clause (2), "totally and permanently incapacitated" means that the employee's physical disability, in combination with the employee's: (1) age,; (2) education,; (3) training, and; (4) experience,; and (5) efforts to obtain employment within a radius of 50 miles of the employee's residence, causes the employee to be unable to secure anything more than sporadic employment resulting in an insubstantial income.

Sec. 11. Minnesota Statutes 1994, section 176.101, subdivision 6, is amended to read:

Subd. 6. [MINORS; APPRENTICES.] (a) If any employee entitled to the benefits of this chapter is an apprentice of any age and sustains a personal injury arising out of and in the course of employment resulting in permanent total or a compensable permanent partial disability, for the purpose of computing the compensation to which the employee is entitled for the injury, the compensation rate for temporary total, temporary partial, or a permanent total disability or economic recovery compensation shall be the maximum rate for temporary total disability under subdivision 1.

(b) If any employee entitled to the benefits of this chapter is a minor and sustains a personal injury arising out of and in the course of employment resulting in permanent total disability, for the purpose of computing the compensation to which the employee is entitled for the injury, the compensation rate for a permanent total disability shall be the maximum rate for temporary total disability under subdivision 1.

Sec. 12. Minnesota Statutes 1994, section 176.102, subdivision 11, is amended to read:

Subd. 11. [RETRAINING; COMPENSATION.] (a) Retraining is limited to 156 weeks. An employee who has been approved for retraining may petition the commissioner or compensation judge for additional compensation not to exceed 25 percent of the compensation otherwise payable. If the commissioner or compensation judge determines that this additional compensation is warranted due to unusual or unique circumstances of the employee's retraining plan, the commissioner may award additional compensation in an amount not to exceed the employee's request. This additional compensation shall cease at any time the commissioner or compensation judge determines the special circumstances are no longer present.

(b) If the employee is not employed during a retraining plan that has been specifically approved under this section, temporary total compensation is payable for up to 90 days after the end of during the retraining plan; except that, payment during the 90-day period is subject to cessation in accordance with section 176.101. If the employee is employed during the retraining plan but earning less than at the time of injury, temporary partial compensation is payable at the rate of 66-2/3 percent of the difference between the employee's weekly wage at the time of injury and the weekly wage the employee is able to earn in the employee's partially disabled condition, subject to the maximum rate for temporary total compensation. Temporary partial compensation is not subject to the 225-week or 450-week 350-week limitations provided by section 176.101, subdivision 2, during the retraining plan, but is subject to those limitations before and after the plan.

Sec. 13. Minnesota Statutes 1994, section 176.105, subdivision 2, is amended to read:

Subd. 2. [RULES; INTERNAL ORGANS.] The commissioner shall by rule establish a schedule of internal organs that are compensable and indicate in the schedule to what extent the organs are compensable under section 176.101, subdivision 3 3w.

Sec. 14. Minnesota Statutes 1994, section 176.105, subdivision 4, is amended to read:

Subd. 4. [LEGISLATIVE INTENT; RULES; LOSS OF MORE THAN ONE BODY PART.] (a) For the purpose of establishing a disability schedule pursuant to clause (b), the legislature declares its intent that the commissioner establish a disability schedule which, assuming the same number and distribution of severity of injuries, the aggregate total of impairment compensation and economic recovery compensation benefits under section 176.101, subdivisions 3a to 3u be approximately equal to the total aggregate amount payable for permanent partial disabilities under section 176.101, subdivision 3, provided, however, that awards for specific injuries under the proposed schedule need not be the same as they were for the same injuries under the schedule pursuant to section 176.101, subdivision 3. The schedule shall be determined by sound actuarial evaluation and shall be based on the benefit level which exists on January 1, 1983.

(b) The commissioner shall by rulemaking adopt procedures setting forth rules for the evaluation and rating of functional disability and the schedule for permanent partial disability and to determine the percentage of loss of function of a part of the body based on the body as a whole, including internal organs, described in section 176.101, subdivision 3, and any other body part not listed in section 176.101, subdivision 3, which the commissioner deems appropriate.

The rules shall promote objectivity and consistency in the evaluation of permanent functional impairment due to personal injury and in the assignment of a numerical rating to the functional impairment.

Prior to adoption of rules the commissioner shall conduct an analysis of the current permanent partial disability schedule for the purpose of determining the number and distribution of permanent partial disabilities and the average compensation for various permanent partial disabilities. The commissioner shall consider setting the compensation under the proposed schedule for the most serious conditions higher in comparison to the current schedule and shall consider decreasing awards for minor conditions in comparison to the current schedule.

The commissioner may consider, among other factors, and shall not be limited to the following factors in developing rules for the evaluation and rating of functional disability and the schedule for permanent partial disability benefits:

(1) the workability and simplicity of the procedures with respect to the evaluation of functional disability;

(2) the consistency of the procedures with accepted medical standards;

(3) rules, guidelines, and schedules that exist in other states that are related to the evaluation of permanent partial disability or to a schedule of benefits for functional disability provided that the commissioner is not bound by the degree of disability in these sources but shall adjust the relative degree of disability to conform to the expressed intent of clause (a);

(4) rules, guidelines, and schedules that have been developed by associations of health care providers or organizations provided that the commissioner is not bound by the degree of disability in these sources but shall adjust the relative degree of disability to conform to the expressed intent of clause (a);

(5) the effect the rules may have on reducing litigation;

(6) the treatment of preexisting disabilities with respect to the evaluation of permanent functional disability provided that any preexisting disabilities must be objectively determined by medical evidence; and

(7) symptomatology and loss of function and use of the injured member.

The factors in paragraphs (1) to (7) shall not be used in any individual or specific workers' compensation claim under this chapter but shall be used only in the adoption of rules pursuant to this section.

Nothing listed in paragraphs (1) to (7) shall be used to dispute or challenge a disability rating given to a part of the body so long as the whole schedule conforms with the expressed intent of clause (a).

(c) If an employee suffers a permanent functional disability of more than one body part due to a personal injury incurred in a single occurrence, the percent of the whole body which is permanently partially disabled shall be determined by the following formula so as to ensure that the percentage for all functional disability combined does not exceed the total for the whole body:

where: A is the greater percentage whole body loss of the first body part; and B is the lesser percentage whole body loss otherwise payable for the second body part. A + B (1-A) is equivalent to A + B - AB.

For permanent partial disabilities to three body parts due to a single occurrence or as the result of an occupational disease, the above formula shall be applied, providing that A equals the result obtained from application of the formula to the first two body parts and B equals the percentage for the third body part. For permanent partial disability to four or more body parts incurred as described above, A equals the result obtained from the prior application of the formula, and B equals the percentage for the fourth body part or more in arithmetic progressions.

Sec. 15. Minnesota Statutes 1994, section 176.106, subdivision 7, is amended to read:

Subd. 7. [REQUEST FOR HEARING.] Any party aggrieved by the decision of the commissioner may request a formal hearing by filing the request with the commissioner no later than 30 days after the decision. The request shall be referred to the office of administrative hearings for a de novo hearing before a compensation judge. The commissioner shall refer a timely request to the office of administrative hearings within five working days after filing of the request and. If the request for hearing concerns a claim for rehabilitation services, retraining, or surgery, the hearing at the office of administrative hearings must be held on the first date that all parties are available but not later

than 60 days after the office of administrative hearings receives the matter. Following the hearing, the compensation judge must issue the decision within 30 days. The decision of the compensation judge is appealable pursuant to section 176.421.

Sec. 16. Minnesota Statutes 1994, section 176.135, subdivision 1, is amended to read:

Subdivision 1. [MEDICAL, PSYCHOLOGICAL, CHIROPRACTIC, PODIATRIC, OPTOMETRIC, SURGICAL, HOSPITAL.] (a) The employer shall furnish any medical, psychological, chiropractic, podiatric, surgical and hospital treatment, including nursing, medicines, medical, chiropractic, podiatric, optometric, and surgical supplies, crutches and apparatus, including artificial members, or, at the option of the employee, if the employer has not filed notice as hereinafter provided, Christian Science treatment in lieu of medical treatment, chiropractic medicine and medical supplies, as may reasonably be required at the time of the injury and any time thereafter to cure and relieve from the effects of the injury. This treatment shall include treatments necessary to physical rehabilitation.

(b) The employer shall pay for the reasonable value of nursing services provided by a member of the employee's family in cases of permanent total disability.

(c) Exposure to rabies is an injury and an employer shall furnish preventative treatment to employees exposed to rabies.

(d) The employer shall furnish replacement or repair for artificial members, glasses, or spectacles, artificial eyes, podiatric orthotics, dental bridge work, dentures or artificial teeth, hearing aids, canes, crutches, or wheel chairs damaged by reason of an injury arising out of and in the course of the employment. For the purpose of this paragraph, "injury" includes damage wholly or in part to an artificial member. In case of the employer's inability or refusal seasonably to provide the items required to be provided under this paragraph, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing the same, including costs of copies of any medical records or medical reports that are in existence, obtained from health care providers, and that directly relate to the items for which payment is sought under this chapter, limited to the charges allowed by subdivision 7, and attorney fees incurred by the employee. Attorney's fees shall be determined on an hourly basis according to the criteria in section 176.081, subdivision 5.

(e) Both the commissioner and the compensation judges have authority to make determinations under this section in accordance with sections 176.106 and 176.305.

(f) An employer may require that the treatment and supplies required to be provided by an employer by this section be received in whole or in part from a managed care plan certified under section 176.1351 except as otherwise provided by that section.

Sec. 17. Minnesota Statutes 1994, section 176.135, subdivision 2, is amended to read:

Subd. 2. [CHANGE OF PHYSICIANS, PODIATRISTS, OPTOMETRISTS, OR CHIROPRACTORS.] An employee is entitled to one change of physician, podiatrist, optometrist, or chiropractor as a matter of right. For employees receiving treatment under section 176.1351, the change as a matter of right shall be to another provider within the plan in accordance with the rules governing managed care. The commissioner shall adopt rules establishing standards and criteria to be used when a dispute arises over a change of physicians, podiatrists, optometrists, or chiropractors in the case that either the employee or the employer desire a change. If a change is required as a matter of right, agreed upon, or ordered, the medical expenses shall be borne by the employer upon the same terms and conditions as provided in subdivision 1.

Sec. 18. Minnesota Statutes 1994, section 176.179, is amended to read:

176.179 [RECOVERY OF OVERPAYMENTS.]

Notwithstanding section 176.521, subdivision 3, or any other provision of this chapter to the contrary, except as provided in this section, no lump sum or weekly payment, or settlement, which is voluntarily paid to an injured employee or the survivors of a deceased employee in apparent or seeming accordance with the provisions of this chapter by an employer or insurer, or is paid pursuant to an order of the workers' compensation division, a compensation judge, or court of appeals relative to a claim by an injured employee or the employee's survivors, and received in good faith by the employee or the employee's survivors shall be refunded to the paying employer or insurer in the event that it is subsequently determined that the payment was made under a mistake in fact or law by

the employer or insurer. When the payments have been made to a person who is entitled to receive further payments of compensation for the same injury, the mistaken compensation may be taken as a full credit against future lump sum benefit entitlement and as a partial credit against future weekly benefits. The credit applied against further payments of temporary total disability, temporary partial disability, permanent total disability, retraining benefits, death benefits, or weekly payments of economic recovery or impairment compensation permanent partial disability shall not exceed 20 percent of the amount that would otherwise be payable.

A credit may not be applied against medical expenses due or payable.

Where the commissioner or compensation judge determines that the mistaken compensation was not received in good faith, the commissioner or compensation judge may order reimbursement of the compensation. For purposes of this section, a payment is not received in good faith if it is obtained through fraud, or if the employee knew that the compensation was paid under mistake of fact or law, and the employee has not refunded the mistaken compensation.

Sec. 19. Minnesota Statutes 1994, section 176.221, subdivision 1, is amended to read:

Subdivision 1. [COMMENCEMENT OF PAYMENT.] Within 14 days of notice to or knowledge by the employer of an injury compensable under this chapter the payment of temporary total compensation shall commence. Within 14 days of notice to or knowledge by an employer of a new period of temporary total disability which is caused by an old injury compensable under this chapter, the payment of temporary total compensation shall commence; provided that the employer or insurer may file for an extension with the commissioner within this 14-day period, in which case the compensation need not commence within the 14-day period but shall commence no later than 30 days from the date of the notice to or knowledge by the employer of the new period of disability. Commencement of payment by an employer or insurer does not waive any rights to any defense the employer has on any claim or incident either with respect to the compensability of the claim under this chapter or the amount of the compensation due. Where there are multiple employers, the first employer shall pay, unless it is shown that the injury has arisen out of employment with the second or subsequent employer. Liability for compensation under this chapter may be denied by the employer or insurer by giving the employee written notice of the denial of liability. If liability is denied for an injury which is required to be reported to the commissioner under section 176.231, subdivision 1, the denial of liability must be filed with the commissioner within 14 days after notice to or knowledge by the employer of an injury which is alleged to be compensable under this chapter. If the employer or insurer has commenced payment of compensation under this subdivision but determines within 30 120 days of notice to or knowledge by the employer of the injury that the disability is not a result of a personal injury, payment of compensation may be terminated upon the filing of a notice of denial of liability within 30 120 days of notice or knowledge. After the 30-day 120-day period, payment may be terminated only by the filing of a notice as provided under section 176.239. Upon the termination, payments made may be recovered by the employer if the commissioner or compensation judge finds that the employee's claim of work related disability was not made in good faith. A notice of denial of liability must state in detail the facts forming the basis for the denial and specific reasons explaining why the claimed injury or occupational disease was determined not to be within the scope and course of employment and shall include the name and telephone number of the person making this determination.

Sec. 20. Minnesota Statutes 1994, section 176.221, subdivision 6a, is amended to read:

Subd. 6a. [MEDICAL, REHABILITATION, ECONOMIC RECOVERY, AND IMPAIRMENT PERMANENT PARTIAL DISABILITY COMPENSATION.] The penalties provided by this section apply in cases where payment for treatment under section 176.135, rehabilitation expenses under section 176.102, subdivisions 9 and 11, economic recovery compensation or impairment or permanent partial disability compensation are not made in a timely manner as required by law or by rule adopted by the commissioner.

Sec. 21. Minnesota Statutes 1994, section 176.238, subdivision 6, is amended to read:

Subd. 6. [EXPEDITED HEARING BEFORE A COMPENSATION JUDGE.] A hearing before a compensation judge shall be held within 30 60 calendar days after the office receives the file from the commissioner if:

(a) an objection to discontinuance has been filed under subdivision 4 within 60 calendar days after the notice of discontinuance was filed and where no administrative conference has been held;

(b) an objection to discontinuance has been filed under subdivision 4 within 60 calendar days after the commissioner's decision under this section has been issued;

(c) a petition to discontinue has been filed by the insurer in lieu of filing a notice of discontinuance; or

(d) a petition to discontinue has been filed within 60 calendar days after the commissioner's decision under this section has been issued.

If the petition or objection is filed later than the deadlines listed above, the expedited procedures in this section apply only where the employee is unemployed at the time of filing the objection and shows, to the satisfaction of the chief administrative judge, by sworn affidavit, that the failure to file the objection within the deadlines was due to some infirmity or incapacity of the employee or to circumstances beyond the employee's control. The hearing shall be limited to the issues raised by the notice or petition unless all parties agree to expanding the issues. If the issues are expanded, the time limits for hearing and issuance of a decision by the compensation judge under this subdivision shall not apply.

Once a hearing date has been set, a continuance of the hearing date will be granted only under the following circumstances:

(a) the employer has agreed, in writing, to a continuation of the payment of benefits pending the outcome of the hearing; or

(b) the employee has agreed, in a document signed by the employee, that benefits may be discontinued pending the outcome of the hearing.

Absent a clear showing of surprise at the hearing or the unexpected unavailability of a crucial witness, all evidence must be introduced at the hearing. If it is necessary to accept additional evidence or testimony after the scheduled hearing date, it must be submitted no later than 14 days following the hearing, unless the compensation judge, for good cause, determines otherwise.

The compensation judge shall issue a decision pursuant to this subdivision within 30 days following the close of the hearing record.

Sec. 22. Minnesota Statutes 1994, section 176.645, subdivision 1, is amended to read:

Subdivision 1. [AMOUNT.] For injuries occurring after October 1, 1975 for which benefits are payable under section 176.101, subdivisions 1, 2 and 4, and section 176.111, subdivision 5, the total benefits due the employee or any dependents shall be adjusted in accordance with this section. On October 1, 1981, and thereafter on the anniversary of the date of the employee's injury the total benefits due shall be adjusted by multiplying the total benefits due prior to each adjustment by a fraction, the denominator of which is the statewide average weekly wage for December 31, of the year two years previous to the adjustment and the numerator of which is the statewide average weekly wage for December 31, of the year previous to the adjustment. For injuries occurring after October 1, 1975, all adjustments provided for in this section shall be included in computing any benefit due under this section. Any limitations of amounts due for daily or weekly compensation under this chapter shall not apply to adjustments made under this section. No adjustment increase made on or after October 1, 1977, but prior to October 1, 1992, under this section shall exceed six percent a year; in those instances where the adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be six percent. For injuries occurring on or after October 1, 1992, no adjustment increase made on or after October 1, 1992, under this section shall exceed four percent a year; in those instances where the adjustment under the formula of this section would exceed this maximum, the increase shall be deemed to be four percent.

Sec. 23. Minnesota Statutes 1994, section 176.66, subdivision 11, is amended to read:

Subd. 11. [AMOUNT OF COMPENSATION.] The compensation for an occupational disease is 66-2/3 percent of the employee's weekly wage on the date of injury subject to a maximum compensation rate equal to the maximum compensation rate in effect on the date of last exposure. The employee shall be eligible for supplementary benefits notwithstanding the provisions of section 176.132, after four years have elapsed since the date of last significant exposure to the hazard of the occupational disease if that employee's weekly compensation rate is less than the current supplementary benefit rate. If an employee eligible for supplementary benefits under this subdivision dies as a result of an occupational disease, the employee's wage for purposes of calculating benefits under section 176.111 shall be deemed to be the wage that would result in a compensation rate equal to the current supplementary benefits rate.

Sec. 24. Minnesota Statutes 1994, section 176.83, subdivision 1, is amended to read:

Subdivision 1. [GENERALLY.] In addition to any other section under this chapter giving the commissioner the authority to adopt rules, the commissioner may adopt, amend, or repeal rules to implement the provisions of this chapter. The rules include but are not limited to the rules listed in this section. The commissioner has no authority to adopt or amend rules with the substance or effect of the 1993 permanent partial disability schedule.

Sec. 25. Minnesota Statutes 1994, section 268.08, subdivision 3, is amended to read:

Subd. 3. [NOT ELIGIBLE.] An individual shall not be eligible to receive benefits for any week with respect to which the individual is receiving, has received, or has filed a claim for remuneration in an amount equal to or in excess of the individual's weekly benefit amount in the form of:

(1) termination, severance, or dismissal payment or wages in lieu of notice whether legally required or not; provided that if a termination, severance, or dismissal payment is made in a lump sum, such lump sum payment shall be allocated over a period equal to the lump sum divided by the employee's regular pay while employed by such employer; provided such payment shall be applied for a period immediately following the last day of employment but not to exceed 28 calendar days provided that 50 percent of the total of any such payments in excess of eight weeks shall be similarly allocated to the period immediately following the 28 days; or

(2) vacation allowance paid directly by the employer for a period of requested vacation, including vacation periods assigned by the employer under the provisions of a collective bargaining agreement, or uniform vacation shutdown; or

(3) compensation for loss of wages under the workers' compensation law of this state or any other state or under a similar law of the United States, or under other insurance or fund established and paid for by the employer except that this does not apply to an individual who is receiving temporary partial compensation pursuant to section 176.101, subdivision 3k; or

(4) 50 percent of the pension payments from any fund, annuity or insurance maintained or contributed to by a base period employer including the armed forces of the United States if the employee contributed to the fund, annuity or insurance and all of the pension payments if the employee did not contribute to the fund, annuity or insurance; or

(5) 50 percent of a primary insurance benefit under title II of the Social Security Act, as amended, or similar old age benefits under any act of Congress or this state or any other state.

Provided, that if such remuneration is less than the benefits which would otherwise be due under sections 268.03 to 268.231, the individual shall be entitled to receive for such week, if otherwise eligible, benefits reduced by the amount of such remuneration; provided, further, that if the appropriate agency of such other state or the federal government finally determines that the individual is not entitled to such benefits, this provision shall not apply. If the computation of reduced benefits, required by this subdivision, is not a whole dollar amount, it shall be rounded down to the next lower dollar amount.

Sec. 26. [MINNESOTA RULES REPEALED; REINSTATEMENT.]

Minnesota Rules, parts 5223.0300 to 5223.0650, are repealed and the rules previously in effect are reinstated.

Sec. 27. [REPEALER; TWO TIER SYSTEM.]

Minnesota Statutes 1994, sections 176.011, subdivisions 25 and 26; 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u, are repealed.

Sec. 28. [APPROPRIATION.]

In fiscal year 1996, $100,000 is appropriated from the special compensation fund to the office of administrative hearings for a pilot program to offer formal workers' compensation hearings by video conferencing for parties in outstate Minnesota.

Sec. 29. [EFFECTIVE DATE.]

Sections 3 to 14, 18, 20, and 23 to 27 are effective October 1, 1995, and apply to injuries on or after that date. Section 22 is effective the day following final enactment and applies retroactively to October 1, 1992."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Winter amendment and the roll was called. There were 56 yeas and 76 nays as follows:

Those who voted in the affirmative were:

Bakk         Hausman      Luther       Osthoff      Trimble
Brown        Huntley      Mahon        Ozment       Tuma
Carlson      Jaros        Mariani      Perlt        Tunheim
Carruthers   Jefferson    Marko        Peterson     Wagenius
Dawkins      Johnson, A.  McCollum     Pugh         Wejcman
Delmont      Johnson, R.  McGuire      Rest         Wenzel
Entenza      Kahn         Milbert      Rice         Winter
Farrell      Kelley       Munger       Rukavina     Sp.Anderson,I
Garcia       Kinkel       Murphy       Sarna        
Greenfield   Leighton     Olson, E.    Skoglund     
Greiling     Long         Orenstein    Solberg      
Hasskamp     Lourey       Orfield      Tomassoni    

Abrams       Erhardt      Koppendrayer Opatz        Swenson, D.
Anderson, B. Finseth      Kraus        Osskopp      Swenson, H.
Bertram      Frerichs     Krinkie      Ostrom       Sykora
Bettermann   Girard       Larsen       Otremba      Tompkins
Bishop       Goodno       Leppik       Paulsen      Van Dellen
Boudreau     Haas         Lieder       Pawlenty     Van Engen
Bradley      Hackbarth    Lindner      Pellow       Vickerman
Broecker     Harder       Lynch        Pelowski     Warkentin
Commers      Holsten      Macklin      Rhodes       Weaver
Cooper       Hugoson      Mares        Rostberg     Wolf
Daggett      Jennings     McElroy      Schumacher   Worke
Dauner       Johnson, V.  Molnau       Seagren      Workman 
Davids       Kalis        Mulder       Simoneau     
Dehler       Kelso        Ness         Smith        
Dempsey      Knight       Olson, M.    Stanek       
Dorn         Knoblach     Onnen        Sviggum      

Farrell moved to amend H. F. No. 642, the third engrossment, as amended, as follows:

Delete everything after the enacting clause and insert:

Section 1. [176C.01] [CITATION.]

This act may be referred to as the "workers' compensation act" and allowances, recoveries, and liabilities under this act constitute "workers' compensation."

Sec. 2. [176C.02] [DEFINITIONS.]

Subdivision 1. [SCOPE.] For the purposes of this act, the terms defined in this section have the meanings given them.

Subd. 2. [COMPENSATION.] "Compensation" means workers' compensation.

Subd. 3. [COMPENSATION RATING BUREAU.] "Compensation rating bureau" means the bureau provided for in section 176D.06.

Subd. 4. [DEPARTMENT.] "Department" means the department of labor and industry unless the context clearly indicates otherwise.

Subd. 5. [INJURY.] "Injury" means mental or physical harm to an employee caused by accident or disease, and also means damage to or destruction of artificial members, dental appliances, teeth, hearing aids, and eyeglasses, but, in the case of hearing aids or eyeglasses, only if the damage or destruction resulted from an accident which also caused personal injury entitling the employee to compensation either for disability or treatment.

Subd. 6. [MUNICIPALITY.] "Municipality" includes a county, home rule charter or statutory city, town, school district, sewer district, drainage district, and other public or quasi-public corporations.

Subd. 7. [PRIMARY COMPENSATION AND DEATH BENEFIT.] "Primary compensation and death benefit" means compensation or indemnity for disability or death benefit, other than increased, double or treble compensation or death benefit.

Subd. 8. [TEMPORARY HELP AGENCY.] "Temporary help agency" means an employer who places its employee with or leases its employees to another employer who controls the employee's work activities and compensates the first employer for the employee's services, regardless of the duration of the services.

Subd. 9. [TIME OF INJURY; OCCURRENCE OF INJURY; DATE OF INJURY.] Except as provided in section 176C.555 with respect to occupational deafness, "time of injury," "occurrence of injury," or "date of injury" means:

(1) in the case of accidental injury, the date of the accident which caused the injury; and

(2) in the case of disease, the date of disability or, if that date occurs after the cessation of all employment that contributed to the disability, the last day of work for the last employer whose employment caused disability.

Subd. 10. [UNINSURED EMPLOYER.] "Uninsured employer" means an employer that is in violation of chapter 176C.

Subd. 11. [UNINSURED EMPLOYER ASSESSMENT.] "Uninsured employer assessment" means the assessment imposed under chapter 176C.

Subd. 12. [UNINSURED EMPLOYERS FUND.] "Uninsured employers fund" means the fund established under chapter 176C.

Sec. 3. [176C.03] [CONDITIONS OF LIABILITY.]

Subdivision 1. [CONDITIONS.] Liability under this act exists against an employer only if the following conditions concur:

(1) the employee sustains an injury;

(2) at the time of injury, both the employer and employee are subject to the provisions of this act;

(3) at the time of the injury, the employee is performing service growing out of and incidental to the employee's employment;

(4) the injury is not intentionally self-inflicted; and

(5) the accident or disease causing injury arises out of the employee's employment.

Subd. 2. [GOING TO AND FROM WORK; COVERED.] Any employee going to and from the employee's employment in the ordinary and usual way, while on the premises of the employer, or while in their immediate vicinity if the injury results from an occurrence on the premises, any employee going between an employer's

designated parking lot and the employer's work premises while on a direct route and in the ordinary and usual way or any firefighter or municipal utility employee responding to a call for assistance outside the limits of the firefighter's or employer's city or town, unless that response is in violation of law, is performing service growing out of and incidental to employment.

Subd. 3. [GOING TO AND FROM WORK; NO LIABILITY.] An employee is not performing service growing out of and incidental to the employee's employment while going to or from employment in a private or group or employer-sponsored car pool, van pool, commuter bus service or other ride-sharing program in which the employee participates voluntarily and the sole purpose of which is the mass transportation of employees to and from employment.

Subd. 4. [PHYSICAL FITNESS PROGRAMS.] An employee is not performing service growing out of and incidental to employment while engaging in a program designed to improve the physical well-being of the employee, whether or not the program is located on the employer's premises, if participation in the program is voluntary, and the employee receives no compensation for participation.

Subd. 5. [EMPLOYMENT PREMISES.] The premises of the employer include the premises of any other person on whose premises the employee performs service.

Subd. 6. [PUBLIC EMPLOYMENT.] To enhance the morale and efficiency of public employees in this state and attract qualified personnel to the public service, it is the policy of the state that benefits of this act shall extend and be granted to employees in the service of the state or of any municipality on the same basis, in the same manner, under the same conditions, and with like right of recovery as in the case of employees of persons, firms, or private corporations. Accordingly, the same considerations, standards, and rules of decision shall apply in all cases in determining whether any employee under this act, at the time of the injury, was performing service growing out of and incidental to the employee's employment. For the purposes of this subdivision no differentiation shall be made among any of the classes of employers enumerated in section 176C.04 or of employees enumerated in section 176C.07; and no statutes, ordinances, or administrative rules otherwise applicable to any employees enumerated in section 176C.07 shall be controlling.

Subd. 7. [TRAVELING DURING EMPLOYMENT.] Every employee whose employment requires travel shall be deemed to be performing service growing out of and incidental to employment at all times while on a trip, except when engaged in a deviation for a private or personal purpose. An act reasonably necessary for living or incidental to living shall not be regarded as such a deviation. Any accident or disease arising out of a hazard of service shall be deemed to arise out of employment.

Subd. 8. [LEGISLATORS.] Members of the state legislature are covered by this act when they are engaged in performing duties as state legislators including:

(1) performing services growing out of and incidental to their function as legislators;

(2) performing their official duties as members of committees or other official bodies created by the legislature;

(3) traveling to and from the state capital to perform their duties as legislators; and

(4) traveling to and from any place to perform services growing out of and incidental to their function as legislators, regardless of where the trip originated, and including acts reasonably necessary for living but excluding any deviations for private or personal purposes except that acts reasonably necessary for living are not deviations.

Subd. 9. [EXCLUSIVE REMEDY; EXCEPTIONS.] If the conditions in subdivisions 1 to 8 exist, the right to the recovery of compensation under this act shall be the exclusive remedy against the employer, any other employee of the same employer, and the workers' compensation insurance carrier. This section does not limit the right of an employee to bring action against any coemployee for an assault intended to cause bodily harm, or against a coemployee for negligent operation of a motor vehicle not owned or leased by the employer, or against a coemployee of the same employer to the extent that there would be liability of a governmental unit to pay judgments against employees under a collective bargaining agreement or a local ordinance.

Subd. 10. [SAFETY INSPECTION OR SERVICE ACTIVITIES.] Providing or failing to provide any safety inspection or safety advisory service incident to a contract for workers' compensation insurance or to a contract for safety inspections or safety advisory services does not by itself subject an insurer, an employer, an insurance service

organization, a union, a union member, or any agent or employee of the insurer, employer, insurance service organization, or union to liability for damages for an injury resulting from providing or failing to provide the inspection or services.

Subd. 11. [DATE OF INJURY GOVERNS.] The right to compensation and the amount of the compensation shall in all cases be determined in accordance with the provisions of law in effect as of the date of the injury except as to employees whose rate of compensation is changed as provided in sections 176C.43, subdivision 8, and 176C.44, subdivision 5, and employees who are eligible to receive private rehabilitative counseling and training under section 176C.61.

Subd. 12. [OUT-OF-STATE INJURIES.] If an employee, while working outside the territorial limits of this state, suffers an injury on account of which the employee, or in the event of the employee's death, the employee's dependents, would have been entitled to the benefits provided by this act had the injury occurred within this state, the employee, or in the event of the employee's death resulting from the injury, the dependents of the employee, shall be entitled to the benefits provided by this act, if at the time of the injury any of the following applies:

(1) the employee's employment is principally localized in this state;

(2) the employee is working under a contract of hire made in this state in employment not principally localized in any state;

(3) the employee is working under a contract made in this state in employment principally localized in another state whose workers' compensation law is not applicable to that person's employer;

(4) the employee is working under a contract of hire made in this state for employment outside the United States; or

(5) the employee is a Minnesota peace officer acting under an agreement authorized in sections 626.65 to 626.72.

Sec. 4. [176C.04] [EMPLOYER; DEFINITION.]

Subdivision 1. [SCOPE.] "Employer" has the meaning given in this section and the employers described in this section are subject to the provisions of this act, within the meaning of section 176C.03.

Subd. 2. [GOVERNMENT EMPLOYERS.] The state, each county, city, town, school district, sewer district, drainage district, and other public or quasi-public corporations in the state.

Subd. 3. [EMPLOYER.] Every person who usually employs three or more employees, whether in one or more trades, businesses, professions or occupations, and whether in one or more locations.

This subdivision does not apply to farmers or farm labor.

Subd. 3a. [SMALL EMPLOYER; WAGES PAID.] Every person who usually employs less than three employees, provided the person has paid wages of $500 or more in any calendar quarter for services performed in this state. Such an employer is subject on the tenth day of the month next succeeding such quarter.

This subdivision does not apply to farmers or farm labor.

Subd. 4. [FARMING.] Every person engaged in farming who on any 20 consecutive or nonconsecutive days during a calendar year employs six or more employees, whether in one or more locations. The provisions of this act apply to such an employer ten days after the 20th such day.

Subd. 5. [JOINT VENTURES.] Every joint venture electing under section 176C.281, subdivision 1, to be an employer.

Subd. 6. [ELECTED COVERAGE.] Every person to whom subdivisions 2 to 5 are not applicable, who has any person in service under any contract of hire, express or implied, oral or written, and who, at or prior to the time of the injury to the employee for which compensation may be claimed, shall, as provided in section 176C.05, have elected to become subject to the provisions of this act, and who has not, prior to the accident, effected a withdrawal of the election.

Subd. 7. [PARTNERS.] Except with respect to a partner or member electing under section 176C.075, members of partnerships or limited liability companies shall not be counted as employees.

Subd. 8. [EMPLOYEE OF ONLY ONE EMPLOYER.] Except as provided in section 176C.07, subdivision 7, clause (a), a person under contract of hire for the performance of any service for any employer subject to this section shall not constitute an employer of any other person with respect to the service and the other person shall, with respect to the service, be deemed to be an employee only of the employer for whom the service is being performed.

Subd. 9. [FARMING; FARM PREMISES; FARMER.] As used in this act, "farming" means the operation of farm premises owned or rented by the operator. "Farm premises" means areas used for operations set forth in this subdivision, but does not include other areas, greenhouses, or other similar structures unless used principally for the production of food and farm plants. "Farmer" means any person engaged in farming. Operation of farm premises shall be deemed to be:

(1) planting and cultivating of their soil;

(2) raising and harvesting of agricultural, horticultural, or arboricultural crops on them;

(3) raising, breeding, tending, training, and management of livestock, bees, poultry, fur-bearing animals, wildlife or aquatic life, or their products on them;

(4) processing, drying, packing, packaging, freezing, grading, storing, delivering to storage, to market or to a carrier for transportation to market, distributing directly to consumers or marketing any of the above-named commodities, substantially all of which have been planted or produced on the premises;

(5) clearing of the premises and salvaging of timber and management and use of wood lots on them, but not including logging, lumbering, or wood cutting operations unless conducted as an accessory to other farming operations; and

(6) managing, conserving, improving, and maintaining the premises or the tools, equipment and improvements on them and the exchange of labor, services, or the exchange of use of equipment with other farmers in pursuing those activities.

The operation for not to exceed 30 days during any calendar year, by any person deriving the person's principal income from farming, of farm machinery in performing farming services for other farmers for a consideration other than exchange of labor shall be deemed farming. Operation of the premises shall be deemed to include also any other activities commonly considered to be farming whether conducted on or off the premises by the farm operator.

Sec. 5. [176C.05] [ELECTION BY EMPLOYER, WITHDRAWAL.]

Subdivision 1. [WITHDRAWAL.] An employer who has had no employee at any time within a continuous period of two years shall be deemed to have effected withdrawal, which shall be effective on the last day of that period. An employer who has not usually employed three employees and who has not paid wages of at least $500 for employment in this state in any calendar quarter in a calendar year may file a withdrawal notice with the department, which withdrawal shall take effect 30 days after the date of the filing or at a later date specified in the notice. If an employer who is subject to this chapter only because the employer elected to become subject to this chapter under subdivision 2 cancels or terminates the contract for the insurance of compensation under this chapter, that employer is deemed to have effected withdrawal, which shall be effective on the day after the contract is canceled or terminated.

Subd. 2. [ELECTION BY PURCHASE OF INSURANCE.] An employer who enters into insurance of compensation, or against liability for compensation, shall be deemed by that action to have elected to accept the provisions of this act, and the election shall include farm laborers, domestic servants, and employees not in the course of a trade, business, profession, or occupation of the employer if such an intent is shown by the terms of the policy. The election shall remain in force until withdrawn in the manner provided in subdivision 1.

Subd. 3. [WITHDRAWAL BY FARMER.] Any person engaged in farming who has become subject to this act may withdraw by filing with the department a notice of withdrawal, providing he has not employed six or more employees as defined by section 176C.07, subdivision 7, on 20 or more days during the current or previous calendar year. The withdrawal shall be effective 30 days after the date of receipt by the department, or at the later date specified in the notice. The person may again become subject to this act as provided by section 176C.04, subdivisions 4 and 6.

Sec. 6. [176C.06] [JOINT LIABILITY OF EMPLOYER AND CONTRACTOR.]

An employer shall be liable for compensation to an employee of a contractor or subcontractor under the employer who is not subject to this chapter, or who has not complied with the conditions of section 176C.281, subdivision 2, in any case where such employer would have been liable for compensation if such employee had been working directly for the employer, including also work in the erection, alteration, repair, or demolition of improvements or of fixtures upon premises of such employer which are used or to be used in the operations of such employer. The contractor or subcontractor, if subject to this chapter, shall also be liable for such compensation, but the employee shall not recover compensation for the same injury from more than one party. The employer who becomes liable for and pays such compensation may recover the same from such contractor, subcontractor, or other employer for whom the employee was working at the time of the injury if such contractor, subcontractor, or other employer was an employer as defined in section 176C.04.

Sec. 7. [176C.07] [EMPLOYEES DEFINED.]

Subdivision 1. [SCOPE.] As used in this act employee means the persons described in this section.

Subd. 2. [PUBLIC EMPLOYEES.] Every person, including all officials, in the service of the state, or of any municipality whether elected or under any appointment, or contract of hire, express or implied, and whether a resident or employed or injured within or without the state.

Subd. 3. [PEACE OFFICER.] Any peace officer shall be considered an employee while engaged in the enforcement of peace or in the pursuit and capture of those charged with crime.

Subd. 4. [PUBLIC EMPLOYEES; PAYMENT DURING DISABILITY.] Nothing herein contained shall prevent municipalities from paying teachers, police officers, firefighters, and other employees full salaries during disability, or interfere with any pension funds, or prevent payment to teachers, police officers, or firefighters from them.

Subd. 5. [EMPLOYEE IN COURSE OF TRADE; SERVANTS.] Every person in the service of another under any contract of hire, express or implied, all helpers and assistants of employees, whether paid by the employer or employee, if employed with the knowledge, actual or constructive, of the employer, including minors (who shall have the same power of contracting as adult employees), but not including (1) domestic servants, (2) any person whose employment is not in the course of a trade, business, profession, or occupation of the employer, unless as to any of those classes, the employer has elected to include them. Clause (2) shall not operate to exclude an employee whose employment is in the course of a trade, business, profession, or occupation of the employer, however casual, unusual, desultory, or isolated such a trade, business, profession, or occupation may be.

Subd. 6. [FARM EMPLOYEES.] For the purposes of determining the number of employees to be counted under section 176C.04, subdivision 4, but for no other purpose, the following shall apply:

(a) Farmers or their employees working on an exchange basis shall not be deemed employees of a farmer to whom their labor is furnished in exchange.

(b) The parents, spouse, child, brother, sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of a farmer shall not be deemed the farmer's employees.

(c) A shareholder-employee of a family farm corporation shall be deemed a "farmer" for purposes of this act and shall not be deemed an employee of a farmer. A "family farm corporation" means a corporation engaged in farming all of whose shareholders are related as lineal ancestors or lineal descendants, or as spouses, brothers, sisters, uncles, aunts, cousins, sons-in-law, daughters-in-law, fathers-in-law, mothers-in-law, brothers-in-law, or sisters-in-law of lineal ancestors or lineal descendants.

Subd. 7. [NEWSPAPER AND MAGAZINE SELLERS.] Every person selling or distributing newspapers or magazines on the street or from house to house. Such a person shall be deemed an employee of each independent news agency which is subject to this act, or (in the absence of such agencies) of each publisher's (or other intermediate) selling agency which is subject to this act, or (in the absence of all such agencies) of each publisher, whose newspapers or magazines the person sells or distributes. Such a person shall not be counted in determining whether an intermediate agency or publisher is subject to this act.

Subd. 8. [VOLUNTEER FIREFIGHTER.] (a) Every member of a volunteer fire company or fire department organized under statute or a legally organized rescue squad shall be deemed an employee of the company, department, or squad. Every member, while serving as an auxiliary police officer at an emergency, shall also be

deemed an employee of the company, department, or squad. If the company, department, or squad has not insured its liability for compensation to its employees, the municipality or county within which the company, department, or squad was organized shall be liable for such compensation.

(b) The department may issue an order under section 176C.31, subdivision 2, permitting the county within which a volunteer fire company or fire department organized under chapter 424A, a legally organized volunteer rescue squad or a volunteer ambulance service provider, as defined in section 144.8091, subdivision 2, is organized to assume full liability for the compensation provided under this chapter of all volunteer members of that company, department, squad, or provider.

Subd. 9. [INDEPENDENT CONTRACTOR.] (a) Except as provided in paragraph (b), every independent contractor is, for the purpose of this act, an employee of any employer under this act for whom the independent contractor is performing service in the course of the trade, business, profession, or occupation of the employer at the time of the injury.

(b) An independent contractor is not an employee of an employer for whom the independent contractor performs work or services if the independent contractor meets all of the following requirements concurrently:

(1) maintains a separate business with an office, equipment, materials, and other facilities;

(2) holds or has applied for a federal employer identification number;

(3) operates under contracts to perform specific services or work for specific amounts of money and under which the independent contractor controls the means of performing the services or work;

(4) incurs the main expenses related to the service or work that the independent contractor performs under contract;

(5) is responsible for the satisfactory completion of work or services that the independent contractor contracts to perform and is liable for a failure to complete the work or service;

(6) receives compensation for work or service performed under a contract on a commission, per job, or competitive bid basis and not on any other basis;

(7) may realize a profit or suffer a loss under contracts to perform work or service;

(8) has continuing or recurring business liabilities or obligations; and

(9) the success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.

(c) The department may not admit in evidence state or federal laws, regulations, or documents granting operating authority or licenses when determining whether an independent contractor meets the conditions specified in paragraph (b), clause (1) or (3).

(d) An employer who is subject to this chapter is not an employee of another employer for whom the first employer performs work or service in the course of the other employer's trade, business, profession, or occupation.

Subd. 10. [NATIONAL GUARD.] Members of the national guard and state defense force, when on state active duty under direction of appropriate authority, but only if federal laws, rules, or regulations provide no benefits substantially equivalent to those provided in this act.

Subd. 11. [PUBLIC EMPLOYEES; GOVERNING LAW.] Further to effectuate the policy of the state that the benefits of this chapter shall extend and be granted to employees in the service of the state, or of any municipality on the same basis, in the same manner, under the same conditions, and with like right of recovery as in the case of employees of persons, firms, or private corporations, any question whether any person is an employee under this act shall be governed by and determined under the same standards, considerations, and rules of decision in all cases under subdivisions 1 to 10. Any statutes, ordinances, or administrative rules or regulations which may be otherwise applicable to the classes of employees enumerated in subdivision 2 shall not be controlling in deciding whether any person is an employee for the purposes of this act.

Subd. 12. [VOLUNTEERS.] The department of labor and industry may by rule prescribe classes of volunteer workers who may, at the election of the person for whom the service is being performed, be deemed to be employees for the purposes of this act. Election shall be by endorsement upon the workers' compensation insurance policy with written notice to the department. In the case of an employer exempt from insuring liability, election shall be by written notice to the department. The department shall by rule prescribe the means and manner in which notice of election by the employer is to be provided to the volunteer workers.

Subd. 13. [STUDENTS.] A student in a technical college while, as a part of a program, engaged in performing services for which a college collects a fee or is engaged in producing a product sold by the college is an employee of that college.

Subd. 14. [MINORS; COMMUNITY SERVICE WORK.] A minor performing uncompensated community service work as a result of an informal disposition under an order or direction of a court is an employee of the county in which the court ordering the community service work is located. No compensation may be paid to that employee for temporary disability during the healing period.

Subd. 15. [ADULT COMMUNITY SERVICE WORK.] An adult performing uncompensated community service work under an order or direction of a court is an employee of the county in which the county attorney requiring or the court ordering the community service work is located. No compensation may be paid to that employee for temporary disability during the healing period.

Subd. 16. [SOLE PROPRIETOR, PARTNER, OR MEMBER.] A sole proprietor, partner, or member electing under section 176C.075 is an employee.

Subd. 17. [WORK RELEASE PROGRAM.] An inmate participating in a work release program or a transitional employment program is an employee of any employer under this act for whom the inmate is performing service at the time of the injury.

Sec. 8. [176C.075] [ELECTION BY SOLE PROPRIETOR, PARTNER, OR MEMBER.]

Subdivision 1. [OBTAINING INSURANCE.] Any sole proprietor, partner, or member of a limited liability company engaged in a vocation, profession, or business on a substantially full-time basis may elect to be an employee under this act by procuring insurance against injury sustained in the pursuit of that vocation, profession, or business. This coverage may be obtained by endorsement on an existing policy of workers' compensation insurance or by issuance of a separate policy to the sole proprietor, partner, or member on the same basis as any other policy of workers' compensation insurance.

Subd. 2. [ELIGIBILITY FOR BENEFITS.] For the purpose of any insurance policy other than a workers' compensation insurance policy, no sole proprietor, partner, or member may be considered eligible for workers' compensation benefits unless the person elected to be an employee under this section.

Subd 3. [WITHDRAWAL OF ELECTION.] Any sole proprietor, partner, or member who elected to be an employee under this section may withdraw that election upon 30 days' prior written notice to the insurance carrier and the compensation rating bureau.

Sec. 9. [176C.076] [ELECTION BY CORPORATE OFFICER.]

Subdivision 1. [NONCOVERAGE; LIMITS.] Not more than two officers of a corporation having not more than ten shareholders may elect not to be subject to this act. Except as provided in subdivision 2, the election shall be made by an endorsement, on the policy of workers' compensation insurance issued to that corporation, naming each officer who has so elected. The election is effective for the period of the policy. An officer who so elects is an employee for the purpose of determining whether the corporation is an employer under section 176C.04, subdivision 3.

Subd. 2. [ELECTION BY OFFICERS OF CORPORATION NOT SUBJECT TO COVERAGE.] If a corporation has not more than ten shareholders, not more than two officers, and no other employees and is not otherwise required under this act to have a policy of workers' compensation insurance, an officer of that corporation who elects not to be subject to this act shall file a notice of that election with the department of labor and industry on a form approved by the department. The election is effective until the officer rescinds it by notifying the department in writing.

Sec. 10. [176C.08] [ADMINISTRATION FOR STATE EMPLOYEES.]

The department of employee relations has responsibility for the timely delivery of benefits payable under this act to employees of the state and their dependents and other functions of the state as an employer under this act. The department of employee relations may delegate this authority to employing departments and agencies and require reports as it deems necessary to accomplish this purpose. The department of employee relations or its delegated authorities shall file with the department of labor and industry the reports that are required of all employers. The department of labor and industry shall monitor the delivery of benefits to state employees and their dependents and shall consult with and advise the department of employee relations in the manner and at the times necessary to ensure prompt and proper delivery.

Sec. 11. [176C.11] [EARNINGS, METHOD OF COMPUTATION.]

Subdivision 1. [MAXIMUM EARNINGS AND COMPENSATION RATES.] The average weekly earnings for temporary disability, permanent total disability, or death benefits for injury in each calendar year shall be not less than $30 nor more than the wage rate which results in a maximum compensation rate of 100 percent of the state's average weekly earnings as of June 30 of the previous year. The average weekly earnings for temporary disability, permanent total disability, or death benefits for injuries occurring before January 1, 1996, shall be not more than $718.50, resulting in a maximum compensation rate of $479. The average weekly earnings for permanent partial disability shall be not less than $30 and for permanent partial disabilities not more than $246 resulting in a maximum compensation rate of $164. Between those limits the average weekly earnings shall be determined as provided in this section.

Subd. 2. [DAILY EARNINGS.] Daily earnings means the daily earnings of the employee at the time of the injury in the employment in which the employee was then engaged. In determining daily earnings under this subdivision, overtime shall not be considered. If at the time of the injury the employee is working on part time for the day, daily earnings shall be arrived at by dividing the amount received, or to be received by the employee for the part-time service for the day, by the number of hours and fractional hours of part-time service, and multiplying the result by the number of hours of the normal full-time working day for the employment involved. The words "part time for the day" shall apply to Saturday half days and all other days upon which the employee works less than normal full-time working hours. The average weekly earnings shall be arrived at by multiplying the daily earnings by the number of days and fractional days normally worked per week at the time of the injury in the business operation of the employer for the particular employment in which the employee was engaged at the time of the injury.

Subd. 3. [SEASONAL EMPLOYMENT.] In case of seasonal employment, average weekly earnings shall be arrived at by the method prescribed in subdivision 2, except that the number of hours of the normal full-time working day and the number of days of the normal full-time working week shall be the hours and days in similar service in the same or similar nonseasonal employment. Seasonal employment shall mean employment which can be conducted only during certain times of the year, and in no event shall employment be considered seasonal if it extends during a period of more than fourteen weeks within a calendar year.

Subd. 4. [EARNINGS NOT CALCULABLE BY NORMAL METHOD.] In the case of persons performing service without fixed earnings, or if normal full-time days or weeks are not maintained by the employer in the employment in which the employee worked when injured, or if, for other reason, earnings cannot be determined under the methods prescribed by subdivision 2 or 3, the earnings of the injured person shall, for the purpose of calculating compensation payable under this act, be taken to be the usual going earnings paid for similar services on a normal full-time basis in the same or similar employment in which earnings can be determined under the methods set out in subdivision 2 or 3.

Subd. 5. [AVERAGE WEEKLY EARNING CALCULATION.] Except in situations where subdivision 3 applies, average weekly earnings shall in no case be less than actual average weekly earnings of the employee for the four calendar quarters before the injury within which the employee has been employed in the business, in the kind of employment and for the employer for whom the employee worked when injured. Calendar weeks within which no work was performed shall not be considered under this subdivision. This subdivision applies only if the employee has worked within a total of at least six calendar weeks during the four calendar quarters before the injury in the business, in the kind of employment and for the employer for whom the employee worked when injured. For purposes of this section, earnings for part-time services performed for a labor organization pursuant to a collective bargaining agreement between the employer and that labor organization shall be considered as part of the total earnings in the preceding four calendar quarter, whether payment is made by the labor organization or the employer.

Subd. 6. [NONCASH EARNINGS.] If any things of value are received in addition to monetary earnings as a part of the wage contract, they shall be deemed a part of earnings and computed at their value to the employee.

Subd. 7. [MINIMUM AVERAGE WEEKLY EARNINGS.] (a) Except as provided in paragraph (b), average weekly earnings may not be less than 24 times the normal hourly earnings at the time of injury.

(b) The weekly temporary disability benefits for a part-time employee who restricts availability in the labor market to part-time work and is not employed elsewhere may not exceed the average weekly wages of the part-time employment.

Subd. 8. [EMPLOYEES UNDER AGE 27.] If an employee is under 27 years of age, the average weekly earnings on which to compute the benefits accruing for permanent disability or death shall be determined on the basis of the earnings that the employee, if not disabled, probably would earn after attaining the age of 27. Unless otherwise established, the earnings shall be taken as equivalent to the amount upon which maximum weekly indemnity is payable.

Subd. 9. [AVERAGE ANNUAL EARNINGS.] The average annual earnings when referred to in this act shall consist of 50 times the employee's average weekly earnings. Subject to the maximum limitation, average annual earnings shall in no case be taken at less than the actual earnings of the employee in the year immediately preceding the injury in the kind of employment in which he worked at the time of injury.

Subd. 10. [WEEKLY WAGE LOSS.] The weekly wage loss referred to in this act, except under section 176C.60, subdivision 3, shall be the percentage of the average weekly earnings of the injured employee computed according to this section, as shall fairly represent the proportionate extent of the impairment of the employee's earning capacity in the employment in which the employee was working at the time of the injury, and other suitable employments, to be fixed as of the time of the injury, but to be determined in view of the nature and extent of the injury.

Sec. 12. [176C.12] [NOTICE OF INJURY, EXCEPTION, LACHES.]

No claim for compensation may be maintained unless, within 30 days after the occurrence of the injury or within 30 days after the employee knew or ought to have known the nature of a disability and its relation to the employment, actual notice was received by the employer or by an officer, manager, or designated representative of an employer. If no representative has been designated by posters placed in one or more conspicuous places, then notice received by any superior is sufficient. Absence of notice does not bar recovery if it is found that the employer was not misled by it. Regardless of whether notice was received, if no payment of compensation, other than medical treatment or burial expense, is made, and no application is filed with the department of labor and industry within two years from the date of the injury or death, or from the date the employee or the dependent knew or ought to have known the nature of the disability and its relation to the employment, the right to compensation is barred, except that the right to compensation is not barred if the employer knew or should have known, within the two-year period, that the employee had sustained the injury on which the claim is based. Issuance of notice of a hearing on the department's own motion has the same effect for the purposes of this section as the filing of an application. This section does not affect any claim barred under section 176C.17, subdivision 11.

Sec. 13. [176C.125] [FRAUDULENT CLAIMS REPORTING AND INVESTIGATION.]

(a) If an insurer or self-insured employer has evidence that a claim is false or fraudulent in violation of chapter 609 and if the insurer or self-insured employer is satisfied that reporting the claim to the department will not impede its ability to defend the claim, the insurer or self-insured employer shall report the claim to the department. The department may require an insurer or self-insured employer to investigate an allegedly false or fraudulent claim and may provide the insurer or self-insured employer with any records of the department relating to that claim. An insurer or self-insured employer that investigates a claim under this section shall report on the results of that investigation to the department. If based on the investigation the department has a reasonable basis to believe that a violation of chapter 609 has occurred, the department shall refer the results of the investigation to the district attorney of the county in which the alleged violation occurred for prosecution.

(b) Annually, the department shall submit a report to the house labor management relations committee; the senate jobs, energy, and community development committee; and the governor detailing, for the previous year, the number of reports under paragraph (a) that the department received, the number of referrals for prosecution that the department made, and the results of those referrals.

Sec. 14. [176C.13] [EXAMINATION; COMPETENT WITNESSES; EXCLUSION OF EVIDENCE; AUTOPSY.]

Subdivision 1. [SUBMISSION TO EXAMINATION.] Except as provided in subdivision 8, when compensation is claimed by an employee, the employee shall, upon the written request of the employee's employer, or workers' compensation insurer, submit to reasonable examinations by physicians, chiropractors, psychologists, or podiatrists

provided and paid for by the employer or insurer. No employee who submits to an examination under this paragraph is a patient of the examining physician, chiropractor, psychologist, or podiatrist for any purpose unless the employee specifically requests treatment from the physician, chiropractor, psychologist, or podiatrist. When compensation is claimed for loss of earning capacity under section 176C.44, subdivision 2 or 3, the employee shall, on the written request of the employee's employer or insurer, submit to reasonable examinations by vocational experts provided and paid for by the employer or insurer.

Subd. 2. [EXPENSES AND NOTICE OF EXAMINATION.] An employer or insurer who requests that an employee submit to reasonable examination under subdivision 1 shall tender to the employee, before the examination, all necessary expenses including transportation expenses. The employee is entitled to have a physician, chiropractor, psychologist, or podiatrist, provided by the employee present at the examination and to request and receive a copy of all reports of the examination that are prepared by the examiner. The employee is also entitled to provide and have a translator present at the examination if the employee has difficulty speaking or understanding the English language. The employer's or insurer's written request for examination shall notify the employee of the following:

(1) the proposed date, time, and place of the examination and the identity of the examining physician, chiropractor, psychologist, podiatrist, or vocational expert;

(2) the procedure for changing the proposed date, time, and place of the examination;

(3) the employee's right to have the employee's physician, chiropractor, psychologist, podiatrist, or vocational expert present at the examination;

(4) the employee's right to request and receive a copy of all reports of the examination that are prepared by the examiner; and

(5) the employee's right to provide a translator to be present at the examination if the employee has difficulty speaking or understanding the English language.

Subd. 3. [REFUSAL TO COOPERATE; CONSEQUENCES.] So long as the employee, after a written request of the employer or insurer which complies with subdivision 2, refuses to submit to or in any way obstructs the examination, the employee's right to begin or maintain any proceeding for the collection of compensation is suspended, except as provided in subdivision 8. If the employee refuses to submit to the examination after direction by the department, or an examiner, or in any way obstructs the examination, the employee's right to the weekly indemnity which accrues and becomes payable during the period of that refusal or obstruction, is barred, except as provided in subdivision 8.

Subd. 4. [REPORTS AND TESTIMONY OF HEALTH CARE PROVIDER.] Subject to subdivision 5:

(a) A physician, chiropractor, psychologist, podiatrist, or vocational expert who is present at an examination under subdivision 1 may be required to testify as to its results.

(b) A physician, chiropractor, psychologist, podiatrist, or vocational expert who attended a workers' compensation claimant for any condition or complaint reasonably related to the condition for which the claimant claims compensation may be required to testify before the department when it so directs.

(c) Notwithstanding any statutory provisions except subdivision 5, a physician, chiropractor, psychologist, podiatrist, or vocational expert attending a workers' compensation claimant for a condition or complaint reasonably related to the condition for which the claimant claims compensation may furnish to the employee, employer, workers' compensation insurer, or the department information and reports relative to a compensation claim.

(d) The testimony of a physician, chiropractor, psychologist, or podiatrist who is licensed to practice or practices in any state and the testimony of any vocational expert may be received in evidence in compensation proceedings.

Subd. 5. [HEALTH CARE FEES; TESTIMONY.] No person may testify on the issue of the reasonableness of the fees of a licensed health care professional unless the person is licensed to practice the same health care profession as the professional whose fees are the subject of the testimony. This subdivision does not apply to the fee dispute resolution process under section 176C.16, subdivision 2. If an employee claims compensation under section 176C.81, the department may require the employee to submit to physical or vocational examinations under this section.

Subd. 6. [DOCTOR-PATIENT PRIVILEGE WAIVER.] An employee who reports an injury alleged to be work-related or files an application for hearing waives any physician-patient, psychologist-patient, or chiropractor-patient privilege with respect to any condition or complaint reasonably related to the condition for which the employee claims compensation. Any physician, chiropractor, podiatrist, hospital, or health care provider shall, within a reasonable time after written request by the employee, employer, workers' compensation insurer, or department or its representative, provide that person with any information or written material reasonably related to any injury for which the employee claims compensation.

Subd. 6a. [COSTS.] A physician, chiropractor, psychologist, podiatrist, hospital, or health service provider shall furnish a legible, certified duplicate of the written material requested under subdivision 6 upon payment of the greater of the actual costs not to exceed 45 cents per page or $7.50 per request plus the actual costs of postage. Any person who refuses to provide certified duplicates of written material in the person's custody that is requested under subdivision 6 shall be liable for reasonable and necessary costs and reasonable attorney fees incurred in enforcing the requester's right to the duplicates under subdivision 6.

Subd. 7. [MEDICAL DISPUTE; THIRD PARTY OPINION.] If two or more physicians, chiropractors, psychologists, or podiatrists disagree as to the extent of an injured employee's temporary disability, the end of an employee's healing period, or an employee's ability to return to work at suitable available employment, or the necessity for further treatment or for a particular type of treatment, the department may appoint another physician, chiropractor, psychologist, or podiatrist to examine the employee and render an opinion as soon as possible. The department shall promptly notify the parties of this appointment. If the employee has not returned to work, payment for temporary disability shall continue until the department receives the opinion. The employer or its insurance carrier or both shall pay for the examination and opinion. The employer or insurance carrier or both shall receive appropriate credit for any overpayment to the employee determined by the department after receipt of the opinion.

Subd. 8. [DISTANT EXAM; EXCEPTIONS.] The rights of employees to begin or maintain proceedings to collect compensation and to receive weekly indemnities which accrue and become payable shall not be suspended or barred under subdivision 3 when an employee refuses to submit to a physical examination, upon the request of the employer or workers' compensation insurer or at the direction of the department or examiner, which would require the employee to travel a distance of 100 miles or more from the employee's place of residence, unless the employee has claimed compensation for treatment from a practitioner whose office is located 100 miles or more from the employee's place of residence, or the department or examiner determines that any other circumstances warrant the examination. If the employee has claimed compensation for treatment from a practitioner whose office is located 100 miles or more from the employee's place of residence, the employer or insurer may request or the department or an examiner may direct, the employee to submit to a physical examination in the area where the employee's treatment practitioner is located.

Subd. 9. [AUTOPSY EVIDENCE.] The department may refuse to receive testimony as to conditions determined from an autopsy if it appears that the party offering the testimony had procured the autopsy and failed to make reasonable effort to notify at least one party in adverse interest or the department at least 12 hours before the autopsy of the time and place it would be performed, or that the autopsy was performed by or at the direction of the coroner or medical examiner or at the direction of the county attorney for purposes not authorized by statute. The department may withhold findings until an autopsy is held in accordance with its directions.

Sec. 15. [176C.14] [JURISDICTION OF DEPARTMENT; ADVISORY COMMITTEE.]

Subdivision 1. [ADMINISTRATION.] This act shall be administered by the department.

Subd. 2. [ADVISORY COUNCIL RECOMMENDATIONS.] The council on workers' compensation shall advise the department in carrying out the purposes of this act. The council shall submit its recommendations with respect to amendments to this act to each regular session of the legislature and report its views upon any pending bill relating to this act to the proper legislative committee. At the request of the chairs of the senate and house committees on labor, the department shall schedule a meeting of the council with the members of the committees to review and discuss matters of legislative concern arising under this act.

Sec. 16. [176C.15] [RULES OF PROCEDURE; TRANSCRIPTS.]

Subject to this act, the department may adopt its own rules of procedure and change them from time to time.

The department may provide by rule the conditions under which transcripts of testimony and proceedings shall be furnished.

All testimony at any hearing held under this act shall be taken down by a stenographic reporter except that in the case of an emergency as determined by the examiner conducting the hearing, testimony may be recorded by a recording machine.

Sec. 17. [176C.16] [SUBMISSION OF DISPUTES; CONTRIBUTIONS BY EMPLOYEES.]

Subdivision 1. [CONTROVERSIES; SETTLEMENTS; DEPARTMENT JURISDICTION.] Any controversy concerning compensation, or a violation of subdivision 3, including controversies in which the state may be a party, shall be submitted to the department in the manner and with the effect provided in this act. Every compromise of a claim for compensation may be reviewed and set aside, modified, or confirmed by the department within one year from the date the compromise is filed with the department, or from the date an award has been entered, based on the compromise, or the department may take that action upon application made within one year. Unless the word "compromise" appears in a stipulation of settlement, the settlement shall not be deemed a compromise, and further claim is not barred except as provided in section 176C.17, subdivision 12, regardless of whether an award is made. The employer, insurer, or a dependent under section 176C.51, subdivision 5, shall have equal rights with the employee to have review of a compromise or any other stipulation of settlement. Upon petition filed with the department, the department may set aside the award or otherwise determine the rights of the parties.

Subd. 2. [DISPUTE RESOLUTION; FEES.] (a) The department has jurisdiction to resolve a dispute between a health service provider and an insurer or self-insured employer over the reasonableness of a fee charged by the health service provider for health services provided to an injured employee who claims benefits under this chapter. The department shall deny payment of a health service fee that the department determines under this subdivision to be unreasonable. A health service provider and an insurer or self-insured employer that are parties to a fee dispute under this subdivision are bound by the department's determination on the reasonableness of the disputed fee, unless that determination is set aside on judicial review under paragraph (f).

(b) An insurer or self-insured employer that disputes the reasonableness of a fee charged by a health service provider shall provide reasonable notice to the health service provider that the fee is being disputed. After receiving reasonable notice that a health service fee is being disputed, a health service provider may not collect the disputed fee from, or bring an action for collection of the disputed fee against, the employee who received the services for which the fee was charged.

(c) After a fee dispute is submitted to the department, the insurer or self-insured employer that is a party to the dispute shall provide to the department information on that fee and information on fees charged by other health service providers for comparable services. The insurer or self-insured employer shall obtain the information on comparable fees from a database that is certified by the department under paragraph (h). Except as provided in paragraph (e), if the insurer or self-insured employer does not provide the information required under this paragraph, the department shall determine that the disputed fee is reasonable and order that it be paid. If the insurer or self-insured employer provides the information required under this paragraph, the department shall use that information to determine the reasonableness of the disputed fee.

(d) For fee disputes that are submitted to the department before July 1, 1996, the department shall analyze the information provided to the department under paragraph (c) according to the criteria provided in this paragraph to determine the reasonableness of the disputed fee. The department shall determine that a disputed fee is reasonable and order that the disputed fee be paid if that fee is at or below the mean fee for the health service procedure for which the disputed fee was charged, plus 1.5 standard deviations from that mean, as shown by data from a database that is certified by the department under paragraph (h). The department shall determine that a disputed fee is unreasonable and order that a reasonable fee be paid if the disputed fee is above the mean fee for the health service procedure for which the disputed fee was charged, plus 1.5 standard deviations from that mean, as shown by data from a database that is certified by the department under paragraph (h), unless the health service provider proves to the satisfaction of the department that a higher fee is justified because the service provided in the disputed case was more difficult or more complicated to provide than in the usual case.

(e) If an insurer or self-insured employer that disputes the reasonableness of a fee charged by a health service provider cannot provide information on fees charged by other health service providers for comparable services because the database to which the insurer or self-insured employer subscribes is not able to provide accurate information for the health service procedure at issue, the department may use any other information that the department considers to be reliable and relevant to the disputed fee to determine the reasonableness of the disputed fee. Notwithstanding subdivision 1, the department may use only a hospital radiology database that has been certified by the department under paragraph (h) to determine the reasonableness of a hospital fee for radiology services.

(f) A health service provider, insurer, or self-insured employer that is aggrieved by a determination of the department under this subdivision may seek judicial review of that determination in the same manner that compensation claims are reviewed under section 176C.23.

(g) Section 176C.13, subdivision 5, does not apply to the fee dispute resolution process under this subdivision.

(h) The department shall promulgate rules establishing procedures and requirements for the fee dispute resolution process under this subdivision, including rules specifying the standards that health service fee databases must meet for certification under this paragraph. Using those standards, the department shall certify databases of the health service fees that various health service providers charge. In certifying databases under this paragraph, the department shall certify at least one database of hospital fees for radiology services, including diagnostic and interventional radiology, diagnostic ultrasound, and nuclear medicine.

Subd. 2a. [DISPUTE RESOLUTION; TREATMENT.] (a) The department has jurisdiction to resolve a dispute between a health service provider and an insurer or self-insured employer over the necessity of treatment provided for an injured employee who claims benefits under this act. The department shall deny payment for any treatment that the department determines under this subdivision to be unnecessary. A health service provider and an insurer or self-insured employer that are parties to a dispute under this subdivision over the necessity of treatment are bound by the department's determination on the necessity of that treatment, unless that determination is set aside on judicial review under paragraph (e).

(b) An insurer or self-insured employer that disputes the necessity of treatment provided by a health service provider shall provide reasonable notice to the health service provider that the necessity of that treatment is being disputed. After receiving reasonable notice that the necessity of treatment is being disputed, a health service provider may not collect a fee for that disputed treatment from, or bring an action for collection of the fee for that disputed treatment against, the employee who received the treatment.

(c) Before determining the necessity of treatment provided for an injured employee who claims benefits under this chapter, the department shall obtain a written opinion on the necessity of the treatment in dispute from an expert selected by the department. To qualify as an expert, a person must be licensed to practice the same health care profession as the individual health service provider whose treatment is under review and must either be performing services for an impartial health care services review organization or be a member of an independent panel of experts established by the department under paragraph (f). The department shall adopt the written opinion of the expert as the department's determination on the issues covered in the written opinion, unless the health service provider or the insurer or self-insured employer present clear and convincing written evidence that the expert's opinion is in error.

(d) The department may charge a party to a dispute over the necessity of treatment provided for an injured employee who claims benefits under this act for the full cost of obtaining the written opinion of the expert under paragraph (c). The department shall charge the insurer or self-insured employer for the full cost of obtaining the written opinion of the expert for the first dispute that a particular individual health service provider is involved in, unless the department determines that the individual health service provider's position in the dispute is frivolous or based on fraudulent representations. In a subsequent dispute involving the same individual health service provider, the department shall charge the losing party to the dispute for the full cost of obtaining the written opinion of the expert.

(e) A health service provider, insurer, or self-insured employer that is aggrieved by a determination of the department under this subdivision may seek judicial review of that determination in the same manner that compensation claims are reviewed under section 176C.23.

(f) The department may contract with an impartial health care services review organization to provide the expert opinions required under paragraph (c), or establish a panel of experts to provide those opinions, or both. If the department establishes a panel of experts to provide the expert opinions required under paragraph (c), the department may pay the members of that panel a reasonable fee, plus actual and necessary expenses, for their services.

(g) The department shall promulgate rules establishing procedures and requirements for the necessity of treatment dispute resolution process under this subdivision, including rules setting the fees under paragraph (f).

Subd. 3. [PAYMENTS BY EMPLOYEE PROHIBITED.] No employer subject to this act may solicit, receive, or collect any money from an employee or any other person or make any deduction from their wages, either directly or indirectly, for the purpose of discharging any liability under this act or recovering premiums paid on a contract

described in section 176C.31, subdivision 1; nor may the employer sell to an employee or other person, or solicit or require the employee or other person to purchase, medical, chiropractic, podiatric, psychological, or hospital tickets or contracts for medical, surgical, hospital, or other health care treatment which is required to be furnished by that employer.

Subd. 4. [PENALTIES.] The department has jurisdiction to pass on any question arising out of subdivision 3 and has jurisdiction to order the employer to reimburse an employee or other person for any sum deducted from wages or paid by the employee in violation of that subdivision. In addition, any employer violating subdivision 3 shall be subject to the penalties provided in section 176C.281, subdivision 5, and be liable to an injured employee for the reasonable value of the necessary services rendered to that employee pursuant to any arrangement made in violation of subdivision 3 without regard to that employee's actual disbursements for the same.

Subd. 5. [WAIVER.] No agreement by an employee to waive the right to compensation is valid.

Sec. 18. [176C.17] [PROCEDURE; NOTICE OF HEARING; WITNESSES; CONTEMPT; TESTIMONY; MEDICAL EXAMINATION.]

Subdivision 1. [NOTICE; SERVICE; HEARING.] Upon the filing with the department by any party in interest of an application in writing stating the general nature of a claim as to which a dispute or controversy may have arisen, it shall mail a copy of the application to all other parties in interest. The insurance carrier shall be deemed a party in interest. The department may bring in additional parties by service of a copy of the application. The department shall cause notice of hearing on the application to be given to each party interested, by service of notice on the interested party personally or by mailing a copy to the interested party's last-known address at least ten days before the hearing. If a party in interest is located without the state, and has no post office address within the state, the copy of the application and copies of all notices shall be filed in the office of the secretary of state and also be sent by registered or certified mail to the last-known post office address of the party. Such a filing and mailing shall constitute sufficient service, with the same effect as if served upon a party located within this state. The hearing may be adjourned in the discretion of the department, and hearings may be held at places the department designates, within or without the state. The department may also arrange to have a hearing held by the commission, officer, or tribunal having authority to hear cases arising under the workers' compensation law of another state, of the District of Columbia, or of a territory of the United States, the testimony and proceedings at the hearing to be reported to the department and to be part of the record in the case. Any evidence so taken shall be subject to rebuttal upon final hearing before the department.

Subd. 2. [APPEARANCE BEFORE EXAMINER; DISCOVERY ORDERS.] In any dispute or controversy pending before the department, the department may direct the parties to appear before an examiner for a conference to consider the clarification of issues, the joining of additional parties, the necessity or desirability of amendments to the pleadings, the obtaining of admissions of fact or of documents, records, reports and bills which may avoid unnecessary proof, and other matters as may aid in disposition of the dispute or controversy. After this conference the department may issue an order requiring disclosure or exchange of any information or written material which it considers material to the timely and orderly disposition of the dispute or controversy. If a party fails to disclose or exchange within the time stated in the order, the department may issue an order dismissing the claim without prejudice or excluding evidence or testimony relating to the information or written material. The department shall provide each party with a copy of any order.

Subd. 3. [APPEARANCE BY REPRESENTATIVE; ATTORNEY.] Either party shall have the right to be present at any hearing, in person or by attorney, or any other agent, and to present testimony that is pertinent to the controversy before the department. No person, firm, or corporation other than an attorney at law, licensed to practice law in the state, may appear on behalf of a party in interest before the department or a member or employee of the department assigned to conduct a hearing, investigation, or inquiry relative to a claim for compensation or benefits under this act, unless the person is 18 years of age or older, does not have an arrest or conviction record, is otherwise qualified, and has obtained from the department a license with authorization to appear in matters or proceedings before the department. The license shall be issued by the department under rules to be adopted by the department. A current list of persons to whom licenses have been issued shall be maintained in the office of the department. A license may be suspended or revoked by the department for fraud or serious misconduct on the part of an agent. Before suspending or revoking the license of an agent, the department shall give notice in writing to the agent of the charges of fraud or misconduct, and give the agent full opportunity to be heard in relation to them. The license and certificate of authority shall, unless otherwise suspended or revoked, be in force from the date of issuance until the June 30 following the date of issuance and may be renewed by the department from time to time. Each renewed license shall expire on the June 30 following its issuance.

Subd. 4. [MEDICAL REPORTS.] The contents of verified medical and surgical reports by physicians, podiatrists, surgeons, dentists, psychologists, and chiropractors licensed in and practicing in this state and of verified reports by experts concerning loss of earning capacity presented by a party for compensation constitute prima facie evidence as to the matter contained in them, subject to any rules and limitations the department prescribes. Verified reports of physicians, podiatrists, surgeons, dentists, psychologists, and chiropractors, wherever licensed and practicing, who have examined or treated the claimant, and of experts, if the practitioner or expert consents to cross-examination also constitute prima facie evidence as to the matter contained in them. Verified reports of physicians, podiatrists, surgeons, psychologists, and chiropractors are admissible as evidence of the diagnosis, necessity of the treatment, and cause and extent of the disability. Verified reports by doctors of dentistry are admissible as evidence of the diagnosis and necessity for treatment but not of disability. Physicians, podiatrists, surgeons, dentists, psychologists, and chiropractors licensed in and practicing in this state and experts may certify instead of verify the reports. That certification is equivalent to verification. Any physician, podiatrist, surgeon, dentist, psychologist, chiropractor, or expert who knowingly makes a false statement of fact or opinion in a verified or certified report violates section 609.48 and is subject to fines, imprisonment, or both. The record of a hospital or sanitarium in this state operated by a department or agency of the federal or state government or by a municipality, or of another hospital or sanitarium in this state which is satisfactory to the department, established by certificate, affidavit, or testimony of the supervising officer or other person having charge of the record, or of a physician, podiatrist, surgeon, dentist, psychologist, or chiropractor to be the record of the patient, and made in the regular course of examination or treatment of the patient, constitutes prima facie evidence in any workers' compensation proceeding as to the matter contained in it, to the extent that it is otherwise competent and relevant. The department may, by rule, establish the qualifications of and the form used for verified reports submitted by experts who provide information concerning loss of earning capacity. The department may not admit into evidence a verified report of a practitioner or other expert that was not filed with the department and all parties in interest at least 15 days before the date of the hearing, unless the department is satisfied that there is good cause for the failure to file the report.

Subd. 5. [DEPARTMENT INVESTIGATION OR INSPECTION.] The department may, with or without notice to either party, cause testimony to be taken, or an inspection of the premises where the injury occurred to be made, or the time books and payrolls of the employer to be examined by an examiner, and may direct an employee claiming compensation to be examined by a physician, chiropractor, psychologist, or podiatrist. The testimony so taken, and the results of such an inspection or examination, shall be reported to the department for its consideration upon final hearing. All ex parte testimony taken by the department shall be reduced to writing and either party shall have opportunity to rebut it on final hearing.

Subd. 6. [INDEPENDENT PHYSICAL EXAMINATION OR AUTOPSY.] Whenever the testimony presented at a hearing indicates a dispute, or is such as to create doubt as to the extent or cause of disability or death, the department may direct that the injured employee be examined or an autopsy be performed, or an opinion of a physician, chiropractor, psychologist, or podiatrist be obtained without examination or autopsy, by an impartial, competent physician, chiropractor, psychologist, or podiatrist designated by the department who is not under contract with or regularly employed by a compensation insurance carrier or self-insured employer. The expense of the examination shall be paid by the employer or if the employer is uninsured, from the special compensation fund.

The report of the examination shall be transmitted in writing to the department and a copy furnished by the department to each party, who shall have an opportunity to rebut the report on further hearing.

Subd. 7. [INDUSTRIAL SAFETY SPECIALIST REPORT.] The contents of certified reports of investigation, made by industrial safety specialists who are employed by the department and available for cross-examination, served upon the parties 15 days prior to hearing, shall constitute prima facie evidence as to matter contained in them.

Subd. 8. [FAILURE TO MAKE PAYMENT; HEARING.] If the department has reason to believe that the payment of compensation has not been made, it may on its own motion give notice to the parties, in the manner provided for the service of an application, of a time and place when a hearing will be had for the purpose of determining the facts. The notice shall contain a statement of the matter to be considered. Thereafter all other provisions governing proceedings on application shall attach insofar as the same may be applicable.

Subd. 9. [SUBPOENA.] A party, including the department, may require a person to produce books, papers, and records at the hearing by personal service of a subpoena upon the person along with a tender of witness fees. Except as provided in subdivision 9a, the subpoena shall be on a form provided by the department and give the name and address of the party requesting the subpoena.

Subd. 9a. [ATTORNEY SUBPOENA.] A party's attorney of record may issue a subpoena to compel the attendance of a witness or the production of evidence. A subpoena issued by an attorney must be in substantially the same form and must be served in the same manner as in a civil action. The attorney shall, at the time if issuance, send a copy of the subpoena to the appeal tribunal or other representative of the department responsible for conducting the proceeding.

Subd. 10. [FAILURE TO APPEAR OR PRODUCE RECORDS.] A person who willfully and unlawfully fails or neglects to appear or to testify or to produce books, papers, and records as required, shall be fined not less than $25 nor more than $100, or imprisoned not longer than 30 days. Each day a person fails or neglects constitutes a separate offense.

Subd. 11. [STATUTE OF LIMITATIONS.] The right of an employee, the employee's legal representative, or a dependent to proceed under this section shall not extend beyond 12 years from the date of the injury or death or from the date that compensation, other than treatment or burial expenses, was last paid, or would have been last payable if no advancement were made, whichever date is latest. In the case of occupational disease there shall be no statute of limitations, except that benefits or treatment expense becoming due after 12 years from the date of injury or death or last payment of compensation shall be paid from the work injury supplemental benefit fund under section 176C.65 and in the manner provided in section 176C.66. Payment of wages by the employer during disability or absence from work to obtain treatment is payment of compensation for the purpose of this section if the employer knew of the employee's condition and its alleged relation to the employment.

Subd. 12. [LIMITATIONS; EXCEPTION FOR STATE ACTION.] This section does not limit the time within which the state may bring an action to recover the amounts specified in sections 176C.49, subdivision 5, and 176C.59.

Subd. 13. [STATUTE OF LIMITATION; MINORS.] If an employee or dependent is, at the time of injury, or at the time the right accrues, under 18 years of age, the limitations of time within which the employee may file application or proceed under this act, if they would otherwise expire sooner, shall be extended to one year after the employee attains the age of 18 years. If, within any part of the last year of such a period of limitation, an employee, the employee's personal representative, or surviving dependent is insane or on active duty in the armed forces of the United States the period of limitation shall be extended to two years after the date that the limitation would otherwise expire. The provision of this subdivision with respect to persons on active duty in the armed forces of the United States applies only if no applicable federal statute is in effect.

Subd. 14. [LOSS OF EARNING CAPACITY TESTIMONY.] (a) Except as provided in paragraph (b), in a claim under section 176C.44, subdivisions 2 and 3, testimony or verified reports of expert witnesses on loss of earning capacity may be received in evidence and considered with all other evidence to decide on an employee's actual loss of earning capacity.

(b) Except as provided in paragraph (c), the department shall exclude from evidence testimony or verified reports from expert witnesses under paragraph (a) offered by the party that raises the issue of loss of earning capacity if that party failed to notify the department and the other parties of interest, at least 60 days before the date of the hearing, of the party's intent to provide the testimony or reports and of the names of the expert witnesses involved. Except as provided in paragraph (c), the department shall exclude from evidence testimony or verified reports from expert witnesses under paragraph (a) offered by a party of interest in response to the party that raises the issue of loss of earning capacity if the responding party failed to notify the department and the other parties of interest, at least 45 days before the date of the hearing, of the party's intent to provide the testimony or reports and of the names of the expert witnesses involved.

(c) Notwithstanding the notice deadlines provided in paragraph (b), the department may receive in evidence testimony or verified reports from expert witnesses under paragraph (a) when the applicable notice deadline under paragraph (b) is not met if good cause is shown for the delay in providing the notice required under paragraph (b) and if no party is prejudiced by the delay.

Subd. 15. [MEDICAL EXPENSE STATEMENT.] Unless otherwise agreed to by all parties, an injured employee shall file with the department and serve on all parties at least 15 days before the date of the hearing an itemized statement of all medical expenses and incidental compensation under section 176C.42 claimed by the injured employee. The itemized statement shall include, if applicable, information relating to any travel expenses incurred by the injured employee in obtaining treatment including the injured employee's destination, number of trips, round trip mileage, and meal and lodging expenses. The department may not admit into evidence any information relating to medical expenses and incidental compensation under section 176C.42 claimed by an injured employee if the injured

employee failed to file with the department and serve on all parties at least 15 days before the date of the hearing an itemized statement of the medical expenses and incidental compensation under section 176C.42 claimed by the injured employee, unless the department is satisfied that there is good cause for the failure to file and serve the itemized statement.

Sec. 19. [176C.175] [APPORTIONMENT OF LIABILITY.]

(a) If it is established at the hearing that two or more accidental injuries, for each of which a party to the proceedings is liable under this act, have each contributed to a physical or mental condition for which benefits would be otherwise due, liability for the benefits shall be apportioned according to the proof of the relative contribution to disability resulting from the injury.

(b) If after a hearing or a prehearing conference the department determines that an injured employee is entitled to compensation but that there remains in dispute only the issue of which of two or more parties is liable for that compensation, the department may order one or more parties to pay compensation in an amount, time, and manner as determined by the department. If the department later determines that another party is liable for compensation, the department shall order that other party to reimburse any party that was ordered to pay compensation under this section.

Sec. 20. [176C.18] [FINDINGS, ORDERS, AND AWARDS.]

Subdivision 1. [HEARING NOT REQUIRED.] All parties shall be afforded opportunity for full, fair, public hearing after reasonable notice, but disposition of application may be made by compromise, stipulation, agreement, or default without hearing.

Subd. 2. [FINDINGS AND ORDER.] Within 90 days after the final hearing and close of the record, the department shall make and file its findings upon the ultimate facts involved in the controversy, and its order, which shall state its determination as to the rights of the parties. Pending the final determination of a controversy, the department may in its discretion after any hearing make interlocutory findings, orders, and awards which may be enforced in the same manner as final awards. The department may include in its final award, as a penalty for noncompliance with an interlocutory order or award, if it finds that noncompliance was not in good faith, not exceeding 25 percent of each amount which shall not have been paid as directed. If there is a finding that the employee is in fact suffering from an occupational disease caused by the employment of the employer against whom the application is filed, a final award dismissing the application upon the ground that the applicant has suffered no disability from the disease shall not bar any claim the applicant may thereafter have for disability sustained after the date of the award.

Subd. 3. [AWARD OF PENALTY.] The department may include a penalty in an award to an employee if it determines that the employer's or insurance carrier's suspension of, termination of, or failure to make payments or failure to report injury resulted from malice or bad faith. This penalty is the exclusive remedy against an employer or insurance carrier for malice or bad faith. The department may award an amount which it considers just, not to exceed the lesser of 200 percent of total compensation due or $15,000. The department may assess the penalty against the employer, the insurance carrier, or both. Neither the employer nor the insurance carrier is liable to reimburse the other for the penalty amount. The department may, by rule, define actions which demonstrate malice or bad faith.

Subd. 3a. [LIABILITY FOR EXCESS PAYMENT.] If an insurer, a self-insured employer, or, if applicable, the special compensation fund pays compensation to an employee in excess of its liability and another insurer is liable for all or part of the excess payment, the department may order the insurer or self-insured employer that is liable to reimburse the insurer or self-insured employer that made the excess payment or, if applicable, the special compensation fund.

Subd. 4. [MAJORITY DECISION GOVERNS.] If two or more examiners have conducted a formal hearing on a claim and are unable to agree on the order or award to be issued, the decision shall be the decision of the majority. If the examiners are equally divided on the decision, the department may appoint an additional examiner who shall review the record and consult with the other examiners concerning their personal impressions of the credibility of the evidence. Findings of fact and an order or award may then be issued by a majority of the examiners.

Subd. 5. [AWARD WITHIN RANGE OF EVIDENCE.] Any award which falls within a range of five percent of the highest or lowest estimate of permanent partial disability made by a practitioner which is in evidence is presumed to be a reasonable award, provided it is not higher than the highest or lower than the lowest estimate in evidence.

Subd. 6. [CLAIMS EXAMINER.] The department shall have and maintain on its staff the examiners necessary to hear and decide disputed claims and to assist in the effective administration of this act. The examiners shall be attorneys and may be designated as administrative law judges. The examiners may make findings and orders, and approve, review, set aside, modify, or confirm stipulations of settlement or compromises of claims for compensation.

Subd. 7. [REVIEW OF EXAMINER'S DECISION.] A party in interest may petition the workers' compensation court of appeals for review of an examiner's decision awarding or denying compensation if the department or the court receives the petition within 21 days after the department mailed a copy of the examiner's findings and order to the party's last-known address. The workers' compensation court of appeals shall dismiss a petition which is not timely filed unless the petition shows probable good cause that the reason for failure to timely file was beyond the petitioner's control. If no petition is filed within 21 days from the date that a copy of the findings or order of the examiner is mailed to the last-known address of the parties in interest, the findings or order shall be considered final unless set aside, reversed, or modified by the examiner within that time. If the findings or order are set aside by the examiner, the status shall be the same as prior to the findings or order set aside. If the findings or order are reversed or modified by the examiner, the time for filing a petition commences with the date that notice of reversal or modification is mailed to the last-known address of the parties in interest. The workers' compensation court of appeals shall either affirm, reverse, set aside, or modify the findings or order in whole or in part, or direct the taking of additional evidence. This action shall be based on a review of the evidence submitted.

Subd. 8. [CERTAIN LIABILITY UNAFFECTED.] Unless the liability under section 176C.35, subdivision 3, 176C.43, subdivision 6, 176C.48, 176C.57, 176C.58, 176C.59, 176C.60, or 176C.61 is specifically mentioned, the order, findings, or award are deemed not to affect the liability.

Subd. 9. [SETTING ASIDE ORDERS.] Within 28 days after a decision of the workers' compensation court of appeals is mailed to the last-known address of each party in interest, the court may, on its own motion, set aside the decision for further consideration.

On its own motion, for reasons it deems sufficient, the court may set aside any final order or award of the court or examiner within one year after the date of the order or award, upon grounds of mistake or newly discovered evidence, and, after further consideration, do any of the following:

(1) Affirm, reverse, or modify, in whole or in part, the order or award.

(2) Reinstate the previous order or award.

(3) Remand the case to the department for further proceedings.

Subd. 10. [REMAND OF COMPROMISE.] While a petition for review by the workers' compensation court of appeals is pending or after entry of an order or award by the court but before commencement of an action for judicial review or expiration of the period in which to commence an action for judicial review, the court shall remand any compromise presented to it to the department for consideration and approval or rejection pursuant to section 176C.16, subdivision 1.

Presentation of a compromise does not affect the period in which to commence an action for judicial review.

Subd. 11. [MISTAKE AS TO CAUSE OF INJURY.] If it appears to the department that a mistake may have been made as to cause of injury in the findings, order, or award upon an alleged injury based on accident, when in fact the employee was suffering from an occupational disease, the department may upon its own motion, with or without hearing, within three years from the date of the findings, order, or award, set aside the findings, order, or award. The department may take similar action upon an application made within the three years. After opportunity for hearing, the department may then, if in fact the employee is suffering from disease arising out of the employment, make new findings and award, or reinstate the previous findings, order, or award.

Subd. 12. [OCCUPATIONAL DISEASE; FINDINGS, ORDER, AND AWARD.] In case of disease arising out of the employment, the department may from time to time review its findings, order, or award, and make new findings, order, or award, based on the facts regarding disability or otherwise as they may then appear. This subdivision shall not affect the application of the limitation in section 176C.17, subdivision 12.

Sec. 21. [176C.19] [ALIEN DEPENDENTS; PAYMENTS THROUGH CONSULAR OFFICERS.]

In case a deceased employee, for whose injury or death compensation is payable, leaves surviving alien dependents residing outside of the United States, the accredited consular officer of the country of which the dependents are citizens or the officer's designated representative residing within the state shall, except as otherwise determined by the department, be the sole representative of the deceased employee and dependents in all matters pertaining to their claims for compensation. The receipt by the officer or representative of compensation funds and their distribution shall be made only upon order of the department. Payment to the officer or representative pursuant to the order shall be a full discharge of the benefits or compensation. The consular officer or the officer's representative shall furnish, if required by the department, a bond to be approved by it, conditioned upon the proper application of all money received by the person. Before the bond is discharged, the consular officer or representative shall file with the department a verified account of the items of receipt and disbursement of the compensation. The consular officer or representative shall make interim reports to the department as it may require.

Sec. 22. [176C.195] [EMPLOYEES CONFINED IN INSTITUTIONS; PAYMENT OF BENEFITS.]

If an employee is adjudged insane or incompetent, or convicted of a felony, and is confined in a public institution and has wholly dependent upon the employee for support a person, whose dependency is determined as if the employee were deceased, compensation payable during the period of confinement may be paid to the employee and the employee's dependents, in the manner, for the time and in the amount as the department provides by order.

Sec. 23. [176C.20] [JUDGMENT ON AWARD.]

Either party may present a certified copy of the award to the district court. The court shall then, without notice, render judgment in accordance with the award. The judgment shall have the same effect as though rendered in an action tried and determined by the court, and shall be entered and docketed with like effect.

Sec. 24. [176C.21] [PAYMENT OF AWARDS BY MUNICIPALITIES.]

When an award is made by the department under this act, against a municipality, the person in whose favor it is made shall file a certified copy of it with the municipal clerk. Within 20 days thereafter, unless an appeal is taken, the clerk shall draw an order on the municipal treasurer for the payment of the award. If upon appeal the award is affirmed in whole or in part the order for payment shall be drawn within ten days after a certified copy of the judgment is filed with the proper clerk. If more than one payment is provided for in the award or judgment, orders shall be drawn as the payments become due. No statute relating to the filing of claims against, and the auditing, allowing, and payment of claims by municipalities shall apply to the payment of an award or judgment under this section.

Sec. 25. [176C.22] [PENALTY FOR DELAYED PAYMENTS; INTEREST.]

Subdivision 1. [INEXCUSABLE DELAY.] If the employer or the employer's insurer inexcusably delays in making the first payment that is due an injured employee for more than 30 days after the day on which the employee leaves work as a result of an injury and if the amount due is $500 or more, the payments as to which the delay is found shall be increased by ten percent. If the employer or the employer's insurer inexcusably delays in making the first payment that is due an injured employee for more than 14 days after the day on which the employee leaves work as a result of an injury, the payments as to which the delay is found may be increased by ten percent. If the employer or the employer's insurer inexcusably delays for any length of time in making any other payment that is due an injured employee, the payments as to which the delay is found may be increased by ten percent. If the delay is chargeable to the employer and not to the insurer, section 176C.62 shall apply and the relative liability of the parties shall be fixed and discharged as provided by it. The department may also order the employer or insurance carrier to reimburse the employee for any finance charges, collection charges, or interest which the employee paid as a result of the inexcusable delay by the employer or insurance carrier.

Subd. 2. [OVERDUE PAYMENT.] If the sum ordered by the department to be paid is not paid when due, that sum shall bear interest at the rate of ten percent per year. The state is liable for interest on awards issued against it under this act. The department has jurisdiction to issue an award for payment of the interest at any time within one year of the date of its order, or upon appeal after final court determination. The interest becomes due from the date the examiner's order becomes final or from the date of a decision by the court of appeals, whichever is later.

Subd. 3. [INTEREST ON AWARD.] If upon petition for review the court affirms an examiner's order, interest at the rate of seven percent per year on the amount ordered by the examiner shall be due for the period beginning on the 21st day after the date of the examiner's order and ending on the date paid under the court's decision. If upon petition for judicial review under section 176C.23 the district court affirms the court of appeals' decision, interest at the rate of seven percent per year on the amount ordered by the examiner shall be due up to the date of the court of appeals' decision. Thereafter interest shall be computed under subdivision 2.

Sec. 26. [176C.23] [JUDICIAL REVIEW.]

Subdivision 1. [COMMENCEMENT OF ACTION.] The findings of fact made by the court of appeals acting within it powers shall, in the absence of fraud, be conclusive. The order or award granting or denying compensation, either interlocutory or final, whether judgment has been rendered on it or not, is subject to review only as provided in this section. Within 30 days after the date of an order or award made by the court of appeals either originally or after the filing of a petition for review with the department under section 176C.18 any party aggrieved by it may by serving a complaint as provided in subdivision 2 and filing the summons and complaint with the court administrator of the district court commence, in district court, an action against the court of appeals for the review of the order or award, in which action the adverse party shall also be made a defendant. If the district court is satisfied that a party in interest has been prejudiced because of an exceptional delay in the receipt of a copy of a finding or order, it may extend the time in which an action may be commenced by an additional 30 days. The proceedings shall be in the district court of the county where the plaintiff resides, except that if the plaintiff is a state agency, the proceedings shall be in the district court of the county where the defendant resides. The proceedings may be brought in another county if all parties stipulate and the court agrees.

Subd. 2. [SERVICE OF SUMMONS AND COMPLAINT.] In such an action a complaint shall be served with an authenticated copy of the summons. The complaint shall state the grounds upon which a review is sought. Service upon a commissioner or agent authorized by the court of appeals to accept service constitutes complete service on all parties, but there shall be left with the person so served as many copies of the summons and complaint as there are defendants, and the court of appeals shall mail one copy to each other defendant.

Subd. 3. [ANSWER.] The court of appeals shall serve its answer within 20 days after the service of the complaint, and, within the like time, the adverse party may serve an answer to the complaint, which answer may, by way of counterclaim or cross complaint, ask for the review of the order or award referred to in the complaint, with the same effect as if the party had commenced a separate action for its review.

Subd. 4. [FILING OF DOCUMENTS WITH COURT.] The court of appeals shall make return to the district court of all documents and papers on file in the matter, and of all testimony which has been taken, and of its orders, findings, and award. The return of the court of appeals when filed in the district court shall constitute a judgment roll in the action and it shall not be necessary to have a transcript approved. The action may thereupon be brought on for hearing before the court upon the record by either party on ten days' notice to the other; subject, however, to the provisions for a change of the place of trial or the calling in of another judge.

Subd. 5. [ACTION BY COURT.] Upon the hearing, the district court may confirm or set aside the order or award and any judgment which may have been rendered on it; but an order, award, or judgment shall be set aside only upon the following grounds:

(1) that the commission acted without or in excess of its powers;

(2) that the order or award was procured by fraud; or

(3) that the findings of fact by the commission do not support the order or award.

Subd. 6. [HARMLESS ERROR DISREGARDED.] Upon the trial of the appeal the district court shall disregard any irregularity or error of the commission or the department unless it is made to affirmatively appear that the plaintiff was damaged by it.

Subd. 7. [COURT RECORD TRANSMITTED TO DEPARTMENT.] The record in any case shall be transmitted to the department within five days after expiration of the time for appeal from the order or judgment of the court, unless appeal is taken from the order or judgment.

Subd. 8. [ATTORNEY GENERAL ACTION FOR REVIEW.] When an award is made against the state the attorney general may bring an action for review in the manner and upon the grounds provided by subdivision 5.

Subd. 9. [PAYMENT LIABILITY PENDING REVIEW.] The commencement of action for review shall not relieve the employer from paying compensation as directed, when the review involves only the question of liability as between the employer and one or more insurance companies or as between several insurance companies.

Subd. 10. [REVIEW OF FACTS.] If the court of appeals' order or award depends on any fact found by the court of appeals, the district court shall not substitute its judgment for that of the court of appeals as to the weight or credibility of the evidence on any finding of fact. The court may, however, set aside the court of appeals' order or award and remand the case to the court of appeals if the court of appeals' order or award depends on a material and controverted finding of fact that is not supported by credible and substantial evidence.

Sec. 27. [176C.24] [REMANDING RECORD.]

Subdivision 1. [ABSTRACT OF JUDGMENT; ACTION OF COURT.] Upon the setting aside of an order or award, the court may recommit the controversy and remand the record in the case to the court of appeals for further hearing or proceedings, or it may enter the proper judgment upon the findings of the court of appeals, as the nature of the case shall demand. An abstract of the judgment entered by the district court upon the review of an order or award shall be made by the district court administrator upon the docket entry of any judgment which may have been rendered upon the order or award. Transcripts of the abstract may be obtained for entry upon the dockets in other counties.

Subd. 2. [REMAND OF RECORD TO DEPARTMENT.] After the commencement of an action to review an award of the commission the parties may have the record remanded by the court for the time and under the condition as they may provide, to have the department act upon the question of approving or disapproving any settlement or compromise that the parties may desire to have approved. If approved the action shall be at an end and judgment may be entered upon the approval as upon an award. If not approved, the record shall immediately be returned to the court and the action proceed as if no remand had been made.

Sec. 28. [176C.25] [APPEAL FROM JUDGMENT ON AWARD.]

Subdivision 1. [PROCEDURES.] Any party aggrieved by a judgment entered upon the review of any order or award may appeal from it as in other civil actions. The state is a party aggrieved under this subdivision if a judgment is entered upon the review confirming an order or award against it. At any time before the case is set down for hearing in the court of appeals or the supreme court, the parties may have the record remanded by the court to the department in the same manner and for the same purposes as provided for remanding from the court to the department under section 176C.24, subdivision 2.

Subd. 2. [COPY OF DECISION TO DEPARTMENT.] The clerk of any court rendering a decision affecting an award of the court of appeals shall promptly furnish that court with a copy of the decision without charge.

Sec. 29. [176C.26] [FEES AND COSTS.]

Subdivision 1. [COURT FEE CHARGES LIMITED; COSTS REGULATED.] No fees may be charged by the clerk of any court for the performance of any service required by this act, except for docketing judgments and for certified transcripts. In proceedings to review an order or award, costs between the parties shall be in the discretion of the court, but no costs may be taxed against the court of appeals.

Subd. 2. [ATTORNEY AND COLLECTION FEES.] Unless previously authorized by the department, no fee may be charged or received to enforce or collect any claim for compensation, nor may any contract to enforce or collect be enforceable if the fee, inclusive of all taxable attorney's fees paid or agreed to be paid for enforcement or collection, exceeds 20 percent of the amount at which the claim is compromised or of the amount awarded, adjudged, or collected, except that in cases of admitted liability where there is no dispute as to amount of compensation due and in which no hearing or appeal is necessary, the fee charged shall not exceed ten percent or $100, whichever is less, of the amount at which the claim is compromised or of the amount awarded, adjudged, or collected. The limitation as to fees applies to the combined charges of attorneys, solicitors, representatives, and adjusters who knowingly combine their efforts to enforce or collect any compensation claim.

Subd. 3. [TUBERCULOSIS SANITARIUM; ATTORNEY'S FEES.] In an action for the recovery of costs of hospitalization in a tuberculosis sanitarium, if the cost was incurred by a patient whose tuberculosis entitled the patient to workers' compensation, no attorney fee for the recovery of the cost shall be allowed to the attorney for the patient in the workers' compensation action, unless, by express agreement with the governing board of the institution the attorney has been retained by the board to also act as its attorney.

Subd. 4. [PAYMENT OF VARIOUS CLAIMS.] (a) Except as provided in this subdivision, compensation exceeding $100 in favor of a claimant shall be made payable to and delivered directly to the claimant in person.

(b) The department may upon application of an interested party and subject to paragraph (c), fix the fee of the claimant's attorney or representative and provide in the award for that fee to be paid directly to the attorney or representative.

(c) At the request of the claimant, medical expense, witness fees, and other charges associated with the claim may be ordered paid out of the amount awarded.

(d) Payment according to the directions of the award shall protect the employer and the employer's insurer, or the special compensation fund, if applicable, from any claim of attorney's lien.

Subd. 5. [UNAUTHORIZED FEES; PENALTY.] Charging or receiving a fee in violation of this section is unlawful, and an attorney or other guilty person shall forfeit double the amount retained by the person, to be collected by the state in a civil action in debt, upon complaint of the department. Out of the sum recovered, the court shall direct payment to the injured party of the amount of the overcharge.

Sec. 30. [176C.27] [CLAIMS AND AWARDS PROTECTED; EXCEPTIONS.]

Subdivision 1. [ASSIGNMENT OF CLAIM PROHIBITED.] Except as provided in subdivision 2, no claim for compensation is assignable, but this provision shall not affect the survival of the claim. No claim for compensation, or compensation awarded or paid, may be taken for the debts of the party entitled to the compensation.

Subd. 2. [EXCEPTIONS.] If a governmental unit provides public assistance to pay medical costs or living expenses related to a claim under this act, the employer or insurance carrier owing compensation shall reimburse that governmental unit any compensation awarded or paid if the governmental unit has given the parties to the claim written notice stating that it provided the assistance and the cost of the assistance provided. Reimbursement shall equal the least of either the amount of assistance the governmental unit provided or two-thirds of the amount of the award or payment remaining after deduction or two-thirds of the amount of the award or payment remaining after deduction of attorney fees and any other fees or costs chargeable under this act. The department shall comply with this subdivision when making payments under the special compensation fund.

Sec. 31. [176C.28] [PREFERENCE OF CLAIMS.]

The whole claim for compensation for the injury or death of any employee or any award or judgment on the claim, and any claim for unpaid compensation insurance premiums are entitled to preference in bankruptcy or insolvency proceedings as is given creditor's actions except as denied or limited by state or federal law. This section shall not impair the lien of any judgment entered upon any award.

Sec. 32. [176C.281] [WORKERS' COMPENSATION INSURANCE.]

Subdivision 1. [DUTY TO INSURE PAYMENT FOR COMPENSATION.] Unless exempted by the department, every employer as described in section 176C.04, subdivisions 1 to 3, shall insure payment for the compensation in an insurer authorized to do business in this state. A joint venture may elect to be an employer under this act and obtain insurance for payment of compensation. If a joint venture that is subject to this chapter only because the joint venture elected to be an employer under this chapter is dissolved and cancels or terminates its contract for the insurance of compensation under this chapter, that joint venture is deemed to have effected withdrawal, which shall be effective on the day after the contract is canceled or terminated.

Subd. 2. [EXEMPTION FROM DUTY TO INSURE.] The department may grant a written order of exemption to an employer who shows its financial ability to pay the amount of compensation, agrees to report faithfully all compensable injuries, and agrees to comply with this act and the rules of the department. The department may condition the granting of an exemption upon the employer's furnishing of satisfactory security to guarantee payment of all claims under compensation. The department may require that bonds or other personal guarantees be enforceable against sureties in the same manner as an award may be enforced. The department may from time to time require proof of financial ability of the employer to pay compensation. Any exemption shall be void if the application for it contains a financial statement which is false in any material respect. An employer who files an application containing a false financial statement remains subject to subdivision 1.

The department may promulgate rules establishing an amount to be charged as an initial application fee and an amount to be charged as a renewal application fee to employers applying for exemption under this subdivision.

Subd. 3. [REVOCATION OF EXEMPTION.] Upon giving ten days' notice in writing, the department may, after hearing, revoke the exemption for financial reasons or for the failure of the employer to faithfully discharge its obligations according to the agreement contained in the application for exemption. Upon revocation, the employer shall insure its liability immediately as provided in subdivision 1.

Subd. 4. [EFFECT OF INSURING WITH UNAUTHORIZED INSURER.] An employer who procures an exemption under subdivision 2 and thereafter enters into any agreement for excess insurance coverage with an insurer not authorized to do business in this state shall report that agreement to the department immediately. The placing of excess insurance coverage with such an insurer shall not by itself be grounds for revocation of the exemption.

Subd. 5. [CLOSURE ORDER.] (a) When the department discovers an uninsured employer, the department may order the employer to cease operations until the employer complies with subdivisions 1 to 4.

(b) If the department believes that an employer may be an uninsured employer, the department shall notify the employer of the alleged violation and the possibility of closure. The employer may request and shall receive a hearing under section 176C.17 on the matter if the employer applies for a hearing within ten days after the notice of the alleged violation is served.

(c) After a hearing under paragraph (b), or without a hearing if one is not requested, the department may issue an order to an employer to cease operations on a finding that the employer is an uninsured employer.

(d) The attorney general may bring an action in any court of competent jurisdiction for an injunction or other remedy to enforce the department's order to cease operations under paragraph (c).

Subd. 6. [EMPLOYER'S LIABILITY.] If compensation is awarded under this act, against an employer who at the time of the accident has not complied with subdivision 1, the employer shall not be entitled as to the award or a judgment entered on it, to any of the exemptions of property from seizure and sale on execution allowed in Minnesota Statutes, chapter 550. If the employer is a corporation, its officers and directors are individually and jointly and severally liable for any portion of the judgment that is returned unsatisfied after execution against the corporation.

Subd. 7. [REPORTS BY EMPLOYER.] Every employer shall upon request of the department report to it the number of employees and the nature of their work and also the name of the insurance company with whom the employer has insured liability under this act and the number and date of expiration of the policy. Failure to furnish the report within ten days from the making of a request by certified mail is presumptive evidence that the delinquent employer is violating subdivision 1.

Subd. 8. [INSOLVENT EMPLOYERS; ASSESSMENTS.] (a) If an employer who is currently or was formerly exempted by written order of the department under subdivision 2 is unable to pay an award, judgment is rendered in accordance with section 176C.20 against that employer and execution is levied and returned unsatisfied in whole or in part, payments for the employer's liability shall be made from the fund established under subdivision 10. If a currently or formerly exempted employer files for bankruptcy and not less than 60 days after that filing the department has reason to believe that compensation payments due are not being paid, the department in its discretion may make payment for the employer's liability from the fund established under subdivision 10. The state treasurer shall proceed to recover the payments from the employer or the employer's receiver or trustee in bankruptcy, and may commence an action or proceeding or file a claim for them. The attorney general shall appear on behalf of the state treasurer in the action or proceeding. All money recovered in the action or proceeding shall be paid into the fund established under subdivision 10.

(b) Each employer exempted by written order of the department under subdivision 2 shall pay into the fund established by subdivision 10 the sum assessed against each exempt employer upon the issuance of an initial order. The order shall provide for a sum sufficient to secure estimated payments of the insolvent exempt employer due for the period up to the date of the order and for one year following the date of the order and to pay the estimated cost of insurance carrier or insurance service organization services under subdivision 9. Payments ordered to be made to the fund shall be paid to the department within 30 days. If additional money is required, further assessments shall be made based on orders of the department with assessments prorated on the basis of the gross payroll for this state of the exempt employer, reported to the department for the previous calendar year for unemployment compensation purposes. If the exempt employer has not reported the necessary information, the department shall determine the comparable gross payroll for the exempt employer. If an assessment made under this subdivision is not paid within 30 days of the order of the department, the attorney general may collect the assessment by civil action or otherwise.

Subd. 9. [SERVICE OF CLAIMS.] The department may retain an insurance carrier or insurance service organization to process, investigate, and pay valid claims. The charge for the service shall be paid from the fund as provided under subdivision 8, paragraph (b).

Subd. 10. [SELF-INSURED EMPLOYERS LIABILITY FUND.] The money paid into the state treasury under subdivision 8, together with all accrued interest, shall constitute the "self-insured employers liability fund."

Sec. 33. [176C.29] [THIRD PARTY LIABILITY.]

Subdivision 1. [RIGHT OF ACTION; NOTICE; DISTRIBUTION OF PROCEEDS.] Making a claim for compensation against an employer or compensation insurer for the injury or death of an employee shall not affect the right of the employee, the employee's personal representative, or other person entitled to bring action, to make claim or maintain an action in tort against any other party for the injury or death. The other party is referred to in this section as the third party. Making a claim by a person against a third party for damages by reason of an injury to which this act applies, or the adjustment of the claim, shall not affect the right of the injured employee or the employee's dependents to recover compensation. An employer or compensation insurer who has paid or is obligated to pay a lawful claim under this act shall have the same right to make claim or maintain an action in tort against any other party for the injury or death. If the department pays or is obligated to pay a claim under the special compensation fund, the department shall also have the right to maintain an action in tort against any other party for the employee's injury or death. However, each shall give to the other reasonable notice and opportunity to join in the making of the claim or instituting an action and to be represented by counsel. If a party entitled to notice cannot be found, the department shall be the agent of the party for the giving of a notice as required in this subdivision. The notice, when given to the department, shall include an affidavit setting forth the facts, including the steps taken to locate the party. Each shall have an equal voice in the prosecution of the claim, and any disputes arising shall be passed upon by the court before whom the case is pending, and if no action is pending, then by a court of record or by the department. If notice is given as provided in this subdivision, the liability of the tort-feasor shall be determined as to all parties having a right to make claim, and irrespective of whether or not all parties join in prosecuting the claim, the proceeds of the claim shall be divided as follows: After deducting the reasonable cost of collection, one-third of the remainder shall in any event be paid to the injured employee of the employee's personal representative or other person entitled to bring action. Out of the balance remaining, the employer or insurance carrier or, if applicable, the special compensation fund shall be reimbursed for all payments made by it, or which it may be obligated to make in the future, under this act, except that it shall not be reimbursed for any payments of increased compensation made or to be made under section 176C.18, subdivision 3, 176C.22, 176C.35, subdivision 3, 176C.57, or 176C.60. Any balance remaining shall be paid to the employee or the employee's personal representative or other person entitled to bring action. If both the employee or the employee's personal representative or other person entitled to bring action, and the employer, compensation insurer or department, join in pressing the claim and are represented by counsel, the attorney's fees allowed as a part of the costs of collection shall be, unless otherwise agreed upon, divided between the attorneys as directed by the court or by the department. A settlement of any third party claim shall be void unless the settlement and the distribution of its proceeds is approved by the court before whom the action is pending and, if no action is pending, by a court of record or by the department.

Subd. 2. [CERTAIN ACTIONS; CONTRIBUTION; CONSOLIDATION.] In the case of liability of the employer or insurer to make payment into the state treasury under section 176C.49 or 176C.59, if the injury or death was due to the actionable act, neglect, or default of a third party, the employer or insurer shall have a right of action against the third party to recover the sum paid into the state treasury, which right may be enforced either by joining in the action mentioned in subdivision 1, or by independent action. Contributory negligence of the employee because of whose injury or death the payment was made shall bar recovery if the contributory negligence was greater than the negligence of the person against whom recovery is sought, and the recovery allowed the employer or insurer shall be diminished in proportion to the amount of negligence attributable to the injured or deceased employee. Any action brought under this subdivision may, upon order of the court, be consolidated and tried together with any action brought under subdivision 1.

Subd. 3. [ACTION AGAINST HEALTH CARE PROVIDER.] Nothing in this act shall prevent an employee from taking the compensation that the employee may be entitled to under it and also maintaining a civil action against any physician, chiropractor, psychologist, or podiatrist for malpractice.

Subd. 4. [COMMON INSURER; NOTICE.] If the employer and the third party are insured by the same insurer, or by insurers who are under common control, the employer's insurer shall promptly notify the parties in interest and the department. If the employer has assumed the liability of the third party, it shall give similar notice, in default of which any settlement with an injured employee or beneficiary is void. This subdivision does not prevent the employer or compensation insurer from sharing in the proceeds of any third party claim or action, as set forth in subdivision 1.

Subd. 5. [TEMPORARY HELP AGENCY.] No employee of a temporary help agency who makes a claim for compensation may make a claim or maintain an action in tort against an employer who compensates the temporary help agency for the employee's services.

Subd. 5a. [LOANED EMPLOYEES.] No employee who is loaned by an employer to another employer and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer who accepted the loaned employee's services.

Sec. 34. [176C.30] [OTHER INSURANCE NOT AFFECTED; LIABILITY OF INSURED EMPLOYER.]

Subdivision 1. [RIGHT TO INSURE.] This act does not affect the organization of any mutual or other insurance company or the right of the employer to insure in mutual or other companies against liability including the liability for the compensation provided for by this act.

Subd. 2. [ADDITIONAL COVERAGE PERMITTED.] An employer may provide by mutual or other insurance, by arrangement with employees or otherwise, for the payment to those employees, their families, their dependents, or their representatives, of sick, accident, or death benefits in addition to the compensation provided under this act. Liability for compensation is not affected by any insurance, contribution, or other benefit due to or received by the person entitled to that compensation.

Subd. 3. [SICK LEAVE.] Unless an employee elects to receive sick leave benefits in lieu of compensation under this act, if sick leave benefits are paid during the period that temporary disability benefits are payable, the employer shall restore sick leave benefits to the employee in an amount equal in value to the amount payable under this act. The combination of temporary disability benefits and sick leave benefits paid to the employee may not exceed the employee's weekly wage.

Subd. 4. [DIRECT LIABILITY OF EMPLOYER.] Regardless of any insurance or other contract, an employee or dependent entitled to compensation under this act may recover compensation directly from the employer and may enforce in the person's own name, in the manner provided in this act, the liability of any insurance company which insured the liability for that compensation. The appearance, whether general or special, of the insurance carrier by agent or attorney constitutes waiver of the service of copy of application and of notice of hearing required by section 176C.17.

Subd. 5. [EMPLOYER AND INSURER RELATIONSHIP.] Payment of compensation under this act by either the employer or the insurance company shall, to the extent of the payment, bar recovery against the other of the amount paid. As between the employer and the insurance company, payment by either the employer or the insurance company directly to the employee or the person entitled to compensation is subject to the conditions of the policy.

Subd. 6. [NONCOOPERATION DEFENSE PROHIBITED.] The failure of the assured to do or refrain from doing any act required by the policy is not available to the insurance carrier as a defense against the claim of the injured employee or the injured employee's dependents.

Subd. 7. [REIMBURSEMENT FOR PAYMENT FROM OTHER INSURANCE.] The department may order direct reimbursement out of the proceeds payable under this act for payments made under a nonindustrial insurance policy covering the same disability and expenses compensable under section 176C.42 when the claimant consents or when it is established that the payments under the nonindustrial insurance policy were improper. No attorney fee is due with respect to that reimbursement. An insurer who issues a nonindustrial insurance policy may not intervene as a party in any proceeding under this act for reimbursement under this subdivision.

Sec. 35. [176C.31] [INSURANCE POLICY REGULATIONS.]

Subdivision 1. [POLICIES MUST COMPLY WITH STATUTE.] Every contract for the insurance of compensation provided under this act or against liability for the compensation is subject to this act and provisions inconsistent with this act are void.

Subd. 2. [FULL COVERAGE REQUIRED.] Except as provided in subdivision 3, a contract under subdivision 1 shall be construed to grant full coverage of all liability of the assured under this act unless the department specifically consents by written order to the issuance of a contract providing divided insurance or partial insurance.

Subd. 3. [CERTAIN LIABILITY EXCLUSIVE.] Liability under section 176C.35, subdivision 3, is the sole liability of the employer, notwithstanding any agreement of the parties to the contrary.

Subd. 4. [INTERMEDIATE AGENCY OR PUBLISHER.] An intermediate agency or publisher referred to in section 176C.07, subdivision 8, may, under its own contract of insurance, cover liability of employees as defined in section 176C.07, subdivision 8, for an intermediate or independent news agency, if the contract of insurance of the publisher or intermediate agency is endorsed to cover those persons. If the publisher so covers, the intermediate or independent news agency need not cover liability for those persons.

Subd. 5. [PARTNERSHIPS.] A contract procured to insure a partnership may not be construed to cover the individual liability of the members of the partnership in the course of a trade, business, profession, or occupation conducted by them as individuals. A contract procured to insure an individual may not be construed to cover the liability of a partnership of which the individual is a member or to cover the liability of the individual arising as a member of any partnership.

Subd. 6. [POLICY CANCELLATION OR TERMINATION.] No party to a contract of insurance may cancel or not renew it within the contract period or terminate it upon the expiration date until a notice in writing is given to the other party fixing the proposed date of cancellation or declaring that the party intends to terminate or does not intend to renew the policy upon expiration. Except as provided in this subdivision, when an insurance company does not renew a policy upon expiration the nonrenewal is not effective until 60 days after the insurance company has given written notice of the nonrenewal to the insured employer and the department. Cancellation or termination of a policy by an insurance company for any reason other than nonrenewal is not effective until 30 days after the insurance company has given written notice of the cancellation or termination to the insured employer and the department either by personal service of the notice upon the department or by sending the notice by facsimile transmission or certified mail addressed to the department. The department may provide by rule that the notice of cancellation or termination be given by certified mail or facsimile machine transmission to the compensation rating bureau rather than to the department. Whenever the compensation rating bureau receives such a notice of cancellation or termination it shall immediately notify the department of the notice of cancellation or termination.

In the event of a court-ordered liquidation of an insurance company, a contract of insurance issued by that company terminates on the date specified in the court order.

Regardless of whether notice has been given to the department, a cancellation or termination is effective upon the effective date of replacement insurance coverage obtained by the employer or of an order exempting the employer from carrying insurance under section 176C.281, subdivisions 1 to 4.

Subd. 7. [EXAMINATION OF BOOKS AND RECORDS.] The department may examine from time to time the books and records of any insurer insuring liability or compensation for an employer in this state. The department may require an insurer to designate one mailing address for use by the department and to respond to correspondence from the department within 30 days. Any insurer that refuses or fails to answer correspondence from the department or allow the department to examine its books and records is subject to enforcement proceedings.

Subd. 8. [INSURER'S FAILURE TO PAY CLAIMS PROMPTLY.] If any insurer authorized to transact workers' compensation insurance in this state fails to promptly pay claims for compensation for which it is liable or fails to make reports to the department required by section 176C.38, the department may recommend to the commissioner of commerce, with detailed reasons, that enforcement proceedings be commenced. The commissioner shall furnish a copy of the recommendation to the insurer and set a date for a hearing, at which both the insurer and the department shall be afforded an opportunity to present evidence. If after the hearing the commissioner finds that the insurer has failed to carry out its obligations under this act, the commissioner shall institute enforcement proceedings. If the commissioner does not so find, the commissioner shall dismiss the complaint.

Subd. 9. [EXEMPT EMPLOYER; REVOCATION FOR DISCRIMINATION.] If an employer whom the department exempted from carrying compensation insurance arbitrarily or unreasonably refuses employment to or discharges employees because of a nondisabling physical condition, the department shall revoke the exemption of that employer.

Subd. 10. [CONSTRUCTION PROJECTS.] If the department by one or more written orders specifically consents to the issuance of one or more contracts covering only the liability incurred on a construction project and if the construction project owner designates the insurance carrier and pays for each contract, the construction project owner shall reimburse the department for all costs incurred by the department in issuing the written orders and in ensuring minimum confusion and maximum safety on the construction project.

Subd. 11. [RATING BUREAU.] The compensation rating bureau shall provide the department with any information it requests relating to workers' compensation insurance coverage, including but not limited to the names of employers insured and any insured employer's address, business status, type and date of coverage, manual premium code, and

policy information including numbers, cancellations, terminations, endorsements and reinstatement dates. The department may enter into contracts with compensation rating bureau to share the costs of data processing and other services.

Sec. 36. [176C.32] [CONTINUING LIABILITY; GUARANTEE SETTLEMENT; GROSS PAYMENT.]

Subdivision 1. [PAYMENTS OVER SIX MONTHS; GUARANTEE.] In any case in which compensation payments have extended or will extend over six months or more from the date of the injury (or at any time in death benefit cases), any party in interest may, in the discretion of the department, be discharged from, or compelled to guarantee, future compensation payments as follows:

(1) By depositing the present value of the total unpaid compensation upon a seven percent interest discount basis with a credit union, savings and loan association, bank, or trust company designated by the department; or

(2) By purchasing an annuity within the limitations provided by law, in an insurance company granting annuities and licensed in this state, designated by the department; or

(3) By making payment in gross upon a seven percent interest discount basis approved by the department; and

(4) If the time for making payments or their amounts cannot be definitely determined, by furnishing a bond, or other security, satisfactory to the department for the payment of compensation as may be due or become due. The acceptance of the bond, or other security, and its form and sufficiency, shall be subject to the approval of the department. If the employer or insurer is unable or fails to immediately procure the bond, then, in lieu of it, deposit shall be made with a credit union, savings and loan association, bank, or trust company designated by the department, of the maximum amount that may reasonably become payable in these cases, to be determined by the department at amounts consistent with the extent of the injuries and the law. The bonds and deposits are to be reduced only to satisfy claims and withdrawn only after the claims which they are to guarantee are fully satisfied or liquidated under clauses (1), (2), or (3); and

(5) Any insured employer may, within the discretion of the department, compel the insurer to discharge, or to guarantee payment of its liabilities in any case under this section and thereby release the employer from compensation liability in the case, but if for any reason a bond furnished or deposit made under clause (4) does not fully protect, the compensation insurer or uninsured employer, as the case may be, shall be liable to its beneficiary.

Subd. 2. [PERMANENT DISABILITY.] If compensation is due for permanent disability following an injury or if death benefits are payable, payments shall be made to the employee or dependent on a monthly basis. The department may direct an advance on a payment of unaccrued compensation or death benefits if it determines that the advance payment is in the best interest of the injured employee or the employee's dependents. In directing the advance, the department shall give the employer or the employer's insurer an interest credit against its liability. The credit shall be computed at seven percent.

Subd. 3. [LUMP SUM SETTLEMENT.] No lump sum settlement shall be allowed in any case of permanent total disability upon an estimated life expectancy, except upon consent of all parties, after hearing and finding by the department that the interests of the injured employee will be conserved by it.

Sec. 37. [176C.33] [BLANKS AND RECORDS.]

Subdivision 1. [RECORDS.] The department shall print and furnish free to any employer or employee the blank forms that it shall deem requisite to facilitate efficient administration of this act. It shall keep the record books or records that it shall deem required for the proper and efficient administration of this act. The records of the department related to the administration of this act are not subject to inspection and copying under chapter 13, except as provided by the department by rule.

Subd. 2. [CONFIDENTIALITY.] Notwithstanding subdivision 1, a record maintained by the department that reveals the identity of an employee who claims workers' compensation benefits, the nature of the employee's claimed injury, the employee's past or present medical condition, the extent of the employee's disability, the amount, type, or duration of benefits paid to the employee or any financial information provided to the department by a self-insured employer or by an applicant for exemption is confidential and not open to public inspection or copying. The department may deny a request made to inspect and copy a record that is confidential under this paragraph, unless one of the following applies:

(1) The requester is the employee who is the subject of the record or an attorney or authorized agent of that employee. An attorney or authorized agent of an employee who is the subject of a record shall provide a written authorization for inspection and copying from the employee if requested by the department.

(2) The record that is requested contains confidential information concerning a workers' compensation claim and the requester is an insurance carrier or employer that is a party to the claim or an attorney or authorized agent of that insurance carrier or employer. An attorney or authorized agent of an insurance carrier or employer that is a party to an employee's workers' compensation claim shall provide a written authorization for inspection and copying from the insurance carrier or employer if requested by the department.

(3) The record that is requested contains financial information provided by a self-insured employer or by an applicant for exemption and the requester is the self-insured employer or applicant for exemption or an attorney or authorized agent of the self-insured employer or applicant for exemption. An attorney or authorized agent of the self-insured employer or of the applicant for exemption shall provide a written authorization for inspection and copying from the self-insured employer or applicant for exemption if requested by the department.

Sec. 38. [176C.35] [PENALTIES.]

Subdivision 1. [RECORDS OR REPORTS VIOLATION.] Every employer and every insurance company that fails to keep the records or to make the reports required by this act or that knowingly falsifies the records or makes false reports shall forfeit to the state not less than $10 nor more than $100 for each offense.

Subd. 2. [REFUSAL TO HIRE; DISCRIMINATION.] Any employer, or duly authorized agent of any employer, who, without reasonable cause, refuses to rehire an employee injured in the course of employment, or who, because of a claim or attempt to claim compensation benefits from the employer, discriminates or threatens to discriminate against an employee as to the employee's employment, shall forfeit to the state not less than $50 nor more than $500 for each offense. No action under this subdivision may be commenced except upon request of the department.

Subd. 3. [REFUSAL TO REHIRE.] Any employer who without reasonable cause refuses to rehire an employee who is injured in the course of employment, where suitable employment is available within the employee's physical and mental limitations, upon order of the department and in addition to other benefits, has exclusive liability to pay to the employee the wages lost during the period of the refusal, not exceeding one year's wages. In determining the availability of suitable employment the continuance in business of the employer shall be considered and written rules promulgated by the employer with respect to seniority or the provisions of any collective bargaining agreement with respect to seniority shall govern.

Sec. 39. [176C.37] [EMPLOYERS' RECORDS.]

Every employer of three or more persons and every employer who is subject to this act shall keep a record of all accidents causing death or disability of any employee while performing services growing out of and incidental to the employment. This record shall give the name, address, age, and wages of the deceased or injured employee, the time and causes of the accident, the nature and extent of the injury, and any other information the department may require by general order. Reports based upon this record shall be furnished to the department at the times and in the manner as it may require by general order, upon forms approved by the department.

Sec. 40. [176C.38] [RECORDS OF PAYMENTS; REPORTS.]

Every insurance company which transacts the business of compensation insurance, and every employer who is subject to this act but whose liability is not insured, shall keep a record of all payments made under this act and of the time and manner of making the payments, and shall furnish reports based upon these records to the department as it may require by general order, upon forms approved by the department.

Sec. 41. [176C.39] [GENERAL ORDERS; APPLICATION OF STATUTES.]

The provisions of chapter 14, relating to the administrative procedures of the department apply to this act.

Sec. 42. [176C.40] [REPORTS NOT EVIDENCE IN ACTIONS.]

Reports furnished to the department pursuant to sections 176C.37 and 176C.38 shall not be admissible as evidence in any action or proceeding arising out of the death or accident reported.

Sec. 43. [176C.42] [INCIDENTAL COMPENSATION.]

Subdivision 1. [TREATMENT OF EMPLOYEE.] The employer shall supply the medical, surgical, chiropractic, psychologist, podiatric, dental, and hospital treatment, medicines, medical and surgical supplies, crutches, artificial members, appliances, and training in the use of artificial members and appliances, or, at the option of the employee,

if the employer has not filed notice as provided in subdivision 4, Christian Science treatment in lieu of medical treatment, medicines, and medical supplies, as may be reasonably required to cure and relieve from the effects of the injury, and to attain efficient use of artificial members and appliances, and in case of the employer's neglect or refusal seasonably to do so, or in emergency until it is practicable for the employee to give notice of injury, the employer shall be liable for the reasonable expense incurred by or on behalf of the employee in providing the treatment, medicines, supplies, and training. If the employer has knowledge of the injury and the necessity for treatment, the employer's failure to tender the necessary treatment, medicines, supplies, and training constitutes neglect or refusal. The employer shall also be liable for reasonable expense incurred by the employee for necessary treatment to cure and relieve the employee from the effects of occupational disease prior to the time that the employee knew or should have known the nature of the employee's disability and its relation to employment, and as to such treatment subdivisions 2 and 3 shall not apply. The obligation to furnish treatment and appliances shall continue as required to prevent further deterioration in the condition of the employee or to maintain the existing status of the condition whether or not healing is completed.

Subd. 2. [CHOICE OF PRACTITIONER.] (a) If the employer has notice of an injury and its relationship to the employment the employer shall offer to the injured employee the choice of any physician, chiropractor, psychologist, or podiatrist licensed to practice and practicing in this state for treatment of the injury. By mutual agreement, the employee may have the choice of any qualified practitioner not licensed in this state. In case of emergency, the employer may arrange for treatment without tendering a choice. After the emergency has passed the employee shall be given the choice of attending practitioner at the earliest opportunity. The employee has the right to a second choice of attending practitioner on notice to the employer or its insurance carrier. Any further choice shall be by mutual agreement. Partners and clinics are deemed to be one practitioner. Treatment by a practitioner on referral from another practitioner is deemed to be treatment by one practitioner.

(b) The employer is not liable for the expense of unreasonable travel to obtain treatment.

Subd. 3. [PRACTITIONER CHOICE UNRESTRICTED.] If the employer fails to tender treatment as provided in subdivision 1 or choice of an attending practitioner as provided in subdivision 2, the employee's right to choose the attending practitioner is not restricted and the employer is liable for the reasonable and necessary expense of the choice.

Subd. 4. [CHRISTIAN SCIENCE.] Any employer may elect not to be subject to the provisions for Christian Science treatment provided for in this section by filing written notice of the election with the department.

Subd. 5. [ARTIFICIAL MEMBERS.] Liability for repair and replacement of prosthetic devices is limited to the effects of normal wear and tear. Artificial members furnished at the end of the healing period for cosmetic purposes only need not be duplicated.

Subd. 6. [TREATMENT REJECTED BY EMPLOYEE.] Unless the employee has elected Christian Science treatment in lieu of medical, surgical, hospital, or sanitarium treatment, no compensation shall be payable for the death or disability of an employee, if the death is caused, or insofar as the disability may be aggravated, caused, or continued (1) by an unreasonable refusal or neglect to submit to or follow any competent and reasonable medical or surgical treatment, (2) or, in the case of tuberculosis, by refusal or neglect to submit to or follow hospital or sanitarium treatment when found by the department to be necessary. The right to compensation accruing during a period of refusal or neglect under clause (2) shall be barred, irrespective of whether disability was aggravated, caused, or continued by the refusal.

Subd. 7. [AWARD TO STATE EMPLOYEE.] When an award is made by the department in behalf of a state employee, it shall file duplicate copies of the award with the department of employee relations. Upon receipt of the copies of the award, the department of employee relations shall promptly issue a voucher in payment of the award from the proper appropriation, and shall transmit one copy of the voucher and the award to the officer, department, or agency by whom the affected employee is employed.

Subd. 8. [REHABILITATION; PHYSICAL AND VOCATIONAL.] (a) One of the primary purposes of this act is restoration of an injured employee to gainful employment. To this end, the department shall employ a specialist in physical, medical, and vocational rehabilitation.

(b) The specialist shall study the problems of rehabilitation, both physical and vocational, and refer suitable cases to the vocational rehabilitation unit of the department for vocational evaluation and training. The specialist shall investigate and maintain a directory of rehabilitation facilities, private and public, that are capable of rendering competent rehabilitation service to seriously injured employees.

(c) The specialist shall review and evaluate reported injuries for potential cases in which seriously injured employees may be in need of physical and medical rehabilitation and may confer with the injured employee, employer, insurance carrier, or attending practitioner regarding treatment and rehabilitation.

Sec. 44. [176C.43] [WEEKLY COMPENSATION SCHEDULE.]

Subdivision 1. [WHEN PAYMENT DUE.] If the injury causes disability, an indemnity shall be due as wages commencing the fourth calendar day from the commencement of the day the scheduled work shift began, exclusive of Sundays only, except if the employee works on Sunday, after the employee leaves work as the result of the injury, and shall be payable weekly thereafter, during the disability. If the disability exists after seven calendar days from the date the employee leaves work as a result of the injury and only if it so exists, indemnity shall also be due and payable for the first three calendar days, exclusive of Sundays only, except if the employee works on Sunday. The weekly indemnity shall be as provided in this section.

Subd. 2. [TOTAL DISABILITY.] If the injury causes total disability, the indemnity is two-thirds of the average weekly earnings during the disability.

Subd. 3. [PARTIAL DISABILITY.] If the injury causes partial disability, during the partial disability, the proportion of the weekly indemnity rate for total disability that the actual wage loss of the injured employee bears to the employee's average weekly wage at the time of the injury.

Subd. 4. [TEMPORARY AND PARTIAL DISABILITY.] If the disability caused by the injury is at times total and at times partial, the weekly indemnity each total or partial disability shall be in accordance with subdivisions 1 and 2, respectively.

Subd. 5. [PAYMENT FOR FRACTIONAL WEEK.] If the disability period involves a fractional week, indemnity shall be paid for each day of the week, except Sundays only, at the rate of one-sixth of the weekly indemnity.

Subd. 6. [PAYMENT DURING TRAINING.] Temporary disability, during which compensation shall be payable for loss of earnings, shall include the period reasonably required for training in the use of artificial members and appliances, and shall include the period that the employee may be receiving instruction pursuant to section 176C.61. Temporary disability on account of receiving instruction of the latter nature, and not otherwise resulting from the injury, shall not be in excess of 40 weeks. Such 40-week limitation does not apply to temporary disability or travel or maintenance expense under section 176C.61 if the department determines that additional training is warranted. The necessity for additional training as authorized by the department for any employee shall be subject to periodic review and reevaluation.

Subd. 7. [USE OF SICK LEAVE AND OTHER WAGES IN COMPUTING BENEFITS.] Except as provided in this subdivision, no sick leave benefits provided in connection with other employment or wages received from other employment held by the employee when the injury occurred may be considered in computing actual wage loss from the employer in whose employ the employee sustained injury. Wages received from other employment held by the employee when the injury occurred shall be considered in computing actual wage loss from the employer in whose employ the employee sustained the injury, if the employee's weekly temporary disability benefits are calculated under section 176C.11, subdivision 2. Wages received from the employer in whose employ the employee sustained injury or from other employment obtained after the injury occurred shall be considered in computing benefits for temporary disability.

Subd. 8. [RENEWED PERIOD OF DISABILITY.] (a) If an employee has a renewed period of temporary disability commencing more than two years after the date of injury and, except as provided in paragraph (b), the employee returned to work for at least ten days preceding the renewed period of disability, payment of compensation for the new period of disability shall be made as provided in paragraph (c).

(b) An employee need not return to work at least ten days preceding a renewed period of temporary disability to obtain benefits under subdivision 6 for rehabilitative training commenced more than two years after the date of injury. Benefits for rehabilitative training shall be made as provided in paragraph (c).

(c)(1) If the employee was entitled to maximum weekly benefits at the time of injury, payment for the renewed temporary disability or the rehabilitative training shall be at the maximum rate in effect at the commencement of the new period.

(2) If the employee was entitled to less than the maximum rate, the employee shall receive the same proportion of the maximum which is in effect at the time of the commencement of the renewed period or the rehabilitative training as the employee's actual rate at the time of injury bore to the maximum rate in effect at that time.

Subd. 9. [COMPULSORY VACATION PERIOD.] During a compulsory vacation period scheduled in accordance with a collective bargaining agreement:

(a) Regardless of whether the employee's healing period has ended, no employee at work immediately before the compulsory vacation period may receive a temporary total disability benefit for injury sustained while engaged in employment for that employer.

(b) An employee receiving temporary partial disability benefits immediately before the compulsory vacation period for injury sustained while engaged in employment for that employer shall continue to receive those benefits.

Sec. 45. [176C.44] [MAXIMUM LIMITATIONS.]

Subdivision 1. [SCOPE.] Section 176C.43 is subject to the limitations in this section.

Subd. 2. [PERMANENT TOTAL DISABILITY.] In case of permanent total disability aggregate indemnity shall be weekly indemnity for the period that the employee may live. Total impairment for industrial use of both eyes, or the loss of both arms at or near the shoulder, or of both legs at or near the hip, or of one arm at the shoulder and one leg at the hip, constitutes permanent total disability. This enumeration is not exclusive, but in other cases the department shall find the facts.

Subd. 3. [PERMANENT PARTIAL DISABILITY.] For permanent partial disability not covered by sections 176C.52 to 176C.56, the aggregate number of weeks of indemnity shall bear the relation to 1,000 weeks that the nature of the injury bears to one causing permanent total disability and shall be payable at the rate of two-thirds of the average weekly earnings of the employee, the earnings to be computed as provided in section 176C.11. The weekly indemnity shall be in addition to compensation for the healing period and shall be for the period that the employee may live, not to exceed 1,000 weeks.

Subd. 4. [CERTAIN PERMANENT DISABILITIES.] If the permanent disability is covered by sections 176C.52, 176C.53, and 176C.55, those sections shall govern; but in no case shall the percentage of permanent total disability be taken as more than 100 percent.

Subd. 5. [SOCIAL SECURITY REDUCTION.] When it is determined that periodic benefits granted by the federal social security act are paid to the employee because of disability, the benefits payable under this act shall be reduced as follows:

(a) For each dollar that the total monthly benefits payable under this act, excluding attorney fees and costs, plus the monthly benefits payable under the social security act for disability exceed 80 percent of the employee's average current earnings as determined by the social security administration, the benefits payable under this act shall be reduced by the same amount so that the total benefits payable shall not exceed 80 percent of the employee's average current earning. However, no total benefit payable under this act and under the federal social security act may be reduced to an amount less than the benefit payable under this act.

(b) No reduction under this section shall be made because of an increase granted by the social security administration as a cost of living adjustment.

(c) Failure of the employee, except for excusable neglect, to report social security disability payments within 30 days after written request shall allow the employer or insurance carrier to reduce weekly compensation benefits payable under this act by 75 percent. Compensation benefits otherwise payable shall be reimbursed to the employee after reporting.

(d) The employer or insurance carrier making a reduction under this section shall report to the department the reduction and as requested by the department, furnish to the department satisfactory proof of the basis for the reduction.

(e) The reduction prescribed by this section shall be allowed only as to payments made on or after July 1, 1980, and shall be computed on the basis of payments made for temporary total, temporary partial, permanent total, and permanent partial disability.

(f) No reduction shall take into account payments made under the social security act to dependents of an employee.

Subd. 6. [EARNING CAPACITY.] If an injured employee claiming compensation for disability under subdivision 3 or 4 has returned to work for the employer for whom the employee worked at the time of the injury, the permanent disability award shall be based upon the physical limitations resulting from the injury without regard to loss of earning capacity unless the actual wage loss in comparison with earnings at the time of injury equals or exceeds 15 percent.

Subd. 7. [AWARD; REOPENING AND REDETERMINATION.] If, during the period set forth in section 176C.17, subdivision 11, the employment relationship is terminated by the employer at the time of the injury, or by the employee because the employee's physical or mental limitations prevent continuing in the employment, or if during the period a wage loss of 15 percent or more occurs, the department may reopen and redetermine any award taking into account loss of earning capacity.

Subd. 8. [DETERMINATION OF WAGE LOSS.] The determination of wage loss shall not take into account any period during which benefits are payable for temporary disability.

The determination of wage loss shall not take into account any period during which reemployment insurance or unemployment compensation benefits are paid.

For the purpose of determining wage loss, payment of benefits for permanent partial disability shall not be considered payment of wages.

Wage loss shall be determined on wages, as defined in section 176C.11. Percentage of wage loss shall be calculated on the basis of actual average wages over a period of at least 13 weeks.