1.1 A bill for an act
1.2 relating to insurance; establishing the Minnesota patients' compensation fund to
1.3 recover certain damages from medical malpractice; creating a board to manage
1.4 and operate the Minnesota patients' compensation fund; requiring provider
1.5 participation in the fund; establishing procedures for fund governance and recovery
1.6 from the fund; requiring a report; authorizing rulemaking; proposing coding for
1.7 new law as Minnesota Statutes, chapter 62X.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.9 Section 1. [62X.01] DEFINITIONS.
1.10 Subdivision 1.Scope.As used in this chapter, the following terms have the meanings
1.11given.
1.12 Subd. 2.Board."Board" means the Patients' Compensation Board established under
1.13section 62X.03.
1.14 Subd. 3.Commissioner."Commissioner" means the commissioner of commerce.
1.15 Subd. 4.Fund."Fund" means the Minnesota patients' compensation fund established
1.16under section 62X.02.
1.17 Subd. 5.Health care provider."Health care provider" has the meaning given in section
1.18145B.02. Health care provider does not include a person, facility, organization, or corporation
1.19that relies on spiritual or divine intervention as the only means of care or treatment.
1.20 Subd. 6.Insurer."Insurer" means any insurance company, as defined in section 60A.02,
1.21that writes medical malpractice insurance in Minnesota.
1.22 Subd. 7.Medical malpractice insurance."Medical malpractice insurance" means
1.23insurance coverage against the insured's legal liability for loss, damage, or expense incident
1Section 1.
25-03648 as introduced02/27/25 REVISOR RSI/AC
SENATE
STATE OF MINNESOTA
S.F. No. 2391NINETY-FOURTH SESSION
(SENATE AUTHORS: MANN)
OFFICIAL STATUSD-PGDATE
Introduction and first reading03/10/2025
Referred to Commerce and Consumer Protection 2.1to a claim arising out of the death or injury of a person as a result of a health care provider's
2.2negligence or malpractice in rendering a professional health care service.
2.3 Sec. 2. [62X.02] MINNESOTA PATIENTS' COMPENSATION FUND.
2.4 Subdivision 1.Minnesota patients' compensation fund account established.The
2.5Minnesota patients' compensation fund account is created in the special revenue fund in the
2.6state treasury. Money in the account is appropriated to the commissioner for the purposes
2.7of this chapter and to administer the account. Membership fees and premium surcharges
2.8collected under section 62X.05 are credited to the account. Earnings, including interest,
2.9dividends, and any other earnings arising from assets of the account, are credited to the
2.10account. Money remaining in the account at the end of a fiscal year does not cancel to the
2.11general fund, but remains in the account until expended.
2.12 Subd. 2.Fund obligations.(a) Money in the fund must be used to pay the portion of a
2.13medical malpractice claim, settlement, or judgment that exceeds the greater of: (1) the
2.14minimum liability limits set forth under section 62X.07; or (2) the maximum amount for
2.15which the health care provider is insured with respect to a claim, settlement, or judgment.
2.16 (b) The fund is liable only to pay claims against a licensed health care provider, and
2.17against an employee of a licensed health care provider, in compliance with this chapter.
2.18 (c) The fund is liable for reasonable and necessary expenses incurred to pay claims and
2.19the fund's administrative expenses.
2.20 (d) The fund is not liable for damages for injury or death caused by an intentional crime
2.21committed by a health care provider or an employee of a health care provider, regardless
2.22of whether the criminal conduct is the basis for a medical malpractice claim.
2.23 (e) The fund is not liable for punitive damages rendered in a judgment.
2.24 (f) Except as otherwise provided in this subdivision, the state is not liable for costs,
2.25expenses, liabilities, judgments, or other obligations of the fund.
2.26 Subd. 3.Rulemaking authorized.The commissioner may adopt rules necessary to carry
2.27out the provisions of this chapter.
2.28 Sec. 3. [62X.03] PATIENTS' COMPENSATION BOARD.
2.29 Subdivision 1.Patients' Compensation Board established.A Patients' Compensation
2.30Board is established within the Department of Commerce. The Patients' Compensation
2Sec. 3.
25-03648 as introduced02/27/25 REVISOR RSI/AC 3.1Board is composed of the commissioner and nine members appointed by the commissioner.
3.2The board members appointed by the commissioner must include:
3.3 (1) one member who is licensed to practice medicine and surgery in Minnesota who is
3.4a doctor of medicine and who is on a list of nominees submitted to the commissioner by an
3.5organization representing Minnesota physicians and surgeons;
3.6 (2) one member who is a doctor of osteopathic medicine and who is on a list of nominees
3.7submitted to the commissioner by an organization representing Minnesota doctors of
3.8osteopathic medicine;
3.9 (3) one member who is a licensed nurse in Minnesota and who is on a list submitted to
3.10the commissioner by an organization representing Minnesota nurses;
3.11 (4) one member who is a representative of Minnesota hospitals and who is on a list of
3.12nominees submitted to the commissioner by an organization representing Minnesota hospitals;
3.13 (5) two members who are insurance representatives and who are on a list of nominees
3.14submitted to the commissioner by the insurance industry;
3.15 (6) two members who are attorneys with expertise in medical malpractice and who are
3.16on a list of nominees submitted to the commissioner by an organization representing
3.17Minnesota attorneys; and
3.18 (7) one member of the general public who is unaffiliated with the insurance or health
3.19care industries or the medical or legal professions.
3.20 Subd. 2.Board meetings.The board is created to manage and operate the fund. The
3.21appointed members serve for a term of six years and until a successor is duly appointed and
3.22qualified. The board must meet at the call of the commissioner or a majority of the members,
3.23and must meet at least once a year. A majority of the board members constitutes a quorum
3.24for the board to conduct business. The affirmative vote by a majority of the members present
3.25at a duly called meeting, for which reasonable notice was provided and that has achieved
3.26a quorum, is required to exercise a board function.
3.27 Subd. 3.Board vacancies.(a) Except as provided under paragraph (b), upon a vacancy
3.28in the membership of the board, the commissioner must:
3.29 (1) notify the applicable organization or industry under subdivision 1 that a vacancy
3.30exists and request a list of three nominations from which to make a replacement appointment;
3.31and
3.32 (2) appoint a qualified successor from the provided list.
3Sec. 3.
25-03648 as introduced02/27/25 REVISOR RSI/AC 4.1 (b) Upon a vacancy of a member appointed pursuant to subdivision 1, clause (7), the
4.2commissioner must appoint a qualified successor.
4.3 Subd. 4.Operation plan required.(a) The board must develop an operation plan to
4.4efficiently administer the fund in a manner consistent with this chapter. The fund must
4.5operate pursuant to the operation plan, which must provide for: (1) the economic, fair, and
4.6nondiscriminatory administration of excess medical malpractice insurance; and (2) the
4.7prompt and efficient provision of excess medical malpractice insurance.
4.8 (b) The plan of operations may contain other provisions, including but not limited to:
4.9(1) assessment of all members for expenses, deficits, losses, commissions, arrangements,
4.10reasonable underwriting standards, acceptance and cession of reinsurance, and appointment
4.11of servicing carriers; and (2) procedures to determine the amounts of insurance provided
4.12by the fund. The operation plan and an amendment to the plan are subject to the
4.13commissioner's approval. If the board fails to develop an operation plan within a reasonable
4.14time frame established by the commissioner, the commissioner or the commissioner's
4.15designee must develop the plan of operation for the fund.
4.16 Subd. 5.Necessary expenses authorized.The board may appoint employees and provide
4.17all office space, services, equipment, materials, and supplies, and provide all budgeting,
4.18personnel, purchasing, and related management functions necessary for the board to exercise
4.19the powers, duties, and functions imposed or authorized by this chapter.
4.20 Subd. 6.Technical assistance.The commissioner must:
4.21 (1) provide technical and administrative assistance to the board with respect to
4.22administering the fund, upon the board's request; and
4.23 (2) provide expertise the board may reasonably request with respect to evaluating claims
4.24or potential claims.
4.25 Sec. 4. [62X.04] PROVIDER DUTIES.
4.26 Subdivision 1.Membership required.A health care provider must actively pursue
4.27membership in the fund.
4.28 Subd. 2.Payment required.Membership in the fund is contingent upon the participating
4.29member making timely payment of all membership fees and premium surcharges under
4.30section 62X.05.
4Sec. 4.
25-03648 as introduced02/27/25 REVISOR RSI/AC 5.1 Sec. 5. [62X.05] PAYMENT OBLIGATIONS.
5.2 Subdivision 1.Membership fees.A health care provider must pay annual membership
5.3fees on or before the anniversary date of the provider's membership in the fund. The board
5.4must set the membership fees subject to the commissioner's approval. Membership fees
5.5may be paid annually or in semiannual or quarterly installments.
5.6 Subd. 2.Premium surcharge.(a) In addition to the membership fees under subdivision
5.71, the commissioner must levy an annual premium surcharge on (1) each participating health
5.8care provider who has obtained a policy that meets the requirements of section 62X.06, and
5.9(2) each self-insurer.
5.10 (b) The commissioner must determine the surcharge based upon sound actuarial
5.11principles, using data obtained from Minnesota experience, if available. The amount of the
5.12surcharge must be sufficient to pay claims and expenses from the fund. The surcharge may
5.13differ between individual health care providers.
5.14 (c) The insurer must collect the surcharge on the same basis as the insurer collects
5.15premiums from the health care provider. The surcharge with accrued interest must be remitted
5.16to the fund within 30 days after the date the premiums for medical malpractice insurance
5.17have been received by the insurer from the health care provider.
5.18 (d) If the insurer collects the annual premium surcharge but does not remit the annual
5.19premium surcharge within the time limit specified in paragraph (c), the insurer's certificate
5.20of authority must be suspended until the annual premium surcharge is paid.
5.21 Subd. 3.Self-insureds.(a) A self-insured is eligible for membership in the fund upon
5.22(1) payment of membership fees and premium surcharges, and (2) compliance with other
5.23board requirements.
5.24 (b) The commissioner must determine the (1) surcharge for self-insureds, and (2) process
5.25for self-insureds to remit the surcharge. The amount of the surcharge imposed on self-insureds
5.26must be in an amount comparable to what a health care provider would be required to pay
5.27if the provider's surcharge was based upon a medical malpractice insurance policy issued
5.28by an insurer.
5.29 Sec. 6. [62X.06] FINANCIAL TRANSPARENCY.
5.30 Subdivision 1.Books and records.All books, records, and audits of the fund are open
5.31to the general public for reasonable inspection. This subdivision does not apply to confidential
5.32claim information.
5Sec. 6.
25-03648 as introduced02/27/25 REVISOR RSI/AC 6.1 Subd. 2.Annual state audit.On or before December 31 of each year, the state auditor
6.2must audit the records of the fund and furnish an audited financial report to all fund members
6.3and the Department of Commerce.
6.4 Sec. 7. [62X.07] MEDICAL MALPRACTICE INSURANCE REQUIREMENTS.
6.5 Subdivision 1.Medical malpractice insurance required.A health care provider must
6.6maintain a medical malpractice insurance policy issued by an insurer or must qualify as a
6.7self-insurer. Qualification as a self-insurer is subject to conditions established by the
6.8commissioner. The commissioner may establish conditions that permit a self-insurer to
6.9self-insure for claims that are (1) against an employee who is a health care provider, and
6.10(2) not covered by the fund.
6.11 Subd. 2.Rulemaking.The commissioner must establish by rule the minimum liability
6.12limits for a medical malpractice insurance policy that must be maintained by a health care
6.13provider. The limits may differ between individual health care providers. When determining
6.14the minimum level of coverage for health care providers, the commissioner must consider
6.15the health care provider's area of practice, past and prospective risk experience, and any
6.16other factors the commissioner deems relevant. The commissioner must also consider the
6.17fund's financial solvency when establishing the minimum liability limits.
6.18 Subd. 3.Insurer certificate of insurance filing required.Each insurer must, at the
6.19time and in a form prescribed by the commissioner, file with the commissioner a certificate
6.20of insurance on behalf of the health care provider upon original issuance and each renewal
6.21of a medical malpractice insurance policy.
6.22 Subd. 4.Self-insured provider certificate of insurance filing required.Each
6.23self-insured health care provider furnishing medical malpractice insurance must, at the time
6.24and in a form prescribed by the commissioner, file with the commissioner a certificate of
6.25self-insurance and a separate certificate of insurance for each health care provider covered
6.26by the self-insured plan.
6.27 Sec. 8. [62X.08] FILED CLAIMS.
6.28 Subdivision 1.Recovery from the fund.A person filing a claim may recover from the
6.29fund only if:
6.30 (1) the health care provider or the health care provider's employee has coverage under
6.31the fund;
6.32 (2) the fund is named as a party in the action; and
6Sec. 8.
25-03648 as introduced02/27/25 REVISOR RSI/AC 7.1 (3) the action against the fund is commenced within the same time limitation as the
7.2action against the health care provider or the health care provider's employee.
7.3 Subd. 2.Fund's right to defense.If, after reviewing the facts upon which the claim is
7.4based, the fund determines that there is a reasonable probability that a damages payment
7.5exceeds the limits provided in section 62X.07, the fund may appear and actively defend the
7.6fund if the fund is named as a party in an action against a health care provider or a health
7.7care provider's employee that has coverage under the fund. In an action under this
7.8subdivision, the fund may retain counsel and pay out of the fund attorney fees and expenses,
7.9including court costs, incurred to defend the fund. The attorney or law firm retained to
7.10defend the fund must not be retained or employed by the board to perform legal services
7.11for the board other than legal services directly connected with the fund. The fund may appeal
7.12a judgment affecting the fund as provided by law.
7.13 Subd. 3.Insurer obligation to defend.The insurer or self-insurer providing insurance
7.14or self-insurance for a health care provider who is also covered by the fund is responsible
7.15for providing an adequate defense of the fund on a claim filed that may potentially affect
7.16the fund with respect to the insurance or self-insurance policy. The insurer or self-insurer
7.17must act in good faith and in a fiduciary relationship with respect to a claim affecting the
7.18fund. The board must approve a settlement exceeding an amount that may require payment
7.19by the fund.
7.20 Subd. 4.Right of recovery.(a) A person who has recovered a final judgment or a
7.21settlement approved by the board against a health care provider or a health care provider's
7.22employee that has coverage under the fund may file a claim with the board to recover the
7.23portion of the judgment or settlement that is in excess of the limits provided under section
7.2462X.07 or the maximum liability limit for which the health care provider is insured,
7.25whichever limit is greater.
7.26 (b) If the fund incurs liability for future payments exceeding $500,000 to a person under
7.27a single claim as the result of a settlement or judgment, the fund must pay the full medical
7.28expenses for which the fund is liable each year, plus an amount not to exceed $500,000 per
7.29year that pays the remaining liability over the person's anticipated lifetime until the liability
7.30is paid in full. The fund may deduct from payments made under this paragraph the reasonable
7.31costs incurred that are attributable to the remaining liability, including attorney fees reduced
7.32to present value. If the remaining liability is not paid before the person dies, the fund must
7.33pay the remaining liability in a lump sum.
7Sec. 8.
25-03648 as introduced02/27/25 REVISOR RSI/AC 8.1 Subd. 5.Fund payment requirements.(a) A payment under this section must be made
8.2from money collected and paid into the fund and from interest earned on the fund's assets.
8.3 (b) A claim duly filed against the fund must be paid in the order received and within 90
8.4days after the date the claim is filed, unless the payment is appealed by the fund or is subject
8.5to a periodic payment under this section. If the money in the fund is insufficient to pay all
8.6claims, a claim received after the money is exhausted must be immediately payable the
8.7following year, in the order in which the claim was received.
8.8 Subd. 6.Board right of action.The board may bring an action against an insurer,
8.9self-insurer, or health care provider for failure to act in good faith or a breach of fiduciary
8.10responsibility.
8.11 Sec. 9. [62X.09] NOTICE PERIOD FOR INSURANCE POLICY CHANGES.
8.12 An insurer must not (1) increase the premium upon any renewal or reissuance of a
8.13medical malpractice insurance policy, or (2) impose a change in deductible, coverage, or
8.14other policy term that materially alters the policy, unless the insurer mails or delivers to the
8.15named insured written notice of an increase or change at least 90 days before the policy's
8.16renewal or anniversary date.
8Sec. 9.
25-03648 as introduced02/27/25 REVISOR RSI/AC