Synopsis of Selected Minnesota Tort & Insurance Laws
Table of Contents:
MINNESOTA COURT SYSTEMS
FAULT, LIABILITY, and DAMAGES
ComparativeFault, Joint and Several Liability, and Assumption of Risk
Claims Against Public Entities
Collateral Source Calculations
Workers' Compensation Subrogation Claims
STATUTES OF LIMITATION
Improvements to Real Property
Wrongful Death and Survival
Libel, Slander and Defamation
When does the Statute of Limitations Begin to Run?
ARBITRATION and ALTERNATIVE DISPUTE RESOLUTION
Automobile No-Fault Action
Alternative Dispute Resolution
PRE- and POST-JUDGMENT INTEREST
OFFERS OF JUDGMENT OR SETTLEMENT
The Making of an Offer
Consequences of Non-Acceptance
Ingress and Egress
Ice and Snow
Miscellaneous Foreign Substances on the Floor
Causes of Action 1. Design Defect
2. Failure to Warn
3. Manufacturing Defects
4. Breach of Warranty
1. Useful Life of Product
2. Limits on the Liability of Non-Manufacturers and Retailers
VERDICT POTENTIAL OF MINNESOTA COUNTIES
TYPICAL COMMON LAW CLAIMS IN THE EMPLOYMENT CONTEXT
Breach of Contract
Negligent Hiring, Retention and Supervision of Employees
THE UNFAIR CLAIMS PRACTICES ACT (UCPA) & BAD FAITH CLAIMS
MINNESOTA COURT SYSTEMS
The Minnesota judiciary has three levels of hearing civil cases.
District Courts. These are courts of trial level general jurisdiction. Cases are tried either by a judge or a jury of six persons. Twelve-person juries are only used in felony criminal cases. Most cases filed in district court are tried by a judge or jury (or otherwise resolved) in 18 months from the time the case is filed.
Minnesota Court of Appeals. This is an intermediate appellate court. Appeal is by right from the District Courts to the Minnesota Court of Appeals. An appeal must be filed within 90 days of the entry of judgment in the District Court.
Minnesota Supreme Court. This is the highest court in the State of Minnesota. Decisions of the Court of Appeals are reviewed by the Minnesota Supreme Court on a discretionary basis. The Minnesota Supreme Court grants relatively few Petitions for Review. Generally, for review to be granted, the case must involve novel issues.
Minnesota also has Conciliation Court, a small claims court. Conciliation Court claims are resolved by an informal hearing before a judge. Conciliation Court claims may not exceed $7,500, and an action must be brought in the county where the defendant lives or operates a business. Conciliation Court hearings are normally set 15 days after the summons is mailed. An appeal may be taken to District Court if filed within 20 days of judgment.
Minnesota state court cases are commenced by service of a Summons and Complaint upon a defendant. The Summons and Complaint are not required to be filed in order to commence the action. Following commencement of the action, the Summons and Complaint or the Answer may be filed by the parties whenever they select. However, the case is not assigned to a judge and does not move towards trial or other resolution until it is filed.
The Minnesota Rules of Civil Procedure and Minnesota's General Rules of Practice for District Courtscontain the procedures for civil cases filed in the district courts of the State of Minnesota. The Federal Rules of Civil Procedure and the Local Rules of the United States District Court for the District of Minnesota contain the procedures for civil cases filed in the United States District Court for the District of Minnesota. The rules governing civil cases filed in the State of Minnesota district courts differ in some respects from the rules governing civil cases filed in the United States District Court for the District of Minnesota.
FAULT, LIABILITY, and DAMAGES
Comparative Fault, Joint and Several Liability, and Assumption of Risk
Minnesota is a comparative fault state; thus, the fault of all parties to an occurrence is compared whether the case is based on negligence, strict liability, or breach of warranty. Plaintiff may recover against any party if plaintiff's fault is not greater than the fault of the other party. However, plaintiff's recovery is reduced by the percentage of his or her fault. In Minnesota comparative negligence may be used as a defense in an action based on strict liability. Minnesota's Comparative fault statute defines "fault" broadly.
Minnesota Statute section 604.02 was amended in 2003 for claims arising after 8/1/03 and is now more friendly to defendants. The Minnesota law for claims that occur before 8/1/03 is still following the principle of joint and several liability. However, a person can meet the statutory limitation if an actor is found 15% or less at fault, his or her negligence is limited to four times that amount in the event that another defendant or defendants are insolvent or were previously released from the case.
Now due to the amendment, if the claim arises after 8/1/03 and two or more persons are severally liable, they will not be held jointly and severally liable for the whole award unless they meet one of the exceptions. More specifically, contribution to awards shall be in proportion to the percentage of fault attributable to each individually, unless one of the following is true:
1) a person's fault is greater than 50%;
2) two or more persons are acting in a common scheme or plan that results in injury;
3) a person commits an intentional tort;
4) or, a person's liability arises under pesticide control, water pollution control, waste management, environmental response and liability, leaking underground storage tanks and pipeline safety, public nuisance, damage to the environment or the public health, or any other environmental or public health law, or any environmental or public health ordinance or program of a municipality (as defined in Section 466.01).
Minnesota recognizes the doctrines of primary and secondary assumption of risk. Secondary assumption of risk is not a complete defense, but simply an element of fault. Primary assumption of risk involves situations where plaintiff's conduct is to such a high degree as to absolve a defendant from any duty. Situations involving primary assumption of risk are rare, and the factors to establish it exists are outlined in Andren v. White-Rodgers Co., 465 N.W.2d 102 (Minn. App. 1991).
The applicable statute section 604.01 (comparative fault; effect) is found in the Appendix.
Claims Against Public Entities
Minnesota law limits the liability of a municipality as follows:
$300,000 when the claim is one for death by wrongful act or omission and $300,000 to any claimant in any other case;
$750,000 for any number of claims arising out of a single occurrence; and
$1,000,000 for any number of claims arising out of a single occurrence, for claims arising on or after January 1, 2000; or
twice the limits provided in clauses 1 and 3 above when the claim arises out of the release or threatened release of a hazardous substance.
No award for damages on any such claim shall include punitive damages.
The applicable statute section 466.04 (maximum liability) is found in the Appendix.
Collateral Source Calculations
In a civil action, whether based on contract or tort, Minnesota's collateral source rule prevents double recoveries by the plaintiff by requiring deduction of certain benefits recovered by the plaintiff. The statute requires deducting payments related to the injury or disability made to the plaintiff or on the plaintiff's behalf up to the date of verdict by or pursuant to:
a federal, state, or local income disability or workers' compensation act; or other public program providing medical expenses, disability payments, or similar benefits;
health, accident and sickness, or automobile accident insurance or liability insurance that provides health benefits or income disability coverage; except life insurance benefits, payments made pursuant to the United States Social Security Act, or pension payments;
a contract or agreement of a group, organization, partnership, or corporation to provide, pay for, or reimburse the costs of hospital, medical, dental or other health care services; or
a contractual or voluntary wage continuation plan provided by employers or any other system intended to provide wages during a period of disability, except benefits received from a private disability insurance policy where the premiums were wholly paid for by the plaintiff.
Normally, the jury may not be informed of the existence of collateral sources. Deduction of collateral sources is achieved by a party filing a motion within a certain time after entry of the verdict requesting the court to determine collateral sources. The collateral source reduction does not apply to amounts paid for which a subrogation right has been asserted.
The applicable statute section 548.36 (collateral source calculations) is found in the Appendix.
Minnesota law provides for punitive damages; however, upon commencement of a civil action, the complaint can not seek punitive damages. Only after the suit has been filed can a motion to amend the complaint to claim punitive damages be brought.
Upon motion to amend the complaint, the plaintiff must make a showing that a jury could reasonably find that there is clear and convincing evidence that the acts of the defendant show a "deliberate disregard for the rights or safety of others." Previously, the statute required clear and convincing evidence of a "willful indifference" of the rights and safety of others. A 1990 amendment provided the much more difficult standard of clear and convincing evidence showing a "deliberate disregard" for the rights and safety of others. In addition, after any award of punitive damages, the award is to be specifically reviewed by the court. There is no statutory cap on punitive damages in Minnesota.
Minnesota prohibits punitive damages in a breach of contract case. Punitive damages may be awarded in a master-servant or principal-agent situation in a tort case only if certain statutory requirements are met pursuant to Minnesota Statutes section 549.20. For example, punitive damages are available in this situation if the principal authorized the doing of the act, or the agent was unfit and the principal knowingly disregarded knowledge of that fact, or the agent was employed in a managerial capacity and was acting in the scope of that employment, or the principal ratified the act of the agent with knowledge of the consequences. Punitive damage claims against a principal frequently occur in discrimination, sexual harassment, defamation, and employment termination cases.
Although Minnesota has tightened its standards for punitive damages, District Courts will frequently allow amendments to add punitive damages in products liability cases, particularly if the product has not been tested or if the product has been distributed without any warning whatsoever. Finally, in motor vehicle accidents, if the defendant driver has a blood alcohol concentration of .10 or more, or if the driver was operating a motor vehicle under the influence and refused to take a test, the statute permits a finding of punitive damages, even in the absence of aggravated driving conduct.
The applicable statutes sections 549.191 (claim for punitive damages) and 549.20 (punitive damages) are found in the Appendix.
Workers' Compensation Subrogation Claims
Like most states, Minnesota permits statutory subrogation for workers' compensation claims pursuant to Minnesota Statute section 176.061. However, unlike virtually every other jurisdiction, Minnesota permits contribution cases against an employer. The seminal case is Lambertson v. Cincinnati Corp., 257 N.W.2d 679 (Minn. 1977). Even if a third-party defendant employer is less at fault than the plaintiff-employee, the employer may have to contribute to the verdict. However, a third-party defendant employer's liability is limited to an amount in new money equal to the amount of workers' compensation benefits paid or payable. For example, assume that an employee received $50,000 in workers' compensation benefits from his employer and later commenced a tort action against a third party. The third party (defendant and third-party plaintiff) may commence a third-party action against the employer and attempt to prove fault on the part of the employer. If a verdict were rendered in favor of plaintiff-employee in the amount of $100,000 and the jury found plaintiff 0% at fault, defendant and third-party plaintiff 10% at fault and third-party defendant-employer 90% at fault, defendant and third-party plaintiff would owe the entire verdict to the plaintiff. It could, though, recover contribution from third-party defendant-employer. Using general comparative negligence principle, a third-party defendant would owe 90% of the verdict, or $90,000. However, since an employer's contribution is limited to an amount in new money equal to the amount of workers' compensation benefits paid, the employer's contribution would be limited to an additional $50,000. Accordingly, defendant and third-party plaintiff would ultimately pay $50,000 of the $100,000 verdict. Using the same scenario, but assuming the jury were to find defendant and third-party plaintiff 90% at fault and third-party defendant-employer 10% at fault, defendant and third-party plaintiff would pay the entire $100,000 verdict to the plaintiff, but would be entitled to recover 10%, or $10,000 from the employer.
This application, while often confusing, was created by the Minnesota Supreme Court to balance the equitable right of contribution against the Minnesota Workers' Compensation Act, which provides that workers' compensation benefits is to be the only remedy by an employee against the employer.
In Minnesota, employees can and frequently do settle their claims against a third-party tortfeasor and exclude the subrogation interest of the employer and insurer. As long as the subrogation claim is not jeopardized, this type of release is allowed under the Minnesota case of Naig v. Bloomington Sanitation, 258 N.W.2d 891 (Minn. 1977). This is commonly referred to as a Naig release. An employer and insurer can also settle its subrogation claim directly with the tortfeasor apart from the plaintiff-employee's claim. This is commonly referred to as a reverse Naig settlement.
If the plaintiff-employee settles his claim, leaving the subrogation unresolved, there can be no contribution against the employer for the amounts paid in the settlement to the plaintiff-employee for his own claim. The contribution would only attach as to those amounts that had been earmarked as workers' compensation funds.
Complicating matters is the fact that when subrogation is asserted and the case for subrogation is tried, the employer and insurer must prove all of the damages of the insured employee according to the recent Minnesota Supreme Court case of M.W. Ettinger Transfer v. Schaper Manufacturing, Inc., 494 N.W.2d 29 (Minn. 1992). Despite the fact that the Supreme Court has separated the claim of the employee from that of the employer, when the employer tries its subrogation case, it must prove the nature and extent of the employee's damages. The decision causes many problems because the benefits under the workers' compensation statute do not correlate directly with damages at law for personal and bodily injury.
Finally, with respect to subrogation claims for workers' compensation, there can be no workers' compensation subrogation in either an uninsured motorist or underinsured motorist action under the Minnesota decisional law as it currently stands. There is a basis for an argument under Minnesota Statute section 176.061, subdivision 10, that there should be statutory indemnity for workers' compensation subrogation in uninsured and underinsured motorist cases. However, there are no appellate decisions standing for that proposition.
The applicable statute section 176.061 (third party liability) is found in the Appendix.
STATUTES OF LIMITATION
Personal injury actions generally have a six-year statute of limitations. Minn. Stat. § 541.05, subd. 1(5).
Claims for property damage, and claims arising from contracts unless the Uniform Commercial Code otherwise specifies, must be filed within six years of their accrual. Minn. Stat. § 541.05.
Improvements to Real Property
A claim for damages based on services or construction regarding improvements to real property must be brought within two years of accrual. Minn. Stat. § 541.051.
Wrongful Death and Survival
An action for damages due to wrongful death, in which there is no allegation of professional negligence of a medical provider or an act of murder, must be commenced within three years after the date of death. There is a further requirement that the action must be commenced within six years after any act or omission which caused death. Minn. Stat. § 573.02, subd. 1.
Libel, Slander and Defamation
Defamation, including libel and slander, has a two-year statute of limitations. Minn. Stat. § 541.07(1).
Where an injury to a minor is concerned, the statute of limitations does not apply until one year after the plaintiff has reached the age of 18 years. Minn. Stat. § 541.15. In other words, if the plaintiff was injured at age 10, he or she has until age 19 to commence the action. If the plaintiff received an injury when he or she was 19 years old, the normal six-year statute would apply.
When does the Statute of Limitations Begin to Run?
The statute of limitations begins to run when the action "accrues." The Minnesota Supreme Court has held that an action accrues when the act causes an injury upon which one could base a claim. Sollar v. Oliver Iron Mining Co., 54 N.W.2d 114 (Minn. 1952).
Note that an action based upon breach of warranty pursuant to the Uniform Commercial Code must be commenced within four years after the cause of action accrues. Minn. Stat. § 336.2-725.
ARBITRATION and ALTERNATIVE DISPUTE RESOLUTION
Minnesota has adopted the Uniform Arbitration Act to carry out the policy of a speedy, informal and relatively inexpensive procedure for resolving controversies. The first step in ascertaining whether arbitration is an alternative to litigation is to determine whether a valid arbitration agreement exists. This is an issue for the court. Once it is determined a valid arbitration agreement exists, the procedures for initiating arbitration and the process to be used are generally provided in the agreement itself or a reference is made to the rules of the American Arbitration Association for arbitration of that type.
After the award is made, the statute provides for an application to the arbitrator to modify or correct the award. Application must be made within 20 days after delivery of the award. The statute then provides for the District Court to confirm the award, vacate the award, or modify or correct the award. A request to vacate, modify or correct the award must be made within 90 days after delivery of a copy of the award or after grounds become known for an order vacating an award.
Upon the court's granting an order to confirm, modify, or correct an award, a judgment will be entered. A party may then appeal from the judgment. The appeal is taken in the same manner as one would from orders or judgments in other civil actions.
Finally, of note, pursuant to Wacker v. Allstate Ins. Co., 251 N.W.2d 346 (Minn. 1977), one who wishes to appeal an arbitration award must first move to vacate the award within the statutory time limit. If a motion to vacate an award is not brought within the 90-day period, it is barred, and there is nothing for the higher court to review. From a practical standpoint, absent bias or partiality of the arbitrator, arbitration awards are rarely overruled.
The relevant statutes are found in Minnesota Chapter 572. Of particular interest and found in the Appendix are statutes sections 572.08, 572.09, 572.16, 572.18, 572.19, 572.20, and 572.26.
Automobile No-Fault Action
The Minnesota No-Fault Act requires mandatory submission to binding arbitration of no-fault cases where a claim at commencement of arbitration is in an amount of $10,000 or less against the insurer for no-fault benefits or comprehensive or collision damage coverage.
The applicable statute section 65B.525 is found in the Appendix.
Alternative Dispute Resolution
The Minnesota General Rules of Practice for District Courts provides that essentially all civil cases are subject to alternative dispute resolution (ADR). The processes available to the parties include arbitration, consensual special magistrate, early neutral evaluation, mediation, mediation/arbitration, mini trial, and summary jury trial.
Pursuant to the Rules, the parties are to meet within sixty days of filing the action to select an ADR process. The form of resolution selected is then placed on the court's scheduling order and becomes a part of the litigation process. ADR is new to Minnesota; and in reality, at the present time, only Hennepin County and Ramsey County have viable ADR mechanisms in place. The parties may voluntarily agree to ADR at an earlier time which they mutually select.
The ADR procedure is outlined in the General Rules of Practice for District Courts, Rule 114; Special Rules of Practice for the District Courts, Second Judicial District [Ramsey County], Rule 25; and Special Rules of Practice for District Courts, Fourth Judicial District [Hennepin County], Rule 5.
PRE- and POST-JUDGMENT INTEREST
"Pre-judgment interest" is awarded to provide full compensation by converting time-of-demand damages into time-of-verdict damages; it is designed to compensate a plaintiff for the loss of the use of money owed. Simeone v. First Bank Nat'l Ass'n, 73 F.3d 184 (8th Cir. 1996). Simple pre-judgment interest, which for 1996 is six (6) percent. 1 Pre-judgment interest is awarded in most civil actions except for the following cases:
judgments, awards, or benefits in workers' compensation cases, but not including third-party actions;
judgments or awards for future damages;
punitive damages, fines, or other damages that are noncompensatory in nature;
judgments or awards not in excess in the amount specified in 491A.01 [which is currently $7,500]; and
that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.
Unless otherwise specified by contract or allowed by law, the interest is computed from the time of the commencement of the action, time of written notice of claim, or demand for arbitration, whichever comes first.
If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days. After that time, interest on the judgment is calculated in the following manner. If the amount of the prevailing party's offer is closer to the judgment than the opposing party's offer, the prevailing party receives interest from the time of the action's commencement (or demand for arbitration or written notice of the claim) until the time of the verdict or award. If, however, the amount of the losing party's offer is closer to the judgment, the prevailing party receives interest only on the amount of the settlement offer or the judgment or award, whichever is less, and only from the time of commencement of the action (or demand for arbitration or written notice of the claim) until the time the settlement offer was made.
The applicable statute section 549.09 is found in the Appendix.
Each calendar year, interest (at the same rate as described above for pre-judgment interest) accrues on the unpaid balance of a judgment or award from the time it is entered or made until it is paid.
OFFERS OF JUDGMENT OR SETTLEMENT
The Making of an Offer
At any time up to 10 days before the trial begins, any party may serve upon an adverse party an offer of judgment or an offer of settlement. Offers of settlement are more common. An offer of settlement must specify the amount offered and should also state that costs and disbursements then accrued by the other party will also be paid. Such offers may be accepted within 10 days after service of the offer and offers not accepted by that time are deemed to be withdrawn. During the 10-day period the offer is irrevocable.
The applicable Minnesota Rule of Civil Procedure (Rule 68) is found in the Appendix.
Consequences of Non-Acceptance
An unaccepted offer is not admissible as evidence, except in a proceeding to determine costs and disbursements. However, if the judgment finally entered is not more favorable to the offeree than the offer, the offeree must pay the offeror's costs and disbursements. The purpose of this rule is to encourage settlement of lawsuits. Borchert v. Maloney, 581 N.W.2d 838 (Minn. 1998).
Subchapter XVIII of 42 U.S.C., chapter 7§1395 et. seq., known as the Medicare Act, provides health insurance for the aged and disabled. On December 5, 1980, Congress passed the Omnibus Reconciliation Act of 1980, a portion of which is encompassed in 42 U.S.C. § 1395y(b). The Act establishes that Medicare should not make payments for medical services to the extent that payment has been made "or can reasonably be expected to be made" under a "workmen's compensation law or plan, automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance." This Amendment became effective for services rendered after July 1, 1981.
In 1984, Congress passed the Deficit Reduction Act, which amended 42 U.S.C. §. 1395y(b). It allows the United States a right of action for Medicare payments against any entity which would be responsible for payment or against any entity which has been paid for medical service. The United States is also subrogated, to the extent of payments made, to the right of any individual or entity on whose behalf the payment has been made. The statute also allows a private right of action with double damages for a primary plan which fails to provide primary coverage. "Primary plan" under this Act includes self-insured plans as set forth above. These amendments took effect for services rendered on or after July 18, 1984. There is a 6-year limitation of action during which Medicare may seek reimbursement. U.S. v. Blue Cross & Blue Shield of Michigan, 726 F. Supp. 1517 (E.D. Mich. 1989).
42 U.S.C. § 1396, the federal Medicaid anti-lien provision prohibits states from imposing a lien on property of a Medicaid recipient to seek reimbursement for medical assistance paid. Specifically excepted from this prohibition is a state's lien on real property of an individual institutionalized for personal care (nursing homes, intermediate care facilities for the mentally retarded, or a hospital).
In Minnesota, a state agency that provides medical assistance benefits (limited to nursing homes, intermediate care facilities for the mentally retarded, or a hospital) to a person or a person's spouse who owns real property in Minnesota has a lien upon all real property owned on or after institutionalization. The lien becomes unenforceable 18 months after receipt of notice by the lienor of the later of the recipient's or the recipient's spouse's death, or three years after the last to die of the recipient or the recipient's spouse. The applicable statute section 514.981 is found in the Appendix.
Minnesota's medical assistance subrogation provision, Minn. Stat. § 256B.37, subd. 1 (see Appendix), provides that the state or state agency that furnishes medical care is subrogated to the rights, legal or otherwise, of a person with the right to receive medical care from an organization or entity arising from an occurrence that necessitated the payment of medical assistance to the extent of the cost of medical care furnished. Recently, the Minnesota Supreme Court held the federal Medicaid anti-lien provision preempts § 256B.37 to the extent that it allows a lien for medical assistance paid to be placed on a medical assistance recipient's cause of action before a recipients death. Martin v. City of Rochester, 2002 WL 433356 (Reporter citation currently unavailable).
Rule 3.1 of the Minnesota Rules of Professional Conduct prohibits a lawyer from bringing or defending a frivolous proceeding, or assenting or controverting a frivolous issue.
Rule 11 of the Minnesota Rules of Civil Procedure provides that every pleading, motion or other paper of a party represented by an attorney must be signed by the attorney, or, if the pleader does not have an attorney, by the pleader. The signature constitutes a certification that the pleading, motion or paper has been read; that to the best of the signer's knowledge and after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion or other paper is signed in violation of this rule, the court, upon motion or its own initiative, will impose a sanction, which could include an order to pay the other party's expenses incurred because of the filing of the pleading, motion or other paper, including reasonable attorney fees.
The applicable Minnesota Rules of Civil Procedure (Rules 3.1 and 11) are found in the Appendix.
A few general, perhaps competing, rules govern this area of law. First, a store owner is not an insurer of safety of an invitee; the invitee must use reasonable care for his or her own protection. Krengel v. Midwest Automatic Photo, Inc., 295 Minn. 200, 203 N.W.2d 841, 845 (Minn. 1973). Second, a store has a duty to use reasonable care to protect its customers from even obvious hazards on its property, if the store should anticipate that the hazard might cause injury. Gearin v. Wal-Mart Stores, Inc., 53 F.3d 216, 217 (8th Cir. 1995).
Ingress and Egress
Minnesota has abolished the traditional distinction between licensees and invitees. Instead, the duty is one of reasonable care to entrants. A landowner's duty to use reasonable care for the safety of all persons on its premises includes a duty to provide and maintain suitable access to and from buildings on the land. McIlrath v. College of St. Catherine, 399 N.W.2d 173, 174 (Minn. Ct.App. 1987). A unique twist to this law comes in the area of maintenance of city sidewalks. The obligation to maintain a public sidewalk in a reasonably safe condition is solely that of the municipality, even where ordinances require the abutting property owner to shovel or clean the boulevard (public) portion of the sidewalk. Sternitzke v. Donahue's Jewelers, 249 Minn. 514, 83 N.W.2d 96 (1957). In other words, although it is customary for a property owner to shovel the boulevard portion of the sidewalk, there is no obligation to do so and the property owner cannot be held liable if it is not shoveled or maintained. This is the rule, as well, in situations where the sidewalk is cracked, broken or fallen. Unless the property owner has created the defective condition of the sidewalk by some affirmative act, the property owner is not liable for its condition. Id.
Ice and Snow
As one may imagine, winter in Minnesota presents a fertile occasion for slip and fall cases. However, decisions from Minnesota appellate courts have not imposed unreasonable burdens on property owners. The rule in Minnesota is that a property owner may await the end of a storm and a reasonable time thereafter before removing ice and snow from sidewalks and steps. Niemann v. Northwestern College, 389 N.W.2d 260 (Minn. App. 1986). A fact issue is presented to resolve issues relating to when a storm actually ended. Frykman. v. University of Minnesota-Duluth, 611 N.W.2d 379, 381 (Minn. Ct. App. 2000).
For a customer to succeed in a slip and fall case involving a store's icy parking lot, the customer must prove that the store knew about the patch of ice or that the ice patch had been in the lot long enough for the store to discover it through reasonable inspection and take steps to protect the customers from the hazard. Gearin v. Wal-Mart Stores, Inc., 53 F.3d 216 (8th Cir. 1995). In evaluating whether the store was negligent in a slip and fall case, several factors must be considered, including the purpose for which the plaintiff was on the premises, foreseeability of the accident, and ease with which the accident could have been prevented. Block v. Target Stores, Inc., 458 N.W.2d 705 (Minn. App. 1990), review denied (Minn. Sept. 28, 1990).
Miscellaneous Foreign Substances on the Floor
Cases involving foreign substances on a floor are quite fact-specific. For example, in suit by a customer against a grocery store for injuries sustained when she stepped on a banana peel, the Minnesota Supreme Court held the evidence was insufficient to justify finding that a dangerous condition resulted from the acts of the grocery store's employees. Messner v. Red Owl Stores, 57 N.W.2d 659 (Minn. 1953). Also, in a customer's action for injuries sustained while stepping on a nail in an aisle of a department store, the supreme court held the evidence was insufficient for a jury to find the store was negligent in permitting a depression in which nails and similar articles could become lodged to remain in the floor.Bragg v. Dayton Co., 4 N.W.2d 320 (Minn. 1942). On the other hand, in Sears Roebuck & Co. v. Peterson, 76 F.2d 243 (8th Cir. 1935), the evidence in an action against a store for injuries to a customer, who tripped on twine left in an aisle by a store employee was held to warrant a jury's finding that the store was negligent in failing to keep the aisle clean.
Generally, a retailer is not liable for a fall resulting from a foreign substance on the floor, unless the plaintiff can prove that store employees were the source of the object on the floor or that store employees knew or should have known of its presence and failed to take corrective action.
Causes of Action
The traditional differences between product liability actions based on strict liability or negligence have been all but eliminated in Minnesota. Cases based on defective design and failure to warn employ a reasonableness standard which compares the conduct of the manufacturer to that of the consumer.
1. Design Defect
A manufacturer has a duty to use reasonable care when designing a product so as to avoid any unreasonable risk of harm to the consumer. The reasonableness standard considers the facts and circumstances of each particular case. This may include the likelihood and seriousness of harm as well as the feasibility of any precautions which may prevent the harm. If the manufacturer did not use reasonable care when designing the product in question, then the product is in a defective condition and reasonably dangerous to the consumer.
2. Failure to Warn
A product is also in a defective condition unreasonably dangerous to the consumer if the manufacturer or seller knew or should have known of the dangers involved in using the product but did not provide the consumer adequate warnings or instructions. A retailer must provide warning of dangers inherent in the improper use of the product if that misuse is one the retailer should reasonably foresee.
3. Manufacturing Defects
This is one area where the concept of strict liability is alive and well. If a product has a manufacturing flaw which causes it to fail during use, the manufacturer will be found strictly liable. A product is in a defective condition unreasonably dangerous to the consumer if it presents a danger not contemplated by an ordinary consumer who uses the product with the knowledge common in the community.
4. Breach of Warranty
An injured party may also assert a product liability claim based upon breaches of express or implied warranties pursuant to the U.C.C.
In product liability actions, Minnesota recognizes comparative negligence as a defense to actions based in negligence. An unforeseeable misuse of a product is also considered a defense.
1. Useful Life of Product
In a product liability action for the recovery of damages for personal injury, death, or property damage, the designer, manufacturer, distributor, or seller of the product that caused the injury may have a defense if the injury was sustained following the expiration of the ordinary useful life of the product. Minn. Stat. § 604.03, subd. 1. The product's useful life is not necessarily the life inherent in the product but instead is the period during which the reasonable safety of the product should be useful to the user. Minn. Stat. § 604.03, subd. 2.
However, in Hodder v. Goodyear Tire & Rubber, 426 N.W.2d 826 (Minn. 1988), the Minnesota Supreme Court limited the application of the statute. The court held that a defendant may still be held liable when plaintiff is injured by a product whose useful life has expired. The court explained that the useful life a product is merely one factor for the trier of fact to consider in determining fault. The jury is to use information regarding the useful life, as well as the other evidence in the case, to arrive at its determination as to whether a defendant is at fault.
2. Limits on the Liability of Non-Manufacturers and Retailers
In any product liability action based upon strict liability against a defendant other than the manufacturer of the product, the non-manufacturing defendant shall, upon answering or otherwise pleading, file an affidavit certifying the correct identity of the manufacturer of the product. Minn. Stat. § 544.41, subd. 1. Once the plaintiff has filed a complaint against a manufacturer and the manufacturer has, or is required to have, answered or otherwise pleaded, the court shall order the dismissal of the strict liability claim against the non-manufacturing defendant. Minn. Stat. § 544.41, subd. 2. The courts shall not enter a dismissal in favor of a non-manufacturing defendant if the plaintiff can show the defendant exercised some significant control over the design or manufacture of the product, the defendant had actual knowledge of the defect, or the defendant caused the defect in the product. Minn. Stat. § 544.41, subd. 3.
The applicable statute section 544.41 (Products liability; limit on liability of non-manufacturers) is found in the Appendix.
VERDICT POTENTIAL OF MINNESOTA COUNTIES
There are eighty-seven counties in Minnesota which comprise ten judicial districts. Cases are tried in the county seats of each county. Accordingly, a county by county analysis is not practical. The largest judicial districts are the Fourth District, which is comprised of Hennepin County. The county seat is Minneapolis. The next largest is the Second Judicial District which is comprised of Ramsey County with the county seat in St. Paul. The verdicts in both of those judicial districts could be characterized as moderately liberal.
TYPICAL COMMON LAW CLAIMS IN THE EMPLOYMENT CONTEXT
As most people who have dealt with an employment related claim can attest, a disgruntled employee rarely, if ever, limits his/her claims to a single factual incident or cause of action. Instead, the employee will throw a mixed bag of claims at the employer which typically include legal theories premised upon statutory and common law claims. Thus, it is not uncommon for an employee to seek damages based upon causes of action such as statutory violations under the ADA, Human Rights Act, and other related state and federal regulations; breach of contract; and defamation and/or infliction of emotional distress. The following is intended to provide a brief overview of common law which are typically brought in the employment context, other than claims for intentional and negligent infliction of emotional distress.
Claims for defamation typically arise out of the context of the termination of an employee. In order to prove defamation, the employee must establish that:
The employer communicated a defamatory statement to someone other than the plaintiff;
The statement was false; and
The statement harmed plaintiff's reputation.
Stuempges v. Park Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). It is not necessary for the employer to actually make false statements in order for an employee to claim defamation. Statements which carry negative inferences may also give rise to a claim for defamation. Lewis v. Equitable Life Assurance Soc'y of the United States, 389 N.W.2d 876, 889 (Minn.1986) (examination of truth of statement should go to the underlying implication of the statement and not just to the verbal accuracy of the statement). An employer cannot be held liable for defamation by mere conduct alone, however. Bolton v. Dept. of Human Services, 540 N.W.2d 523 (Minn. 1995). In Bolton, the plaintiff was escorted from the building by a supervisor immediately after his termination. Id. at 524. The Court held that when there was no spoken word or conduct other than escorting the plaintiff to the exit door, the plaintiff was not defamed as a matter of law. Id. at 526.
In certain circumstances, a former employee may also make a claim for defamation even if the employer makes no publication of statements about the employee. Lewis at 886. When considering the reasoning of other courts which have considered the issue of self-publication, the Court stated:
These courts have recognized that if a defamed person was in some way compelled to communicate the defamatory statement to a third person, and if it was foreseeable to the defendant that the defamed person would be so compelled, then the defendant could be held liable for the defamation.
Id. Therefore, under to Lewis, a terminated employee may succeed on a claim for defamation if he or she was required to discuss the reasons for termination in a subsequent job interview, the reasons carried a negative implication, and the reasons were untrue.
In certain circumstances, an employer's defamatory statements may be subject to a qualified privilege. If so, the employer will not be liable for its statements as long as they are made in good faith and for a legitimate purpose. Brooks v. Doherty, Rumble & Butler, 481 N.W.2d 120, 124-25 (Minn. Ct. App. 1992). A plaintiff employee may overcome a qualified privilege by showing that the employer acted with malice.Bauer v. State, 511 N.W.2d 447 (Minn. 1994). Malice can be established by showing that the employer acted with ill-will or a design to carelessly and wantonly injure the plaintiff. Brooks, 481 N.W.2d at 126. Likewise, malice can be proved by evidence that the employer knew the statements were false or by intrinsic evidence such as the character of the language used (exaggerated language), or the extent of publication. Frankson v. Design Space International, 394 N.W.2d 140, 144 (Minn. 1986).
Breach Of Contract
In considering claims for breach of employment contracts, courts typically agree on four settled principals. First, unless otherwise agreed, the employer/employee relationship is terminable at the will of either party. Cederstrand v. Lutheran Brotherhood, 117 N.W.2d 213, 221 (Minn. 1962). Second, a promise of employment on particular terms may create a binding unilateral contract which alters the at-will relationship. Pine River State Bank v. Mettille, 333 N.W.2d 622, 626 (Minn. 1983). Third, an offer or promise of particular employment may be inferred from statements or conduct of the parties, but such an offer or promise must be definite in form and communicated to the offeree. Cederstrand, 117 N.W.2d at 221. Finally, an employer's general statements of policy do not constitute a contractual offer. Pine River State Bank, 333 N.W.2d at 626, 630.
Critical to the formation/modification of an employment contract (whether based on an employee handbook, an employer's oral promise of continued employment, or an implied contract) are:
An offer definite in form;
Communication of the offer to the employee;
Acceptance of the offer by the employee; and
See, e.g., Pine River, 333 N.W.2d at 626; Hunt v. IBM Midamerica Employees Federal Credit Union, 384 N.W.2d 853, 856 (Minn. 1986).
Typically speaking, breach of contract claims are founded upon allegations that promises made by an employer, during the course of employment, change the nature of the employment relationship from at-will to permanent or one of a specific duration. In these cases, the employee typically claims reliance upon an employer's promise of permanent employment and some form of detriment as a result of relying upon such promise.
There are occasions where promises made by employers are sufficient to imply a promise of permanent employment. Pine River, 333 N.W.2d 622 (employee handbook modified employment relationship so that employer was required to follow disciplinary procedures set out in handbook). However, in many of these situations, the employee handbook contains a provision which expressly reserves the right to terminate based upon the employer's discretion. See, e.g., Ward v. Employee Development Corp., 516 N.W.2d 198, 202-03 (Minn. Ct. App. 1994).
While disclaimers may be useful in defeating a claim based upon language contained in the same handbook, such disclaimers are not necessarily helpful when a promise is made after the dissemination of the handbook. For example, a subsequent dissemination of a company policy concerning issues such as sexual harassment and/or equal opportunity may modify the nature of the employment relationship if it contains sufficiently definite language. Fitzgerald v. Norwest Corp., 382 N.W.2d 290, 292 (Minn. Ct. App. 1986) ("Statements in an employee handbook may become enforceable as part of an employment agreement if the requirements for formation of a unilateral contract are met"). Therefore, care must be exercised to ensure that subsequent policy statements which are disseminated to employees have the intended effect.
Promissory estoppel is an equitable remedy that implies a contract in law where none exists in fact.Grouse v. Group Health Plan, 306 N.W.2d 114, 116 (Minn. 1981). Thus, even when there is no contract, a party may be entitled to contract damages if he/she can establish that:
A party made a clear and definite promise;
The party intended to induce reliance by its promise;
Reliance occurred; and
The promise must be enforced in order to prevent an injustice.
Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369 (Minn. 1995); Grouse, 306 N.W.2d at 116. As with a breach of contract action, there must be a clear and definite promise. Promissory estoppel cannot be claimed, however, if there is an expressed contract already in existence. Frey v. Ramsey County Community Human Services, 517 N.W.2d 591 (Minn. Ct. App. 1994).
Negligent Hiring, Retention And Supervision Of Employees
In order to prove a claim based upon negligence, it is necessary for the employee to establish:
The existence of a duty;
A breach of said duty; and
Damages caused directly by the breach.
Generally speaking, in order to prove negligent hiring of an employee, the plaintiff must show that the employer knew or should have known that its employee had a propensity to injure others, that the employer nonetheless hired and placed the employee in a position where the threat of injury was foreseeable, and injury occurred. Yunker v. Honeywell, Inc., 496 N.W.2d 419 (Minn. Ct. App. 1993). See also, Leidig v. Honeywell, 850 F. Supp. 796 (D. Minn.1994) (claims dismissed because employee did not sustain physical injury.)
The Minnesota Court of Appeals has limited an employer's liability under the negligent hiring theory to cases where the employee committed an intentional act which caused injury to a third party. Bruchas v. Preventive Care, Inc., 553 N.W.2d 440 (Minn. Ct. App. 1996). Another significant limitation on the theory of negligent hiring is the requirement of a breach of the duty owed to the third party. In P.L. v. Aubert, 545 N.W.2d 666 (Minn. 1996), a high school student was sexually abused by his teacher. He sued the school district alleging negligent hiring. The district court dismissed the complaint. While the school district did not contest that it owed a duty to the student, it presented evidence that no duty was breached since the teacher had a valid license, good academic credentials, and excellent references. The Court stated:
A school district cannot be held liable for actions that are not foreseeable when reasonable measures of supervision are employed to insure adequate educational duties are being performed by the teachers, and there is adequate consideration being given for the safety and welfare of all students in the school. The safety and welfare of the students in a school setting is paramount. However, in this case, closer vigilance would not have uncovered the relationship because both participants worked hard to conceal it.
Id. at 668. Therefore, the Court concluded, no duty was breached. For this reason, the Court reinstated the summary judgment granted by the trial court.
For causes of action based on negligent supervision or retention the elements are similar. In order to state a cause of action, it must be established that (1) the employer knew or should have known that the employee posed a risk; (2) the employer failed to take action against such risk; and (3) the employee's unfitness caused injury to the plaintiff. Yunker v. Honeywell, Inc., 496 N.W.2d 419, 422 (Minn. Ct. App. 1993) review denied April 20, 1993; citing Ponticus v. K.M.S. Investments, 331 N.W.2d 907, 911 (Minn 1983).
THE UNFAIR CLAIMS PRACTICES ACT & BAD FAITH CLAIMS
Minnesota's Unfair Claims Practices Act ("UCPA") authorizes the Commissioner of Commerce to impose administrative remedies, including fines, on insurers for various unfair claims handling practices. Minn. Stat. §§ 72A.20 and 72A.201, located in the Appendix, outline the prohibited conduct. The express purpose of the UCPA is to regulate trade practices in the business of insurance. The UCPA provides for administrative enforcement and does not permit first party bad faith claims against insurers. Morris v. American Family Mut. Ins. Co., 386 N.W.2d 283 (Minn. 1986).
Further, it is well settled in Minnesota that an injured third party claimant is not privy to the insurance contract and cannot sue an insurer directly for failure to pay a claim but must first obtain a judgment against the insured. Rinn v. Transit Casualty Co., 322 N.W.2d 357, 358 (Minn.1982); Miller v. Market Men's Mutual Insurance Co., 115 N.W.2d 266 (1962). If an insurer fails to settle in good faith with a third-party claimant, the insured can bring a bad faith action against the insurer; further, the claimant can take an assignment of the insured's bad faith claim and maintain the insured's action against the insurer. Strand v. Travelers Insurance Co., 219 N.W.2d 622 (1974). Minnesota common law follows the traditional rule that a bad faith breach of contract does not convert a breach of contract into a tort, Haagenson v. National Farmers Union Property & Casualty Co., 277 N.W.2d 648, 652 (Minn.1979). Consequently, a first party insured cannot recover punitive damages in a breach of contract action against an insurer in the absence of some independent tort. Minnesota-Iowa Television Co. v. Watonwan T.V. Improvement Association, 294 N.W.2d 297, 309 (Minn.1980)..
1 Rates for prior calendar years are as follows: 2001 - 6%; 2000 - 5%; 1999 - 4%; 1998 - 5%; 1997 - 5%; 1995 - 6%; 1994 - 3%; 1993 - 4%; 1992 - 5%; 1991 - 7%; 1990 - 7%. The rate for 2002 has not been announced. BACK
Minn. Stat. § 72A.20 - Methods, acts, and practices which are defined as unfair or deceptive
Minn. Stat. § 72A.201 - Regulation of claims practices
Minn. Stat. § 256B.37 - Private insurance policies, causes of action
Minn. Stat. § 65B.525 - Arbitration procedure; rules of court
Minn. Stat. § 514.981 - Medical assistance lien
Minn. Stat. § 544.41 - Product liability; limit on liability of non-manufacturers
Minn. Stat. § 548.36 - Collateral source calculations
Minn. Stat. § 549.09 - Interest on verdicts, awards, and judgments
Minn. Stat. § 549.20 - Punitive damages
Minn. Stat. § 549.191 - Claim for punitive damages
Minn. Stat. § 572.08 - Validity of arbitration agreements, application to specific agreements
Minn. Stat. § 572.09 - Procedure to compel or stay arbitration
Minn. Stat. § 572.16 - Change of award by arbitrators
Minn. Stat. § 572.18 - Confirmation of an award
Minn. Stat. § 572.19 - Vacating an award
Minn. Stat. § 572.20 - Modification or correction of award
Minn. Stat. § 572.26 - Appeals
Minn. Stat. § 604.01 - Comparative fault; effect
Minn. Stat. § 176.061 - Third party liability
Minnesota Rule of Civil Procedure 11
Minnesota Rule of Civil Procedure 68
Rule of Professional Conduct 3.1
604.01 Comparative fault; effect
Subdivision 1. Scope of application. Contributory fault does not bar recovery in an action by any person or the person's legal representative to recover damages for fault resulting in death, in injury to person or property, or in economic loss, if the contributory fault was not greater than the fault of the person against whom recovery is sought, but any damages allowed must be diminished in proportion to the amount of fault attributable to the person recovering. The court may, and when requested by any party shall, direct the jury to find separate special verdicts determining the amount of damages and the percentage of fault attributable to each party and the court shall then reduce the amount of damages in proportion to the amount of fault attributable to the person recovering.
Subd. 1a. Fault. "Fault" includes acts or omissions that are in any measure negligent or reckless toward the person or property of the actor or others, or that subject a person to strict tort liability. The term also includes breach of warranty, unreasonable assumption of risk not constituting an express consent or primary assumption of risk, misuse of a product and unreasonable failure to avoid an injury or to mitigate damages, and the defense of complicity under section 340A.801. Legal requirements of causal relation apply both to fault as the basis for liability and to contributory fault. The doctrine of last clear chance is abolished.
Evidence of unreasonable failure to avoid aggravating an injury or to mitigate damages may be considered only in determining the damages to which the claimant is entitled. It may not be considered in determining the cause of an accident.
Subd. 2. Personal injury or death; settlement or payment. Settlement with or any payment made to an injured person or to others on behalf of such injured person with the permission of such injured person or to anyone entitled to recover damages on account of injury or death of such person shall not constitute an admission of liability by the person making the payment or on whose behalf payment was made.
Subd. 3. Property damage or economic loss; settlement or payment. Settlement with or any payment made to a person or on the person's behalf to others for damage to or destruction of property or for economic loss does not constitute an admission of liability by the person making the payment or on whose behalf the payment was made.
Subd. 4. Settlement or payment; admissibility of evidence. Except in an action in which settlement and release has been pleaded as a defense, any settlement or payment referred to in subdivisions 2 and 3 shall be inadmissible in evidence on the trial of any legal action.
Subd. 5. Credit for settlements and payments; refund. All settlements and payments made under subdivisions 2 and 3 shall be credited against any final settlement or judgment; provided however that in the event that judgment is entered against the person seeking recovery or if a verdict is rendered for an amount less than the total of any such advance payments in favor of the recipient thereof, such person shall not be required to refund any portion of such advance payments voluntarily made. Upon motion to the court in the absence of a jury and upon proper proof thereof, prior to entry of judgment on a verdict, the court shall first apply the provisions of subdivision 1 and then shall reduce the amount of the damages so determined by the amount of the payments previously made to or on behalf of the person entitled to such damages.
466.04. Maximum liability
Subdivision 1. Limits; punitive damages. (a) Liability of any municipality on any claim within the scope of sections 466.01 to 466.15 shall not exceed:
(1) $300,000 when the claim is one for death by wrongful act or omission and $300,000 to any claimant in any other case;
(2) $750,000 for any number of claims arising out of a single occurrence, for claims arising on or after January 1, 1998, and before January 1, 2000;
(3) $1,000,000 for any number of claims arising out of a single occurrence, for claims arising on or after January 1, 2000; or
(4) twice the limits provided in clauses (1) to (3) when the claim arises out of the release or threatened release of a hazardous substance, whether the claim is brought under sections 115B.01 to 115B.15 or under any other law.
(b) No award for damages on any such claim shall include punitive damages.
Subd. 1a. Officers and employees. The liability of an officer or an employee of any municipality for a tort arising out of an alleged act or omission occurring in the performance of duty shall not exceed the limits set forth in subdivision 1, unless the officer or employee provides professional services and also is employed in the profession for compensation by a person or persons other than the municipality.
Subd. 1b. Total claim. The total liability of the municipality on a claim against it and against its officers or employees arising out of a single occurrence shall not exceed the limits set forth in subdivision 1.
Subd. 2. Inclusions. The limitation imposed by this section on individual claimants includes damages claimed for loss of services or loss of support arising out of the same tort.
Subd. 3. Disposition of multiple claims. Where the amount awarded to or settled upon multiple claimants exceeds the applicable limit under subdivision 1, paragraph (a), clauses (2) to (4), any party may apply to any district court to apportion to each claimant a proper share of the total amount limited by subdivision 1. The share apportioned each claimant shall be in the proportion that the ratio of the award or settlement made to each bears to the aggregate awards and settlements for all claims arising out of the occurrence.
548.36. Collateral source calculations
Subdivision 1. Definition. For purposes of this section, "collateral sources" means payments related to the injury or disability in question made to the plaintiff, or on the plaintiff's behalf up to the date of the verdict, by or pursuant to:
(1) a federal, state, or local income disability or workers' compensation act; or other public program providing medical expenses, disability payments, or similar benefits;
(2) health, accident and sickness, or automobile accident insurance or liability insurance that provides health benefits or income disability coverage; except life insurance benefits available to the plaintiff, whether purchased by the plaintiff or provided by others, payments made pursuant to the United States Social Security Act, or pension payments;
(3) a contract or agreement of a group, organization, partnership, or corporation to provide, pay for, or reimburse the costs of hospital, medical, dental or other health care services; or
(4) a contractual or voluntary wage continuation plan provided by employers or any other system intended to provide wages during a period of disability, except benefits received from a private disability insurance policy where the premiums were wholly paid for by the plaintiff.
Subd. 2. Motion. In a civil action, whether based on contract or tort, when liability is admitted or is determined by the trier of fact, and when damages include an award to compensate the plaintiff for losses available to the date of the verdict by collateral sources, a party may file a motion within ten days of the date of entry of the verdict requesting determination of collateral sources. If the motion is filed, the parties shall submit written evidence of, and the court shall determine:
(1) amounts of collateral sources that have been paid for the benefit of the plaintiff or are otherwise available to the plaintiff as a result of losses except those for which a subrogation right has been asserted; and
(2) amounts that have been paid, contributed, or forfeited by, or on behalf of, the plaintiff or members of the plaintiff's immediate family for the two-year period immediately before the accrual of the action to secure the right to a collateral source benefit that the plaintiff is receiving as a result of losses.
Subd. 3. Duties of the court. (a) The court shall reduce the award by the amounts determined under subdivision 2, clause (1), and offset any reduction in the award by the amounts determined under subdivision 2, clause (2).
(b) If the court cannot determine the amounts specified in paragraph (a) from the written evidence submitted, the court may within ten days request additional written evidence or schedule a conference with the parties to obtain further evidence.
(c) In any case where the claimant is found to be at fault under section 604.01, reduction required under paragraph (a) must be made before the claimant's damages are reduced under section 604.01, subdivision 1.
Subd. 4. Calculation of attorneys' fees. If the fees for legal services provided to the plaintiff are based on a percentage of the amount of money awarded to the plaintiff, the percentage must be based on the amount of the award as adjusted under subdivision 3. Any subrogated provider of a collateral source not separately represented by counsel shall pay the same percentage of attorneys' fees as paid by the plaintiff and shall pay its proportionate share of the costs.
Subd. 5. Jury not informed of collateral sources. The jury shall not be informed of the existence of collateral sources or any future benefits which may or may not be payable to the plaintiff.
544.41. Product liability; limit on liability of non-manufacturers
Subdivision 1. In any product liability action based in whole or in part on strict liability in tort commenced or maintained against a defendant other than the manufacturer, that party shall upon answering or otherwise pleading file an affidavit certifying the correct identity of the manufacturer of the product allegedly causing injury, death or damage. The commencement of a product liability action based in whole or part on strict liability in tort against a certifying defendant shall toll the applicable statute of limitation relative to the defendant for purposes of asserting a strict liability in tort cause of action.
Subd. 2. Once the plaintiff has filed a complaint against a manufacturer and the manufacturer has or is required to have answered or otherwise pleaded, the court shall order the dismissal of a strict liability in tort claim against the certifying defendant, provided the certifying defendant is not within the categories set forth in subdivision 3. Due diligence shall be exercised by the certifying defendant in providing the plaintiff with the correct identity of the manufacturer and due diligence shall be exercised by the plaintiff in filing a law suit and obtaining jurisdiction over the manufacturer.
The plaintiff may at any time subsequent to dismissal move to vacate the order of dismissal and reinstate the certifying defendant, provided plaintiff can show one of the following:
(a) That the applicable statute of limitation bars the assertion of a strict liability in tort cause of action against the manufacturer of the product allegedly causing the injury, death or damage;
(b) That the identity of the manufacturer given to the plaintiff by the certifying defendant was incorrect. Once the correct identity of the manufacturer has been given by the certifying defendant the court shall again dismiss the certifying defendant;
(c) That the manufacturer no longer exists, cannot be subject to the jurisdiction of the courts of this state, or, despite due diligence, the manufacturer is not amenable to service of process;
(d) That the manufacturer is unable to satisfy any judgment as determined by the court; or
(e) That the court determines that the manufacturer would be unable to satisfy a reasonable settlement or other agreement with plaintiff.
Subd. 3. A court shall not enter a dismissal order relative to any certifying defendant even though full compliance with subdivision 1 has been made where the plaintiff can show one of the following:
(a) That the defendant has exercised some significant control over the design or manufacture of the product, or has provided instructions or warnings to the manufacturer relative to the alleged defect in the product which caused the injury, death or damage;
(b) That the defendant had actual knowledge of the defect in the product which caused the injury, death or damage; or
(c) That the defendant created the defect in the product which caused the injury, death or damage.
Subd. 4. Nothing contained in subdivisions 1 to 3 shall be construed to create a cause of action in strict liability in tort or based on other legal theory, or to affect the right of any person to seek and obtain indemnity or contribution.
549.191. Claim for punitive damages
Upon commencement of a civil action, the complaint must not seek punitive damages. After filing the suit a party may make a motion to amend the pleadings to claim punitive damages. The motion must allege the applicable legal basis under section 549.20 or other law for awarding punitive damages in the action and must be accompanied by one or more affidavits showing the factual basis for the claim. At the hearing on the motion, if the court finds prima facie evidence in support of the motion, the court shall grant the moving party permission to amend the pleadings to claim punitive damages. For purposes of tolling the statute of limitations, pleadings amended under this section relate back to the time the action was commenced.
549.20. Punitive damages
Subdivision 1. (a) Punitive damages shall be allowed in civil actions only upon clear and convincing evidence that the acts of the defendant show deliberate disregard for the rights or safety of others.
(b) A defendant has acted with deliberate disregard for the rights or safety of others if the defendant has knowledge of facts or intentionally disregards facts that create a high probability of injury to the rights or safety of others and:
(1) deliberately proceeds to act in conscious or intentional disregard of the high degree of probability of injury to the rights or safety of others; or
(2) deliberately proceeds to act with indifference to the high probability of injury to the rights or safety of others.
Subd. 2. Punitive damages can properly be awarded against a master or principal because of an act done by an agent only if:
(a) the principal authorized the doing and the manner of the act, or
(b) the agent was unfit and the principal deliberately disregarded a high probability that the agent was unfit, or
(c) the agent was employed in a managerial capacity with authority to establish policy and make planning level decisions for the principal and was acting in the scope of that employment, or
(d) the principal or a managerial agent of the principal, described in clause (c), ratified or approved the act while knowing of its character and probable consequences.
Subd. 3. Any award of punitive damages shall be measured by those factors which justly bear upon the purpose of punitive damages, including the seriousness of hazard to the public arising from the defendant's misconduct, the profitability of the misconduct to the defendant, the duration of the misconduct and any concealment of it, the degree of the defendant's awareness of the hazard and of its excessiveness, the attitude and conduct of the defendant upon discovery of the misconduct, the number and level of employees involved in causing or concealing the misconduct, the financial condition of the defendant, and the total effect of other punishment likely to be imposed upon the defendant as a result of the misconduct, including compensatory and punitive damage awards to the plaintiff and other similarly situated persons, and the severity of any criminal penalty to which the defendant may be subject.
Subd. 4. Separate proceeding. In a civil action in which punitive damages are sought, the trier of fact shall, if requested by any of the parties, first determine whether compensatory damages are to be awarded. Evidence of the financial condition of the defendant and other evidence relevant only to punitive damages is not admissible in that proceeding. After a determination has been made, the trier of fact shall, in a separate proceeding, determine whether and in what amount punitive damages will be awarded.
Subd. 5. Judicial review. The court shall specifically review the punitive damages award in light of the factors set forth in subdivision 3 and shall make specific findings with respect to them. The appellate court, if any, also shall review the award in light of the factors set forth in that subdivision. Nothing in this section may be construed to restrict either court's authority to limit punitive damages.
572.08. Validity of arbitration agreements, application to specific agreements
A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. The provisions of sections 572.08 to 572.30 shall apply to controversies arising out of any contract for the construction or repair of state trunk highways when such contract specifically provides for arbitration or when the parties agree to submit an existing controversy to arbitration. Sections 572.08 to 572.30 also apply to arbitration agreements between employers and employees or between their respective representatives unless otherwise provided in the agreement.
572.09. Procedure to compel or stay arbitration
(a) On application of a party showing an agreement described in section 572.08, and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.
(b) On application, the court may stay an arbitration proceeding commenced or threatened on a showing that there is no agreement to arbitrate. Such an issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. If found for the opposing party, the court shall order the parties to proceed to arbitration.
(c) If an issue referable to arbitration under the alleged agreement is in an action or proceeding pending in a court having jurisdiction to hear applications under clause (a), the application shall be made therein. Otherwise and subject to section 572.25, the application may be made in any court of competent jurisdiction.
(d) Any action or proceeding involving an issue subject to arbitration shall be stayed if an order for arbitration or an application therefor has been made under this section or, if the issue is severable, the stay may be with respect thereto only. When the application is made in such action or proceeding, the order for arbitration shall include such stay.
(e) An order for arbitration shall not be refused on the ground that the claim in issue lacks merit or bona fides or because any fault or grounds for the claim sought to be arbitrated have not been shown.
572.16. Change of award by arbitrators
Subdivision 1. Application of party. On application of a party, the arbitrator may modify or correct the award:
(1) upon the grounds stated in section 572.20, subdivision 1;
(2) for the purpose of clarifying the award; or
(3) where the award is based on an error of law.
Subd. 2. Submission by court. If an application to the court is pending under section 572.18, 572.19, or 572.20, on submission to the arbitrators by the court under such conditions as the court may order, the arbitrators may modify or correct the award upon the grounds stated in section 572.20, subdivision 1, or for the purpose of clarifying the award.
Subd. 3. Procedure. For purposes of subdivision 1 or 2, the application shall be made within 20 days after delivery of the award to the applicant. Written notice thereof shall be given forthwith to the opposing party, stating that the opposing party must serve objections thereto, if any, within ten days from the notice. The award so modified or corrected is subject to the provisions of sections 572.18, 572.19 and 572.20.
572.18. Confirmation of an award
Upon application of a party, the court shall confirm an award, unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award, in which case the court shall proceed as provided in sections 572.19 and 572.20.
572.19. Vacating an award
Subdivision 1. Upon application of a party, the court shall vacate an award where:
(1) The award was procured by corruption, fraud or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of section 572.12, as to prejudice substantially the rights of a party; or
(5) There was no arbitration agreement and the issue was not adversely determined in proceedings under section 572.09 and the party did not participate in the arbitration hearing without raising the objection;
But the fact that the relief was such that it could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm the award.
Subd. 2. An application under this section shall be made within 90 days after delivery of a copy of the award to the applicant, except that, if predicated upon corruption, fraud or other undue means, it shall be made within 90 days after such grounds are known or should have been known.
Subd. 3. In vacating the award on grounds other than stated in clause (5) of subdivision 1, the court may order a rehearing before new arbitrators chosen as provided in the agreement, or in the absence thereof, by the court in accordance with section 572.10, or, if the award is vacated on grounds set forth in clauses (3) and (4) of subdivision 1, the court may order a rehearing before the arbitrators who made the award or their successors appointed in accordance with section 572.10. The time within which the agreement requires the award to be made is applicable to the rehearing and commences from the date of the order.
Subd. 4. If the application to vacate is denied and no motion to modify or correct the award is pending, the court shall confirm the award.
572.20. Modification or correction of award
Subdivision 1. Upon application made within 90 days after delivery of a copy of the award to the applicant, the court shall modify or correct the award where:
(1) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;
(2) The arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or
(3) The award is imperfect in a matter of form, not affecting the merits of the controversy.
Subd. 2. If the application is granted, the court shall modify and correct the award so as to effect its intent and shall confirm the award as so modified and corrected. Otherwise, the court shall confirm the award as made.
Subd. 3. An application to modify or correct an award may be joined in the alternative with an application to vacate the award.
Subdivision 1. An appeal may be taken from:
(1) An order denying an application to compel arbitration made under section 572.09;
(2) An order granting an application to stay arbitration made under section 572.09(b);
(3) An order confirming or denying confirmation of an award;
(4) An order modifying or correcting an award;
(5) An order vacating an award without directing a rehearing; or
(6) A judgment or decree entered pursuant to the provisions of this chapter.
Subd. 2. The appeal shall be taken in the manner and to the same extent as from orders or judgments in a civil action.
176.061. Third party liability
Subdivision 1. Election of remedies. If an injury or death for which benefits are payable occurs under circumstances which create a legal liability for damages on the part of a party other than the employer and at the time of the injury or death that party was insured or self-insured in accordance with this chapter, the employee, in case of injury, or the employee's dependents, in case of death, may proceed either at law against that party to recover damages or against the employer for benefits, but not against both.
Subd. 2. Action for recovery of damages. If the employee, in case of injury, or the employee's dependents, in case of death, brings an action for the recovery of damages, the amount of the damages, the manner in which they are paid, and the persons to whom they are payable, are as provided in this chapter. In no case shall the party be liable to any person other than the employee or the employee's dependents for any damages resulting from the injury or death.
Subd. 3. Election to receive benefits from employer; subrogation. If the employee or the employee's dependents elect to receive benefits from the employer, or the special compensation fund, the employer or the special compensation fund has a right of indemnity or is subrogated to the right of the employee or the employee's dependents to recover damages against the other party. The employer, or the attorney general on behalf of the special compensation fund, may bring legal proceedings against the party and recover the aggregate amount of benefits payable to or on behalf of the employee or the employee's dependents, regardless of whether such benefits are recoverable by the employee or the employee's dependents at common law or by statute together with costs, disbursements, and reasonable attorney's fees of the action.
If an action as provided in this chapter is prosecuted by the employee, the employer, or the attorney general on behalf of the special compensation fund, against the third person, and results in judgment against the third person, or settlement by the third person, the employer has no liability to reimburse or hold the third person harmless on the judgment or settlement in absence of a written agreement to do so executed prior to the injury.
Subd. 4. Application of subdivisions 1, 2, and 3. The provisions of subdivisions 1, 2, and 3 apply only if the employer liable for benefits and the other party legally liable for damages are insured or self-insured and engaged, in the due course of business in, (a) furtherance of a common enterprise, or (b) in the accomplishment of the same or related purposes in operations on the premises where the injury was received at the time of the injury.
Subd. 5. Cumulative remedies. If an injury or death for which benefits are payable is caused under circumstances which created a legal liability for damages on the part of a party other than the employer, that party being then insured or self-insured in accordance with this chapter, and the provisions of subdivisions 1, 2, 3, and 4 do not apply, or the party other than the employer is not then insured or self-insured as provided by this chapter, legal proceedings may be taken by the employee or the employee's dependents in accordance with clause (a), or by the employer, or by the attorney general on behalf of the special compensation fund, in accordance with clause (b), against the other party to recover damages, notwithstanding the payment of benefits by the employer or the special compensation fund or their liability to pay benefits.
(a) If an action against the other party is brought by the injured employee or the employee's dependents and a judgment is obtained and paid or settlement is made with the other party, the employer or the special compensation fund may deduct from the benefits payable the amount actually received by the employee or dependents or paid on their behalf in accordance with subdivision 6. If the action is not diligently prosecuted or if the court deems it advisable in order to protect the interests of the employer or the special compensation fund, upon application the court may grant the employer or the special compensation fund the right to intervene in the action for the prosecution of the action. If the injured employee or the employee's dependents or any party on their behalf receives benefits from the employer or the special compensation fund or institutes proceedings to recover benefits or accepts from the employer or the special compensation fund any payment on account of the benefits, the employer or the special compensation fund is subrogated to the rights of the employee or the employee's dependents or has a right of indemnity against a third party regardless of whether such benefits are recoverable by the employee or the employee's dependents at common law or by statute. The employer or the attorney general on behalf of the special compensation fund may maintain a separate action or continue an action already instituted. This action may be maintained in the name of the employee or the names of the employee's dependents, or in the name of the employer, or in the name of the attorney general on behalf of the special compensation fund, against the other party for the recovery of damages. If the action is not diligently prosecuted by the employer or the attorney general on behalf of the special compensation fund, or if the court deems it advisable in order to protect the interest of the employee, the court, upon application, may grant to the employee or the employee's dependents the right to intervene in the action for the prosecution of the action. The proceeds of the action or settlement of the action shall be paid in accordance with subdivision 6.
(b) If an employer, being then insured, sustains damages due to a change in workers' compensation insurance premiums, whether by a failure to achieve a decrease or by a retroactive or prospective increase, as a result of the injury or death of an employee which was caused under circumstances which created a legal liability for damages on the part of a party other than the employer, the employer, notwithstanding other remedies provided, may maintain an action against the other party for recovery of the premiums. This cause of action may be brought either by joining in an action described in clause (a) or by a separate action. Damages recovered under this clause are for the benefit of the employer and the provisions of subdivision 6 are not applicable to the damages.
(c) The third party is not liable to any person other than the employee or the employee's dependents, or the employer, or the special compensation fund, for any damages resulting from the injury or death.
A coemployee working for the same employer is not liable for a personal injury incurred by another employee unless the injury resulted from the gross negligence of the coemployee or was intentionally inflicted by the coemployee.
Subd. 6. Costs, attorney fees, expenses. The proceeds of all actions for damages or of a settlement of an action under this section, except for damages received under subdivision 5, clause (b) received by the injured employee or the employee's dependents or by the employer or the special compensation fund, as provided by subdivision 5, shall be divided as follows:
(a) After deducting the reasonable cost of collection, including but not limited to attorneys fees and burial expense in excess of the statutory liability, then
(b) One-third of the remainder shall in any event be paid to the injured employee or the employee's dependents, without being subject to any right of subrogation.
(c) Out of the balance remaining, the employer or the special compensation fund shall be reimbursed in an amount equal to all benefits paid under this chapter to or on behalf of the employee or the employee's dependents by the employer or special compensation fund, less the product of the costs deducted under clause (a) divided by the total proceeds received by the employee or dependents from the other party multiplied by all benefits paid by the employer or the special compensation fund to the employee or the employee's dependents.
(d) Any balance remaining shall be paid to the employee or the employee's dependents, and shall be a credit to the employer or the special compensation fund for any benefits which the employer or the special compensation fund is obligated to pay, but has not paid, and for any benefits that the employer or the special compensation fund is obligated to make in the future.
There shall be no reimbursement or credit to the employer or to the special compensation fund for interest or penalties.
Subd. 7. Medical treatment. The liability of an employer or the special compensation fund for medical treatment or payment of any other compensation under this chapter is not affected by the fact that the employee was injured through the fault or negligence of a third party, against whom the employee may have a cause of action which may be sued under this chapter, but the employer, or the attorney general on behalf of the special compensation fund, has a separate additional cause of action against the third party to recover any amounts paid for medical treatment or for other compensation payable under this section resulting from the negligence of the third party regardless of whether such other compensation is recoverable by the employee or the employee's dependents at common law or by statute. This separate cause of action of the employer or the attorney general on behalf of the special compensation fund may be asserted in a separate action brought by the employer or the attorney general on behalf of the special compensation fund against the third party, or in the action commenced by the employee or the employer or the attorney general on behalf of the special compensation fund under this chapter, but in the latter case the cause of action shall be separately stated, the amount awarded in the action shall be separately set out in the verdict, and the amount recovered by suit or otherwise as reimbursement for medical expenses or other compensation shall be for the benefit of the employer or the special compensation fund to the extent that the employer or the special compensation fund has paid or will be required to pay compensation or pay for medical treatment of the injured employee and does not affect the amount of periodic compensation to be paid.
Subd. 8. Repealed by amendment, Laws 1983, c. 290, § 35, eff. July 1, 1983.
Subd. 8a. Notice to employer. In every case arising under subdivision 5, a settlement between the third party and the employee is not valid unless prior notice of the intention to settle is given to the employer within a reasonable time. If the employer or insurer pays compensation to the employee under the provisions of this chapter and becomes subrogated to the right of the employee or the employee's dependents or has a right of indemnity, any settlement between the employee or the employee's dependents and the third party is void as against the employer's right of subrogation or indemnity. When an action at law is instituted by an employee or the employee's dependents against a third party for recovery of damages, a copy of the complaint and notice of trial or note of issue in the action shall be served on the employer or insurer. Any judgment rendered in the action is subject to a lien of the employer for the amount to which it is entitled to be subrogated or indemnified under the provisions of subdivision 5.
Subd. 9. Service of notice on attorney general. In every case in which the state is liable to pay compensation or is subrogated to the rights of the employee or the employee's dependents or has a right of indemnity, all notices required to be given the state shall be served on the attorney general and the commissioner.
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, regardless of whether such compensation is recoverable by the employee or the employee's dependents at common law or by statute, including temporary total compensation, temporary partial compensation, permanent partial compensation, medical compensation, rehabilitation, death, and permanent total compensation.
Subd. 11. Right of contribution. To the extent the employer has fault, separate from the fault of the injured employee to whom workers' compensation benefits are payable, any nonemployer third party who is liable has a right of contribution against the employer in an amount proportional to the employer's percentage of fault but not to exceed the net amount the employer recovered pursuant to subdivision 6, paragraphs (c) and (d). The employer may avoid contribution exposure by affirmatively waiving, before selection of the jury, the right to recover workers' compensation benefits paid and payable, thus removing compensation benefits from the damages payable by any third party.
Procedurally, if the employer waives or settles the right to recover workers' compensation benefits paid and payable, the employee or the employee's dependents have the option to present all common law or wrongful death damages whether they are recoverable under the Workers' Compensation Act or not. Following the verdict, the trial court will deduct any awarded damages that are duplicative of workers' compensation benefits paid or payable.
65B.525. Arbitration procedure; rules of court
Subdivision 1. Except as otherwise provided in section 72A.327, the supreme court and the several courts of general trial jurisdiction of this state shall by rules of court or other constitutionally allowable device, provide for the mandatory submission to binding arbitration of all cases at issue where the claim at the commencement of arbitration is in an amount of $10,000 or less against any insured's reparation obligor for no-fault benefits or comprehensive or collision damage coverage.
Subdivision 2. The rules of court may provide that cases which are not at issue, whether or not suit has been filed, may be referred to arbitration by agreement of reference signed by counsel for both sides, or by the parties themselves. Such agreement of reference shall define the issues to be arbitrated and, shall also contain any stipulations with respect to facts submitted or agreed or defenses waived. In such cases, the agreement of reference shall take the place of the pleadings in the case and be filed of record.
RULE 11. SIGNING OF PLEADINGS, MOTIONS AND OTHER PAPERS; SANCTIONS
Every pleading, motion and other paper of a party represented by an attorney shall be personally signed by at least one attorney of record in the attorney's individual name and shall state the attorney's address, telephone number, and attorney registration number. A party who is not represented by an attorney shall personally sign the pleading, motion or other paper and state the pleader's address and telephone number. Except when otherwise specifically provided by rule or statute, pleadings need not be verified by affidavit or accompanied by affidavit. The signature of an attorney or party constitutes a certification that the pleading, motion or other paper has been read; that to the best of the signer's knowledge, information and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If a pleading, motion or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion or other paper, including reasonable attorney fees.
RULE 68. OFFER OF JUDGMENT OR SETTLEMENT
At any time prior to 10 days before the trial begins, any party may serve upon an adverse party an offer to allow judgment to be entered to the effect specified in the offer or to pay or accept a specified sum of money, with costs and disbursements then accrued, either as to the claim of the offering party against the adverse party or as to the claim of the adverse party against the offering party. Acceptance of the offer shall be made by service of written notice of acceptance within 10 days after service of the offer. If the offer is not accepted within the 10-day period, it is deemed withdrawn. During the 10-day period the offer is irrevocable. If the offer is accepted, either party may file the offer and the notice of acceptance, together with the proof of service thereof, and thereupon the court administrator shall enter judgment. An offer not accepted is not admissible, except in a proceeding to determine costs and disbursements. If the judgment finally entered is not more favorable to the offeree than the offer, the offeree must pay the offeror's costs and disbursements. The fact that an offer is made but not accepted does not preclude a subsequent offer.
RULE 3.1 MERITORIOUS CLAIMS AND CONTENTIONS
A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law. A lawyer for the defendant in a criminal proceeding, or the respondent in a proceeding that could result in incarceration, may nevertheless so defend the proceeding as to require that every element of the case be established.
Comment -- 1985
The advocate has a duty to use legal procedure for the fullest benefits of the client's cause, but also a duty not to abuse legal procedure. The law, both procedural and substantive, establishes the limits within which an advocate may proceed. However, the law is not always clear and never is static. Accordingly, in determining the proper scope of advocacy, account must be taken of the law's ambiguities and potential for change.
The filing of an action or defense or similar action taken for a client is not frivolous merely because the facts have not first been fully substantiated or because the lawyer expects to develop vital evidence only by discovery. Such action is not frivolous even though the lawyer believes that the client's position ultimately will not prevail. The action is frivolous, however, if the client desires to have the action taken primarily for the purpose of harassing or maliciously injuring a person or if the lawyer is unable either to make a good faith argument on the merits of the action taken or to support the action taken by a good faith argument for an extension, modification or reversal of existing law.
514.981. Medical assistance lien
Subdivision 1. Property subject to lien; lien amount. (a) Subject to sections 514.980 to 514.985, payments made by a medical assistance agency to provide medical assistance benefits to a medical assistance recipient who owns property in this state or to the recipient's spouse constitute a lien in favor of the agency upon all real property that is owned by the medical assistance recipient on or after the time when the recipient is institutionalized.
(b) The amount of the lien is limited to the same extent as a claim against the estate under section 256B.15, subdivision 2.
Subd. 2. Attachment. (a) A medical assistance lien attaches and becomes enforceable against specific real property as of the date when the following conditions are met:
(1) payments have been made by an agency for a medical assistance benefit;
(2) notice and an opportunity for a hearing have been provided under paragraph (b);
(3) a lien notice has been filed as provided in section 514.982;
(4) if the property is registered property, the lien notice has been memorialized on the certificate of title of the property affected by the lien notice; and
5) all restrictions against enforcement have ceased to apply.
(b) An agency may not file a medical assistance lien notice until the medical assistance recipient and the recipient's spouse or their legal representatives have been sent, by certified or registered mail, written notice of the agency's lien rights and there has been an opportunity for a hearing under section 256.045. In addition, the agency may not file a lien notice unless the agency determines as medically verified by the recipient's attending physician that the medical assistance recipient cannot reasonably be expected to be discharged from a medical institution and return home.
(c) An agency may not file a medical assistance lien notice against real property while it is the home of the recipient's spouse.
(d) An agency may not file a medical assistance lien notice against real property that was the homestead of the medical assistance recipient or the recipient's spouse when the medical assistance recipient received medical institution services if any of the following persons are lawfully residing in the property:
(1) a child of the medical assistance recipient if the child is under age 21 or is blind or permanently and totally disabled according to the supplemental security income criteria;
(2) a child of the medical assistance recipient if the child resided in the homestead for at least two years immediately before the date the medical assistance recipient received medical institution services, and the child provided care to the medical assistance recipient that permitted the recipient to live without medical institution services; or
(3) a sibling of the medical assistance recipient if the sibling has an equity interest in the property and has resided in the property for at least one year immediately before the date the medical assistance recipient began receiving medical institution services.
(e) A medical assistance lien applies only to the specific real property described in the lien notice.
Subd. 3. Continuation of lien notice and lien. A medical assistance lien notice remains effective from the time it is filed until it can be disregarded under sections 514.980 to 514.985. A medical assistance lien that has attached to specific real property continues until the lien is satisfied, becomes unenforceable under subdivision 6, or is released and discharged under subdivision 5.
Subd. 4. Lien priority. A medical assistance lien that attaches to specific real property is subject to the rights of any other person whose interest in the real property is perfected before a lien notice has been filed under section 514.982, including:
(a) an owner, other than the recipient or recipient's spouse;
(b) a purchaser;
(c) a holder of a mortgage or security interest; or
(d) a judgment lien creditor.
The rights of the other person have the same protections against a medical assistance lien as are afforded against a judgment lien that arises out of an unsecured obligation and that arises as of the time of the filing of the medical assistance lien notice under section 514.982. A medical assistance lien is inferior to a lien for taxes or special assessments or other lien that would be superior to the perfected lien of a judgment creditor.
Subd. 5. Release. (a) An agency that files a medical assistance lien notice shall release and discharge the lien in full if:
(1) the medical assistance recipient is discharged from the medical institution and returns home;
(2) the medical assistance lien is satisfied;
(3) the agency has received reimbursement for the amount secured by the lien or a legally enforceable agreement has been executed providing for reimbursement of the agency for that amount; or
(4) the medical assistance recipient, if single, or the recipient's surviving spouse, has died, and a claim may not be filed against the estate of the decedent under section 256B.15, subdivision 3.
(b) Upon request, the agency that files a medical assistance lien notice shall release a specific parcel of real property from the lien if:
(1) the property is or was the homestead of the recipient's spouse during the time of the medical assistance recipient's institutionalization, or the property is or was attributed to the spouse under section 256B.059, subdivision 3 or 4, and the spouse is not receiving medical assistance benefits;
(2) the property would be exempt from a claim against the estate under section 256B.15, subdivision 4;
(3) the agency receives reimbursement, or other collateral sufficient to secure payment of reimbursement, in an amount equal to the lesser of the amount secured by the lien, or the amount the agency would be allowed to recover upon enforcement of the lien against the specific parcel of property if the agency attempted to enforce the lien on the date of the request to release the lien; or
(4) the medical assistance lien cannot lawfully be enforced against the property because of an error, omission, or other material defect in procedure, description, identity, timing, or other prerequisite to enforcement.
(c) The agency that files a medical assistance lien notice may release the lien if the attachment or enforcement of the lien is determined by the agency to be contrary to the public interest.
(d) The agency that files a medical assistance lien notice shall execute the release of the lien and file the release as provided in section 514.982, subdivision 2.
Subd. 6. Time limits; claim limits. (a) A medical assistance lien is a lien on the real property it describes for a period of ten years from the date it attaches according to section 514.981, subdivision 2, paragraph (a), except as otherwise provided for in sections 514.980 to 514.985. The agency may renew a medical assistance lien for an additional ten years from the date it would otherwise expire by recording or filing a certificate of renewal before the lien expires. The certificate shall be recorded or filed in the office of the county recorder or registrar of titles for the county in which the lien is recorded or filed. The certificate must refer to the recording or filing data for the medical assistance lien it renews. The certificate need not be attested, certified, or acknowledged as a condition for recording or filing. The registrar of titles or the recorder shall file, record, index, and return the certificate of renewal in the same manner as provided for medical assistance liens in section 514.982, subdivision 2.
(b) A medical assistance lien is not enforceable against the real property of an estate to the extent there is a determination by a court of competent jurisdiction, or by an officer of the court designated for that purpose, that there are insufficient assets in the estate to satisfy the agency's medical assistance lien in whole or in part because of the homestead exemption under section 256B.15, subdivision 4, the rights of the surviving spouse or minor children under section 524.2-403, paragraphs (a) and (b), or claims with a priority under section 524.3-805, paragraph (a), clauses (1) to (4). For purposes of this section, the rights of the decedent's adult children to exempt property under section 524.2-403, paragraph (b), shall not be considered costs of administration under section 524.3-805, paragraph (a), clause (1).
549.09. Interest on verdicts, awards, and judgments
Subdivision 1. When owed; rate. (a) When a judgment or award is for the recovery of money, including a judgment for the recovery of taxes, interest from the time of the verdict, award, or report until judgment is finally entered shall be computed by the court administrator or arbitrator as provided in clause (c) and added to the judgment or award.
(b) Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest on pecuniary damages shall be computed as provided in clause (c) from the time of the commencement of the action or a demand for arbitration, or the time of a written notice of claim, whichever occurs first, except as provided herein. The action must be commenced within two years of a written notice of claim for interest to begin to accrue from the time of the notice of claim. If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days. After that time, interest on the judgment or award shall be calculated by the judge or arbitrator in the following manner. The prevailing party shall receive interest on any judgment or award from the time of commencement of the action or a demand for arbitration, or the time of a written notice of claim, or as to special damages from the time when special damages were incurred, if later, until the time of verdict, award, or report only if the amount of its offer is closer to the judgment or award than the amount of the opposing party's offer. If the amount of the losing party's offer was closer to the judgment or award than the prevailing party's offer, the prevailing party shall receive interest only on the amount of the settlement offer or the judgment or award, whichever is less, and only from the time of commencement of the action or a demand for arbitration, or the time of a written notice of claim, or as to special damages from when the special damages were incurred, if later, until the time the settlement offer was made. Subsequent offers and counteroffers supersede the legal effect of earlier offers and counteroffers. For the purposes of clause (2), the amount of settlement offer must be allocated between past and future damages in the same proportion as determined by the trier of fact. Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest shall not be awarded on the following:
(1) judgments, awards, or benefits in workers' compensation cases, but not including third-party actions;
(2) judgments or awards for future damages;
(3) punitive damages, fines, or other damages that are noncompensatory in nature;
(4) judgments or awards not in excess of the amount specified in section 491A.01; and
(5) that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.
(c) The interest shall be computed as simple interest per annum. The rate of interest shall be based on the secondary market yield of one year United States treasury bills, calculated on a bank discount basis as provided in this section.
On or before the 20th day of December of each year the state court administrator shall determine the rate from the secondary market yield on one year United States treasury bills for the most recent calendar month, reported on a monthly basis in the latest statistical release of the board of governors of the federal reserve system. This yield, rounded to the nearest one percent, shall be the annual interest rate during the succeeding calendar year. The state court administrator shall communicate the interest rates to the court administrators and sheriffs for use in computing the interest on verdicts and shall make the interest rates available to arbitrators.
When a judgment creditor, or the judgment creditor's attorney or agent, has received a payment after entry of judgment, whether the payment is made voluntarily by or on behalf of the judgment debtor, or is collected by legal process other than execution levy where a proper return has been filed with the court administrator, the judgment creditor, or the judgment creditor's attorney, before applying to the court administrator for an execution shall file with the court administrator an affidavit of partial satisfaction. The affidavit must state the dates and amounts of payments made upon the judgment after the most recent affidavit of partial satisfaction filed, if any; the part of each payment that is applied to taxable disbursements and to accrued interest and to the unpaid principal balance of the judgment; and the accrued, but the unpaid interest owing, if any, after application of each payment.
(d) This section does not apply to arbitrations between employers and employees under chapter 179 or 179A. An arbitrator is neither required to nor prohibited from awarding interest under chapter 179 or under section 179A.16 for essential employees.
Subd. 2. Accrual of interest. During each calendar year, interest shall accrue on the unpaid balance of the judgment or award from the time that it is entered or made until it is paid, at the annual rate provided in subdivision 1. The court administrator shall compute and add the accrued interest to the total amount to be collected when the execution is issued and compute the amount of daily interest accruing during the calendar year. The person authorized by statute to make the levy shall compute and add interest from the date that the writ of execution was issued to the date of service of the writ of execution and shall direct the daily interest to be computed and added from the date of service until any money is collected as a result of the levy.
Subd. 3. Deductions. If an affidavit is filed pursuant to subdivision 4, a judgment creditor, or the judgment creditor's attorney or agent, is entitled to deduct from any payment made upon a judgment, whether the payment is made voluntarily by or on behalf of the judgment debtor, or is collected by legal process, all disbursements that are made taxable by statute or by rule of court, that have been paid or incurred by the judgment creditor or the judgment creditor's attorney, after the entry of judgment. Any remaining portion of the payment must be applied to the interest that has accrued upon the unpaid principal balance of the judgment before any remaining part is applied to reduce the unpaid principal balance of the judgment.
Subd. 4. Affidavit. A judgment creditor, or the judgment creditor's attorney, may file an affidavit specifying the nature and amount of taxable disbursements paid or incurred by the judgment creditor, or the judgment creditor's attorney, after the entry of judgment. An execution issued by the court administrator must include increased disbursements as are included in the affidavit filed with the court administrator.
256B.37. Private insurance policies, causes of action
Subdivision 1. Subrogation. Upon furnishing medical assistance to any person who has private accident or health care coverage, or receives or has a right to receive health or medical care from any type of organization or entity, or has a cause of action arising out of an occurrence that necessitated the payment of medical assistance, the state agency or the state agency's agent shall be subrogated, to the extent of the cost of medical care furnished, to any rights the person may have under the terms of the coverage, or against the organization or entity providing or liable to provide health or medical care, or under the cause of action.
The right of subrogation created in this section includes all portions of the cause of action, notwithstanding any settlement allocation or apportionment that purports to dispose of portions of the cause of action not subject to subrogation.
Subd. 2. Civil action for recovery. To recover under this section, the attorney general may institute or join a civil action to enforce the subrogation rights of the commissioner established under this section.
Any prepaid health plan providing services under sections 256B.69, 256D.03, subdivision 4, paragraph (d), and 256L.12; children's mental health collaboratives under section 245.493; demonstration projects for persons with disabilities under section 256B.77; nursing homes under the alternative payment demonstration project under section 256B.434; or the county-based purchasing entity providing services under section 256B.692 may retain legal representation to enforce the subrogation rights created under this section or, if no action has been brought, may initiate and prosecute an independent action on their behalf against a person, firm, or corporation that may be liable to the person to whom the care or payment was furnished.
Subd. 3. Notice. The state agency must be given notice of monetary claims against a person, firm, or corporation that may be liable in damages, or otherwise obligated to pay part or all of the cost of medical care when the state agency has paid or become liable for the cost of care. Notice must be given as follows:
(a) Applicants for medical assistance shall notify the state or local agency of any possible claims when they submit the application. Recipients of medical assistance shall notify the state or local agency of any possible claims when those claims arise.
(b) A person providing medical care services to a recipient of medical assistance shall notify the state agency when the person has reason to believe that a third party may be liable for payment of the cost of medical care.
(c) A person who is party to a claim upon which the state agency may be entitled to subrogation under this section shall notify the state agency of its potential subrogation claim before filing a claim, commencing an action, or negotiating a settlement. A person who is a party to a claim includes the plaintiff, the defendants, and any other party to the cause of action.
Notice given to the local agency is not sufficient to meet the requirements of paragraphs (b) and (c).
Subd. 4. Recovery. Upon any judgment, award, or settlement of a cause of action, or any part of it, upon which the state agency has a subrogation right, including compensation for liquidated, unliquidated, or other damages, reasonable costs of collection, including attorney fees, must be deducted first. The full amount of medical assistance paid to or on behalf of the person as a result of the injury must be deducted next and paid to the state agency. The rest must be paid to the medical assistance recipient or other plaintiff. The plaintiff, however, must receive at least one-third of the net recovery after attorney fees and collection costs.
Subd. 5. Private benefits to be used first. Private accident and health care coverage including Medicare for medical services is primary coverage and must be exhausted before medical assistance is paid for medical services including home health care, personal care assistant services, hospice, or services covered under a Health Care Financing Administration (HCFA) waiver. When a person who is otherwise eligible for medical assistance has private accident or health care coverage, including Medicare or a prepaid health plan, the private health care benefits available to the person must be used first and to the fullest extent.
Subd. 5a. Supplemental payment by medical assistance. Medical assistance payment will not be made when either covered charges are paid in full by a third party or the provider has an agreement to accept payment for less than charges as payment in full. Payment for patients that are simultaneously covered by medical assistance and a liable third party other than Medicare will be determined as the lesser of clauses (1) to (3):
(1) the patient liability according to the provider/insurer agreement;
(2) covered charges minus the third party payment amount; or
(3) the medical assistance rate minus the third party payment amount.
A negative difference will not be implemented.
Subd. 6. Parent's or obligee's health plan. When a parent or a person with an obligation of support has enrolled in a prepaid health care plan under section 518.171, subdivision 1, the commissioner of human services shall limit the recipient of medical assistance to the benefits payable under that prepaid health care plan to the extent that services available under medical assistance are also available under the prepaid health care plan.
72A.20. Methods, acts, and practices which are defined as unfair or deceptive
Subdivision 1. Misrepresentations and false advertising of policy contracts. Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or making any false or misleading statement as to the dividends or share of surplus previously paid on similar policies, or making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or title of any policy or class of policies misrepresenting the true nature thereof, or making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice in the business of insurance.
Subd. 2. False information and advertising generally. Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station, or in any other way, an advertisement, announcement, or statement, containing any assertion, representation, or statement with respect to the business of insurance, or with respect to any person in the conduct of the person's insurance business, which is untrue, deceptive, or misleading, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 3. Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 4. Boycott, coercion and intimidation. Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation, resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 4a. Renumbered 72A.201, subd. 4a in St.1994.
Subd. 5. False financial statements. Filing with any supervisory or other public official, or making, publishing, disseminating, circulating, or delivering to any person, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of financial condition of an insurer with intent to deceive, shall constitute an unfair method of competition and an unfair and deceptive act or practice in the insurance business.
Subd. 6. False entries. Making any false entry in any book, report, or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, willfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report, or statement of such insurer, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 7. Stock operations and advisory board contracts. Issuing or delivering, or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 8. Discrimination. (a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract or in making or permitting the rejection of an individual's application for life insurance coverage, as well as the determination of the rate class for such individual, on the basis of a disability, shall constitute an unfair method of competition and an unfair and deceptive act or practice, unless the claims experience and actuarial projections and other data establish significant and substantial differences in class rates because of the disability.
(b) Refusing to insure or refusing to continue to insure the life of a member of a reserve component of the armed forces of the United States, or the national guard due to that person's status as a member, or duty assignment while a member of any of these military organizations, constitutes an unfair method of competition and an unfair and deceptive act or practice unless the individual has received an order for active duty.
(c) Refusing to reinstate coverage for the insured or any covered dependents under an individual or group life or health insurance policy or contract of a member of a reserve component of the armed forces of the United States or the national guard whose coverage or dependent coverage was terminated, canceled, or nonrenewed while that person was on active duty constitutes an unfair method of competition and an unfair and deceptive act or practice. For purposes of paragraphs (a) to (c), "health insurance policy or contract" means any policy, contract, or certificate providing benefits regulated under chapter 62A, 62C, 62D, or 64B.
For purposes of reinstatement of an individual policy, the person shall apply for reinstatement within 90 days after removal from active duty.
The reinstated coverage must not contain any new preexisting condition or other exclusion or limitation, except a condition determined by the Veterans Administration to be a disability incurred or aggravated in the line of duty. The remainder of a preexisting condition limitation that was not satisfied before the coverage was terminated may be applied once the person returns and coverage is reinstated. Reinstatement is effective upon the payment of any required premiums.
(d) Refusing to offer, sell, or renew coverage; limiting coverage; or charging a rate different from that normally charged for the same coverage under a life insurance policy or health plan because the applicant who is also the proposed insured has been or is a victim of domestic abuse is an unfair method of competition and an unfair and deceptive act or practice.
Nothing in this paragraph prevents an insurer from underwriting a risk on the basis of the physical or mental history of an individual if the insurer does not take into consideration whether the individual's condition was caused by an act of domestic abuse.
For purposes of this paragraph, "domestic abuse" has the meaning given in section 518B.01, subdivision 2; and "health plan" has the meaning given in section 62Q.01, subdivision 3, and includes the coverages referred to in section 62A.011, subdivision 3, clauses (1), (7), (9), and (10).
Subd. 9. Discrimination between individuals of the same class. Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever, or in making or permitting the rejection of an individual's application for accident or health insurance coverage, as well as the determination of the rate class for such individual, on the basis of a disability, shall constitute an unfair method of competition and an unfair and deceptive act or practice, unless the claims experience and actuarial projections and other data establish significant and substantial differences in class rates because of the disability.
Subd. 10. Rebates. Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of life insurance, annuity, or accident and health insurance, or agreement as to such contract, other than as plainly expressed in the contract issued thereon, or paying or allowing or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving or selling or purchasing, or offering to give, sell, or purchase, as inducement to such insurance or annuity, or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 11. Application to certain sections. Violating any provision of the following sections of this chapter not set forth in this section shall constitute an unfair method of competition and an unfair and deceptive act or practice: sections 72A.12, subdivisions 2, 3, and 4, 72A.16, subdivision 2, 72A.03 and 72A.04, 72A.08, subdivision 1, as modified by sections 72A.08, subdivision 4, 72A.201, sections 72A.49 to 72A.505, and 65B.13.
Subd. 12. Unfair service. Causing or permitting with such frequency to indicate a general business practice any unfair, deceptive, or fraudulent act concerning any claim or complaint of an insured or claimant including, but not limited to, the following practices:
(1) misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(2) failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
(3) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(4) refusing to pay claims without conducting a reasonable investigation based upon all available information;
(5) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
(6) not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;
(7) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds;
(8) attempting to settle a claim for less than the amount to which reasonable persons would have believed they were entitled by reference to written or printed advertising material accompanying or made part of an application;
(9) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured;
(10) making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made;
(11) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
(12) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
(13) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
(14) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;
(15) requiring an insured to provide information or documentation that is or would be dated more than five years prior to or five years after the date of a fire loss, except for proof of ownership of the damaged property.
Subd. 12a. Renumbered 72A.201 in St.1987 Supp.
Subd. 13. Refusal to renew. Refusing to renew, declining to offer or write, or charging differential rates for an equivalent amount of homeowner's insurance coverage, as defined by section 65A.27, for property located in a town or statutory or home rule charter city, in which the insurer offers to sell or writes homeowner's insurance, solely because:
(a) of the geographic area in which the property is located;
(b) of the age of the primary structure sought to be insured;
(c) the insured or prospective insured was denied coverage of the property by another insurer, whether by cancellation, nonrenewal or declination to offer coverage, for a reason other than those specified in section 65A.01, subdivision 3a, clauses (a) to (e); or
(d) the property of the insured or prospective insured has been insured under the Minnesota FAIR Plan Act, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
This subdivision prohibits an insurer from filing or charging different rates for different zip code areas within the same town or statutory or home rule charter city.
This subdivision shall not prohibit the insurer from applying underwriting or rating standards which the insurer applies generally in all other locations in the state and which are not specifically prohibited by clauses (a) to (d). Such underwriting or rating standards shall specifically include but not be limited to standards based upon the proximity of the insured property to an extraordinary hazard or based upon the quality or availability of fire protection services or based upon the density or concentration of the insurer's risks. Clause (b) shall not prohibit the use of rating standards based upon the age of the insured structure's plumbing, electrical, heating or cooling system or other part of the structure, the age of which affects the risk of loss. Any insurer's failure to comply with section 65A.29, subdivisions 2 to 4, either (1) by failing to give an insured or applicant the required notice or statement or (2) by failing to state specifically a bona fide underwriting or other reason for the refusal to write shall create a presumption that the insurer has violated this subdivision.
Subd. 14. Application form refusal. An insurance agent refusing to supply a requested application form for homeowner's insurance with any insurer whom the agent represents or refusing to transmit forthwith any completed application form to the insurer, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 15. Practices not held to be discrimination or rebates. Nothing in subdivision 8, 9, or 10, or in section 72A.12, subdivisions 3 and 4, shall be construed as including within the definition of discrimination or rebates any of the following practices:
(1) in the case of any contract of life insurance or annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that any bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders;
(2) in the case of life insurance policies issued on the industrial debit plan, making allowance, to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer, in an amount which fairly represents the saving in collection expense;
(3) readjustment of the rate of premium for a group insurance policy based on the loss or expense experienced thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year;
(4) in the case of an individual or group health insurance policy, the payment of differing amounts of reimbursement to insureds who elect to receive health care goods or services from providers designated by the insurer, provided that each insurer shall on or before August 1 of each year file with the commissioner summary data regarding the financial reimbursement offered to providers so designated.
Any insurer which proposes to offer an arrangement authorized under this clause shall disclose prior to its initial offering and on or before August 1 of each year thereafter as a supplement to its annual statement submitted to the commissioner pursuant to section 60A.13, subdivision 1, the following information:
(a) the name which the arrangement intends to use and its business address;
(b) the name, address, and nature of any separate organization which administers the arrangement on the behalf of the insurers; and
(c) the names and addresses of all providers designated by the insurer under this clause and the terms of the agreements with designated health care providers.
The commissioner shall maintain a record of arrangements proposed under this clause, including a record of any complaints submitted relative to the arrangements.
If the commissioner requests copies of contracts with a provider under this clause and the provider requests a determination, all information contained in the contracts that the commissioner determines may place the provider or health care plan at a competitive disadvantage is nonpublic data.
Subd. 16. Discrimination based on sex or marital status. Refusing to insure, refusing to continue to insure, refusing to offer or submit an application for coverage, or limiting the amount of coverage available to an individual because of the sex or marital status of the individual; however, nothing in this subsection prohibits an insurer from taking marital status into account for the purpose of defining persons eligible for dependents' benefits.
Subd. 17. Return of premiums. (a) Refusing, upon surrender of an individual policy of life insurance in the case of the insured's death, or in the case of a surrender prior to death, of an individual insurance policy not covered by the standard nonforfeiture laws under section 61A.24, to refund to the owner all unearned premiums paid on the policy covering the insured as of the time of the insured's death or surrender if the unearned premium is for a period of more than one month. The return of unearned premium must be delivered to the insured within 30 days following receipt by the insurer of the insured's request for cancellation.
(b) Refusing, upon termination or cancellation of a policy of automobile insurance under section 65B.14, subdivision 2, or a policy of homeowner's insurance under section 65A.27, subdivision 4, or a policy of accident and sickness insurance under section 62A.01, or a policy of comprehensive health insurance under chapter 62E, to refund to the insured all unearned premiums paid on the policy covering the insured as of the time of the termination or cancellation if the unearned premium is for a period of more than one month. The return of unearned premium must be delivered to the insured within 30 days following receipt by the insurer of the insured's request for cancellation.
(c) This subdivision does not apply to policies of insurance providing coverage only for motorcycles or other seasonally rated or limited use vehicles where the rate is reduced to reflect seasonal or limited use.
(d) For purposes of this section, a premium is unearned during the period of time the insurer has not been exposed to any risk of loss. Except for premiums for motorcycle coverage or other seasonally rated or limited use vehicles where the rate is reduced to reflect seasonal or limited use, the unearned premium is determined by multiplying the premium by the fraction that results from dividing the period of time from the date of termination to the date the next scheduled premium is due by the period of time for which the premium was paid.
(e) The owner may cancel a policy referred to in this section at any time during the policy period. This provision supersedes any inconsistent provision of law or any inconsistent policy provision.
Subd. 18. Improper business practices. (a) Improperly withholding, misappropriating, or converting any money belonging to a policyholder, beneficiary, or other person when received in the course of the insurance business; or (b) engaging in fraudulent, coercive, or dishonest practices in connection with the insurance business, shall constitute an unfair method of competition and an unfair and deceptive act or practice.
Subd. 19. Support for underwriting standards. No life or health insurance company doing business in this state shall engage in any selection or underwriting process unless the insurance company establishes beforehand substantial data, actuarial projections, or claims experience which support the underwriting standards used by the insurance company. The data, projections, or claims experience used to support the selection or underwriting process is not limited to only that of the company. The experience, projections, or data of other companies or a rate service organization may be used as well.
Subd. 20. Contact with government. An insurance company may not terminate or otherwise penalize an insurance agent solely because the agent contacted any government department or agency regarding a problem that the agent or an insured may be having with an insurance company. For purposes of this section, "government department or agency" includes the executive, legislative, and judicial branches of government as stated in article III of the Constitution.
Subd. 21. No insurance company doing business in this state shall engage in any selection or underwriting practice that is arbitrary, capricious, or unfairly discriminatory.
Subd. 22. Limitations on health care providers. (a) No insurer providing benefits under the Minnesota No-Fault Automobile Insurance Act or a plan authorized by sections 471.617 or 471.98 to 471.982 may limit the type of licensed health care provider who may provide treatment for covered conditions under a policy so long as the services provided are within the scope of licensure for the provider. The insurer may not exclude a specific method of treatment for a covered condition if that exclusion has the effect of excluding a specific type of licensed health care provider from treating a covered condition.
(b) This subdivision does not limit the right of an insurer to contract with individual members of any type of licensed health care provider to the exclusion of other members of the group, nor shall it limit the right to the insurer to exclude coverage for a type of treatment if the insurer can show the treatment is not medically necessary or is not medically appropriate.
Subd. 23. Discrimination in automobile insurance policies. (a) No insurer that offers an automobile insurance policy in this state shall:
(1) use the employment status of the applicant as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason.
(b) No insurer that offers an automobile insurance policy in this state shall:
(1) use the applicant's status as a residential tenant, as the term is defined in section 504B.001, subdivision 12, as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason; or
(3) make any discrimination in offering or establishing rates, premiums, dividends, or benefits of any kind, or by way of rebate, for the same reason.
(c) No insurer that offers an automobile insurance policy in this state shall:
(1) use the failure of the applicant to have an automobile policy in force during any period of time before the application is made as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason.
Paragraph (c) does not apply if the applicant was required by law to maintain automobile insurance coverage and failed to do so.
An insurer may require reasonable proof that the applicant did not fail to maintain this coverage. The insurer is not required to accept the mere lack of a conviction or citation for failure to maintain this coverage as proof of failure to maintain coverage. The insurer must provide the applicant with information identifying the documentation that is required to establish reasonable proof that the applicant did not fail to maintain the coverage.
(d) No insurer that offers an automobile insurance policy in this state shall use an applicant's prior claims for benefits paid under section 65B.44 as an underwriting standard or guideline if the applicant was 50 percent or less negligent in the accident or accidents causing the claims.
(e) No insurer shall refuse to issue any standard or preferred policy of motor vehicle insurance or make any discrimination in the acceptance of risks, in rates, premiums, dividends, or benefits of any kind, or by way of rebate:
(1) between persons of the same class, or
(2) on account of race, or
(3) on account of physical handicap if the handicap is compensated for by special training, equipment, prosthetic device, corrective lenses, or medication and if the physically handicapped person:
(i) is licensed by the department of public safety to operate a motor vehicle in this state, and
(ii) operates only vehicles that are equipped with auxiliary devices and equipment necessary for safe and effective operation by the handicapped person, or
(4) on account of marital dissolution.
Subd. 24. Cancellations and nonrenewals. No insurer shall cancel or fail to renew an individual life or individual health policy or an individual nonprofit health service plan subscriber contract for nonpayment of premium unless it mails or delivers to the named insured, at the address shown on the policy or subscriber contract at least 30 days before lapse, final notice of the cancellation or nonrenewal and the effective date of the cancellation or nonrenewal.
If the named insured is not the policy or subscriber contract owner, the notice required by this subdivision must be sent to the insured's last known address, if any, and to the owner's last known address.
Proof of mailing of the notice of lapse for failure to pay the premium before the expiration of the grace period is sufficient proof that notice required in this subdivision has been given.
This subdivision does not apply to a life or health insurance policy or contract upon which premiums are paid at a monthly interval or less and that contains any grace period required by statute for the payment of premiums during which time the insurance continues in force.
Subd. 25. Use of statements of a minor. No statement of a minor or information obtained by an insurer or a representative of an insurer from a minor may be used in any manner in regard to a claim unless the parent or guardian of the minor has granted permission for the minor to be interviewed or the minor's statement to be taken.
Subd. 26. Loss experience. An insurer shall without cost to the insured provide an insured with the loss or claims experience of that insured for the current policy period and for the two policy periods preceding the current one for which the insurer has provided coverage, within 30 days of a request for the information by the policyholder. Claims experience data must be provided to the insured in accordance with state and federal requirements regarding the confidentiality of medical data. The insurer shall not be responsible for providing information without cost more often than once in a 12-month period. The insurer is not required to provide the information if the policy covers the employee of more than one employer and the information is not maintained separately for each employer and not all employers request the data.
An insurer, health maintenance organization, or a third-party administrator may not request more than three years of loss or claims experience as a condition of submitting an application or providing coverage.
This subdivision only applies to group life policies and group health policies.
Subd. 27. Solicitations and sales of insurance products to borrowers. (a) A loan officer, a loan representative, or other person involved in taking or processing a loan may not solicit an insurance product, except for credit life, credit disability, credit involuntary unemployment, mortgage life, mortgage accidental death, or mortgage disability, and except for life insurance when offered in lieu of credit life insurance, from the completion of the initial loan application, as defined in the federal Equal Credit Opportunity Act, United States Code, title 15, sections 1691 to 1691f, and any regulations adopted under those sections, until after the closing of the loan transaction.
(b) This subdivision applies only to loan transactions covered by the federal Truth-in-Lending Act, United States Code, title 15, sections 1601 to 1666j, and any regulations adopted under those sections.
(c) This subdivision does not apply to sales of title insurance, homeowner's insurance, a package homeowner's-automobile insurance product, automobile insurance, or a similar insurance product, required to perfect title to, or protect, property for which a security interest will be taken if the product is required as a condition of the loan.
(d) Nothing in this subdivision prohibits the solicitation or sale of any insurance product by means of mass communication.
Subd. 28. Conversion fees prohibited. An issuer providing health coverage through conversion policies, plans, or contracts shall not impose a fee or charge, other than the premium, for issuing these policies, plans, or contracts.
Subd. 29. HIV tests; crime victims and emergency medical service personnel. No insurer regulated under chapter 61A, 62B, or 62S, or providing health, medical, hospitalization, long-term care insurance, or accident and sickness insurance regulated under chapter 62A, or nonprofit health service plan corporation regulated under chapter 62C, health maintenance organization regulated under chapter 62D, or fraternal benefit society regulated under chapter 64B, may:
(1) use the results of a test to determine the presence of the human immunodeficiency virus (HIV) antibody performed on an offender under section 611A.19 or performed on a crime victim who was exposed to or had contact with an offender's bodily fluids during commission of a crime that was reported to law enforcement officials, in order to make an underwriting decision, cancel, fail to renew, or take any other action with respect to a policy, plan, certificate, or contract;
(2) use the results of a test to determine the presence of a bloodborne pathogen performed on an individual according to sections 144.7401 to 144.7415, 241.33 to 241.342, or 246.71 to 246.722 in order to make an underwriting decision, cancel, fail to renew, or take any other action with respect to a policy, plan, certificate, or contract; or
(3) ask an applicant for coverage or a person already covered whether the person has: (i) had a test performed for the reason set forth in clause (1) or (2); or (ii) been the victim of an assault or any other crime which involves bodily contact with the offender.
This subdivision does not affect tests conducted for purposes other than those described in clause (1) or (2), including any test to determine the presence of a bloodborne pathogen if such test was performed at the insurer's direction as part of the insurer's normal underwriting requirements.
Subd. 29a. HIV tests; vaccine research. (a) No insurer regulated under chapter 61A or 62B, or providing health, medical, hospitalization, or accident and sickness insurance regulated under chapter 62A, or nonprofit health services corporation regulated under chapter 62C, health maintenance organization regulated under chapter 62D, or fraternal benefit society regulated under chapter 64B, may make an underwriting decision, cancel, fail to renew, or take any other action with respect to a policy, plan, certificate, or contract based solely on the fact of a person's participation in a human immunodeficiency virus (HIV) vaccine clinical trial.
(b) If a test to determine the presence of the HIV antibody is performed at the insurer's direction, as part of the insurer's normal underwriting requirements or on any other basis, and an applicant or covered person is a participant or former participant in a vaccine clinical trial and tests positive for the HIV antibody in the insurer-directed test, the person shall disclose the person's status as a participant or former participant in a vaccine clinical trial and provide the insurance company with certification from the trial sponsor of the person's participation or former participation in the vaccine trial. Upon that notification, an insurer shall stay any adverse decision or refrain from making an underwriting decision to cancel, fail to renew, or take any other action based solely on the positive test result until the insurer obtains a confidential certificate from the sponsor of the trial verifying the person's HIV status. If the confidential certificate indicates that the person's HIV antibodies are a result of exposure to the vaccine, that the person does not have the HIV virus, and that the person did not test positive for the HIV virus in any test administered by the trial sponsor prior to entering the vaccine clinical trial, the insurer shall ignore the presence of the HIV antibody in the insurer-directed test.
(c) This subdivision does not affect any tests to determine the presence of the HIV antibody, except as provided under paragraph (b).
(d) This subdivision does not apply to persons who are confirmed as having the HIV virus.
(e) For purposes of this subdivision, "vaccine clinical trial" means a clinical trial conducted by a sponsor under an investigational new drug application as provided by Code of Federal Regulations, title 21, section 312. "Sponsor" means the hospital, clinic, or health care professional that is conducting the vaccine clinical trial.
Subd. 30. Records retention. An insurer shall retain copies of all underwriting documents, policy forms, and applications for three years from the effective date of the policy. An insurer shall retain all claim files and documentation related to a claim for three years from the date the claim was paid or denied. This subdivision does not relieve the insurer of its obligation to produce these documents to the department after the retention period has expired in connection with an enforcement action or administrative proceeding against the insurer from whom the documents are requested, if the insurer has retained the documents. Records required to be retained by this section may be retained in paper, photograph, microprocess, magnetic, mechanical, or electronic media, or by any process which accurately reproduces or forms a durable medium for the reproduction of a record.
Subd. 31. Reasonable, adequate, and not predatory premiums. Premiums charged by a health plan company, as defined in section 62Q.01, shall be reasonable, adequate, and not predatory in relation to the benefits, considering actuarial projection of the cost of providing or paying for the covered health services, considering the costs of administration, and in relation to the reserves and surplus required by law.
Subd. 32. Unfair health risk avoidance. No insurer or health plan company may design a network of providers, policies on access to providers, or marketing strategy in such a way as to discourage enrollment by individuals or groups whose health care needs are perceived as likely to be more expensive than the average. This subdivision does not prohibit underwriting and rating practices that comply with Minnesota law.
Subd. 33. Prohibition of inappropriate incentives. No insurer or health plan company may give any financial incentive to a health care provider based solely on the number of services denied or referrals not authorized by the provider. This subdivision does not prohibit capitation or other compensation methods that serve to hold health care providers financially accountable for the cost of caring for a patient population.
Subd. 34. Suitability of insurance for customer. In recommending or issuing life, endowment, individual accident and sickness, long-term care, annuity, life-endowment, or Medicare supplement insurance to a customer, an insurer, either directly or through its agent, must have reasonable grounds for believing that the recommendation is suitable for the customer.
In the case of group insurance marketed on a direct response basis without the use of direct agent contact, this subdivision is satisfied if the insurer has reasonable grounds to believe that the insurance offered is generally suitable for the group to whom the offer is made.
Subd. 35. Determination of health plan policy limits. Any health plan that includes a specific policy limit within its insurance policy, certificate, or subscriber agreement shall calculate the policy limit by using the amount actually paid on behalf of the insured, subscriber, or dependents for services covered under the policy, subscriber agreement, or certificate unless the amount paid is greater than the billed charge.
72A.201. Regulation of claims practices
Subdivision 1. Administrative enforcement. The commissioner may, in accordance with chapter 14, adopt rules to ensure the prompt, fair, and honest processing of claims and complaints. The commissioner may, in accordance with sections 72A.22 to 72A.25, seek and impose appropriate administrative remedies, including fines, for (1) a violation of this section or the rules adopted pursuant to this section; or (2) a violation of section 72A.20, subdivision 12. The commissioner need not show a general business practice in taking an administrative action for these violations.
No individual violation constitutes an unfair, discriminatory, or unlawful practice in business, commerce, or trade for purposes of section 8.31.
Subd. 2. Construction. The policy of the department of commerce, in interpreting and enforcing this section, will be to take into consideration all pertinent facts and circumstances in determining the severity and appropriateness of the action to be taken in regard to any violation of this section.
The magnitude of the harm to the claimant or insured, and any actions by the insured, claimant, or insurer that mitigate or exacerbate the impact of the violation may be considered.
Actions of the claimant or insured which impeded the insurer in processing or settling the claim, and actions of the insurer which increased the detriment to the claimant or insured may also be considered in determining the appropriate administrative action to be taken.
Subd. 3. Definitions. For the purposes of this section, the following terms have the meanings given them.
(1) Adjuster or adjusters. "Adjuster" or "adjusters" is as defined in section 72B.02.
(2) Agent. "Agent" means insurance agents or insurance agencies licensed pursuant to sections 60K.01 to 60K.18, and representatives of these agents or agencies.
(3) Claim. "Claim" means a request or demand made with an insurer for the payment of funds or the provision of services under the terms of any policy, certificate, contract of insurance, binder, or other contracts of temporary insurance. The term does not include a claim under a health insurance policy made by a participating provider with an insurer in accordance with the participating provider's service agreement with the insurer which has been filed with the commissioner of commerce prior to its use.
(4) Claim settlement. "Claim settlement" means all activities of an insurer related directly or indirectly to the determination of the extent of liabilities due or potentially due under coverages afforded by the policy, and which result in claim payment, claim acceptance, compromise, or other disposition.
(5) Claimant. "Claimant" means any individual, corporation, association, partnership, or other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity which is insured under an insurance policy or insurance contract of an insurer.
(6) Complaint. "Complaint" means a communication primarily expressing a grievance.
(7) Insurance policy. "Insurance policy" means any evidence of coverage issued by an insurer including all policies, contracts, certificates, riders, binders, and endorsements which provide or describe coverage. The term includes any contract issuing coverage under a self-insurance plan, group self-insurance plan, or joint self-insurance employee health plans.
(8) Insured. "Insured" means an individual, corporation, association, partnership, or other legal entity asserting a right to payment under their insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by the policy or contract. The term does not apply to a person who acquires rights under a mortgage.
(9) Insurer. "Insurer" includes any individual, corporation, association, partnership, reciprocal exchange, Lloyds, fraternal benefits society, self-insurer, surplus line insurer, self-insurance administrator, and nonprofit service plans under the jurisdiction of the department of commerce.
(10) Investigation. "Investigation" means a reasonable procedure adopted by an insurer to determine whether to accept or reject a claim.
(11) Notification of claim. "Notification of claim" means any communication to an insurer by a claimant or an insured which reasonably apprises the insurer of a claim brought under an insurance contract or policy issued by the insurer. Notification of claim to an agent of the insurer is notice to the insurer.
(12) Proof of loss. "Proof of loss" means the necessary documentation required from the insured to establish entitlement to payment under a policy.
(13) Self-insurance administrator. "Self-insurance administrator" means any vendor of risk management services or entities administering self-insurance plans, licensed pursuant to section 60A.23, subdivision 8.
(14) Self-insured or self-insurer. "Self-insured" or "self-insurer" means any entity authorized pursuant to section 65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 2; Laws of Minnesota 1983, chapter 290, section 171; section 471.617; or section 471.981 and includes any entity which, for a fee, employs the services of vendors of risk management services in the administration of a self-insurance plan as defined by section 60A.23, subdivision 8, clause (2), subclauses (a) and (d).
Subd. 4. Standards for claim filing and handling. The following acts by an insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair settlement practices:
(1) except for claims made under a health insurance policy, after receiving notification of claim from an insured or a claimant, failing to acknowledge receipt of the notification of the claim within ten business days, and failing to promptly provide all necessary claim forms and instructions to process the claim, unless the claim is settled within ten business days. The acknowledgment must include the telephone number of the company representative who can assist the insured or the claimant in providing information and assistance that is reasonable so that the insured or claimant can comply with the policy conditions and the insurer's reasonable requirements. If an acknowledgment is made by means other than writing, an appropriate notation of the acknowledgment must be made in the claim file of the insurer and dated. An appropriate notation must include at least the following information where the acknowledgment is by telephone or oral contact:
(i) the telephone number called, if any;
(ii) the name of the person making the telephone call or oral contact;
(iii) the name of the person who actually received the telephone call or oral contact;
(iv) the time of the telephone call or oral contact; and
(v) the date of the telephone call or oral contact;
(2) failing to reply, within ten business days of receipt, to all other communications about a claim from an insured or a claimant that reasonably indicate a response is requested or needed;
(3) unless provided otherwise by law or in the policy, failing to complete its investigation and inform the insured or claimant of acceptance or denial of a claim within 30 business days after receipt of notification of claim unless the investigation cannot be reasonably completed within that time. In the event that the investigation cannot reasonably be completed within that time, the insurer shall notify the insured or claimant within the time period of the reasons why the investigation is not complete and the expected date the investigation will be complete. For claims made under a health policy the notification of claim must be in writing;
(4) where evidence of suspected fraud is present, the requirement to disclose their reasons for failure to complete the investigation within the time period set forth in clause (3) need not be specific. The insurer must make this evidence available to the department of commerce if requested;
(5) failing to notify an insured who has made a notification of claim of all available benefits or coverages which the insured may be eligible to receive under the terms of a policy and of the documentation which the insured must supply in order to ascertain eligibility;
(6) unless otherwise provided by law or in the policy, requiring an insured to give written notice of loss or proof of loss within a specified time, and thereafter seeking to relieve the insurer of its obligations if the time limit is not complied with, unless the failure to comply with the time limit prejudices the insurer's rights and then only if the insurer gave prior notice to the insured of the potential prejudice;
(7) advising an insured or a claimant not to obtain the services of an attorney or an adjuster, or representing that payment will be delayed if an attorney or an adjuster is retained by the insured or the claimant;
(8) failing to advise in writing an insured or claimant who has filed a notification of claim known to be unresolved, and who has not retained an attorney, of the expiration of a statute of limitations at least 60 days prior to that expiration. For the purposes of this clause, any claim on which the insurer has received no communication from the insured or claimant for a period of two years preceding the expiration of the applicable statute of limitations shall not be considered to be known to be unresolved and notice need not be sent pursuant to this clause;
(9) demanding information which would not affect the settlement of the claim;
(10) unless expressly permitted by law or the policy, refusing to settle a claim of an insured on the basis that the responsibility should be assumed by others;
(11) failing, within 60 business days after receipt of a properly executed proof of loss, to advise the insured of the acceptance or denial of the claim by the insurer. No insurer shall deny a claim on the grounds of a specific policy provision, condition, or exclusion unless reference to the provision, condition, or exclusion is included in the denial. The denial must be given to the insured in writing with a copy filed in the claim file;
(12) denying or reducing a claim on the basis of an application which was altered or falsified by the agent or insurer without the knowledge of the insured;
(13) failing to notify the insured of the existence of the additional living expense coverage when an insured under a homeowners policy sustains a loss by reason of a covered occurrence and the damage to the dwelling is such that it is not habitable;
(14) failing to inform an insured or a claimant that the insurer will pay for an estimate of repair if the insurer requested the estimate and the insured or claimant had previously submitted two estimates of repair.
Subd. 4a. Standards for preauthorization approval. If a policy of accident and sickness insurance or a subscriber contract requires preauthorization approval for any nonemergency services or benefits, the decision to approve or disapprove the requested services or benefits must be processed in accordance with section 62M.07.
Subd. 5. Standards for fair settlement offers and agreements. The following acts by an insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair settlement practices:
(1) making any partial or final payment, settlement, or offer of settlement, which does not include an explanation of what the payment, settlement, or offer of settlement is for;
(2) making an offer to an insured of partial or total settlement of one part of a claim contingent upon agreement to settle another part of the claim;
(3) refusing to pay one or more elements of a claim by an insured for which there is no good faith dispute;
(4) threatening cancellation, rescission, or nonrenewal of a policy as an inducement to settlement of a claim;
(5) notwithstanding any inconsistent provision of section 65A.01, subdivision 3, failing to issue payment for any amount finally agreed upon in settlement of all or part of any claim within five business days from the receipt of the agreement by the insurer or from the date of the performance by the claimant of any conditions set by such agreement, whichever is later;
(6) failing to inform the insured of the policy provision or provisions under which payment is made;
(7) settling or attempting to settle a claim or part of a claim with an insured under actual cash value provisions for less than the value of the property immediately preceding the loss, including all applicable taxes and license fees. In no case may an insurer be required to pay an amount greater than the amount of insurance;
(8) except where limited by policy provisions, settling or offering to settle a claim or part of a claim with an insured under replacement value provisions for less than the sum necessary to replace the damaged item with one of like kind and quality, including all applicable taxes, license, and transfer fees;
(9) reducing or attempting to reduce for depreciation any settlement or any offer of settlement for items not adversely affected by age, use, or obsolescence;
(10) reducing or attempting to reduce for betterment any settlement or any offer of settlement unless the resale value of the item has increased over the preloss value by the repair of the damage.
Subd. 6. Standards for automobile insurance claims handling, settlement offers, and agreements. In addition to the acts specified in subdivisions 4, 5, 7, 8, and 9, the following acts by an insurer, adjuster, or a self-insured or self-insurance administrator constitute unfair settlement practices:
(1) if an automobile insurance policy provides for the adjustment and settlement of an automobile total loss on the basis of actual cash value or replacement with like kind and quality and the insured is not an automobile dealer, failing to offer one of the following methods of settlement:
(a) comparable and available replacement automobile, with all applicable taxes, license fees, at least pro rata for the unexpired term of the replaced automobile's license, and other fees incident to the transfer or evidence of ownership of the automobile paid, at no cost to the insured other than the deductible amount as provided in the policy;
(b) a cash settlement based upon the actual cost of purchase of a comparable automobile, including all applicable taxes, license fees, at least pro rata for the unexpired term of the replaced automobile's license, and other fees incident to transfer of evidence of ownership, less the deductible amount as provided in the policy. The costs must be determined by:
(i) the cost of a comparable automobile, adjusted for mileage, condition, and options, in the local market area of the insured, if such an automobile is available in that area; or
(ii) one of two or more quotations obtained from two or more qualified sources located within the local market area when a comparable automobile is not available in the local market area. The insured shall be provided the information contained in all quotations prior to settlement; or
(iii) any settlement or offer of settlement which deviates from the procedure above must be documented and justified in detail. The basis for the settlement or offer of settlement must be explained to the insured;
(2) if an automobile insurance policy provides for the adjustment and settlement of an automobile partial loss on the basis of repair or replacement with like kind and quality and the insured is not an automobile dealer, failing to offer one of the following methods of settlement:
(a) to assume all costs, including reasonable towing costs, for the satisfactory repair of the motor vehicle. Satisfactory repair includes repair of both obvious and hidden damage as caused by the claim incident. This assumption of cost may be reduced by applicable policy provision; or
(b) to offer a cash settlement sufficient to pay for satisfactory repair of the vehicle. Satisfactory repair includes repair of obvious and hidden damage caused by the claim incident, and includes reasonable towing costs;
(3) regardless of whether the loss was total or partial, in the event that a damaged vehicle of an insured cannot be safely driven, failing to exercise the right to inspect automobile damage prior to repair within five business days following receipt of notification of claim. In other cases the inspection must be made in 15 days;
(4) regardless of whether the loss was total or partial, requiring unreasonable travel of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate, to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made pursuant to policy requirements, or to have the automobile repaired;
(5) regardless of whether the loss was total or partial, if loss of use coverage exists under the insurance policy, failing to notify an insured at the time of the insurer's acknowledgment of claim, or sooner if inquiry is made, of the fact of the coverage, including the policy terms and conditions affecting the coverage and the manner in which the insured can apply for this coverage;
(6) regardless of whether the loss was total or partial, failing to include the insured's deductible in the insurer's demands under its subrogation rights. Subrogation recovery must be shared at least on a proportionate basis with the insured, unless the deductible amount has been otherwise recovered by the insured, except that when an insurer is recovering directly from an uninsured third party by means of installments, the insured must receive the full deductible share as soon as that amount is collected and before any part of the total recovery is applied to any other use. No deduction for expenses may be made from the deductible recovery unless an attorney is retained to collect the recovery, in which case deduction may be made only for a pro rata share of the cost of retaining the attorney. An insured is not bound by any settlement of its insurer's subrogation claim with respect to the deductible amount, unless the insured receives, as a result of the subrogation settlement, the full amount of the deductible. Recovery by the insurer and receipt by the insured of less than all of the insured's deductible amount does not affect the insured's rights to recover any unreimbursed portion of the deductible from parties liable for the loss;
(7) requiring as a condition of payment of a claim that repairs to any damaged vehicle must be made by a particular contractor or repair shop or that parts, other than window glass, must be replaced with parts other than original equipment parts;
(8) where liability is reasonably clear, failing to inform the claimant in an automobile property damage liability claim that the claimant may have a claim for loss of use of the vehicle;
(9) failing to make a good faith assignment of comparative negligence percentages in ascertaining the issue of liability;
(10) failing to pay any interest required by statute on overdue payment for an automobile personal injury protection claim;
(11) if an automobile insurance policy contains either or both of the time limitation provisions as permitted by section 65B.55, subdivisions 1 and 2, failing to notify the insured in writing of those limitations at least 60 days prior to the expiration of that time limitation;
(12) if an insurer chooses to have an insured examined as permitted by section 65B.56, subdivision 1, failing to notify the insured of all of the insured's rights and obligations under that statute, including the right to request, in writing, and to receive a copy of the report of the examination;
(13) failing to provide, to an insured who has submitted a claim for benefits described in section 65B.44, a complete copy of the insurer's claim file on the insured, excluding internal company memoranda, all materials that relate to any insurance fraud investigation, materials that constitute attorney work-product or that qualify for the attorney-client privilege, and medical reviews that are subject to section 145.64, within ten business days of receiving a written request from the insured. The insurer may charge the insured a reasonable copying fee. This clause supersedes any inconsistent provisions of sections 72A.49 to 72A.505;
(14) if an automobile policy provides for the adjustment or settlement of an automobile loss due to damaged window glass, failing to provide payment to the insured's chosen vendor based on a competitive price. If the insurer disputes the amount charged by the vendor, the price shall be as established by the commissioner through a market survey to determine a fair and reasonable market price for similar services. The survey shall be:
(a) an annual survey using accepted industry standards;
(b) a statistically significant sample of auto glass vendors; and
(c) of work actually done.
The commissioner shall consult with interested parties in designing the survey document. Reasonable deviation from the market price determined by survey is allowed when based on the facts in each case. This clause does not prohibit an insurer from recommending a vendor to the insured or from agreeing with a vendor to perform work at an agreed-upon price, provided, however, that before recommending a vendor, the insurer shall offer its insured the opportunity to choose the vendor;
(15) requiring that the repair or replacement of motor vehicle glass and related products and services be made in a particular place or shop or by a particular entity, or by otherwise limiting the ability of the insured to select the place, shop, or entity to repair or replace the motor vehicle glass and related products and services; or
(16) engaging in any act or practice of intimidation, coercion, threat, incentive, or inducement for or against an insured to use a particular company or location to provide the motor vehicle glass repair or replacement services or products. For purposes of this section, a warranty shall not be considered an inducement or incentive.
Subd. 7. Standards for releases. The following acts by an insurer, adjuster, or self-insured or self-insurance administrator constitute unfair settlement practices:
(1) requesting or requiring an insured or a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment;
(2) issuing a check or draft in payment of a claim that contains any language or provision that implies or states that acceptance of the check or draft constitutes a final settlement or release of any or all future obligations arising out of the loss.
Subd. 8. Standards for claim denial. The following acts by an insurer, adjuster, or self-insured, or self-insurance administrator constitute unfair settlement practices:
(1) denying a claim or any element of a claim on the grounds of a specific policy provision, condition, or exclusion, without informing the insured of the policy provision, condition, or exclusion on which the denial is based;
(2) denying a claim without having made a reasonable investigation of the claim;
(3) denying a liability claim because the insured has requested that the claim be denied;
(4) denying a liability claim because the insured has failed or refused to report the claim, unless an independent evaluation of available information indicates there is no liability;
(5) denying a claim without including the following information:
(i) the basis for the denial;
(ii) the name, address, and telephone number of the insurer's claim service office or the claim representative of the insurer to whom the insured or claimant may take any questions or complaints about the denial;
(iii) the claim number and the policy number of the insured; and
(iv) if the denied claim is a fire claim, the insured's right to file with the department of commerce a complaint regarding the denial, and the address and telephone number of the department of commerce;
(6) denying a claim because the insured or claimant failed to exhibit the damaged property unless:
(i) the insurer, within a reasonable time period, made a written demand upon the insured or claimant to exhibit the property; and
(ii) the demand was reasonable under the circumstances in which it was made;
(7) denying a claim by an insured or claimant based on the evaluation of a chemical dependency claim reviewer selected by the insurer unless the reviewer meets the qualifications specified under subdivision 8a. An insurer that selects chemical dependency reviewers to conduct claim evaluations must annually file with the commissioner of commerce a report containing the specific evaluation standards and criteria used in these evaluations. The report must be filed at the same time its annual statement is submitted under section 60A.13. The report must also include the number of evaluations performed on behalf of the insurer during the reporting period, the types of evaluations performed, the results, the number of appeals of denials based on these evaluations, the results of these appeals, and the number of complaints filed in a court of competent jurisdiction.
Subd. 8a. Chemical dependency claim reviewer qualifications. (a) The personnel file of a chemical dependency claim reviewer must include documentation of the individual's competency in the following areas:
(1) knowledge of chemical abuse and dependency;
(2) chemical use assessment, including client interviewing and screening;
(3) case management, including treatment planning, general knowledge of social services, and appropriate referrals, and recordkeeping, reporting requirements, and confidentiality rules and regulations that apply to chemical dependency clients; and
(4) individual and group counseling, including crisis intervention.
(b) The insurer may accept one of the following as adequate documentation that a chemical dependency claim reviewer is competent in the areas required under paragraph (a):
(1) the individual has at least a baccalaureate degree with a major or concentration in social work, nursing, sociology, human services, or psychology, is a licensed registered nurse, or is a licensed physician; has successfully completed 30 hours of classroom instruction in each of the areas identified in paragraph (a), clauses (1) and (2); and has successfully completed 480 hours of supervised experience as a chemical dependency counselor, either as a student or as an employee; or
(2) the individual has documented the successful completion of the following:
(i) 60 hours of classroom training in the subject area identified in paragraph (a), clause (1);
(ii) 30 hours of classroom training in the subject area identified in paragraph (a), clause (2);
(iii) 160 hours of classroom training in the subject areas identified in paragraph (a), clauses (3) and (4); and
(iv) completion of 480 hours of supervised experience as a chemical dependency counselor, either as a student or as an employee; or
(3) the individual is certified by the Institute for Chemical Dependency Professionals of Minnesota, Inc., as a chemical dependency counselor or as a chemical dependency counselor reciprocal, through the evaluation process established by the Certification Reciprocity Consortium Alcohol and Other Drug Abuse, Inc., and published in the Case Presentation Method Trainer's Manual, copyright 1986;
(4) the individual successfully completed three years of supervised work experience as a chemical dependency counselor before January 1, 1988; or
(5) the individual is a licensed physician, who has 480 hours of experience in a licensed chemical dependency program.
After January 1, 1993, chemical dependency counselors must document that they meet the requirements of clause (1), (2), or (3) in order to comply with this paragraph.
Subd. 9. Standards for communications with the department. In addition to the acts specified elsewhere in this section and section 72A.20, the following acts by an insurer, adjuster, or a self-insured or self-insurance administrator constitute unfair settlement practices:
(1) failure to respond, within 15 working days after receipt of an inquiry from the commissioner, about a claim, to the commissioner;
(2) failure, upon request by the commissioner, to make specific claim files available to the commissioner;
(3) failure to include in the claim file all written communications and transactions emanating from, or received by, the insurer, as well as all notes and work papers relating to the claim. All written communications and notes referring to verbal communications must be dated by the insurer;
(4) failure to submit to the commissioner, when requested, any summary of complaint data reasonably required;
(5) failure to compile and maintain a file on all complaints. If the complaint deals with a loss, the file must contain adequate information so as to permit easy retrieval of the entire file. If the complaint alleges that the company, or agent of the company, or any agent producing business written by the company is engaged in any unfair, false, misleading, dishonest, fraudulent, untrustworthy, coercive, or financially irresponsible practice, or has violated any insurance law or rule, the file must indicate what investigation or action was taken by the company. The complaint file must be maintained for at least four years after the date of the complaint.
For purposes of clause (1) the term insurer includes an agent of the insurer. The insurer must have been sent a copy of any communication to an agent to be held in violation of this provision.
Subd. 10. Scope. This section does not apply to workers' compensation insurance. Nothing in this section abrogates any policy provisions.
Subd. 11. Disclosure mandatory. An insurer must disclose the coverage and limits of an insurance policy within 30 days after the information is requested in writing by a claimant.
Subd. 12. Prejudgment interest. If a judgment is entered against an insured, the principal amount of which is within the applicable policy limits, the insurer is responsible for their insured's share of the costs, disbursements, and prejudgment interest, as determined under section 549.09, included in the judgment even if the total amount of the judgment is in excess of the applicable policy limits.
Subd. 13. Improper claim of discount. (a) No insurer or community integrated service network shall intentionally provide a health care provider with an explanation of benefits or similar document claiming a right to a discounted fee, price, or other charge, when the insurer or community integrated service network does not have an agreement with the provider for the discount with respect to the patient involved.
(b) The insurer or community integrated service network may, notwithstanding paragraph (a), claim the right to a discount based upon a discount agreement between the health care provider and another entity, but only if:
(1) that agreement expressly permitted the entity to assign its right to receive the discount;
(2) an assignment to the insurer or community integrated service network of the right to receive the discount complies with any relevant requirements for assignments contained in the discount agreement; and
(3) the insurer or community integrated service network has complied with any relevant requirements contained in the assignment.
(c) When an explanation of benefits or similar document claims a discount permitted under paragraph (b), it shall prominently state that the discount claimed is based upon an assignment and shall state the name of the entity from whom the assignment was received. This paragraph does not apply if the entity that issues the explanation of benefits or similar document has a provider agreement with the provider.
(d) No insurer or community integrated service network that has entered into an agreement with a health care provider that involves discounted fees, prices, or other charges shall disclose the discounts to another entity, with the knowledge or expectation that the disclosure will result in claims for discounts prohibited under paragraphs (a) and (b).