Bill
HF 4598
HF4598 reforms Minnesota’s workers’ compensation reinsurance system, updating surplus/deficiency distributions, occupational disease presumptions, attorney fees, and admin processe
Title: Workers' Compensation Advisory Council 2026 recommendations adopted
Purpose and intent
- The bill adopts the 2026 recommendations of the Workers' Compensation Advisory Council and updates Minnesota statutes related to the state workers’ compensation reinsurance system and related processes.
- It restructures and clarifies the operation, funding, and distribution mechanics of the Workers’ Compensation Reinsurance Association (WCRA), and makes targeted updates to several chapters of the Minnesota Workers’ Compensation Act and related provisions.
Key provisions and changes
1) Reinsurance Association operations and liabilities (Sections 1–6)
- Withdrawal, liabilities, and ongoing obligations:
- Insurers or self-insurers withdrawing or whose membership ends remain bound by the plan of operation, with unpaid premiums and other outstanding amounts due as of withdrawal/termination (Sec. 1).
- Insolvent members: unsatisfied net liabilities of insolvent members are handled under the plan of operation at the time a member is declared insolvent (Sec. 2).
- Duties and financial administration (Sec. 3):
- The reinsurance association (WCRA) will: assume 100% of liabilities; require prompt reporting of potential claims; maintain loss/expense data; calculate and charge premiums to members; receive and distribute funds; review and, if needed, adjust claims practices; provide annual reports; equitably distribute excess or deficient premiums; distribute excess surplus per board recommendations; and collect deficiency assessments as recommended.
- New be explicit about premium setting, reporting, and distribution of any excess or deficiency.
- Additional powers (Sec. 4):
- WCRA can sue/be sued, reinsure liabilities, contract for services, adopt operating rules, intervene in or prosecute subrogation or third-party actions, and determine allocations of recovered net proceeds to reimburse the association first, with any excess to members as determined by the board, subject to court orders.
- Excess surplus distribution and deficiency assessments (Sec. 5):
- Establishes procedures for declaring, approving, and administering excess surplus distributions to self-insurers and insured employers, with oversight by the Labor and Industry (L&I) and Commerce departments.
- If distributions create deficiencies, the board may determine required assessments to eliminate them, applying rates to self-insured and insured exposure bases.
- Distributions/assessments are prospective; costs of distribution may be deducted from excess surplus earnings; information sharing and timing requirements are specified.
- Plan of operation requirements (Sec. 6):
- Plan must cover facilities, management, initial expenses, premium charging procedures (including treatment of excess/deficient premiums), board reimbursement, governance, investment policy, and rates/exposure bases methodology.
2) Administrative efficiency and governance (Sec. 7)
- Adds an option for active compensation judges to cover temporary shortfalls in quorum when Workers’ Compensation Court of Appeals judges are not available, with compensation paid via Court of Administrative Hearings (CAH) processes. Effective upon enactment.
3) Occupational disease definition and presumption updates (Sec. 8)
- Updates to definitions and presumptions for occupational diseases, including:
- Expanded presumption framework for certain occupations (firefighters, police, EMTs, etc.) with specified conditions.
- Mental impairment definitions aligned with DSM references (PTSD defined via mental health professionals; certain occupations included for presumptive mental impairment under specific conditions).
- Effective date: injuries on or after October 1, 2026.
4) Attorney fees and retainer disclosures (Sec. 9)
- Retainer agreements required for employees’ legal representation in workers’ compensation matters.
- Notice to employees of the maximum fee: 20% of first $275,000 of compensation (with a cumulative maximum of $55,000 for fees related to the same injury). Agreement and signature required to establish presumption of understanding fee limits.
- Effective for dates of injury on or after October 1, 2024.
5) Permanent partial disability schedule adjustments (Sec. 10)
- Recalibrates the permanent partial disability (PPD) schedule with updated monetary amounts for various impairment percentages.
- New table shows higher dollar amounts across all impairment bands (reflecting updated compensation levels).
- Effective for injuries on or after October 1, 2026.
6) Employer exams and related procedures (Sec. 11)
- Modifies employer’s right to examine injured employees, including travel considerations, cost-sharing, and timing for examination reports.
- For self-insured employers/insurers, sets a 120-day deadline to complete and file examination reports, with extensions available for specific circumstances.
- Extends requirements for timely service of reports; adds good cause criteria for extensions.
7) Stipulated facts and expedited determinations (Sec. 13)
- Allows for decisions based on stipulated facts without a hearing, with appeal to the Court of Appeals.
- Must be assigned to a compensation judge; determinations issued within 60 days after receipt of stipulated facts.
8) Repealer and appendix (Sec. 14)
- Repeals certain pre-1993 and related sections (79.34 subd. 2a; 79.361; 79.363) and aligns with the new framework for WCRA governance and surplus distribution.
Effective dates
- Many changes are effective the day after final enactment; several provisions (notably Sections 8 and 10) specify effective dates for injury dates on or after October 1, 2026.
- Retainer-related changes take effect the day after enactment and apply to injuries after October 1, 2024.
Affected parties
- Employers, self-insured employers, insurer members of the WCRA, and insureds (policyholders) under Minnesota workers’ compensation programs.
- Workers’ Compensation Court of Appeals and Court of Administrative Hearings, for governance and scheduling provisions.
- Labor and Industry (L&I) and Department of Commerce for oversight of distributions, assessments, and approvals.
- Attorneys representing injured employees, through new retainer disclosure requirements.
Procedural and timeline notes
- Clear sequencing for excess surplus distributions and subsequent deficiencies with notification timelines to the commissioner.
- Prospective application for distributions/assessments; annual plans and rates require board approval and commissioner consent.
- Several provisions tie into final enactment dates and injury-date-based effectiveness (Oct 1, 2024 and Oct 1, 2026 benchmarks).
Sponsors
- Co-sponsor: Dave Baker
Bottom line
- HF4598 reforms the state’s workers’ compensation reinsurance framework, streamlining management and distribution of surplus/deficiency funds, updating occupational disease presumptions, modernizing attorney-fee disclosures, adjusting disability schedules, and enhancing administrative processes for timely determinations and exams. The bill emphasizes financial stability of the reinsurance mechanism while expanding protections and clarity for employers, claimants, and practitioners.
Compiled from official sources — confirm details with the bill’s official record.
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