1.2relating to commerce; providing recovery of damages and attorney fees for
1.3breach of an insurance policy; permitting a deceased professional's surviving
1.4spouse to retain ownership of a professional firm that was solely owned by the
1.5decedent for up to one year after the death;amending Minnesota Statutes 2008,
1.6sections 319B.02, by adding a subdivision; 319B.07, subdivision 1; 319B.08;
1.7319B.09, subdivision 1; 471.982, subdivision 3; proposing coding for new law
1.8in Minnesota Statutes, chapter 60A.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10    Section 1. [60A.0811] BREACH OF INSURANCE POLICY; RECOVERY OF
1.11INTEREST.
1.12    Subdivision 1. Definitions. For purposes of this section:
1.13(1) "insurance policy" means a commercial or professional insurance policy or
1.14contract other than:
1.15(i) a workers' compensation insurance policy or contract;
1.16(ii) a health insurance policy or contract issued, executed, renewed, maintained, or
1.17delivered in this state by a health carrier as defined in section 62A.011, subdivision 2;
1.18(iii) a life insurance or disability insurance policy or contract; or
1.19(iv) a policy or contract issued by a township mutual fire insurance company or
1.20farmers mutual fire insurance company operating under chapter 65A or 67A;
1.21(2) "insured" means any named insured, additional insured, or insured under an
1.22insurance policy; and
1.23(3) "insurer" means an insurer:
1.24(i) incorporated or organized in this state; or
1.25(ii) admitted, authorized, or licensed to do business or doing business in this state but
1.26not incorporated or organized in this state. Insurer does not include the joint underwriting
2.1association operating under chapter 62F or 62I; or a township mutual fire insurance
2.2company or farmers mutual fire insurance company operating under chapter 65A or 67A.
2.3    Subd. 2. Interest. (a) An insured who prevails in any claim against an insurer based
2.4on the insurer's breach or repudiation of, or failure to fulfill, a duty to provide services or
2.5make payments is entitled to recover 10 percent per annum interest on monetary amounts
2.6due under the insurance policy, calculated from the date the request for payment of those
2.7benefits was made to the insurer.
2.8(b) Punitive damages or damages for nonmonetary losses are not recoverable
2.9under this section.
2.10    Subd. 3. Application. This section applies to a court action or arbitration
2.11proceeding, including an action seeking declaratory judgment.
2.12EFFECTIVE DATE.This section is effective August 1, 2009, and applies to a
2.13cause of action existing on, or arising on or after that date.

2.14    Sec. 2. Minnesota Statutes 2008, section 319B.02, is amended by adding a subdivision
2.15to read:
2.16    Subd. 21a. Surviving spouse. "Surviving spouse" means a surviving spouse of a
2.17deceased professional as an individual, as the personal representative of the estate of the
2.18decedent, as the trustee of an inter vivos or testamentary trust created by the decedent, or
2.19as the sole heir or beneficiary of an estate or trust of which the personal representative or
2.20trustee is a bank or other institution that has trust powers.
2.21EFFECTIVE DATE.This section is effective the day following final enactment
2.22and applies to surviving spouses of professionals who die on or after that date.

2.23    Sec. 3. Minnesota Statutes 2008, section 319B.07, subdivision 1, is amended to read:
2.24    Subdivision 1. Ownership of interests restricted. Ownership interests in a
2.25professional firm may not be owned or held, either directly or indirectly, except by any of
2.26the following:
2.27(1) professionals who, with respect to at least one category of the pertinent
2.28professional services, are licensed and not disqualified;
2.29(2) general partnerships, other than limited liability partnerships, authorized to
2.30furnish at least one category of the professional firm's pertinent professional services;
2.31(3) other professional firms authorized to furnish at least one category of the
2.32professional firm's pertinent professional services;
3.1(4) a voting trust established with respect to some or all of the ownership interests
3.2in the professional firm, if (i) the professional firm's generally applicable governing law
3.3permits the establishment of voting trusts, and (ii) all the voting trustees and all the holders
3.4of beneficial interests in the trust are professionals licensed to furnish at least one category
3.5of the pertinent professional services; and
3.6(5) an employee stock ownership plan as defined in section 4975(e)(7) of the
3.7Internal Revenue Code of 1986, as amended, if (i) all the voting trustees of the plan are
3.8professionals licensed to furnish at least one category of the pertinent professional services,
3.9and (ii) the ownership interests are not directly issued to anyone other than professionals
3.10licensed to furnish at least one category of the pertinent professional services; and
3.11(6) sole ownership by a surviving spouse of a deceased professional who was the
3.12sole owner of the professional firm at the time of the professional's death, but only during
3.13the period of time ending one year after the death of the professional.
3.14EFFECTIVE DATE.This section is effective the day following final enactment
3.15and applies to surviving spouses of professionals who die on or after that date.

3.16    Sec. 4. Minnesota Statutes 2008, section 319B.08, is amended to read:
3.17319B.08 EFFECT OF DEATH OR DISQUALIFICATION OF OWNER.
3.18    Subdivision 1. Acquisition of interests or automatic loss of professional
3.19firm status. (a) If an owner dies or becomes disqualified to practice all the pertinent
3.20professional services, then either:
3.21(1) within 90 days after the death or the beginning of the disqualification, all of
3.22that owner's ownership interest must be acquired by the professional firm, by persons
3.23permitted by section 319B.07 to own the ownership interest, or by some combination; or
3.24(2) at the end of the 90-day period, the firm's election under section 319B.03,
3.25subdivision 2 , or 319B.04, subdivision 2, is automatically rescinded, the firm loses
3.26its status as a professional firm, and the authority created by that election and status
3.27terminates.
3.28An acquisition satisfies clause (1) if all right and title to the deceased or disqualified
3.29owner's interest are acquired before the end of the 90-day period, even if some or all of
3.30the consideration is paid after the end of the 90-day period. However, payment cannot be
3.31secured in any way that violates sections 319B.01 to 319B.12.
3.32(b) If automatic rescission does occur under paragraph (a), the firm must immediately
3.33and accordingly update its organizational document, certificate of authority, or statement
3.34of foreign qualification. Even without that updating, however, the rescission, loss of
4.1status, and termination of authority provided by paragraph (a) occur automatically at the
4.2end of the 90-day period.
4.3    Subd. 2. Terms of acquisition. (a) If:
4.4(1) an owner dies or becomes disqualified to practice all the pertinent professional
4.5services;
4.6(2) the professional firm has in effect a mechanism, valid according to the
4.7professional firm's generally applicable governing law, to effect a purchase of the deceased
4.8or disqualified owner's ownership interest so as to satisfy subdivision 1, paragraph (a),
4.9clause (1); and
4.10(3) the professional firm does not agree with the disqualified owner or the
4.11representative of the deceased owner to set aside the mechanism,
4.12then that mechanism applies.
4.13(b) If:
4.14(1) an owner dies or becomes disqualified to practice all the pertinent professional
4.15services;
4.16(2) the professional firm has in effect no mechanism as described in paragraph (a), or
4.17has agreed as mentioned in paragraph (a), clause (3), to set aside that mechanism; and
4.18(3) consistent with its generally applicable governing law, the professional firm
4.19agrees with the disqualified owner or the representative of the deceased owner, before
4.20the end of the 90-day period, to an arrangement to effect a purchase of the deceased
4.21or disqualified owner's ownership interest so as to satisfy subdivision 1, paragraph (a),
4.22clause (1),
4.23then that arrangement applies.
4.24(c) If:
4.25(1) an owner of a Minnesota professional firm dies or becomes disqualified to
4.26practice all the pertinent professional services;
4.27(2) the Minnesota professional firm does not have in effect a mechanism as described
4.28in paragraph (a);
4.29(3) the Minnesota professional firm does not make an arrangement as described in
4.30paragraph (b); and
4.31(4) no provision or tenet of the Minnesota professional firm's generally applicable
4.32governing law and no provision of any document or agreement authorized by the
4.33Minnesota professional firm's generally applicable governing law expressly precludes an
4.34acquisition under this paragraph,
5.1then the firm may acquire the deceased or disqualified owner's ownership interest as
5.2stated in this paragraph. To act under this paragraph, the Minnesota professional firm
5.3must within 90 days after the death or beginning of the disqualification tender to the
5.4representative of the deceased owner's estate or to the disqualified owner the fair value
5.5of the owner's ownership interest, as determined by the Minnesota professional firm's
5.6governance authority. That price must be at least the book value, as determined in
5.7accordance with the Minnesota professional firm's regular method of accounting, as of the
5.8end of the month immediately preceding the death or loss of license. The tender must be
5.9unconditional and may not attempt to have the recipient waive any rights provided in this
5.10section. If the Minnesota professional firm tenders a price under this paragraph within
5.11the 90-day period, the deceased or disqualified owner's ownership interest immediately
5.12transfers to the Minnesota professional firm regardless of any dispute as to the fairness
5.13of the price. A disqualified owner or representative of the deceased owner's estate who
5.14disputes the fairness of the tendered price may take the tendered price and bring suit
5.15in district court seeking additional payment. The suit must be commenced within one
5.16year after the payment is tendered. A Minnesota professional firm may agree with a
5.17disqualified owner or the representative of a deceased owner's estate to delay all or part
5.18of the payment due under this paragraph, but all right and title to the owner's ownership
5.19interests must be acquired before the end of the 90-day period and payment may not be
5.20secured in any way that violates sections 319B.01 to 319B.12.
5.21    Subd. 3. Expiration of firm-issued option on death or disqualification of holder.
5.22If the holder of an option issued under section 319B.07, subdivision 3, paragraph (a),
5.23clause (1), dies or becomes disqualified, the option automatically expires.
5.24    Subd. 4. One-year period for surviving spouse of sole owner. For purposes
5.25of this section, each mention of "90 days," "90-day period," or similar term shall be
5.26interpreted as one year after the death of a professional who was the sole owner of the
5.27professional firm if the surviving spouse of the deceased professional owns and controls
5.28the firm after the death.
5.29EFFECTIVE DATE.This section is effective the day following final enactment
5.30and applies to surviving spouses of professionals who die on or after that date.

5.31    Sec. 5. Minnesota Statutes 2008, section 319B.09, subdivision 1, is amended to read:
5.32    Subdivision 1. Governance authority. (a) Except as stated in paragraph (b), a
5.33professional firm's governance authority must rest with:
5.34(1) one or more professionals, each of whom is licensed to furnish at least one
5.35category of the pertinent professional services; or
6.1(2) a surviving spouse of a deceased professional who was the sole owner of the
6.2professional firm, while the surviving spouse owns and controls the firm, but only during
6.3the period of time ending one year after the death of the professional.
6.4(b) In a Minnesota professional firm organized under chapter 317A and in a foreign
6.5professional firm organized under the nonprofit corporation statute of another state, at least
6.6one individual possessing governance authority must be a professional licensed to furnish
6.7at least one category of the pertinent professional services.
6.8(c) Individuals who possess governance authority within a professional firm may
6.9delegate administrative and operational matters to others. No decision entailing the
6.10exercise of professional judgment may be delegated or assigned to anyone who is not a
6.11professional licensed to practice the professional services involved in the decision.
6.12(d) An individual whose license to practice any pertinent professional services is
6.13revoked or suspended may not, during the time the revocation or suspension is in effect,
6.14possess or exercise governance authority, hold a position with governance authority,
6.15or take part in any decision or other action constituting an exercise of governance
6.16authority. Nothing in this chapter prevents a board from further terminating, restricting,
6.17limiting, qualifying, or imposing conditions on an individual's governance role as board
6.18disciplinary action.
6.19(e) A professional firm owned and controlled by a surviving spouse must comply
6.20with all requirements of this chapter, except those clearly inapplicable to a firm owned
6.21and governed by a surviving spouse who is not a professional of the same type as the
6.22surviving spouse's decedent.
6.23EFFECTIVE DATE.This section is effective the day following final enactment
6.24and applies to surviving spouses of professionals who die on or after that date.

6.25    Sec. 6. Minnesota Statutes 2008, section 471.982, subdivision 3, is amended to read:
6.26    Subd. 3. Exemptions. Self-insurance pools established and open for enrollment
6.27on a statewide basis by the Minnesota League of Cities Insurance Trust, the Minnesota
6.28School Boards Association Insurance Trust, the Minnesota Association of Townships
6.29Insurance and Bond Trust, or the Minnesota Association of Counties Insurance Trust
6.30and the political subdivisions that belong to them are exempt from the requirements of
6.31this section and section sections 65B.48, subdivision 3, and 60A.0811. In addition, the
6.32Minnesota Association of Townships Insurance and Bond Trust and the townships that
6.33belong to it are exempt from the requirement to hold the certificate of surety authorization
6.34issued by the commissioner of commerce as provided in section 574.15.