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Prohibited practices

  • Statute violated -- Minnesota Statutes 176.194, subd. 3

  • Assessment statute -- Minnesota Statutes 176.194, subd. 4

  • Penalty payable to -- Assigned Risk Safety Account (ARSA)

  • Assessed against -- insurer, self-insured employer, third-party administrator or adjuster

Special note

Prohibited-practice penalties may be assessed in addition to any other penalties provided by the workers' compensation laws. They may be assessed against insurance companies, self-insured employers, third-party administrators that act on behalf of an insurer, adjusters, the Minnesota Insurance Guaranty Association or any other entity.


A penalty may be assessed when the department finds that any of 11 specific types of prohibited conduct have occurred in the handling of claims.

Types of prohibited conduct

  1. Failing to reply, within 30 calendar-days after receipt, to all written communication about a claim from a claimant that requests a response.

  2. Failing, within 45 calendar-days after receipt of a written request, to commence benefits or to advise the claimant of the acceptance or denial of the claim by the insurer.

  3. Failing to pay or deny medical bills within 45 days after the receipt of all information requested from medical providers that is necessary to make a payment determination.

  4. Filing a denial of liability for workers' compensation benefits without conducting an investigation.

  5. Failing to regularly pay weekly benefits in a timely manner, as prescribed by the rules adopted by the commissioner, after weekly benefits have begun. Failure to regularly pay weekly benefits means failure to pay an employee on more than three occasions in any 12-month period, within three business-days of when payment was due.

  6. Failing to respond to the department within 30 calendar-days after receipt of a written inquiry from the department about a matter related to benefits. Responses must be substantive and address the question.

  7. Failing to pay pursuant to an order from the department, compensation judge, court of appeals or the supreme court, within 45 days from the filing or the order, unless the order is under appeal.

  8. Advising a claimant not to obtain the services of an attorney or representing that payment will be delayed if an attorney is retained by the claimant.

  9. Altering information on a document to be filed with the department without the notice and consent of any person who previously signed the document and who would be adversely affected by the alteration.

  10. Providing fraudulent written information to the department or an employee pertaining to a workers' compensation matter.

  11. Failing to pay a claim, or otherwise correct behavior on a claim, for which a penalty assessed has been paid or become a final order.

The prohibited conduct most commonly penalized by the department is failing to respond to the department within 30 days after receipt of a written inquiry from the department about a matter related to benefits.


The penalty amount is based on the number of penalties assessed against the party for violations during the previous 12-month period prior to the current violation. The chart below shows the current penalty amounts for each violation.

Items 1 to 6

Violation number Penalty amount
1 through 5 Warning
6 through 10 $3,000 each
11 through 30 $6,000 each

Items 7 and 11

Violation number Penalty amount
1 through 5 $3,000 each
6 through 30 $6,000 each

If a party has 31 or more violations during a 12-month period, a penalty of $6,000 is assessed for each violation. In addition, the department may refer the party to the Minnesota Department of Commerce for license review.

How to avoid a penalty

Although the law requires a response to the department's written request within 30 days, we realize the information we request may not be readily available, especially when an older claim is involved. When a party receives a request from the department but is unable to supply the requested information within 30 days, contact the department. Telling the department the information cannot be immediately supplied will generally satisfy the statutory requirement to respond to the initial request. The department will continue to expect to receive the information that was requested.

When the department asks for information that a party no longer has available because their file has been destroyed, they should contact the person who made the request. Often, alternative ways to obtain the information can be found.

Communication with the department is the key to avoiding penalties for failure to respond.