SB-0062, As Passed Senate, January 31, 2013
SENATE BILL No. 62
January 16,
2013, Introduced by Senators SMITH and HUNE and referred to the Committee on
Insurance.
A
bill to amend 1956 PA 218, entitled
"The
insurance code of 1956,"
by
amending sections 2213b, 2242, 3426, 3705, 3712, 5008, 5104,
5209,
5800, and 5824 (MCL 500.2213b, 500.2242, 500.3426, 500.3705,
500.3712,
500.5008, 500.5104, 500.5209, 500.5800, and 500.5824),
section
2213b as amended by 1998 PA 457, section 2242 as amended by
1990
PA 305, section 3426 as added by 2006 PA 412, sections 3705
and
3712 as added by 2003 PA 88, section 5008 as amended by 1994 PA
226,
section 5104 as amended by 1999 PA 211, and section 5800 as
amended
by 2000 PA 8, and by adding sections 3405a, 3428, 3472,
3474a,
3612a, 5801, 5805, 5825, and 5826.
THE
PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
2213b. (1) Except as otherwise provided in this section,
an
insurer that delivers, issues for delivery, or renews in this
state
an expense-incurred hospital, medical, or surgical individual
policy
under chapter 34 shall renew or continue in force the policy
at
the option of the individual.
(2)
Except as otherwise provided in this section, an insurer
that
delivers, issues for delivery, or renews in this state an
expense-incurred
hospital, medical, or surgical group policy or
certificate
under chapter 36 shall renew or continue in force the
policy
or certificate at the option of the sponsor of the plan.
(3)
Guaranteed renewal is not required in cases of fraud,
intentional
misrepresentation of material fact, lack of payment, if
the
insurer no longer offers that particular type of coverage in
the
market, or if the individual or group moves outside the service
area.
(4)
An insurer or health maintenance organization that offers
an
expense-incurred hospital, medical, or surgical policy under
chapter
34 or 36 shall not discontinue offering a particular plan
or
product in the nongroup or group market unless the insurer or
health
maintenance organization does all of the following:
(a)
Provides notice to the commissioner and to each covered
individual
or group, as applicable, provided coverage under the
plan
or product of the discontinuation at least 90 days before the
date
of the discontinuation.
(b)
Offers to each covered individual or group, as applicable,
provided
coverage under the plan or product the option to purchase
any
other plan or product currently being offered in the nongroup
market
or group market, as applicable, by that insurer or health
maintenance
organization without excluding or limiting coverage for
a
preexisting condition or providing a waiting period.
(c)
Acts uniformly without regard to any health status factor
of
enrolled individuals or individuals who may become eligible for
coverage
in making the determination to discontinue coverage and in
offering
other plans or products.
(5)
An insurer or health maintenance organization shall not
discontinue
offering all coverage in the nongroup or group market
unless
the insurer or health maintenance organization does all of
the
following:
(a)
Provides notice to the commissioner and to each covered
individual
or group, as applicable, of the discontinuation at least
180
days before the date of the expiration of coverage.
(b)
Discontinues all health benefit plans issued in the
nongroup
or group market from which the insurer or health
maintenance
organization withdrew and does not renew coverage under
those
plans.
(6)
If an insurer or health maintenance organization
discontinues
coverage under subsection (5), the insurer or health
maintenance
organization shall not provide for the issuance of any
health
benefit plans in the nongroup or group market from which the
insurer
or health maintenance organization withdrew during the 5-
year
period beginning on the date of the discontinuation of the
last
plan not renewed under that subsection.
(7) (4)
Subsections (1) ,
(2), and (3) to (6) do not apply to
a
short-term or 1-time limited duration policy or certificate of no
longer
than 6 months.
(8) (5)
For the purposes of this section
and section 3406f, a
short-term
or 1-time limited duration policy or certificate of no
longer
than 6 months is an individual health policy that meets all
of
the following:
(a)
Is issued to provide coverage for a period of 185 days or
less,
except that the health policy may permit a limited extension
of
benefits after the date the policy ended solely for expenses
attributable
to a condition for which a covered person incurred
expenses
during the term of the policy.
(b)
Is nonrenewable, provided that the health insurer may
provide
coverage for 1 or more subsequent periods that satisfy
subdivision
(a), if the total of the periods of coverage do not
exceed
a total of 185 days out of any 365-day period, plus any
additional
days permitted by the policy for a condition for which a
covered
person incurred expenses during the term of the policy.
(c)
Does not cover any preexisting conditions.
(d)
Is available with an immediate effective date, without
underwriting,
upon receipt by the insurer of a completed
application
indicating eligibility under the health insurer's
eligibility
requirements, except that coverage that includes
optional
benefits may be offered on a basis that does not meet this
requirement.
(9) (6)
An By March 31 each year, an insurer that delivers,
issues
for delivery, or renews in this state a short-term or 1-time
limited
duration policy or certificate of no longer than 6 months
shall
provide the following to the commissioner :
(a)
By no later than February 1, 1999, a written report that
discloses
both of the following:
(i) The gross written premium for short-term or 1-time
limited
duration
policies or certificates of no longer than 6 months issued
in
this state during the 1996 calendar year.
(ii) The gross written premium for all individual
expense-
incurred
hospital, medical, or surgical policies or certificates
issued
or delivered in this state during the 1996 calendar year
other
than policies or certificates described in subparagraph (i).
(b)
By no later than March 31, 1999 and annually thereafter, a
written
annual report that discloses both of the following:
(a) (i) The
gross written premium for short-term or 1-time
limited
duration policies or certificates issued in this state
during
the preceding calendar year.
(b) (ii) The
gross written premium for all individual expense-
incurred
hospital, medical, or surgical policies or certificates
issued
or delivered in this state during the preceding calendar
year
other than policies or certificates described in subparagraph
(i).subdivision
(a).
(10) (7)
The commissioner shall maintain
copies of reports
prepared
pursuant to subsection (6) (9)
on file with the annual
statement
of each reporting insurer. The commissioner shall
annually
compile the reports received under subsection (6) (9).
The
commissioner
shall provide this annual compilation to the senate
and
house of representatives standing committees on insurance
issues
no later than the June 1 immediately following the February
1
or March 31 date for which the
reports under subsection (6) (9)
are
provided.
(11) (8)
In each calendar year, a health
insurer shall not
continue
to issue short-term or 1-time limited duration policies or
certificates
if to do so the collective gross written premiums on
those
policies or certificates would total more than 10% of the
collective
gross written premiums for all individual expense-
incurred
hospital, medical, or surgical policies or certificates
issued
or delivered in this state either directly by that insurer
or
through a corporation that owns or is owned by that insurer.
Sec.
2242. (1) Except as otherwise provided in section
2236(8)(d),
a group disability policy shall not be issued or
delivered
in this state unless a copy of the form has been filed
with
the commissioner and approved by him or her.
(2)
The Subject to subsection
(3), the commissioner may within
30
days after the filing of a disability insurance policy form
applicable
to individual or family expense coverage, disapprove the
form
for any of the following, subject to the requirements as to
notice,
hearing, and appeal set forth in sections 244 and 2236:
(a)
The benefits provided therein under
the policy are
unreasonable
in relation to the premium charged.
(b)
It The policy contains a provision or provisions which are
that
is unjust, unfair, inequitable,
misleading, or deceptive
, or
encourage
that encourages misrepresentation of the policy.
(c)
It The policy does not comply with other provisions of
law.
(3)
The commissioner
may extend the time period in
subsection (2) for an additional period not to exceed
30 days if
written notice to the insurer is provided within 30
days after
the filing under subsection (2).
(4) (3)
The commissioner may at any time
withdraw his or her
approval
of an individual or family expense policy form on any of
the
grounds stated in subsection (2), subject to the requirements
as
to notice, hearing, and appeal set forth in sections 244 and
2236.
An insurer shall not issue the form after the effective date
of
the withdrawal of approval.
Sec.
3405a. (1) Notwithstanding any provision of this act to
the
contrary, this section applies to the use of a most favored
nation
clause in a provider contract on and after February 1, 2013.
(2)
Subject to subsection (3), beginning February 1, 2013, an
insurer
or a health maintenance organization shall not use a most
favored
nation clause in any provider contract, including a
provider
contract in effect on February 1, 2013, unless the most
favored
nation clause has been filed with and approved by the
commissioner.
Subject to subsection (3), beginning February 1,
2013,
an insurer or a health maintenance organization shall not
enforce
a most favored nation clause in any provider contract
without
the prior approval of the commissioner.
(3)
Beginning January 1, 2014, an insurer or a health
maintenance
organization shall not use a most favored nation clause
in
any provider contract, including a provider contract in effect
on
January 1, 2014.
(4)
As used in this section, "most favored nation clause"
means
a clause that does any of the following:
(a)
Prohibits, or grants a contracting insurer or health
maintenance
organization an option to prohibit, a provider from
contracting
with another party to provide health care services at a
lower
rate than the payment or reimbursement rate specified in the
contract
with the insurer or health maintenance organization.
(b)
Requires, or grants a contracting insurer or health
maintenance
organization an option to require, a provider to accept
a
lower payment or reimbursement rate if the provider agrees to
provide
health care services to any other party at a lower rate
than
the payment or reimbursement rate specified in the contract
with
the insurer or health maintenance organization.
(c)
Requires, or grants a contracting insurer or health
maintenance
organization an option to require, termination or
renegotiation
of an existing provider contract if a provider agrees
to
provide health care services to any other party at a lower rate
than
the payment or reimbursement rate specified in the contract
with
the insurer or health maintenance organization.
(d)
Requires a provider to disclose, to the insurer or health
maintenance
organization or the insurer's or health maintenance
organization's
designee, the provider's contractual payment or
reimbursement
rates with other parties.
Sec.
3426. (1) Each insurer providing a group expense-incurred
hospital,
medical, or surgical certificate delivered, issued for
delivery,
or renewed in this state and each health maintenance
organization
may offer group wellness coverage. Wellness coverage
may
provide for an appropriate rebate or reduction in premiums or
for
reduced copayments, coinsurance, or deductibles, or a
combination
of these incentives, for participation in any health
behavior
wellness, maintenance, or improvement program offered by
the
employer. The employer shall provide evidence of demonstrative
maintenance
or improvement of the insureds' or enrollees' health
behaviors
as determined by assessments of agreed-upon health status
indicators
between the employer and the health insurer or health
maintenance
organization. Any rebate of premium provided by the
health
insurer or health maintenance
organization is presumed to be
appropriate
unless credible data demonstrate otherwise, but shall
not
exceed 10% 30% of paid premiums, unless otherwise approved by
the
commissioner. Each insurer and each
health maintenance
organization
shall make available to employers all wellness
coverage
plans that the insurer or health maintenance organization
markets
to employers in this state.
(2)
Each insurer providing an individual or family expense-
incurred
hospital, medical, or surgical policy delivered, issued
for
delivery, or renewed in this state and each health maintenance
organization
may offer individual and family wellness coverage.
Wellness
coverage may provide for an appropriate rebate or
reduction
in premiums or for reduced copayments, coinsurance, or
deductibles,
or a combination of these incentives, for
participation
in any health behavior wellness, maintenance, or
improvement
program approved by the insurer or health maintenance
organization.
The insured or enrollee shall provide evidence of
demonstrative
maintenance or improvement of the individual's or
family's
health behaviors as determined by assessments of agreed-
upon
health status indicators between the insured or enrollee and
the
health insurer or health maintenance organization. Any rebate
of
premium provided by the health insurer or health maintenance
organization
is presumed to be appropriate unless credible data
demonstrate
otherwise, but shall not exceed 10% 30% of paid
premiums, unless otherwise approved by the
commissioner. Each
insurer
and each health maintenance organization shall make
available
to individuals and families all wellness coverage plans
that
the insurer or health maintenance organization markets to
individuals
and families in this state.
(3)
An insurer and a health maintenance organization are not
required
to continue any health behavior wellness, maintenance, or
improvement
program or to continue any incentive associated with a
health
behavior wellness, maintenance, or improvement program.
Sec.
3428. Beginning January 1, 2014, an insurer shall
establish
and maintain a provider network that, at a minimum,
satisfies
any network adequacy requirements imposed by the
commissioner
pursuant to federal law.
Sec.
3472. (1) Beginning January 1, 2014, during an applicable
open
enrollment period, an insurer shall not deny or condition the
issuance
or effectiveness of a policy and shall not discriminate in
the
pricing of a policy on the basis of health status, claims
experience,
receipt of health care, or medical condition.
(2)
Subject to prior approval of the commissioner, an insurer
shall
establish reasonable open enrollment periods for all
disability
policies offered, delivered, issued for delivery, or
renewed
in this state on or after January 1, 2014.
(3)
The commissioner shall establish minimum standards for the
frequency
and duration of open enrollment periods established under
subsection
(2). The commissioner shall uniformly apply the minimum
standards
for the frequency and duration of open enrollment periods
established
under this subsection to all insurers.
Sec.
3474a. The premium rate charged by an insurer, health
maintenance
organization, or nonprofit health care corporation for
health
insurance coverage offered through a policy or certificate
delivered,
issued for delivery, or renewed in this state on or
after
January 1, 2014 in the individual or small group market shall
vary
based on the following factors only:
(a)
Whether the policy or certificate covers an individual or
family.
(b)
The rating area.
(c)
Age, except that the premium rate shall not vary by more
than
3 to 1 for adults for all plans other than child-only plans.
(d)
Tobacco use, except that the premium rate shall not vary
by
more than 1.5 to 1.
Sec.
3612a. Notwithstanding section 3612(8), for a policy
delivered,
issued for delivery, or renewed in this state on or
after
January 1, 2014, the premium for an individual conversion
policy
under section 3612 shall be determined only by using the
rating
factors set forth in section 3474a.
Sec.
3705. (1) For adjusting premiums for health benefit plans
subject
to this chapter, a carrier may establish up to 10
geographic
areas in this state. A nonprofit health care corporation
shall
establish geographic areas that cover all counties in this
state.
(2)
Premiums for a health benefit plan under this chapter are
subject
to the following:
(a)
For a nonprofit health care corporation, only industry and
age
may be used for determining the premiums within a geographic
area
for a small employer or sole proprietor located in that
geographic
area. For a health maintenance organization, only
industry,
age, and group size may be used for determining the
premiums
within a geographic area for a small employer or sole
proprietor
located in that geographic area. For a commercial
carrier,
only industry, age, group size, and health status may be
used
for determining the premiums within a geographic area for a
small
employer or sole proprietor located in that geographic area.
(b)
The premiums charged during a rating period by a nonprofit
health
care corporation or a health maintenance organization for a
health
benefit plan in a geographic area to small employers or sole
proprietors
located in that geographic area shall not vary from the
index
rate for that health benefit plan by more than 35% of the
index
rate. However, for a health benefit plan issued before the
effective
date of this chapter by a nonprofit health care
corporation
or health maintenance organization, the premiums for
the
plan are subject to the following:
(i) For a renewal occurring on or after the effective
date of
this
chapter and through December 31, 2004, the premiums charged
for
a health benefit plan in a geographic area to small employers
or
sole proprietors located in that geographic area shall not be
higher
than 15% above the index rate or lower than 35% below the
index
rate.
(ii) For a renewal occurring on or after January 1,
2005, the
premiums
charged for a health benefit plan in a geographic area to
small
employers or sole proprietors located in that geographic area
shall
not vary from the index rate for that health benefit plan by
more
than 35% of the index rate.For
a health benefit plan
delivered,
issued for delivery, or renewed in this state on or
after
January 1, 2014, the premiums charged during a rating period
to
small employers shall be determined only by using the rating
factors
set forth in section 3474a.
(c)
The premiums charged during a rating period by a nonprofit
health
care corporation, health maintenance organization, or
commercial
carrier for a health benefit plan in a geographic area
to
small employers or sole proprietors located in that geographic
area
shall not vary from the index rate for that health benefit
plan
by more than 45% of the index rate. However, for a health
benefit
plan issued before the effective date of this chapter by a
commercial
carrier, the premiums for the plan are subject to the
following:
(i) For a renewal occurring on or after the effective
date of
this
chapter and through December 31, 2004, the premiums charged
for
a health benefit plan in a geographic area to small employers
or
sole proprietors located in that geographic area shall not vary
from
the index rate for that health benefit plan by more than 70%
of
the index rate.
(ii) For a renewal occurring on or after January 1,
2005 and
through
December 31, 2005, the premiums charged for a health
benefit
plan in a geographic area to small employers or sole
proprietors
located in that geographic area shall not vary from the
index
rate for that health benefit plan by more than 55% of the
index
rate.
(iii) For a renewal occurring on or after January 1,
2006, the
premiums
charged for a health benefit plan in a geographic area to
small
employers or sole proprietors located in that geographic area
shall
not vary from the index rate for that health benefit plan by
more
than 45% of the index rate.
(d)
For a sole proprietor, a small employer carrier may charge
an
additional premium of up to 25% above the premiums in
subdivision
(b). or (c).
(e)
Except as otherwise provided in this section, the
percentage
increase in the premiums charged to a small employer or
sole
proprietor in a geographic area for a new rating period shall
not
exceed the sum of the annual percentage adjustment in the
geographic
area's index rate for the health benefit plan and an
adjustment
pursuant to subdivision (a). The adjustment pursuant to
subdivision
(a) shall not exceed 15% annually and shall be adjusted
pro
rata for rating periods of less than 1 year. This subdivision
does
not prohibit an adjustment due to change in coverage.
(3)
Beginning 1 year after the effective date of this chapter
January
23, 2005, if a small employer had been
covered by a self-
insured
health benefit plan immediately preceding application for a
health
benefit plan subject to this chapter, a carrier may charge
an
additional premium of up to 33% above the premium in subsection
(2)(b)
or (c) for no more than 2 years.
(4)
Health benefit plan options, number of family members
covered,
and medicare eligibility may be used in establishing a
small
employer's or sole proprietor's premium.
(5)
A small employer carrier shall apply all rating factors
consistently
with respect to all small employers and sole
proprietors
in a geographic area. Except as otherwise
provided in
subsection
(4), a small employer carrier shall bill a small
employer
group only with a composite rate and shall not bill so
that
1 or more employees in a small employer group are charged a
higher
premium than another employee in that small employer group.
Sec.
3712. (1) If a small employer carrier decides to
discontinue
offering all small employer health benefit plans in a
geographic
area, all of the following apply:
(a)
The small employer carrier shall provide notice to the
commissioner
and to each small employer covered by the small
employer
carrier in the geographic area of the discontinuation at
least
180 days prior to the date of the discontinuation of the
coverage.
(b)
All small employer health benefit plans issued or
delivered
for issuance in the geographic area are discontinued and
all
current health benefit plans in the geographic area are not
renewed.
(c)
The small employer carrier shall not issue or deliver for
issuance
any small employer health benefit plans in the geographic
area
for 5 years beginning on the date the last small employer
health
benefit plan in the geographic area is not renewed under
subdivision
(b).
(d)
The small employer carrier shall not issue or deliver for
issuance
for 5 years any small employer health benefit plans in an
area
that was not a geographic area where the small employer
carrier
was issuing or delivering for issuance small employer
health
benefit plans on the date notice was given under subdivision
(a).
The 5-year period under this subdivision begins on the date
notice
was given under subdivision (a).
(2)
A nonprofit health care corporation shall not cease to
renew
all health benefit plans in a geographic area.A small
employer
carrier shall not discontinue offering a particular plan
or
product in the small employer group market unless the small
employer
carrier does all of the following:
(a)
Provides notice to the commissioner and to each small
employer
provided coverage under the plan or product of the
discontinuation
at least 90 days before the date of the
discontinuation.
(b)
Offers to each small employer provided coverage under the
plan
or product the option to purchase any other plan or product
currently
being offered in the small employer group market by that
small
employer carrier without excluding or limiting coverage for a
preexisting
condition or providing a waiting period.
(c)
Acts uniformly without regard to any health status factor
of
enrolled individuals or individuals who may become eligible for
coverage
in making the determination to discontinue coverage and in
offering
other plans or products.
Sec.
5008. (1) The commissioner shall prepare and keep on hand
blank
forms of articles of incorporation for insurers desiring to
incorporate
under this act, which forms may be had on application.
(2)
The incorporators shall subscribe articles of
incorporation
in duplicate, which articles shall contain all of the
following:
(a)
The names of the incorporators and their places of
residence
respectively.
(b)
The location of the principal office for the transaction
of
business in this state.
(c)
The name by which the incorporation shall be known, which
if
it be upon the mutual plan shall contain the word "mutual".
However,
a nonprofit mutual disability insurer into which a
nonprofit
health care corporation that is organized under the
nonprofit
health care corporation reform act, 1980 PA 350, MCL
550.1101
to 550.1704, is merged or consolidated may retain and use
trade
names in use by the nonprofit health care corporation before
the
merger or consolidation.
(d)
The purposes of the incorporation and the reference to the
chapter
of this act under which the purposes are enumerated and
under
which the company intends to operate.
(e)
The manner in which the corporate powers are to be
exercised;
the number of directors and other officers; the manner
of
electing the directors and other officers, and how many of the
directors
shall constitute a quorum, and the manner of filling all
vacancies;
and, in the case of mutual life or life and disability
insurers,
the names and mailing addresses of the directors who
shall
serve until the first annual meeting of the corporation.
(f)
The amount of capital stock, if any, what proportion is to
be
paid in before the corporation commences business, and the value
of
the stock, as provided in section 5014.
(g)
The term of existence of the corporation, subject to
section
5010.
(h)
The time for the holding of the annual meetings of the
corporation.
(i)
Any terms and conditions of membership that the
incorporators
have agreed upon and which they consider important to
have
set forth in the articles.
(j)
Any other terms and conditions prescribed by law for that
class
of insurer.
(k)
If a mutual company operating on the assessment plan, the
number
of classes or divisions of members and the object or purpose
of
the classification or division, all of which shall be definitely
and
correctly stated; and in what manner assessments, premiums, or
payments
are to be required from the members, the purpose and
objects
for which the money so realized are to be appropriated, and
the
names and objects of each fund into which any the money shall
be
paid.
(3)
The articles of any stock insurer formed or existing under
this
act may contain, or may be amended to contain, a provision
that
the shareholders shall have no preemptive rights to subscribe
for
any additional shares of capital stock and authorizing the
board
of directors to prescribe the terms and conditions upon which
additional
shares of capital stock shall be offered for
subscription
including the price of the stock, which shall not be
less
than the par value of the stock; and to offer shares that have
not
been subscribed by stockholders within the time duly fixed by
the
board of directors for subscription to any other person or
persons
at a price and upon terms not less favorable than those
offered
to the stockholders.
(4)
The articles of incorporation may contain a provision
providing
that a director is not personally liable to the
corporation
or its shareholders or policyholders for monetary
damages
for a breach of the director's fiduciary duty. However, the
provision
does not eliminate or limit the liability of a director
for
any of the following:
(a)
A breach of the director's duty of loyalty to the
corporation
or its shareholders or policyholders.
(b)
Acts or omissions not in good faith or that involve
intentional
misconduct or knowing violation of law.
(c)
A violation of section 5036, 5276, or 5280.
(d)
A transaction from which the director derived an improper
personal
benefit.
(e)
An act or omission occurring before January 1, 1989.
(5)
The articles shall be acknowledged by the person signing
the
articles before some officer of this state authorized to take
acknowledgments
of deeds, who shall attach his or her certificate
of
acknowledgment.
Sec.
5104. (1) Subject to the requirements of this act
applicable
to domestic stock insurers, domestic mutual insurers,
reciprocals, or
inter-insurance exchanges, and the further
requirements
of this chapter, 13 or more persons may organize a
stock
insurer or 20 or more persons may organize a mutual insurer
for
the purpose of transacting any or all of the following kinds of
insurance:
property, marine, inland navigation and transportation,
casualty,
or fidelity and surety, all as defined in chapter 6. Once
organized
and authorized, the acquiring insurer is subject to all
applicable
provisions of this act.
(2)
If During the period that the acquiring insurer is a
domestic
stock insurer owned by a nonprofit health care corporation
formed
pursuant to the nonprofit health care corporation reform
act,
1980 PA 350, MCL 550.1101 to 550.1704, then for insurance
products
and services, the acquiring insurer under this chapter,
whether
directly or indirectly, shall only transact worker's
compensation
insurance and employer's liability insurance, transact
disability
insurance limited to replacement of loss of earnings,
and
act as an administrative services organization for an approved
self-insured
worker's compensation plan or a disability insurance
plan
limited to replacement of loss of earnings. This subsection
does
not preclude the acquiring insurer from providing either
directly
or indirectly noninsurance products and services as
otherwise
provided by law.
Sec.
5209. An Except as
otherwise provided in this section, an
insurer
shall transact its business under its own name , and shall
not
adopt any assumed name. ; excepting that an An insurer,
by
amending
its articles of incorporation, may change its name or take
a
new name. A nonprofit mutual
disability insurer into which a
nonprofit
health care corporation that is organized under the
nonprofit
health care corporation reform act, 1980 PA 350, MCL
550.1101
to 550.1704, is merged or consolidated may retain and use
trade
names in use by the nonprofit health care corporation before
the
merger or consolidation.
Sec.
5800. (1) This chapter applies only to domestic mutual
insurers
transacting property, casualty, disability, and other
insurances, and
to mutual holding companies resulting from the
reorganization
of those mutual insurers, and to
nonprofit mutual
disability
insurers.
(2)
This chapter does not apply to any domestic insurer doing
business
on August 10, 1917, unless the insurer fully complies with
this
chapter and by resolution of its board of directors duly
certified
to by the president and secretary and filed with and
approved
by the commissioner elects to adopt the provisions of this
chapter,
in which case the insurer may thereafter effect such kind
or
kinds of insurance as specified in its articles of incorporation
as
then or thereafter amended or as may be specified in the
resolution.
(3)
A person incorporating under this chapter after January 1,
1984,
is subject to the minimum financial requirements of sections
408
and 410. Any corporation incorporated under this chapter on or
before
January 1, 1984, shall continue continues
to be subject to
the
provisions of section 5810(3).
(4)
A Except as otherwise
provided in section 5801(2), a
domestic
mutual insurer transacting property, casualty, disability,
and
other insurances may be reorganized pursuant to chapters 59 and
60.
Sec.
5801. (1) A domestic mutual insurer may be formed with
nonprofit
status.
(2)
A nonprofit mutual disability insurer has all powers of a
mutual
insurer organized under this chapter unless expressly
reserved.
A nonprofit mutual disability insurer that has merged
with
a nonprofit health care corporation as provided in section
5805(1)
shall not convert its status to a stock insurer under
chapter
59 or reorganize under chapter 60.
Sec.
5805. (1) As set forth in section 220 of the nonprofit
health
care corporation reform act, 1980 PA 350, MCL 550.1220, a
nonprofit
health care corporation may merge with a nonprofit mutual
disability
insurer where the surviving entity is governed by this
chapter.
A merger described in this section is exempt from the
application
of sections 1311 to 1319. Notwithstanding any provision
of
this act to the contrary, the resulting nonprofit mutual
disability
insurer shall continue as a nonprofit entity and shall
continue
to provide coverage to the individual and small group
health
markets in this state.
(2)
A nonprofit mutual disability insurer that has merged with
a
nonprofit health care corporation as described in subsection (1)
may,
at its option, continue to offer any product that was offered
to
the subscribers of the nonprofit health care corporation.
(3)
A nonprofit mutual disability insurer that has merged with
a
nonprofit health care corporation as described in subsection (1)
may
offer supplemental coverage to medicare enrollees as provided
in
chapter 38. Notwithstanding any other provision of this act to
the
contrary and until July 31, 2016, both of the following apply
to
an insurer described in this subsection:
(a)
The insurer shall continue to offer to current or new
eligible
policyholders who are residents of this state, at the same
rates
as offered to subscribers by the nonprofit health care
corporation
on the effective date of this section, the supplemental
coverage
to medicare enrollees.
(b)
The insurer offering supplemental coverage under
subdivision
(a) shall continue all cost transfers as authorized
under
section 609(5) of the nonprofit health care corporation
reform
act, 1980 PA 350, MCL 550.1609, on the effective date of
this
section.
(4)
Benefits paid by a nonprofit mutual disability insurer
that
has merged with a nonprofit health care corporation as
described
in subsection (1) to an insured or provider by way of a
check
or other similar written instrument for the transmission or
payment
of money, that is not cashed within the period prescribed
in
the uniform unclaimed property act, 1995 PA 29, MCL 567.221 to
567.265,
shall escheat to this state pursuant to the uniform
unclaimed
property act, 1995 PA 29, MCL 567.221 to 567.265.
Sec.
5824. Every member of the company shall be is entitled
to
1
vote, or to a number of votes based upon the insurance in force,
the
number of policies held, or the amount of premiums paid, as may
be
provided in the bylaws. A
nonprofit mutual disability insurer
may
permit entities holding administrative services agreements with
it
to be members and may provide in its bylaws the basis for the
number
of votes the entities will have as members.
Sec.
5825. (1) A member of a nonprofit mutual disability
insurer
that has merged with a nonprofit health care corporation as
provided
in section 5805(1) shall have no interest in, or residual
rights
to, the assets of the nonprofit mutual disability insurer;
shall
not receive policy or surplus dividends; and shall not be
required
to pay capital assessments by the nonprofit mutual
disability
insurer.
(2)
In the event of the dissolution or winding up of a
nonprofit
mutual disability insurer described in subsection (1),
any
residual value remaining after satisfaction of claims filed
under
section 8142(1)(a) to (h), shall be distributed for the
benefit
of the people of this state to the Michigan health
endowment
fund created under part 6A of the nonprofit health care
corporation
reform act, 1980 PA 350, MCL 550.1651 to 550.1655, and
shall
be administered in a manner consistent with the supervision
of
trustees for charitable purposes act, 1961 PA 101, MCL 14.251 to
14.266.
(3)
In the event of a transaction or series of transactions
pursuant
to which the nonprofit mutual disability insurer
demutualizes
under chapter 59; converts to a mutual holding company
under
chapter 60; sells, transfers, or otherwise disposes of all or
substantially
all of its assets; merges into an entity and the
nonprofit
mutual disability insurer is not the surviving entity;
moves
its principal executive office out of this state;
redomesticates
to another state; or allows or permits a person or a
group
of persons acting in concert to beneficially own greater than
50%
of the voting power associated with ownership interests in the
nonprofit
mutual disability insurer, whether by merger, dividend,
or
any other means, then the nonprofit mutual disability insurer or
the
acquiring person or entity shall make payment for the benefit
of
the people of this state to the Michigan health endowment fund
created
under part 6A of the nonprofit health care corporation
reform
act, 1980 PA 350, MCL 550.1651 to 550.1655, in an amount
equal
to the greater of the acquisition price or the fair market
value
of the nonprofit mutual disability insurer and its
subsidiaries,
considered on a consolidated holding company basis as
of
the time of the closing of the transaction or series of
transactions,
as determined by an independent valuation by a person
or
entity mutually agreed upon by the attorney general, the
commissioner,
and the nonprofit mutual disability insurer. The cost
of
the independent valuation shall be paid by the nonprofit mutual
disability
insurer or the acquiring person or entity. The payment
for
the benefit of the people of this state shall be administered
in
a manner consistent with the supervision of trustees for
charitable
purposes act, 1961 PA 101, MCL 14.251 to 14.266, and
shall
be in satisfaction of any claim or assertion that
consideration
is due with respect to the charitable assets of the
nonprofit
mutual disability insurer.
(4)
As used in this section, "beneficially own" means actual
ownership
or the right, directly or indirectly, to control voting
power
associated with ownership interests in the nonprofit mutual
disability
insurer.
Sec.
5826. Until January 1, 2014, a nonprofit mutual
disability
insurer that has merged with a nonprofit health care
corporation
as described in section 5805(1) shall offer health care
benefits
to all residents of this state regardless of health
status.
Enacting
section 1. This amendatory act does not take effect
unless
Senate Bill No. 61
of the 97th Legislature is enacted into law.