HB 2713 Text

H. B. 2713

(By Delegates H. White, Hrutkay and R. M. Thompson)

[Introduced January 28, 2003 ; referred to the

Committee on Banking and Insurance then Government Organization.]

A BILL to amend and reenact sections three-a and twenty-four, article twenty-five-a, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, all relating to conditions precedent to issuance or maintenance of a certificate of authority by a health maintenance organization; and designating the secretary of state as attorney-in-fact for service of all legal process upon a nondomestic health maintenance organization.

Be it enacted by the Legislature of West Virginia:

That sections three-a and twenty-four, article twenty-five-a, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-3a. Conditions.

(1) As a condition precedent to the issuance or maintenance of a certificate of authority, a
health maintenance organization must file or have on file with the commissioner:

(a) An acknowledgment that a delinquency proceeding pursuant to article ten of this chapter or supervision by the commissioner pursuant to article thirty-four of this chapter constitutes the sole and exclusive method for the liquidation, rehabilitation, reorganization or conservation of a health maintenance organization;

(b) A waiver of any right to file or be subject to a bankruptcy proceeding;

(c) Within thirty days of any change in the membership of the governing body of the organization or in the officers or persons holding five percent or more of the common stock of the organization, or as otherwise required by the commissioner:

(i) An amended list of the names, addresses and official positions of each member of the governing body, and a full disclosure of any financial interest by a member of the governing body or any provider or any organization or corporation owned or controlled by that person and the health maintenance organization and the extent and nature of any contract or financial arrangements between that person and the health maintenance organization; and

(ii) A complete biographical statement on forms prescribed by the commissioner and an independent investigation report on each person for whom a biographical statement and independent investigation report have not previously been submitted; and

(d) Effective the first day of May, one thousand nine hundred ninety-eight, for health maintenance organizations that have been in existence at least three years, a copy of the current quality assurance report submitted to the health maintenance organization by a nationally recognized accreditation and review organization approved by the commissioner, or in the case of the issuance of an initial certificate of authority to a health maintenance organization, a determination by the commissioner as to the feasibility of the health maintenance organization's proposed quality assurance program: Provided, That if a health maintenance organization files proof found in the commissioners discretion to be sufficient to demonstrate that the health maintenance organization has timely applied for and reasonably pursued a review of its quality assurance program, but a quality report has not been issued by the accreditation and review organization, the health maintenance organization shall be ~~deemed~~ considered to have complied with this subdivision.

(2) After ~~the effective date of this section~~ the first day of July, two thousand three, as a condition precedent to the issuance of a certificate of authority, any organization ~~that has not yet obtained~~ making application for a certificate of authority to operate a health maintenance organization in this state shall be incorporated under the provisions of article one, chapter thirty-one of this code or the applicable law of the organization's state of domicile: Provided, That nothing in this subsection is intended to permit any corporation to apply for a certificate of authority to operate a health maintenance organization in this state unless the corporation complies with all requirements for health maintenance organizations contained within this article.

(3) After the effective date of this subsection, all certificates of authority issued to health maintenance organizations shall expire at midnight on the thirty-first day of May of each year. The commissioner shall renew annually the certificates of authority of all health maintenance organizations that continue to meet all requirements of this section and subsection (2), section four of this article, make application therefor upon a form prescribed by the commissioner and pay the renewal fee prescribed: Provided, That a health maintenance organization shall not qualify for renewal of its certificate of authority if the organization has no subscribers in this state within twelve months after issuance of the certificate of authority: Provided, however, That an organization not qualifying for renewal may apply for a new certificate of authority under section three of this article.

(4) The commencement of a bankruptcy proceeding either by or against a health maintenance organization shall, by operation of law:

(a) Terminate the health maintenance organization's certificate of authority; and

(b) Vest in the commissioner for the use and benefit of the subscribers of the health maintenance organization the title to any deposits of the health maintenance organization held by the commissioner.

(5) If the bankruptcy proceeding is initiated by a party other than the health maintenance organization, the operation of subsection (4) of this section shall be stayed for a period of sixty days following the date of commencement of the proceeding.
§33-25A-24. Statutory construction and relationship to other laws.

(a) Except as otherwise provided in this article, provisions of the insurance laws and provisions of hospital or medical service corporation laws are not applicable to any health maintenance organization granted a certificate of authority under this article. The provisions of this article shall not apply to an insurer or hospital or medical service corporation licensed and regulated pursuant to the insurance laws or the hospital or medical service corporation laws of this state except with respect to its health maintenance corporation activities authorized and regulated pursuant to this article. The provisions of this article may not apply to an entity properly licensed by a reciprocal state to provide health care services to employer groups, where residents of West Virginia are members of an employer group, and the employer group contract is entered into in the reciprocal state. For purposes of this subsection, a "reciprocal state" means a state which physically borders West Virginia and which has subscriber or enrollee hold harmless requirements substantially similar to those set out in section seven-a of this article.

(b) Factually accurate advertising or solicitation regarding the range of services provided, the premiums and copayments charged, the sites of services and hours of operation and any other quantifiable, nonprofessional aspects of its operation by a health maintenance organization granted a certificate of authority, or its representative may not be construed to violate any provision of law relating to solicitation or advertising by health professions: Provided, That nothing contained in this subsection shall be construed as authorizing any solicitation or advertising which identifies or refers to any individual provider or makes any qualitative judgment concerning any provider.

(c) Any health maintenance organization authorized under this article may not be considered to be practicing medicine and is exempt from the provisions of chapter thirty of this code, relating to the practice of medicine.

(d) The provisions of sections twelve, fifteen and twenty, article four (general provisions); section seventeen, article six (noncomplying forms); section twenty, article five (borrowing by insurers); article six-c (guaranteed loss ratio); article seven (assets and liabilities); article eight (investments); article eight-a (use of clearing corporations and federal reserve book- entry system); article nine (administration of deposits); article twelve (agents, brokers, solicitors and excess line); section fourteen, article fifteen (individual accident and sickness insurance); section sixteen, article fifteen (coverage of children); section eighteen, article fifteen (equal treatment of state agency); section nineteen, article fifteen (coordination of benefits with medicaid); article fifteen-b (uniform health care administration act); section three, article sixteen (required policy provisions); section three-f, article sixteen (treatment of temporomandibular disorder and craniomandibular disorder); section eleven article sixteen (coverage of children); section thirteen, article sixteen (equal treatment of state agency); section fourteen, article sixteen (coordination of benefits with medicaid); article sixteen-a (group health insurance conversion); article sixteen-d (marketing and rate practices for small employers); article twenty-five-c (health maintenance organization patient bill of rights); article twenty-seven (insurance holding company systems); article thirty-four-a (standards and commissioner's authority for companies considered to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-seven (managing general agents); article thirty-nine (disclosure of material transactions); article forty-one (privileges and immunity); and article forty-two (women's access to health care) shall be applicable to any health maintenance organization granted a certificate of authority under this article. In circumstances where the code provisions made applicable to health maintenance organizations by this section refer to the "insurer", the "corporation" or words of similar import, the language shall be construed to include health maintenance organizations.

(e) Any long-term care insurance policy delivered or issued for delivery in this state by a health maintenance organization shall comply with the provisions of article fifteen-a of this chapter.

NOTE: The purpose of this bill is to authorize corporations incorporated under the laws of states other than West Virginia to make application for, obtain and maintain a certificate of authority to operate a health maintenance organization, and to incorporate West Virginia Code §33-4-12 into the Health Maintenance Organization Act so that the West Virginia Secretary of State will be constituted the attorney-in-fact for service of legal process on every HMO licensed in this state whether it be a domestic or foreign corporation.

Strike-through indicates language that would be deleted from the present law, and underscoring indicates language that would be added.

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