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S1572aa,aa.................................................by STATE AFFAIRS
MANAGED CARE ORGANIZATIONS - Amends existing law to provide that managed
care organizations are members of the life and health insurance guaranty
association; to revise the purpose of the act to include members of managed
care organizations as members of the association; to provide coverage for
managed care contracts of disability insurers; to exclude coverage of
contractual obligations owed to nonresidents under a managed care plan; and
to provide that a managed care organization shall not be subject to a class
B or class C assessment for any domestic, foreign or alien insurer that is
declared insolvent by any court prior to July 1, 2000.
03/15 Senate intro - 1st rdg - to printing
03/16 Rpt prt - to Com/HuRes
03/17 Rpt out - to 14th Ord
Rpt out amen - to engros
03/20 Rpt engros - 1st rdg - to 2nd rdg as amen
To 14th Ord
03/21 Rpt out amen - to engros
03/22 Rpt engros - to 1st rdg as amen
03/23 2nd rdg - to 3rd rdg as amen
03/24 3rd rdg as amen - PASSED - 30-1-4
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Davis, Deide, Dunklin, Frasure, Geddes, Hawkins,
Keough, King-Barrutia, Lee, McLaughlin, Parry, Richardson, Risch,
Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler,
Whitworth, Williams
NAYS--Riggs
Absent and excused--Darrington, Ingram, Ipsen, Noh
Floor Sponsor - Crow
Title apvd - to House
03/27 House intro - 1st rdg as amen - to Bus
03/30 Rpt out - rec d/p - to 2nd rdg as amen
03/31 2nd rdg - to 3rd rdg as amen
04/04 3rd rdg as amen - PASSED - 62-2-6
AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell, Bieter,
Black, Boe, Bruneel, Callister, Campbell, Chase, Cheirrett, Crow,
Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes,
Hadley, Hammond, Hansen(23), Henbest, Hornbeck, Jaquet, Jones, Judd,
Kempton, Kendell, Kunz, Lake, Loertscher(Loertscher), Marley,
McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner,
Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali, Schaefer, Sellman,
Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman,
Trail, Wood, Zimmermann
NAYS -- Gould, Kellogg
Absent and excused -- Clark, Hansen(29), Linford, Mader, Wheeler, Mr
Speaker
Floor Sponsor - Alltus
Title apvd - to Senate
To enrol - rpt enrol - Pres signed
04/05 Sp signed
04/06 To Governor
04/14 Governor signed
Session Law Chapter 371
Effective: 07/01/00
S1572
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE SENATE
SENATE BILL NO. 1572, As Amended, As Amended
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE IDAHO LIFE AND HEALTH GUARANTY ASSOCIATION; PROVIDING LEGISLA-
3 TIVE INTENT; AMENDING SECTION 41-3931, IDAHO CODE, TO PROVIDE THAT MAN-
4 AGED CARE ORGANIZATIONS ARE MEMBERS OF THE ASSOCIATION; AMENDING SECTION
5 41-4302, IDAHO CODE, TO REVISE THE PURPOSE OF THE ACT AND TO MAKE TECHNI-
6 CAL CORRECTIONS; AMENDING SECTION 41-4303, IDAHO CODE, TO PROVIDE COVERAGE
7 FOR MANAGED CARE CONTRACTS OF DISABILITY INSURERS; AMENDING SECTION
8 41-4308, IDAHO CODE, TO EXCLUDE COVERAGE OF CONTRACTUAL OBLIGATIONS OWED
9 TO NONRESIDENTS UNDER A MANAGED CARE PLAN AND TO MAKE TECHNICAL CORREC-
10 TIONS; AMENDING SECTION 41-4309, IDAHO CODE, TO PROVIDE THAT A MANAGED
11 CARE ORGANIZATION SHALL NOT BE SUBJECT TO A CLASS B OR CLASS C ASSESSMENT
12 FOR ANY DOMESTIC, FOREIGN OR ALIEN INSURER THAT IS DECLARED INSOLVENT BY
13 ANY COURT PRIOR TO JULY 1, 2000 AND TO MAKE A TECHNICAL CORRECTION.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. LEGISLATIVE INTENT. It is the intent of the Legislature that
16 at least one member of the board of directors of the Idaho Life and Health
17 Guaranty Association be a managed care organization on and after July 1, 2000.
18
19 SECTION 2. That Section 41-3931, Idaho Code, be, and the same is hereby
20 amended to read as follows:
21 41-3931. PARTICIPATION IN IDAHO LIFE AND HEALTH INSURANCE GUARANTY ASSO-
22 CIATION. BY THE YEAR 2000. (1) By the conclusion of the year 2000, eEach orga-
23 nization offering a managed care plan for which a certificate of authority is
24 required under this chapter shall, as a condition of its authority to continue
25 to offer managed care plans in this state, become a member of a insurer of the
26 Idaho life and health insurance guaranty association having as its purpose the
27 protection of all members of the managed care organization in this state
28 against failure by the organization in the performance of its obligations due
29 to impairment or insolvency established under chapter 43, title 41, Idaho
30 Code.
31 (2) The director may take such actions and promulgate such rules as may
32 be necessary to effectuate the provisions of this section.
33 SECTION 3. That Section 41-4302, Idaho Code, be, and the same is hereby
34 amended to read as follows:
35 41-4302. PURPOSE. The purpose of this act is to protect policyowners,
36 insureds, members, beneficiaries, annuitants, payees, and assignees of life
37 insurance policies, health insurance policies, managed care plans, annuity
38 contracts, and supplemental contracts, subject to certain limitations, against
39 failure in the performance of contractual obligations due to the impairment of
40 insolvency of the insurer issuing such policies or contracts. To provide this
41 protection,: (1) an association of insurers is created to enable the guaranty
2
1 of payment of benefits and of continuation of coverages, to residents,;
2 (2) members of the association are subject to assessment to provide funds to
3 carry out the purpose of this act,; and (3) the association is authorized to
4 assist the director in the prescribed manner, in the detection and prevention
5 of insurer impairments or insolvencies.
6 SECTION 4. That Section 41-4303, Idaho Code, be, and the same is hereby
7 amended to read as follows:
8 41-4303. APPLICATION OF ACT. (1) This act shall apply to direct life
9 insurance policies, contractual obligations of managed care plans to members
10 of such plans only, disability insurance policies, annuity contracts, and con-
11 tracts supplemental to life and disability insurance policies, annuity con-
12 tracts, and contracts supplemental to life and disability insurance policies
13 and annuity contracts issued by persons licensed to transact insurance in this
14 state at any time.
15 (2) This act shall not apply to:
16 (a) That portion or part of a variable life insurance or variable annuity
17 contract not guaranteed by an insurer;
18 (b) That portion or part of any policy or contract under which the risk
19 is borne by the policyholder;
20 (c) Any policy or contract or part thereof assumed by the impaired or
21 insolvent insurer under a contract of reinsurance, other than reinsurance
22 for which assumption certificates have been issued;
23 (d) Any such policy or contract issued by a reciprocal insurer, mutual
24 benefit association, fraternal benefit society, hospital and medical ser-
25 vice corporation, health maintenance organization, limited managed care
26 plan, or self-funded health care plan; or
27 (e) Any unallocated annuity contract.
28 SECTION 5. That Section 41-4308, Idaho Code, be, and the same is hereby
29 amended to read as follows:
30 41-4308. POWERS AND DUTIES OF THE ASSOCIATION. In addition to the powers
31 and duties enumerated in other sections of this act:
32 (1) If a domestic insurer is an impaired insurer, the association may,
33 subject to any conditions imposed by the association, other than those which
34 impair the contractual obligations of the impaired insurer, and approved by
35 the impaired insurer and the director:
36 (a) Guarantee or reinsure, or cause to be guaranteed, assumed, or rein-
37 sured, any or all of the covered policies of residents of the impaired
38 insurers;
39 (b) Provide such monies moneys, pledges, notes, guarantees, or other
40 means as are proper to effectuate and assure payment of the contractual
41 obligations to residents of the impaired insurer pending action under sub-
42 section paragraph (a) above of this subsection;
43 (c) Loan money to the impaired insurer.
44 (d) This chapter shall provide coverage for the policies and contracts
45 specified in subsection (1) of this section, for persons who are not resi-
46 dents, but only under the following conditions:
47 (i) The insurers which issued such policies or contracts are domi-
48 ciled in this state; and
49 (ii) The director has determined that by statute, similar protection
50 is not available for such nonresidents as that provided in this chap-
51 ter for residents of this state; and
3
1 (iii) The policy or contract establishing or creating the obligation
2 is not a managed care plan.
3 (2) If a domestic insurer is an insolvent insurer, the association shall,
4 subject to the approval of the director:
5 (a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed,
6 or reinsured the covered policies of residents of the insolvent insurer;
7 (b) Assume payment of the contractual obligations to residents of the
8 insolvent insurer; and
9 (c) Provide such monies moneys, pledges, notes, guarantees, or other
10 means as are reasonably necessary to discharge such duties.
11 (d) This chapter shall provide coverage for the policies and contracts
12 specified in subsection (2) of this section, for persons who are not resi-
13 dents, but only under the following conditions:
14 (i) The insurers which issued such policies or contracts are domi-
15 ciled in this state; and
16 (ii) The director has determined that by statute, similar protection
17 is not available for such nonresidents as that provided by this chap-
18 ter for residents of this state; and
19 (iii) The policy or contract establishing or creating the obligation
20 is not a managed care plan.
21 (3) If a foreign or alien insurer is an insolvent insurer, the associa-
22 tion shall, subject to the approval of the director:
23 (a) Guarantee, assume, or reinsure, or cause to be guaranteed, assumed,
24 or reinsured the covered policies of residents;
25 (b) Assure payment of the contractual obligations of the insolvent
26 insurer to residents; and
27 (c) Provide such monies moneys, pledges, notes, guarantees, or other
28 means as are reasonably necessary to discharge such duties.
29 Provided, however, that this subsection shall not apply where the director has
30 determined that the foreign or alien insurer's domiciliary jurisdiction or
31 state of entry provides, by statute, protection substantially similar to that
32 provided by this act for residents of this state.
33 (4) (a) In carrying out its duties under subsections (2) and (3) of this
34 section, permanent policy liens, or contract liens may be imposed in con-
35 nection with any guarantee, assumption or reinsurance agreement, if the
36 court:
37 (i) Finds that the amounts which can be assessed under this act are
38 less than the amounts needed to assure full and prompt performance of
39 the insolvent insurer's contractual obligations, or that the economic
40 or financial conditions as they affect member insurers are suffi-
41 ciently adverse to render the imposition of policy or contract liens,
42 to be in the public interest; and
43 (ii) Approves the specific policy liens or contract liens to be
44 used.
45 (b) Before being obligated under subsections (2) and (3) of this section
46 the association may request that there be imposed temporary moratoriums or
47 liens on payments of cash values and policy loans in addition to any con-
48 tractual provisions for deferral of cash or policy loan values and such
49 temporary moratoriums and liens may be imposed if they are approved by the
50 court.
51 (5) If the association fails to act within a reasonable period of time as
52 provided in subsections (2) and (3) of this section, the director shall have
53 the powers and duties of the association under this act with respect to insol-
54 vent insurers.
55 (6) The association may render assistance and advice to the director upon
4
1 his request, concerning rehabilitation, payment of claims, continuance of cov-
2 erage, or the performance of other contractual obligations of any impaired or
3 insolvent insurer.
4 (7) The association shall have standing to appear before any court in
5 this state with jurisdiction over an impaired or insolvent insurer concerning
6 which the association is or may become obligated under this act. Such standing
7 shall extend to all matters germane to the powers and duties of the associa-
8 tion, including, but not limited to, proposals for reinsuring or guaranteeing
9 the covered policies of the impaired or insolvent insurer and the determina-
10 tion of the covered policies and contractual obligations.
11 (8) (a) Any person receiving benefits under this act shall be deemed to
12 have assigned the rights under the covered policy to the association to
13 the extent of the benefits received because of this act whether the bene-
14 fits are payments of contractual obligations or continuation of coverage.
15 The association may require an assignment to it of such rights by any
16 payee, policy or contract owner, beneficiary, insured or annuitant as a
17 condition precedent to the receipt of any rights or benefits conferred by
18 this act upon such person. The association shall be subrogated to these
19 rights against the assets of any insolvent insurer.
20 (b) The subrogation rights of the association under this subsection shall
21 have the same priority against the assets of the insolvent insurer as that
22 possessed by the person entitled to receive benefits under this act.
23 (9) The contractual obligations of the insolvent insurer for which the
24 association becomes or may become liable shall be as great as but no greater
25 than the contractual obligations of the insolvent insurer would have been in
26 the absence of an insolvency unless such obligations are reduced as permitted
27 by subsection (4) of this section but the aggregate liability of the associa-
28 tion shall not exceed one hundred thousand dollars ($100,000) in cash values,
29 or three hundred thousand dollars ($300,000) for all benefits, including cash
30 values, with respect to any one life.
31 (10) The association may:
32 (a) Enter into such contracts as are necessary or proper to carry out the
33 provisions and purposes of this act;
34 (b) Sue or be sued, including taking any legal actions necessary or
35 proper for recovery of any unpaid assessments under section 41-4309, Idaho
36 Code;
37 (c) Borrow money to effect the purposes of this act. Any notes or other
38 evidence of indebtedness of the association not in default shall be legal
39 investments for domestic insurers and may be carried as admitted assets;
40 (d) Employ or retain such persons as are necessary to handle the finan-
41 cial transactions of the association and to perform such other functions
42 as become necessary or proper under this act;
43 (e) Negotiate and contract with any liquidator, rehabilitator, conserva-
44 tor, or ancillary receiver to carry out the powers and duties of the asso-
45 ciation;
46 (f) Take such legal action as may be necessary to avoid payment of
47 improper claims;
48 (g) Exercise, for the purposes of this act and to the extent approved by
49 the director, the powers of a domestic life or health insurer, but in no
50 case may the association issue insurance policies or annuity contracts
51 other than those issued to perform the contractual obligations of the
52 impaired or insolvent insurer.
53 SECTION 6. That Section 41-4309, Idaho Code, be, and the same is hereby
54 amended to read as follows:
5
1 41-4309. ASSESSMENTS. (1) For the purpose of providing the funds neces-
2 sary to carry out the powers and duties of the association, the board of
3 directors shall assess the member insurers, separately for each account, at
4 such time and for such amounts as the board finds necessary. Assessments shall
5 be due not less than thirty (30) days after prior written notice to the member
6 insurers and shall accrue interest at eight percent (8%) per annum on and
7 after the due date.
8 (2) There shall be three (3) classes of assessments, as follows:
9 (a) Class A assessments shall be made for the purpose of meeting adminis-
10 trative costs and other general expenses and examinations conducted under
11 the authority of subsection (5) of section 41-4312 and of section 41-4315,
12 Idaho Code.
13 (b) Class B assessments shall be made to the extent necessary to carry
14 out the powers and duties of the association under section 41-4308, Idaho
15 Code, with regard to an impaired or insolvent domestic insurer.
16 (c) Class C assessments shall be made to the extent necessary to carry
17 out the powers and duties of the association under section 41-4308, Idaho
18 Code, with regard to an insolvent foreign or alien insurer.
19 (3) (a) The amount of any class A assessment shall be determined by the
20 board and may be made on a nonprorata non pro rata basis. Such assessment
21 shall be credited against future insolvency assessments. The amount of any
22 class B or C assessment shall be allocated for assessment purposes among
23 the accounts in the proportion that the premiums received by the impaired
24 or insolvent insurer on the policies covered by each account for the last
25 calendar year preceding the assessment in which the impaired or insolvent
26 insurer received premiums bears to the premiums received by such insurer
27 for such calendar year on all covered policies.
28 (b) Class C assessments against member insurers for each account shall be
29 in the proportion that the premiums received on business in this state by
30 each assessed member insurer on policies covered by each account for the
31 calendar year preceding the assessments bears to such premiums received on
32 business in this state for the calendar year preceding the assessment by
33 all assessed member insurers.
34 (c) Class B assessments for each account shall be made separately for
35 each state in which the impaired or insolvent domestic insurer was autho-
36 rized to transact insurance at any time, in the proportion that the pre-
37 miums received on business in such state by the impaired or insolvent
38 insurer on policies covered by such account for the last calendar year
39 preceding the assessment in which the impaired or insolvent insurer
40 received premiums bears to such premiums received in all such states for
41 such calendar year by the impaired or insolvent insurer. The assessments
42 against member insurers shall be in the proportion that the premiums
43 received on business in each such state by each assessed member insurer on
44 policies covered by each account for the calendar year preceding the
45 assessment bears to such premiums received on business in each state for
46 the calendar year preceding assessment by all assessed member insurers.
47 (d) Assessments for funds to meet the requirements of the association
48 with respect to an impaired or insolvent insurer shall not be made until
49 necessary to implement the purposes of this act. Classification of assess-
50 ments under subsection (2) of this section and computation of assessments
51 under this subsection shall be made with a reasonable degree of accuracy,
52 recognizing that exact determinations may not always be possible.
53 (e) Notwithstanding any other provision of this section, a managed care
54 organization shall not be subject to a class B or class C assessment for
55 any domestic, foreign or alien insurer that is declared insolvent by any
6
1 court prior to July 1, 2000.
2 (4) The association may abate or defer, in whole or in part, the assess-
3 ment of a member insurer if, in the opinion of the board, payment of the
4 assessment would endanger the ability of the member insurer to fulfill its
5 contractual obligations. In the event an assessment against a member insurer
6 is abated, or deferred in whole or in part, the amount by which such assess-
7 ment is abated or deferred may be assessed against the other member insurers
8 in a manner consistent with the basis for assessments set forth in this sec-
9 tion.
10 (5) The total of all assessments upon a member insurer for each account
11 shall not in any one calendar year exceed two percent (2%) of such insurer's
12 premiums received in this state during the calendar year preceding the assess-
13 ment on the policies covered by the account. If the maximum assessment,
14 together with the other assets of the association in either account, does not
15 provide in any one year in either account an amount sufficient to carry out
16 the responsibilities of the association, the necessary additional funds shall
17 be assessed as soon thereafter as permitted by this act.
18 (6) The board may, by an equitable method as established in the plan of
19 operation, refund to member insurers, in proportion to the contribution of
20 each insurer to that account, the amount by which the assets of the account
21 exceed the amount the board finds is necessary to carry out during the coming
22 year the obligations of the association with regard to that account, including
23 assets accruing from net realized gains and income from investments. A reason-
24 able amount may be retained in any account to provide funds for the continuing
25 expenses of the association and for future losses if refunds are impractical.
26 (7) It shall be proper for any member insurer, in determining its premium
27 rates and policyowner dividends as to any kind of insurance within the scope
28 of this act, to consider the amount reasonably necessary to meet its assess-
29 ment obligations under this act.
30 (8) The association shall issue to each insurer paying an assessment
31 under this act, other than a class A assessment, a certificate of contribu-
32 tion, in a form prescribed by the director, for the amount of the assessment
33 so paid. All outstanding certificates shall be of equal dignity and priority
34 without reference to amounts or dates of issue. A certificate of contribution
35 may be shown by the insurer in its financial statement as an asset in such
36 form and for such amount, if any, and period of time as the director may
37 approve.
AS1572
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
Moved by Crow
Seconded by Cameron
IN THE SENATE
SENATE AMENDMENTS TO S.B. NO. 1572
1 AMENDMENT TO SECTION 4
2 On page 2 of the printed bill, in line 10, following "plans" insert:
3 "only".
4 AMENDMENTS TO SECTION 5
5 On page 3, in line 2, delete "of" and insert: "is not"; and in line 20,
6 delete "of" and insert: "is not".
Moved by Cameron
Seconded by Crow
IN THE SENATE
SENATE AMENDMENT TO S.B. NO. 1572, As Amended
7 AMENDMENT TO SECTION 4
8 On page 2 of the engrossed bill, in line 25, following "organization,"
9 insert: "limited managed care plan,".
STATEMENT OF PURPOSE
RS 10297
The purpose of the proposed legislation is to provide that managed care
organizations are members of the Idaho Life and Health Insurance Guaranty
Association and to provide coverage for managed care contracts of disability
insurers. The proposed legislation excludes coverage of contractual obligations
owed to non-residents under a managed care plan and states a legislative intent to
include a managed care organization on the board of directors of the Association.
Managed care organizations shall not be subject to a Class B or Class C
assessment for any domestic, foreign or alien insurer declared insolvent by any
court prior to July 1, 2000.
FISCAL IMPACT
There would be no fiscal impact.
Contact:
Name: Senator Gordon Crow
Telephone: (208) 332-1330
STATEMENT OF PURPOSE/FISCAL NOTE S1572