(215 ILCS 5/513a7) (from Ch. 73, par. 1065.60a7)
Sec. 513a7.
License suspension; revocation or denial.
(a) Any license issued under this Article may be suspended, revoked, or
denied if the Director finds that the licensee or applicant:
(1) has wilfully violated any provisions of this Code |
| or the rules and regulations thereunder;
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(2) has intentionally made a material misstatement in
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| the application for a license;
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(3) has obtained or attempted to obtain a license
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| through misrepresentation or fraud;
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(4) has misappropriated or converted to his own use
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| or improperly withheld monies;
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(5) has used fraudulent, coercive, or dishonest
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| practices or has demonstrated incompetence, untrustworthiness, or financial irresponsibility;
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(6) has been, within the past 3 years, convicted of a
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| felony, unless the individual demonstrates to the Director sufficient rehabilitation to warrant public trust;
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(7) has failed to appear without reasonable cause or
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| excuse in response to a subpoena issued by the Director;
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(8) has had a license suspended, revoked, or denied
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| in any other state on grounds similar to those stated in this Section; or
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(9) has failed to report a felony conviction as
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| required by Section 513a6.
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(b) Suspension, revocation, or denial of a license under this Section
shall be by written order sent to the licensee or applicant by certified or
registered mail at the address specified in the records of the Department.
The licensee or applicant may in writing request a hearing within 30 days
from the date of mailing. If no written request is made the order shall be
final upon the expiration of that 30 day period.
(c) If the licensee or applicant requests a hearing under this Section,
the Director shall issue a written notice of hearing sent to the licensee
or applicant by certified or registered mail at his address, as specified
in the records of the Department, and stating:
(1) the grounds, charges, or conduct that justifies
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| suspension, revocation, or denial under this Section;
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(2) the specific time for the hearing, which may not
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| be fewer than 20 nor more than 30 days after the mailing of the notice of hearing; and
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(3) a specific place for the hearing, which may be
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| either in the City of Springfield or in the county where the licensee's principal place of business is located.
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(d) Upon the suspension or revocation of a license, the licensee or
other person having possession or custody of the license shall promptly
deliver it to the Director in person or by mail. The Director shall
publish all suspensions and revocations after they become final in a manner
designed to notify interested insurance companies and other persons.
(e) Any person whose license is revoked or denied under this Section
shall be ineligible to apply for any license for 2 years. A suspension
under this Section may be for a period of up to 2 years.
(f) In addition to or instead of a denial, suspension, or revocation of
a license under this Section, the licensee may be subjected to a civil
penalty of up to $2,000 for each cause for denial, suspension,
or
revocation. The penalty is enforceable under subsection (5) of Section
403A of this Code.
(Source: P.A. 93-32, eff. 7-1-03.)
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(215 ILCS 5/513a13) Sec. 513a13. Electronic delivery of notices and documents. (a) As used in this Section: "Delivered by electronic means" includes: (1) delivery to an electronic mail address at which a |
| party has consented to receive notices or documents; or
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(2) posting on an electronic network or site
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| accessible via the Internet, mobile application, computer, mobile device, tablet, or any other electronic device, together with separate notice of the posting, which shall be provided by electronic mail to the address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party.
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"Party" means any recipient of any notice or document required as part of a premium finance agreement including, but not limited to, an applicant or contracting party. For the purposes of this Section, "party" includes the producer of record.
(b) Subject to the requirements of this Section, any notice to a party or any other document required under applicable law in a premium finance agreement or that is to serve as evidence of a premium finance agreement may be delivered, stored, and presented by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act.
(c) Delivery of a notice or document in accordance with this Section shall be considered equivalent to delivery by first class mail or first class mail, postage prepaid.
(d) A notice or document may be delivered by electronic means by a premium finance company to a party under this Section if:
(1) the party has affirmatively consented to that
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| method of delivery and has not withdrawn the consent;
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(2) the party, before giving consent, is provided
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| with a clear and conspicuous statement informing the party of:
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(A) the right of the party to withdraw consent to
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| have a notice or document delivered by electronic means, at any time, and any conditions or consequences imposed in the event consent is withdrawn;
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(B) the types of notices and documents to which
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| the party's consent would apply;
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(C) the right of a party to have a notice or
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| document delivered in paper form; and
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(D) the procedures a party must follow to
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| withdraw consent to have a notice or document delivered by electronic means and to update the party's electronic mail address;
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(3) the party:
(A) before giving consent, is provided with a
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| statement of the hardware and software requirements for access to, and retention of, a notice or document delivered by electronic means; and
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(B) consents electronically, or confirms consent
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| electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party has given consent; and
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(4) after consent of the party is given, the premium
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| finance company, in the event a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies:
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(A) provides the party with a statement that
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(i) the revised hardware and software
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| requirements for access to and retention of a notice or document delivered by electronic means; and
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(ii) the right of the party to withdraw
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| consent without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and
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(B) complies with paragraph (2) of this
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(e) Delivery of a notice or document in accordance with this Section does not affect requirements related to content or timing of any notice or document required under applicable law.
(f) The legal effectiveness, validity, or enforceability of any premium finance agreement executed by a party may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subparagraph (B) of paragraph (3) of subsection (d) of this Section.
(g) A withdrawal of consent by a party does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective.
A withdrawal of consent by a party is effective within a reasonable period of time after receipt of the withdrawal by the premium finance company.
Failure by a premium finance company to comply with paragraph (4) of subsection (d) of this Section and subsection (j) of this Section may be treated, at the election of the party, as a withdrawal of consent for purposes of this Section.
(h) This Section does not apply to a notice or document delivered by a premium finance company in an electronic form before the effective date of this amendatory Act of the 100th General Assembly to a party who, before that date, has consented to receive notice or document in an electronic form otherwise allowed by law.
(i) If the consent of a party to receive certain notices or documents in an electronic form is on file with a premium finance company before the effective date of this amendatory Act of the 100th General Assembly and, pursuant to this Section, a premium finance company intends to deliver additional notices or documents to the party in an electronic form, then prior to delivering such additional notices or documents electronically, the premium finance company shall:
(1) provide the party with a statement that
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(A) the notices or documents that shall be
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| delivered by electronic means under this Section that were not previously delivered electronically; and
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(B) the party's right to withdraw consent to
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| have notices or documents delivered by electronic means without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and
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(2) comply with paragraph (2) of subsection (d)
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(j) A premium finance company shall deliver a notice or document by any other delivery method permitted by law other than electronic means if:
(1) the premium finance company attempts to deliver
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| the notice or document by electronic means and has a reasonable basis for believing that the notice or document has not been received by the party; or
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(2) the premium finance company becomes aware that
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| the electronic mail address provided by the party is no longer valid.
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(k) The producer of record shall not be subject to civil liability for any harm or injury that occurs as a result of a party's election to receive any notice or document by electronic means or by a premium finance company's failure to deliver a notice or document by electronic means unless the harm or injury is caused by the willful and wanton misconduct of the producer of record.
(l) This Section shall not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and National Commerce Act, as amended.
(Source: P.A. 102-38, eff. 6-25-21.)
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(215 ILCS 5/513b1) Sec. 513b1. Pharmacy benefit manager contracts. (a) As used in this Section: "340B drug discount program" means the program established
under Section 340B of the federal Public Health Service Act, 42 U.S.C. 256b. "340B entity" means a covered entity as defined in 42 U.S.C. 256b(a)(4) authorized to participate in the 340B drug discount program. "340B pharmacy" means any pharmacy used to dispense 340B drugs for a covered entity, whether entity-owned or external. "Biological product" has the meaning ascribed to that term in Section 19.5 of the Pharmacy Practice Act. "Maximum allowable cost" means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug. "Maximum allowable cost list" means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager. "Pharmacy benefit manager" means a person, business, or entity, including a wholly or partially owned or controlled subsidiary of a pharmacy benefit manager, that provides claims processing services or other prescription drug or device services, or both, for health benefit plans. "Retail price" means the price an individual without prescription drug coverage would pay at a retail pharmacy, not including a pharmacist dispensing fee. "Third-party payer" means any entity that pays for prescription drugs on behalf of a patient other than a health care provider or sponsor of a plan subject to regulation under Medicare Part D, 42 U.S.C. 1395w-101 et seq. (b) A contract between a health insurer and a pharmacy benefit manager must require that the pharmacy benefit manager: (1) Update maximum allowable cost pricing information |
| at least every 7 calendar days.
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(2) Maintain a process that will, in a timely manner,
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| eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data used in formulating maximum allowable cost prices and product availability.
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(3) Provide access to its maximum allowable cost list
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| to each pharmacy or pharmacy services administrative organization subject to the maximum allowable cost list. Access may include a real-time pharmacy website portal to be able to view the maximum allowable cost list. As used in this Section, "pharmacy services administrative organization" means an entity operating within the State that contracts with independent pharmacies to conduct business on their behalf with third-party payers. A pharmacy services administrative organization may provide administrative services to pharmacies and negotiate and enter into contracts with third-party payers or pharmacy benefit managers on behalf of pharmacies.
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(4) Provide a process by which a contracted pharmacy
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| can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing. The appeals process must, at a minimum, include the following:
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(A) A requirement that a contracted pharmacy has
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| 14 calendar days after the applicable fill date to appeal a maximum allowable cost if the reimbursement for the drug is less than the net amount that the network provider paid to the supplier of the drug.
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(B) A requirement that a pharmacy benefit manager
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| must respond to a challenge within 14 calendar days of the contracted pharmacy making the claim for which the appeal has been submitted.
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(C) A telephone number and e-mail address or
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| website to network providers, at which the provider can contact the pharmacy benefit manager to process and submit an appeal.
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(D) A requirement that, if an appeal is denied,
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| the pharmacy benefit manager must provide the reason for the denial and the name and the national drug code number from national or regional wholesalers.
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(E) A requirement that, if an appeal is
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| sustained, the pharmacy benefit manager must make an adjustment in the drug price effective the date the challenge is resolved and make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the managed care organization or pharmacy benefit manager.
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(5) Allow a plan sponsor contracting with a pharmacy
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| benefit manager an annual right to audit compliance with the terms of the contract by the pharmacy benefit manager, including, but not limited to, full disclosure of any and all rebate amounts secured, whether product specific or generalized rebates, that were provided to the pharmacy benefit manager by a pharmaceutical manufacturer.
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(6) Allow a plan sponsor contracting with a pharmacy
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| benefit manager to request that the pharmacy benefit manager disclose the actual amounts paid by the pharmacy benefit manager to the pharmacy.
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(7) Provide notice to the party contracting with the
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| pharmacy benefit manager of any consideration that the pharmacy benefit manager receives from the manufacturer for dispense as written prescriptions once a generic or biologically similar product becomes available.
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(c) In order to place a particular prescription drug on a maximum allowable cost list, the pharmacy benefit manager must, at a minimum, ensure that:
(1) if the drug is a generically equivalent drug, it
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| is listed as therapeutically equivalent and pharmaceutically equivalent "A" or "B" rated in the United States Food and Drug Administration's most recent version of the "Orange Book" or have an NR or NA rating by Medi-Span, Gold Standard, or a similar rating by a nationally recognized reference;
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(2) the drug is available for purchase by each
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| pharmacy in the State from national or regional wholesalers operating in Illinois; and
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(3) the drug is not obsolete.
(d) A pharmacy benefit manager is prohibited from limiting a pharmacist's ability to disclose whether the cost-sharing obligation exceeds the retail price for a covered prescription drug, and the availability of a more affordable alternative drug, if one is available in accordance with Section 42 of the Pharmacy Practice Act.
(e) A health insurer or pharmacy benefit manager shall not require an insured to make a payment for a prescription drug at the point of sale in an amount that exceeds the lesser of:
(1) the applicable cost-sharing amount; or
(2) the retail price of the drug in the absence of
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| prescription drug coverage.
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(f) Unless required by law, a contract between a pharmacy benefit manager or third-party payer and a 340B entity or 340B pharmacy shall not contain any provision that:
(1) distinguishes between drugs purchased through the
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| 340B drug discount program and other drugs when determining reimbursement or reimbursement methodologies, or contains otherwise less favorable payment terms or reimbursement methodologies for 340B entities or 340B pharmacies when compared to similarly situated non-340B entities;
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(2) imposes any fee, chargeback, or rate adjustment
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| that is not similarly imposed on similarly situated pharmacies that are not 340B entities or 340B pharmacies;
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(3) imposes any fee, chargeback, or rate adjustment
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| that exceeds the fee, chargeback, or rate adjustment that is not similarly imposed on similarly situated pharmacies that are not 340B entities or 340B pharmacies;
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(4) prevents or interferes with an individual's
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| choice to receive a covered prescription drug from a 340B entity or 340B pharmacy through any legally permissible means, except that nothing in this paragraph shall prohibit the establishment of differing copayments or other cost-sharing amounts within the benefit plan for covered persons who acquire covered prescription drugs from a nonpreferred or nonparticipating provider;
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(5) excludes a 340B entity or 340B pharmacy from a
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| pharmacy network on any basis that includes consideration of whether the 340B entity or 340B pharmacy participates in the 340B drug discount program;
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(6) prevents a 340B entity or 340B pharmacy from
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| using a drug purchased under the 340B drug discount program; or
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(7) any other provision that discriminates against a
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| 340B entity or 340B pharmacy by treating the 340B entity or 340B pharmacy differently than non-340B entities or non-340B pharmacies for any reason relating to the entity's participation in the 340B drug discount program.
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As used in this subsection, "pharmacy benefit manager" and "third-party payer" do not include pharmacy benefit managers and third-party payers acting on behalf of a Medicaid program.
(g) A violation of this Section by a pharmacy benefit manager constitutes an unfair or deceptive act or practice in the business of insurance under Section 424.
(h) A provision that violates subsection (f) in a contract between a pharmacy benefit manager or a third-party payer and a 340B entity that is entered into, amended, or renewed after July 1, 2022 shall be void and unenforceable.
(i)(1) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information in a court, in an administrative hearing, before a legislative commission or committee, or in any other proceeding, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation.
(2) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information to a government or law enforcement agency, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation.
(3) A pharmacist or pharmacy shall make commercially reasonable efforts to limit the disclosure of confidential and proprietary information.
(4) Retaliatory actions against a pharmacy or pharmacist include cancellation of, restriction of, or refusal to renew or offer a contract to a pharmacy solely because the pharmacy or pharmacist has:
(A) made disclosures of information that the
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| pharmacist or pharmacy has reasonable cause to believe is evidence of a violation of a State or federal law, rule, or regulation;
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(B) filed complaints with the plan or pharmacy
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(C) filed complaints against the plan or pharmacy
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| benefit manager with the Department.
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(j) This Section applies to contracts entered into or renewed on or after July 1, 2022.
(k) This Section applies to any group or individual policy of accident and health insurance or managed care plan that provides coverage for prescription drugs and that is amended, delivered, issued, or renewed on or after July 1, 2020.
(Source: P.A. 102-778, eff. 7-1-22; 103-154, eff. 6-30-23; 103-453, eff. 8-4-23.)
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(215 ILCS 5/513b7) Sec. 513b7. Pharmacy audits. (a) As used in this Section: "Audit" means any physical on-site, remote electronic, or concurrent review of a pharmacist or pharmacy service submitted to the pharmacy benefit manager or pharmacy benefit manager affiliate by a pharmacist or pharmacy for payment. "Auditing entity" means a person or company that performs a pharmacy audit. "Extrapolation" means the practice of inferring a frequency of dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency of dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims. "Misfill" means a prescription that was not dispensed; a prescription that was dispensed but was an incorrect dose, amount, or type of medication; a prescription that was dispensed to the wrong person; a prescription in which the prescriber denied the authorization request; or a prescription in which an additional dispensing fee was charged. "Pharmacy audit" means an audit conducted of any records of a pharmacy for prescriptions dispensed or nonproprietary drugs or pharmacist services provided by a pharmacy or pharmacist to a covered person. "Pharmacy record" means any record stored electronically or as a hard copy by a pharmacy that relates to the provision of a prescription or pharmacy services or other component of pharmacist care that is included in the practice of pharmacy. (b) Notwithstanding any other law, when conducting a pharmacy audit, an auditing entity shall: (1) not conduct an on-site audit of a pharmacy at any |
| time during the first 3 business days of a month or the first 2 weeks and final 2 weeks of the calendar year or during a declared State or federal public health emergency;
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(2) notify the pharmacy or its contracting agent no
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| later than 14 business days before the date of initial on-site audit; the notification to the pharmacy or its contracting agent shall be in writing and delivered either:
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(A) by mail or common carrier, return receipt
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(B) electronically, not including facsimile, with
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| electronic receipt confirmation and delivered during normal business hours of operation, addressed to the supervising pharmacist and pharmacy corporate office, if applicable, at least 14 business days before the date of an initial on-site audit;
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(3) limit the audit period to 24 months after the
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| date a claim is submitted to or adjudicated by the pharmacy benefit manager;
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(4) provide in writing the list of specific
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| prescription numbers to be included in the audit 14 business days before the on-site audit that may or may not include the final 2 digits of the prescription numbers;
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(5) use the written and verifiable records of a
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| hospital, physician, or other authorized practitioner that are transmitted by any means of communication to validate the pharmacy records in accordance with State and federal law;
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(6) limit the number of prescriptions audited to no
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| more than 100 prescriptions per audit and an entity shall not audit more than 200 prescriptions in any 12-month period, except in cases of fraud or knowing and willful misrepresentation; a refill shall not constitute a separate prescription and a pharmacy shall not be audited more than once every 6 months;
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(7) provide the pharmacy or its contracting agent
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| with a copy of the preliminary audit report within 45 days after the conclusion of the audit;
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(8) be allowed to conduct a follow-up audit on site
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| if a remote or desk audit reveals the necessity for a review of additional claims;
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(9) accept invoice audits as validation invoices from
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| any wholesaler registered with the Department of Financial and Professional Regulation from which the pharmacy has purchased prescription drugs or, in the case of durable medical equipment or sickroom supplies, invoices from an authorized distributor other than a wholesaler;
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(10) provide the pharmacy or its contracting agent
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| with the ability to provide documentation to address a discrepancy or audit finding if the documentation is received by the pharmacy benefit manager no later than the 45th day after the preliminary audit report was provided to the pharmacy or its contracting agent; the pharmacy benefit manager shall consider a reasonable request from the pharmacy for an extension of time to submit documentation to address or correct any findings in the report;
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(11) be required to provide the pharmacy or its
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| contracting agent with the final audit report no later than 90 days after the initial audit report was provided to the pharmacy or its contracting agent;
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(12) conduct the audit in consultation with a
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| pharmacist in specific cases if the audit involves clinical or professional judgment;
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(13) not chargeback, recoup, or collect penalties
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| from a pharmacy until the time period to file an appeal of the final pharmacy audit report has passed or the appeals process has been exhausted, whichever is later, unless the identified discrepancy is expected to exceed $25,000, in which case the auditing entity may withhold future payments in excess of that amount until the final resolution of the audit;
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(14) not compensate the employee or contractor
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| conducting the audit based on a percentage of the amount claimed or recouped pursuant to the audit;
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(15) not use extrapolation to calculate penalties or
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| amounts to be charged back or recouped unless otherwise required by federal law or regulation; any amount to be charged back or recouped due to overpayment may not exceed the amount the pharmacy was overpaid;
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(16) not include dispensing fees in the calculation
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| of overpayments unless a prescription is considered a misfill, the medication is not delivered to the patient, the prescription is not valid, or the prescriber denies authorizing the prescription; and
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(17) conduct a pharmacy audit under the same
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| standards and parameters as conducted for other similarly situated pharmacies audited by the auditing entity.
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(c) Except as otherwise provided by State or federal law, an auditing entity conducting a pharmacy audit may have access to a pharmacy's previous audit report only if the report was prepared by that auditing entity.
(d) Information collected during a pharmacy audit shall be confidential by law, except that the auditing entity conducting the pharmacy audit may share the information with the health benefit plan for which a pharmacy audit is being conducted and with any regulatory agencies and law enforcement agencies as required by law.
(e) A pharmacy may not be subject to a chargeback or recoupment for a clerical or recordkeeping error in a required document or record, including a typographical error or computer error, unless the pharmacy benefit manager can provide proof of intent to commit fraud or such error results in actual financial harm to the pharmacy benefit manager, a health plan managed by the pharmacy benefit manager, or a consumer.
(f) A pharmacy shall have the right to file a written appeal of a preliminary and final pharmacy audit report in accordance with the procedures established by the entity conducting the pharmacy audit.
(g) No interest shall accrue for any party during the audit period, beginning with the notice of the pharmacy audit and ending with the conclusion of the appeals process.
(h) An auditing entity must provide a copy to the plan sponsor of its claims that were included in the audit, and any recouped money shall be returned to the plan sponsor, unless otherwise contractually agreed upon by the plan sponsor and the pharmacy benefit manager.
(i) The parameters of an audit must comply with manufacturer listings or recommendations, unless otherwise prescribed by the treating provider, and must be covered under the individual's health plan, for the following:
(1) the day supply for eye drops must be calculated
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| so that the consumer pays only one 30-day copayment if the bottle of eye drops is intended by the manufacturer to be a 30-day supply;
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(2) the day supply for insulin must be calculated so
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| that the highest dose prescribed is used to determine the day supply and consumer copayment; and
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(3) the day supply for topical product must be
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| determined by the judgment of the pharmacist or treating provider upon the treated area.
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(j) This Section shall not apply to:
(1) audits in which suspected fraud or knowing and
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| willful misrepresentation is evidenced by a physical review, review of claims data or statements, or other investigative methods;
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(2) audits of claims paid for by federally funded
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| programs not applicable to health insurance coverage regulated by the Department; or
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(3) concurrent reviews or desk audits that occur
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| within 3 business days after transmission of a claim and in which no chargeback or recoupment is demanded.
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(Source: P.A. 103-102, eff. 1-1-24 .)
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(215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
Sec. 531.03. Coverage and limitations.
(1) This Article shall provide
coverage for the policies and contracts specified in subsection (2) of this
Section:
(a) to persons who, regardless of where they reside |
| (except for non-resident certificate holders under group policies or contracts), are the beneficiaries, assignees or payees, including health care providers rendering services covered under a health insurance policy or certificate, of the persons covered under paragraph (b) of this subsection, and
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(b) to persons who are owners of or certificate
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| holders or enrollees under the policies or contracts (other than unallocated annuity contracts and structured settlement annuities) and in each case who:
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(i) are residents; or
(ii) are not residents, but only under all of the
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(A) the member insurer that issued the
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| policies or contracts is domiciled in this State;
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(B) the states in which the persons reside
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| have associations similar to the Association created by this Article;
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(C) the persons are not eligible for coverage
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| by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in that state at the time specified in that state's guaranty association law.
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(c) For unallocated annuity contracts specified in
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| subsection (2), paragraphs (a) and (b) of this subsection (1) shall not apply and this Article shall (except as provided in paragraphs (e) and (f) of this subsection) provide coverage to:
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(i) persons who are the owners of the unallocated
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| annuity contracts if the contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this State; and
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(ii) persons who are owners of unallocated
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| annuity contracts issued to or in connection with government lotteries if the owners are residents.
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(d) For structured settlement annuities specified in
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| subsection (2), paragraphs (a) and (b) of this subsection (1) shall not apply and this Article shall (except as provided in paragraphs (e) and (f) of this subsection) provide coverage to a person who is a payee under a structured settlement annuity (or beneficiary of a payee if the payee is deceased), if the payee:
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(i) is a resident, regardless of where the
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| contract owner resides; or
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(ii) is not a resident, but only under both of
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| the following conditions:
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(A) with regard to residency:
(I) the contract owner of the structured
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| settlement annuity is a resident; or
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(II) the contract owner of the structured
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| settlement annuity is not a resident but the insurer that issued the structured settlement annuity is domiciled in this State and the state in which the contract owner resides has an association similar to the Association created by this Article; and
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(B) neither the payee or beneficiary nor
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| the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.
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(e) This Article shall not provide coverage to:
(i) a person who is a payee or beneficiary of a
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| contract owner resident of this State if the payee or beneficiary is afforded any coverage by the association of another state; or
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(ii) a person covered under paragraph (c) of this
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| subsection (1), if any coverage is provided by the association of another state to that person.
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(f) This Article is intended to provide coverage to
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| a person who is a resident of this State and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this Article is provided coverage under the laws of any other state, then the person shall not be provided coverage under this Article. In determining the application of the provisions of this paragraph in situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary, or assignee, this Article shall be construed in conjunction with other state laws to result in coverage by only one association.
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(2)(a) This Article shall provide coverage to the persons
specified in subsection (1) of this Section for policies or contracts of direct, (i)
nongroup life insurance, health insurance (that, for the purposes of this Article, includes health maintenance organization subscriber contracts and certificates), annuities and
supplemental contracts to any of these, (ii) for
certificates under direct group policies or contracts, (iii) for unallocated
annuity contracts and (iv) for contracts to furnish
health care services and subscription certificates for medical or health
care services issued by persons licensed to transact insurance business
in this State under this Code.
Annuity contracts and certificates under group annuity contracts include
but are not limited to guaranteed investment contracts, deposit
administration contracts, unallocated funding agreements, allocated funding
agreements, structured settlement agreements, lottery contracts
and any immediate or deferred annuity contracts.
(b) Except as otherwise provided in paragraph (c) of this subsection, this Article shall not provide coverage for:
(i) that portion of a policy or contract not
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| guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner;
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|
(ii) any such policy or contract or part thereof
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| assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued;
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(iii) any portion of a policy or contract to the
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| extent that the rate of interest on which it is based or the interest rate, crediting rate, or similar factor is determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value:
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|
(A) averaged over the period of 4 years prior to
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| the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody's Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier; and
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|
(B) on and after the date on which the member
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| insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody's Corporate Bond Yield Average as most recently available;
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(iv) any unallocated annuity contract issued to or in
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| connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan;
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(v) any portion of any unallocated annuity contract
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| which is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery;
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(vi) an obligation that does not arise under the
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| express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner, or policy owner, including without limitation:
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|
(A) a claim based on marketing materials;
(B) a claim based on side letters, riders, or
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| other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements;
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(C) a misrepresentation of or regarding policy
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|
(D) an extra-contractual claim; or
(E) a claim for penalties or consequential or
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|
(vii) any stop-loss insurance, as defined in clause
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| (b) of Class 1 or clause (a) of Class 2 of Section 4, and further defined in subsection (d) of Section 352;
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|
(viii) any policy or contract providing any hospital,
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| medical, prescription drug, or other health care benefits pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code (commonly known as Medicare Part C & D), Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto;
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(ix) any portion of a policy or contract to the
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| extent that the assessments required by Section 531.09 of this Code with respect to the policy or contract are preempted or otherwise not permitted by federal or State law;
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(x) any portion of a policy or contract issued to a
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| plan or program of an employer, association, or other person to provide life, health, or annuity benefits to its employees, members, or others to the extent that the plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association, or other person under:
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|
(A) a multiple employer welfare arrangement as
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| defined in 29 U.S.C. Section 1002;
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|
(B) a minimum premium group insurance plan;
(C) a stop-loss group insurance plan; or
(D) an administrative services only contract;
(xi) any portion of a policy or contract to the
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| extent that it provides for:
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|
(A) dividends or experience rating credits;
(B) voting rights; or
(C) payment of any fees or allowances to any
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| person, including the policy or contract owner, in connection with the service to or administration of the policy or contract;
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(xii) any policy or contract issued in this State by
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| a member insurer at a time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this State;
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(xiii) any contractual agreement that establishes the
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| member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer;
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|
(xiv) any portion of a policy or contract to the
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| extent that it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this Code, whichever is earlier. If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this Section, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture; or
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(xv) that portion or part of a variable life
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| insurance or variable annuity contract not guaranteed by a member insurer.
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|
(c) The exclusion from coverage referenced in subdivision (iii) of paragraph (b) of this subsection shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or other health insurance benefits.
(3) The benefits for which the Association may become liable shall in
no event exceed the lesser of:
(a) the contractual obligations for which the member
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| insurer is liable or would have been liable if it were not an impaired or insolvent insurer, or
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(b)(i) with respect to any one life, regardless of
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| the number of policies or contracts:
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(A) $300,000 in life insurance death benefits,
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| but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;
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(B) for health insurance benefits:
(I) $100,000 for coverages not defined as
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| disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values;
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(II) $300,000 for disability income
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| insurance and $300,000 for long-term care insurance; and
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|
(III) $500,000 for health benefit plans;
(C) $250,000 in the present value of annuity
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| benefits, including net cash surrender and net cash withdrawal values;
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|
(ii) with respect to each individual participating in
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| a governmental retirement benefit plan established under Section 401, 403(b), or 457 of the U.S. Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values;
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|
(iii) with respect to each payee of a structured
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| settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; or
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|
(iv) with respect to either (1) one contract owner
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| provided coverage under subparagraph (ii) of paragraph (c) of subsection (1) of this Section or (2) one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (ii) of paragraph (b) of this subsection, $5,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this Article and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this State. In no event shall the Association be obligated to cover more than $5,000,000 in benefits with respect to all these unallocated contracts.
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In no event shall the Association be obligated to cover more than (1) an aggregate of $300,000 in benefits with respect to any one life under subparagraphs (i), (ii), and (iii) of this paragraph (b) except with respect to benefits for health benefit plans under item (B) of subparagraph (i) of this paragraph (b), in which case the aggregate liability of the Association shall not exceed $500,000 with respect to any one individual or (2) with respect to one owner of multiple nongroup policies of life insurance, whether the policy or contract owner is an individual, firm, corporation, or other person and whether the persons insured are officers, managers, employees, or other persons, $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.
The limitations set forth in this subsection are limitations on the benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the Association's obligations under this Article may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights.
For purposes of this Article, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.
(4) In performing its obligations to provide coverage under Section 531.08 of this Code, the Association shall not be required to guarantee, assume, reinsure, reissue, or perform or cause to be guaranteed, assumed, reinsured, reissued, or performed the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.
(Source: P.A. 100-687, eff. 8-3-18; 100-863, eff. 8-14-18.)
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(215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)
Sec. 531.05. Definitions. As used in this Act:
"Account" means either of the 2 accounts created under Section
531.06.
"Association" means the Illinois Life and Health Insurance
Guaranty Association created under Section 531.06.
"Authorized assessment" or the term "authorized" when used in the context of assessments means a resolution by the Board of Directors has been passed whereby an assessment shall be called immediately or in the future from member insurers for a specified amount. An assessment is authorized when the resolution is passed. "Benefit plan" means a specific employee, union, or association of natural persons benefit plan. "Called assessment" or the term "called" when used in the context of assessments means that a notice has been issued by the Association to member insurers requiring that an authorized assessment be paid within the time frame set forth within the notice. An authorized assessment becomes a called assessment when notice is mailed by the Association to member insurers. "Director" means the Director of Insurance of this State.
"Contractual obligation" means any obligation under a policy or
contract or certificate under a group policy or contract, or portion
thereof for which coverage is provided under Section 531.03.
"Covered person" means any person who is entitled to the
protection of the Association as described in Section 531.02.
"Covered contract" or "covered policy" means any policy or contract within the scope
of this Article under Section 531.03.
"Extra-contractual claims" shall include, but are not limited to, claims relating to bad faith in the payment of claims, punitive or exemplary damages, or attorneys' fees and costs. "Health benefit plan" means any hospital or medical expense policy or certificate or
health maintenance organization subscriber contract or any other similar health
contract. "Health benefit plan" does not include: (1) accident only insurance; (2) credit insurance; (3) dental only insurance; (4) vision only insurance; (5) Medicare supplement insurance; (6) benefits for long-term care, home health care, |
| community-based care, or any combination thereof;
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|
(7) disability income insurance;
(8) coverage for on-site medical clinics; or
(9) specified disease, hospital confinement
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| indemnity, or limited benefit health insurance if the types of coverage do not provide coordination of benefits and are provided under separate policies or certificates.
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|
"Impaired insurer" means (A) a member insurer which, after the effective date of this amendatory Act of the 96th General Assembly, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction or (B) a member insurer deemed by the Director after the effective date of this amendatory Act of the 96th General Assembly to be potentially unable to fulfill its contractual obligations and not an insolvent insurer.
"Insolvent insurer" means a member insurer that, after the effective date of this amendatory Act of the 96th General Assembly, is placed under a final order of liquidation by a court of competent jurisdiction with a finding of insolvency.
"Member insurer" means an insurer or health maintenance organization licensed or holding a certificate of authority to transact in this State any kind of insurance or health maintenance organization business for which coverage is provided under Section 531.03 of this Code and includes an insurer or health maintenance organization whose license or certificate of authority in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn or whose certificate of authority may have been suspended pursuant to Section 119 of this Code, but does not include:
(1) a hospital or medical service organization,
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| whether profit or nonprofit;
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|
(2) (blank);
(3) any burial society organized under Article
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| XIX of this Code, any fraternal benefit society organized under Article XVII of this Code, any mutual benefit association organized under Article XVIII of this Code, and any foreign fraternal benefit society licensed under Article VI of this Code;
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|
(4) a mandatory State pooling plan;
(5) a mutual assessment company or other person that
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| operates on an assessment basis;
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|
(6) an insurance exchange;
(7) an organization that is permitted to issue
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| charitable gift annuities pursuant to Section 121-2.10 of this Code;
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|
(8) any health services plan corporation
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| established pursuant to the Voluntary Health Services Plans Act;
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|
(9) any dental service plan corporation
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| established pursuant to the Dental Service Plan Act; or
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|
(10) an entity similar to any of the above.
"Moody's Corporate Bond Yield Average" means the Monthly Average
Corporates as published by Moody's Investors Service, Inc., or any successor
thereto.
"Owner" of a policy or contract and "policyholder", "policy owner", and "contract owner" mean the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the member insurer. The terms owner, contract owner, policyholder, and policy owner do not include persons with a mere beneficial interest in a policy or contract.
"Person" means an individual, corporation, limited liability company, partnership, association, governmental body or entity, or voluntary organization.
"Plan sponsor" means:
(1) the employer in the case of a benefit plan
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| established or maintained by a single employer;
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|
(2) the employee organization in the case of a
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| benefit plan established or maintained by an employee organization; or
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|
(3) in a case of a benefit plan established or
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| maintained by 2 or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan.
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|
"Premiums" mean amounts or considerations, by whatever name called, received on covered policies or contracts less returned premiums, considerations, and deposits and less dividends and experience credits.
"Premiums" does not include:
(A) amounts or considerations received for policies
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| or contracts or for the portions of policies or contracts for which coverage is not provided under Section 531.03 of this Code except that assessable premium shall not be reduced on account of the provisions of subparagraph (iii) of paragraph (b) of subsection (2) of Section 531.03 of this Code relating to interest limitations and the provisions of paragraph (b) of subsection (3) of Section 531.03 relating to limitations with respect to one individual, one participant, and one policy owner or contract owner;
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|
(B) premiums in excess of $5,000,000 on an
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| unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code; or
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|
(C) with respect to multiple nongroup policies of
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| life insurance owned by one owner, whether the policy owner or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.
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|
"Principal place of business" of a plan sponsor or a person other than a natural person means the single state in which the natural persons who establish policy for the direction, control, and coordination of the operations of the entity as a whole primarily exercise that function, determined by the Association in its reasonable judgment by considering the following factors:
(A) the state in which the primary executive and
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| administrative headquarters of the entity is located;
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|
(B) the state in which the principal office of the
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| chief executive officer of the entity is located;
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|
(C) the state in which the board of directors (or
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| similar governing person or persons) of the entity conducts the majority of its meetings;
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|
(D) the state in which the executive or management
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| committee of the board of directors (or similar governing person or persons) of the entity conducts the majority of its meetings;
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|
(E) the state from which the management of the
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| overall operations of the entity is directed; and
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|
(F) in the case of a benefit plan sponsored by
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| affiliated companies comprising a consolidated corporation, the state in which the holding company or controlling affiliate has its principal place of business as determined using the above factors. However, in the case of a plan sponsor, if more than 50% of the participants in the benefit plan are employed in a single state, that state shall be deemed to be the principal place of business of the plan sponsor.
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|
The principal place of business of a plan sponsor of a benefit plan described in paragraph (3) of the definition of "plan sponsor" shall be deemed to be the principal place of business of the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan that, in lieu of a specific or clear designation of a principal place of business, shall be deemed to be the principal place of business of the employer or employee organization that has the largest investment in the benefit plan in question.
"Receivership court" means the court in the insolvent or impaired insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation of the member insurer.
"Resident" means a person to whom a contractual obligation is owed and who resides in this State on the date of entry of a court order that determines a member insurer to be an impaired insurer or a court order that determines a member insurer to be an insolvent insurer. A person may be a resident of only one state, which in the case of a person other than a natural person shall be its principal place of business. Citizens of the United States that are either (i) residents of foreign countries or (ii) residents of United States possessions, territories, or protectorates that do not have an association similar to the Association created by this Article, shall be deemed residents of the state of domicile of the member insurer that issued the policies or contracts.
"Structured settlement annuity" means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant.
"State" means a state, the District of Columbia, Puerto Rico, and a United States possession, territory, or protectorate.
"Supplemental contract" means a written agreement entered into for the distribution of proceeds under a life, health, or annuity policy or a life, health, or annuity contract.
"Unallocated annuity contract" means any annuity contract or group
annuity certificate which is not issued to and owned by an individual,
except to the extent of any annuity benefits guaranteed to an individual by
an insurer under such contract or certificate.
(Source: P.A. 100-687, eff. 8-3-18.)
|
(215 ILCS 5/531.08) (from Ch. 73, par. 1065.80-8)
Sec. 531.08. Powers and duties of the Association. (a) In addition to
the powers and duties enumerated in other Sections of this Article:
(1) If a member insurer is an impaired insurer, then |
| the Association may, in its discretion and subject to any conditions imposed by the Association that do not impair the contractual obligations of the impaired insurer and that are approved by the Director:
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|
(A) guarantee, assume, reissue, or reinsure or
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| cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; or
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|
(B) provide such money, pledges, loans, notes,
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| guarantees, or other means as are proper to effectuate paragraph (A) and assure payment of the contractual obligations of the impaired insurer pending action under paragraph (A).
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|
(2) If a member insurer is an insolvent insurer,
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| then the Association shall, in its discretion, either:
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|
(A) guaranty, assume, reissue, or reinsure or
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| cause to be guaranteed, assumed, reissued, or reinsured the policies or contracts of the insolvent insurer or assure payment of the contractual obligations of the insolvent insurer and provide money, pledges, loans, notes, guarantees, or other means reasonably necessary to discharge the Association's duties; or
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|
(B) provide benefits and coverages in accordance
|
| with the following provisions:
|
|
(i) with respect to policies and contracts,
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| ensure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer for claims incurred:
|
|
(a) with respect to group policies and
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| contracts, not later than the earlier of the next renewal date under those policies or contracts or 45 days, but in no event less than 30 days, after the date on which the Association becomes obligated with respect to the policies and contracts;
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|
(b) with respect to nongroup policies,
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| contracts, and annuities not later than the earlier of the next renewal date (if any) under the policies or contracts or one year, but in no event less than 30 days, from the date on which the Association becomes obligated with respect to the policies or contracts;
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|
(ii) make diligent efforts to provide all
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| known insureds, enrollees, or annuitants (for nongroup policies and contracts), or group policy owners or contract owners with respect to group policies and contracts, 30 days notice of the termination (pursuant to subparagraph (i) of this paragraph (B)) of the benefits provided;
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|
(iii) with respect to nongroup policies and
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| contracts covered by the Association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured, enrollee, or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of subsection (b), if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class.
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|
(b) In providing the substitute coverage required under subparagraph (iii) of paragraph (B) of item (2) of subsection (a)
of this Section, the Association may offer either to reissue the
terminated coverage or to issue an alternative policy or contract at actuarially justified rates, subject to the prior approval of the Director.
Alternative or reissued policies or contracts shall be offered without requiring
evidence of insurability, and shall not provide for any waiting period or
exclusion that would not have applied under the terminated policy or contract.
The Association may reinsure any alternative or reissued policy or contract.
Alternative policies or contracts adopted by the Association shall be subject
to the approval of the Director. The Association may adopt alternative
policies or contracts of various types for future issuance without regard to any
particular impairment or insolvency.
Alternative policies or contracts shall contain at least the minimum statutory
provisions required in this State and provide benefits that shall not be
unreasonable in relation to the premium charged. The
Association shall set the premium in accordance with a table of rates which
it shall adopt. The premium shall reflect the amount of insurance to be
provided and the age and class of risk of each insured, but shall not
reflect any changes in the health of the insured after the original policy or contract
was last underwritten.
Any alternative policy or contract issued by the Association shall provide
coverage of a type similar to that of the policy or contract issued by the impaired or
insolvent insurer, as determined by the Association.
(c) If the Association elects to reissue terminated coverage at a
premium rate different from that charged under the terminated policy or contract, the
premium shall be actuarially justified and set by the Association in accordance with the amount of
insurance or coverage provided and the age and class of risk, subject to approval of
the Director.
(d) The Association's obligations with respect to coverage under any
policy or contract of the impaired or insolvent insurer or under any reissued or
alternative policy or contract shall cease on the date such coverage or policy or contract is
replaced by another similar policy or contract by the policyholder, the insured, the enrollee, or the
Association.
(e) When proceeding under this Section with
respect to any policy or contract carrying guaranteed minimum interest
rates, the Association shall assure the payment or crediting of a rate of
interest consistent with subparagraph (2)(b)(iii)(B) of Section 531.03.
(f) Nonpayment of premiums thirty-one days after the date required under
the terms of any guaranteed, assumed, alternative or reissued policy or
contract or substitute coverage shall terminate the Association's
obligations under such policy, contract, or coverage under this Act with respect to
such policy, contract, or coverage, except with respect to any claims incurred or any
net cash surrender value which may be due in accordance with the provisions of
this Act.
(g) Premiums due for coverage after entry of an order of liquidation of
an insolvent insurer shall belong to and be payable at the direction of the
Association,
and the Association shall be liable for unearned premiums due to policy or
contract owners arising after the entry of such order.
(h) In carrying out its duties under paragraph (2) of subsection (a) of this Section, the Association may:
(1) subject to approval by a court in this State,
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| impose permanent policy or contract liens in connection with a guarantee, assumption, or reinsurance agreement if the Association finds that the amounts which can be assessed under this Article are less than the amounts needed to assure full and prompt performance of the Association's duties under this Article or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of such permanent policy or contract liens to be in the public interest; or
|
|
(2) subject to approval by a court in this State,
|
| impose temporary moratoriums or liens on payments of cash values and policy loans or any other right to withdraw funds held in conjunction with policies or contracts in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans or on any other right to withdraw funds held in conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer, the Association may defer the payment of cash values, policy loans, or other rights by the Association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the Association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.
|
|
(i) There shall be no liability on the part of and no cause of action
shall arise against the Association or against any transferee from the
Association in connection with the transfer by reinsurance or otherwise of
all or any part of an impaired or insolvent insurer's business by reason of
any action taken or any failure to take any action by the impaired or
insolvent insurer at any time.
(j) If the Association fails to act within a reasonable period of
time as provided in subsection (2) of this Section with respect to an
insolvent insurer, the
Director shall have the powers and duties of the Association under this
Act with regard to such insolvent insurers.
(k) The Association or its designated representatives
may render assistance and advice to the
Director, upon his request, concerning rehabilitation, payment of
claims, continuations of coverage, or the performance of other
contractual obligations of any impaired or insolvent insurer.
(l) The Association shall have standing to appear or intervene before a court or agency in this State with jurisdiction over an impaired or insolvent insurer concerning which the Association is or may become obligated under this Article or with jurisdiction over any person or property against which the Association may have rights through subrogation or otherwise. Standing shall extend to all matters germane to the powers and duties of the Association, including, but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The Association shall also have the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the Association is or may become obligated or with jurisdiction over any person or property against whom the Association may have rights through subrogation or otherwise.
(m)(1) A person receiving benefits under this Article shall be deemed to have assigned the rights under and any causes of action against any person for losses arising under, resulting from, or otherwise relating to the covered policy or contract to the Association to the extent of the benefits received because of this Article, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The Association may require an assignment to it of such rights and cause of action by any enrollee, payee, policy, or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this Article upon the person.
(2) The subrogation rights of the Association under this subsection
have the same priority against the assets of the impaired or insolvent insurer as
that possessed by the person entitled to receive benefits under this
Article.
(3) In addition to paragraphs (1) and (2), the Association shall have all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contracts, including without limitation, in the case of a structured settlement annuity, any rights of the owner, beneficiary, enrollee, or payee of the annuity to the extent of benefits received pursuant to this Article, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment therefor, excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under Internal Revenue Code Section 130.
(4) If the preceding provisions of this subsection (m) are invalid or ineffective with respect to any person or claim for any reason, then the amount payable by the Association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts, or portion thereof, covered by the Association.
(5) If the Association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the Association has rights as described in the preceding paragraphs of this subsection (10), then the person shall pay to the Association the portion of the recovery attributable to the policies or contracts, or portion thereof, covered by the Association.
(n) The Association may:
(1) Enter into such contracts as are necessary or
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| proper to carry out the provisions and purposes of this Article.
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(2) Sue or be sued, including taking any legal
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| actions necessary or proper for recovery of any unpaid assessments under Section 531.09. The Association shall not be liable for punitive or exemplary damages.
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(3) Borrow money to effect the purposes of this
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| Article. Any notes or other evidence of indebtedness of the Association not in default are legal investments for domestic member insurers and may be carried as admitted assets.
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(4) Employ or retain such persons as are necessary to
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| handle the financial transactions of the Association, and to perform such other functions as become necessary or proper under this Article.
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(5) Negotiate and contract with any liquidator,
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| rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association.
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(6) Take such legal action as may be necessary to
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| avoid payment of improper claims.
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(7) Exercise, for the purposes of this Article and to
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| the extent approved by the Director, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the Association issue policies or contracts other than those issued to perform the contractual obligations of the impaired or insolvent insurer.
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(8) Exercise all the rights of the Director under
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| Section 193(4) of this Code with respect to covered policies after the association becomes obligated by statute.
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(9) Request information from a person seeking
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| coverage from the Association in order to aid the Association in determining its obligations under this Article with respect to the person, and the person shall promptly comply with the request.
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(9.5) Unless prohibited by law, in accordance with
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| the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this Article.
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(10) Take other necessary or appropriate action to
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| discharge its duties and obligations under this Article or to exercise its powers under this Article.
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(o) With respect to covered policies for which the Association becomes
obligated after an entry of an order of liquidation or rehabilitation,
the Association may
elect to succeed to the rights of the insolvent insurer arising after the
date of the order of liquidation or rehabilitation under any contract
of reinsurance to which
the insolvent insurer was a party, to the extent that such contract
provides coverage for losses occurring after the date of the order of
liquidation or rehabilitation. As a condition to making this election,
the Association must pay all unpaid premiums due under the contract for
coverage relating to periods before and after the date of the order of
liquidation or rehabilitation.
(p) A deposit in this State, held pursuant to law or required by the Director for the benefit of creditors, including policy owners or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in this State or in a reciprocal state, pursuant to Article XIII 1/2 of this Code, shall be promptly paid to the Association. The Association shall be entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy owners' or contract owners' claims related to that insolvency for which the Association has provided statutory benefits by the aggregate amount of all policy owners' or contract owners' claims in this State related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the Association less the amount retained pursuant to this subsection (p). Any amount so paid to the Association and retained by it shall be treated as a distribution of estate assets pursuant to applicable State receivership law dealing with early access disbursements.
(q) The Board of Directors of the Association shall have discretion and may exercise reasonable business judgment to determine the means by which the Association is to provide the benefits of this Article in an economical and efficient manner.
(r) Where the Association has arranged or offered to provide the benefits of this Article to a covered person under a plan or arrangement that fulfills the Association's obligations under this Article, the person shall not be entitled to benefits from the Association in addition to or other than those provided under the plan or arrangement.
(s) Venue in a suit against the Association arising under the Article shall be in Cook County. The Association shall not be required to give any appeal bond in an appeal that relates to a cause of action arising under this Article.
(t) The Association may join an organization of one or more other State associations of similar purposes to further the purposes and administer the powers and duties of the Association.
(u) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under subsections (1) or (2), the Association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:
(1) in lieu of the index or other external reference
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| provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate, or (ii) payment of dividends with minimum guarantees, or (iii) a different method for calculating interest or changes in value;
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(2) there is no requirement for evidence of
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| insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and
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(3) the alternative policy or contract is
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| substantially similar to the replaced policy or contract in all other material terms.
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(Source: P.A. 100-687, eff. 8-3-18.)
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(215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
Sec. 531.10. Plan of operation. (1)(a) The Association must
submit to the Director a plan of operation and any amendments thereto necessary
or suitable to assure the fair, reasonable, and equitable administration of the
Association. The plan of operation and any amendments thereto become effective
upon approval in writing by the Director.
(b) If the Association fails to submit a suitable plan of operation
within 180 days following the effective date of this Article or if at any time
thereafter the Association fails to submit suitable amendments to the plan, the
Director may, after notice and hearing, adopt and promulgate such reasonable
rules as are necessary or advisable to effectuate the provisions of this Article.
Such rules are in force until modified by the Director or superseded by a plan
submitted by the Association and approved by the Director.
(2) All member insurers must comply with the plan of operation.
(3) The plan of operation must, in addition to requirements enumerated
elsewhere in this Article:
(a) Establish procedures for handling the assets of |
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(b) Establish the amount and method of reimbursing
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| members of the board of directors under Section 531.07;
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(c) Establish regular places and times for meetings
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| of the board of directors;
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(d) Establish procedures for records to be kept of
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| all financial transactions of the Association, its agents, and the board of directors;
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(e) Establish the procedures whereby selections for
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| the board of directors will be made and submitted to the Director;
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(f) Establish any additional procedures for
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| assessments under Section 531.09; and
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(g) Contain additional provisions necessary or proper
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| for the execution of the powers and duties of the Association.
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(4) The plan of operation shall establish a procedure for protest by
any member insurer of assessments made by the Association pursuant to
Section 531.09. Such procedures shall require that:
(a) a member insurer that wishes to protest all or
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| part of an assessment shall pay when due the full amount of the assessment as set forth in the notice provided by the Association. The payment shall be available to meet Association obligations during the pendency of the protest or any subsequent appeal. Payment shall be accompanied by a statement in writing that the payment is made under protest and setting forth a brief statement of the grounds for the protest;
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(b) within 30 days following the payment of an
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| assessment under protest by any protesting member insurer, the Association must notify the member insurer in writing of its determination with respect to the protest unless the Association notifies the member that additional time is required to resolve the issues raised by the protest;
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(c) in the event the Association determines that the
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| protesting member insurer is entitled to a refund, such refund shall be made within 30 days following the date upon which the Association makes its determination;
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(d) the decision of the Association with respect to a
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| protest may be appealed to the Director pursuant to Section 531.11(3);
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(e) in the alternative to rendering a decision with
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| respect to any protest based on a question regarding the assessment base, the Association may refer such protests to the Director for final decision, with or without a recommendation from the Association; and
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(f) interest on any refund due a protesting member
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| insurer shall be paid at the rate actually earned by the Association.
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(5) The plan of operation may provide that any or all powers and duties
of the Association, except those under paragraph (3) of subsection (n)
of Section 531.08 and Section 531.09 are delegated to a corporation,
association or other organization which performs or will perform functions
similar to those of this Association, or its equivalent, in 2 or more states.
Such a corporation, association or organization shall be reimbursed for any
payments made on behalf of the Association and shall be paid for its
performance of any function of the Association. A delegation under this
subsection shall take effect only with the approval of both the Board of
Directors and the Director, and may be made only to a corporation, association
or organization which extends protection not substantially less favorable and
effective than that provided by this Act.
(Source: P.A. 100-687, eff. 8-3-18.)
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(215 ILCS 5/531.12) (from Ch. 73, par. 1065.80-12)
Sec. 531.12. Prevention of Insolvencies. To aid in the detection and
prevention of member insurer insolvencies or impairments:
(1) It shall be the duty of the Director:
(a) To notify the Commissioners of all other |
| states, territories of the United States, and the District of Columbia when he takes any of the following actions against a member insurer:
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(i) revocation of license;
(ii) suspension of license;
(iii) makes any formal order except for an
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| order issued pursuant to Article XII 1/2 of this Code that such member insurer restrict its premium writing, obtain additional contributions to surplus, withdraw from the State, reinsure all or any part of its business, or increase capital, surplus or any other account for the security of policy owners, contract owners, certificate holders, or creditors.
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Such notice shall be transmitted to all
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| commissioners within 30 days following the action taken or the date on which the action occurs.
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(b) To report to the board of directors when he
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| has taken any of the actions set forth in subparagraph (a) of this paragraph or has received a report from any other commissioner indicating that any such action has been taken in another state. Such report to the board of directors shall contain all significant details of the action taken or the report received from another commissioner.
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(c) To report to the board of directors when the
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| Director has reasonable cause to believe from an examination, whether completed or in process, of any member insurer that the member insurer may be an impaired or insolvent insurer.
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(d) To furnish to the board of directors the
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| National Association of Insurance Commissioners Insurance Regulatory Information System ratios and listings of companies not included in the ratios developed by the National Association of Insurance Commissioners. The board may use the information contained therein in carrying out its duties and responsibilities under this Section. The report and the information contained therein shall be kept confidential by the board of directors until such time as made public by the Director or other lawful authority.
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(2) The Director may seek the advice and
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| recommendations of the board of directors concerning any matter affecting his or her duties and responsibilities regarding the financial condition of member insurers and insurers or health maintenance organizations seeking admission to transact business in this State.
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(3) The board of directors may, upon majority vote,
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| make reports and recommendations to the Director upon any matter germane to the liquidation, rehabilitation or conservation of any member insurer and insurers or health maintenance organizations seeking admission to transact business in this State. Such reports and recommendations shall not be considered public documents.
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(4) The board of directors may, upon majority vote,
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| make recommendations to the Director for the detection and prevention of member insurer insolvencies.
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(5) The board of directors shall, at the conclusion
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| of any member insurer insolvency in which the Association was obligated to pay covered claims prepare a report to the Director containing such information as it may have in its possession bearing on the history and causes of such insolvency. The board shall cooperate with the boards of directors of guaranty associations in other states in preparing a report on the history and causes for insolvency of a particular member insurer, and may adopt by reference any report prepared by such other associations.
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(Source: P.A. 100-687, eff. 8-3-18.)
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