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Illinois Compiled Statutes

Information maintained by the Legislative Reference Bureau
Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process. Recent laws may not yet be included in the ILCS database, but they are found on this site as Public Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the Guide.

Because the statute database is maintained primarily for legislative drafting purposes, statutory changes are sometimes included in the statute database before they take effect. If the source note at the end of a Section of the statutes includes a Public Act that has not yet taken effect, the version of the law that is currently in effect may have already been removed from the database and you should refer to that Public Act to see the changes made to the current law.

INSURANCE
(215 ILCS 125/) Health Maintenance Organization Act.

215 ILCS 125/Art. I

 
    (215 ILCS 125/Art. I heading)
ARTICLE I. SHORT TITLE AND DEFINITIONS

215 ILCS 125/1-1

    (215 ILCS 125/1-1) (from Ch. 111 1/2, par. 1401)
    Sec. 1-1. This Act shall be known and may be cited as the "Health Maintenance Organization Act".
(Source: P.A. 85-20.)

215 ILCS 125/1-2

    (215 ILCS 125/1-2) (from Ch. 111 1/2, par. 1402)
    Sec. 1-2. Definitions. As used in this Act, unless the context otherwise requires, the following terms shall have the meanings ascribed to them:
    (1) "Advertisement" means any printed or published material, audiovisual material and descriptive literature of the health care plan used in direct mail, newspapers, magazines, radio scripts, television scripts, billboards and similar displays; and any descriptive literature or sales aids of all kinds disseminated by a representative of the health care plan for presentation to the public including, but not limited to, circulars, leaflets, booklets, depictions, illustrations, form letters and prepared sales presentations.
    (2) "Director" means the Director of Insurance.
    (3) "Basic health care services" means emergency care, and inpatient hospital and physician care, outpatient medical services, mental health services and care for alcohol and drug abuse, including any reasonable deductibles and co-payments, all of which are subject to the limitations described in Section 4-20 of this Act and as determined by the Director pursuant to rule.
    (4) "Enrollee" means an individual who has been enrolled in a health care plan.
    (5) "Evidence of coverage" means any certificate, agreement, or contract issued to an enrollee setting out the coverage to which he is entitled in exchange for a per capita prepaid sum.
    (6) "Group contract" means a contract for health care services which by its terms limits eligibility to members of a specified group.
    (7) "Health care plan" means any arrangement whereby any organization undertakes to provide or arrange for and pay for or reimburse the cost of basic health care services, excluding any reasonable deductibles and copayments, from providers selected by the Health Maintenance Organization and such arrangement consists of arranging for or the provision of such health care services, as distinguished from mere indemnification against the cost of such services, except as otherwise authorized by Section 2-3 of this Act, on a per capita prepaid basis, through insurance or otherwise. A "health care plan" also includes any arrangement whereby an organization undertakes to provide or arrange for or pay for or reimburse the cost of any health care service for persons who are enrolled under Article V of the Illinois Public Aid Code or under the Children's Health Insurance Program Act through providers selected by the organization and the arrangement consists of making provision for the delivery of health care services, as distinguished from mere indemnification. A "health care plan" also includes any arrangement pursuant to Section 4-17. Nothing in this definition, however, affects the total medical services available to persons eligible for medical assistance under the Illinois Public Aid Code.
    (8) "Health care services" means any services included in the furnishing to any individual of medical or dental care, or the hospitalization or incident to the furnishing of such care or hospitalization as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing or healing human illness or injury.
    (9) "Health Maintenance Organization" means any organization formed under the laws of this or another state to provide or arrange for one or more health care plans under a system which causes any part of the risk of health care delivery to be borne by the organization or its providers.
    (10) "Net worth" means admitted assets, as defined in Section 1-3 of this Act, minus liabilities.
    (11) "Organization" means any insurance company, a nonprofit corporation authorized under the Dental Service Plan Act or the Voluntary Health Services Plans Act, or a corporation organized under the laws of this or another state for the purpose of operating one or more health care plans and doing no business other than that of a Health Maintenance Organization or an insurance company. "Organization" shall also mean the University of Illinois Hospital as defined in the University of Illinois Hospital Act or a unit of local government health system operating within a county with a population of 3,000,000 or more.
    (12) "Provider" means any physician, hospital facility, facility licensed under the Nursing Home Care Act, or facility or long-term care facility as those terms are defined in the Nursing Home Care Act or other person which is licensed or otherwise authorized to furnish health care services and also includes any other entity that arranges for the delivery or furnishing of health care service.
    (13) "Producer" means a person directly or indirectly associated with a health care plan who engages in solicitation or enrollment.
    (14) "Per capita prepaid" means a basis of prepayment by which a fixed amount of money is prepaid per individual or any other enrollment unit to the Health Maintenance Organization or for health care services which are provided during a definite time period regardless of the frequency or extent of the services rendered by the Health Maintenance Organization, except for copayments and deductibles and except as provided in subsection (f) of Section 5-3 of this Act.
    (15) "Subscriber" means a person who has entered into a contractual relationship with the Health Maintenance Organization for the provision of or arrangement of at least basic health care services to the beneficiaries of such contract.
(Source: P.A. 98-651, eff. 6-16-14; 98-841, eff. 8-1-14; 99-78, eff. 7-20-15.)

215 ILCS 125/1-3

    (215 ILCS 125/1-3) (from Ch. 111 1/2, par. 1402.1)
    Sec. 1-3. Definitions of admitted assets. "Admitted Assets" includes the investments authorized or permitted by Section 3-1 of this Act and, in addition thereto, only the following:
        (1) Amounts due from affiliates pursuant to
    
management contracts or service agreements which meet the requirements of Section 141.1 of the Illinois Insurance Code to the extent that the affiliate has liquid assets with which to pay the balance and maintain its accounts on a current basis; provided that the aggregate amount due from affiliates may not exceed the lesser of 10% of the organization's admitted assets or 25% of the organization's net worth as defined in Section 3-1. Any amount outstanding more than 3 months shall be deemed not current. For purpose of this subsection "affiliates" are as defined in Article VIII 1/2 of the Illinois Insurance Code.
        (2) Amounts advanced to providers under contract to
    
the organization for services to be rendered to enrollees pursuant to the contract. Amounts advanced must be for period of not more than 3 months and must be based on historical or estimated utilization patterns with the provider and must be reconciled against actual incurred claims at least semi-annually. Amounts due in the aggregate may not exceed 50% of the organization's net worth as defined in Section 3-1. Amounts due from a single provider may not exceed the lesser of 5% of the organization's admitted assets or 10% of the organization's net worth.
        (3) Amounts permitted under Section 2-7.
(Source: P.A. 91-357, eff. 7-29-99; 91-549, eff. 8-14-99; 92-16, eff. 6-28-01.)

215 ILCS 125/Art. II

 
    (215 ILCS 125/Art. II heading)
ARTICLE II. CERTIFICATE OF AUTHORITY,
GENERAL CORPORATE AND FINANCIAL REQUIREMENTS

215 ILCS 125/2-1

    (215 ILCS 125/2-1) (from Ch. 111 1/2, par. 1403)
    Sec. 2-1. Certificate of authority - Exception for corporate employee programs - Applications - Material modification of operation.
    (a) No organization shall establish or operate a Health Maintenance Organization in this State without obtaining a certificate of authority under this Act. No person other than an organization may lawfully establish or operate a Health Maintenance Organization in this State. This Act shall not apply to the establishment and operation of a Health Maintenance Organization exclusively providing or arranging for health care services to employees of a corporate affiliate of such Health Maintenance Organization. This exclusion shall be available only to those Health Maintenance Organizations which require employee contributions which equal less than 50% of the total cost of the health care plan, with the remainder of the cost being paid by the corporate affiliate which is the employer of the participants in the plan. This Act shall not apply to the establishment and operation of a Health Maintenance Organization exclusively providing or arranging health care services under contract with the State to persons committed to the custody of the Illinois Department of Corrections.
    This Act does not apply to the establishment and operation of managed care community networks that are certified as risk-bearing entities under Section 5-11 of the Illinois Public Aid Code and that contract with the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) pursuant to that Section.
    (b) Any organization may apply to the Director for and obtain a certificate of authority to establish and operate a Health Maintenance Organization in compliance with this Act. A foreign corporation may qualify under this Act, subject to its registration to do business in this State as a foreign corporation.
    (c) Each application for a certificate of authority shall be filed in triplicate and verified by an officer or authorized representative of the applicant, shall be in a form prescribed by the Director, and shall set forth, without limiting what may be required by the Director, the following:
        (1) A copy of the organizational document;
        (2) A copy of the bylaws, rules and regulations, or
    
similar document regulating the conduct of the internal affairs of the applicant, which shall include a mechanism to afford the enrollees an opportunity to participate in an advisory capacity in matters of policy and operations;
        (3) A list of the names, addresses, and official
    
positions of the persons who are to be responsible for the conduct of the affairs of the applicant; including, but not limited to, all members of the board of directors, executive committee, the principal officers, and any person or entity owning or having the right to acquire 10% or more of the voting securities or subordinated debt of the applicant;
        (4) A statement generally describing the applicant,
    
geographic area to be served, its facilities, personnel and the health care services to be offered;
        (5) A copy of the form of any contract made or to be
    
made between the applicant and any providers regarding the provision of health care services to enrollees;
        (6) A copy of the form of any contract made or to be
    
made between the applicant and any person listed in paragraph (3) of this subsection;
        (7) A copy of the form of any contract made or to be
    
made between the applicant and any person, corporation, partnership or other entity for the performance on the applicant's behalf of any functions including, but not limited to, marketing, administration, enrollment, investment management and subcontracting for the provision of health services to enrollees;
        (8) A copy of the form of any group contract which is
    
to be issued to employers, unions, trustees, or other organizations and a copy of any form of evidence of coverage to be issued to any enrollee or subscriber and any advertising material;
        (9) Descriptions of the applicant's procedures for
    
resolving enrollee grievances which must include procedures providing for enrollees participation in the resolution of grievances;
        (10) A copy of the applicant's most recent financial
    
statements audited by an independent certified public accountant. If the financial affairs of the applicant's parent company are audited by an independent certified public accountant but those of the applicant are not, then a copy of the most recent audited financial statement of the applicant's parent, attached to which shall be consolidating financial statements of the parent including separate unaudited financial statements of the applicant, unless the Director determines that additional or more recent financial information is required for the proper administration of this Act;
        (11) A copy of the applicant's financial plan,
    
including a three-year projection of anticipated operating results, a statement of the sources of working capital, and any other sources of funding and provisions for contingencies;
        (12) A description of rate methodology;
        (13) A description of the proposed method of
    
marketing;
        (14) A copy of every filing made with the Illinois
    
Secretary of State which relates to the applicant's registered agent or registered office;
        (15) A description of the complaint procedures to be
    
established and maintained as required under Section 4-6 of this Act;
        (16) A description, in accordance with regulations
    
promulgated by the Illinois Department of Public Health, of the quality assessment and utilization review procedures to be utilized by the applicant;
        (17) The fee for filing an application for issuance
    
of a certificate of authority provided in Section 408 of the Illinois Insurance Code, as now or hereafter amended; and
        (18) Such other information as the Director may
    
reasonably require to make the determinations required by this Act.
(Source: P.A. 95-331, eff. 8-21-07.)

215 ILCS 125/2-2

    (215 ILCS 125/2-2) (from Ch. 111 1/2, par. 1404)
    Sec. 2-2. Determination by Director; Health Maintenance Advisory Board.
    (a) Upon receipt of an application for issuance of a certificate of authority, the Director shall transmit copies of such application and accompanying documents to the Director of the Illinois Department of Public Health. The Director of the Department of Public Health shall then determine whether the applicant for certificate of authority, with respect to health care services to be furnished: (1) has demonstrated the willingness and potential ability to assure that such health care service will be provided in a manner to insure both availability and accessibility of adequate personnel and facilities and in a manner enhancing availability, accessibility, and continuity of service; and (2) has arrangements, established in accordance with regulations promulgated by the Department of Public Health for an ongoing quality of health care assurance program concerning health care processes and outcomes. Upon investigation, the Director of the Department of Public Health shall certify to the Director whether the proposed Health Maintenance Organization meets the requirements of this subsection (a). If the Director of the Department of Public Health certifies that the Health Maintenance Organization does not meet such requirements, he shall specify in what respect it is deficient.
    There is created in the Department of Public Health a Health Maintenance Advisory Board composed of 11 members. Nine members shall have practiced in the health field, 4 of which shall have been or are currently affiliated with a Health Maintenance Organization. Two of the members shall be members of the general public, one of whom is over 50 years of age. Each member shall be appointed by the Director of the Department of Public Health and serve at the pleasure of that Director and shall receive no compensation for services rendered other than reimbursement for expenses. Six members of the Board shall constitute a quorum. A vacancy in the membership of the Advisory Board shall not impair the right of a quorum to exercise all rights and perform all duties of the Board. The Health Maintenance Advisory Board has the power to review and comment on proposed rules and regulations to be promulgated by the Director of the Department of Public Health within 30 days after those proposed rules and regulations have been submitted to the Advisory Board.
    (b) Issuance of a certificate of authority shall be granted if the following conditions are met:
        (1) the requirements of subsection (c) of Section 2-1
    
have been fulfilled;
        (2) the persons responsible for the conduct of the
    
affairs of the applicant are competent, trustworthy, and possess good reputations, and have had appropriate experience, training or education;
        (3) the Director of the Department of Public Health
    
certifies that the Health Maintenance Organization's proposed plan of operation meets the requirements of this Act;
        (4) the Health Care Plan furnishes basic health care
    
services on a prepaid basis, through insurance or otherwise, except to the extent of reasonable requirements for co-payments or deductibles as authorized by this Act;
        (5) the Health Maintenance Organization is
    
financially responsible and may reasonably be expected to meet its obligations to enrollees and prospective enrollees; in making this determination, the Director shall consider:
            (A) the financial soundness of the applicant's
        
arrangements for health services and the minimum standard rates, co-payments and other patient charges used in connection therewith;
            (B) the adequacy of working capital, other
        
sources of funding, and provisions for contingencies; and
            (C) that no certificate of authority shall be
        
issued if the initial minimum net worth of the applicant is less than $2,000,000. The initial net worth shall be provided in cash and securities in combination and form acceptable to the Director;
        (6) the agreements with providers for the provision
    
of health services contain the provisions required by Section 2-8 of this Act; and
        (7) any deficiencies identified by the Director have
    
been corrected.
(Source: P.A. 91-617, eff. 1-1-00.)

215 ILCS 125/2-3

    (215 ILCS 125/2-3) (from Ch. 111 1/2, par. 1405)
    Sec. 2-3. Powers of health maintenance organizations. The powers of a health maintenance organization include, but are not limited to the following:
    (a) The purchase, lease, construction, renovation, operation, or maintenance of hospitals, medical facilities or both, and their ancillary equipment, and such property as may reasonably be required for its principal office or for such other purposes as may be necessary in the transaction of the business of the organization.
    (b) The making of loans to a medical group under contract with it and in furtherance of its program or the making of loans to a corporation or corporations under its control for the purpose of acquiring or constructing medical facilities at hospitals or in furtherance of a program providing health care services for enrollees.
    (c) The furnishing of health care services through providers which are under contract with or employed by the health maintenance organization.
    (d) The contracting with any person for the performance on its behalf of certain functions such as marketing, enrollment and administration.
    (e) The contracting with an insurance company licensed in this State, or with a hospital, medical, dental, vision or pharmaceutical service corporation authorized to do business in this State, for the provision of insurance, indemnity, or reimbursement against the cost of health care service provided by the health maintenance organization.
    (f) The offering, in addition to basic health care services, of (1) health care services, (2) indemnity benefits covering out of area or emergency services, (3) indemnity benefits provided through insurers or hospital, medical, dental, vision, or pharmaceutical service corporations, and (4) health maintenance organization point-of-service benefits as authorized under Article 4.5.
    (g) Rendering services related to the functions involved in the operating of its health maintenance organization business including but not limited to providing health services, data processing, accounting, or claims.
    (g-5) Indemnification for services provided to a child as required under subdivision (e)(3) of Section 4-2.
    (h) Any other business activity reasonably complementary or supplementary to its health maintenance organization business to the extent approved by the Director.
(Source: P.A. 92-135, eff. 1-1-02.)

215 ILCS 125/2-3.1

    (215 ILCS 125/2-3.1) (from Ch. 111 1/2, par. 1405.1)
    Sec. 2-3.1. (a) No health maintenance organization shall cause to be dispensed any drug other than that prescribed by a physician. Nothing herein shall prohibit drug product selection under Section 3.14 of the "Illinois Food, Drug and Cosmetic Act", approved June 29, 1967, as amended, and in accordance with the requirements of Section 25 of the "Pharmacy Practice Act", approved September 24, 1987, as amended.
    (b) No health maintenance organization shall include in any contract with any physician providing for health care services any provision requiring such physician to prescribe any particular drug product to any enrollee unless the enrollee is a hospital in-patient where such drug product may be permitted pursuant to written guidelines or procedures previously established by a pharmaceutical or therapeutics committee of a hospital, approved by the medical staff of such hospital and specifically approved, in writing, by the prescribing physician for his or her patients in such hospital, and unless it is compounded, dispensed or sold by a pharmacy located in a hospital, as defined in Section 3 of the Hospital Licensing Act or a hospital organized under "An Act in relation to the founding and operation of the University of Illinois Hospital and the conduct of University of Illinois health care programs", approved July 3, 1931, as amended.
(Source: P.A. 95-689, eff. 10-29-07.)

215 ILCS 125/2-4

    (215 ILCS 125/2-4) (from Ch. 111 1/2, par. 1406)
    Sec. 2-4. Required minimum net worth; special contingent reserve; deficiency; impairment.
    (a) A health maintenance organization issued a certificate of authority on or after the effective date of this amendatory Act of 1987 shall have and at all times maintain net worth of not less than $1,500,000. As an allocation of net worth, organizations certified prior to the effective date of this amendatory Act of 1987 shall maintain a special contingent reserve. The special contingent reserve for an organization certified between January 1, 1986 and the effective date of this amendatory Act of 1987 shall be equal to 5% of its net earned subscription revenue for health care services through December 31st of the year in which certified. In subsequent years such organization shall accumulate additions to the contingent reserve in an amount which is equal to 2% of its net earned subscription revenue for each calendar year. For purposes of this Section, net earned subscription revenue means premium minus reinsurance expenses. Maintenance of the contingent reserve requires that net worth equals or exceeds the contingent reserve at any balance sheet date.
    (b) Additional accumulations under subsection (a) will no longer be required at such time that the total special contingent reserve required by subsection (a) is equal to $1,500,000.
    (c) A deficiency in meeting amounts required in subsections (a), (b), and (d) will require (1) filing with the Director a plan for correction of the deficiency, acceptable to the Director and (2) correction of the deficiency within a reasonable time, not to exceed 60 days unless an extension of time, not to exceed 60 additional days, is granted by the Director. Such a deficiency will be deemed an impairment, and failure to correct the deficiency in the prescribed time shall be grounds for suspension or revocation pursuant to subsection (h) of Section 5-5.
    (d) All health maintenance organizations issued a certificate of authority on or prior to December 31, 1985 and regulated under this Act must have and at all times maintain, prior to December 31, 1988, the net worth and special contingent reserve that was required for that particular organization at the time it was certified. All such organizations must have by December 31, 1988 and thereafter maintain at all times, net worth of not less than $300,000 and a special contingent reserve calculated and accumulated in the same manner as required of a health maintenance organization issued a certificate of authority on or between January 1, 1986 and the effective date of this amendatory Act of 1987. Such calculation shall commence with the financial reporting period first following certification.
    All organizations issued a certificate of authority between January 1, 1986 and the effective date of this amendatory Act of 1987 must have and at all times maintain the net worth and special contingent reserve that was required for that particular organization at the time it was certified.
    (d-5) A health maintenance organization that offers a point-of-service product must maintain minimum net worth of not less than:
        (1) the greater of 300% of the "authorized control
    
level" as defined by Article IIA of the Illinois Insurance Code; or
        (2) $3,500,000 if the health maintenance
    
organization's annual projected out-of-plan claims are less than $500,000; or
        (3) $4,500,000 if the health maintenance
    
organization's annual projected out-of-plan claims are equal to or greater than $500,000 but less than $1,000,000; or
        (4) $6,000,000 if the health maintenance
    
organization's annual projected out-of-plan claims are $1,000,000 or greater.
    (e) Unless allowed by the Director, no health maintenance organization, officer, director, trustee, producer, or employee of such organization may renew, issue, or deliver, or cause to be renewed, issued or delivered, any certificate, agreement, or contract of coverage in this State, for which a premium is charged or collected, when the organization writing such coverage is insolvent or impaired, and the fact of such insolvency or impairment is known to the organization, officer, director, trustee, producer, or employee of such organization. An organization is impaired when a deficiency exists in meeting the amounts required in subsections (a), (b), and (d) of Section 2-4.
    However, the existence of an impairment does not prevent the issuance or renewal of a certificate, agreement or contract when the enrollee exercises an option granted under the plan to obtain new, renewed or converted coverage.
    Any organization, officer, director, trustee, producer, or employee of such organization violating this subsection shall be guilty of a Class A misdemeanor.
(Source: P.A. 92-135, eff. 1-1-02.)

215 ILCS 125/2-5

    (215 ILCS 125/2-5) (from Ch. 111 1/2, par. 1406.1)
    Sec. 2-5. Claims Liabilities. Every Health Maintenance Organization shall, at all times, maintain liabilities in an amount estimated in the aggregate to provide for the payment of all claims incurred and any due and unpaid provider capitation, whether reported or unreported, which are unpaid and for which such organization is or may be liable, and to provide for the expense of adjustment or settlement of such claims. Such liabilities shall be computed in accordance with regulations promulgated by the Director upon reasonable consideration of the ascertained experience and character of such business for the purpose of adequately protecting enrollees and securing the solvency of such organizations.
    Whenever the claim and claim expense experience of any such organization shows the liabilities calculated in accordance with such regulations to be inadequate, the Director may require such organization to maintain additional liabilities.
(Source: P.A. 86-620.)

215 ILCS 125/2-6

    (215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2)
    Sec. 2-6. Statutory deposits.
    (a) An organization subject to the provisions of this Act shall make and maintain with the Director through December 30, 1993, for the protection of enrollees of the organization, a deposit of securities which are authorized investments under paragraphs (1) and (2) of subsection (h) of Section 3-1 having a fair market value equal to at least $100,000. Effective December 31, 1993 and through December 30, 1994, the deposit shall have a fair market value at least equal to $200,000. Effective December 31, 1994 and thereafter, the deposit shall have a fair market value at least equal to $300,000. An organization issued a certificate of authority on or after the effective date of this Amendatory Act of 1993, shall make and maintain with the Director; for the protection of enrollees of the organization, a deposit of securities which are authorized investments under paragraphs (1) and (2) of subsection (h) of Section 3-1 having a fair market value equal to at least $300,000. The amount on deposit shall remain as an admitted asset of the organization in the determination of its net worth. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the organization that it has no outstanding enrollee creditors, enrollees, certificate holders, or enrollee obligations in effect and no plans to engage in the business of insurance as a health maintenance organization; (ii) receipt of a lawful resolution of the organization's governing body effecting the surrender of its certificate of authority, articles of incorporation, or other organizational documents to their issuing governmental officer for voluntary or administrative dissolution; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the organization, together with a plan of dissolution approved by the Director.
    (b) An organization that offers a point-of-service product, as permitted by Article 4.5, must maintain an additional deposit in an amount that is not less than the greater of 125% of the organization's annual projected point-of-service claims or $300,000.
(Source: P.A. 92-75, eff. 7-12-01; 92-135, eff. 1-1-02; 92-651, eff. 7-11-02.)

215 ILCS 125/2-7

    (215 ILCS 125/2-7)
    Sec. 2-7. (Repealed).
(Source: P.A. 92-16, eff. 6-28-01. Repealed by P.A. 97-486, eff. 1-1-12.)

215 ILCS 125/2-8

    (215 ILCS 125/2-8) (from Ch. 111 1/2, par. 1407.01)
    Sec. 2-8. Provider agreements. (a) All provider contracts currently in existence between any organization and any hospital which are renewed on or after 180 days following the effective date of this amendatory Act of 1987, and all contracts between any organization and any hospital executed on or after 180 days after such effective date, shall contain the following "hold-harmless" clause: "The provider agrees that in no event, including but not limited to nonpayment by the organization of amounts due the hospital provider under this contract, insolvency of the organization or any breach of this contract by the organization, shall the hospital provider or its assignees or subcontractors have a right to seek any type of payment from, bill, charge, collect a deposit from, or have any recourse against, the enrollee, persons acting on the enrollee's behalf (other than the organization), the employer or group contract holder for services provided pursuant to this contract except for the payment of applicable co-payments or deductibles for services covered by the organization or fees for services not covered by the organization. The requirements of this clause shall survive any termination of this contract for services rendered prior to such termination, regardless of the cause of such termination. The organization's enrollees, the persons acting on the enrollee's behalf (other than the organization) and the employer or group contract holder shall be third party beneficiaries of this clause. This clause supersedes any oral or written agreement now existing or hereafter entered into between the provider and the enrollee, persons acting on the enrollee's behalf (other than the organization) and the employer or group contract holder." To the extent that any hospital provider contract, which is renewed or entered into on or after 180 days following the effective date of this amendatory Act of 1987, fails to incorporate such provisions, such provisions shall be deemed incorporated into such contracts by operation of law as of the date of such renewal or execution.
    (b) All provider and subcontractor contracts must contain provisions whereby the provider or subcontractor shall provide, arrange for, or participate in the quality assurance programs mandated by this Act, unless the Illinois Department of Public Health certifies that such programs will be fully implemented without any participation or action from such contracting provider.
    (c) The Director may promulgate rules requiring that provider contracts contain provisions concerning reasonable notices to be given between the parties and for the organization to provide reasonable notice to its enrollees and to the Director. Notice shall be given for such events as, but not limited to, termination of insurance protection, quality assurance or availability of medical care.
(Source: P.A. 86-620.)

215 ILCS 125/2-9

    (215 ILCS 125/2-9) (from Ch. 111 1/2, par. 1407.02)
    Sec. 2-9. Subordinated Indebtedness. An organization having a certificate of authority under this Act may borrow or assume a liability for the repayment of a sum of money upon a written agreement that the loan or advance with interest thereon not exceeding a reasonable rate shall be repaid only out of net worth of the organization in excess of such minimum net worth as is stipulated in and by the agreement. The agreement form shall first be submitted to and approved by the appropriate authoritative body of the organization and the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he is satisfied that the financial condition of the organization warrants such action, but such approval may not be withheld if the organization shall have and submit satisfactory evidence of net worth of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement. No loan or advance made under this Section or interest accruing thereon shall form a part of the legal liabilities of the organization until authorized for payment by the Director, but, until such authorization, all statements published by the organization or filed with the Director shall show the amount thereof then remaining unpaid as a special surplus account. Nothing in this Section shall be construed to mean that an organization may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the organization as a liability.
(Source: P.A. 86-620.)

215 ILCS 125/2-10

    (215 ILCS 125/2-10)
    Sec. 2-10. Directors.
    (a) After June 30, 2002, the corporate powers for domestic organizations issued a certificate of authority under this Act must be exercised by, and its business and affairs must be under the control of, a board of directors composed of not less than 3 nor more than 21 natural persons who are at least 18 years of age. At least 3 of the directors must be residents and citizens of this State. A person convicted of a felony may not be a director. A director must be of good character and known professional, administrative, or business ability. The requisite ability must include a practical knowledge of managed health care, insurance, finance, or investment.
    (b) After June 30, 2002, not less than one-third of the directors of a domestic organization that is not a controlled insurer for purposes of Section 131.20b of the Illinois Insurance Code must be persons who are not officers or employees of the organization. At least one of those persons must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof.
(Source: P.A. 92-140, eff. 7-24-01.)

215 ILCS 125/Art. III

 
    (215 ILCS 125/Art. III heading)
ARTICLE III. INVESTMENTS

215 ILCS 125/3-1

    (215 ILCS 125/3-1) (from Ch. 111 1/2, par. 1407.3)
    Sec. 3-1. Investment Regulations.
    (a) Any health maintenance organization may invest its funds as provided in this Section and not otherwise. A health maintenance organization that is organized as an insurance company may also acquire the investment assets authorized for an insurance company pursuant to the laws applicable to an insurance company in the organization's state of domicile. Notwithstanding the provisions of this Section, the Director may, after notice and hearing, order an organization to limit or withdraw from certain investments, or discontinue certain investment practices, to the extent the Director finds that such investments or investment practices are hazardous to the financial condition of the organization.
    (b) No investment or loan shall be made or engaged in by any health maintenance organization unless the same have been authorized or ratified by the board of directors or by a committee thereof charged with the duty of supervising investments and loans. Nothing contained in this subsection shall prevent the board of directors of any such organization from depositing any of its securities with a committee appointed for the purpose of protecting the interest of security holders or with the authorities of any state where it is necessary to do so in order to secure permission to transact its appropriate business therein, and nothing contained in this subsection shall prevent the board of directors of such organization from depositing any securities as collateral for the securing of any bond required for the business of the organization.
    (c) No health maintenance organization shall pay any commission or brokerage for the purchase or sale of property whether real or personal, in excess of that usual and customary at the time and in the locality where such purchases or sales are made, and information regarding payments of commissions and brokerage shall be maintained.
    (d) A health maintenance organization may not directly or indirectly, unless it has notified the Director in writing of its intention to enter into the transaction at least 30 days prior thereto, or any shorter period as the Director may permit, and the Director has not disapproved it within that period:
        (1) make a loan to or other investment in an officer
    
or director of the organization or a person in which the officer or director has any direct or indirect financial interest;
        (2) make a guarantee for the benefit of or in favor
    
of an officer or director of the organization or a person in which the officer or director has any direct or indirect financial interest; or
        (3) enter into an agreement for the purchase or sale
    
of property from or to an officer or director of the organization or a person in which the officer or director has any direct or indirect financial interest.
    For the purposes of this Section, an officer or director shall not be deemed to have a financial interest by reason of an interest that is held directly or indirectly through the ownership of equity interests representing less than 2% of all outstanding equity interests issued by a person that is a party to the transaction, or solely by reason of that individual's position as a director or officer of a person that is a party to the transaction.
    This subsection does not apply to a transaction between an organization and any of its subsidiaries or affiliates that is entered into in compliance with Section 131.20a of the Illinois Insurance Code, other than a transaction between an insurer and its officer or director.
    (e) In applying the percentage limitations imposed by this Section there shall be used as a base the total of all assets which would be admitted by this Section without regard to percentage limitations. All legal measurements used as a base in the determination of all investment qualifications shall consist of the amounts determined at the most recent year end adjusted for subsequent acquisition and disposition of investments.
    (f) Valuation of investments. Investments shall be valued in accordance with the published valuation standards of the National Association of Insurance Commissioners. Securities investments as to which the National Association of Insurance Commissioners has not published valuation standards in its Valuations of Securities manual or its successor publication shall be valued as follows:
        (1) All obligations having a fixed term and rate
    
shall, if not in default as to principal or interest, be valued as follows: if purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made;
        (2) Common, preferred or guaranteed stocks shall be
    
valued at market value.
        (3) Other security investments shall be valued in
    
accordance with regulations promulgated by the Director pursuant to paragraph (6) of this subsection.
        (4) Other investments, including real property, shall
    
be valued in accordance with regulations promulgated by the Director pursuant to paragraph (6) of this subsection, but in no event shall such other investments be valued at more than the purchase price. The purchase price for real property includes capitalized permanent improvements, less depreciation spread evenly over the life of the property or, at the option of the company, less depreciation computed on any basis permitted under the Internal Revenue Code and regulations thereunder. Such investments that have been affected by permanent declines in value shall be valued at not more than market value.
        (5) Any investment, including real property, not
    
purchased by the Health Maintenance Organization but acquired in satisfaction of a debt or otherwise shall be valued in accordance with the applicable procedures for that type of investment contained in this subsection. For purposes of applying the valuation procedures, the purchase price shall be deemed to be the market value at the time the investment is acquired or, in the case of any investment acquired in satisfaction of debt, the amount of the debt, including interest, taxes and expenses, whichever amount is less.
        (6) The Director shall promulgate rules and
    
regulations for determining and calculating values to be used in financial statements submitted to the Department for investments.
    (g) Definitions. As used in this Section, unless the context otherwise requires.
        (1) "Business Corporation" means corporations
    
organized for other than not for profit purposes.
        (2) "Business Entity" includes sole proprietorships,
    
corporations, associations, partnerships and business trusts.
        (3) "Bank or Trust Company" means any bank or trust
    
company organized under the laws of the United States or any State thereof if said bank or trust company is regularly examined pursuant to such laws and said bank or trust company has the insurance protection afforded by an agency of the United States government.
        (4) "Capital" means capital stock paid-up, if any,
    
and its use in a provision does not imply that a non-profit Health Maintenance Organization without stated capital stock is excluded from the provision. The capital of such an organization will be zero.
        (5) "Direct" when used in connection with
    
"obligation" means that the designated obligor shall be primarily liable on the instrument representing the obligation.
        (6) "Facility" means and includes real estate and any
    
and all forms of tangible personal property and services used constituting an operating unit.
        (7) "Guaranteed or insured" means that the guarantor
    
or insurer will perform or insure the obligation of the obligor or will purchase the obligation to the extent of the guaranty or insurance.
        (8) "Mortgage" shall include a trust deed or other
    
lien on real property securing an obligation for the payment of money.
        (9) "Servicer" means a business entity that has a
    
contractual obligation to service a pool of mortgage loans. The service provided shall include, but is not limited to, collection of principal and interest, keeping the accounts current, maintaining or confirming in force hazard insurance and tax status and providing supportive accounting services.
        (10) "Single credit risk" means the direct,
    
guaranteed or insured obligations of any one business entity including affiliates thereof.
        (11) "Surplus" means the amount properly shown as
    
total net worth on a company's balance sheet, plus all voluntary reserves, but not including capital paid-up.
        (12) "Tangible net worth" means the par value of all
    
issued and outstanding capital stock of a corporation (or in the case of shares having no par value, the stated value) and the amounts of all surplus accounts less the sum of (a) such intangible assets as deferred charges, organization and development expense, discount and expense incurred in securing capital, good will, trade-marks, trade-names and patents, (b) leasehold improvements, and (c) any reserves carried by the corporation and not otherwise deducted from assets.
        (13) "Unconditional" when used in connection with
    
"obligation" means that nothing remains to be done or to occur to make the designated obligor liable on the instrument, and that the legal holder shall have the status at least equal to that of general creditor of the obligor.
    (h) Authorized investments. Any Health Maintenance Organization, except those organized as an insurance company, may acquire the assets set forth in paragraphs 1 through 17, inclusive. A Health Maintenance Organization that is organized as an insurance company may acquire the investment assets authorized for an insurance company pursuant to the laws applicable to an insurance company in the organization's state of domicile. Any restriction, exclusion or provision appearing in any paragraph shall apply only with respect to the authorization of the particular paragraph in which it appears and shall not constitute a general prohibition and shall not be applicable to any other paragraph. The qualifications or disqualifications of an investment under one paragraph shall not prevent its qualification in whole or in part under another paragraph, and an investment authorized by more than one paragraph may be held under whichever authorizing paragraph the organization elects. An investment which qualified under any paragraph at the time it was acquired or entered into by an organization shall continue to be qualified under that paragraph. An investment in whole or in part may be transferred from time to time, at the election of the organization, to the authority of any paragraph under which it qualifies, whether originally qualifying thereunder or not.
        (1) Direct obligations of the United States for the
    
payment of money, or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by the United States.
        (2) Direct obligations for the payment of money,
    
issued by an agency or instrumentality of the United States, or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by an agency or instrumentality of the United States.
        (3) Direct, general obligations of any state of the
    
United States for the payment of money, or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by any state of the United States, on the following conditions:
            (i) Such state has the power to levy taxes for
        
the prompt payment of the principal and interest of such obligations; and
            (ii) Such state shall not be in default in the
        
payment of principal or interest on any of its direct, guaranteed or insured obligations at the date of such investment.
        (4) Direct, general obligations of any political
    
subdivision of any state of the United States for the payment of money, or obligations for the payment of money to the extent guaranteed as to the payment of principal and interest by any political subdivision of any state of the United States, on the following conditions:
            (i) The obligations are payable or guaranteed
        
from ad valorem taxes;
            (ii) Such political subdivision is not in default
        
in the payment of principal or interest on any of its direct or guaranteed obligations;
            (iii) No investment shall be made under this
        
paragraph in obligations which are secured only by special assessments for local improvements; and
            (iv) An organization shall not invest under this
        
paragraph more than 2% of its admitted assets in obligations issued or guaranteed by any one such political subdivision.
        (5) Anticipation obligations of any political
    
subdivision of any state of the United States, including but not limited to bond anticipation notes, tax anticipation notes and construction anticipation notes, for the payment of money within 12 months from the issuance of the obligation, on the following conditions:
            (i) Such anticipation notes must be a direct
        
obligation of the issuer under conditions set forth in paragraph 4;
            (ii) Such political subdivision is not in default
        
in the payment of the principal or interest on any of its direct general obligations or any obligation guaranteed by such political subdivision;
            (iii) The anticipated funds must be specifically
        
pledged to secure the obligation;
            (iv) An organization shall not invest under this
        
paragraph more than 2% of its admitted assets in the anticipation obligations issued by any one such political subdivision.
        (6) Obligations of any state of the United States, a
    
political subdivision thereof, or a public instrumentality of any one or more of the foregoing, for the payment of money, on the following conditions:
            (i) The obligations are payable from revenues or
        
earnings of a public utility of such state, political subdivision, or public instrumentality which are specifically pledged therefor;
            (ii) The law under which the obligations are
        
issued requires such rates for service shall be charged and collected at all times that they will produce sufficient revenue or earnings together with any other revenues or moneys pledged to pay all operating and maintenance charges of the public utility and all principal and interest on such obligations;
            (iii) No prior or parity obligations payable from
        
the revenues or earnings of that public utility are in default at the date of such investment;
            (iv) An organization shall not invest more than
        
20% of its admitted assets under this paragraph; and
            (v) An organization shall not invest under this
        
Section more than 2% of its admitted assets in the revenue obligations issued in connection with any one facility.
        (7) Obligations of any state of the United States, a
    
political subdivision thereof, or a public instrumentality of any of the foregoing, for the payment of money, on the following conditions:
            (i) The obligations are payable from revenues or
        
earnings, excluding revenues or earnings from public utilities, specifically pledged therefor by such state, political subdivision or public instrumentality;
            (ii) No prior or parity obligation of the same
        
issuer payable from revenues or earnings from the same source has been in default as to principal or interest during the 5 years next preceding the date of such investment, but such issuer need not have been in existence for that period, and obligations acquired under this paragraph may be newly issued;
            (iii) An organization shall not invest in excess
        
of 20% of its admitted assets under this paragraph;
            (iv) An organization shall not invest under this
        
paragraph more than 2% of its admitted assets in the revenue obligations issued in connection with any one facility; and
            (v) An organization shall not invest under this
        
paragraph more than 2% of its admitted assets in revenue obligations payable from revenue or earning sources which are the contractual responsibility of any one single credit risk.
        (8) Direct, unconditional obligations of a solvent
    
business corporation for the payment of money, including obligations to pay rent for equipment used in its business or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by any solvent business corporation, on the following conditions:
            (i) The corporation shall be incorporated under
        
the laws of the United States or any state of the United States;
            (ii) The corporation shall have tangible net
        
worth of not less than $1,000,000;
            (iii) No such obligation, guarantee or insurance
        
of the corporation has been in default as to principal or interest during the 5 years preceding the date of investment, but the corporation need not have had obligations guarantees or insurance outstanding during that period and need not have been in existence for that period, and obligations acquired under this paragraph may be newly issued;
            (iv) An organization shall not invest more than
        
2% of its admitted assets in obligations issued, guaranteed or insured by any one such corporation;
            (v) An organization may invest under this
        
paragraph up to an additional 2% of its admitted assets in obligations which (i) are issued, guaranteed or insured by any one or more such corporations, each having a tangible net worth of not less than $25,000,000 and (ii) mature within 12 months from the date of acquisition;
            (vi) An organization may invest not more than 1/2
        
of 1% of its admitted assets in such obligations of corporations which do not meet the condition of subparagraph (ii) of this paragraph; and
            (vii) An organization shall not invest more than
        
75% of its admitted assets under this paragraph.
        (9) Direct, unconditional obligations for the payment
    
of money issued or obligations for the payment of money to the extent guaranteed as to principal and interest by a solvent not for profit corporation, on the following conditions:
            (i) The corporation shall be incorporated under
        
the laws of the United States or of any state of the United States;
            (ii) The corporation shall have been in existence
        
for at least 5 years and shall have assets of at least $2,000,000;
            (iii) Revenues or other income from such assets
        
and the services or commodities dispensed by the corporation shall be pledged for the payment of the obligations or guarantees;
            (iv) No such obligation or guarantee of the
        
corporation has been in default as to principal or interest during the 5 years next preceding the date of such investment, but the corporation need not have had obligations or guarantees outstanding during that period and obligations which are acquired under this paragraph may be newly issued;
            (v) An organization shall not invest more than
        
15% of its admitted assets under this paragraph; and
            (vi) An organization shall not invest under this
        
paragraph more than 2% of its admitted assets in the obligations issued or guaranteed by any one such corporation.
        (10) Direct, unconditional nondemand obligations for
    
the payment of money issued by a solvent bank, mutual savings bank or trust company on the following conditions:
            (i) The bank, mutual savings bank or trust
        
company shall be incorporated under the laws of the United States, or of any state of the United States;
            (ii) The bank, mutual savings bank or trust
        
company shall have tangible net worth of not less than $1,000,000;
            (iii) Such obligations must be of the type which
        
are insured by an agency of the United States or have a maturity of no more than 1 day;
            (iv) An organization shall not invest under this
        
paragraph more than the amount which is fully insured by an agency of the United States plus 2% of its admitted assets in nondemand obligations issued by any one such financial institution; and
            (v) An organization may invest under this
        
paragraph up to an additional 8% of its admitted assets in nondemand obligations which (1) are issued by any such banks, mutual savings banks or trust companies, each having a tangible net worth of not less than $25,000,000 and (2) mature within 12 months from the date of acquisition.
        (11) Preferred or guaranteed stocks issued or
    
guaranteed by a solvent business corporation incorporated under the laws of the United States or any state of the United States, on the following conditions:
            (i) The corporation shall have tangible net worth
        
of not less than $1,000,000;
            (ii) If such stocks have been outstanding prior
        
to purchase, an organization shall not invest under this paragraph in such stock if prescribed current or cumulative dividends are in arrears;
            (iii) An organization shall not invest more than
        
33 1/3% of its admitted assets under this paragraph and an organization shall not invest more than 15% of its admitted assets under this paragraph in stocks which, at the time of purchase, are not Sinking Fund Stocks. An issue of preferred or guaranteed stock shall be a Sinking Fund Stock when (1) such issue is subject to a 100% mandatory sinking fund or similar arrangement which will provide for the redemption of the entire issue over a period not longer than 40 years from the date of purchase; (2) annual mandatory sinking fund installments on each issue commence not more than 10 years from the date of issue; and (3) each annual sinking fund installment provides for the purchase or redemption of at least 2 1/2% of the original number of shares of such issue; and
            (iv) An organization shall not invest under this
        
paragraph more than 2% of its admitted assets in the preferred or guaranteed stocks of any one such corporation.
        (12) Common stock issued by any solvent business
    
corporation incorporated under the laws of the United States, or of any state of the United States, on the following conditions:
            (i) The issuing corporation must have tangible
        
net worth of $1,000,000 or more;
            (ii) An organization may not invest more than an
        
amount equal to its net worth under this paragraph; and
            (iii) An organization may not invest under this
        
paragraph an amount equal to more than 10% of its net worth in the common stock of any one corporation.
        (13) Shares of common stock or units of beneficial
    
interest issued by any solvent business corporation or trust incorporated or organized under the laws of the United States, or of any state of the United States, on the following conditions:
            (i) If the issuing corporation or trust is
        
advised by an investment advisor which is the organization or an affiliate of the organization, the issuing corporation or trust shall have net assets of $100,000 or more, or if the issuing corporation or trust has an unaffiliated investment advisor, the issuing corporation or trust shall have net assets of $10,000,000 or more;
            (ii) The issuing corporation or trust is
        
registered as an investment company with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended;
            (iii) An organization shall not invest under this
        
paragraph more than the greater of $100,000 or 10% of its admitted assets in any one bond fund, municipal bond fund or money market fund;
            (iv) An organization shall not invest under this
        
paragraph more than 10% of its net worth in any one common stock fund, balanced fund or income fund;
            (v) An organization shall not invest more than
        
50% of its admitted assets in bond funds, municipal bond funds and money market funds under this paragraph; and
            (vi) An organization's investments in common
        
stock funds, balanced funds or income funds when combined with its investments in common stocks made under paragraph (12) shall not exceed the aggregate limitation provided by subparagraph (ii) of paragraph (12).
        (14) Shares of, or accounts or deposits with savings
    
and loan associations or building and loan associations, on the following conditions:
            (i) The shares, accounts, or deposits, or
        
investments in any form legally issuable shall be of a withdrawable type and issued by an association which has the insurance protection afforded by the Federal Savings and Loan Insurance Corporation; but nonwithdrawable accounts which are not eligible for insurance by the Federal Savings and Loan Insurance Corporation shall not be eligible for investment under this paragraph;
            (ii) The association shall have tangible net
        
worth of not less than $1,000,000;
            (iii) The investment shall be in the name of and
        
owned by the organization, unless the account is under a trusteeship with the organization named as the beneficiary;
            (iv) An organization shall not invest more than
        
50% of its admitted assets under this paragraph; and
            (v) Under this paragraph, an organization shall
        
not invest in any one such association an amount in excess of 2% of its admitted assets or an amount which is fully insured by the Federal Savings and Loan Insurance Corporation, whichever is greater.
        (15) Direct, unconditional obligations for the
    
payment of money secured by the pledge of any investment which is authorized by any of the preceding paragraphs, on the following conditions:
            (i) The investment pledged shall by its terms be
        
legally assignable and shall be validly assigned to the organization;
            (ii) The investment pledged shall have a fair
        
market value which is at least 25% greater than the amount invested under this paragraph, except that a loan may be made up to 100% of the full fair market value of collateral that would qualify as an investment under paragraph (1) provided it qualifies under condition (i) of this paragraph; and
            (iii) An organization's investment under this
        
paragraph when added to its investment of the category of the collateral pledged shall not cause the sum to exceed the limits provided by the paragraph authorizing that category of investments.
        (16) Real estate (including leasehold estates and
    
leasehold improvements) for the convenient accommodation of the organization's business operations, including home office, branch office, medical facilities and field office operations, on the following conditions:
            (i) Any parcel of real estate acquired under this
        
paragraph may include excess space for rent to others, if it is reasonably anticipated that such excess will be required by the organization for expansion or if the excess is reasonably required in order to have one or more buildings that will function as an economic unit;
            (ii) Such real estate may be subject to a
        
mortgage; and
            (iii) The greater of the admitted value of the
        
asset as determined by subsection (f) or the organization's equity plus all encumbrances on such real estate owned by a company under this paragraph shall not exceed 20% of its admitted assets, except with the permission of the Director if he finds that such percentage of its admitted assets is insufficient to provide convenient accommodation for the company's business; provided, however, an organization that directly provides medical services may invest an additional 20% of its admitted assets in such real estate, not requiring the permission of the Director.
        (17) Any investments of any kind, in the complete
    
discretion of the organization, without regard to any condition of, restriction in, or exclusion from paragraphs (1) to (16), inclusive, and regardless of whether the same or a similar type of investment has been included in or omitted from any such paragraph, on the following condition: An organization shall not invest under this paragraph more than the lesser of (i) 10% of its admitted assets, or (ii) 50% of the amount by which its net worth exceeds the minimum requirements of a new health maintenance organization to qualify for a certificate of authority.
(Source: P.A. 92-140, eff. 7-24-01; 92-651, eff. 7-11-02.)

215 ILCS 125/Art. IV

 
    (215 ILCS 125/Art. IV heading)
ARTICLE IV. DELIVERY OF SERVICES - REQUIRED
PROVISIONS AND MARKETING.

215 ILCS 125/4-1

    (215 ILCS 125/4-1) (from Ch. 111 1/2, par. 1408)
    Sec. 4-1. Description and securing of services. Every Health Maintenance Organization shall at the time of enrollment and annually thereafter provide its enrollees a description of the services and information as to where and how to secure them. The Health Maintenance Organization shall issue to each subscriber or enrollee a group contract or evidence of coverage. The group contract or evidence of coverage and related material shall be delivered or issued for delivery to an enrollee within 30 days from the later of the effective date of coverage or the date on which the Health Maintenance Organization is provided completed notification of enrollment.
(Source: P.A. 86-620.)

215 ILCS 125/4-2

    (215 ILCS 125/4-2) (from Ch. 111 1/2, par. 1408.2)
    Sec. 4-2. Medical assistance; coverage of child.
    (a) In this Section, "Medicaid" means medical assistance authorized under Section 1902 of the Social Security Act.
    (b) A contract or evidence of coverage delivered, issued for delivery, renewed, or amended by a Health Maintenance Organization may not contain any provision which limits or excludes payments of health care services to or on behalf of the enrollee because the enrollee or any covered dependent is eligible for or is receiving Medicaid benefits in this or any other state.
    (c) To the extent that payment for covered expenses has been made under Article V, VI, or VII of the Illinois Public Aid Code for health care services provided to an individual, if a third party has a legal liability to make payments for those health care services, the State is considered to have acquired the rights of the individual to payment.
    (d) If a child is covered under a health care plan of a Health Maintenance Organization in which the child's noncustodial parent is an enrollee, the Health Maintenance Organization shall:
        (1) Provide necessary information to the child's
    
custodial parent to enable the child to obtain benefits under that health care plan.
        (2) Permit the child's custodial parent (or the
    
provider, with the custodial parent's approval) to submit claims for payment for covered services without the approval of the noncustodial parent.
        (3) Make payments on claims submitted in accordance
    
with paragraph (2) directly to the custodial parent, the provider of health care services, or the state Medicaid agency.
    (e) A Health Maintenance Organization may not deny enrollment of a child under the health care plan in which the child's parent is an enrollee on any of the following grounds:
        (1) The child was born out of wedlock.
        (2) The child is not claimed as a dependent on the
    
parent's federal income tax return.
        (3) The child does not reside with the parent or in
    
the service area covered by the health care plan.
    (f) If a parent is required by a court or administrative order to provide coverage for a child under a health care plan in which the parent is enrolled, and that offers coverage for eligible dependents, the Health Maintenance Organization, upon receiving a copy of the order, shall:
        (1) Upon application, permit the parent to enroll in
    
the health care plan a child who is otherwise eligible for that coverage, without regard to any enrollment season restrictions that might otherwise be applicable as to the time period within which a person may enroll in the plan.
        (2) Enroll the child in the health care plan upon
    
application of the child's other parent, the state agency administering the Medicaid program, or the state agency administering a program for enforcing child support and establishing paternity under 42 U.S.C. 651 through 669 (or another child support enforcement program), if the parent is enrolled in the health care plan but fails to apply for enrollment of the child.
    (g) A Health Maintenance Organization may not impose, on a state agency that has been assigned the rights of an enrollee in a health care plan who receives Medicaid benefits, requirements that are different from requirements applicable to an assignee of any other enrollee in that health care plan.
    (h) Nothing in subsections (e) and (f) prevents a Health Maintenance Organization from denying any such application if the child is not eligible for coverage according to the Health Maintenance Organization's medical underwriting standards.
    (i) The Health Maintenance Organization may not disenroll (or otherwise eliminate coverage of) the child from the health care plan unless the Health Maintenance Organization is provided satisfactory written evidence of either of the following:
        (1) The court or administrative order is no longer in
    
effect.
        (2) The child is or will be enrolled in a comparable
    
health care plan obtained by the parent under such order and that enrollment is currently in effect or will take effect not later than the date the prior coverage is terminated.
(Source: P.A. 89-183, eff. 1-1-96.)

215 ILCS 125/4-3

    (215 ILCS 125/4-3) (from Ch. 111 1/2, par. 1408.3)
    Sec. 4-3. (Repealed).
(Source: Repealed by P.A. 89-183, eff. 1-1-96.)

215 ILCS 125/4-4

    (215 ILCS 125/4-4) (from Ch. 111 1/2, par. 1408.4)
    Sec. 4-4. Sexual assault or abuse victims; coverage of expenses; recovery of State funds; reimbursement of Department of Public Health.
    (1) Contracts or evidences of coverage issued by a health maintenance organization, which provide benefits for health care services, shall to the full extent of coverage provided for any other emergency or accident care, provide for the payment of actual expenses incurred, without offset or reduction for benefit deductibles or co-insurance amounts, in the examination and testing of a victim of an offense defined in Sections 11-1.20 through 11-1.60 or 12-13 through 12-16 of the Criminal Code of 1961 or the Criminal Code of 2012, or an attempt to commit such offense, to establish that sexual contact did occur or did not occur, and to establish the presence or absence of sexually transmitted disease or infection, and examination and treatment of injuries and trauma sustained by a victim of such offense.
    (2) For purposes of enabling the recovery of State funds, any health maintenance organization subject to this Section shall upon reasonable demand by the Department of Public Health disclose the names and identities of its enrollees entitled to benefits under this provision to the Department of Public Health whenever the Department of Public Health has determined that it has paid, or is about to pay for, health care services for which a health maintenance organization is liable under this Section. All information received by the Department of Public Health under this provision shall be held on a confidential basis and shall not be subject to subpoena and shall not be made public by the Department of Public Health or used for any purpose other than that authorized by this Section.
    (3) Whenever the Department of Public Health finds that it has paid for all or part of any health care services for which a health maintenance organization is obligated to pay under this Section, the Department of Public Health shall be entitled to receive reimbursement for its payments from such organization provided that the Department of Public Health has notified the organization of its claims before the organization has paid such benefits to its enrollees or in behalf of its enrollees.
(Source: P.A. 96-1551, eff. 7-1-11; 97-1150, eff. 1-25-13.)

215 ILCS 125/4-5

    (215 ILCS 125/4-5) (from Ch. 111 1/2, par. 1408.5)
    Sec. 4-5. Organ Transplants. No contract or evidence of coverage issued by a health maintenance organization which provides coverage for health care services shall deny reimbursement for an otherwise covered expense incurred for any organ transplantation procedure solely on the basis that such procedure is deemed experimental or investigational unless supported by the determination of the Office of Health Care Technology Assessment within the Agency for Health Care Policy and Research within the federal Department of Health and Human Services that such procedure is either experimental or investigational or that there is insufficient data or experience to determine whether an organ transplantation procedure is clinically acceptable. If a health maintenance organization has made written request, or had one made on its behalf by a national organization, for determination by the Office of Health Care Technology Assessment within the Agency for Health Care Policy and Research within the federal Department of Health and Human Services as to whether a specific organ transplantation procedure is clinically acceptable and said organization fails to respond to such a request within a period of 90 days, the failure to act may be deemed a determination that the procedure is deemed to be experimental or investigational.
(Source: P.A. 87-218.)

215 ILCS 125/4-6

    (215 ILCS 125/4-6) (from Ch. 111 1/2, par. 1408.6)
    Sec. 4-6. Complaint handling procedure. (a) Every health maintenance organization shall establish and maintain a complaint system providing reasonable procedures for resolving complaints initiated by enrollees. Nothing herein shall be construed to preclude an enrollee or a provider from filing a complaint with the Director or as limiting the Director's ability to investigate such complaints.
    (b) When a complaint is received by the Department of Insurance against a health maintenance organization or producer (respondent), the respondent, shall be notified of the complaint. The Department shall, in its notification, specify the date when a report is to be received from the respondent, which shall be no later than 21 days after notification is sent to the respondent. A failure to reply by the date specified may be followed by a collect telephone call or collect telegram. Repeated instances of failing to reply by the date specified may result in further regulatory action.
    (c) Contents of Response or Report. (1) Each respondent shall supply adequate documentation which explains all actions taken or not taken and which were the basis for the complaint;
    (2) Documents necessary to support the respondent's position and information requested by the Department, shall be furnished with the respondent's reply;
    (3) The respondent's reply shall be in duplicate, but duplicate copies of supporting documents shall not be required;
    (4) The respondent's reply shall include the name, telephone number and address of the individual assigned to the complaint; and
    (5) The Department shall respect the confidentiality of medical reports and other documents which by law are confidential. Any other information furnished by a respondent shall be marked "confidential" if the respondent does not wish it to be released to the complainant.
    (d) Follow-up Conclusion. Upon receipt of the respondent's report, the investigating deputy shall evaluate the material submitted; and
    (1) Advise the complainant of the action taken and disposition of his complaint;
    (2) Pursue further investigation with respondent or complainant; or
    (3) Refer the investigation report to the appropriate branch within the Department of Insurance for further regulatory action.
(Source: P.A. 86-620.)

215 ILCS 125/4-6.1

    (215 ILCS 125/4-6.1) (from Ch. 111 1/2, par. 1408.7)
    Sec. 4-6.1. Mammograms; mastectomies.
    (a) Every contract or evidence of coverage issued by a Health Maintenance Organization for persons who are residents of this State shall contain coverage for screening by low-dose mammography for all women 35 years of age or older for the presence of occult breast cancer. The coverage shall be as follows:
        (1) A baseline mammogram for women 35 to 39 years of
    
age.
        (2) An annual mammogram for women 40 years of age or
    
older.
        (3) A mammogram at the age and intervals considered
    
medically necessary by the woman's health care provider for women under 40 years of age and having a family history of breast cancer, prior personal history of breast cancer, positive genetic testing, or other risk factors.
        (4) A comprehensive ultrasound screening of an entire
    
breast or breasts if a mammogram demonstrates heterogeneous or dense breast tissue, when medically necessary as determined by a physician licensed to practice medicine in all of its branches.
    For purposes of this Section, "low-dose mammography" means the x-ray examination of the breast using equipment dedicated specifically for mammography, including the x-ray tube, filter, compression device, and image receptor, with radiation exposure delivery of less than 1 rad per breast for 2 views of an average size breast. The term also includes digital mammography and includes breast tomosynthesis. As used in this Section, the term "breast tomosynthesis" means a radiologic procedure that involves the acquisition of projection images over the stationary breast to produce cross-sectional digital three-dimensional images of the breast.
    If, at any time, the Secretary of the United States Department of Health and Human Services, or its successor agency, promulgates rules or regulations to be published in the Federal Register or publishes a comment in the Federal Register or issues an opinion, guidance, or other action that would require the State, pursuant to any provision of the Patient Protection and Affordable Care Act (Public Law 111-148), including, but not limited to, 42 U.S.C. 18031(d)(3)(B) or any successor provision, to defray the cost of any coverage for breast tomosynthesis outlined in this subsection, then the requirement that an insurer cover breast tomosynthesis is inoperative other than any such coverage authorized under Section 1902 of the Social Security Act, 42 U.S.C. 1396a, and the State shall not assume any obligation for the cost of coverage for breast tomosynthesis set forth in this subsection.
    (a-5) Coverage as described in subsection (a) shall be provided at no cost to the enrollee and shall not be applied to an annual or lifetime maximum benefit.
    (b) No contract or evidence of coverage issued by a health maintenance organization that provides for the surgical procedure known as a mastectomy shall be issued, amended, delivered, or renewed in this State on or after the effective date of this amendatory Act of the 92nd General Assembly unless that coverage also provides for prosthetic devices or reconstructive surgery incident to the mastectomy, providing that the mastectomy is performed after the effective date of this amendatory Act. Coverage for breast reconstruction in connection with a mastectomy shall include:
        (1) reconstruction of the breast upon which the
    
mastectomy has been performed;
        (2) surgery and reconstruction of the other breast to
    
produce a symmetrical appearance; and
        (3) prostheses and treatment for physical
    
complications at all stages of mastectomy, including lymphedemas.
Care shall be determined in consultation with the attending physician and the patient. The offered coverage for prosthetic devices and reconstructive surgery shall be subject to the deductible and coinsurance conditions applied to the mastectomy and all other terms and conditions applicable to other benefits. When a mastectomy is performed and there is no evidence of malignancy, then the offered coverage may be limited to the provision of prosthetic devices and reconstructive surgery to within 2 years after the date of the mastectomy. As used in this Section, "mastectomy" means the removal of all or part of the breast for medically necessary reasons, as determined by a licensed physician.
    Written notice of the availability of coverage under this Section shall be delivered to the enrollee upon enrollment and annually thereafter. A health maintenance organization may not deny to an enrollee eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the plan solely for the purpose of avoiding the requirements of this Section. A health maintenance organization may not penalize or reduce or limit the reimbursement of an attending provider or provide incentives (monetary or otherwise) to an attending provider to induce the provider to provide care to an insured in a manner inconsistent with this Section.
    (c) Rulemaking authority to implement this amendatory Act of the 95th General Assembly, if any, is conditioned on the rules being adopted in accordance with all provisions of the Illinois Administrative Procedure Act and all rules and procedures of the Joint Committee on Administrative Rules; any purported rule not so adopted, for whatever reason, is unauthorized.
(Source: P.A. 99-407 (see Section 20 of P.A. 99-588 for the effective date of P.A. 99-407); 99-588, eff. 7-20-16.)

215 ILCS 125/4-6.2

    (215 ILCS 125/4-6.2) (from Ch. 111 1/2, par. 1408.8)
    Sec. 4-6.2. Breast implant removal. No contract offered by Health Maintenance Organizations shall deny coverage for the removal of breast implants when the removal of the implants is medically necessary treatment for a sickness or injury. This Section does not apply to surgery performed for removal of breast implants that were implanted solely for cosmetic reasons. For the purpose of this Section, cosmetic reasons does not include cosmetic surgery performed as reconstruction resulting from sickness or injury.
(Source: P.A. 87-938; 88-45.)

215 ILCS 125/4-6.3

    (215 ILCS 125/4-6.3)
    Sec. 4-6.3. Prescription drugs; cancer treatment. No health maintenance organization that provides coverage for prescribed drugs approved by the federal Food and Drug Administration for the treatment of certain types of cancer shall exclude coverage of any drug on the basis that the drug has been prescribed for the treatment of a type of cancer for which the drug has not been approved by the federal Food and Drug Administration. The drug, however, must be approved by the federal Food and Drug Administration and must be recognized for the treatment of the specific type of cancer for which the drug has been prescribed in any one of the following established reference compendia:
        (a) the American Hospital Formulary Service Drug
    
Information;
        (b) National Comprehensive Cancer Network's Drugs &
    
Biologics Compendium;
        (c) Thomson Micromedex's Drug Dex;
        (d) Elsevier Gold Standard's Clinical Pharmacology; or
        (e) other authoritative compendia as identified from
    
time to time by the Federal Secretary of Health and Human Services;
or if not in the compendia, recommended for that particular type of cancer in formal clinical studies, the results of which have been published in at least two peer reviewed professional medical journals published in the United States or Great Britain.
    Any coverage required by this Section shall also include those medically necessary services associated with the administration of a drug.
    Despite the provisions of this Section, coverage shall not be required for any experimental or investigational drugs or any drug that the federal Food and Drug Administration has determined to be contraindicated for treatment of the specific type of cancer for which the drug has been prescribed. This Section shall apply only to cancer drugs. Nothing in this Section shall be construed, expressly or by implication, to create, impair, alter, limit, notify, enlarge, abrogate or prohibit reimbursement for drugs used in the treatment of any other disease or condition.
(Source: P.A. 96-457, eff. 8-14-09.)

215 ILCS 125/4-6.4

    (215 ILCS 125/4-6.4)
    Sec. 4-6.4. Post-parturition care. A health maintenance organization is subject to the provisions of Section 356s of the Illinois Insurance Code.
(Source: P.A. 89-513, eff. 9-15-96; 90-14, eff. 7-1-97.)

215 ILCS 125/4-6.5

    (215 ILCS 125/4-6.5)
    Sec. 4-6.5. Required health benefits; Illinois Insurance Code requirements. A health maintenance organization is subject to the provisions of Sections 155.37, 356g.5, 356t, 356u, and 356z.1 of the Illinois Insurance Code.
(Source: P.A. 95-189, eff. 8-16-07.)

215 ILCS 125/4-7

    (215 ILCS 125/4-7) (from Ch. 111 1/2, par. 1409)
    Sec. 4-7. Solicitations of enrollees. Solicitations of enrollees by a Health Maintenance Organization authorized under this Act, or its representatives shall not be construed to be violative of any provisions of law relating to solicitation or advertising by health professionals. No solicitation may be made which advertises, identifies or makes a qualitative judgment concerning any health professional who provides services for a Health Maintenance Organization. Nothing in this Section precludes a Health Maintenance Organization from providing to a particular potential enrollee the names of health providers upon request by that particular potential individual enrollee. No Health Maintenance Organization, or representative thereof, may cause or knowingly permit the use of advertising which is untrue or misleading, solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive. Health Maintenance Organizations shall be subject to Section 143c of the "Illinois Insurance Code", approved June 29, 1937, as amended.
    If the Director finds that any advertisement of a plan has materially failed to comply with the provisions of this Act or the rules thereunder, the Director may, by order, require the plan to publish in the same or similar medium, an approved correction or retraction of any untrue, misleading, or deceptive statement contained in the advertising and may prohibit such plan from publishing or distributing, or allowing to be published or distributed on its behalf such advertisement or any new materially revised advertisement without first having filed a copy thereof with the Director 30 days prior to the publication or distribution thereof, or any shorter period specified in such order. An order issued under this Section shall be effective for 12 months from its issuance, and may be renewed by order if the advertisements submitted under this Section indicate difficulties of voluntary compliance with the applicable provisions of this Act and the rules thereunder.
(Source: P.A. 85-20.)

215 ILCS 125/4-8

    (215 ILCS 125/4-8) (from Ch. 111 1/2, par. 1409.1)
    Sec. 4-8. Newborn Infants. (1) No contract or evidence of coverage issued by a Health Maintenance Organization which provides for coverage of dependents of the principal enrollee shall contain any disclaimer, waiver or other limitation relative to the eligibility or coverage of newborn infants of a principal enrollee from and after the moment of birth.
    (2) Each such contract or evidence of coverage shall contain a provision stating that benefits shall be granted immediately with respect to newborn infants from the moment of birth and that such coverage shall include illness, injury, congenital defects, birth abnormalities and premature birth.
    (3) If payment of a specific premium is required under the terms of a contract to provide coverage for a child, there may be requirements that notification of birth of a newly born infant be given to the Health Maintenance Organization within the 31 days following the birth in order to have coverage continued beyond such 31 day period and that such specific premium be paid within 30 days following receipt of such notice.
    (4) In the event that no other members of the enrollee's immediate family are covered, immediate coverage for the first newborn infant shall be provided if the enrollee applies for dependent's coverage within 31 days of the newborn's birth. Such coverage shall be contingent upon payment of the additional premium.
    (5) The requirements of this Section shall apply, on or after the sixtieth day following the effective date of this amendatory Act of 1989, (a) to all such evidences of coverage delivered or issued for delivery, and (b) to all such group contracts delivered, issued for delivery, renewed or amended. The health maintenance organizations which issue such evidences of coverage that are in effect on the sixtieth day following the effective date of this amendatory Act of 1989 shall extend to owners of such contracts, on or before the first contract anniversary following such date, the opportunity to apply for the addition to their contracts of a provision as set forth in subsection (2) above, with, at the option of the health maintenance organization, payment of a premium appropriate thereto.
(Source: P.A. 86-620.)

215 ILCS 125/4-9

    (215 ILCS 125/4-9) (from Ch. 111 1/2, par. 1409.2)
    Sec. 4-9. Adopted children. No contract or evidence of coverage issued by a Health Maintenance Organization which provides for coverage of dependents of the principal enrollees shall exclude a child from coverage or eligibility for coverage or limit coverage for a child solely on the basis that he or she is an adopted child. For purposes of this Section, a child who is in the custody of a principal enrollee, pursuant to an interim court order of adoption or, in the case of group insurance, placement of adoption, whichever comes first, vesting temporary care of the child in the enrollee, is an adopted child, regardless of whether a final order granting adoption is ultimately issued.
(Source: P.A. 91-549, eff. 8-14-99.)

215 ILCS 125/4-9.1

    (215 ILCS 125/4-9.1) (from Ch. 111 1/2, par. 1409.2-1)
    Sec. 4-9.1. Dependent Coverage Termination.
    (a) The attainment of a limiting age under a group contract or evidence of coverage which provides that coverage of a dependent person of an enrollee shall terminate upon attainment of the limiting age for dependent persons does not operate to terminate the coverage of a person who, because of a disabling condition that occurred before attainment of the limiting age, is incapable of self-sustaining employment and is dependent on his or her parents or other care providers for lifetime care and supervision.
    (b) For purposes of subsection (a), "dependent on other care providers" is defined as requiring a Community Integrated Living Arrangement, group home, supervised apartment, or other residential services licensed or certified by the Department of Human Services (as successor to the Department of Mental Health and Developmental Disabilities), the Department of Public Health, or the Department of Healthcare and Family Services (formerly Department of Public Aid).
    (c) Proof of such incapacity and dependency shall be furnished to the health maintenance organization by the enrollee within 31 days of a request for the information by the health maintenance organization and subsequently as may be required by the health maintenance organization, but not more frequently than annually. In the absence of proof submitted within 31 days of such inquiry that such dependent is a person who has a disability and is a dependent, the health maintenance organization may terminate coverage of such person at or after attainment of the limiting age. In the absence of such inquiry, coverage of any person who has a disability and is a dependent shall continue through the term of the group contract or evidence of coverage or any extension or renewal thereof.
(Source: P.A. 99-143, eff. 7-27-15.)

215 ILCS 125/4-9.2

    (215 ILCS 125/4-9.2) (from Ch. 111 1/2, par. 1409.2-2)
    Sec. 4-9.2. Continuation of group HMO coverage after termination of employee or membership. A group contract delivered, issued for delivery, renewed, or amended in this State that covers employees or members for health care services shall provide that employees or members whose coverage under the group contract would otherwise terminate because of termination of employment or membership or because of a reduction in hours below the minimum required by the group contract shall be entitled to continue their coverage under that group contract, for themselves and their eligible dependents, subject to all of the group contract's terms and conditions applicable to those forms of coverage and to the following conditions:
        (1) Continuation shall only be available to an
    
employee or member who has been continuously covered under the group contract (and for similar benefits under any group contract that it replaced) during the entire 3 month period ending with the termination of employment or membership or reduction in hours below the minimum required by the group contract. With respect to an employee or member who is involuntarily terminated between September 1, 2008 and the end of the period set forth in Section 3001(a)(3)(A) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, as now or hereafter amended, continuation shall be available if the employee or member was covered under the group contract the day prior to such termination.
        (2) Continuation shall not be available for any
    
enrollee who is covered by Medicare, except for those individuals who have been covered under a group Medicare supplement policy. Continuation shall not be available for any enrollee who is covered by any other insured or uninsured plan that provides hospital, surgical, or medical coverage for individuals in a group and under which the enrollee was not covered immediately before termination or reduction in hours below the minimum required by the group contract or who exercises his or her conversion privilege under the group policy.
        (3) Continuation need not include dental, vision
    
care, prescription drug, or similar supplementary benefits that are provided under the group contract in addition to its basic health care services.
        (4) Within 10 days after the employee's or member's
    
termination or reduction in hours below the minimum required by the group contract, written notice of continuation shall be presented to the employee or member by the employer. If the employee or member is unavailable, written notice shall be mailed by the employer to the last known address of the employee or member within 10 days after the employee's or member's termination or reduction in hours below the minimum required by the group plan. The employer shall also send a copy of the notice to the HMO. An employee or member who wishes continuation of coverage must request continuation in writing within the 30 day period following the later of (i) the date of termination or reduction in hours below the minimum required by the group contract or (ii) the date the employee is presented or mailed written notice of the right of continuation by either the employer or the group policyholder. In no event, however, shall the employee or member elect continuation more than 60 days after the date of termination or reduction in hours below the minimum required by the group contract. Written notice of continuation presented to the employee or member by the policyholder, or mailed by the policyholder to the last known address of the employee, shall constitute the giving of notice for the purpose of this paragraph.
        The HMO shall not deny coverage to the employee or
    
member due to the employer's failure to provide notice pursuant to this Section to the employee or member. Until the end of the period set forth in Section 3001(a)(3)(A) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, as now or hereafter amended, in the event the employee or member contacts the HMO regarding continuation rights and advises that notice has not been provided by the employer or group policyholder, the HMO shall provide a written explanation to the employee or member of the employee's or member's continuation rights pursuant to this Section.
        (4a) Unless contrary to the provisions of, or any
    
rules promulgated pursuant to, the federal American Recovery and Reinvestment Act of 2009, with respect to employees or members of health plans that are subject solely to State continuation coverage and who are terminated or whose reduction in hours below the minimum required by the group occurs between the effective date of this amendatory Act of the 96th General Assembly and the end of the period set forth in Section 3001(a)(3)(A) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, as now or hereafter amended, the notice requirements of this Section are not satisfied unless notice is presented or mailed to the employee or member by the HMO informing the employee or member of the availability of premium reduction with respect to such coverage under the federal American Recovery and Reinvestment Act of 2009. Such written notice shall conform to all applicable requirements set forth in the federal American Recovery and Reinvestment Act of 2009. The Department shall publish models for the notification that shall be provided by HMOs pursuant to this paragraph (4a).
        (4b) Unless contrary to the provisions of, or any
    
rules promulgated pursuant to, Section 3001(a)(7) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, with respect to employees or members of health plans that are subject solely to State continuation coverage who were terminated or whose reduction in hours below the minimum required by the group occurred between September 1, 2008, and the effective date of this amendatory Act of the 96th General Assembly and who have an election of continuation of coverage pursuant to this Section in effect, notice shall be presented or mailed to the employee or member by the HMO informing the employee or member of the availability of premium reduction with respect to such coverage under the federal American Recovery and Reinvestment Act of 2009. Such written notice shall conform to all applicable requirements set forth in Section 3001(a)(7) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009 and shall be presented or mailed to the employee or member within 14 days of the effective date of this amendatory Act of the 96th General Assembly. The Department shall publish models for the notification that shall be provided by HMOs pursuant to this paragraph (4b).
        (5) An employee or member electing continuation must
    
pay to the group policyholder or his employer, on a monthly basis in advance, the total amount of premium required by the HMO, including that portion of the premium contributed by the policyholder or employer, if any, but not more than the group rate for the coverage being continued with appropriate reduction in premium for any supplementary benefits that have been discontinued under paragraph (3) of this Section. The premium rate required by the HMO shall be the applicable premium required on the due date of each payment.
        (6) Continuation of coverage under the group contract
    
for any person shall terminate when the person becomes eligible for Medicare or is covered by any other insured or uninsured plan that provides hospital, surgical, or medical coverage for individuals in a group and under which the person was not covered immediately before termination or reduction in hours below the minimum required by the group contract as provided in paragraph (2) of this Section or, if earlier, at the first to occur of the following:
            (a) The expiration of 12 months after the
        
employee's or member's coverage because of termination of employment or membership or reduction in hours below the minimum required by the group contract.
            (b) If the employee or member fails to make
        
timely payment of a required contribution, the end of the period for which contributions were made or, with respect to an employee or member who is an assistance eligible individual as defined in Section 3001(a)(3) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, the date that the individual ceases to be eligible for premium assistance under Section 3001(a)(2)(A)(ii)(I) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, as now or hereafter amended.
            (c) The date on which the group contract is
        
terminated or, in the case of an employee, the date his or her employer terminates participation under the group contract. If, however, this paragraph applies and the coverage ceasing by reason of termination is replaced by similar coverage under another group contract, then (i) the employee or member shall have the right to become covered under the replacement group contract for the balance of the period that he or she would have remained covered under the prior group contract in accordance with paragraph (6) had a termination described in this item (c) not occurred and (ii) the prior group contract shall continue to provide benefits to the extent of its accrued liabilities and extensions of benefits as if the replacement had not occurred.
        (7) A notification of the continuation privilege
    
shall be included in each evidence of coverage.
        (8) Continuation shall not be available for any
    
employee who was discharged because of the commission of a felony in connection with his or her work, or because of theft in connection with his or her work, for which the employer was in no way responsible if the employee (i) admitted to committing the felony or theft or (ii) was convicted or placed under supervision by a court of competent jurisdiction.
        (9) An employee or member without an election of
    
continuation of coverage pursuant to this Section in effect on the effective date of this amendatory Act of the 96th General Assembly may elect continuation pursuant to this paragraph (9) if the employee or member: (i) would be an assistance eligible individual as defined in Section 3001(a)(3) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009 if such an election were in effect and (ii) at the time of termination was eligible for continuation pursuant to paragraphs (1) and (2) of this Section.
        Unless contrary to the provisions of, or any rules
    
promulgated pursuant to, Section 3001(a)(7) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009, written notice of continuation pursuant to this paragraph (9) shall be presented to the employee or member by the HMO or mailed by the HMO to the last known address of the employee or member within 30 days after the effective date of this amendatory Act of the 96th General Assembly. The written notice shall conform to all applicable requirements set forth in Section 3001(a)(7) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009. The Department shall publish models for the notification that shall be provided by HMOs pursuant to this paragraph (9).
        An employee or member electing continuation of
    
coverage under this paragraph (9) must request such continuation in writing within 60 days after the date the employee or member receives written notice of the right of continuation by the HMO.
        Continuation of coverage elected pursuant to this
    
paragraph (9) shall commence with the first period of coverage beginning on or after February 17, 2009, the effective date of the federal American Recovery and Reinvestment Act of 2009, and shall not extend beyond the period of continuation that would have been required if the coverage had been elected pursuant to paragraph (4) of this Section.
        With respect to an employee or member who elects
    
continuation of coverage under this paragraph (9), the period beginning on the date of the employee or member's involuntary termination of employment and ending on the date of the first period of coverage on or after February 17, 2009 shall be disregarded for purposes of determining the 63-day period referred to in Section 20 of the Illinois Health Insurance Portability and Accountability Act.
    The requirements of this amendatory Act of 1992 shall apply to any group contract, as defined in this Section, delivered or issued for delivery on or after 180 days following the effective date of this amendatory Act of 1992.
(Source: P.A. 96-13, eff. 6-18-09; 96-894, eff. 5-17-10.)

215 ILCS 125/4-10

    (215 ILCS 125/4-10) (from Ch. 111 1/2, par. 1409.3)
    Sec. 4-10. (a) Medical Necessity - Dispute Resolution-Independent Second Opinion. Each Health Maintenance Organization shall provide a mechanism for the timely review by a physician holding the same class of license as the primary care physician, who is unaffiliated with the Health Maintenance Organization, jointly selected by the patient (or the patient's next of kin or legal representative if the patient is unable to act for himself), primary care physician and the Health Maintenance Organization in the event of a dispute between the primary care physician and the Health Maintenance Organization regarding the medical necessity of a covered service proposed by a primary care physician. In the event that the reviewing physician determines the covered service to be medically necessary, the Health Maintenance Organization shall provide the covered service. Future contractual or employment action by the Health Maintenance Organization regarding the primary care physician shall not be based solely on the physician's participation in this procedure.
(Source: P.A. 85-20; 85-850.)

215 ILCS 125/4-11

    (215 ILCS 125/4-11) (from Ch. 111 1/2, par. 1409.4)
    Sec. 4-11. Any person who enrolls recipients of Public Aid or Medicare in a health maintenance organization, either personally or by mail, shall, on or after July 1, 1989, be licensed as a limited insurance representative under Section 495.1 of the Illinois Insurance Code. No such person shall be required to pass a written examination in order to qualify to be licensed as a limited insurance representative under this Section.
(Source: P.A. 85-1246.)

215 ILCS 125/4-12

    (215 ILCS 125/4-12) (from Ch. 111 1/2, par. 1409.5)
    Sec. 4-12. Changes in Rate Methodology and Benefits, Material Modifications. A health maintenance organization shall file with the Director, prior to use, a notice of any change in rate methodology, or benefits and of any material modification of any matter or document furnished pursuant to Section 2-1, together with such supporting documents as are necessary to fully explain the change or modification.
    (a) Contract modifications described in subsections (c)(5), (c)(6) and (c)(7) of Section 2-1 shall include all form agreements between the organization and enrollees, providers, administrators of services and insurers of health maintenance organizations.
    (b) Material transactions or series of transactions other than those described in subsection (a) of this Section, the total annual value of which exceeds the greater of $100,000 or 5% of net earned subscription revenue for the most current twelve month period as determined from filed financial statements.
    (c) Any agreement between the organization and an insurer shall be subject to the provisions of the laws of this State regarding reinsurance as provided in Article XI of the Illinois Insurance Code. All reinsurance agreements must be filed. Approval of the Director is required for all agreements except the following: individual stop loss, aggregate excess, hospitalization benefits or out-of-area of the participating providers unless 20% or more of the organization's total risk is reinsured, in which case all reinsurance agreements require approval.
(Source: P.A. 86-620.)

215 ILCS 125/4-13

    (215 ILCS 125/4-13) (from Ch. 111 1/2, par. 1409.6)
    Sec. 4-13. Prior approval of policy forms. No health maintenance organization shall issue or deliver in this State a group contract or evidence of coverage, attach an endorsement or rider thereto, incorporate by reference bylaws or other matter therein, or use an application blank in this State until the form and content of the group contract or evidence of coverage, endorsement, rider, bylaw, or other matter incorporated by reference or application blank has been filed with and approved by the Director, except that any such endorsement or rider that is to be attached to a group contract or evidence of coverage after the date the group contract or evidence of coverage is issued must be filed with, reviewed, and approved by the Director before the date it is attached to a group contract or evidence of coverage issued or delivered in this State. The Director shall withhold approval of any such group contract, evidence of coverage, endorsement, rider, bylaw, or other matter incorporated by reference or application blank if it contains provisions that may encourage misrepresentation or that are unjust, unfair, inequitable, ambiguous, misleading, inconsistent, deceptive, or contrary to the law or public policy of this State or contains exceptions and conditions that unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the group contract or evidence of coverage. The Director shall not withhold approval of a form under this Section solely because of the absence of coverage for mental health services if the Department of Children and Family Services presents evidence that coverage of mental health services for clients of that Department will be provided by another entity. In all cases the Director shall approve or disapprove any such form within 60 days after submission unless the Director extends by not more than an additional 30 days the period within which he shall approve or disapprove any such form by giving written notice to the organization of the extension before expiration of the initial 60-day period.
    The Director shall withdraw his approval of a group contract or evidence of coverage, endorsement, rider, bylaw, or other matter incorporated by reference or application blank if he subsequently determines that the group contract or evidence of coverage, endorsement, rider, bylaw, other matter, or application blank is misrepresentative, unjust, unfair, inequitable, ambiguous, misleading, inconsistent, deceptive, or contrary to the law or public policy of this State, or contains exceptions or conditions that unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the group contract or evidence of coverage. The Director shall not withdraw approval of a form under this Section solely because of the absence of coverage for mental health services if the Department of Children and Family Services presents evidence that coverage of mental health services for clients of that Department is being or will be provided by another entity.
    If a previously approved group contract or evidence of coverage, endorsement, rider, bylaw, or other matter incorporated by reference or application blank is withdrawn for use, the Director shall serve upon the company an order of withdrawal of use, either personally or by mail. If the service is by mail, the service shall be completed if the notice is deposited in the post office, postage prepaid, addressed to the health maintenance organization's last known address specified in the records of the Department of Insurance. The order of withdrawal of use shall take effect 30 days from the date of mailing but shall be stayed if within the 30-day period a written request for hearing is filed with the Director. The hearing shall be held at the time and place designated in the order given by the Director. The hearing may be held either in the City of Springfield, the City of Chicago, or in the county where the principal business address of the health maintenance organization is located.
    The action of the Director in disapproving or withdrawing the form shall be subject to judicial review under the Administrative Review Law.
(Source: P.A. 88-487.)

215 ILCS 125/4-14

    (215 ILCS 125/4-14) (from Ch. 111 1/2, par. 1409.7)
    Sec. 4-14. Evidence of Coverage.
    (a) Every subscriber shall be issued an evidence of coverage, which shall contain a clear and complete statement of:
        (1) The health services to which each enrollee is
    
entitled;
        (2) Eligibility requirements indicating the
    
conditions which must be met to enroll in a Health Care Plan;
        (3) Any limitation of the services, kinds of services
    
or benefits to be provided, and exclusions, including any reasonable deductibles, copayments, or other charges;
        (4) The terms or conditions upon which coverage may
    
be cancelled or otherwise terminated;
        (5) Where and in what manner information is available
    
as to where and how services may be obtained; and
        (6) The method for resolving complaints.
    (b) Any amendment to the evidence of coverage may be provided to the subscriber in a separate document.
(Source: P.A. 97-1148, eff. 1-24-13.)

215 ILCS 125/4-15

    (215 ILCS 125/4-15) (from Ch. 111 1/2, par. 1409.8)
    Sec. 4-15. (a) No contract or evidence of coverage for basic health care services delivered, issued for delivery, renewed or amended by a Health Maintenance Organization shall exclude coverage for emergency transportation by ambulance. For the purposes of this Section, the term "emergency" means a need for immediate medical attention resulting from a life threatening condition or situation or a need for immediate medical attention as otherwise reasonably determined by a physician, public safety official or other emergency medical personnel.
    (b) Upon reasonable demand by a provider of emergency transportation by ambulance, a Health Maintenance Organization shall promptly pay to the provider, subject to coverage limitations stated in the contract or evidence of coverage, the charges for emergency transportation by ambulance provided to an enrollee in a health care plan arranged for by the Health Maintenance Organization. By accepting any such payment from the Health Maintenance Organization, the provider of emergency transportation by ambulance agrees not to seek any payment from the enrollee for services provided to the enrollee.
(Source: P.A. 86-833; 86-1028.)

215 ILCS 125/4-16

    (215 ILCS 125/4-16) (from Ch. 111 1/2, par. 1409.9)
    Sec. 4-16. Fibrocystic condition; denial of coverage. No contract or evidence of coverage issued by a Health Maintenance Organization shall be denied by the Organization, nor shall any contract or evidence of coverage contain any exception or exclusion of benefits, solely because the enrollee has been diagnosed as having a fibrocystic breast condition, unless the condition is diagnosed by a breast biopsy that demonstrates an increased disposition to the development of breast cancer or unless the enrollee's medical history confirms a chronic, relapsing, symptomatic breast condition.
(Source: P.A. 87-519; 87-1066.)

215 ILCS 125/4-17

    (215 ILCS 125/4-17)
    Sec. 4-17. Basic outpatient preventive and primary health care services for children. In order to attempt to address the needs of children in Illinois (i) without health care coverage, either through a parent's employment, through medical assistance under the Illinois Public Aid Code, or any other health plan or (ii) who lose medical assistance if and when their parents move from welfare to work and do not find employment that offers health care coverage, a health maintenance organization may undertake to provide or arrange for and to pay for or reimburse the cost of basic outpatient preventive and primary health care services. The Department shall promulgate rules to establish minimum coverage and disclosure requirements. These requirements at a minimum shall include routine physical examinations and immunizations, sick visits, diagnostic x-rays and laboratory services, and emergency outpatient services. Coverage may also include preventive dental services, vision screening and one pair of eyeglasses, prescription drugs, and mental health services. The coverage may include any reasonable co-payments, deductibles, and benefit maximums subject to limitations established by the Director by rule. Coverage shall be limited to children who are 18 years of age or under, who have resided in the State of Illinois for at least 30 days, and who do not qualify for medical assistance under the Illinois Public Aid Code. Any such coverage shall be made available to an adult on behalf of such children and shall not be funded through State appropriations. In counties with populations in excess of 3,000,000, the Director shall not approve any arrangement under this Section unless and until an arrangement for at least one health maintenance organization under contract with the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) for furnishing health services pursuant to Section 5-11 of the Illinois Public Aid Code and for which the requirements of 42 CFR 434.26(a) have been waived is approved.
(Source: P.A. 95-331, eff. 8-21-07.)

215 ILCS 125/4-18

    (215 ILCS 125/4-18)
    Sec. 4-18. Retirement facility residents. With respect to an enrollee who is a resident of a retirement facility consisting of a long-term care facility, as defined in the Nursing Home Care Act, and residential apartments, a contract or evidence of coverage issued, amended, delivered, or renewed after the effective date of this amendatory Act of 1997 shall provide that the enrollee's primary care physician must refer the enrollee to the retirement facility's long-term care facility for Medicare covered skilled nursing services if the primary care physician finds that:
        (1) it is in the best interests of the patient;
        (2) the facility, if not a participating provider in
    
the specific health maintenance organization, agrees during the preauthorization period to a negotiated rate for skilled nursing services covered in that organization's health care plan; and
        (3) the facility meets all the requirements of a
    
participating provider for skilled nursing services as defined and covered under the health maintenance organization's health care plan.
    Both the facility and the health maintenance organization must fully disclose all pertinent information to consumers to assure that their decisions are based upon full knowledge of the implications of their decision making.
(Source: P.A. 90-408, eff. 1-1-98; 90-655, eff. 7-30-98.)

215 ILCS 125/4-19

    (215 ILCS 125/4-19)
    Sec. 4-19. Purchase of ophthalmic goods or services. A health maintenance organization may not require a provider, as a condition of participation in the health maintenance organization's health care plan, to purchase ophthalmic goods or services, including but not limited to eyeglass frames, in a quantity or dollar amount in excess of the quantity or dollar amount an enrollee purchases under the terms of the health care plan.
(Source: P.A. 93-1077, eff. 1-18-05.)

215 ILCS 125/4-20

    (215 ILCS 125/4-20)
    Sec. 4-20. Deductibles and copayments.
    (a) A Health Maintenance Organization may require deductibles and copayments of enrollees as a condition for the receipt of specific health care services, including basic health care services. Deductibles and copayments shall be the only allowable charges, other than premiums, assessed enrollees. Nothing within this subsection (a) shall preclude the provider from charging reasonable administrative fees, such as service fees for checks returned for non-sufficient funds and missed appointments.
    (b) Deductibles and copayments shall be for specific dollar amounts or for specific percentages of the cost of the health care services.
    (c) No combination of deductibles and copayments paid for the receipt of basic health care services may exceed the annual maximum out-of-pocket expenses of a high deductible health plan as defined in 26 U.S.C. 223.
    (d) Deductibles and copayments applicable to supplemental health care services, catastrophic-only plans as defined under the federal Affordable Care Act, or pre-existing conditions are not subject to the annual limitations described in this Section.
    (e) This Section applies to enrollees and does not limit the health care plan payment for services provided by non-participating providers.
    (f) This Section applies to enrollees and does not limit the health care plan payment for services provided by non-participating providers.
(Source: P.A. 97-1148, eff. 1-24-13.)

215 ILCS 125/Art. 4.5

 
    (215 ILCS 125/Art. 4.5 heading)
ARTICLE 4.5. POINT-OF-SERVICE
PRODUCTS

215 ILCS 125/4.5-1

    (215 ILCS 125/4.5-1)
    Sec. 4.5-1. Point-of-service health service contracts.
    (a) A health maintenance organization that offers a point-of-service contract:
        (1) must include as in-plan covered services all
    
services required by law to be provided by a health maintenance organization;
        (2) must provide incentives, which shall include
    
financial incentives, for enrollees to use in-plan covered services;
        (3) may not offer services out-of-plan without
    
providing those services on an in-plan basis;
        (4) may include annual out-of-pocket limits and
    
lifetime maximum benefits allowances for out-of-plan services that are separate from any limits or allowances applied to in-plan services;
        (5) may not consider emergency services, authorized
    
referral services, or non-routine services obtained out of the service area to be point-of-service services;
        (6) may treat as out-of-plan services those services
    
that an enrollee obtains from a participating provider, but for which the proper authorization was not given by the health maintenance organization; and
        (7) after the effective date of this amendatory Act
    
of the 92nd General Assembly, must include the following disclosure on its point-of-service contracts and evidences of coverage: "WARNING, LIMITED BENEFITS WILL BE PAID WHEN NON-PARTICIPATING PROVIDERS ARE USED. You should be aware that when you elect to utilize the services of a non-participating provider for a covered service in non-emergency situations, benefit payments to such non-participating provider are not based upon the amount billed. The basis of your benefit payment will be determined according to your policy's fee schedule, usual and customary charge (which is determined by comparing charges for similar services adjusted to the geographical area where the services are performed), or other method as defined by the policy. YOU CAN EXPECT TO PAY MORE THAN THE COINSURANCE AMOUNT DEFINED IN THE POLICY AFTER THE PLAN HAS PAID ITS REQUIRED PORTION. Non-participating providers may bill members for any amount up to the billed charge after the plan has paid its portion of the bill. Participating providers have agreed to accept discounted payments for services with no additional billing to the member other than co-insurance and deductible amounts. You may obtain further information about the participating status of professional providers and information on out-of-pocket expenses by calling the toll free telephone number on your identification card.".
    (b) A health maintenance organization offering a point-of-service contract is subject to all of the following limitations:
        (1) The health maintenance organization may not
    
expend in any calendar quarter more than 20% of its total expenditures for all its members for out-of-plan covered services.
        (2) If the amount specified in item (1) of this
    
subsection is exceeded by 2% in a quarter, the health maintenance organization must effect compliance with item (1) of this subsection by the end of the following quarter.
        (3) If compliance with the amount specified in item
    
(1) of this subsection is not demonstrated in the health maintenance organization's next quarterly report, the health maintenance organization may not offer the point-of-service contract to new groups or include the point-of-service option in the renewal of an existing group until compliance with the amount specified in item (1) of this subsection is demonstrated or until otherwise allowed by the Director.
        (4) A health maintenance organization failing,
    
without just cause, to comply with the provisions of this subsection shall be required, after notice and hearing, to pay a penalty of $250 for each day out of compliance, to be recovered by the Director. Any penalty recovered shall be paid into the General Revenue Fund. The Director may reduce the penalty if the health maintenance organization demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the health maintenance organization.
    (c) A health maintenance organization that offers a point-of-service product must do all of the following:
        (1) File a quarterly financial statement detailing
    
compliance with the requirements of subsection (b).
        (2) Track out-of-plan, point-of-service utilization
    
separately from in-plan or non-point-of-service, out-of-plan emergency care, referral care, and urgent care out of the service area utilization.
        (3) Record out-of-plan utilization in a manner that
    
will permit such utilization and cost reporting as the Director may, by rule, require.
        (4) Demonstrate to the Director's satisfaction that
    
the health maintenance organization has the fiscal, administrative, and marketing capacity to control its point-of-service enrollment, utilization, and costs so as not to jeopardize the financial security of the health maintenance organization.
        (5) Maintain, in addition to any other deposit
    
required under this Act, the deposit required by Section 2-6.
        (6) Maintain cash and cash equivalents of sufficient
    
amount to fully liquidate 10 days' average claim payments, subject to review by the Director.
        (7) Maintain and file with the Director, reinsurance
    
coverage protecting against catastrophic losses on out of network point-of-service services. Deductibles may not exceed $100,000 per covered life per year, and the portion of risk retained by the health maintenance organization once deductibles have been satisfied may not exceed 20%. Reinsurance must be placed with licensed authorized reinsurers qualified to do business in this State.
    (d) A health maintenance organization may not issue a point-of-service contract until it has filed and had approved by the Director a plan to comply with the provisions of this Section. The compliance plan must, at a minimum, include provisions demonstrating that the health maintenance organization will do all of the following:
        (1) Design the benefit levels and conditions of
    
coverage for in-plan covered services and out-of-plan covered services as required by this Article.
        (2) Provide or arrange for the provision of adequate
    
systems to:
            (A) process and pay claims for all out-of-plan
        
covered services;
            (B) meet the requirements for point-of-service
        
contracts set forth in this Section and any additional requirements that may be set forth by the Director; and
            (C) generate accurate data and financial and
        
regulatory reports on a timely basis so that the Department of Insurance can evaluate the health maintenance organization's experience with the point-of-service contract and monitor compliance with point-of-service contract provisions.
        (3) Comply with the requirements of subsections (b)
    
and (c).
(Source: P.A. 92-135, eff. 1-1-02; 92-579, eff. 1-1-03.)

215 ILCS 125/Art. V

 
    (215 ILCS 125/Art. V heading)
ARTICLE V. GENERAL PROVISIONS

215 ILCS 125/5-1

    (215 ILCS 125/5-1) (from Ch. 111 1/2, par. 1409A)
    Sec. 5-1. Section 155 of the Insurance Code shall apply to Health Maintenance Organizations; except that no action shall be brought for an unreasonable delay in the settling of a claim if the delay is caused by the failure of the enrollee to execute a lien as requested by the health care plan.
(Source: P.A. 85-20.)

215 ILCS 125/5-2

    (215 ILCS 125/5-2) (from Ch. 111 1/2, par. 1410)
    Sec. 5-2. Rules and regulations or licensing of producers. The Director may promulgate such reasonable rules and regulations as are necessary to provide for the licensing of producers.
(Source: P.A. 85-20.)

215 ILCS 125/5-3

    (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
    (Text of Section before amendment by P.A. 99-761)
    Sec. 5-3. Insurance Code provisions.
    (a) Health Maintenance Organizations shall be subject to the provisions of Sections 133, 134, 136, 137, 139, 140, 141.1, 141.2, 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 154.6, 154.7, 154.8, 155.04, 155.22a, 355.2, 355.3, 355b, 356g.5-1, 356m, 356v, 356w, 356x, 356y, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 356z.9, 356z.10, 356z.11, 356z.12, 356z.13, 356z.14, 356z.15, 356z.17, 356z.18, 356z.19, 356z.21, 356z.22, 364.01, 367.2, 367.2-5, 367i, 368a, 368b, 368c, 368d, 368e, 370c, 370c.1, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1, paragraph (c) of subsection (2) of Section 367, and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the Illinois Insurance Code.
    (b) For purposes of the Illinois Insurance Code, except for Sections 444 and 444.1 and Articles XIII and XIII 1/2, Health Maintenance Organizations in the following categories are deemed to be "domestic companies":
        (1) a corporation authorized under the Dental Service
    
Plan Act or the Voluntary Health Services Plans Act;
        (2) a corporation organized under the laws of this
    
State; or
        (3) a corporation organized under the laws of another
    
state, 30% or more of the enrollees of which are residents of this State, except a corporation subject to substantially the same requirements in its state of organization as is a "domestic company" under Article VIII 1/2 of the Illinois Insurance Code.
    (c) In considering the merger, consolidation, or other acquisition of control of a Health Maintenance Organization pursuant to Article VIII 1/2 of the Illinois Insurance Code,
        (1) the Director shall give primary consideration to
    
the continuation of benefits to enrollees and the financial conditions of the acquired Health Maintenance Organization after the merger, consolidation, or other acquisition of control takes effect;
        (2)(i) the criteria specified in subsection (1)(b) of
    
Section 131.8 of the Illinois Insurance Code shall not apply and (ii) the Director, in making his determination with respect to the merger, consolidation, or other acquisition of control, need not take into account the effect on competition of the merger, consolidation, or other acquisition of control;
        (3) the Director shall have the power to require the
    
following information:
            (A) certification by an independent actuary of
        
the adequacy of the reserves of the Health Maintenance Organization sought to be acquired;
            (B) pro forma financial statements reflecting the
        
combined balance sheets of the acquiring company and the Health Maintenance Organization sought to be acquired as of the end of the preceding year and as of a date 90 days prior to the acquisition, as well as pro forma financial statements reflecting projected combined operation for a period of 2 years;
            (C) a pro forma business plan detailing an
        
acquiring party's plans with respect to the operation of the Health Maintenance Organization sought to be acquired for a period of not less than 3 years; and
            (D) such other information as the Director shall
        
require.
    (d) The provisions of Article VIII 1/2 of the Illinois Insurance Code and this Section 5-3 shall apply to the sale by any health maintenance organization of greater than 10% of its enrollee population (including without limitation the health maintenance organization's right, title, and interest in and to its health care certificates).
    (e) In considering any management contract or service agreement subject to Section 141.1 of the Illinois Insurance Code, the Director (i) shall, in addition to the criteria specified in Section 141.2 of the Illinois Insurance Code, take into account the effect of the management contract or service agreement on the continuation of benefits to enrollees and the financial condition of the health maintenance organization to be managed or serviced, and (ii) need not take into account the effect of the management contract or service agreement on competition.
    (f) Except for small employer groups as defined in the Small Employer Rating, Renewability and Portability Health Insurance Act and except for medicare supplement policies as defined in Section 363 of the Illinois Insurance Code, a Health Maintenance Organization may by contract agree with a group or other enrollment unit to effect refunds or charge additional premiums under the following terms and conditions:
        (i) the amount of, and other terms and conditions
    
with respect to, the refund or additional premium are set forth in the group or enrollment unit contract agreed in advance of the period for which a refund is to be paid or additional premium is to be charged (which period shall not be less than one year); and
        (ii) the amount of the refund or additional premium
    
shall not exceed 20% of the Health Maintenance Organization's profitable or unprofitable experience with respect to the group or other enrollment unit for the period (and, for purposes of a refund or additional premium, the profitable or unprofitable experience shall be calculated taking into account a pro rata share of the Health Maintenance Organization's administrative and marketing expenses, but shall not include any refund to be made or additional premium to be paid pursuant to this subsection (f)). The Health Maintenance Organization and the group or enrollment unit may agree that the profitable or unprofitable experience may be calculated taking into account the refund period and the immediately preceding 2 plan years.
    The Health Maintenance Organization shall include a statement in the evidence of coverage issued to each enrollee describing the possibility of a refund or additional premium, and upon request of any group or enrollment unit, provide to the group or enrollment unit a description of the method used to calculate (1) the Health Maintenance Organization's profitable experience with respect to the group or enrollment unit and the resulting refund to the group or enrollment unit or (2) the Health Maintenance Organization's unprofitable experience with respect to the group or enrollment unit and the resulting additional premium to be paid by the group or enrollment unit.
    In no event shall the Illinois Health Maintenance Organization Guaranty Association be liable to pay any contractual obligation of an insolvent organization to pay any refund authorized under this Section.
    (g) Rulemaking authority to implement Public Act 95-1045, if any, is conditioned on the rules being adopted in accordance with all provisions of the Illinois Administrative Procedure Act and all rules and procedures of the Joint Committee on Administrative Rules; any purported rule not so adopted, for whatever reason, is unauthorized.
(Source: P.A. 97-282, eff. 8-9-11; 97-343, eff. 1-1-12; 97-437, eff. 8-18-11; 97-486, eff. 1-1-12; 97-592, eff. 1-1-12; 97-805, eff. 1-1-13; 97-813, eff. 7-13-12; 98-189, eff. 1-1-14; 98-1091, eff. 1-1-15.)
 
    (Text of Section after amendment by P.A. 99-761)
    Sec. 5-3. Insurance Code provisions.
    (a) Health Maintenance Organizations shall be subject to the provisions of Sections 133, 134, 136, 137, 139, 140, 141.1, 141.2, 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 154.6, 154.7, 154.8, 155.04, 155.22a, 355.2, 355.3, 355b, 356g.5-1, 356m, 356v, 356w, 356x, 356y, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 356z.9, 356z.10, 356z.11, 356z.12, 356z.13, 356z.14, 356z.15, 356z.17, 356z.18, 356z.19, 356z.21, 356z.22, 364, 364.01, 367.2, 367.2-5, 367i, 368a, 368b, 368c, 368d, 368e, 370c, 370c.1, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1, paragraph (c) of subsection (2) of Section 367, and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the Illinois Insurance Code.
    (b) For purposes of the Illinois Insurance Code, except for Sections 444 and 444.1 and Articles XIII and XIII 1/2, Health Maintenance Organizations in the following categories are deemed to be "domestic companies":
        (1) a corporation authorized under the Dental Service
    
Plan Act or the Voluntary Health Services Plans Act;
        (2) a corporation organized under the laws of this
    
State; or
        (3) a corporation organized under the laws of another
    
state, 30% or more of the enrollees of which are residents of this State, except a corporation subject to substantially the same requirements in its state of organization as is a "domestic company" under Article VIII 1/2 of the Illinois Insurance Code.
    (c) In considering the merger, consolidation, or other acquisition of control of a Health Maintenance Organization pursuant to Article VIII 1/2 of the Illinois Insurance Code,
        (1) the Director shall give primary consideration to
    
the continuation of benefits to enrollees and the financial conditions of the acquired Health Maintenance Organization after the merger, consolidation, or other acquisition of control takes effect;
        (2)(i) the criteria specified in subsection (1)(b) of
    
Section 131.8 of the Illinois Insurance Code shall not apply and (ii) the Director, in making his determination with respect to the merger, consolidation, or other acquisition of control, need not take into account the effect on competition of the merger, consolidation, or other acquisition of control;
        (3) the Director shall have the power to require the
    
following information:
            (A) certification by an independent actuary of
        
the adequacy of the reserves of the Health Maintenance Organization sought to be acquired;
            (B) pro forma financial statements reflecting the
        
combined balance sheets of the acquiring company and the Health Maintenance Organization sought to be acquired as of the end of the preceding year and as of a date 90 days prior to the acquisition, as well as pro forma financial statements reflecting projected combined operation for a period of 2 years;
            (C) a pro forma business plan detailing an
        
acquiring party's plans with respect to the operation of the Health Maintenance Organization sought to be acquired for a period of not less than 3 years; and
            (D) such other information as the Director shall
        
require.
    (d) The provisions of Article VIII 1/2 of the Illinois Insurance Code and this Section 5-3 shall apply to the sale by any health maintenance organization of greater than 10% of its enrollee population (including without limitation the health maintenance organization's right, title, and interest in and to its health care certificates).
    (e) In considering any management contract or service agreement subject to Section 141.1 of the Illinois Insurance Code, the Director (i) shall, in addition to the criteria specified in Section 141.2 of the Illinois Insurance Code, take into account the effect of the management contract or service agreement on the continuation of benefits to enrollees and the financial condition of the health maintenance organization to be managed or serviced, and (ii) need not take into account the effect of the management contract or service agreement on competition.
    (f) Except for small employer groups as defined in the Small Employer Rating, Renewability and Portability Health Insurance Act and except for medicare supplement policies as defined in Section 363 of the Illinois Insurance Code, a Health Maintenance Organization may by contract agree with a group or other enrollment unit to effect refunds or charge additional premiums under the following terms and conditions:
        (i) the amount of, and other terms and conditions
    
with respect to, the refund or additional premium are set forth in the group or enrollment unit contract agreed in advance of the period for which a refund is to be paid or additional premium is to be charged (which period shall not be less than one year); and
        (ii) the amount of the refund or additional premium
    
shall not exceed 20% of the Health Maintenance Organization's profitable or unprofitable experience with respect to the group or other enrollment unit for the period (and, for purposes of a refund or additional premium, the profitable or unprofitable experience shall be calculated taking into account a pro rata share of the Health Maintenance Organization's administrative and marketing expenses, but shall not include any refund to be made or additional premium to be paid pursuant to this subsection (f)). The Health Maintenance Organization and the group or enrollment unit may agree that the profitable or unprofitable experience may be calculated taking into account the refund period and the immediately preceding 2 plan years.
    The Health Maintenance Organization shall include a statement in the evidence of coverage issued to each enrollee describing the possibility of a refund or additional premium, and upon request of any group or enrollment unit, provide to the group or enrollment unit a description of the method used to calculate (1) the Health Maintenance Organization's profitable experience with respect to the group or enrollment unit and the resulting refund to the group or enrollment unit or (2) the Health Maintenance Organization's unprofitable experience with respect to the group or enrollment unit and the resulting additional premium to be paid by the group or enrollment unit.
    In no event shall the Illinois Health Maintenance Organization Guaranty Association be liable to pay any contractual obligation of an insolvent organization to pay any refund authorized under this Section.
    (g) Rulemaking authority to implement Public Act 95-1045, if any, is conditioned on the rules being adopted in accordance with all provisions of the Illinois Administrative Procedure Act and all rules and procedures of the Joint Committee on Administrative Rules; any purported rule not so adopted, for whatever reason, is unauthorized.
(Source: P.A. 98-189, eff. 1-1-14; 98-1091, eff. 1-1-15; 99-761, eff. 1-1-18.)

215 ILCS 125/5-3.1

    (215 ILCS 125/5-3.1)
    Sec. 5-3.1. Woman's health care provider. Health maintenance organizations are subject to the provisions of Section 356r of the Illinois Insurance Code.
(Source: P.A. 89-514, eff. 7-17-96.)

215 ILCS 125/5-3.5

    (215 ILCS 125/5-3.5)
    Sec. 5-3.5. Illinois Health Insurance Portability and Accountability Act. The provisions of this Act are subject to the Illinois Health Insurance Portability and Accountability Act as provided in Section 15 of that Act.
(Source: P.A. 90-30, eff. 7-1-97.)

215 ILCS 125/5-3.6

    (215 ILCS 125/5-3.6)
    Sec. 5-3.6. Managed Care Reform and Patient Rights Act. Health maintenance organizations are subject to the provisions of the Managed Care Reform and Patient Rights Act.
(Source: P.A. 91-617, eff. 1-1-00.)

215 ILCS 125/5-4

    (215 ILCS 125/5-4) (from Ch. 111 1/2, par. 1412)
    Sec. 5-4. Examination of affairs and quality of services by the Director; books and records. The Director shall have with respect to health maintenance organizations the powers of examination conferred upon him relative to Sections 132 through 132.7 of the Illinois Insurance Code. The Director of Public Health shall make an examination concerning the quality of health care services of any health maintenance organization and providers with whom the organization has contracts, agreements, or other arrangements pursuant to its health care plan as often as he deems it necessary for the protection of the interest of the people of this State, but not less frequently than once every 3 years. The cost of any examination shall be paid by the health maintenance organization being examined.
    The fee assessed against the organization being examined shall be composed of a fixed annual fee plus an additional fee based on the individual health maintenance organization's enrollment in Illinois. The revenues generated shall not exceed the estimated actual costs of the program. The methodology for computing the fee to be assessed shall be established by rule, pursuant to the Illinois Administrative Procedure Act.
    Every health maintenance organization and provider shall submit its books and records relating to the Health Care Plan to examination and in every way facilitate them. For the purpose of examinations, the Director and the Director of Public Health may administer oaths to and examine the officers and agents of the health maintenance organization and the principals of providers concerning their business.
(Source: P.A. 89-97, eff. 7-7-95.)

215 ILCS 125/5-5

    (215 ILCS 125/5-5) (from Ch. 111 1/2, par. 1413)
    Sec. 5-5. Suspension, revocation or denial of certification of authority. The Director may suspend or revoke any certificate of authority issued to a health maintenance organization under this Act or deny an application for a certificate of authority if he finds any of the following:
    (a) The health maintenance organization is operating significantly in contravention of its basic organizational document, its health care plan, or in a manner contrary to that described in any information submitted under Section 2-1 or 4-12.
    (b) The health maintenance organization issues contracts or evidences of coverage or uses a schedule of charges for health care services that do not comply with the requirement of Section 2-1 or 4-12.
    (c) The health care plan does not provide or arrange for basic health care services, except as provided in Section 4-13 concerning mental health services for clients of the Department of Children and Family Services.
    (d) The Director of Public Health certifies to the Director that (1) the health maintenance organization does not meet the requirements of Section 2-2 or (2) the health maintenance organization is unable to fulfill its obligations to furnish health care services as required under its health care plan. The Department of Public Health shall promulgate by rule, pursuant to the Illinois Administrative Procedure Act, the precise standards used for determining what constitutes a material misrepresentation, what constitutes a material violation of a contract or evidence of coverage, or what constitutes good faith with regard to certification under this paragraph.
    (e) The health maintenance organization is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees.
    (f) The health maintenance organization, or any person on its behalf, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner.
    (g) The continued operation of the health maintenance organization would be hazardous to its enrollees.
    (h) The health maintenance organization has neglected to correct, within the time prescribed by subsection (c) of Section 2-4, any deficiency occurring due to the organization's prescribed minimum net worth or special contingent reserve being impaired.
    (i) The health maintenance organization has otherwise failed to substantially comply with this Act.
    (j) The health maintenance organization has failed to meet the requirements for issuance of a certificate of authority set forth in Section 2-2.
    When the certificate of authority of a health maintenance organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. The Director may permit further operation of the organization that he finds to be in the best interest of enrollees to the end that the enrollees will be afforded the greatest practical opportunity to obtain health care services.
(Source: P.A. 88-487.)

215 ILCS 125/5-6

    (215 ILCS 125/5-6) (from Ch. 111 1/2, par. 1414)
    Sec. 5-6. Supervision of rehabilitation, liquidation or conservation by the Director.
    (a) For purposes of the rehabilitation, liquidation or conservation of a health maintenance organization, the operation of a health maintenance organization in this State constitutes a form of insurance protection which should be governed by the same provisions governing the rehabilitation, liquidation or conservation of insurance companies. Any rehabilitation, liquidation or conservation of a Health Maintenance Organization shall be based upon the grounds set forth in and subject to the provisions of the laws of this State regarding the rehabilitation, liquidation, or conservation of an insurance company and shall be conducted under the supervision of the Director. Insolvency, as a ground for rehabilitation, liquidation, or conservation of a Health Maintenance Organization, shall be recognized when a Health Maintenance Organization cannot be expected to satisfy its financial obligations when such obligations are to become due or when the Health Maintenance Organization has neglected to correct within the time prescribed by subsection (c) of Section 2-4, a deficiency occurring due to such organization's prescribed minimum net worth or special contingent reserve being impaired. For purpose of determining the priority of distribution of general assets, claims of enrollees and enrollees' beneficiaries shall have the same priority as established by Section 205 of the Illinois Insurance Code for policyholders and beneficiaries of insureds of insurance companies. If an enrollee is liable to any provider for services provided pursuant to and covered by the health care plan, that liability shall have the status of an enrollee claim for distribution of general assets.
    Any provider who is obligated by statute or agreement to hold enrollees harmless from liability for services provided pursuant to and covered by a health care plan shall have a priority of distribution of the general assets immediately following that of enrollees and enrollees' beneficiaries as described herein, and immediately preceding the priority of distribution described in paragraph (e) of subsection (1) of Section 205 of the Illinois Insurance Code.
    (b) For purposes of Articles XIII and XIII-1/2 of the Illinois Insurance Code, organizations in the following categories shall be deemed to be a "domestic company" and a "domiciliary company":
        (i) a corporation authorized under the Dental Service
    
Plan Act or the Voluntary Health Services Plans Act;
        (ii) a corporation organized under the laws of this
    
State; or
        (iii) a corporation organized under the laws of
    
another state, 20% or more of the enrollees of which are residents of this State, except where such a corporation is, in its state of incorporation, subject to rehabilitation, liquidation and conservation under the laws relating to insurance companies.
    (c) In the event of the insolvency of a health maintenance organization, no enrollee of such organization shall be liable to any provider for medical services rendered by such provider, except for applicable co-payments or deductibles for covered services or fees for services not covered by the health maintenance organization, with respect to the amounts such provider is not paid by the Association pursuant to the provisions of Section 6-8 (8)(b) and (c). No provider, whether or not the provider is obligated by statute or agreement to hold enrollees harmless from liability, shall seek to recover any such amount from any enrollee until the Association has made a final determination of its liability (or the resolution of any dispute or litigation resulting therefrom) with respect to the matters specified in such provisions. In the event that the provider seeks to recover such amounts before the Association's final determination of its liability (or the resolution of any dispute or litigation resulting therefrom), the provider shall be liable for all reasonable costs and attorney fees incurred by the Director or the Association in enforcing this provision or any court orders related hereto.
(Source: P.A. 89-206, eff. 7-21-95; 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-655, eff. 7-30-98.)

215 ILCS 125/5-7

    (215 ILCS 125/5-7) (from Ch. 111 1/2, par. 1415)
    Sec. 5-7. Rules and regulations to carry out provisions of Act. The Director may, after notice and hearing, promulgate reasonable rules and regulations as are necessary and proper to:
    (1) Establish minimum coverage standards for basic health care services, the application of which standards discriminate against no class of physician;
    (2) Establish specific standards, including standards for the full and fair disclosure of health care services provided by group contracts or evidences of coverage which may cover but shall not be limited to:
    (a) Coordination of benefits
    (b) Conversion
    (c) Cancellation and termination
    (d) Deductibles and co-payments
    (e) Pre-existing conditions; and
    (3) Otherwise carry out the provisions of this Act.
(Source: P.A. 86-620.)

215 ILCS 125/5-7.1

    (215 ILCS 125/5-7.1) (from Ch. 111 1/2, par. 1415.1)
    Sec. 5-7.1. No health care plan shall include any provision which shall have the effect of denying coverage to or on behalf of an enrollee under such plan on the basis of a failure by the enrollee to file a notice of claim within the time period required by the plan, provided such failure is caused solely by the physical inability or mental incapacity of the enrollee to file such notice of claim because of a period of emergency hospitalization.
(Source: P.A. 86-784.)

215 ILCS 125/5-8

    (215 ILCS 125/5-8) (from Ch. 111 1/2, par. 1416)
    Sec. 5-8. Grounds for denial, suspension or revocation of certificate of authority-Hearing-Review under Administrative Review Law.
    (a) When the Director has cause to believe that grounds for the denial of an application for a certificate of authority exists, or that grounds for the suspension or revocation of a certificate of authority exists, he shall issue an order to the organization or applicant stating the grounds upon which the denial, suspension, or revocation is based. The order shall be sent to the organization or applicant by certified or registered mail and to the Director of Public Health. The organization or applicant may in writing request a hearing within 30 days of receipt of the order. If no written request is made, the order shall be final upon the expiration of said 30 days.
    (b) If the organization or applicant requests a hearing pursuant to this Section, the Director shall issue a written notice of hearing sent to the organization or applicant by certified or registered mail and to the Director of Public Health, stating:
    (i) a specified time for the hearing, which may not be less than 20 nor more than 30 days after receipt of the notice of hearing; and
    (ii) a specific place for the hearing, which may be either in the city of Springfield or in the county where the organization's or applicant's principal place of business is located.
    (c) If a hearing is requested, the Director of the Department of Public Health or his delegated representative, shall be in attendance at the hearing and shall participate in the proceedings. The recommendations and findings of the Director of the Department of Public Health with regard to matters relating to the quality of health care services provided in connection with any decision regarding denial, suspension or revocation of a certificate of authority, shall be conclusive and binding upon the Director.
    (d) After such hearing, or upon the failure of the organization or applicant to appear at such hearing, the Director shall take such action as is deemed advisable on written findings which shall be served on the organization or applicant with a copy thereof to the Director of the Department of Public Health. The action of the Director and the recommendations and findings of the Director of the Department of Public Health shall be subject to review under and in accordance with the Administrative Review Law.
(Source: P.A. 86-620.)

215 ILCS 125/5-9

    (215 ILCS 125/5-9) (from Ch. 111 1/2, par. 1417)
    Sec. 5-9. Violations-Class B misdemeanor-Cease and desist order. (a) Any organization which violates this Act shall be guilty of a Class B misdemeanor.
    (b) The Director may issue to any organization subject to this Act, a cease and desist order as provided in Article XXIV, Section 401.1 of the "Illinois Insurance Code".
    (c) The Director may issue corrective orders to any organization subject to this Act, as provided in Article XII 1/2, Sections 186.1 and 186.2 of the "Illinois Insurance Code".
(Source: P.A. 85-20.)

215 ILCS 125/Art. VI

 
    (215 ILCS 125/Art. VI heading)
ARTICLE VI. HEALTH MAINTENANCE
ORGANIZATION GUARANTY ASSOCIATION

215 ILCS 125/6-1

    (215 ILCS 125/6-1) (from Ch. 111 1/2, par. 1418.1)
    Sec. 6-1. This Article shall be known and may be cited as the "Illinois Health Maintenance Organization Guaranty Association Law".
(Source: P.A. 85-20.)

215 ILCS 125/6-2

    (215 ILCS 125/6-2) (from Ch. 111 1/2, par. 1418.2)
    Sec. 6-2. Purpose. The purpose of this Article is to protect enrollees of health care plans who reside in this State, and their beneficiaries, payees and assignees, subject to certain limitations, against failure in the performance of contractual obligations due to the impairment or insolvency of the organization operating such health care plans. Nonresident enrollees of such health care plans shall be protected by this Association if: (1) they reside in states which have associations similar to the Association created by this Article; (2) they are not eligible for coverage by such associations; (3) the organization which operates such health care plan never held a license or certificate of authority in such states; and (4) such organization was domiciled in this State. To provide this protection, (1) an association of health maintenance organizations is created to enable the guaranty of payment of benefits and of continuation of coverages, either on a prepaid or indemnity basis, (2) members of the Association are subject to assessment to provide funds to carry out the purpose of this Article, and (3) the Association is authorized to assist the Director, in the prescribed manner, in the detection and prevention of health care plan impairments or insolvencies.
(Source: P.A. 86-620.)

215 ILCS 125/6-3

    (215 ILCS 125/6-3) (from Ch. 111 1/2, par. 1418.3)
    Sec. 6-3. Scope. This Article applies to direct individual contracts, group contracts and certificates issued thereunder, or any other evidence of coverage, each of which provides for coverage under a health care plan, and has been issued by organizations licensed to transact health maintenance organization business in this State under the Health Maintenance Organization Act, but not to any business of such organization not transacted under its health maintenance organization certificate of authority.
(Source: P.A. 92-370, eff. 8-15-01.)

215 ILCS 125/6-4

    (215 ILCS 125/6-4) (from Ch. 111 1/2, par. 1418.4)
    Sec. 6-4. Construction. This Article shall be construed to effect the purpose under Section 6-2.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 125/6-5

    (215 ILCS 125/6-5) (from Ch. 111 1/2, par. 1418.5)
    Sec. 6-5. Definitions. As used in this Act:
    (1) "Association" means the Illinois Health Maintenance Organization Guaranty Association created under Section 6-6.
    (2) "Director" means the Director of Insurance of this State.
    (3) "Contractual obligation" means any obligation of the member organization under covered health care plan certificates.
    (4) "Covered person" means any enrollee who is entitled to the protection of the Association as described in Section 6-2.
    (5) "Covered health care plan certificate" means any health care plan certificate, contract or other evidence of coverage within the scope of this Article under Section 6-3.
    (6) "Fund" means the fund created under Section 6-6.
    (7) "Impaired organization" means a member organization deemed by the Director after the effective date of this Article to be potentially unable to fulfill its contractual obligations and not an insolvent organization.
    (8) "Insolvent organization" means a member organization which becomes insolvent and is placed under a final order of liquidation or rehabilitation by a court of competent jurisdiction.
    (9) "Member organization" means any person licensed or who holds a certificate of authority to transact in this State any kind of business to which this Article applies under Section 6-3. For purposes of this Article "member organization" includes any person whose certificate of authority may have been suspended pursuant to Section 5-5 of this Act.
    (10) "Premiums" means direct gross premiums or subscriptions received on covered health care plan certificates. "Premiums" does not include amounts or considerations received for policies, contracts, or certificates or for the portions of policies, contracts, or certificates for which coverage is not provided.
    (11) "Person" means any individual, corporation, partnership, association or voluntary organization.
    (12) "Resident" means any person who resides in this State at the time the organization is issued a Notice of Impairment by the Director or at the time a complaint for liquidation or rehabilitation is filed and to whom contractual obligations are owed. 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.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 125/6-6

    (215 ILCS 125/6-6) (from Ch. 111 1/2, par. 1418.6)
    Sec. 6-6. Creation of the Association. There is created a non-profit legal entity to be known as the Illinois Health Maintenance Organization Guaranty Association. All member organizations are and must remain members of the Association as a condition of their authority to transact business in this State. The Association must perform its functions under the plan of operation established and approved under Section 6-10 and must exercise its powers through a board of directors established under Section 6-7. For purposes of administration and assessment, the Association must maintain the Health Maintenance Organization Fund. The Association shall be supervised by the Director and is subject to this Act and the applicable provisions of the Illinois Insurance Code.
(Source: P.A. 85-20.)

215 ILCS 125/6-7

    (215 ILCS 125/6-7) (from Ch. 111 1/2, par. 1418.7)
    Sec. 6-7. Board of Directors. The board of directors of the Association consists of not less than 7 nor more than 11 members serving terms as established in the plan of operation. The members of the board are to be selected by member organizations subject to the approval of the Director, except the Director shall name 2 members who are current enrollees, one of whom is over 50 years of age. Vacancies on the board must be filled for the remaining period of the term in the manner described in the plan of operation. To select the initial board of directors, and initially organize the Association, the Director must give notice to all member organizations of the time and place of the organizational meeting. In determining voting rights at the organizational meeting each member organization is entitled to one vote in person or by proxy. If the board of directors is not selected at the organizational meeting, the Director may appoint the initial members.
    In approving selections or in appointing members to the board, the Director must consider, whether all member organizations are fairly represented.
    Members of the board may be reimbursed from the assets of the Association for expenses incurred by them as members of the board of directors but members of the board may not otherwise be compensated by the Association for their services.
(Source: P.A. 91-617, eff. 1-1-00.)

215 ILCS 125/6-8

    (215 ILCS 125/6-8) (from Ch. 111 1/2, par. 1418.8)
    Sec. 6-8. Powers and duties of the Association. In addition to the powers and duties enumerated in other Sections of this Article, the Association shall have the powers set forth in this Section.
    (1) If a domestic organization is an impaired organization, the Association may, subject to any conditions imposed by the Association other than those which impair the contractual obligations of the impaired organization, and approved by the impaired organization and the Director:
        (a) guarantee, assume, or reinsure, or cause to be
    
guaranteed, assumed or reinsured, any or all of the covered health care plan certificates of covered persons of the impaired organization;
        (b) provide such monies, pledges, notes, guarantees,
    
or other means as are proper to effectuate paragraph (a), and assure payment of the contractual obligations of the impaired organization pending action under paragraph (a); and
        (c) loan money to the impaired organization.
    (2) If a domestic, foreign, or alien organization is an insolvent organization, the Association shall, subject to the approval of the Director:
        (a) guarantee, assume, indemnify or reinsure or cause
    
to be guaranteed, assumed, indemnified or reinsured the covered health care plan benefits of covered persons of the insolvent organization; however, in the event that the Director of Healthcare and Family Services (formerly Director of the Department of Public Aid) assigns individuals that are recipients of public aid from an insolvent organization to another organization, the Director of Healthcare and Family Services shall, before fixing the rates to be paid by the Department of Healthcare and Family Services to the transferee organization on account of such individuals, consult with the Director of the Department of Insurance as to the reasonableness of such rates in light of the health care needs of such individuals and the costs of providing health care services to such individuals;
        (b) assure payment of the contractual obligations of
    
the insolvent organization to covered persons;
        (c) make payments to providers of health care, or
    
indemnity payments to covered persons, so as to assure the continued payment of benefits substantially similar to those provided for under covered health care plan certificate issued by the insolvent organization to covered persons; and
        (d) provide such monies, pledges, notes, guaranties,
    
or other means as are reasonably necessary to discharge such duties.
    This subsection (2) shall not apply when the Director has determined that the foreign or alien organization's domiciliary jurisdiction or state of entry provides, by statute, protection substantially similar to that provided by this Article for residents of this State and such protection will be provided in a timely manner.
    (3) 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 organization's business by reason of any action taken or any failure to take any action by the impaired or insolvent organization at any time.
    (4) 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 organization, the Director shall have the powers and duties of the Association under this Article with regard to such insolvent organization.
    (5) 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 organization.
    (6) The Association has standing to appear before any court concerning all matters germane to the powers and duties of the Association, including, but not limited to, proposals for reinsuring or guaranteeing the covered health care plan certificates of the impaired or insolvent organization and the determination of the covered health care plan certificates and contractual obligations.
    (7) (a) Any person receiving benefits under this Article is deemed to have assigned the rights under the covered health care plan certificates to the Association to the extent of the benefits received because of this Article whether the benefits are payments of contractual obligations or continuation of coverage. The Association may require an assignment to it of such rights by any payee, enrollee or beneficiary as a condition precedent to the receipt of any rights or benefits conferred by this Article upon such person. The Association is subrogated to these rights against the assets of any insolvent organization and against any other party who may be liable to such payee, enrollee or beneficiary.
    (b) The subrogation rights of the Association under this subsection have the same priority against the assets of the insolvent organization as that possessed by the person entitled to receive benefits under this Article.
    (8) (a) The contractual obligations of the insolvent organization for which the Association becomes or may become liable are as great as but no greater than the contractual obligations of the insolvent organization would have been in the absence of an insolvency unless such obligations are reduced as permitted by subsection (3), but the aggregate liability of the Association shall not exceed $500,000 with respect to any one natural person.
    (b) Furthermore, the Association shall not be required to pay, and shall have no liability to, any provider of health care services to an enrollee:
        (i) if such provider, or his or its affiliates or
    
members of his immediate family, at any time within the one year prior to the date of the issuance of the first order, by a court of competent jurisdiction, of conservation, rehabilitation or liquidation pertaining to the health maintenance organization:
            (A) was a securityholder of such organization
        
(but excluding any securityholder holding an equity interest of 5% or less);
            (B) exercised control over the organization by
        
means such as serving as an officer or director, through a management agreement or as a principal member of a not-for-profit organization;
            (C) had a representative serving by virtue of his
        
or her official position as a representative of such provider on the board of any entity which exercised control over the organization;
            (D) received provider payments made by such
        
organization pursuant to a contract which was not a product of arms-length bargaining; or
            (E) received distributions other than for
        
physician services from a not-for-profit organization on account of such provider's status as a member of such organization.
        For purposes of this subparagraph (i), the terms
    
"affiliate," "person," "control" and "securityholder" shall have the meanings ascribed to such terms in Section 131.1 of the Illinois Insurance Code; or
        (ii) if and to the extent such a provider has agreed
    
by contract not to seek payment from the enrollee for services provided to such enrollee or if, and to the extent, as a matter of law such provider may not seek payment from the enrollee for services provided to such enrollee; or
        (iii) related to any policy, contract, or certificate
    
providing any hospital, 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) or any regulations issued pursuant thereto; or
        (iv) for any portion of a policy, contract, or
    
certificate to the extent that the assessments required by this Article with respect to the policy or contract are preempted or otherwise not permitted by federal or State law; or
        (v) for any obligation that does not arise under the
    
express written terms of the policy or contract issued by the organization to the contract owner or policy owner, including without limitation:
            (A) claims based on marketing materials;
            (B) claims based on side letters, riders, or
        
other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements;
            (C) misrepresentations of or regarding policy
        
benefits;
            (D) extra-contractual claims; or
            (E) claims for penalties or consequential or
        
incidental damages.
    (c) In no event shall the Association be required to pay any provider participating in the insolvent organization any amount for in-plan services rendered by such provider prior to the insolvency of the organization in excess of (1) the amount provided by a capitation contract between a physician provider and the insolvent organization for such services; or (2) the amounts provided by contract between a hospital provider and the Department of Healthcare and Family Services (formerly Department of Public Aid) for similar services to recipients of public aid; or (3) in the event neither (1) nor (2) above is applicable, then the amounts paid under the Medicare area prevailing rate for the area where the services were provided, or if no such rate exists with respect to such services, then 80% of the usual and customary rates established by the Health Insurance Association of America. The payments required to be made by the Association under this Section shall constitute full and complete payment for such provider services to the enrollee.
    (d) The Association shall not be required to pay more than an aggregate of $300,000 for any organization which is declared to be insolvent prior to July 1, 1987, and such funds shall be distributed first to enrollees who are not public aid recipients pursuant to a plan recommended by the Association and approved by the Director and the court having jurisdiction over the liquidation.
    (9) The Association may:
        (a) Enter into such contracts as are necessary or
    
proper to carry out the provisions and purposes of this Article.
        (b) Sue or be sued, including taking any legal
    
actions necessary or proper for recovery of any unpaid assessments under Section 6-9. The Association shall not be liable for punitive or exemplary damages.
        (c) Borrow money to effect the purposes of this
    
Article. Any notes or other evidence of indebtedness of the Association not in default are legal investments for domestic organizations and may be carried as admitted assets.
        (d) Employ or retain such persons as are necessary to
    
handle the financial transactions of the Association, and to perform such other functions as become necessary or proper under this Article.
        (e) Negotiate and contract with any liquidator,
    
rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the Association.
        (f) Take such legal action as may be necessary to
    
avoid payment of improper claims.
        (g) Exercise, for the purposes of this Article and to
    
the extent approved by the Director, the powers of a domestic organization, but in no case may the Association issue evidence of coverage other than that issued to perform the contractual obligations of the impaired or insolvent organization.
        (h) Exercise all the rights of the Director under
    
Section 193(4) of the Illinois Insurance Code with respect to covered health care plan certificates after the association becomes obligated by statute.
        (i) Request information from a person seeking
    
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.
        (j) Take other necessary or appropriate action to
    
discharge its duties and obligations under this Article or to exercise its powers under this Article.
    (10) The obligations of the Association under this Article shall not relieve any reinsurer, insurer or other person of its obligations to the insolvent organization (or its conservator, rehabilitator, liquidator or similar official) or its enrollees, including without limitation any reinsurer, insurer or other person liable to the insolvent insurer (or its conservator, rehabilitator, liquidator or similar official) or its enrollees under any contract of reinsurance, any contract providing stop loss coverage or similar coverage or any health care contract. With respect to covered health care plan certificates 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 organization arising after the date of the order of liquidation or rehabilitation under any contract of reinsurance, any contract providing stop loss coverage or similar coverages or any health care service contract to which the insolvent organization was a party, on the terms set forth under such contract, to the extent that such contract provides coverage for health care services provided after the date of the order of liquidation or rehabilitation. As a condition to making this election, the Association must pay premiums for coverage relating to periods after the date of the order of liquidation or rehabilitation.
    (11) The Association shall be entitled to collect premiums due under or with respect to covered health care certificates for a period from the date on which the domestic, foreign, or alien organization became an insolvent organization until the Association no longer has obligations under subsection (2) of this Section with respect to such certificates. The Association's obligations under subsection (2) of this Section with respect to any covered health care plan certificates shall terminate in the event that all such premiums due under or with respect to such covered health care plan certificates are not paid to the Association (i) within 30 days of the Association's demand therefor, or (ii) in the event that such certificates provide for a longer grace period for payment of premiums after notice of non-payment or demand therefor, within the lesser of (A) the period provided for in such certificates or (B) 60 days.
    (12) 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.
    (13) 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.
    (14) 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.
(Source: P.A. 95-331, eff. 8-21-07; 96-1450, eff. 8-20-10; 96-1509, eff. 1-27-11; 97-333, eff. 8-12-11.)

215 ILCS 125/6-9

    (215 ILCS 125/6-9) (from Ch. 111 1/2, par. 1418.9)
    Sec. 6-9. Assessments.
    (1) For the purpose of providing the funds necessary to carry out the powers and duties of the Association, the board of directors shall assess the member organizations, at such times and for such amounts as the board finds necessary. Assessments shall be due not less than 30 days after written notice to the member organizations and shall accrue interest from the due date at such adjusted rate as is established under Section 531.09 of the Illinois Insurance Code and such interest shall be compounded daily.
    (2) There shall be 2 classes of assessments, as follows:
        (a) Class A assessments shall be made for the purpose
    
of meeting administrative costs and other general expenses and examinations conducted under the authority of the Director under subsection (5) of Section 6-12.
        (b) Class B assessments shall be made to the extent
    
necessary to carry out the powers and duties of the Association under Section 6-8 with regard to an impaired or insolvent domestic organization or insolvent foreign or alien organizations.
    (3)(a) The amount of any Class A assessment shall be determined by the Board and may be made on a non-pro rata basis.
    (b) Class B assessments against member organizations shall be in the proportion that the premiums received on health maintenance organization business in this State by each assessed member organization on covered health care plan certificates for the calendar year preceding the assessment bears to such premiums received on health maintenance organization business in this State for the calendar year preceding the assessment by all assessed member organizations.
    (c) Assessments to meet the requirements of the Association with respect to an impaired or insolvent organization shall not be made until necessary to implement the purposes of this Article. Classification of assessments under subsection (2) and computations of assessments under this subsection shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.
    (4)(a) The Association may abate or defer, in whole or in part, the assessment of a member organization if, in the opinion of the board, payment of the assessment would endanger the ability of the member organization to fulfill its contractual obligations.
    (b) The total of all assessments upon a member organization may not in any one calendar year exceed 2% of such organization's premiums in this State during the calendar year preceding the assessment on the covered health care plan certificates.
    (5) In the event an assessment against a member organization is abated, or deferred, in whole or in part, because of the limitations set forth in subsection (4) of this Section, the amount by which such assessment is abated or deferred, may be assessed against the other member organizations in a manner consistent with the basis for assessments set forth in this Section. If the maximum assessment, together with the other assets of the Association, does not provide in any one year an amount sufficient to carry out the responsibilities of the Association, the necessary additional funds may be assessed as soon thereafter as permitted by this Article.
    (6) The board may, by an equitable method as established in the plan of operation, refund to member organizations, in proportion to the contribution of each organization, the amount by which the assets of the fund exceed the amount the board finds is necessary to carry out during the coming year the obligations of the Association, including assets accruing from net realized gains and income from investments. A reasonable amount may be retained in the fund to provide moneys for the continuing expenses of the Association and for future losses.
    (7) An assessment is deemed to occur on the date upon which the board votes such assessment. The board may defer calling the payment of the assessment or may call for payment in one or more installments.
    (8) It is proper for any member organization, in determining its rates to consider the amount reasonably necessary to meet its assessment obligations under this Article.
    (9) The Association must issue to each organization paying a Class B assessment under this Article a certificate of contribution, in a form prescribed by the Director, for the amount of the assessment so paid. All outstanding certificates are of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the organization in its financial statement as an admitted asset in such form and for such amount, if any, and period of time as the Director may approve, provided the organization shall in any event at its option have the right to show a certificate of contribution as an asset at percentages of the original face amount for calendar years as follows:
    100% for the calendar year after the year of issuance;
    80% for the second calendar year after the year of issuance;
    60% for the third calendar year after the year of issuance;
    40% for the fourth calendar year after the year of issuance;
    20% for the fifth calendar year after the year of issuance.
    (10) The Association may request information of member organizations in order to aid in the exercise of its power under this Section and member organizations shall promptly comply with a request.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 125/6-10

    (215 ILCS 125/6-10) (from Ch. 111 1/2, par. 1418.10)
    Sec. 6-10. 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 90 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 organizations 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
    
the Association;
        (b) Establish the amount and method of reimbursing
    
members of the board of directors under Section 6-7;
        (c) Establish regular places and times for meetings
    
of the board of directors;
        (d) Establish procedures for records to be kept of
    
all financial transactions of the Association, its agents, and the board of directors;
        (e) Establish the procedures whereby selections for
    
the board of directors will be made and submitted to the Director;
        (f) Establish any additional procedures for
    
assessments under Section 6-9; and
        (g) Contain additional provisions necessary or proper
    
for the execution of the powers and duties of the Association.
    (4) The plan of operation shall establish a procedure for protest by any member organization of assessments made by the Association pursuant to Section 6-9. Such procedures shall require that:
        (a) A member organization that wishes to protest all
    
or 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.
        (b) Within 30 days following the payment of an
    
assessment under protest by any protesting member organization, the Association must notify the member organization 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.
        (c) In the event the Association determines that the
    
protesting member organization is entitled to a refund, such refund shall be made within 30 days following the date upon which the Association makes its determination.
        (d) The decision of the Association with respect to a
    
protest may be appealed to the Director pursuant to subsection (3) of Section 6-11.
        (e) In the alternative to rendering a decision with
    
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.
        (f) Interest on any refund due a protesting member
    
organization shall be paid at the rate actually earned by the Association.
    (5) The plan of operation may provide that any or all powers and duties of the Association, except those under paragraph (c) of subsection (10) of Section 6-8 and Section 6-9 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 Article.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 125/6-11

    (215 ILCS 125/6-11) (from Ch. 111 1/2, par. 1418.11)
    Sec. 6-11. Duties and Powers of the Director. In addition to the duties and powers enumerated elsewhere in this Article, the Director shall have the powers set forth in this Section.
    (1) The Director must:
        (a) Upon request of the board of directors, provide
    
the Association with a statement of the premiums in the appropriate states for each member organization.
        (b) Notify the board of directors of the existence of
    
an impaired or insolvent organization not later than 3 days after a determination of impairment or insolvency is made or when the Director receives notice of impairment or insolvency.
        (c) Give notice to an impaired organization as
    
required by Section 2-4 of this Act. Notice to the impaired organization shall constitute notice to its shareholders, if any.
        (d) In any liquidation or rehabilitation proceeding
    
involving a domestic organization, be appointed as the liquidator or rehabilitator. If a foreign or alien member organization is subject to a liquidation proceeding in its domiciliary jurisdiction or state of entry, the Director may be appointed conservator.
    (2) The Director may suspend or revoke, after notice and hearing, the certificate of authority to transact business in this State of any member organization which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative the Director may levy a forfeiture on any member organization which fails to pay an assessment when due. Such forfeiture may not exceed 5% of the unpaid assessment per month, but no forfeiture may be less than $100 per month.
    (3) Any action of the board of directors or the Association may be appealed to the Director by any member organization or any other person adversely affected by such action if such appeal is taken within 30 days of the action being appealed. Any final action or order of the Director is subject to judicial review in a court of competent jurisdiction.
    (4) The liquidator, rehabilitator, or conservator of any impaired organization may notify all interested persons of the effect of this Article.
(Source: P.A. 86-620.)

215 ILCS 125/6-12

    (215 ILCS 125/6-12) (from Ch. 111 1/2, par. 1418.12)
    Sec. 6-12. Prevention of Insolvencies. To aid in the detection and prevention of organization insolvencies or impairments:
    (1) It shall be the duty of the Director:
    (a) To notify the appropriate regulatory authority 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 organization:
    (i) revocation of license;
    (ii) suspension of license;
    (iii) makes any formal order, except for an order issued pursuant to Article XII 1/2 of the Illinois Insurance Code, that such company restrict its subscriptions, 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 enrollees or creditors.
    Such notice shall be transmitted to all regulatory authorities within 30 days following the action taken or the date on which the action occurs.
    (b) To report to the board of directors when he has taken any of the actions set forth in subparagraph (a) of this paragraph or has received a report from any other regulatory authority 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 regulatory authority.
    (2) The Director may seek the advice and recommendations of the board of directors concerning any matter affecting his duties and responsibilities regarding the financial condition of member organizations and organizations seeking admission to transact business in this State.
    (3) The board of directors may, upon majority vote, make reports and recommendations to the Director upon any matter germane to the liquidation, rehabilitation or conservation of any member organization. Such reports and recommendations shall not be considered public documents.
    (4) The board of directors may, upon majority vote, make recommendations to the Director for the detection and prevention of health maintenance organization insolvencies.
    (5) The board of directors shall, at the conclusion of any health maintenance organization insolvency in which the Association was obligated to make payments, 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 organization, and may adopt by reference any report prepared by such other associations.
(Source: P.A. 86-620.)

215 ILCS 125/6-13

    (215 ILCS 125/6-13) (from Ch. 111 1/2, par. 1418.13)
    Sec. 6-13. Tax offset. In the event the aggregate Class A and B assessments for all member organizations do not exceed $3,000,000 in any one calendar year, no member organization shall receive a tax offset. However, in any one calendar year in which the total of such assessments exceeds $3,000,000, the amount in excess of $3,000,000 shall be subject to a tax offset to the extent of 20% of the amount of such assessment for each of the five calendar years following the year in which such assessment was paid, and ending prior to January 1, 2003, and each member organization may offset the proportionate amount of such excess paid by the organization against its liabilities for the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act. The provisions of this Section shall expire and be given no effect on and after January 1, 2004.
(Source: P.A. 93-29, eff. 6-20-03.)

215 ILCS 125/6-14

    (215 ILCS 125/6-14) (from Ch. 111 1/2, par. 1418.14)
    Sec. 6-14. Miscellaneous Provisions. (1) Records must be kept of all negotiations and meetings in which the Association or its representatives are involved to discuss the activities of the Association in carrying out its powers and duties under Section 6-8. Records of such negotiations or meetings may be made public only upon the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent organization, upon the termination of the impairment or insolvency of the organization, or upon the order of a court of competent jurisdiction. Nothing in this subsection (1) limits the duty of the Association to submit a report of its activities under Section 6-15.
    (2) For the purpose of carrying out its obligations under this Article, the Association is deemed to be a creditor of the impaired or insolvent organization to the extent of assets attributable to covered health care plan certificates reduced by any amounts to which the Association is entitled as subrogee (under subsection (7) of Section 6-8). All assets of the impaired or insolvent organization attributable to covered health care plan certificates must be used to continue all covered health care plan certificates and pay all contractual obligations of the impaired organization as required by this Article. "Assets attributable to covered health care plan certificates", as used in this subsection (2), is that proportion of the assets which the reserves that should have been established for such health care plan certificates bear to the reserve that should have been established for all health care plan certificates of the impaired or insolvent organization.
    (3) (a) Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the Association, the shareholders of the impaired or insolvent organization, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of such impaired or insolvent organization. In such a determination, consideration must be given to the welfare of the enrollees of the continuing or successor organization.
    (b) No distribution to stockholders, if any, of an impaired or insolvent organization may be made until and unless the total amount of valid claims of the Association for funds expended in carrying out its powers and duties under Section 6-8, with respect to such organization have been fully recovered by the Association.
    (4) (a) If an order for liquidation or rehabilitation of an organization domiciled in this State has been entered, the receiver appointed under such order has a right to recover on behalf of the organization, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the organization on its capital stock, made at any time during the 5 years preceding the petition for liquidation or rehabilitation subject to the limitations of paragraphs (b) to (d).
    (b) No such distribution is recoverable if the organization shows that when paid the distribution was lawful and reasonable, and that the organization did not know and could not reasonably have known that the distribution might adversely affect the ability of the organization to fulfill its contractual obligations.
    (c) Any person who was an affiliate that controlled the organization at the time the distributions were paid is liable up to the amount of distributions he received. Any person who was an affiliate that controlled the organization at the time the distributions were declared, is liable up to the amount of distributions he would have received if they had been paid immediately. If 2 persons are liable with respect to the same distributions, they are jointly and severally liable.
    (d) The maximum amount recoverable under subsection (4) of this Section is the amount needed in excess of all other available assets of the insolvent organization to pay the contractual obligations of the insolvent organization.
    (e) If any person liable under paragraph (c) of subsection (4) of this Section is insolvent, all its affiliates that controlled it at the time the distribution was paid are jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.
(Source: P.A. 86-620.)

215 ILCS 125/6-15

    (215 ILCS 125/6-15) (from Ch. 111 1/2, par. 1418.15)
    Sec. 6-15. Examination of the Association - Annual Report. The Association shall be subject to examination and regulation by the Director. The board of directors must submit to the Director, not later than the first day of the fifth month following the end of the Association's fiscal year, a financial report for such fiscal year in a form acceptable to the Director and a report of its activities during such fiscal year.
(Source: P.A. 86-620.)

215 ILCS 125/6-16

    (215 ILCS 125/6-16) (from Ch. 111 1/2, par. 1418.16)
    Sec. 6-16. Tax Exemptions. The Association is exempt from payment of all fees and all taxes levied by this State or any of its subdivisions, except taxes levied on real property.
(Source: P.A. 85-20.)

215 ILCS 125/6-17

    (215 ILCS 125/6-17) (from Ch. 111 1/2, par. 1418.17)
    Sec. 6-17. Immunity. There is no liability on the part of and no cause of action of any nature may arise against any member organization or its agents or employees, the Association or its agents or employees, members of the board of directors, or the Director or his representatives, for any action taken by them in the performance of their powers and duties under this Article.
(Source: P.A. 85-20.)

215 ILCS 125/6-18

    (215 ILCS 125/6-18) (from Ch. 111 1/2, par. 1418.18)
    Sec. 6-18. Stay of Proceedings - Reopening Default Judgments. All proceedings in which the insolvent organization is a party in any court in this State shall be stayed 180 days from the date an order of liquidation, rehabilitation, or conservation is final to permit proper legal action by the Association on any matters germane to its powers or duties. As to a judgment under any decision, order, verdict, or finding based on default the Association may apply to have such judgment set aside by the same court that made such judgment and must be permitted to defend against such suit on the merits.
(Source: P.A. 96-1450, eff. 8-20-10.)

215 ILCS 125/6-19

    (215 ILCS 125/6-19) (from Ch. 111 1/2, par. 1418.19)
    Sec. 6-19. Prohibited Advertisement of Action of the Health Maintenance Organization Guaranty Association in solicitation of enrollees. No person, including an organization, agent or affiliate of an organization shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement which uses the existence of the Health Maintenance Organization Guaranty Association of this State for the purpose of solicitation of enrollees in health care plans covered by this Article; provided, however, that this Section shall not apply to the Illinois Health Maintenance Organization Guaranty Association or any other entity which does not operate health care plans.
(Source: P.A. 85-20.)