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90_SB0193enr 215 ILCS 5/355a from Ch. 73, par. 967a 215 ILCS 5/408 from Ch. 73, par. 1020 215 ILCS 5/531.03 from Ch. 73, par. 1065.80-3 215 ILCS 5/1003 from Ch. 73, par. 1065.703 215 ILCS 125/1-2 from Ch. 111 1/2, par. 1402 215 ILCS 125/5-3 from Ch. 111 1/2, par. 1411.2 215 ILCS 125/5-6 from Ch. 111 1/2, par. 1414 215 ILCS 160/Act rep. Repeals the Vision Service Plan Act. Deletes cross-references. Effective immediately. LRB9000079DPcd SB193 Enrolled LRB9000079DPcd 1 AN ACT to repeal the Vision Service Plan Act. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Insurance Code is amended by 5 changing Sections 355a, 408, 531.03, and 1003 as follows: 6 (215 ILCS 5/355a) (from Ch. 73, par. 967a) 7 Sec. 355a. Standardization of terms and coverage. 8 (1) The purpose of this Section shall be (a) to provide 9 reasonable standardization and simplification of terms and 10 coverages of individual accident and health insurance 11 policies to facilitate public understanding and comparisons; 12 (b) to eliminate provisions contained in individual accident 13 and health insurance policies which may be misleading or 14 unreasonably confusing in connection either with the purchase 15 of such coverages or with the settlement of claims; and (c) 16 to provide for reasonable disclosure in the sale of accident 17 and health coverages. 18 (2) Definitions applicable to this Section are as 19 follows: 20 (a) "Policy" means all or any part of the forms 21 constituting the contract between the insurer and the 22 insured, including the policy, certificate, subscriber 23 contract, riders, endorsements, and the application if 24 attached, which are subject to filing with and approval 25 by the Director. 26 (b) "Service corporations" means non-profit 27 hospital, medical, voluntary health, vision, dental, and 28 pharmaceutical corporations organized and operating 29 respectively under
"the Non-Profit Hospital Service Plan 30 Act ", "the Medical Service Plan Act ", "the Voluntary 31 Health Services Plans Act ", "The Vision Service PlanSB193 Enrolled -2- LRB9000079DPcd 1 Act", "the Dental Service Plan Act ", and "the 2 Pharmaceutical Service Plan Act ". 3 (c) "Accident and health insurance" means insurance 4 written under Article XX of the Insurance Code, other 5 than credit accident and health insurance, and coverages 6 provided in subscriber contracts issued by service 7 corporations. For purposes of this Section such service 8 corporations shall be deemed to be insurers engaged in 9 the business of insurance. 10 (3) The Director shall issue such rules as he shall deem 11 necessary or desirable to establish specific standards, 12 including standards of full and fair disclosure that set 13 forth the form and content and required disclosure for sale, 14 of individual policies of accident and health insurance, 15 which rules and regulations shall be in addition to and in 16 accordance with the applicable laws of this State, and which 17 may cover but shall not be limited to: (a) terms of 18 renewability; (b) initial and subsequent conditions of 19 eligibility; (c) non-duplication of coverage provisions; (d) 20 coverage of dependents; (e) pre-existing conditions; (f) 21 termination of insurance; (g) probationary periods; (h) 22 limitation, exceptions, and reductions; (i) elimination 23 periods; (j) requirements regarding replacements; (k) 24 recurrent conditions; and (l) the definition of terms 25 including but not limited to the following: hospital, 26 accident, sickness, injury, physician, accidental means, 27 total disability, partial disability, nervous disorder, 28 guaranteed renewable, and non-cancellable. 29 The Director may issue rules that specify prohibited 30 policy provisions not otherwise specifically authorized by 31 statute which in the opinion of the Director are unjust, 32 unfair or unfairly discriminatory to the policyholder, any 33 person insured under the policy, or beneficiary. 34 (4) The Director shall issue such rules as he shall deem SB193 Enrolled -3- LRB9000079DPcd 1 necessary or desirable to establish minimum standards for 2 benefits under each category of coverage in individual 3 accident and health policies, other than conversion policies 4 issued pursuant to a contractual conversion privilege under a 5 group policy, including but not limited to the following 6 categories: (a) basic hospital expense coverage; (b) basic 7 medical-surgical expense coverage; (c) hospital confinement 8 indemnity coverage; (d) major medical expense coverage; (e) 9 disability income protection coverage; (f) accident only 10 coverage; and (g) specified disease or specified accident 11 coverage. 12 Nothing in this subsection (4) shall preclude the 13 issuance of any policy which combines two or more of the 14 categories of coverage enumerated in subparagraphs (a) 15 through (f) of this subsection. 16 No policy shall be delivered or issued for delivery in 17 this State which does not meet the prescribed minimum 18 standards for the categories of coverage listed in this 19 subsection unless the Director finds that such policy is 20 necessary to meet specific needs of individuals or groups and 21 such individuals or groups will be adequately informed that 22 such policy does not meet the prescribed minimum standards, 23 and such policy meets the requirement that the benefits 24 provided therein are reasonable in relation to the premium 25 charged. The standards and criteria to be used by the 26 Director in approving such policies shall be included in the 27 rules required under this Section with as much specificity as 28 practicable. 29 The Director shall prescribe by rule the method of 30 identification of policies based upon coverages provided. 31 (5) (a) In order to provide for full and fair disclosure 32 in the sale of individual accident and health insurance 33 policies, no such policy shall be delivered or issued for 34 delivery in this State unless the outline of coverage SB193 Enrolled -4- LRB9000079DPcd 1 described in paragraph (b) of this subsection either 2 accompanies the policy, or is delivered to the applicant at 3 the time the application is made, and an acknowledgment 4 signed by the insured, of receipt of delivery of such 5 outline, is provided to the insurer. In the event the policy 6 is issued on a basis other than that applied for, the outline 7 of coverage properly describing the policy must accompany the 8 policy when it is delivered and such outline shall clearly 9 state that the policy differs, and to what extent, from that 10 for which application was originally made. All policies, 11 except single premium nonrenewal policies, shall have a 12 notice prominently printed on the first page of the policy or 13 attached thereto stating in substance, that the policyholder 14 shall have the right to return the policy within ten (10) 15 days of its delivery and to have the premium refunded if 16 after examination of the policy the policyholder is not 17 satisfied for any reason. 18 (b) The Director shall issue such rules as he shall deem 19 necessary or desirable to prescribe the format and content of 20 the outline of coverage required by paragraph (a) of this 21 subsection. "Format" means style, arrangement, and overall 22 appearance, including such items as the size, color, and 23 prominence of type and the arrangement of text and captions. 24 "Content" shall include without limitation thereto, 25 statements relating to the particular policy as to the 26 applicable category of coverage prescribed under subsection 27 4; principal benefits; exceptions, reductions and 28 limitations; and renewal provisions, including any 29 reservation by the insurer of a right to change premiums. 30 Such outline of coverage shall clearly state that it 31 constitutes a summary of the policy issued or applied for and 32 that the policy should be consulted to determine governing 33 contractual provisions. 34 (6) Prior to the issuance of rules pursuant to this SB193 Enrolled -5- LRB9000079DPcd 1 Section, the Director shall afford the public, including the 2 companies affected thereby, reasonable opportunity for 3 comment. Such rulemaking is subject to the provisions of 4 "The Illinois Administrative Procedure Act ". 5 (7) When a rule has been adopted, pursuant to this 6 Section, all policies of insurance or subscriber contracts 7 which are not in compliance with such rule shall, when so 8 provided in such rule, be deemed to be disapproved as of a 9 date specified in such rule not less than 120 days following 10 its effective date, without any further or additional notice 11 other than the adoption of the rule. 12 (8) When a rule adopted pursuant to this Section so 13 provides, a policy of insurance or subscriber contract which 14 does not comply with the rule shall not less than 120 days 15 from the effective date of such rule, be construed, and the 16 insurer or service corporation shall be liable, as if the 17 policy or contract did comply with the rule. 18 (9) Violation of any rule adopted pursuant to this 19 Section shall be a violation of the insurance law for 20 purposes of Sections 370 and 446 of the Insurance Code. 21 (Source: P.A. 81-0657; 81-0722; 81-1509.) 22 (215 ILCS 5/408) (from Ch. 73, par. 1020) 23 Sec. 408. Fees and charges. 24 (1) The Director shall charge, collect and give proper 25 acquittances for the payment of the following fees and 26 charges: 27 (a) For filing all documents submitted for the 28 incorporation or organization or certification of a 29 domestic company, except for a fraternal benefit society, 30 $1,000. 31 (b) For filing all documents submitted for the 32 incorporation or organization of a fraternal benefit 33 society, $250. SB193 Enrolled -6- LRB9000079DPcd 1 (c) For filing amendments to articles of 2 incorporation and amendments to declaration of 3 organization, except for a fraternal benefit society, a 4 mutual benefit association, a burial society or a farm 5 mutual, $100. 6 (d) For filing amendments to articles of 7 incorporation of a fraternal benefit society, a mutual 8 benefit association or a burial society, $50. 9 (e) For filing amendments to articles of 10 incorporation of a farm mutual, $25. 11 (f) For filing bylaws or amendments thereto, $25. 12 (g) For filing agreement of merger or 13 consolidation: 14 (i) for a domestic company, except for a 15 fraternal benefit society, a mutual benefit 16 association, a burial society, or a farm mutual, 17 $1,000. 18 (ii) for a foreign or alien company, except 19 for a fraternal benefit society, $300. 20 (iii) for a fraternal benefit society, a 21 mutual benefit association, a burial society, or a 22 farm mutual, $100. 23 (h) For filing agreements of reinsurance by a 24 domestic company, $100. 25 (i) For filing all documents submitted by a foreign 26 or alien company to be admitted to transact business or 27 accredited as a reinsurer in this State, except for a 28 fraternal benefit society, $2,500. 29 (j) For filing all documents submitted by a foreign 30 or alien fraternal benefit society to be admitted to 31 transact business in this State, $250. 32 (k) For filing declaration of withdrawal of a 33 foreign or alien company, $25. 34 (l) For filing annual statement, except a fraternal SB193 Enrolled -7- LRB9000079DPcd 1 benefit society, a mutual benefit association, a burial 2 society, or a farm mutual, $100. 3 (m) For filing annual statement by a fraternal 4 benefit society, $50. 5 (n) For filing annual statement by a farm mutual, a 6 mutual benefit association, or a burial society, $25. 7 (o) For issuing a certificate of authority or 8 renewal thereof except to a fraternal benefit society, 9 $100. 10 (p) For issuing a certificate of authority or 11 renewal thereof to a fraternal benefit society, $50. 12 (q) For issuing an amended certificate of 13 authority, $25. 14 (r) For each certified copy of certificate of 15 authority, $10. 16 (s) For each certificate of deposit, or valuation, 17 or compliance or surety certificate, $10. 18 (t) For copies of papers or records per page, $1. 19 (u) For each certification to copies of papers or 20 records, $10. 21 (v) For multiple copies of documents or 22 certificates listed in subparagraphs (r), (s), and (u) of 23 paragraph (1) of this Section, $10 for the first copy of 24 a certificate of any type and $5 for each additional copy 25 of the same certificate requested at the same time, 26 unless, pursuant to paragraph (2) of this Section, the 27 Director finds these additional fees excessive. 28 (w) For issuing a permit to sell shares or increase 29 paid-up capital: 30 (i) in connection with a public stock 31 offering, $150; 32 (ii) in any other case, $50. 33 (x) For issuing any other certificate required or 34 permissible under the law, $25. SB193 Enrolled -8- LRB9000079DPcd 1 (y) For filing a plan of exchange of the stock of a 2 domestic stock insurance company, a plan of 3 demutualization of a domestic mutual company, or a plan 4 of reorganization under Article XII, $1,000. 5 (z) For filing a statement of acquisition of a 6 domestic company as defined in Section 131.4 of this 7 Code, $1,000. 8 (aa) For filing an agreement to purchase the 9 business of an organization authorized under the Dental 10 Service Plan Act , the Vision Service Plan Act,or the 11 Voluntary Health Services Plans Act or of a health 12 maintenance organization or a limited health service 13 organization, $1,000. 14 (bb) For filing a statement of acquisition of a 15 foreign or alien insurance company as defined in Section 16 131.12a of this Code, $500. 17 (cc) For filing a registration statement as 18 required in Sections 131.13 and 131.14, the notification 19 as required by Sections 131.16, 131.20a, or 141.4, or an 20 agreement or transaction required by Sections 124.2(2), 21 141, 141a, or 141.1, $100. 22 (dd) For filing an application for licensing of: 23 (i) a religious or charitable risk pooling 24 trust or a workers' compensation pool, $500; 25 (ii) a workers' compensation service company, 26 $250; 27 (iii) a self-insured automobile fleet, $100; 28 or 29 (iv) a renewal of or amendment of any license 30 issued pursuant to (i), (ii), or (iii) above, $50. 31 (ee) For filing articles of incorporation for a 32 syndicate to engage in the business of insurance through 33 the Illinois Insurance Exchange, $1,000. 34 (ff) For filing amended articles of incorporation SB193 Enrolled -9- LRB9000079DPcd 1 for a syndicate engaged in the business of insurance 2 through the Illinois Insurance Exchange, $50. 3 (gg) For filing articles of incorporation for a 4 limited syndicate to join with other subscribers or 5 limited syndicates to do business through the Illinois 6 Insurance Exchange, $500. 7 (hh) For filing amended articles of incorporation 8 for a limited syndicate to do business through the 9 Illinois Insurance Exchange, $50. 10 (ii) For a permit to solicit subscriptions to a 11 syndicate or limited syndicate, $50. 12 (jj) For the filing of each form as required in 13 Section 143 of this Code, $25 per form. The fee for 14 advisory and rating organizations shall be $100 per form. 15 (i) For the purposes of the form filing fee, 16 filings made on insert page basis will be considered 17 one form at the time of its original submission. 18 Changes made to a form subsequent to its approval 19 shall be considered a new filing. 20 (ii) Only one fee shall be charged for a form, 21 regardless of the number of other forms or policies 22 with which it will be used. 23 (iii) Fees charged for a policy filed as it 24 will be issued regardless of the number of forms 25 comprising that policy shall not exceed $500 or 26 $1000 for advisory or rating organizations. 27 (iv) The Director may by rule exempt forms 28 from such fees. 29 (kk) For filing an application for licensing of a 30 reinsurance intermediary, $250. 31 (ll) For filing an application for renewal of a 32 license of a reinsurance intermediary, $100. 33 (2) When printed copies or numerous copies of the same 34 paper or records are furnished or certified, the Director may SB193 Enrolled -10- LRB9000079DPcd 1 reduce such fees for copies if he finds them excessive. He 2 may, when he considers it in the public interest, furnish 3 without charge to state insurance departments and persons 4 other than companies, copies or certified copies of reports 5 of examinations and of other papers and records. 6 (3) The expenses incurred in any performance examination 7 authorized by law shall be paid by the company or person 8 being examined. The charge shall be reasonably related to the 9 cost of the examination including but not limited to 10 compensation of examiners, electronic data processing costs, 11 supervision and preparation of an examination report and 12 lodging and travel expenses. All lodging and travel expenses 13 shall be in accord with the applicable travel regulations as 14 published by the Department of Central Management Services 15 and approved by the Governor's Travel Control Board, except 16 that out-of-state lodging and travel expenses related to 17 examinations authorized under Section 132 shall be in 18 accordance with travel rates prescribed under paragraph 19 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2, 20 for reimbursement of subsistence expenses incurred during 21 official travel. All lodging and travel expenses may be 22 reimbursed directly upon authorization of the Director. With 23 the exception of the direct reimbursements authorized by the 24 Director, all performance examination charges collected by 25 the Department shall be paid to the Insurance Producers 26 Administration Fund, however, the electronic data processing 27 costs incurred by the Department in the performance of any 28 examination shall be billed directly to the company being 29 examined for payment to the Statistical Services Revolving 30 Fund. 31 (4) At the time of any service of process on the 32 Director as attorney for such service, the Director shall 33 charge and collect the sum of $10.00, which may be recovered 34 as taxable costs by the party to the suit or action causing SB193 Enrolled -11- LRB9000079DPcd 1 such service to be made if he prevails in such suit or 2 action. 3 (5) (a) The costs incurred by the Department of 4 Insurance in conducting any hearing authorized by law shall 5 be assessed against the parties to the hearing in such 6 proportion as the Director of Insurance may determine upon 7 consideration of all relevant circumstances including: (1) 8 the nature of the hearing; (2) whether the hearing was 9 instigated by, or for the benefit of a particular party or 10 parties; (3) whether there is a successful party on the 11 merits of the proceeding; and (4) the relative levels of 12 participation by the parties. 13 (b) For purposes of this subsection (5) costs incurred 14 shall mean the hearing officer fees, court reporter fees, and 15 travel expenses of Department of Insurance officers and 16 employees; provided however, that costs incurred shall not 17 include hearing officer fees or court reporter fees unless 18 the Department has retained the services of independent 19 contractors or outside experts to perform such functions. 20 (c) The Director shall make the assessment of costs 21 incurred as part of the final order or decision arising out 22 of the proceeding; provided, however, that such order or 23 decision shall include findings and conclusions in support of 24 the assessment of costs. This subsection (5) shall not be 25 construed as permitting the payment of travel expenses unless 26 calculated in accordance with the applicable travel 27 regulations of the Department of Central Management Services, 28 as approved by the Governor's Travel Control Board. The 29 Director as part of such order or decision shall require all 30 assessments for hearing officer fees and court reporter fees, 31 if any, to be paid directly to the hearing officer or court 32 reporter by the party(s) assessed for such costs. The 33 assessments for travel expenses of Department officers and 34 employees shall be reimbursable to the Director of Insurance SB193 Enrolled -12- LRB9000079DPcd 1 for deposit to the fund out of which those expenses had been 2 paid. 3 (d) The provisions of this subsection (5) shall apply in 4 the case of any hearing conducted by the Director of 5 Insurance not otherwise specifically provided for by law. 6 (6) The Director shall charge and collect an annual 7 financial regulation fee from every domestic company for 8 examination and analysis of its financial condition and to 9 fund the internal costs and expenses of the Interstate 10 Insurance Receivership Commission as may be allocated to the 11 State of Illinois and companies doing an insurance business 12 in this State pursuant to Article X of the Interstate 13 Insurance Receivership Compact. The fee shall be the greater 14 fixed amount based upon the combination of nationwide direct 15 premium income and nationwide reinsurance assumed premium 16 income or upon admitted assets calculated under this 17 subsection as follows: 18 (a) Combination of nationwide direct premium income 19 and nationwide reinsurance assumed premium. 20 (i) $100, if the premium is less than $500,000 21 and there is no reinsurance assumed premium; 22 (ii) $500, if the premium is $500,000 or more, 23 but less than $5,000,000 and there is no reinsurance 24 assumed premium; or if the premium is less than 25 $5,000,000 and the reinsurance assumed premium is 26 less than $10,000,000; 27 (iii) $2,500, if the premium is less than 28 $5,000,000 and the reinsurance assumed premium is 29 $10,000,000 or more; 30 (iv) $5,000, if the premium is $5,000,000 or 31 more, but less than $10,000,000; 32 (v) $7,500, if the premium is $10,000,000 or 33 more, but less than $25,000,000; 34 (vi) $10,000, if the premium is $25,000,000 or SB193 Enrolled -13- LRB9000079DPcd 1 more, but less than $50,000,000; 2 (vii) $14,000, if the premium is $50,000,000 3 or more, but less than $100,000,000; 4 (viii) $16,000, if the premium is $100,000,000 5 or more. 6 (b) Admitted assets. 7 (i) $100, if admitted assets are less than 8 $1,000,000; 9 (ii) $500, if admitted assets are $1,000,000 10 or more, but less than $5,000,000; 11 (iii) 2,500, if admitted assets are $5,000,000 12 or more, but less than $25,000,000; 13 (iv) $5,000, if admitted assets are 14 $25,000,000 or more, but less than $50,000,000; 15 (v) $7,500, if admitted assets are $50,000,000 16 or more, but less than $100,000,000; 17 (vi) $10,000, if admitted assets are 18 $100,000,000 or more, but less than $500,000,000; 19 (vii) $14,000, if admitted assets are 20 $500,000,000 or more, but less than $1,000,000,000; 21 (viii) $16,000, if admitted assets are 22 $1,000,000,000 or more. 23 (c) The sum of financial regulation fees charged to 24 the domestic companies of the same domestic affiliated 25 group shall not exceed $100,000 and shall be billed by 26 the Director to the member company designated by the 27 group. 28 (7) The Director shall charge and collect an annual 29 financial regulation fee from every foreign or alien company, 30 except fraternal benefit societies, for the examination and 31 analysis of its financial condition and to fund the internal 32 costs and expenses of the Interstate Insurance Receivership 33 Commission as may be allocated to the State of Illinois and 34 companies doing an insurance business in this State pursuant SB193 Enrolled -14- LRB9000079DPcd 1 to Article X of the Interstate Insurance Receivership 2 Compact. The fee shall be a fixed amount based upon Illinois 3 direct premium income and nationwide reinsurance assumed 4 premium income in accordance with the following schedule: 5 (a) $100, if the premium is less than $500,000 and 6 there is no reinsurance assumed premium; 7 (b) $500, if the premium is $500,000 or more, but 8 less than $5,000,000 and there is no reinsurance assumed 9 premium; or if the premium is less than $5,000,000 and 10 the reinsurance assumed premium is less than $10,000,000; 11 (c) $2,500, if the premium is less than $5,000,000 12 and the reinsurance assumed premium is $10,000,000 or 13 more; 14 (d) $5,000, if the premium is $5,000,000 or more, 15 but less than $10,000,000; 16 (e) $12,000, if the premium is $10,000,000 or more, 17 but less than $25,000,000; 18 (f) $15,000, if the premium is $25,000,000 or more, 19 but less than $50,000,000; 20 (g) $20,000, if the premium is $50,000,000 or more, 21 but less than $100,000,000; 22 (h) $25,000, if the premium is $100,000,000 or 23 more. 24 (8) Beginning January 1, 1992, the financial regulation 25 fees imposed under subsections (6) and (7) of this Section 26 shall be paid by each company or domestic affiliated group 27 annually. After January 1, 1994, the fee shall be billed by 28 Department invoice based upon the company's premium income or 29 admitted assets as shown in its annual statement for the 30 preceding calendar year. The invoice is due upon receipt and 31 must be paid no later than June 30 of each calendar year. 32 All financial regulation fees collected by the Department 33 shall be paid to the Insurance Financial Regulation Fund. 34 The Department may not collect financial examiner per diem SB193 Enrolled -15- LRB9000079DPcd 1 charges from companies subject to subsections (6) and (7) of 2 this Section undergoing financial examination after June 30, 3 1992. 4 (9) In addition to the financial regulation fee required 5 by this Section, a company undergoing any financial 6 examination authorized by law shall pay the following costs 7 and expenses incurred by the Department: electronic data 8 processing costs, the expenses authorized under Section 9 131.21 and subsection (d) of Section 132.4 of this Code, and 10 lodging and travel expenses. 11 Electronic data processing costs incurred by the 12 Department in the performance of any examination shall be 13 billed directly to the company undergoing examination for 14 payment to the Statistical Services Revolving Fund. Except 15 for direct reimbursements authorized by the Director or 16 direct payments made under Section 131.21 or subsection (d) 17 of Section 132.4 of this Code, all financial regulation fees 18 and all financial examination charges collected by the 19 Department shall be paid to the Insurance Financial 20 Regulation Fund. 21 All lodging and travel expenses shall be in accordance 22 with applicable travel regulations published by the 23 Department of Central Management Services and approved by the 24 Governor's Travel Control Board, except that out-of-state 25 lodging and travel expenses related to examinations 26 authorized under Sections 132.1 through 132.7 shall be in 27 accordance with travel rates prescribed under paragraph 28 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2, 29 for reimbursement of subsistence expenses incurred during 30 official travel. All lodging and travel expenses may be 31 reimbursed directly upon the authorization of the Director. 32 In the case of an organization or person not subject to 33 the financial regulation fee, the expenses incurred in any 34 financial examination authorized by law shall be paid by the SB193 Enrolled -16- LRB9000079DPcd 1 organization or person being examined. The charge shall be 2 reasonably related to the cost of the examination including, 3 but not limited to, compensation of examiners and other costs 4 described in this subsection. 5 (10) Any company, person, or entity failing to make any 6 payment of $100 or more as required under this Section shall 7 be subject to the penalty and interest provisions provided 8 for in subsections (4) and (7) of Section 412. 9 (11) Unless otherwise specified, all of the fees 10 collected under this Section shall be paid into the Insurance 11 Financial Regulation Fund. 12 (12) For purposes of this Section: 13 (a) "domestic company" means a company as defined 14 in Section 2 of this Code which is incorporated or 15 organized under the laws of this State, and in addition 16 includes a not-for-profit corporation authorized under 17 the Dental, Vision,Pharmaceutical, or Voluntary Health 18 Service Plan Acts, and a health maintenance organization 19 and a limited health service organization; 20 (b) "foreign company" means a company as defined in 21 Section 2 of this Code which is incorporated or organized 22 under the laws of any state of the United States other 23 than this State and in addition includes a health 24 maintenance organization and a limited health service 25 organization which is incorporated or organized under the 26 laws of any state of the United States other than this 27 State; 28 (c) "alien company" means a company as defined in 29 Section 2 of this Code which is incorporated or organized 30 under the laws of any country other than the United 31 States; 32 (d) "fraternal benefit society" means a 33 corporation, society, order, lodge or voluntary 34 association as defined in Section 282.1 of this Code; SB193 Enrolled -17- LRB9000079DPcd 1 (e) "mutual benefit association" means a company, 2 association or corporation authorized by the Director to 3 do business in this State under the provisions of Article 4 XVIII of this Code; 5 (f) "burial society" means a person, firm, 6 corporation, society or association of individuals 7 authorized by the Director to do business in this State 8 under the provisions of Article XIX of this Code; and 9 (g) "farm mutual" means a district, county and 10 township mutual insurance company authorized by the 11 Director to do business in this State under the 12 provisions of the Farm Mutual Insurance Company Act of 13 1986. 14 (Source: P.A. 88-364; 89-97, eff. 7-7-95; 89-247, eff. 15 1-1-96; 89-626, eff. 8-9-96.) 16 (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3) 17 Sec. 531.03. Coverage and limitations. 18 (1) This Article shall provide coverage for the policies 19 and contracts specified in paragraph (2) of this Section: 20 (a) to persons who, regardless of where they reside 21 (except for non-resident certificate holders under group 22 policies or contracts), are the beneficiaries, assignees 23 or payees of the persons covered under subparagraph 24 (1)(b), and 25 (b) to persons who are owners of or certificate 26 holders under such policies or contracts; or, in the case 27 of unallocated annuity contracts, to the persons who are 28 the contract holders, and who 29 (i) are residents of this State, or 30 (ii) are not residents, but only under all of 31 the following conditions: 32 (A) the insurers which issued such 33 policies or contracts are domiciled in this SB193 Enrolled -18- LRB9000079DPcd 1 State; 2 (B) such insurers never held a license or 3 certificate of authority in the states in which 4 such persons reside; 5 (C) such states have associations similar 6 to the association created by this Act; and 7 (D) such persons are not eligible for 8 coverage by such associations. 9 (2)(a) This Article shall provide coverage to the 10 persons specified in paragraph (l) of this Section for 11 direct, (i) nongroup life, health, annuity and supplemental 12 policies, or contracts, (ii) for certificates under direct 13 group policies or contracts, (iii) for unallocated annuity 14 contracts and (iv) for contracts to furnish health care 15 services and subscription certificates for medical or health 16 care services issued by persons licensed to transact 17 insurance business in this State under the Illinois Insurance 18 Code. Annuity contracts and certificates under group annuity 19 contracts include but are not limited to guaranteed 20 investment contracts, deposit administration contracts, 21 unallocated funding agreements, allocated funding agreements, 22 structured settlement agreements, lottery contracts and any 23 immediate or deferred annuity contracts. 24 (b) This Article shall not provide coverage for: 25 (i) that portion or part of such policies or 26 contracts under which the risk is borne by the 27 policyholder; provided however, that nothing in this 28 subparagraph (i) shall make this Article inapplicable to 29 assessment life and accident and health insurance 30 policies or contracts; or 31 (ii) any such policy or contract or part thereof 32 assumed by the impaired or insolvent insurer under a 33 contract of reinsurance, other than reinsurance for which 34 assumption certificates have been issued; or SB193 Enrolled -19- LRB9000079DPcd 1 (iii) any portion of a policy or contract to the 2 extent such portion represents an accrued value that the 3 rate of interest on which it is accrued 4 (A) averaged over the period of four years 5 prior to the date on which the Association becomes 6 obligated with respect to such policy or contract, 7 exceeds a rate of interest determined by subtracting 8 two percentage points from Moody's Corporate Bond 9 Yield Average averaged for that same four year 10 period or for such lesser period if the policy or 11 contract was issued less than four years before the 12 Association became obligated; and 13 (B) on and after the date on which the 14 Association becomes obligated with respect to such 15 policy or contract, exceeds the rate of interest 16 determined by subtracting three percentage points 17 from Moody's Corporate Bond Yield Average as most 18 recently available; 19 (iv) any unallocated annuity contract issued to an 20 employee benefit plan protected under the federal Pension 21 Benefit Guaranty Corporation; and 22 (v) any portion of any unallocated annuity contract 23 which is not issued to or in connection with a specific 24 employee, union or association of natural persons benefit 25 plan or a government lottery. 26 (vi) any burial society organized under Article XIX 27 of this Act, any fraternal benefit society organized 28 under Article XVII of this Act, any mutual benefit 29 association organized under Article XVIII of this Act, 30 and any foreign fraternal benefit society licensed under 31 Article VI of this Act; or 32 (vii) any health maintenance organization 33 established pursuant to the Health Maintenance 34 Organization Act including any health maintenance SB193 Enrolled -20- LRB9000079DPcd 1 organization business of a member insurer; or 2 (viii) any health services plan corporation 3 established pursuant to the Voluntary Health Services 4 Plans Act; or 5 (ix) (blank); any vision service plan corporation6 established pursuant to the Vision Service Plan Act;or 7 (x) any dental service plan corporation established 8 pursuant to the Dental Service Plan Act; or 9 (xi) any stop-loss insurance, as defined in clause 10 (b) of Class 1 or clause (a) of Class 2 of Section 4, and 11 further defined in subsection (d) of Section 352; or 12 (xii) that portion or part of a variable life 13 insurance or variable annuity contract not guaranteed by 14 an insurer. 15 (3) The benefits for which the Association may become 16 liable shall in no event exceed the lesser of: 17 (a) the contractual obligations for which the 18 insurer is liable or would have been liable if it were 19 not an impaired or insolvent insurer, or 20 (b)(i) with respect to any one life, regardless of 21 the number of policies or contracts: 22 (A) $300,000 in life insurance death benefits, 23 but not more than $100,000 in net cash surrender and 24 net cash withdrawal values for life insurance; 25 (B) $300,000 in health insurance benefits, 26 including any net cash surrender and net cash 27 withdrawal values; 28 (C) $100,000 in the present value of annuity 29 benefits, including net cash surrender and net cash 30 withdrawal values; 31 (ii) with respect to each individual participating 32 in a governmental retirement plan established under 33 Section 401, 403(b) or 457 of the U.S. Internal Revenue 34 Code covered by an unallocated annuity contract or the SB193 Enrolled -21- LRB9000079DPcd 1 beneficiaries of each such individual if deceased, in the 2 aggregate, $100,000 in present value annuity benefits, 3 including net cash surrender and net cash withdrawal 4 values; provided, however, that in no event shall the 5 Association be liable to expend more than $300,000 in the 6 aggregate with respect to any one individual under 7 subparagraph (1) and this subparagraph: 8 (iii) with respect to any one contract holder 9 covered by any unallocated annuity contract not included 10 in subparagraph (3)(b)(ii) of this Section above, 11 $5,000,000 in benefits, irrespective of the number of 12 such contracts held by that contract holder. 13 (Source: P.A. 88-364.) 14 (215 ILCS 5/1003) (from Ch. 73, par. 1065.703) 15 Sec. 1003. Definitions. As used in this Article: 16 (A) "Adverse underwriting decision" means: 17 (1) any of the following actions with respect to 18 insurance transactions involving insurance coverage which 19 is individually underwritten: 20 (a) a declination of insurance coverage, 21 (b) a termination of insurance coverage, 22 (c) failure of an agent to apply for insurance 23 coverage with a specific insurance institution which 24 the agent represents and which is requested by an 25 applicant, 26 (d) in the case of a property or casualty 27 insurance coverage: 28 (i) placement by an insurance institution 29 or agent of a risk with a residual market 30 mechanism, an unauthorized insurer or an 31 insurance institution which specializes in 32 substandard risks, or 33 (ii) the charging of a higher rate on the SB193 Enrolled -22- LRB9000079DPcd 1 basis of information which differs from that 2 which the applicant or policyholder furnished, 3 or 4 (e) in the case of life, health or disability 5 insurance coverage, an offer to insure at higher 6 than standard rates. 7 (2) Notwithstanding paragraph (1) above, the 8 following actions shall not be considered adverse 9 underwriting decisions but the insurance institution or 10 agent responsible for their occurrence shall nevertheless 11 provide the applicant or policyholder with the specific 12 reason or reasons for their occurrence: 13 (a) the termination of an individual policy 14 form on a class or statewide basis, 15 (b) a declination of insurance coverage solely 16 because such coverage is not available on a class or 17 statewide basis, or 18 (c) the rescission of a policy. 19 (B) "Affiliate" or "affiliated" means a person that 20 directly, or indirectly through one or more intermediaries, 21 controls, is controlled by or is under common control with 22 another person. 23 (C) "Agent" means an individual, firm, partnership, 24 association or corporation who is involved in the 25 solicitation, negotiation or binding of coverages for or on 26 applications or policies of insurance, covering property or 27 risks located in this State. For the purposes of this 28 Article, both "Insurance Agent" and "Insurance Broker", as 29 defined in Section 490, shall be considered an agent. 30 (D) "Applicant" means any person who seeks to contract 31 for insurance coverage other than a person seeking group 32 insurance that is not individually underwritten. 33 (E) "Director" means the Director of Insurance. 34 (F) "Consumer report" means any written, oral or other SB193 Enrolled -23- LRB9000079DPcd 1 communication of information bearing on a natural person's 2 credit worthiness, credit standing, credit capacity, 3 character, general reputation, personal characteristics or 4 mode of living which is used or expected to be used in 5 connection with an insurance transaction. 6 (G) "Consumer reporting agency" means any person who: 7 (1) regularly engages, in whole or in part, in the 8 practice of assembling or preparing consumer reports for 9 a monetary fee, 10 (2) obtains information primarily from sources other 11 than insurance institutions, and 12 (3) furnishes consumer reports to other persons. 13 (H) "Control", including the terms "controlled by" or 14 "under common control with", means the possession, direct or 15 indirect, of the power to direct or cause the direction of 16 the management and policies of a person, whether through the 17 ownership of voting securities, by contract other than a 18 commercial contract for goods or nonmanagement services, or 19 otherwise, unless the power is the result of an official 20 position with or corporate office held by the person. 21 (I) "Declination of insurance coverage" means a denial, 22 in whole or in part, by an insurance institution or agent of 23 requested insurance coverage. 24 (J) "Individual" means any natural person who: 25 (1) in the case of property or casualty insurance, 26 is a past, present or proposed named insured or 27 certificateholder; 28 (2) in the case of life, health or disability 29 insurance, is a past, present or proposed principal 30 insured or certificateholder; 31 (3) is a past, present or proposed policyowner; 32 (4) is a past or present applicant; 33 (5) is a past or present claimant; or 34 (6) derived, derives or is proposed to derive SB193 Enrolled -24- LRB9000079DPcd 1 insurance coverage under an insurance policy or 2 certificate subject to this Article. 3 (K) "Institutional source" means any person or 4 governmental entity that provides information about an 5 individual to an agent, insurance institution or 6 insurance-support organization, other than: 7 (1) an agent, 8 (2) the individual who is the subject of the 9 information, or 10 (3) a natural person acting in a personal capacity 11 rather than in a business or professional capacity. 12 (L) "Insurance institution" means any corporation, 13 association, partnership, reciprocal exchange, inter-insurer, 14 Lloyd's insurer, fraternal benefit society or other person 15 engaged in the business of insurance, health maintenance 16 organizations as defined in Section 2 of the "Health 17 Maintenance Organization Act ", medical service plans as 18 defined in Section 2 of "the Medical Service Plan Act ", 19 hospital service corporation under "the Nonprofit Health Care 20 Service Plan Act ", voluntary health services plans as defined 21 in Section 2 of "the Voluntary Health Services Plans Act ", 22 vision service plans as defined in Section 2 of-"The Vision23 Service Plan Act",dental service plans as defined in Section 24 4 of "the Dental Service Plan Act ", and pharmaceutical 25 service plans as defined in Section 4 of "the Pharmaceutical 26 Service Plan Act ". "Insurance institution" shall not include 27 agents or insurance-support organizations. 28 (M) "Insurance-support organization" means: 29 (1) any person who regularly engages, in whole or in 30 part, in the practice of assembling or collecting 31 information about natural persons for the primary purpose 32 of providing the information to an insurance institution 33 or agent for insurance transactions, including: 34 (a) the furnishing of consumer reports or SB193 Enrolled -25- LRB9000079DPcd 1 investigative consumer reports to an insurance 2 institution or agent for use in connection with an 3 insurance transaction, or 4 (b) the collection of personal information 5 from insurance institutions, agents or other 6 insurance-support organizations for the purpose of 7 detecting or preventing fraud, material 8 misrepresentation or material nondisclosure in 9 connection with insurance underwriting or insurance 10 claim activity. 11 (2) Notwithstanding paragraph (1) above, the 12 following persons shall not be considered 13 "insurance-support organizations" for purposes of this 14 Article: agents, government institutions, insurance 15 institutions, medical care institutions and medical 16 professionals. 17 (N) "Insurance transaction" means any transaction 18 involving insurance primarily for personal, family or 19 household needs rather than business or professional needs 20 which entails: 21 (1) the determination of an individual's 22 eligibility for an insurance coverage, benefit or 23 payment, or 24 (2) the servicing of an insurance application, 25 policy, contract or certificate. 26 (O) "Investigative consumer report" means a consumer 27 report or portion thereof in which information about a 28 natural person's character, general reputation, personal 29 characteristics or mode of living is obtained through 30 personal interviews with the person's neighbors, friends, 31 associates, acquaintances or others who may have knowledge 32 concerning such items of information. 33 (P) "Medical-care institution" means any facility or 34 institution that is licensed to provide health care services SB193 Enrolled -26- LRB9000079DPcd 1 to natural persons, including but not limited to: hospitals, 2 skilled nursing facilities, home-health agencies, medical 3 clinics, rehabilitation agencies and public-health agencies 4 and health-maintenance organizations. 5 (Q) "Medical professional" means any person licensed or 6 certified to provide health care services to natural 7 persons, including but not limited to, a physician, dentist, 8 nurse, optometrist, chiropractor, pharmacist, physical or 9 occupational therapist, psychiatric social worker, speech 10 therapist, clinical dietitian or clinical psychologist. 11 (R) "Medical-record information" means personal 12 information which: 13 (1) relates to an individual's physical or mental 14 condition, medical history or medical treatment, and 15 (2) is obtained from a medical professional or 16 medical-care institution, from the individual, or from 17 the individual's spouse, parent or legal guardian. 18 (S) "Person" means any natural person, corporation, 19 association, partnership or other legal entity. 20 (T) "Personal information" means any individually 21 identifiable information gathered in connection with an 22 insurance transaction from which judgments can be made about 23 an individual's character, habits, avocations, finances, 24 occupation, general reputation, credit, health or any other 25 personal characteristics. "Personal information" includes an 26 individual's name and address and "medical-record 27 information" but does not include "privileged information". 28 (U) "Policyholder" means any person who: 29 (1) in the case of individual property or casualty 30 insurance, is a present named insured; 31 (2) in the case of individual life, health or 32 disability insurance, is a present policyowner; or 33 (3) in the case of group insurance which is 34 individually underwritten, is a present group SB193 Enrolled -27- LRB9000079DPcd 1 certificateholder. 2 (V) "Pretext interview" means an interview whereby a 3 person, in an attempt to obtain information about a natural 4 person, performs one or more of the following acts: 5 (1) pretends to be someone he or she is not, 6 (2) pretends to represent a person he or she is not 7 in fact representing, 8 (3) misrepresents the true purpose of the 9 interview, or 10 (4) refuses to identify himself or herself upon 11 request. 12 (W) "Privileged information" means any individually 13 identifiable information that: (1) relates to a claim for 14 insurance benefits or a civil or criminal proceeding 15 involving an individual, and (2) is collected in connection 16 with or in reasonable anticipation of a claim for insurance 17 benefits or civil or criminal proceeding involving an 18 individual; provided, however, information otherwise meeting 19 the requirements of this subsection shall nevertheless be 20 considered "personal information" under this Article if it is 21 disclosed in violation of Section 1014 of this Article. 22 (X) "Residual market mechanism" means an association, 23 organization or other entity described in Article XXXIII of 24 this Act, or Section 7-501 of "The Illinois Vehicle Code ". 25 (Y) "Termination of insurance coverage" or "termination 26 of an insurance policy" means either a cancellation or 27 nonrenewal of an insurance policy, in whole or in part, for 28 any reason other than the failure to pay a premium as 29 required by the policy. 30 (Z) "Unauthorized insurer" means an insurance institution 31 that has not been granted a certificate of authority by the 32 Director to transact the business of insurance in this State. 33 (Source: P.A. 82-108.) SB193 Enrolled -28- LRB9000079DPcd 1 Section 10. The Health Maintenance Organization Act is 2 amended by changing Sections 1-2, 5-3, and 5-6 as follows: 3 (215 ILCS 125/1-2) (from Ch. 111 1/2, par. 1402) 4 Sec. 1-2. Definitions. As used in this Act, unless the 5 context otherwise requires, the following terms shall have 6 the meanings ascribed to them: 7 (1) "Advertisement" means any printed or published 8 material, audiovisual material and descriptive literature of 9 the health care plan used in direct mail, newspapers, 10 magazines, radio scripts, television scripts, billboards and 11 similar displays; and any descriptive literature or sales 12 aids of all kinds disseminated by a representative of the 13 health care plan for presentation to the public including, 14 but not limited to, circulars, leaflets, booklets, 15 depictions, illustrations, form letters and prepared sales 16 presentations. 17 (2) "Director" means the Director of Insurance. 18 (3) "Basic health care services" means emergency care, 19 and inpatient hospital and physician care, outpatient medical 20 services, mental health services and care for alcohol and 21 drug abuse, including any reasonable deductibles and 22 co-payments, all of which are subject to such limitations as 23 are determined by the Director pursuant to rule. 24 (4) "Enrollee" means an individual who has been enrolled 25 in a health care plan. 26 (5) "Evidence of coverage" means any certificate, 27 agreement, or contract issued to an enrollee setting out the 28 coverage to which he is entitled in exchange for a per capita 29 prepaid sum. 30 (6) "Group contract" means a contract for health care 31 services which by its terms limits eligibility to members of 32 a specified group. 33 (7) "Health care plan" means any arrangement whereby any SB193 Enrolled -29- LRB9000079DPcd 1 organization undertakes to provide or arrange for and pay for 2 or reimburse the cost of basic health care services from 3 providers selected by the Health Maintenance Organization and 4 such arrangement consists of arranging for or the provision 5 of such health care services, as distinguished from mere 6 indemnification against the cost of such services, except as 7 otherwise authorized by Section 2-3 of this Act, on a per 8 capita prepaid basis, through insurance or otherwise. A 9 "health care plan" also includes any arrangement whereby an 10 organization undertakes to provide or arrange for or pay for 11 or reimburse the cost of any health care service for persons 12 who are enrolled in the integrated health care program 13 established under Section 5-16.3 of the Illinois Public Aid 14 Code through providers selected by the organization and the 15 arrangement consists of making provision for the delivery of 16 health care services, as distinguished from mere 17 indemnification. Nothing in this definition, however, 18 affects the total medical services available to persons 19 eligible for medical assistance under the Illinois Public Aid 20 Code. 21 (8) "Health care services" means any services included 22 in the furnishing to any individual of medical or dental 23 care, or the hospitalization or incident to the furnishing of 24 such care or hospitalization as well as the furnishing to any 25 person of any and all other services for the purpose of 26 preventing, alleviating, curing or healing human illness or 27 injury. 28 (9) "Health Maintenance Organization" means any 29 organization formed under the laws of this or another state 30 to provide or arrange for one or more health care plans under 31 a system which causes any part of the risk of health care 32 delivery to be borne by the organization or its providers. 33 (10) "Net worth" means admitted assets, as defined in 34 Section 1-3 of this Act, minus liabilities. SB193 Enrolled -30- LRB9000079DPcd 1 (11) "Organization" means any insurance company, or a 2 nonprofit corporation authorized under the Medical Service 3 Plan Act, the Dental Service Plan Act, the Vision Service4 Plan Act,the Pharmaceutical Service Plan Act, the Voluntary 5 Health Services Plans Act or the Non-profit Health Care 6 Service Plan Act, or a corporation organized under the laws 7 of this or another state for the purpose of operating one or 8 more health care plans and doing no business other than that 9 of a Health Maintenance Organization or an insurance company. 10 Organization shall also mean the University of Illinois 11 Hospital as defined in the University of Illinois Hospital 12 Act. 13 (12) "Provider" means any physician, hospital facility, 14 or other person which is licensed or otherwise authorized to 15 furnish health care services and also includes any other 16 entity that arranges for the delivery or furnishing of health 17 care service. 18 (13) "Producer" means a person directly or indirectly 19 associated with a health care plan who engages in 20 solicitation or enrollment. 21 (14) "Per capita prepaid" means a basis of prepayment by 22 which a fixed amount of money is prepaid per individual or 23 any other enrollment unit to the Health Maintenance 24 Organization or for health care services which are provided 25 during a definite time period regardless of the frequency or 26 extent of the services rendered by the Health Maintenance 27 Organization, except for copayments and deductibles and 28 except as provided in subsection (f) of Section 5-3 of this 29 Act. 30 (15) "Subscriber" means a person who has entered into a 31 contractual relationship with the Health Maintenance 32 Organization for the provision of or arrangement of at least 33 basic health care services to the beneficiaries of such 34 contract. SB193 Enrolled -31- LRB9000079DPcd 1 (Source: P.A. 88-554, eff. 7-26-94; 89-90, eff. 6-30-95.) 2 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2) 3 Sec. 5-3. Insurance Code provisions. 4 (a) Health Maintenance Organizations shall be subject to 5 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2, 6 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 7 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 367i, 401, 401.1, 8 402, 403, 403A, 408, 408.2, and 412, paragraph (c) of 9 subsection (2) of Section 367, and Articles VIII 1/2, XII, 10 XII 1/2, XIII, XIII 1/2, and XXVI of the Illinois Insurance 11 Code. 12 (b) For purposes of the Illinois Insurance Code, except 13 for Articles XIII and XIII 1/2, Health Maintenance 14 Organizations in the following categories are deemed to be 15 "domestic companies": 16 (1) a corporation authorized under the Medical 17 Service Plan Act, the Dental Service Plan Act, the Vision18 Service Plan Act,the Pharmaceutical Service Plan Act, 19 the Voluntary Health Services Plan Act, or the Nonprofit 20 Health Care Service Plan Act; 21 (2) a corporation organized under the laws of this 22 State; or 23 (3) a corporation organized under the laws of 24 another state, 30% or more of the enrollees of which are 25 residents of this State, except a corporation subject to 26 substantially the same requirements in its state of 27 organization as is a "domestic company" under Article 28 VIII 1/2 of the Illinois Insurance Code. 29 (c) In considering the merger, consolidation, or other 30 acquisition of control of a Health Maintenance Organization 31 pursuant to Article VIII 1/2 of the Illinois Insurance Code, 32 (1) the Director shall give primary consideration 33 to the continuation of benefits to enrollees and the SB193 Enrolled -32- LRB9000079DPcd 1 financial conditions of the acquired Health Maintenance 2 Organization after the merger, consolidation, or other 3 acquisition of control takes effect; 4 (2)(i) the criteria specified in subsection (1)(b) 5 of Section 131.8 of the Illinois Insurance Code shall not 6 apply and (ii) the Director, in making his determination 7 with respect to the merger, consolidation, or other 8 acquisition of control, need not take into account the 9 effect on competition of the merger, consolidation, or 10 other acquisition of control; 11 (3) the Director shall have the power to require 12 the following information: 13 (A) certification by an independent actuary of 14 the adequacy of the reserves of the Health 15 Maintenance Organization sought to be acquired; 16 (B) pro forma financial statements reflecting 17 the combined balance sheets of the acquiring company 18 and the Health Maintenance Organization sought to be 19 acquired as of the end of the preceding year and as 20 of a date 90 days prior to the acquisition, as well 21 as pro forma financial statements reflecting 22 projected combined operation for a period of 2 23 years; 24 (C) a pro forma business plan detailing an 25 acquiring party's plans with respect to the 26 operation of the Health Maintenance Organization 27 sought to be acquired for a period of not less than 28 3 years; and 29 (D) such other information as the Director 30 shall require. 31 (d) The provisions of Article VIII 1/2 of the Illinois 32 Insurance Code and this Section 5-3 shall apply to the sale 33 by any health maintenance organization of greater than 10% of 34 its enrollee population (including without limitation the SB193 Enrolled -33- LRB9000079DPcd 1 health maintenance organization's right, title, and interest 2 in and to its health care certificates). 3 (e) In considering any management contract or service 4 agreement subject to Section 141.1 of the Illinois Insurance 5 Code, the Director (i) shall, in addition to the criteria 6 specified in Section 141.2 of the Illinois Insurance Code, 7 take into account the effect of the management contract or 8 service agreement on the continuation of benefits to 9 enrollees and the financial condition of the health 10 maintenance organization to be managed or serviced, and (ii) 11 need not take into account the effect of the management 12 contract or service agreement on competition. 13 (f) Except for small employer groups as defined in the 14 Small Employer Rating, Renewability and Portability Health 15 Insurance Act and except for medicare supplement policies as 16 defined in Section 363 of the Illinois Insurance Code, a 17 Health Maintenance Organization may by contract agree with a 18 group or other enrollment unit to effect refunds or charge 19 additional premiums under the following terms and conditions: 20 (i) the amount of, and other terms and conditions 21 with respect to, the refund or additional premium are set 22 forth in the group or enrollment unit contract agreed in 23 advance of the period for which a refund is to be paid or 24 additional premium is to be charged (which period shall 25 not be less than one year); and 26 (ii) the amount of the refund or additional premium 27 shall not exceed 20% of the Health Maintenance 28 Organization's profitable or unprofitable experience with 29 respect to the group or other enrollment unit for the 30 period (and, for purposes of a refund or additional 31 premium, the profitable or unprofitable experience shall 32 be calculated taking into account a pro rata share of the 33 Health Maintenance Organization's administrative and 34 marketing expenses, but shall not include any refund to SB193 Enrolled -34- LRB9000079DPcd 1 be made or additional premium to be paid pursuant to this 2 subsection (f)). The Health Maintenance Organization and 3 the group or enrollment unit may agree that the 4 profitable or unprofitable experience may be calculated 5 taking into account the refund period and the immediately 6 preceding 2 plan years. 7 The Health Maintenance Organization shall include a 8 statement in the evidence of coverage issued to each enrollee 9 describing the possibility of a refund or additional premium, 10 and upon request of any group or enrollment unit, provide to 11 the group or enrollment unit a description of the method used 12 to calculate (1) the Health Maintenance Organization's 13 profitable experience with respect to the group or enrollment 14 unit and the resulting refund to the group or enrollment unit 15 or (2) the Health Maintenance Organization's unprofitable 16 experience with respect to the group or enrollment unit and 17 the resulting additional premium to be paid by the group or 18 enrollment unit. 19 In no event shall the Illinois Health Maintenance 20 Organization Guaranty Association be liable to pay any 21 contractual obligation of an insolvent organization to pay 22 any refund authorized under this Section. 23 (Source: P.A. 88-313; 89-90, eff. 6-30-95.) 24 (215 ILCS 125/5-6) (from Ch. 111 1/2, par. 1414) 25 Sec. 5-6. Supervision of rehabilitation, liquidation or 26 conservation by the Director. 27 (a) For purposes of the rehabilitation, liquidation or 28 conservation of a health maintenance organization, the 29 operation of a health maintenance organization in this State 30 constitutes a form of insurance protection which should be 31 governed by the same provisions governing the rehabilitation, 32 liquidation or conservation of insurance companies. Any 33 rehabilitation, liquidation or conservation of a Health SB193 Enrolled -35- LRB9000079DPcd 1 Maintenance Organization shall be based upon the grounds set 2 forth in and subject to the provisions of the laws of this 3 State regarding the rehabilitation, liquidation, or 4 conservation of an insurance company and shall be conducted 5 under the supervision of the Director. Insolvency, as a 6 ground for rehabilitation, liquidation, or conservation of a 7 Health Maintenance Organization, shall be recognized when a 8 Health Maintenance Organization cannot be expected to satisfy 9 its financial obligations when such obligations are to become 10 due or when the Health Maintenance Organization has neglected 11 to correct within the time prescribed by subsection (c) of 12 Section 2-4, a deficiency occurring due to such 13 organization's prescribed minimum net worth or special 14 contingent reserve being impaired. For purpose of 15 determining the priority of distribution of general assets, 16 claims of enrollees and enrollees' beneficiaries shall have 17 the same priority as established by Section 205 of the 18 Illinois Insurance Code for policyholders and beneficiaries 19 of insureds of insurance companies. If an enrollee is liable 20 to any provider for services provided pursuant to and covered 21 by the health care plan, that liability shall have the status 22 of an enrollee claim for distribution of general assets. 23 Any provider who is obligated by statute or agreement to 24 hold enrollees harmless from liability for services provided 25 pursuant to and covered by a health care plan shall have a 26 priority of distribution of the general assets immediately 27 following that of enrollees and enrollees' beneficiaries as 28 described herein, and immediately preceding the priority of 29 distribution described in paragraph (e) of subsection (1) of 30 Section 205 of the Illinois Insurance Code. 31 (b) For purposes of Articles XIII and XIII-1/2 of the 32 Illinois Insurance Code, organizations in the following 33 categories shall be deemed to be a "domestic company" and a 34 "domiciliary company": SB193 Enrolled -36- LRB9000079DPcd 1 (i) a corporation authorized under the Medical 2 Service Plan Act, the Dental Service Plan Act, the Vision3 Service Plan Act,the Pharmaceutical Service Plan Act, 4 the Voluntary Health Services Plans Act or the Non-Profit 5 Health Care Service Plan Act; 6 (ii) a corporation organized under the laws of this 7 State; or 8 (iii) a corporation organized under the laws of 9 another state, 20% or more of the enrollees of which are 10 residents of this State, except where such a corporation 11 is, in its state of incorporation, subject to 12 rehabilitation, liquidation and conservation under the 13 laws relating to insurance companies. 14 (c) In the event of the insolvency of a health 15 maintenance organization, no enrollee of such organization 16 shall be liable to any provider for medical services rendered 17 by such provider, except for applicable co-payments or 18 deductibles for covered services or fees for services not 19 covered by the health maintenance organization, with respect 20 to the amounts such provider is not paid by the Association 21 pursuant to the provisions of Section 6-8 (8)(b) and (c). 22 No provider, whether or not the provider is obligated by 23 statute or agreement to hold enrollees harmless from 24 liability, shall seek to recover any such amount from any 25 enrollee until the Association has made a final determination 26 of its liability (or the resolution of any dispute or 27 litigation resulting therefrom) with respect to the matters 28 specified in such provisions. In the event that the provider 29 seeks to recover such amounts before the Association's final 30 determination of its liability (or the resolution of any 31 dispute or litigation resulting therefrom), the provider 32 shall be liable for all reasonable costs and attorney fees 33 incurred by the Director or the Association in enforcing this 34 provision or any court orders related hereto. SB193 Enrolled -37- LRB9000079DPcd 1 (Source: P.A. 88-297; 89-206, eff. 7-21-95.) 2 (215 ILCS 160/Act rep.) 3 Section 15. The Vision Service Plan Act is repealed. 4 Section 99. Effective date. This Act takes effect upon 5 becoming law.
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