HB1348enr 91st General Assembly


91_HB1348enr

 
HB1348 Enrolled                                LRB9102806JSpc

 1        AN ACT concerning insurers, amending named Acts.

 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 3.1, 35A-5, 35A-10, 35A-15, 35A-20, 35A-30,
 6    35A-55, 35A-60, 245,  356h,  356v,  364,  367,  and  367i  as
 7    follows:

 8        (215 ILCS 5/3.1) (from Ch. 73, par. 615.1)
 9        Sec.  3.1.  Definitions  of  admitted  assets.  "Admitted
10    Assets" includes the investments authorized or  permitted  by
11    this  Code,  the credit for reinsurance allowed by this Code,
12    and in addition thereto, only the following:
13        (a)  Petty cash and other cash  funds  in  the  company's
14    principal or any official branch office and under the control
15    of the company.
16        (b)  Immediately  withdrawable funds on deposit in demand
17    accounts, in a bank or trust company as  defined  in  Section
18    126.2MMM(1)  or  like  funds actually in the principal or any
19    official branch office at statement date, and, in transit  to
20    such  bank  or  trust  company  with authentic deposit credit
21    given prior to the  close  of  business  on  the  fifth  bank
22    working day following the statement date.
23        (c)  The  amount  fairly estimated as recoverable on cash
24    deposited in a closed bank or trust  company,  if  qualifying
25    under  the provisions of this Section prior to the suspension
26    of such bank or trust company.
27        (d)  Bills  and  accounts  receivable  collateralized  by
28    securities of the kind in which the company is authorized  to
29    invest.
30        (e)  Bills  receivable  not past due covering uncollected
31    premiums taken by a company in the  transaction  of  business
 
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 1    described in Class 3 of Section 4, in an amount not to exceed
 2    the  unearned  premium  reserve  liability calculated on each
 3    respective policy.
 4        (f)  For in force insurance coverages  written  by  fire,
 5    casualty,  and reciprocal companies, excluding group accident
 6    and health business, premium deposits,  gross  premiums,  and
 7    agents'  balances  (net of related commissions) not more than
 8    90 days past due; installments booked but  deferred  and  not
 9    yet  due  (net  of  related  commissions),  provided that all
10    amounts having become due from the insured are not more  than
11    90  days past due; and audit and retrospective premium to the
12    extent permitted  to  be  admitted  pursuant  to  the  Annual
13    Statement  Instructions  and  the  Accounting  Practices  and
14    Procedures   Manual   for   Property  and  Casualty  Insurers
15    published  by   the   National   Association   of   Insurance
16    Commissioners,  unless  the  Director  prescribes  otherwise.
17    However,  audit  and  retrospective  premiums  that represent
18    anticipated additional premiums on  policies  for  which  the
19    policy period has not yet expired may not be admitted.
20        (g)  Net amount of uncollected premiums on group life and
21    group  accident  and  health  policies, not more than 90 days
22    past due.
23        (h)  Due and uncollected accident and health premiums  on
24    in  force  individual policies, on insurance written by Class
25    1, Section 4  companies,  less  commissions  due  thereon  to
26    agents;  not  exceeding  in the aggregate the premium reserve
27    liability computed on such business.
28        (i)  Premium notes, policy loans and liens, and  the  net
29    amount  of  uncollected  and  deferred premiums on individual
30    life insurance policies, not in excess of the  liability  for
31    the  legal  reserves  specified in Section 223 or 281 of this
32    Code on such individual life insurance policies.
33        (j)  Premium and assessment notes, certificate loans  and
34    liens,  and  the  gross  amount  less loading, of premiums or
 
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 1    assessments actually collected by subordinate lodges not  yet
 2    turned over to the Supreme Lodge on individual life insurance
 3    certificates  not  in  excess  of the liability for the legal
 4    reserves  specified  in  Section  297.1  or  305.1  on   such
 5    individual life insurance certificates.
 6        (k)  Mortuary  assessments  due  and  unpaid on last call
 7    made within 60 days, on insurance  in  force  and  for  which
 8    notices  have been issued, not in excess of the liability for
 9    the unpaid claims which are to be paid by the proceeds.
10        (l)  Amounts  fairly  estimated   as   recoverable   from
11    advances made on contracts under surety bonds.
12        (m)  Amounts    receivable   from   insurance   companies
13    authorized to do business in this State and from associations
14    or bureaus owned or controlled by  5  or  more  separate  and
15    nonaffiliated,   by   ownership   or   management,  insurance
16    companies of which  a  majority  thereof  are  authorized  to
17    transact  business  in  this  State.   The  amount  of  those
18    receivables  allowed  as  admitted  assets may not exceed the
19    lesser of 5% of the company's total admitted assets or 10% of
20    the company's  surplus  as  regards  policyholders.   Amounts
21    receivable   from  insurance  companies  or  associations  or
22    bureaus not meeting the preceding standards of  this  Section
23    if collateralized in the manner prescribed by Section 173.1.
24        (n)  Tax refunds due from the United States or any state,
25    the Government of Canada or any province, or the Commonwealth
26    of  Puerto  Rico or amounts due to a subsidiary from a parent
27    under a tax allocation agreement  that  conforms  with  rules
28    adopted by the Director.
29        (o)  The interest accrued on mortgage loans conforming to
30    this Code, not exceeding an aggregate amount on an individual
31    loan of one year's total due and accrued interest.
32        (p)  The  rents  accrued and owing to the company on real
33    and personal property, directly or  beneficially  owned,  not
34    exceeding  on  each  individual  property  the  amount of one
 
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 1    year's total due and accrued rent.
 2        (q)  Interest  or  rents  accrued  on  conditional  sales
 3    agreements, security interests, chattel mortgages and real or
 4    personal property under  lease  to  other  corporations,  all
 5    conforming  to this Code, and not exceeding on any individual
 6    investment, the amount of one year's total  due  and  accrued
 7    interest or rent.
 8        (r)  The  fixed  and required interest due and accrued on
 9    bonds and other like evidences of indebtedness, conforming to
10    this Code, and not in default.
11        (s)  Dividends receivable on shares of  stock  conforming
12    to  this  Code;  provided  that  the  market  price taken for
13    valuation  purposes  does  not  include  the  value  of   the
14    dividend.
15        (t)  The  interest  or dividends due and payable, but not
16    credited, on deposits in banks  and  trust  companies  or  on
17    accounts with savings and loan associations.
18        (u)  Interest accrued on secured loans conforming to this
19    Code,  not exceeding the amount of one year's interest on any
20    loan.
21        (v)  Interest accrued on tax anticipation warrants.
22        (w)  The value of electronic computer or data  processing
23    machines  or systems purchased for use in connection with the
24    business of the company, if such machines or systems whenever
25    purchased have an aggregate original cost to the  company  of
26    at  least  $75,000.  The  amortized value of such machines or
27    systems at the end of any calendar year shall not be  greater
28    than  the original purchase price less 10% for each completed
29    year, or pro rata portion for  any  fraction  thereof,  after
30    such  purchase,  with  the  total  admissible  value  at  any
31    statement date to be limited to an amount not exceeding 2% of
32    the company's admitted assets at such statement date.
33        (1)  (x)  Amounts,  other  than  premium, receivable from
34    affiliates, not outstanding  for  more  than  3  months,  and
 
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 1    arising  under,  management  contracts  or service agreements
 2    which meet the requirements of Section 141.1 of the  Illinois
 3    Insurance  Code  to  the extent that the affiliate has liquid
 4    assets sufficient to pay the balance.  The  amount  of  those
 5    receivables  included  in  admitted assets may not exceed the
 6    lesser of 5% of the company's admitted assets or 10%  of  the
 7    company's  surplus as regards policyholders.  For purposes of
 8    this subsection, "affiliate" has the meaning given that  term
 9    in Article VIII 1/2 of the Illinois Insurance Code.
10        (2)  Amounts permitted under Section 136.
11        (y)  Property  and  liability  guaranty  fund or guaranty
12    association assessments paid in any state, but  only  to  the
13    extent  it  is  probable  the  company will be able to offset
14    those assessments against present or future premium taxes  or
15    income  taxes  payable  in the state in which the assessments
16    were paid.   The  amount  of  those  assessments  allowed  as
17    admitted  assets  may  not  exceed  the  lesser  of 5% of the
18    company's total admitted  assets  or  10%  of  the  company's
19    surplus  as regards policyholders.  The Director may disallow
20    any such assessment as an admitted asset  to  the  extent  he
21    determines  a  company  is  unlikely  to realize a present or
22    future premium tax or income tax offset as a  result  of  the
23    assessment.
24    (Source:  P.A.  89-97,  eff.  7-7-95;  89-669,  eff.  1-1-97;
25    90-418, eff. 8-15-97.)

26        (215 ILCS 5/35A-5)
27        Sec.  35A-5.  Definitions.   As used in this Article, the
28    terms listed in this Section have the meaning given herein.
29        "Adjusted RBC Report" means an RBC Report that  has  been
30    adjusted  by  the  Director in accordance with subsection (f)
31    (e) of Section 35A-10.
32        "Authorized  control  level   RBC"   means   the   number
33    determined under the risk-based capital formula in accordance
 
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 1    with the RBC Instructions.
 2        "Company  action  level RBC" means the product of 2.0 and
 3    the insurer's authorized control level RBC.
 4        "Corrective Order" means an order issued by the  Director
 5    in  accordance  with  Article  XII  1/2 specifying corrective
 6    actions that the Director determines are required.
 7        "Domestic insurer" means any insurance company  domiciled
 8    in this State under Article II, Article III, Article III 1/2,
 9    or  Article  IV  or  a health organization as defined by this
10    Article,  except  this  shall  include  only   those   health
11    maintenance  organizations  that  are "domestic companies" in
12    accordance  with  Section  5-3  of  the  Health   Maintenance
13    Organization  Act  and  only  those  limited  health  service
14    organizations  that  are  "domestic  companies" in accordance
15    with Section 4003 of the Limited Health Service  Organization
16    Act.
17        "Foreign  insurer"  means  any foreign or alien insurance
18    company licensed under Article VI that is  not  domiciled  in
19    this  State  and  any health maintenance organization that is
20    not a "domestic company" in accordance with  Section  5-3  of
21    the  Health  Maintenance  Organization  Act  and  any limited
22    health service organization that is not a "domestic  company"
23    in accordance with Section 4003 of the Limited Health Service
24    Organization Act.
25        "Health  organization"  means an entity operating under a
26    certificate  of  authority  issued  pursuant  to  the  Health
27    Maintenance Organization Act, the Dental  Service  Plan  Act,
28    the Limited Health Service Organization Act, or the Voluntary
29    Health  Services  Plans  Act,  unless the entity is otherwise
30    defined as a "life,  health,  or  life  and  health  insurer"
31    pursuant to this Act.
32        "Life,  health,  or  life  and  health  insurer" means an
33    insurance company that has authority to transact the kinds of
34    insurance described in either or both clause  (a)  or  clause
 
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 1    (b)  of  Class  1  of  Section  4  or a licensed property and
 2    casualty insurer writing only accident and health insurance.
 3        "Mandatory control level RBC" means the product  of  0.70
 4    and the insurer's authorized control level RBC.
 5        "NAIC"   means  the  National  Association  of  Insurance
 6    Commissioners.
 7        "Negative trend" means, with respect to a  life,  health,
 8    or life and health insurer, a negative trend over a period of
 9    time,  as  determined  in  accordance  with  the  trend  test
10    calculation included in the RBC Instructions.
11        "Property   and  casualty  insurer"  means  an  insurance
12    company that has authority to transact the kinds of insurance
13    in either or both Class 2 or  Class  3  of  Section  4  or  a
14    licensed  insurer  writing  only  insurance  authorized under
15    clause (c) of Class 1, but does not include monoline mortgage
16    guaranty insurers, financial  guaranty  insurers,  and  title
17    insurers.
18        "RBC" means risk-based capital.
19        "RBC   Instructions"   means  the  RBC  Report  including
20    risk-based capital instructions adopted by the NAIC as  those
21    instructions  may be amended by the NAIC from time to time in
22    accordance with the procedures adopted by the NAIC.
23        "RBC level" means an insurer's company action level  RBC,
24    regulatory action level RBC, authorized control level RBC, or
25    mandatory control level RBC.
26        "RBC   Plan"   means   a   comprehensive  financial  plan
27    containing  the  elements  specified  in  subsection  (b)  of
28    Section 35A-15.
29        "RBC Report" means the risk-based capital report required
30    under Section 35A-10.
31        "Receivership"  means  conservation,  rehabilitation,  or
32    liquidation under Article XIII.
33        "Regulatory action level RBC" means the  product  of  1.5
34    and the insurer's authorized control level RBC.
 
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 1        "Revised  RBC  Plan"  means  an  RBC Plan rejected by the
 2    Director and revised by  the  insurer  with  or  without  the
 3    Director's recommendations.
 4        "Total   adjusted  capital"  means  the  sum  of  (1)  an
 5    insurer's statutory capital and surplus  and  (2)  any  other
 6    items that the RBC Instructions may provide.
 7    (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)

 8        (215 ILCS 5/35A-10)
 9        Sec. 35A-10.  RBC Reports.
10        (a)  On or before each March 1 (the "filing date"), every
11    domestic  insurer  shall prepare and submit to the Director a
12    report of its RBC levels  as  of  the  end  of  the  previous
13    calendar  year  in  the  form  and containing the information
14    required by the RBC  Instructions.   Every  domestic  insurer
15    shall  also  file  its RBC Report with the NAIC in accordance
16    with the RBC Instructions.   In  addition,  if  requested  in
17    writing  by  the  chief  insurance regulatory official of any
18    state in  which  it  is  authorized  to  do  business,  every
19    domestic insurer shall file its RBC Report with that official
20    no later than the later of 15 days after the insurer receives
21    the written request or the filing date.
22        (b)  A  life,  health,  or  life and health insurer's RBC
23    shall be determined under the formula set forth  in  the  RBC
24    Instructions.   The  formula shall take into account (and may
25    adjust for the covariance between):
26             (1)  the risk with respect to the insurer's assets;
27             (2)  the risk of adverse insurance  experience  with
28        respect to the insurer's liabilities and obligations;
29             (3)  the  interest  rate  risk  with  respect to the
30        insurer's business; and
31             (4)  all other business  risks  and  other  relevant
32        risks set forth in the RBC Instructions.
33    These  risks shall be determined in each case by applying the
 
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 1    factors in the manner set forth in the RBC Instructions.
 2        (c)  A property  and  casualty  insurer's  RBC  shall  be
 3    determined  in  accordance  with the formula set forth in the
 4    RBC Instructions.  The formula shall take into  account  (and
 5    may adjust for the covariance between):
 6             (1)  asset risk;
 7             (2)  credit risk;
 8             (3)  underwriting risk; and
 9             (4)  all  other  business  risks  and other relevant
10        risks set forth in the RBC Instructions.
11    These risks shall be determined in each case by applying  the
12    factors in the manner set forth in the RBC Instructions.
13        (d)  A  health  organization's RBC shall be determined in
14    accordance  with  the  formula   set   forth   in   the   RBC
15    Instructions.   The  formula  shall  take  the following into
16    account (and may adjust for the covariance between):
17             (1)  asset risk;
18             (2)  credit risk;
19             (3)  underwriting risk; and
20             (4)  all other business  risks  and  other  relevant
21        risks set forth in the RBC Instructions.
22    These  risks shall be determined in each case by applying the
23    factors in the manner set forth in the RBC Instructions.
24        (e) (d)  An excess of capital over the amount produced by
25    the risk-based capital requirements contained  in  this  Code
26    and  the  formulas, schedules, and instructions referenced in
27    this  Code  is  desirable  in  the  business  of   insurance.
28    Accordingly,  insurers  should seek to maintain capital above
29    the RBC levels required by this Code.  Additional capital  is
30    used and useful in the insurance business and helps to secure
31    an  insurer  against various risks inherent in, or affecting,
32    the business of insurance  and  not  accounted  for  or  only
33    partially  measured  by  the  risk-based capital requirements
34    contained in this Code.
 
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 1        (f) (e)  If a domestic insurer files an RBC Report  that,
 2    in  the judgment of the Director, is inaccurate, the Director
 3    shall adjust the RBC Report to  correct  the  inaccuracy  and
 4    shall notify the insurer of the adjustment.  The notice shall
 5    contain a statement of the reason for the adjustment.
 6    (Source: P.A. 88-364; 89-97, eff. 7-7-95.)

 7        (215 ILCS 5/35A-15)
 8        Sec. 35A-15.  Company action level event.
 9        (a)  A  company  action  level  event  means  any  of the
10    following events:
11             (1)  The filing of an RBC Report by an insurer  that
12        indicates that:
13                  (A)  the  insurer's  total  adjusted capital is
14             greater than or equal to its regulatory action level
15             RBC, but less than its company action level RBC; or
16                  (B)  The insurer, if a life,  health,  or  life
17             and  health insurer, has total adjusted capital that
18             is greater than or equal to its company action level
19             RBC, but less than the  product  of  its  authorized
20             control level RBC and 2.5 and has a negative trend.
21             (2)  The notification by the Director to the insurer
22        of  an  Adjusted  RBC  Report  that  indicates  an  event
23        described in paragraph (1), provided the insurer does not
24        challenge the Adjusted RBC Report under Section 35A-35.
25             (3)  The notification by the Director to the insurer
26        that  the  Director  has,  after  a hearing, rejected the
27        insurer's challenge under Section 35A-35 to  an  Adjusted
28        RBC   Report   that  indicates  the  event  described  in
29        paragraph (1).
30        (b)  In the event of a company action  level  event,  the
31    insurer  shall prepare and submit to the Director an RBC Plan
32    that does all of the following:
33             (1)  Identifies the conditions  that  contribute  to
 
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 1        the company action level event.
 2             (2)  Contains  proposed  corrective actions that the
 3        insurer intends to take and that are expected  to  result
 4        in  the  elimination of the company action level event. A
 5        health organization  is  not  prohibited  from  proposing
 6        recognition of a parental guarantee or a letter of credit
 7        to  eliminate the company action level event; however the
 8        Director shall, at his discretion, determine  whether  or
 9        the  extent  to  which the proposed parental guarantee or
10        letter of credit is an acceptable part of a  satisfactory
11        RBC Plan or Revised RBC Plan.
12             (3)  Provides projections of the insurer's financial
13        results in the current year and at least the 4 succeeding
14        years, both in the absence of proposed corrective actions
15        and  giving  effect  to  the proposed corrective actions,
16        including projections of statutory operating income,  net
17        income,  capital,  and surplus.  The projections for both
18        new and renewal business may include separate projections
19        for each major line of business and  separately  identify
20        each significant income, expense, and benefit component.
21             (4)  Identifies  the  key  assumptions affecting the
22        insurer's  projections  and  the   sensitivity   of   the
23        projections to the assumptions.
24             (5)  Identifies   the   quality   of,  and  problems
25        associated with, the insurer's  business  including,  but
26        not  limited  to, its assets, anticipated business growth
27        and associated surplus strain, extraordinary exposure  to
28        risk, mix of business, and use of reinsurance, if any, in
29        each case.
30        (c)  The  insurer  shall  submit  the  RBC  Plan  to  the
31    Director  within 45 days after the company action level event
32    occurs  or  within  45  days  after the Director notifies the
33    insurer that the Director has, after a hearing, rejected  its
34    challenge under Section 35A-35 to an Adjusted RBC Report.
 
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 1        (d)  Within  60 days after an insurer submits an RBC Plan
 2    to the  Director,  the  Director  shall  notify  the  insurer
 3    whether  the  RBC  Plan  shall  be  implemented or is, in the
 4    judgment of the Director, unsatisfactory.   If  the  Director
 5    determines  the  RBC Plan is unsatisfactory, the notification
 6    to  the  insurer  shall  set  forth  the  reasons   for   the
 7    determination  and may set forth proposed revisions that will
 8    render the RBC Plan  satisfactory  in  the  judgment  of  the
 9    Director.   Upon  notification from the Director, the insurer
10    shall prepare a Revised RBC Plan, which  may  incorporate  by
11    reference  any  revisions  proposed  by  the  Director.   The
12    insurer  shall  submit  the  Revised RBC Plan to the Director
13    within 45 days after the Director notifies the  insurer  that
14    the  RBC  Plan  is unsatisfactory or within 45 days after the
15    Director notifies the insurer that the Director has, after  a
16    hearing,  rejected  its challenge under Section 35A-35 to the
17    determination that the RBC Plan is unsatisfactory.
18        (e)  In the event the Director notifies an  insurer  that
19    its  RBC  Plan  or  Revised  RBC  Plan is unsatisfactory, the
20    Director may, at the Director's discretion and subject to the
21    insurer's right to a hearing under Section 35A-35, specify in
22    the  notification  that  the   notification   constitutes   a
23    regulatory action level event.
24        (f)  Every  domestic  insurer  that  files an RBC Plan or
25    Revised RBC Plan with the Director shall file a copy  of  the
26    RBC  Plan  or  Revised  RBC  Plan  with  the  chief insurance
27    regulatory official in any state  in  which  the  insurer  is
28    authorized   to   do   business  if  that  state  has  a  law
29    substantially similar to the  confidentiality  provisions  in
30    subsection  (a)  of  Section  35A-50  and  if  that  official
31    requests  in  writing  a copy of the plan.  The insurer shall
32    file a copy of the RBC Plan or Revised RBC Plan in that state
33    no later than the  later  of  15  days  after  receiving  the
34    written  request  for  the  copy or the date on which the RBC
 
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 1    Plan or Revised RBC Plan is filed under subsection (c) or (d)
 2    of this Section.
 3    (Source: P.A. 88-364; 89-97, eff. 7-7-95.)

 4        (215 ILCS 5/35A-20)
 5        Sec. 35A-20.  Regulatory action level event.
 6        (a)  A regulatory action level event  means  any  of  the
 7    following events:
 8             (1)  The filing of an RBC Report by the insurer that
 9        indicates  that  the  insurer's total adjusted capital is
10        greater than or equal to  its  authorized  control  level
11        RBC, but less than its regulatory action level RBC.
12             (2)  The  notification by the Director to an insurer
13        of an  Adjusted  RBC  Report  that  indicates  the  event
14        described in paragraph (1), provided the insurer does not
15        challenge the Adjusted RBC Report under Section 35A-35.
16             (3)  The notification by the Director to the insurer
17        that  the  Director  has,  after  a hearing, rejected the
18        insurer's challenge under Section 35A-35 to  an  Adjusted
19        RBC   Report   that  indicates  the  event  described  in
20        paragraph (1).
21             (4)  The failure of  the  insurer  to  file  an  RBC
22        Report  by  the  filing  date,  unless  the  insurer  has
23        provided   an   explanation   for  the  failure  that  is
24        satisfactory to the Director and has  cured  the  failure
25        within 10 days after the filing date.
26             (5)  The  failure  of  the  insurer to submit an RBC
27        Plan to the Director within the time period set forth  in
28        subsection (c) of Section 35A-15.
29             (6)  The notification by the Director to the insurer
30        that  the  insurer's  RBC Plan or revised RBC Plan is, in
31        the judgment of the Director, unsatisfactory and that the
32        notification constitutes a regulatory action level  event
33        with  respect  to  the insurer, provided the insurer does
 
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 1        not challenge the determination under Section 35A-35.
 2             (7)  The notification by the Director to the insurer
 3        that the Director has,  after  a  hearing,  rejected  the
 4        insurer's   challenge   under   Section   35A-35  to  the
 5        determination made by the Director under paragraph (6).
 6             (8)  The notification by the Director to the insurer
 7        that the insurer has failed to adhere to its RBC Plan  or
 8        Revised  RBC  Plan,  but  only  if  that  failure  has  a
 9        substantial  adverse effect on the ability of the insurer
10        to eliminate the company action level event in accordance
11        with its RBC Plan or Revised RBC Plan  and  the  Director
12        has  so  stated in the notification, provided the insurer
13        does  not  challenge  the  determination  under   Section
14        35A-35.
15             (9)  The notification by the Director to the insurer
16        that  the  Director  has,  after  a hearing, rejected the
17        insurer's  challenge  under   Section   35A-35   to   the
18        determination made by the Director under paragraph (8).
19        (b)  In the event of a regulatory action level event, the
20    Director shall do all of the following:
21             (1)  Require  the  insurer  to prepare and submit an
22        RBC Plan or, if applicable, a Revised  RBC  Plan  to  the
23        Director within 45 days after the regulatory action level
24        event  occurs  or  within  45  days  after  the  Director
25        notifies  the  insurer  that  the  Director  has, after a
26        hearing, rejected its challenge under Section  35A-35  to
27        either  an  Adjusted  RBC  Report  or a Revised RBC Plan.
28        However, if the insurer previously prepared and submitted
29        an RBC Plan or a Revised RBC Plan in accordance with  any
30        provision  of  this  Article,  the Director may determine
31        that the previously prepared RBC Plan or Revised RBC Plan
32        satisfies the requirement of this subsection (b)(1).
33             (2)  Perform any  examination  or  analysis  of  the
34        assets,  liabilities,  and  operations  of  the  insurer,
 
HB1348 Enrolled            -15-                LRB9102806JSpc
 1        including  a  review of its RBC Plan or Revised RBC Plan,
 2        that the Director deems necessary.
 3             (3)  After the  examination  or  analysis,  issue  a
 4        Corrective  Order  specifying  the corrective actions the
 5        Director determines are required.
 6        (c)  In determining corrective actions, the Director  may
 7    take  into  account  any  factors the Director deems relevant
 8    based  upon  the  examination  or  analysis  of  the  assets,
 9    liabilities, and operations of the insurer including, but not
10    limited to, the results of any sensitivity  tests  undertaken
11    under the RBC Instructions. The regulatory action level event
12    shall  be deemed sufficient grounds for the Director to issue
13    a Corrective Order in accordance with Article XII  1/2.   The
14    Director  shall  have rights, powers, and duties with respect
15    to the insurer that are set forth in Article XII 1/2 and  the
16    insurer   shall  be  entitled  to  the  protections  afforded
17    insurers under Article XII 1/2.
18        (d)  The  Director  may  retain   actuaries,   investment
19    experts,   and  other  consultants  necessary  to  review  an
20    insurer's RBC Plan or Revised RBC Plan,  examine  or  analyze
21    the  assets,  liabilities, and operations of the insurer, and
22    formulate the Corrective Order with respect to  the  insurer.
23    The  fees,  costs,  and  expenses  related  to the actuaries,
24    investment experts, and other consultants shall be reasonable
25    and customary for the nature of  the  services  provided  and
26    shall   be  borne  by  the  affected  insurer  or  the  party
27    designated by the Director.
28    (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)

29        (215 ILCS 5/35A-30)
30        Sec. 35A-30.  Mandatory control level event.
31        (a)  A mandatory control level event  means  any  of  the
32    following events:
33             (1)  The filing of an RBC Report that indicates that
 
HB1348 Enrolled            -16-                LRB9102806JSpc
 1        the  insurer's  total  adjusted  capital is less than its
 2        mandatory control level RBC.
 3             (2)  The notification by the Director to the insurer
 4        of an  Adjusted  RBC  Report  that  indicates  the  event
 5        described in paragraph (1), provided the insurer does not
 6        challenge the Adjusted RBC Report under Section 35A-35.
 7             (3)  The notification by the Director to the insurer
 8        that  the  Director  has,  after  a hearing, rejected the
 9        insurer's challenge under Section 35A-35 to the  Adjusted
10        RBC   Report   that  indicates  the  event  described  in
11        paragraph (1).
12        (b)  In the event of a mandatory control level event with
13    respect to a life, health, or life and  health  insurer,  the
14    Director shall take actions necessary to place the insurer in
15    receivership   under   Article  XIII.   In  that  event,  the
16    mandatory control level  event  shall  be  deemed  sufficient
17    grounds  for  the Director to take action under Article XIII,
18    and the Director shall have the rights,  powers,  and  duties
19    with  respect  to  the  insurer that are set forth in Article
20    XIII.  If the Director takes  action  under  this  subsection
21    regarding  an  Adjusted  RBC  Report,  the  insurer  shall be
22    entitled to the protections of Article XIII. If the  Director
23    finds  that  there  is  a  reasonable  expectation  that  the
24    mandatory  control  level  event  may be eliminated within 90
25    days after it occurs, the Director may delay action  for  not
26    more than 90 days after the mandatory control level event.
27        (c)  In  the case of a mandatory control level event with
28    respect to a  property and  casualty  insurer,  the  Director
29    shall  take  the  actions  necessary  to place the insurer in
30    receivership under Article XIII or, in the case of an insurer
31    that is writing no  business  and  that  is  running-off  its
32    existing  business,  may  allow  the  insurer to continue its
33    run-off under the supervision of  the  Director.   In  either
34    case,  the mandatory control level event is deemed sufficient
 
HB1348 Enrolled            -17-                LRB9102806JSpc
 1    grounds for the Director to take action under  Article  XIII,
 2    and  the  Director  has  the  rights, powers, and duties with
 3    respect to the insurer that are set forth  in  Article  XIII.
 4    If  the  Director  takes  action  regarding  an  Adjusted RBC
 5    Report, the insurer shall be entitled to the  protections  of
 6    Article   XIII.  If  the  Director  finds  that  there  is  a
 7    reasonable expectation that the mandatory control level event
 8    may be  eliminated  within  90  days  after  it  occurs,  the
 9    Director may delay action for not more than 90 days after the
10    mandatory control level event.
11        (d)  In  the case of a mandatory control level event with
12    respect to a health organization, the Director shall take the
13    actions necessary to place the insurer in receivership  under
14    Article XIII or, in the case of an insurer that is writing no
15    business  and  that is running-off its existing business, may
16    allow  the  insurer  to  continue  its  run-off   under   the
17    supervision  of  the Director.  In either case, the mandatory
18    control level event is  deemed  sufficient  grounds  for  the
19    Director  to take action under Article XIII, and the Director
20    has the rights,  powers,  and  duties  with  respect  to  the
21    insurer  that are set forth in Article XIII.  If the Director
22    takes action regarding an Adjusted RBC  Report,  the  insurer
23    shall be entitled to the protections of Article XIII.  If the
24    Director  finds  that  there is a reasonable expectation that
25    the mandatory control level event may be eliminated within 90
26    days after it occurs, the Director may delay action  for  not
27    more than 90 days after the mandatory control level event.
28    (Source: P.A. 88-364; 89-97, eff. 7-7-95.)

29        (215 ILCS 5/35A-55)
30        Sec.   35A-55.  Provisions   of   Article   supplemental;
31    exemptions.
32        (a)  The  provisions  of this Article are supplemental to
33    the provisions of any other laws of this  State  and  do  not
 
HB1348 Enrolled            -18-                LRB9102806JSpc
 1    preclude  or  limit  other  powers  or duties of the Director
 2    under any other laws.
 3        (b)  The Director may exempt from the application of this
 4    Article any domestic property and casualty insurer that:
 5             (1)  writes direct business only in this State;
 6             (2)  writes direct annual premiums of $2,000,000  or
 7        less; and
 8             (3)  assumes  no  reinsurance  in  excess  of  5% of
 9        direct premium written.
10        (c)  The Director may exempt from the application of this
11    Article any company that is organized  under  Article  IV  of
12    this  Code,  that  writes direct business only in this State,
13    and that assumes no reinsurance in excess  of  5%  of  direct
14    written premiums.
15        (d)  The Director may exempt from the application of this
16    Article  any  domestic  health organization upon a showing by
17    the health organization of the  reasons  for  requesting  the
18    exemption  and  a determination by the Director of good cause
19    for an exemption.
20        (e) (d)  The Director may by rule impose upon any insurer
21    exempted  from  the  application  of   this   Article   under
22    subsection  (b), or (c), or (d) of this Section conditions to
23    the exemption that require maintenance of  adequate  capital.
24    These  conditions  shall  not exceed the requirements of this
25    Article.
26    (Source: P.A. 88-364; 89-97, eff. 7-7-95.)

27        (215 ILCS 5/35A-60)
28        Sec. 35A-60.  Phase-in of Article.
29        (a)  For RBC Reports filed with respect to  the  December
30    31,  1993  annual  statement,  instead  of  the provisions of
31    Sections 35A-15, 35A-20, 35A-25, and  35A-30,  the  following
32    provisions apply:
33             (1)  In  the  event of a company action level event,
 
HB1348 Enrolled            -19-                LRB9102806JSpc
 1        the Director shall take no action under this Article.
 2             (2)  In the event of a regulatory action level event
 3        under paragraph (1), (2), or (3)  of  subsection  (a)  of
 4        Section  35A-20,  the  Director  shall  take  the actions
 5        required under Section 35A-15.
 6             (3)  In the event of a regulatory action level event
 7        under paragraph (4),  (5),  (6),  (7),  (8),  or  (9)  of
 8        subsection (a) of Section 35A-20 or an authorized control
 9        level event, the Director shall take the actions required
10        under Section 35A-20.
11             (4)  In  the  event  of  a  mandatory  control level
12        event, the Director shall take the actions required under
13        Section 35A-25.
14        (b)  For RBC Reports required to be filed by property and
15    casualty insurers with  respect  to  the  December  31,  1995
16    annual  statement,  instead  of  the  provisions  of  Section
17    35A-15,  35A-20, 35A-25, and 35A-30, the following provisions
18    apply:
19             (1)  In the event of a company  action  level  event
20        with  respect  to  a domestic insurer, the Director shall
21        take no regulatory action under this Article.
22             (2)  In the event of a an  regulatory  action  level
23        event  under  paragraph (1), (2) or (3) of subsection (a)
24        of Section 35A-20, the Director shall  take  the  actions
25        required under Section 35A-15.
26             (3)  In  the  event  of a an regulatory action level
27        event under paragraph (4), (5), (6), (7), (8), or (9)  of
28        subsection (a) of Section 35A-20 or an authorized control
29        level event, the Director shall take the actions required
30        under Section 35A-20.
31             (4)  In  the  event  of  a  mandatory  control level
32        event, the Director shall take the actions required under
33        Section 35A-25.
34        (c)  For RBC Reports  required  to  be  filed  by  health
 
HB1348 Enrolled            -20-                LRB9102806JSpc
 1    organizations  with  respect  to the December 31, 1999 annual
 2    statement and the December 31, 2000 annual statement, instead
 3    of the provisions of Sections  35A-15,  35A-20,  35A-25,  and
 4    35A-30, the following provisions apply:
 5             (1)  In  the  event  of a company action level event
 6        with respect to a domestic insurer,  the  Director  shall
 7        take no regulatory action under this Article.
 8             (2)  In the event of a regulatory action level event
 9        under  paragraph  (1),  (2),  or (3) of subsection (a) of
10        Section 35A-20,  the  Director  shall  take  the  actions
11        required under Section 35A-15.
12             (3)  In the event of a regulatory action level event
13        under  paragraph  (4),  (5),  (6),  (7),  (8),  or (9) of
14        subsection (a) of Section 35A-20 or an authorized control
15        level event, the Director shall take the actions required
16        under Section 35A-20.
17             (4)  In the  event  of  a  mandatory  control  level
18        event, the Director shall take the actions required under
19        Section 35A-25.
20        This  subsection  does not apply to a health organization
21    that provides or arranges for a health care plan under  which
22    enrollees  may  access  health  care services from contracted
23    providers  without  a  referral  from  their   primary   care
24    physician.
25        Nothing  in this subsection shall preclude or limit other
26    powers or duties of the Director under any other laws.
27    (Source: P.A. 88-364; 89-97, eff. 7-7-95.)

28        (215 ILCS 5/245) (from Ch. 73, par. 857)
29        Sec. 245.  Salaries; pensions.
30        (1)  No  domestic  life   company   shall   directly   or
31    indirectly  pay  any salary, compensation or emolument to any
32    officer,  trustee  or  director  thereof,  or   any   salary,
33    compensation or emolument amounting in any year to more than
 
HB1348 Enrolled            -21-                LRB9102806JSpc
 1    $200,000  $100,000 to any person, firm or corporation, unless
 2    such payment be first authorized by a vote of  the  board  of
 3    directors  of such company, which vote shall be duly recorded
 4    in the records of the company.  No such domestic life company
 5    shall make any agreement with any of its  officers,  trustees
 6    or salaried employees whereby it agrees that for any services
 7    rendered  or  to  be  rendered  he  shall receive any salary,
 8    compensation or emolument, directly or indirectly, that  will
 9    extend  beyond  a period of three years from the date of such
10    agreement except that payment of an amount not in  excess  of
11    20%  of  the  salary  of  any  of  its officers, trustees, or
12    salaried employees  may  by  written  agreement  be  deferred
13    beyond  such  period  of  three  years,  which  agreement may
14    include conditions to be met by  such  officer,  trustee,  or
15    salaried employee before payment will be made. The limitation
16    as to time contained herein shall not apply to a contract for
17    renewal   commissions  with  any  such  officer,  trustee  or
18    salaried employee who is also an agent  of  the  company  nor
19    shall  such  limitation be construed as preventing a domestic
20    company from entering into contracts with its agents for  the
21    payment of renewal commissions.
22        (2)  No  such life company shall grant any pension to any
23    officer, director or trustee thereof or to any member of  his
24    family  after  his death except that it may provide a pension
25    pursuant to the terms of the uniform retirement plan  adopted
26    by  the  board  of directors and for any person who is or has
27    been a salaried officer or employee of such company  and  who
28    may retire by reason of age or disability.
29        (3)  No  such company shall hereafter create or establish
30    any account or fund for the purpose of promoting  the  health
31    or  welfare of its employees except from annual accretions to
32    earned surplus computed in the manner provided by this  Code.
33    Contributions  to  such  fund  by any company in any calendar
34    year shall not exceed 15% of the accretion to earned  surplus
 
HB1348 Enrolled            -22-                LRB9102806JSpc
 1    in  such  calendar year. Before such account or fund shall be
 2    established,  maintained  or  operated,  the  plan  for  such
 3    account or fund and its method of operation shall be approved
 4    by the board of directors of the company,  and  submitted  to
 5    the  shareholders  in the case of a stock company, or members
 6    in the case of a mutual company, at a special meeting  called
 7    for  the  purpose  of considering such plan. Contributions to
 8    the fund from sources other than the company may be  provided
 9    for in the operation of the plan. No amount held in such fund
10    or  account  whether  contributed  by the company or from any
11    other source shall be considered an admitted asset as defined
12    in this Code, nor considered in determining the  solvency  of
13    such company, nor be subject to the provisions of this Code.
14    (Source: P.A. 86-384.)

15        (215 ILCS 5/356h) (from Ch. 73, par. 968h)
16        Sec. 356h.  No individual or group policy of accident and
17    health  insurance which covers the insured's immediate family
18    or children, as well as covering the insured, shall exclude a
19    child from coverage or limit  coverage  for  a  child  solely
20    because  the child is an adopted child, or solely because the
21    child does not reside with the insured. For purposes of  this
22    Section,  a  child  who  is  in  the  custody of the insured,
23    pursuant to an interim court order of  adoption  or,  in  the
24    case  of  group  insurance,  placement of adoption, whichever
25    comes first, vesting temporary  care  of  the  child  in  the
26    insured,  is  an adopted child, regardless of whether a final
27    order granting adoption is ultimately issued.
28    (Source: P.A. 86-649.)

29        (215 ILCS 5/356v)
30        Sec.  356v.  Use  of  information  derived  from  genetic
31    testing.  After the effective date of this amendatory Act  of
32    1997,  an  insurer  must  comply  with  the provisions of the
 
HB1348 Enrolled            -23-                LRB9102806JSpc
 1    Genetic  Information  Privacy  Act  in  connection  with  the
 2    amendment, delivery, issuance, or renewal of, or  claims  for
 3    or denial of coverage under, an individual or group policy of
 4    accident   and   health   insurance.   Additionally,  genetic
 5    information shall not be treated as a condition described  in
 6    item  (1)  of  subsection  (A)  of Section 20 of the Illinois
 7    Health Insurance Portability and Accountability  Act  in  the
 8    absence  of  a  diagnosis  of  the  condition related to that
 9    genetic information.
10    (Source: P.A. 90-25, eff. 1-1-98; 90-655, eff. 7-30-98.)

11        (215 ILCS 5/364) (from Ch. 73, par. 976)
12        Sec.  364.   Discrimination  prohibited.   Discrimination
13    between individuals of the same class of risk in the issuance
14    of its policies or in the amount of premiums or rates charged
15    for any insurance covered by this article, or in the benefits
16    payable thereon, or in any of the terms or conditions of such
17    policy,  or  in  any  other  manner whatsoever is prohibited.
18    Nothing in this provision  shall  prohibit  an  insurer  from
19    providing  incentives for insureds to utilize the services of
20    a particular hospital  or  person.  It  is  hereby  expressly
21    provided  that  whenever  the  terms  "physician" or "doctor"
22    appear or are used in any way in any policy  of  accident  or
23    health  insurance  issued  in  this  state,  said terms shall
24    include within their meaning  persons  licensed  to  practice
25    dentistry  under the Illinois Dental Practice Act with regard
26    to benefits payable for services performed  by  a  person  so
27    licensed,   which  such  services  are  within  the  coverage
28    provided by the particular policy or  contract  of  insurance
29    and  are  within  the  professional services authorized to be
30    performed by such person under and  in  accordance  with  the
31    said Act.
32        No company, in any policy of accident or health insurance
33    issued in this State, shall make or permit any distinction or
 
HB1348 Enrolled            -24-                LRB9102806JSpc
 1    discrimination   against   individuals   solely   because  of
 2    handicaps  or  disabilities  in  the  amount  of  payment  of
 3    premiums or rates charged for policies of insurance,  in  the
 4    amount of any dividends or other benefits payable thereon, or
 5    in  any  other terms and conditions of the contract it makes,
 6    except where the distinction or discrimination  is  based  on
 7    sound  actuarial  principles  or  is  related  to  actual  or
 8    reasonably anticipated experience.
 9        No  company shall refuse to insure, or refuse to continue
10    to insure, or limit the amount or extent or kind of  coverage
11    available  to  an  individual,  or  charge  an  individual  a
12    different  rate  for  the  same  coverage  solely  because of
13    blindness or partial blindness.  With respect  to  all  other
14    conditions,  including  the underlying cause of the blindness
15    or partial blindness, persons  who  are  blind  or  partially
16    blind  shall  be  subject  to  the  same  standards  of sound
17    actuarial principles  or  actual  or  reasonably  anticipated
18    experience as are sighted persons. Refusal to insure includes
19    denial  by an insurer of disability insurance coverage on the
20    grounds  that  the  policy  defines  "disability"  as   being
21    presumed  in  the  event  that  the  insured loses his or her
22    eyesight. However,  an  insurer  may  exclude  from  coverage
23    disabilities   consisting  solely  of  blindness  or  partial
24    blindness when such condition existed at the time the  policy
25    was issued.
26    (Source: P.A. 85-1209.)

27        (215 ILCS 5/367) (from Ch. 73, par. 979)
28        Sec. 367.  Group accident and health insurance.
29        (1)  Group   accident  and  health  insurance  is  hereby
30    declared to be that form of  accident  and  health  insurance
31    covering  not less than 2 10 employees, members, or employees
32    of members, (except in case of volunteer fire departments the
33    number shall not be less than  5  members)  written  under  a
 
HB1348 Enrolled            -25-                LRB9102806JSpc
 1    master  policy  issued to any governmental corporation, unit,
 2    agency  or  department  thereof,  or  to   any   corporation,
 3    copartnership,  individual  employer,  or  to any association
 4    upon application of an executive officer or trustee  of  such
 5    association  having  a  constitution  or bylaws and formed in
 6    good  faith  for  purposes  other  than  that  of   obtaining
 7    insurance,  where  officers, members, employees, employees of
 8    members or classes or department thereof, may be insured  for
 9    their  individual  benefit.  In addition a group accident and
10    health policy may be written to insure any group which may be
11    insured under  a  group  life  insurance  policy.   The  term
12    "employees"   shall   include   the  officers,  managers  and
13    employees of subsidiary or affiliated corporations,  and  the
14    individual  proprietors, partners and employees of affiliated
15    individuals and firms, when the business of  such  subsidiary
16    or   affiliated   corporations,   firms  or  individuals,  is
17    controlled by a  common  employer  through  stock  ownership,
18    contract or otherwise.
19        (2)  Any  insurance  company authorized to write accident
20    and health insurance in this State shall have power to  issue
21    group  accident  and  health  policies.   No  policy of group
22    accident and health insurance may be issued or  delivered  in
23    this  State unless a copy of the form thereof shall have been
24    filed with the department and approved by  it  in  accordance
25    with   Section  355,  and  it  contains  in  substance  those
26    provisions contained in Sections 357.1 through 357.30 as  may
27    be  applicable to group accident and health insurance and the
28    following provisions:
29             (a)  A provision that the policy, the application of
30        the employer, or executive  officer  or  trustee  of  any
31        association,  and the individual applications, if any, of
32        the employees, members or employees  of  members  insured
33        shall constitute the entire contract between the parties,
34        and  that  all  statements  made  by the employer, or the
 
HB1348 Enrolled            -26-                LRB9102806JSpc
 1        executive  officer  or  trustee,  or  by  the  individual
 2        employees, members or employees of members shall (in  the
 3        absence  of  fraud)  be  deemed  representations  and not
 4        warranties, and that no such statement shall be  used  in
 5        defense  to  a  claim  under  the  policy,  unless  it is
 6        contained in a written application.
 7             (b)  A provision that the insurer will issue to  the
 8        employer,  or  to the executive officer or trustee of the
 9        association, for delivery  to  the  employee,  member  or
10        employee  of  a member, who is insured under such policy,
11        an individual certificate setting forth a statement as to
12        the insurance protection to which he is entitled  and  to
13        whom payable.
14             (c)  A  provision that to the group or class thereof
15        originally insured shall be added from time to  time  all
16        new employees of the employer, members of the association
17        or  employees  of  members  eligible  to and applying for
18        insurance in such group or class.
19        (3)  Anything   in   this   code    to    the    contrary
20    notwithstanding,  any  group  accident  and health policy may
21    provide that all or any portion of any  indemnities  provided
22    by  any  such policy on account of hospital, nursing, medical
23    or surgical services, may, at the insurer's option,  be  paid
24    directly  to  the hospital or person rendering such services;
25    but the policy may not require that the service  be  rendered
26    by  a  particular  hospital or person.  Payment so made shall
27    discharge the insurer's obligation with respect to the amount
28    of insurance so paid. Nothing in this  subsection  (3)  shall
29    prohibit an insurer from providing incentives for insureds to
30    utilize the services of a particular hospital or person.
31        (4)  Special  group  policies  may  be  issued  to school
32    districts providing medical or hospital service, or both, for
33    pupils of the district injured  while  participating  in  any
34    athletic  activity  under the jurisdiction of or sponsored or
 
HB1348 Enrolled            -27-                LRB9102806JSpc
 1    controlled by the district or the authorities of  any  school
 2    thereof.   The  provisions  of  this  Section  governing  the
 3    issuance  of  group  accident  and  health  insurance  shall,
 4    insofar  as applicable, control the issuance of such policies
 5    issued to schools.
 6        (5)  No policy of group accident and health insurance may
 7    be issued or delivered in this State unless it provides  that
 8    upon  the  death  of the insured employee or group member the
 9    dependents' coverage, if any, continues for a  period  of  at
10    least 90 days subject to any other policy provisions relating
11    to termination of dependents' coverage.
12        (6)  No  group  hospital  policy  covering  miscellaneous
13    hospital  expenses  issued  or  delivered in this State shall
14    contain any exception or exclusion from coverage which  would
15    preclude  the payment of expenses incurred for the processing
16    and administration of blood and its components.
17        (7)  No policy of group accident  and  health  insurance,
18    delivered  in  this  State  more  than  120  days  after  the
19    effective  day  of  the  Section,  which  provides  inpatient
20    hospital  coverage  for  sicknesses  shall  exclude from such
21    coverage the treatment of alcoholism.  This subsection  shall
22    not apply to a policy which covers only specified sicknesses.
23        (8)  No  policy  of  group accident and health insurance,
24    which provides benefits  for  hospital  or  medical  expenses
25    based  upon the actual expenses incurred, issued or delivered
26    in  this  State  shall  contain  any  specific  exception  to
27    coverage which would preclude the payment of actual  expenses
28    incurred  in  the  examination  and testing of a victim of an
29    offense defined  in  Sections  12-13  through  12-16  of  the
30    Criminal  Code of 1961, or an attempt to commit such offense,
31    to establish that sexual contact did occur or did not  occur,
32    and   to  establish  the  presence  or  absence  of  sexually
33    transmitted  disease  or  infection,  and   examination   and
34    treatment  of  injuries and trauma sustained by the victim of
 
HB1348 Enrolled            -28-                LRB9102806JSpc
 1    such offense, arising out of the offense.  Every group policy
 2    of accident and health insurance which specifically  provides
 3    benefits for routine physical examinations shall provide full
 4    coverage for expenses incurred in the examination and testing
 5    of  a  victim of an offense defined in Sections 12-13 through
 6    12-16 of the Criminal Code of 1961, or an attempt  to  commit
 7    such  offense,  as set forth in this Section. This subsection
 8    shall not apply to a policy which covers hospital and medical
 9    expenses for specified illnesses and injuries only.
10        (9)  For purposes  of  enabling  the  recovery  of  State
11    funds,  any  insurance  carrier subject to this Section shall
12    upon reasonable demand by the  Department  of  Public  Health
13    disclose the names and identities of its insureds entitled to
14    benefits  under  this  provision  to the Department of Public
15    Health  whenever  the  Department  of   Public   Health   has
16    determined  that it has paid, or is about to pay, hospital or
17    medical expenses for which an  insurance  carrier  is  liable
18    under   this   Section.   All  information  received  by  the
19    Department of Public Health under  this  provision  shall  be
20    held  on  a  confidential  basis  and shall not be subject to
21    subpoena and shall not be made public by  the  Department  of
22    Public  Health  or  used  for  any  purpose  other  than that
23    authorized by this Section.
24        (10)  Whenever the Department of Public Health finds that
25    it has paid all or part of any hospital or  medical  expenses
26    which  an  insurance  carrier  is obligated to pay under this
27    Section, the Department of Public Health shall be entitled to
28    receive reimbursement for its payments  from  such  insurance
29    carrier  provided  that  the  Department of Public Health has
30    notified the  insurance  carrier  of  its  claim  before  the
31    carrier  has  paid  the  benefits  to  its  insureds  or  the
32    insureds' assignees.
33        (11) (a)  No  group hospital, medical or surgical expense
34        policy  shall  contain  any  provision  whereby  benefits
 
HB1348 Enrolled            -29-                LRB9102806JSpc
 1        otherwise payable thereunder  are  subject  to  reduction
 2        solely  on  account  of the existence of similar benefits
 3        provided under other group  or  group-type  accident  and
 4        sickness  insurance  policies  where such reduction would
 5        operate to reduce  total  benefits  payable  under  these
 6        policies below an amount equal to 100% of total allowable
 7        expenses provided under these policies.
 8             (b)  When dependents of insureds are covered under 2
 9        policies,  both of which contain coordination of benefits
10        provisions, benefits of the policy of the  insured  whose
11        birthday  falls earlier in the year are determined before
12        those of the policy of the insured whose  birthday  falls
13        later in the year.  Birthday, as used herein, refers only
14        to  the month and day in a calendar year, not the year in
15        which the person was born.  The Department  of  Insurance
16        shall  promulgate  rules  defining  the  order of benefit
17        determination pursuant to this paragraph (b).
18        (12)  Every group policy  under  this  Section  shall  be
19    subject  to  the provisions of Sections 356g and 356n of this
20    Code.
21        (13)  No accident and health insurer  providing  coverage
22    for hospital or medical expenses on an expense incurred basis
23    shall  deny  reimbursement  for  an otherwise covered expense
24    incurred for any organ transplantation  procedure  solely  on
25    the  basis  that  such  procedure  is  deemed experimental or
26    investigational unless supported by the determination of  the
27    Office of Health Care Technology Assessment within the Agency
28    for  Health  Care  Policy  and  Research  within  the federal
29    Department of Health and Human Services that  such  procedure
30    is  either  experimental  or investigational or that there is
31    insufficient data or experience to determine whether an organ
32    transplantation procedure is  clinically  acceptable.  If  an
33    accident  and health insurer has made written request, or had
34    one made on  its  behalf  by  a  national  organization,  for
 
HB1348 Enrolled            -30-                LRB9102806JSpc
 1    determination   by  the  Office  of  Health  Care  Technology
 2    Assessment within the  Agency  for  Health  Care  Policy  and
 3    Research  within  the  federal Department of Health and Human
 4    Services as  to  whether  a  specific  organ  transplantation
 5    procedure  is  clinically  acceptable  and  said organization
 6    fails to respond to such a request  within  a  period  of  90
 7    days,  the  failure to act may be deemed a determination that
 8    the   procedure   is   deemed   to   be    experimental    or
 9    investigational.
10        (14)  Whenever a claim for benefits by an insured under a
11    dental  prepayment program is denied or reduced, based on the
12    review of x-ray films, such review must  be  performed  by  a
13    dentist.
14    (Source: P.A. 89-187, eff. 7-19-95.)

15        (215 ILCS 5/367i) (from Ch. 73, par. 979i)
16        Sec.  367i.   Discontinuance and replacement of coverage.
17    Group health insurance policies issued, amended, delivered or
18    renewed on and after the effective date  of  this  amendatory
19    Act of 1989, shall provide a reasonable extension of benefits
20    in  the  event  of total disability on the date the policy is
21    discontinued for any reason.
22        Any applicable extension of benefits or accrued liability
23    shall be described  in  the  policy  and  group  certificate.
24    Benefits  payable  during  any  extension  of benefits may be
25    subject to the policy's regular benefit limits.
26        Any insurer discontinuing a group health insurance policy
27    shall provide to the policyholder  for  delivery  to  covered
28    employees   or   members   a  notice  as  to  the  date  such
29    discontinuation is to be effective and urging them  to  refer
30    to  their  group  certificates  to  determine  what  contract
31    rights, if any, are available to them.
32        In the event a discontinued policy is replaced by another
33    group  policy, the prior insurer or plan shall be liable only
 
HB1348 Enrolled            -31-                LRB9102806JSpc
 1    to the extent of its accrued  liabilities  and  extension  of
 2    benefits.  Persons eligible for coverage under the succeeding
 3    insurer's  plan  or  policy  shall  include all employees and
 4    dependents covered under the prior insurer's plan,  including
 5    disabled  individuals covered under the prior plan but absent
 6    from work on the effective date and  thereafter.   The  prior
 7    insurer  shall provide extension of benefits for an insured's
 8    disabling condition when no coverage is available  under  the
 9    succeeding  insurer's  plan  whether  due  to  the absence of
10    coverage in the  contract  or  lack  of  required  creditable
11    coverage  for  a  preexisting  condition.  be covered by that
12    policy.  Persons  not  eligible  for   coverage   under   the
13    succeeding  insurer's  policy  shall, until such time as such
14    person  becomes  eligible,  be  covered  by  the   succeeding
15    insurer's policy in such a way as to ensure that such persons
16    shall  be  treated  no  less favorably than had the change in
17    insurers not occurred.
18        The  Director  shall  promulgate  reasonable   rules   as
19    necessary to carry out this Section.
20    (Source: P.A. 86-537.)

21        Section  10.  The  Dental  Service Plan Act is amended by
22    changing Section 25 as follows:

23        (215 ILCS 110/25) (from Ch. 32, par. 690.25)
24        Sec.  25.  Application  of  Insurance  Code   provisions.
25    Dental  service  plan corporations and all persons interested
26    therein  or  dealing  therewith  shall  be  subject  to   the
27    provisions  of  Articles IIA and Article XII 1/2 and Sections
28    3.1, 133, 140, 143, 143c, 149, 355.2, 367.2, 401, 401.1, 402,
29    403, 403A, 408,  408.2,  and  412,  and  subsection  (15)  of
30    Section 367 of the Illinois Insurance Code.
31    (Source: P.A. 86-600; 87-587; 87-1090.)
 
HB1348 Enrolled            -32-                LRB9102806JSpc
 1        Section  15.  The  Health Maintenance Organization Act is
 2    amended by changing  Sections  1-3,  2-7,  4-9,  and  5-3  as
 3    follows:

 4        (215 ILCS 125/1-3) (from Ch. 111 1/2, par. 1402.1)
 5        Sec.  1-3.   Definitions  of  admitted assets.  "Admitted
 6    Assets" includes the investments authorized or  permitted  by
 7    Section  3-1  of  this Act and, in addition thereto, only the
 8    following:
 9        (a)  Petty   cash   and   other   cash   funds   in   the
10    organization's principal or any official  branch  office  and
11    under the control of the organization.
12        (b)  Immediately  withdrawable funds on deposit in demand
13    accounts, in a bank or trust company as defined in  paragraph
14    (3)  of  subsection (g) of Section 3-1 or like funds actually
15    in the principal or any official branch office  at  statement
16    date,  and,  in  transit  to  such bank or trust company with
17    authentic deposit credit given prior to the close of business
18    on the fifth bank working day following the statement date.
19        (c)  The amount fairly estimated as recoverable  on  cash
20    deposited  in  a  closed bank or trust company, if qualifying
21    under the provisions of this Sec. prior to the suspension  of
22    such bank or trust company.
23        (d)  Bills  and  accounts  receivable  collateralized  by
24    securities   of   the  kind  in  which  the  organization  is
25    authorized to invest.
26        (e)  Premiums receivable from groups or individuals which
27    are not more than 60 days past due.  Premiums receivable from
28    the  United  States,  any  state  thereof  or  any  political
29    subdivision of either which is not more  than  90  days  past
30    due.
31        (f)  Amounts  due under insurance policies or reinsurance
32    arrangements  from  insurance  companies  authorized  to   do
33    business in this State.
 
HB1348 Enrolled            -33-                LRB9102806JSpc
 1        (g)  Tax refunds due from the United States, any state or
 2    any political subdivision thereof.
 3        (h)  The interest accrued on mortgage loans conforming to
 4    Section 3-1 of this Act, not exceeding in aggregate amount on
 5    an  individual  loan  of  one  year's  total  due and accrued
 6    interest.
 7        (i)  The rents accrued and owing to the  organization  on
 8    real  and  personal property, directly or beneficially owned,
 9    not exceeding on each individual property the amount  of  one
10    year's total due and accrued rent.
11        (j)  Interest  or  rents  accrued  on  conditional  sales
12    agreements, security interests, chattel mortgages and real or
13    personal  property  under  lease  to  other corporations, all
14    conforming to Section 3-1 of this Act, and not  exceeding  on
15    any individual investment, the amount of one year's total due
16    and accrued interest or rent.
17        (k)  The  fixed  and required interest due and accrued on
18    bonds and other like evidences of indebtedness, conforming to
19    Section 3-1 of this Act, and not in default.
20        (l)  Dividends receivable on shares of  stock  conforming
21    to  Section  3-1  of this Act; provided that the market price
22    taken for valuation purposes does not include  the  value  of
23    the dividend.
24        (m)  The  interest  or dividends due and payable, but not
25    credited, on deposits in banks  and  trust  companies  or  on
26    accounts with savings and loan associations.
27        (n)  Interest accrued on secured loans conforming to this
28    Act,  not  exceeding the amount of one year's interest on any
29    loan.
30        (o)  Interest accrued on tax anticipation warrants.
31        (p)  The amortized value of electronic computer  or  data
32    processing   machines   or   systems  purchased  for  use  in
33    connection with the business of the  organization,  including
34    software   purchased   and  developed  specifically  for  the
 
HB1348 Enrolled            -34-                LRB9102806JSpc
 1    organization's use and purposes.
 2        (q)  The  cost  of  furniture,  equipment   and   medical
 3    equipment,   less   accumulated  depreciation  thereon,   and
 4    medical and pharmaceutical supplies  that  are  used  in  the
 5    delivery  of  health  care  and  under  the  control  of  the
 6    organization,  provided  such  assets  do  not  exceed 30% of
 7    admitted assets.
 8        (1)  (r)  Amounts  due  from   affiliates   pursuant   to
 9    management  contracts  or  service  agreements which meet the
10    requirements of Section 141.1 of the Illinois Insurance  Code
11    to the extent that the affiliate has liquid assets with which
12    to  pay  the  balance  and maintain its accounts on a current
13    basis; provided that the aggregate amount due from affiliates
14    may not exceed  the  lesser  of  10%  of  the  organization's
15    admitted  assets  or  25%  of the organization's net worth as
16    defined in Section 3-1.  Any amount outstanding more  than  3
17    months  shall  be  deemed  not  current.  For purpose of this
18    subsection "affiliates" are as defined in Article VIII 1/2 of
19    the Illinois Insurance Code.
20        (s)  Intangible assets, including, but  not  limited  to,
21    organization  goodwill and  purchased goodwill, to the extent
22    reported in the most recent  annual  or  quarterly  financial
23    statement  filed  with  the  Director preceding the effective
24    date of this Amendatory Act of 1987.   However,  such  assets
25    shall  be  amortized, by the straight-line method, to a value
26    of zero no later than December 31, 1990;  provided,  however,
27    that  no  organization  shall  be  required  pursuant  to the
28    foregoing provision to amortize  such  assets  in  an  amount
29    greater  than  $300,000  in  any one year, and in cases where
30    amortization of  such  assets  by  December  31,  1990  would
31    otherwise  require amortization of an annual amount in excess
32    of $300,000, the  organization  shall  be  required  only  to
33    amortize such assets at a rate of $300,000 per year until all
34    such  assets  have  been amortized to a value of zero, unless
 
HB1348 Enrolled            -35-                LRB9102806JSpc
 1    the continuation of the current amortization  schedule  would
 2    result  in  an  earlier zero value, in which case the current
 3    amortization schedule shall be applied.
 4        (t)  Amounts due from patients or  enrollees  for  health
 5    care  services  rendered which are not more than 60 days past
 6    due.
 7        (2) (u)  Amounts advanced to providers under contract  to
 8    the  organization  for  services  to be rendered to enrollees
 9    pursuant to the  contract.   Amounts  advanced  must  be  for
10    period  of  not  more  than  3  months  and  must be based on
11    historical  or  estimated  utilization  patterns   with   the
12    provider  and  must  be  reconciled  against  actual incurred
13    claims at least semi-annually. Amounts due in  the  aggregate
14    may not exceed 50% of the organization's net worth as defined
15    in  Section  3-1.  Amounts due from a single provider may not
16    exceed the lesser of 5% of the organization's admitted assets
17    or 10% of the organization's net worth.
18        (3)  Amounts permitted under Section 2-7.
19        (v)  Cost  reimbursement  due  from   the   Health   Care
20    Financing  Administration  for  furnishing  covered  medicare
21    services to medicare enrollees which are not more than twelve
22    months past due.
23        (w)  Prepaid  rent  or  lease  payments no greater than 3
24    months  in  advance,  on   real   property   used   for   the
25    administration  of  the  organizations  business  or  for the
26    delivery of medical care.
27    (Source: P.A. 88-364; revised 10-31-98.)

28        (215 ILCS 125/2-7) (from Ch. 111 1/2, par. 1407)
29        Sec. 2-7.  Annual statement;  audited  financial  reports
30    enrollment projections and budget filings.
31        (a)  A  health  maintenance  organization shall file with
32    the Director by March 1st  in  each  year  2  copies  of  its
33    financial   statement  for  the  year  ending  December  31st
 
HB1348 Enrolled            -36-                LRB9102806JSpc
 1    immediately preceding on forms prescribed  by  the  Director,
 2    which  shall  conform  substantially to the form of statement
 3    adopted   by   the   National   Association   of    Insurance
 4    Commissioners.   Unless  the Director provides otherwise, the
 5    annual statement is to be prepared  in  accordance  with  the
 6    annual  statement  instructions  and the Accounting Practices
 7    and Procedures Manual adopted by the National Association  of
 8    Insurance  Commissioners.   The  Director shall have power to
 9    make such modifications and additions in this form as he  may
10    deem  desirable  or  necessary to ascertain the condition and
11    affairs  of  the  organization.   The  Director  shall   have
12    authority  to extend the time for filing any statement by any
13    organization  for  reasons  which  he  considers   good   and
14    sufficient.  The  statement shall be verified by oaths of the
15    president and secretary of  the  organization  or,  in  their
16    absence,  by  2  other  principal  officers. In addition, any
17    organization  may  be  required  by  the  Director,  when  he
18    considers that action to be necessary and appropriate for the
19    protection    of    enrollees,    creditors,    shareholders,
20    subscribers, or claimants, to  file,  within  60  days  after
21    mailing to the organization a notice that such is required, a
22    supplemental  summary  statement  as  of  the last day of any
23    calendar month occurring during the 100 days  next  preceding
24    the  mailing  of  such  notice  designated  by  him  on forms
25    prescribed and furnished by the Director.  The  Director  may
26    require supplemental summary statements to be certified by an
27    independent actuary deemed competent by the Director or by an
28    independent   certified   public   accountant.  Every  Health
29    Maintenance Organization shall annually,  on  or  before  the
30    first  day  of  March,  file  2 original copies of its annual
31    statement  with  the  Director  verified  by  at  least   two
32    principal  officers,  covering  the  two  preceding  calendar
33    years.  Such annual statement shall be on forms prescribed by
34    the Director and shall include: (1) financial  statements  of
 
HB1348 Enrolled            -37-                LRB9102806JSpc
 1    the  organization;  (2) the number of persons enrolled during
 2    the year, the number of enrollees at the end of the year  and
 3    the number of enrollments terminated during the year; and (3)
 4    such  other  information  relating  to the performance of the
 5    Health Maintenance Organization as is necessary to enable the
 6    Director to carry out his duties under this Act.
 7        Any organization failing, without just cause, to file its
 8    annual statement as required in this Act shall  be  required,
 9    after  notice  and hearing, to pay a penalty of $100 for each
10    day's delay, to be recovered by the Director of Insurance  of
11    the  State  of Illinois and the penalty so recovered shall be
12    paid into the General Revenue Fund of the State of  Illinois.
13    The   Director   may   reduce  the  penalty  if  the  company
14    demonstrates to the  Director  that  the  imposition  of  the
15    penalty   would   constitute  a  financial  hardship  to  the
16    organization.
17        An annual statement which is not materially complete when
18    filed shall not be considered to  have  been  properly  filed
19    until  those  deficiencies  which  make the filing incomplete
20    have been corrected and file.
21        (b)  Audited financial  reports  shall  be  filed  on  or
22    before  June  1  of  each  year  for  the  two calendar years
23    immediately preceding and shall provide an opinion  expressed
24    by   an   independent  certified  public  accountant  on  the
25    accompanying financial statement of  the  Health  Maintenance
26    Organization   and   a   detailed   reconciliation   for  any
27    differences between the accompanying financial statements and
28    each of the related financial statements filed in  accordance
29    with   subsection  (a)  of  this  Section.  Any  organization
30    failing, without just  cause,  to  file  the  annual  audited
31    financial   statement  as  required  in  this  Act  shall  be
32    required, after the notice and hearing, to pay a  penalty  of
33    $100 for each day's delay, to be recovered by the Director of
34    Insurance  of  the  State  of  Illinois  and  the  penalty so
 
HB1348 Enrolled            -38-                LRB9102806JSpc
 1    recovered shall be paid into the General Revenue Fund of  the
 2    State  of  Illinois.   The Director may reduce the penalty if
 3    the  organization  demonstrates  to  the  Director  that  the
 4    imposition  of  the  penalty  would  constitute  a  financial
 5    hardship to the organization.
 6        (c)  The Director may  require  that  additional  summary
 7    financial information be filed no more often than 3 times per
 8    year  on  reporting  forms  provided by him.  However, he may
 9    request certain key information on a more frequent  basis  if
10    necessary  for  a determination of the financial viability of
11    the organization.
12        (d)  The Director shall have the authority to extend  the
13    time for filing any statement by any organization for reasons
14    which the Director considers good and sufficient.
15    (Source: P.A. 85-20; revised 10-31-98.)

16        (215 ILCS 125/4-9) (from Ch. 111 1/2, par. 1409.2)
17        Sec.  4-9.  Adopted children.  No contract or evidence of
18    coverage issued by a Health  Maintenance  Organization  which
19    provides   for   coverage  of  dependents  of  the  principal
20    enrollees shall exclude a child from coverage or  eligibility
21    for  coverage  or  limit  coverage  for a child solely on the
22    basis that he or she is an adopted child.   For  purposes  of
23    this  Section,  a  child who is in the custody of a principal
24    enrollee, pursuant to an interim court order of adoption  or,
25    in  the  case  of  group  insurance,  placement  of adoption,
26    whichever comes first, vesting temporary care of the child in
27    the enrollee, is an adopted child, regardless  of  whether  a
28    final order granting adoption is ultimately issued.
29    (Source: P.A. 86-620.)

30        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
31        Sec. 5-3.  Insurance Code provisions.
32        (a)  Health Maintenance Organizations shall be subject to
 
HB1348 Enrolled            -39-                LRB9102806JSpc
 1    the  provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
 2    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
 3    154.6,  154.7,  154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
 4    367i, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412,  444,
 5    and  444.1,  paragraph  (c) of subsection (2) of Section 367,
 6    and Articles IIA, VIII 1/2, XII, XII  1/2,  XIII,  XIII  1/2,
 7    XXV, and XXVI of the Illinois Insurance Code.
 8        (b)  For  purposes of the Illinois Insurance Code, except
 9    for Sections 444 and 444.1 and Articles XIII  and  XIII  1/2,
10    Health  Maintenance Organizations in the following categories
11    are deemed to be "domestic companies":
12             (1)  a  corporation  authorized  under  the   Dental
13        Service  Plan  Act or the Voluntary Health Services Plans
14        Act;
15             (2)  a corporation organized under the laws of  this
16        State; or
17             (3)  a  corporation  organized  under  the  laws  of
18        another  state, 30% or more of the enrollees of which are
19        residents of this State, except a corporation subject  to
20        substantially  the  same  requirements  in  its  state of
21        organization as is a  "domestic  company"  under  Article
22        VIII 1/2 of the Illinois Insurance Code.
23        (c)  In  considering  the merger, consolidation, or other
24    acquisition of control of a Health  Maintenance  Organization
25    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
26             (1)  the  Director  shall give primary consideration
27        to the continuation of  benefits  to  enrollees  and  the
28        financial  conditions  of the acquired Health Maintenance
29        Organization after the merger,  consolidation,  or  other
30        acquisition of control takes effect;
31             (2)(i)  the  criteria specified in subsection (1)(b)
32        of Section 131.8 of the Illinois Insurance Code shall not
33        apply and (ii) the Director, in making his  determination
34        with  respect  to  the  merger,  consolidation,  or other
 
HB1348 Enrolled            -40-                LRB9102806JSpc
 1        acquisition of control, need not take  into  account  the
 2        effect  on  competition  of the merger, consolidation, or
 3        other acquisition of control;
 4             (3)  the Director shall have the  power  to  require
 5        the following information:
 6                  (A)  certification by an independent actuary of
 7             the   adequacy   of   the  reserves  of  the  Health
 8             Maintenance Organization sought to be acquired;
 9                  (B)  pro forma financial statements  reflecting
10             the combined balance sheets of the acquiring company
11             and the Health Maintenance Organization sought to be
12             acquired  as of the end of the preceding year and as
13             of a date 90 days prior to the acquisition, as  well
14             as   pro   forma   financial  statements  reflecting
15             projected combined  operation  for  a  period  of  2
16             years;
17                  (C)  a  pro  forma  business  plan detailing an
18             acquiring  party's  plans  with   respect   to   the
19             operation  of  the  Health  Maintenance Organization
20             sought to be acquired for a period of not less  than
21             3 years; and
22                  (D)  such  other  information  as  the Director
23             shall require.
24        (d)  The provisions of Article VIII 1/2 of  the  Illinois
25    Insurance  Code  and this Section 5-3 shall apply to the sale
26    by any health maintenance organization of greater than 10% of
27    its enrollee population  (including  without  limitation  the
28    health  maintenance organization's right, title, and interest
29    in and to its health care certificates).
30        (e)  In considering any management  contract  or  service
31    agreement  subject to Section 141.1 of the Illinois Insurance
32    Code, the Director (i) shall, in  addition  to  the  criteria
33    specified  in  Section  141.2 of the Illinois Insurance Code,
34    take into account the effect of the  management  contract  or
 
HB1348 Enrolled            -41-                LRB9102806JSpc
 1    service   agreement   on  the  continuation  of  benefits  to
 2    enrollees  and  the  financial  condition   of   the   health
 3    maintenance  organization to be managed or serviced, and (ii)
 4    need not take into  account  the  effect  of  the  management
 5    contract or service agreement on competition.
 6        (f)  Except  for  small employer groups as defined in the
 7    Small Employer Rating, Renewability  and  Portability  Health
 8    Insurance  Act and except for medicare supplement policies as
 9    defined in Section 363 of  the  Illinois  Insurance  Code,  a
10    Health  Maintenance Organization may by contract agree with a
11    group or other enrollment unit to effect  refunds  or  charge
12    additional premiums under the following terms and conditions:
13             (i)  the  amount  of, and other terms and conditions
14        with respect to, the refund or additional premium are set
15        forth in the group or enrollment unit contract agreed  in
16        advance of the period for which a refund is to be paid or
17        additional  premium  is to be charged (which period shall
18        not be less than one year); and
19             (ii)  the amount of the refund or additional premium
20        shall  not  exceed  20%   of   the   Health   Maintenance
21        Organization's profitable or unprofitable experience with
22        respect  to  the  group  or other enrollment unit for the
23        period (and, for  purposes  of  a  refund  or  additional
24        premium,  the profitable or unprofitable experience shall
25        be calculated taking into account a pro rata share of the
26        Health  Maintenance  Organization's  administrative   and
27        marketing  expenses,  but shall not include any refund to
28        be made or additional premium to be paid pursuant to this
29        subsection (f)).  The Health Maintenance Organization and
30        the  group  or  enrollment  unit  may  agree   that   the
31        profitable  or  unprofitable experience may be calculated
32        taking into account the refund period and the immediately
33        preceding 2 plan years.
34        The  Health  Maintenance  Organization  shall  include  a
 
HB1348 Enrolled            -42-                LRB9102806JSpc
 1    statement in the evidence of coverage issued to each enrollee
 2    describing the possibility of a refund or additional premium,
 3    and upon request of any group or enrollment unit, provide  to
 4    the group or enrollment unit a description of the method used
 5    to   calculate  (1)  the  Health  Maintenance  Organization's
 6    profitable experience with respect to the group or enrollment
 7    unit and the resulting refund to the group or enrollment unit
 8    or (2) the  Health  Maintenance  Organization's  unprofitable
 9    experience  with  respect to the group or enrollment unit and
10    the resulting additional premium to be paid by the  group  or
11    enrollment unit.
12        In   no  event  shall  the  Illinois  Health  Maintenance
13    Organization  Guaranty  Association  be  liable  to  pay  any
14    contractual obligation of an insolvent  organization  to  pay
15    any refund authorized under this Section.
16    (Source: P.A.   89-90,  eff.  6-30-95;  90-25,  eff.  1-1-98;
17    90-177, eff.  7-23-97;  90-372,  eff.  7-1-98;  90-583,  eff.
18    5-29-98;  90-655,  eff. 7-30-98; 90-741, eff. 1-1-99; revised
19    9-8-98.)

20        Section 20.  The Limited Health Service Organization  Act
21    is amended by changing Sections 2007 and 4003 as follows:

22        (215 ILCS 130/2007) (from Ch. 73, par. 1502-7)
23        Sec.  2007.  Annual statement; audited financial reports;
24    enrollment projections and budget; filings.
25        (a)  A limited health  service  organization  shall  file
26    with  the  Director by March 1st in each year 2 copies of its
27    financial  statement  for  the  year  ending  December   31st
28    immediately  preceding  on  forms prescribed by the Director,
29    which shall conform substantially to the  form  of  statement
30    adopted    by   the   National   Association   of   Insurance
31    Commissioners.  Unless the Director provides  otherwise,  the
32    annual  statement  is  to  be prepared in accordance with the
 
HB1348 Enrolled            -43-                LRB9102806JSpc
 1    annual statement instructions and  the  Accounting  Practices
 2    and  Procedures Manual adopted by the National Association of
 3    Insurance Commissioners.  The Director shall  have  power  to
 4    make  such modifications and additions in this form as he may
 5    deem desirable or necessary to ascertain  the  condition  and
 6    affairs   of  the  organization.   The  Director  shall  have
 7    authority to extend the time for filing any statement by  any
 8    organization   for   reasons  which  he  considers  good  and
 9    sufficient. The statement shall be verified by oaths  of  the
10    president  and  secretary  of  the  organization or, in their
11    absence, by 2 other  principal  officers.  In  addition,  any
12    organization  may  be  required  by  the  Director,  when  he
13    considers that action to be necessary and appropriate for the
14    protection    of    enrollees,    creditors,    shareholders,
15    subscribers,  or  claimants,  to  file,  within 60 days after
16    mailing to the organization a notice that such is required, a
17    supplemental summary statement as of  the  last  day  of  any
18    calendar  month  occurring during the 100 days next preceding
19    the mailing  of  such  notice  designated  by  him  on  forms
20    prescribed  and  furnished  by the Director. The Director may
21    require supplemental summary statements to be certified by an
22    independent actuary deemed competent by the Director or by an
23    independent certified public accountant. Every limited health
24    service organization shall annually, on or before  the  first
25    day  of March, file 2 original copies of its annual statement
26    with the Director verified by at least 2 principal  officers,
27    covering   the  2  preceding  calendar  years.   Such  annual
28    statement shall be on forms prescribed by  the  Director  and
29    shall include:
30             (1)  the financial statements of the organization;
31             (2)  the number of persons enrolled during the year,
32        the  number  of  enrollees at the end of the year and the
33        number of enrollments terminated during the year; and
34             (3)  such  other   information   relating   to   the
 
HB1348 Enrolled            -44-                LRB9102806JSpc
 1        performance of the limited health service organization as
 2        the  Director  deems  necessary to enable the Director to
 3        carry out his duties under this Act.
 4        Any organization failing, without just cause, to file its
 5    annual statement as required in this Act shall  be  required,
 6    after notice and opportunity for hearing, to pay a penalty of
 7    $100 for each day's delay, to be recovered by the Director of
 8    Insurance.   The  penalty so recovered shall be paid into the
 9    General Revenue Fund of the State of Illinois.  The  Director
10    may  reduce  the  penalty if the organization demonstrates to
11    the  Director  that  the  imposition  of  the  penalty  would
12    constitute a financial hardship to the organization.
13        An annual statement which is not materially complete when
14    filed shall not be considered to  have  been  properly  filed
15    until  those  deficiencies  which  make the filing incomplete
16    have been corrected and filed.
17        (b)  Audited financial  reports  shall  be  filed  on  or
18    before  June  1  of  each  year  for  the  2  calendar  years
19    immediately  preceding and shall provide an opinion expressed
20    by  an  independent  certified  public  accountant   on   the
21    accompanying   financial  statement  of  the  limited  health
22    service organization  and  detailed  reconciliation  for  any
23    differences between the accompanying financial statements and
24    each  of the related financial statements filed in accordance
25    with  subsection  (a)  of  this  Section.   Any  organization
26    failing, without just  cause,  to  file  the  annual  audited
27    financial   statement  as  required  in  this  Act  shall  be
28    required, after the notice and opportunity  for  hearing,  to
29    pay  a  penalty of $100 for each day's delay, to be recovered
30    by the Director of Insurance.  The penalty so recovered shall
31    be paid into  the  General  Revenue  Fund  of  the  State  of
32    Illinois.   The  Director  may  reduce  the  penalty  if  the
33    organization demonstrates to the Director that the imposition
34    of  the  penalty would constitute a financial hardship to the
 
HB1348 Enrolled            -45-                LRB9102806JSpc
 1    organization.
 2        (c)  The Director may  require  that  additional  summary
 3    financial information be filed no more often than 3 times per
 4    year  on  reporting  forms  provided by him.  However, he may
 5    request certain key information on a more frequent  basis  if
 6    necessary  for  a determination of the financial viability of
 7    the organization.
 8        (d)  The Director shall have the authority to extend  the
 9    time for filing any statements by an organization for reasons
10    which the Director considers good and sufficient.
11    (Source: P.A. 86-600.)

12        (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
13        Sec.  4003.  Illinois Insurance Code provisions.  Limited
14    health  service  organizations  shall  be  subject   to   the
15    provisions  of  Sections  133,  134,  137, 140, 141.1, 141.2,
16    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
17    154.6,  154.7,  154.8,  155.04, 355.2, 356v, 401, 401.1, 402,
18    403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and Articles
19    IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of
20    the Illinois Insurance Code.  For purposes  of  the  Illinois
21    Insurance  Code,  except  for  Sections  444  and  444.1  and
22    Articles   XIII   and   XIII   1/2,  limited  health  service
23    organizations in the following categories are  deemed  to  be
24    domestic companies:
25             (1)  a corporation under the laws of this State; or
26             (2)  a  corporation  organized  under  the  laws  of
27        another  state, 30% of more of the enrollees of which are
28        residents of this State, except a corporation subject  to
29        substantially  the  same  requirements  in  its  state of
30        organization as is a domestic company under Article  VIII
31        1/2 of the Illinois Insurance Code.
32    (Source: P.A.  90-25,  eff.  1-1-98;  90-583,  eff.  5-29-98;
33    90-655, eff. 7-30-98.)
 
HB1348 Enrolled            -46-                LRB9102806JSpc
 1        Section  25.  The  Voluntary Health Services Plans Act is
 2    amended by changing Section 10 as follows:

 3        (215 ILCS 165/10) (from Ch. 32, par. 604)
 4        Sec.  10.  Application  of  Insurance  Code   provisions.
 5    Health  services plan corporations and all persons interested
 6    therein  or  dealing  therewith  shall  be  subject  to   the
 7    provisions  of  Articles IIA and Article XII 1/2 and Sections
 8    3.1, 133, 140, 143, 143c, 149, 354, 355.2, 356r, 356t,  356u,
 9    356v,  356w,  356x,  367.2,  401, 401.1, 402, 403, 403A, 408,
10    408.2, and 412, and paragraphs (7) and (15) of Section 367 of
11    the Illinois Insurance Code.
12    (Source: P.A.  89-514,  eff.  7-17-96;  90-7,  eff.  6-10-97;
13    90-25,  eff.  1-1-98;  90-655,  eff.  7-30-98;  90-741,  eff.
14    1-1-99.)

15        Section 99.  Effective date.  This Act takes effect  upon
16    becoming law.
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State of Illinois 91st General Assembly Legislation

State of Illinois
91st General Assembly
Legislation
