ENROLLED
Senate Bill No. 371
(By Senators Tomblin, Mr. President, Wooton, Jackson, Bailey,
Craigo, Walker, Plymale, Wiedebusch, Bowman, Dittmar, Kimble,
Dugan, Chafin, Snyder, Anderson, McKenzie, Helmick, Oliverio,
Sharpe, Ross, Schoonover, Love, Ball, Sprouse, Buckalew, Deem and
Scott)
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[Passed April 11, 1997; in effect ninety days from passage.]
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AN ACT to amend and reenact section two, article twenty-two,
chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; to amend and
reenact section four, article twenty-four of said chapter; to
amend and reenact section six, article twenty-five of said
chapter; to amend and reenact section twenty-four, article
twenty-five-a of said chapter; and to further amend said
chapter by adding thereto a new article, designated article
forty-one, all relating to adding provisions for privileges
and immunity to farmers' mutual fire insurance companies;
adding provisions for privileges and immunity to hospitals,
medical and dental corporations; and adding provisions that
govern scientific, nonprofit institutions; increasing an
agent's license fee; adding provisions to be subject to the
supervision and regulation of the insurance commissioner; adding provisions for privileges and immunity to health care
corporations; adding provisions of exemption for any health
maintenance organization considered to be practicing medicine;
adding provisions for privileges and immunity to health
maintenance organizations; making technical corrections;
defining legislative intent; providing for definitions; and
providing for privileges and immunity for persons reporting
insurance fraud.
Be it enacted by the Legislature of West Virginia:
That section two, article twenty-two, chapter thirty-three of
the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; that section four, article
twenty-four of said chapter be amended and reenacted; that section
six, article twenty-five of said chapter be amended and reenacted;
that section twenty-four, article twenty-five-a of said chapter be
amended and reenacted; and that said chapter be further amended by
adding thereto a new article, designated article forty-one, all to
read as follows:
ARTICLE 22. FARMERS' MUTUAL FIRE INSURANCE COMPANIES.
§33-22-2. Applicability of other provisions.
Each company to the same extent such provisions are applicable
to domestic mutual insurers shall be governed by and be subject to
the following articles of this chapter: Article one (definitions);
article two (insurance commissioner); article four (general
provisions) except that section sixteen of said article shall not be applicable thereto; article seven (assets and liabilities);
article ten (rehabilitation and liquidation) except that under the
provisions of section thirty-two of said article assessments shall
not be levied against any former member of a farmers' mutual fire
insurance company who is no longer a member of the company at the
time the order to show cause was issued; article eleven (unfair
trade practices); article twelve (agents, brokers and solicitors)
except that the agent's license fee shall be five dollars; article
twenty-six (West Virginia insurance guaranty association act);
article twenty-seven (insurance holding company systems); article
thirty (mine subsidence insurance) except that under the provisions
of section six of said article, a farmers' mutual insurance company
shall have the option of offering mine subsidence coverage to all
of its policyholders but shall not be required to do so; article
thirty-three (annual audited financial report); article thirty-four
(administrative supervision); article thirty-four-a (standards and
commissioner's authority for companies deemed to be in hazardous
financial condition); article thirty-five (criminal sanctions for
failure to report impairment); article thirty-six (business
transacted with producer-controlled property/casualty insurer);
article thirty-seven (managing general agents); article thirty-nine
(disclosure of material transactions); article forty (risk-based
capital for insurers); and article forty-one (privileges and
immunity); but only to the extent these provisions are not
inconsistent with the provisions of this article.
ARTICLE 24. HOSPITAL SERVICE CORPORATIONS, MEDICAL SERVICE CORPORATIONS, DENTAL SERVICE CORPORATIONS AND HEALTH SERVICE
CORPORATIONS.
§33-24-4. Exemptions; applicability of insurance laws.
Every corporation defined in section two of this article is
hereby declared to be a scientific, nonprofit institution and
exempt from the payment of all property and other taxes. Every
corporation, to the same extent the provisions are applicable to
insurers transacting similar kinds of insurance and not
inconsistent with the provisions of this article, shall be governed
by and be subject to the provisions as hereinbelow indicated, of
the following articles of this chapter: Article two (insurance
commissioner), except that, under section nine of said article,
examinations shall be conducted at least once every four years;
article four (general provisions), except that section sixteen of
said article shall not be applicable thereto; section thirty-four,
article six (fee for form and rate filing); article six-c
(guaranteed loss ratio); article seven (assets and liabilities);
article eleven (unfair trade practices); article twelve (agents,
brokers and solicitors), except that the agent's license fee shall
be twenty-five dollars; section two-a, article fifteen
(definitions); section two-b, article fifteen (guaranteed issue);
section two-d, article fifteen (exception to guaranteed
renewability); section two-e, article fifteen (discontinuation of
coverage); section two-f, article fifteen (certification of
creditable coverage); section two-g, article fifteen (applicability); section four-e, article fifteen (benefits for
mothers and newborns); section fourteen, article fifteen
(individual accident and sickness insurance); section sixteen,
article fifteen (coverage of children); section eighteen, article
fifteen (equal treatment of state agency); section nineteen,
article fifteen (coordination of benefits with medicaid); article
fifteen-a (long-term care insurance); article fifteen-c (diabetes
insurance); section three, article sixteen (required policy
provisions); section three-a, article sixteen (mental health);
section three-c, article sixteen (group accident and sickness
insurance); section three-d, article sixteen (medicare supplement
insurance); section three-f, article sixteen (treatment of
temporomandibular joint disorder and craniomandibular disorder);
section three-j, article sixteen (benefits for mothers and
newborns); section three-k, article sixteen (preexisting condition
exclusions); section three-l, article sixteen (guaranteed
renewability); section three-m, article sixteen (creditable
coverage); section three-n, article sixteen (eligibility for
enrollment); section eleven, article sixteen (coverage of
children); section thirteen, article sixteen (equal treatment of
state agency); section fourteen, article sixteen (coordination of
benefits with medicaid); section sixteen, article sixteen (diabetes
insurance); article sixteen-a (group health insurance conversion);
article sixteen-c (small employer group policies); article sixteen- d (marketing and rate practices for small employers); article
twenty-six-a (West Virginia life and health insurance guaranty association act), after the first day of October, one thousand nine
hundred ninety-one; article twenty-seven (insurance holding company
systems); article twenty-eight (individual accident and sickness
insurance minimum standards); article thirty-three (annual audited
financial report); article thirty-four (administrative
supervision); article thirty-four-a (standards and commissioner's
authority for companies deemed to be in hazardous financial
condition); article thirty-five (criminal sanctions for failure to
report impairment); article thirty-seven (managing general agents);
and article forty-one (privileges and immunity); and no other
provision of this chapter may apply to these corporations unless
specifically made applicable by the provisions of this article.
If, however, the corporation is converted into a corporation
organized for a pecuniary profit or if it transacts business
without having obtained a license as required by section five of
this article, it shall thereupon forfeit its right to these
exemptions.
ARTICLE 25. HEALTH CARE CORPORATIONS.
§33-25-6. Supervision and regulation by insurance commissioner;
exemption from insurance laws.
Corporations organized under this article are subject to
supervision and regulation of the insurance commissioner. The
corporations organized under this article, to the same extent these
provisions are applicable to insurers transacting similar kinds of
insurance and not inconsistent with the provisions of this article, shall be governed by and be subject to the provisions as
hereinbelow indicated of the following articles of this chapter:
Article four (general provisions), except that section sixteen of
said article shall not be applicable thereto; article six-c
(guaranteed loss ratio); article seven (assets and liabilities);
article eight (investments); article ten (rehabilitation and
liquidation); section two-a, article fifteen (definitions); section
two-b, article fifteen (guaranteed issue); section two-d, article
fifteen (exception to guaranteed renewability); section two-e,
article fifteen (discontinuation of coverage); section two-f,
article fifteen (certification of creditable coverage); section
two-g, article fifteen (applicability); section four-e, article
fifteen (benefits for mothers and newborns); section fourteen,
article fifteen (individual accident and sickness insurance);
section sixteen, article fifteen (coverage of children); section
eighteen, article fifteen (equal treatment of state agency);
section nineteen, article fifteen (coordination of benefits with
medicaid); article fifteen-c (diabetes insurance); section three,
article sixteen (required policy provisions); section three-a,
article sixteen (mental health); section three-j, article sixteen
(benefits for mothers and newborns); section three-k, article
sixteen (preexisting condition exclusions); section three-l,
article sixteen (guaranteed renewability); section three-m, article
sixteen (creditable coverage); section three-n, article sixteen
(eligibility for enrollment); section eleven, article sixteen
(coverage of children); section thirteen, article sixteen (equal treatment of state agency); section fourteen, article sixteen
(coordination of benefits with medicaid); section sixteen, article
sixteen (diabetes insurance); article sixteen-a (group health
insurance conversion); article sixteen-c (small employer group
policies); article sixteen-d (marketing and rate practices for
small employers); article twenty-six-a (West Virginia life and
health insurance guaranty association act); article twenty-seven
(insurance holding company systems); article thirty-three (annual
audited financial report); article thirty-four-a (standards and
commissioner's authority for companies deemed to be in hazardous
financial condition); article thirty-five (criminal sanctions for
failure to report impairment); article thirty-seven (managing
general agents); and article forty-one (privileges and immunity);
and no other provision of this chapter may apply to these
corporations unless specifically made applicable by the provisions
of this article.
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-24. Statutory construction and relationship to other laws.
(a) Except as otherwise provided in this article, provisions
of the insurance laws and provisions of hospital or medical service
corporation laws are not applicable to any health maintenance
organization granted a certificate of authority under this article.
The provisions of this article shall not apply to an insurer or
hospital or medical service corporation licensed and regulated
pursuant to the insurance laws or the hospital or medical service
corporation laws of this state except with respect to its health maintenance corporation activities authorized and regulated
pursuant to this article. The provisions of this article shall not
apply to an entity properly licensed by a reciprocal state to
provide health care services to employer groups, where residents of
West Virginia are members of an employer group, and the employer
group contract is entered into in the reciprocal state. For
purposes of this subsection, a "reciprocal state" means a state
which physically borders West Virginia and which has subscriber or
enrollee hold harmless requirements substantially similar to those
set out in section seven-a of this article.
(b) Factually accurate advertising or solicitation regarding
the range of services provided, the premiums and copayments
charged, the sites of services and hours of operation, and any
other quantifiable, nonprofessional aspects of its operation by a
health maintenance organization granted a certificate of authority,
or its representative shall not be construed to violate any
provision of law relating to solicitation or advertising by health
professions: Provided, That nothing contained in this subsection
shall be construed as authorizing any solicitation or advertising
which identifies or refers to any individual provider or makes any
qualitative judgment concerning any provider.
(c) Any health maintenance organization authorized under this
article shall not be considered to be practicing medicine and is
exempt from the provisions of chapter thirty of this code, relating
to the practice of medicine.
(d) The provisions of sections fifteen and twenty, article four (general provisions); section seventeen, article six
(noncomplying forms); article six-c (guaranteed loss ratio);
article seven (assets and liabilities); article eight
(investments); article nine (administration of deposits); article
twelve (agents, brokers, solicitors and excess line); section two- a, article fifteen (definitions); section two-b, article fifteen
(guaranteed issue); section two-d, article fifteen (exception to
guaranteed renewability); section two-e, article fifteen
(discontinuation of coverage); section two-f, article fifteen
(certification of creditable coverage); section two-g, article
fifteen (applicability); section four-e, article fifteen (benefits
for mothers and newborns); section fourteen, article fifteen
(individual accident and sickness insurance); section sixteen,
article fifteen (coverage of children); section eighteen, article
fifteen (equal treatment of state agency); section nineteen,
article fifteen (coordination of benefits with medicaid); article
fifteen-b (uniform health care administration act); section three,
article sixteen (required policy provisions); section three-a,
article sixteen (mental health); section three-f, article sixteen
(treatment of temporomandibular disorder and craniomandibular
disorder); section three-j, article sixteen (benefits for mothers
and newborns); section three-k, article sixteen (preexisting
condition exclusions); section three-l, article sixteen (guaranteed
renewability); section three-m, article sixteen (creditable
coverage); section three-n, article sixteen (eligibility for
enrollment); section eleven, article sixteen (coverage of children); section thirteen, article sixteen (equal treatment of
state agency); section fourteen, article sixteen (coordination of
benefits with medicaid); section sixteen, article sixteen (diabetes
insurance); article sixteen-a (group health insurance conversion);
article sixteen-c (small employer group policies); article
sixteen-d (marketing and rate practices for small employers);
article twenty-seven (insurance holding company systems); article
thirty-four-a (standards and commissioner's authority for companies
deemed to be in hazardous financial condition); article thirty-five
(criminal sanctions for failure to report impairment); article
thirty-seven (managing general agents); article thirty-nine
(disclosure of material transactions); and article forty-one
(privileges and immunity) shall be applicable to any health
maintenance organization granted a certificate of authority under
this article. In circumstances where the code provisions made
applicable to health maintenance organizations by this section
refer to the "insurer", the "corporation" or words of similar
import, the language shall be construed to include health
maintenance organizations.
(e) Any long-term care insurance policy delivered or issued
for delivery in this state by a health maintenance organization
shall comply with the provisions of article fifteen-a of this
chapter.
(f) A health maintenance organization granted a certificate of
authority under this article shall be exempt from paying municipal
business and occupation taxes on gross income it receives from its enrollees, or from their employers or others on their behalf, for
health care items or services provided directly or indirectly by
the health maintenance organization. This exemption applies to all
taxable years through the thirty-first day of December, one
thousand nine hundred ninety-six. The commissioner and the tax
department shall conduct a study of the appropriations of
imposition of the municipal business and occupation tax or other
tax on health maintenance organizations, and shall report to the
regular session of the Legislature, one thousand nine hundred
ninety-seven, on their findings, conclusions and recommendations,
together with drafts of any legislation necessary to effectuate
their recommendations.
ARTICLE 41. PRIVILEGES AND IMMUNITY.
§33-41-1. Legislative purpose and findings.
It is the finding of the Legislature that the business of
insurance involves many transactions that have potential for fraud,
abuse and other illegal activities. It is the further finding of
the Legislature that insurance fraud is a crime pursuant to state
and federal statutes. The Legislature further finds that state,
local and federal law-enforcement and regulatory agencies may
prosecute fraud in accordance with these statutes, thereby
ultimately reducing the cost of insurance fraud to insurers and
consumers. It is the purpose of this article to encourage the
detection, investigation and prosecution of persons engaging in
insurance fraud by providing certain privileges and immunity.
§33-41-2. Definitions.
The following words when used in this article shall have the
meanings set forth in this section, unless the context clearly
indicates otherwise:
(a) "Authorized agency" means:
(1) The division of public safety of this state, the police
department of any municipality, any county sheriff's department and
any duly constituted criminal investigative department or agency of
the United States or of this state;
(2) The prosecuting attorney of any county of this state or of
the United States or any district thereof;
(3) The state insurance commissioner or the commissioner's
employees, agents or representatives;
(4) The national association of insurance commissioners; or
(5) A person or agency involved in the prevention and
detection of fraud or that person's or agency's agents, employees
or representatives.
(b) "Benefits" means money payments, goods, services or any
other thing of value.
(c) "Claim" means an application or request for payment or
benefits provided under an insurance policy.
(d) "Commissioner" means the insurance commissioner of the
state of West Virginia.
(e) "Insurance fraud" includes, but is not limited to,
instances where any person who, with the intent to injure, defraud
or deceive any person, insurer, or agency:
(i) Presents or causes to be presented to any insurer or
insurance representative any written or oral statement as part of
or in support of an application for insurance or a claim for
payment or other benefit pursuant to an insurance policy, knowing
that such statement contains any false, incomplete or misleading
information concerning any fact or thing material to the
application, claim or benefit;
(ii) Submits or causes to be submitted to any authorized
agency any written or oral statement as part of or in support of
any application, audit, claim, report, investigation, valuation,
statement, appraisal, estimation of loss, publication, certificate,
actuarial report or study, filing, financial statement, tax return,
rate request, petition or any other such document knowing that such
statement contains any false, incomplete or misleading information
concerning any fact or thing material thereto;
(iii) Solicits, offers or receives any remuneration, including
any kickback, rebate or bribe, directly or indirectly, with the
intent of causing an expenditure of moneys from any person or
insurer which would not otherwise be payable under an applicable
insurance policy; and
(iv) Assists, abets, solicits or conspires with another to
commit insurance fraud.
(f) "Person" means any individual, partnership, firm,
association, corporation, company, insurer, organization, society,
reciprocal, business trust or any other legal entity. "Person"
also includes hospital service corporations, medical service corporations and dental service corporations as defined in article
twenty-four of this chapter, health care corporations as defined in
article twenty-five of this chapter, or a health maintenance
organization organized pursuant to article twenty-five-a of this
chapter.
§33-41-3. Privileges and immunity.
(a) Any person who makes a report or furnishes information,
written or oral, concerning suspected, anticipated or completed
insurance fraud to an insurer or authorized agency shall be
entitled to those privileges and immunities heretofore existing
under the common or statutory law of this state, as well as the
immunity established herein.
(b) In the absence of fraud, malice or bad faith, no person or
agent, employee or designee of such person shall be subject to
civil liability of any nature arising out of such person's
providing any information related to suspected, anticipated or
completed insurance fraud to any insurer or authorized agency.
(c) Nothing herein shall be construed to limit, abrogate or
modify existing statutes or case law applicable to the duties or
liabilities of insurers regarding bad faith or unfair trade
practices.