H. B. 2713
(By Delegates H. White, Hrutkay and R. M. Thompson)
[Introduced January 28, 2003
; referred to the
Committee on Banking and Insurance then Government Organization.]
A BILL to amend and reenact sections three-a and twenty-four,
article twenty-five-a, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, all relating to conditions precedent to issuance or
maintenance of a certificate of authority by a health
maintenance organization; and designating the secretary of
state as attorney-in-fact for service of all legal process
upon a nondomestic health maintenance organization.
Be it enacted by the Legislature of West Virginia:
That sections three-a and twenty-four, article twenty-five-a,
chapter thirty-three of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted, all
to read as follows:
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-3a. Conditions.
(1) As a condition precedent to the issuance or maintenance of
a certificate of authority, a
health maintenance organization must
file or have on file with the commissioner:
(a) An acknowledgment that a delinquency proceeding pursuant
to article ten of this chapter or supervision by the commissioner
pursuant to article thirty-four of this chapter constitutes the
sole and exclusive method for the liquidation, rehabilitation,
reorganization or conservation of a health maintenance
organization;
(b) A waiver of any right to file or be subject to a
bankruptcy proceeding;
(c) Within thirty days of any change in the membership of the
governing body of the organization or in the officers or persons
holding five percent or more of the common stock of the
organization, or as otherwise required by the commissioner:
(i) An amended list of the names, addresses and official
positions of each member of the governing body, and a full
disclosure of any financial interest by a member of the governing
body or any provider or any organization or corporation owned or
controlled by that person and the health maintenance organization
and the extent and nature of any contract or financial arrangements
between that person and the health maintenance organization; and
(ii) A complete biographical statement on forms prescribed by
the commissioner and an independent investigation report on each person for whom a biographical statement and independent
investigation report have not previously been submitted; and
(d) Effective the first day of May, one thousand nine hundred
ninety-eight, for health maintenance organizations that have been
in existence at least three years, a copy of the current quality
assurance report submitted to the health maintenance organization
by a nationally recognized accreditation and review organization
approved by the commissioner, or in the case of the issuance of an
initial certificate of authority to a health maintenance
organization, a determination by the commissioner as to the
feasibility of the health maintenance organization's proposed
quality assurance program: Provided, That if a health maintenance
organization files proof found in the commissioners discretion to
be sufficient to demonstrate that the health maintenance
organization has timely applied for and reasonably pursued a review
of its quality assurance program, but a quality report has not been
issued by the accreditation and review organization, the health
maintenance organization shall be deemed considered to have
complied with this subdivision.
(2) After the effective date of this section the first day of
July, two thousand three, as a condition precedent to the issuance
of a certificate of authority, any organization that has not yet
obtained making application for a certificate of authority to
operate a health maintenance organization in this state shall be incorporated under the provisions of article one, chapter
thirty-one of this code or the applicable law of the organization's
state of domicile: Provided, That nothing in this subsection is
intended to permit any corporation to apply for a certificate of
authority to operate a health maintenance organization in this
state unless the corporation complies with all requirements for
health maintenance organizations contained within this article.
(3) After the effective date of this subsection, all
certificates of authority issued to health maintenance
organizations shall expire at midnight on the thirty-first day of
May of each year. The commissioner shall renew annually the
certificates of authority of all health maintenance organizations
that continue to meet all requirements of this section and
subsection (2), section four of this article, make application
therefor upon a form prescribed by the commissioner and pay the
renewal fee prescribed: Provided, That a health maintenance
organization shall not qualify for renewal of its certificate of
authority if the organization has no subscribers in this state
within twelve months after issuance of the certificate of
authority: Provided, however, That an organization not qualifying
for renewal may apply for a new certificate of authority under
section three of this article.
(4) The commencement of a bankruptcy proceeding either by or
against a health maintenance organization shall, by operation of law:
(a) Terminate the health maintenance organization's
certificate of authority; and
(b) Vest in the commissioner for the use and benefit of the
subscribers of the health maintenance organization the title to any
deposits of the health maintenance organization held by the
commissioner.
(5) If the bankruptcy proceeding is initiated by a party other
than the health maintenance organization, the operation of
subsection (4) of this section shall be stayed for a period of
sixty days following the date of commencement of the proceeding.
§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 may 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 may 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 may 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 twelve, fifteen and twenty,
article four (general provisions); section seventeen, article six
(noncomplying forms); section twenty, article five (borrowing by insurers); article six-c (guaranteed loss ratio); article seven
(assets and liabilities); article eight (investments); article
eight-a (use of clearing corporations and federal reserve book-
entry system); article nine (administration of deposits); article
twelve (agents, brokers, solicitors and excess line); 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-f, article sixteen (treatment of
temporomandibular disorder and craniomandibular disorder); 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);
article sixteen-a (group health insurance conversion); article
sixteen-d (marketing and rate practices for small employers);
article twenty-five-c (health maintenance organization patient bill
of rights); article twenty-seven (insurance holding company
systems); article thirty-four-a (standards and commissioner's
authority for companies considered 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); article
forty-one (privileges and immunity); and article forty-two (women's
access to health care) 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.
NOTE: The purpose of this bill is to authorize corporations
incorporated under the laws of states other than West Virginia to
make application for, obtain and maintain a certificate of
authority to operate a health maintenance organization, and to
incorporate West Virginia Code §33-4-12 into the Health Maintenance
Organization Act so that the West Virginia Secretary of State will
be constituted the attorney-in-fact for service of legal process on
every HMO licensed in this state whether it be a domestic or
foreign corporation.
Strike-through indicates language that would be deleted from
the present law, and underscoring indicates language that would be
added.