HB2089 EngrossedLRB103 05055 BMS 51381 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by
5changing Sections 1-110.6, 1-110.10, 1-110.15, 1-113.4,
61-113.4a, 1-113.5, 1-113.18, 2-162, 3-110, 4-108, 4-109.3,
718-169, and 22-1004 as follows:
 
8    (40 ILCS 5/1-110.6)
9    Sec. 1-110.6. Transactions prohibited by retirement
10systems; Republic of the Sudan.
11    (a) The Government of the United States has determined
12that Sudan is a nation that sponsors terrorism and genocide.
13The General Assembly finds that acts of terrorism have caused
14injury and death to Illinois and United States residents who
15serve in the United States military, and pose a significant
16threat to safety and health in Illinois. The General Assembly
17finds that public employees and their families, including
18police officers and firefighters, are more likely than others
19to be affected by acts of terrorism. The General Assembly
20finds that Sudan continues to solicit investment and
21commercial activities by forbidden entities, including private
22market funds. The General Assembly finds that investments in
23forbidden entities are inherently and unduly risky, not in the

 

 

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1interests of public pensioners and Illinois taxpayers, and
2against public policy. The General Assembly finds that Sudan's
3capacity to sponsor terrorism and genocide depends on or is
4supported by the activities of forbidden entities. The General
5Assembly further finds and re-affirms that the people of the
6State, acting through their representatives, do not want to be
7associated with forbidden entities, genocide, and terrorism.
8    (b) For purposes of this Section:
9    "Business operations" means maintaining, selling, or
10leasing equipment, facilities, personnel, or any other
11apparatus of business or commerce in the Republic of the
12Sudan, including the ownership or possession of real or
13personal property located in the Republic of the Sudan.
14    "Certifying company" means a company that (1) directly
15provides asset management services or advice to a retirement
16system or (2) as directly authorized or requested by a
17retirement system (A) identifies particular investment options
18for consideration or approval; (B) chooses particular
19investment options; or (C) allocates particular amounts to be
20invested. If no company meets the criteria set forth in this
21paragraph, then "certifying company" shall mean the retirement
22system officer who, as designated by the board, executes the
23investment decisions made by the board, or, in the
24alternative, the company that the board authorizes to complete
25the certification as the agent of that officer.
26    "Company" is any entity capable of affecting commerce,

 

 

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1including but not limited to (i) a government, government
2agency, natural person, legal person, sole proprietorship,
3partnership, firm, corporation, subsidiary, affiliate,
4franchisor, franchisee, joint venture, trade association,
5financial institution, utility, public franchise, provider of
6financial services, trust, or enterprise; and (ii) any
7association thereof.
8    "Division Department" means the Public Pension Division of
9the Department of Insurance Financial and Professional
10Regulation.
11    "Forbidden entity" means any of the following:
12        (1) The government of the Republic of the Sudan and
13    any of its agencies, including but not limited to
14    political units and subdivisions;
15        (2) Any company that is wholly or partially managed or
16    controlled by the government of the Republic of the Sudan
17    and any of its agencies, including but not limited to
18    political units and subdivisions;
19        (3) Any company (i) that is established or organized
20    under the laws of the Republic of the Sudan or (ii) whose
21    principal place of business is in the Republic of the
22    Sudan;
23        (4) Any company (i) identified by the Office of
24    Foreign Assets Control in the United States Department of
25    the Treasury as sponsoring terrorist activities in the
26    Republic of the Sudan; or (ii) fined, penalized, or

 

 

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1    sanctioned by the Office of Foreign Assets Control in the
2    United States Department of the Treasury for any violation
3    of any United States rules and restrictions relating to
4    the Republic of the Sudan that occurred at any time
5    following the effective date of this Act;
6        (5) Any publicly traded company that is individually
7    identified by an independent researching firm that
8    specializes in global security risk and that has been
9    retained by a certifying company as provided in subsection
10    (c) of this Section as being a company that owns or
11    controls property or assets located in, has employees or
12    facilities located in, provides goods or services to,
13    obtains goods or services from, has distribution
14    agreements with, issues credits or loans to, purchases
15    bonds or commercial paper issued by, or invests in (A) the
16    Republic of the Sudan; or (B) any company domiciled in the
17    Republic of the Sudan; and
18        (6) Any private market fund that fails to satisfy the
19    requirements set forth in subsections (d) and (e) of this
20    Section.
21    Notwithstanding the foregoing, the term "forbidden entity"
22shall exclude (A) mutual funds that meet the requirements of
23item (iii) of paragraph (13) of Section 1-113.2 and (B)
24companies that transact business in the Republic of the Sudan
25under the law, license, or permit of the United States,
26including a license from the United States Department of the

 

 

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1Treasury, and companies, except agencies of the Republic of
2the Sudan, who are certified as Non-Government Organizations
3by the United Nations, or who engage solely in (i) the
4provision of goods and services intended to relieve human
5suffering or to promote welfare, health, religious and
6spiritual activities, and education or humanitarian purposes;
7or (ii) journalistic activities.
8    "Private market fund" means any private equity fund,
9private equity fund of funds, venture capital fund, hedge
10fund, hedge fund of funds, real estate fund, or other
11investment vehicle that is not publicly traded.
12    "Republic of the Sudan" means those geographic areas of
13the Republic of Sudan that are subject to sanction or other
14restrictions placed on commercial activity imposed by the
15United States Government due to an executive or congressional
16declaration of genocide.
17    "Retirement system" means the State Employees' Retirement
18System of Illinois, the Judges Retirement System of Illinois,
19the General Assembly Retirement System, the State Universities
20Retirement System, and the Teachers' Retirement System of the
21State of Illinois.
22    (c) A retirement system shall not transfer or disburse
23funds to, deposit into, acquire any bonds or commercial paper
24from, or otherwise loan to or invest in any entity unless, as
25provided in this Section, a certifying company certifies to
26the retirement system that, (1) with respect to investments in

 

 

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1a publicly traded company, the certifying company has relied
2on information provided by an independent researching firm
3that specializes in global security risk and (2) 100% of the
4retirement system's assets for which the certifying company
5provides services or advice are not and have not been invested
6or reinvested in any forbidden entity at any time after 4
7months after the effective date of this Section.
8    The certifying company shall make the certification
9required under this subsection (c) to a retirement system 6
10months after the effective date of this Section and annually
11thereafter. A retirement system shall submit the
12certifications to the Division Department, and the Division
13Department shall notify the Director of Insurance Secretary of
14Financial and Professional Regulation if a retirement system
15fails to do so.
16    (d) With respect to a commitment or investment made
17pursuant to a written agreement executed prior to the
18effective date of this Section, each private market fund shall
19submit to the appropriate certifying company, at no additional
20cost to the retirement system:
21        (1) an affidavit sworn under oath in which an
22    expressly authorized officer of the private market fund
23    avers that the private market fund (A) does not own or
24    control any property or asset located in the Republic of
25    the Sudan and (B) does not conduct business operations in
26    the Republic of the Sudan; or

 

 

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1        (2) a certificate in which an expressly authorized
2    officer of the private market fund certifies that the
3    private market fund, based on reasonable due diligence,
4    has determined that, other than direct or indirect
5    investments in companies certified as Non-Government
6    Organizations by the United Nations, the private market
7    fund has no direct or indirect investment in any company
8    (A) organized under the laws of the Republic of the Sudan;
9    (B) whose principal place of business is in the Republic
10    of the Sudan; or (C) that conducts business operations in
11    the Republic of the Sudan. Such certificate shall be based
12    upon the periodic reports received by the private market
13    fund, and the private market fund shall agree that the
14    certifying company, directly or through an agent, or the
15    retirement system, as the case may be, may from time to
16    time review the private market fund's certification
17    process.
18    (e) With respect to a commitment or investment made
19pursuant to a written agreement executed after the effective
20date of this Section, each private market fund shall, at no
21additional cost to the retirement system:
22        (1) submit to the appropriate certifying company an
23    affidavit or certificate consistent with the requirements
24    pursuant to subsection (d) of this Section; or
25        (2) enter into an enforceable written agreement with
26    the retirement system that provides for remedies

 

 

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1    consistent with those set forth in subsection (g) of this
2    Section if any of the assets of the retirement system
3    shall be transferred, loaned, or otherwise invested in any
4    company that directly or indirectly (A) has facilities or
5    employees in the Republic of the Sudan or (B) conducts
6    business operations in the Republic of the Sudan.
7    (f) In addition to any other penalties and remedies
8available under the law of Illinois and the United States, any
9transaction, other than a transaction with a private market
10fund that is governed by subsections (g) and (h) of this
11Section, that violates the provisions of this Act shall be
12against public policy and voidable, at the sole discretion of
13the retirement system.
14    (g) If a private market fund fails to provide the
15affidavit or certification required in subsections (d) and (e)
16of this Section, then the retirement system shall, within 90
17days, divest, or attempt in good faith to divest, the
18retirement system's interest in the private market fund,
19provided that the Board of the retirement system confirms
20through resolution that the divestment does not have a
21material and adverse impact on the retirement system. The
22retirement system shall immediately notify the Division
23Department, and the Division Department shall notify all other
24retirement systems, as soon as practicable, by posting the
25name of the private market fund on the Division's Department's
26Internet website or through e-mail communications. No other

 

 

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1retirement system may enter into any agreement under which the
2retirement system directly or indirectly invests in the
3private market fund unless the private market fund provides
4that retirement system with the affidavit or certification
5required in subsections (d) and (e) of this Section and
6complies with all other provisions of this Section.
7    (h) If a private market fund fails to fulfill its
8obligations under any agreement provided for in paragraph (2)
9of subsection (e) of this Section, the retirement system shall
10immediately take legal and other action to obtain satisfaction
11through all remedies and penalties available under the law and
12the agreement itself. The retirement system shall immediately
13notify the Division Department, and the Division Department
14shall notify all other retirement systems, as soon as
15practicable, by posting the name of the private market fund on
16the Division's Department's Internet website or through e-mail
17communications, and no other retirement system may enter into
18any agreement under which the retirement system directly or
19indirectly invests in the private market fund.
20    (i) This Section shall have full force and effect during
21any period in which the Republic of the Sudan, or the officials
22of the government of that Republic, are subject to sanctions
23authorized under any statute or executive order of the United
24States or until such time as the State Department of the United
25States confirms in the federal register or through other means
26that the Republic of the Sudan is no longer subject to

 

 

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1sanctions by the government of the United States.
2    (j) If any provision of this Section or its application to
3any person or circumstance is held invalid, the invalidity of
4that provision or application does not affect other provisions
5or applications of this Section that can be given effect
6without the invalid provision or application.
7(Source: P.A. 95-521, eff. 8-28-07.)
 
8    (40 ILCS 5/1-110.10)
9    Sec. 1-110.10. Servicer certification.
10    (a) For the purposes of this Section:
11    "Illinois finance entity" means any entity chartered under
12the Illinois Banking Act, the Savings Bank Act, the Illinois
13Credit Union Act, or the Illinois Savings and Loan Act of 1985
14and any person or entity licensed under the Residential
15Mortgage License Act of 1987, the Consumer Installment Loan
16Act, or the Sales Finance Agency Act.
17    "Retirement system or pension fund" means a retirement
18system or pension fund established under this Code.
19    (b) In order for an Illinois finance entity to be eligible
20for investment or deposit of retirement system or pension fund
21assets, the Illinois finance entity must annually certify that
22it complies with the requirements of the High Risk Home Loan
23Act and the rules adopted pursuant to that Act that are
24applicable to that Illinois finance entity. For Illinois
25finance entities with whom the retirement system or pension

 

 

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1fund is investing or depositing assets on the effective date
2of this Section, the initial certification required under this
3Section shall be completed within 6 months after the effective
4date of this Section. For Illinois finance entities with whom
5the retirement system or pension fund is not investing or
6depositing assets on the effective date of this Section, the
7initial certification required under this Section must be
8completed before the retirement system or pension fund may
9invest or deposit assets with the Illinois finance entity.
10    (c) A retirement system or pension fund shall submit the
11certifications to the Public Pension Division of the
12Department of Insurance Financial and Professional Regulation,
13and the Division shall notify the Director of Insurance
14Secretary of Financial and Professional Regulation if a
15retirement system or pension fund fails to do so.
16    (d) If an Illinois finance entity fails to provide an
17initial certification within 6 months after the effective date
18of this Section or fails to submit an annual certification,
19then the retirement system or pension fund shall notify the
20Illinois finance entity. The Illinois finance entity shall,
21within 30 days after the date of notification, either (i)
22notify the retirement system or pension fund of its intention
23to certify and complete certification or (ii) notify the
24retirement system or pension fund of its intention to not
25complete certification. If an Illinois finance entity fails to
26provide certification, then the retirement system or pension

 

 

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1fund shall, within 90 days, divest, or attempt in good faith to
2divest, the retirement system's or pension fund's assets with
3that Illinois finance entity. The retirement system or pension
4fund shall immediately notify the Public Pension Division of
5the Department of Insurance Department of the Illinois finance
6entity's failure to provide certification.
7    (e) If any provision of this Section or its application to
8any person or circumstance is held invalid, the invalidity of
9that provision or application does not affect other provisions
10or applications of this Section that can be given effect
11without the invalid provision or application.
12(Source: P.A. 95-521, eff. 8-28-07; 95-876, eff. 8-21-08.)
 
13    (40 ILCS 5/1-110.15)
14    Sec. 1-110.15. Transactions prohibited by retirement
15systems; Iran.
16    (a) As used in this Section:
17    "Active business operations" means all business operations
18that are not inactive business operations.
19    "Business operations" means engaging in commerce in any
20form in Iran, including, but not limited to, acquiring,
21developing, maintaining, owning, selling, possessing, leasing,
22or operating equipment, facilities, personnel, products,
23services, personal property, real property, or any other
24apparatus of business or commerce.
25    "Company" means any sole proprietorship, organization,

 

 

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1association, corporation, partnership, joint venture, limited
2partnership, limited liability partnership, limited liability
3company, or other entity or business association, including
4all wholly owned subsidiaries, majority-owned subsidiaries,
5parent companies, or affiliates of those entities or business
6associations, that exists for the purpose of making profit.
7    "Direct holdings" in a company means all securities of
8that company that are held directly by the retirement system
9or in an account or fund in which the retirement system owns
10all shares or interests.
11    "Inactive business operations" means the mere continued
12holding or renewal of rights to property previously operated
13for the purpose of generating revenues but not presently
14deployed for that purpose.
15    "Indirect holdings" in a company means all securities of
16that company which are held in an account or fund, such as a
17mutual fund, managed by one or more persons not employed by the
18retirement system, in which the retirement system owns shares
19or interests together with other investors not subject to the
20provisions of this Section.
21    "Mineral-extraction activities" include exploring,
22extracting, processing, transporting, or wholesale selling or
23trading of elemental minerals or associated metal alloys or
24oxides (ore), including gold, copper, chromium, chromite,
25diamonds, iron, iron ore, silver, tungsten, uranium, and zinc.
26    "Oil-related activities" include, but are not limited to,

 

 

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1owning rights to oil blocks; exporting, extracting, producing,
2refining, processing, exploring for, transporting, selling, or
3trading of oil; and constructing, maintaining, or operating a
4pipeline, refinery, or other oil-field infrastructure. The
5mere retail sale of gasoline and related consumer products is
6not considered an oil-related activity.
7    "Petroleum resources" means petroleum, petroleum
8byproducts, or natural gas.
9    "Private market fund" means any private equity fund,
10private equity fund of funds, venture capital fund, hedge
11fund, hedge fund of funds, real estate fund, or other
12investment vehicle that is not publicly traded.
13    "Retirement system" means the State Employees' Retirement
14System of Illinois, the Judges Retirement System of Illinois,
15the General Assembly Retirement System, the State Universities
16Retirement System, and the Teachers' Retirement System of the
17State of Illinois.
18    "Scrutinized business operations" means business
19operations that have caused a company to become a scrutinized
20company.
21    "Scrutinized company" means the company has business
22operations that involve contracts with or provision of
23supplies or services to the Government of Iran, companies in
24which the Government of Iran has any direct or indirect equity
25share, consortiums or projects commissioned by the Government
26of Iran, or companies involved in consortiums or projects

 

 

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1commissioned by the Government of Iran and:
2        (1) more than 10% of the company's revenues produced
3    in or assets located in Iran involve oil-related
4    activities or mineral-extraction activities; less than 75%
5    of the company's revenues produced in or assets located in
6    Iran involve contracts with or provision of oil-related or
7    mineral-extraction products or services to the Government
8    of Iran or a project or consortium created exclusively by
9    that government; and the company has failed to take
10    substantial action; or
11        (2) the company has, on or after August 5, 1996, made
12    an investment of $20 million or more, or any combination
13    of investments of at least $10 million each that in the
14    aggregate equals or exceeds $20 million in any 12-month
15    period, that directly or significantly contributes to the
16    enhancement of Iran's ability to develop petroleum
17    resources of Iran.
18    "Substantial action" means adopting, publicizing, and
19implementing a formal plan to cease scrutinized business
20operations within one year and to refrain from any such new
21business operations.
22    (b) Within 90 days after the effective date of this
23Section, a retirement system shall make its best efforts to
24identify all scrutinized companies in which the retirement
25system has direct or indirect holdings.
26    These efforts shall include the following, as appropriate

 

 

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1in the retirement system's judgment:
2        (1) reviewing and relying on publicly available
3    information regarding companies having business operations
4    in Iran, including information provided by nonprofit
5    organizations, research firms, international
6    organizations, and government entities;
7        (2) contacting asset managers contracted by the
8    retirement system that invest in companies having business
9    operations in Iran; and
10        (3) Contacting other institutional investors that have
11    divested from or engaged with companies that have business
12    operations in Iran.
13    The retirement system may retain an independent research
14firm to identify scrutinized companies in which the retirement
15system has direct or indirect holdings. By the first meeting
16of the retirement system following the 90-day period described
17in this subsection (b), the retirement system shall assemble
18all scrutinized companies identified into a scrutinized
19companies list.
20    The retirement system shall update the scrutinized
21companies list annually based on evolving information from,
22among other sources, those listed in this subsection (b).
23    (c) The retirement system shall adhere to the following
24procedures for companies on the scrutinized companies list:
25        (1) The retirement system shall determine the
26    companies on the scrutinized companies list in which the

 

 

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1    retirement system owns direct or indirect holdings.
2        (2) For each company identified in item (1) of this
3    subsection (c) that has only inactive business operations,
4    the retirement system shall send a written notice
5    informing the company of this Section and encouraging it
6    to continue to refrain from initiating active business
7    operations in Iran until it is able to avoid scrutinized
8    business operations. The retirement system shall continue
9    such correspondence semiannually.
10        (3) For each company newly identified in item (1) of
11    this subsection (c) that has active business operations,
12    the retirement system shall send a written notice
13    informing the company of its scrutinized company status
14    and that it may become subject to divestment by the
15    retirement system. The notice must inform the company of
16    the opportunity to clarify its Iran-related activities and
17    encourage the company, within 90 days, to cease its
18    scrutinized business operations or convert such operations
19    to inactive business operations in order to avoid
20    qualifying for divestment by the retirement system.
21        (4) If, within 90 days after the retirement system's
22    first engagement with a company pursuant to this
23    subsection (c), that company ceases scrutinized business
24    operations, the company shall be removed from the
25    scrutinized companies list and the provisions of this
26    Section shall cease to apply to it unless it resumes

 

 

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1    scrutinized business operations. If, within 90 days after
2    the retirement system's first engagement, the company
3    converts its scrutinized active business operations to
4    inactive business operations, the company is subject to
5    all provisions relating thereto.
6    (d) If, after 90 days following the retirement system's
7first engagement with a company pursuant to subsection (c),
8the company continues to have scrutinized active business
9operations, and only while such company continues to have
10scrutinized active business operations, the retirement system
11shall sell, redeem, divest, or withdraw all publicly traded
12securities of the company, except as provided in paragraph
13(f), from the retirement system's assets under management
14within 12 months after the company's most recent appearance on
15the scrutinized companies list.
16    If a company that ceased scrutinized active business
17operations following engagement pursuant to subsection (c)
18resumes such operations, this subsection (d) immediately
19applies, and the retirement system shall send a written notice
20to the company. The company shall also be immediately
21reintroduced onto the scrutinized companies list.
22    (e) The retirement system may not acquire securities of
23companies on the scrutinized companies list that have active
24business operations, except as provided in subsection (f).
25    (f) A company that the United States Government
26affirmatively declares to be excluded from its present or any

 

 

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1future federal sanctions regime relating to Iran is not
2subject to divestment or the investment prohibition pursuant
3to subsections (d) and (e).
4    (g) Notwithstanding the provisions of this Section,
5paragraphs (d) and (e) do not apply to indirect holdings in a
6private market fund. However, the retirement system shall
7submit letters to the managers of those investment funds
8containing companies that have scrutinized active business
9operations requesting that they consider removing the
10companies from the fund or create a similar actively managed
11fund having indirect holdings devoid of the companies. If the
12manager creates a similar fund, the retirement system shall
13replace all applicable investments with investments in the
14similar fund in an expedited timeframe consistent with prudent
15investing standards.
16    (h) The retirement system shall file a report with the
17Public Pension Division of the Department of Insurance
18Financial and Professional Regulation that includes the
19scrutinized companies list within 30 days after the list is
20created. This report shall be made available to the public.
21    The retirement system shall file an annual report with the
22Public Pension Division, which shall be made available to the
23public, that includes all of the following:
24        (1) A summary of correspondence with companies engaged
25    by the retirement system under items (2) and (3) of
26    subsection (c).

 

 

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1        (2) All investments sold, redeemed, divested, or
2    withdrawn in compliance with subsection (d).
3        (3) All prohibited investments under subsection (e).
4        (4) A summary of correspondence with private market
5    funds notified under subsection (g).
6    (i) This Section expires upon the occurrence of any of the
7following:
8        (1) The United States revokes all sanctions imposed
9    against the Government of Iran.
10        (2) The Congress or President of the United States
11    declares that the Government of Iran has ceased to acquire
12    weapons of mass destruction and to support international
13    terrorism.
14        (3) The Congress or President of the United States,
15    through legislation or executive order, declares that
16    mandatory divestment of the type provided for in this
17    Section interferes with the conduct of United States
18    foreign policy.
19    (j) With respect to actions taken in compliance with this
20Act, including all good-faith determinations regarding
21companies as required by this Act, the retirement system is
22exempt from any conflicting statutory or common law
23obligations, including any fiduciary duties under this Article
24and any obligations with respect to choice of asset managers,
25investment funds, or investments for the retirement system's
26securities portfolios.

 

 

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1    (k) Notwithstanding any other provision of this Section to
2the contrary, the retirement system may cease divesting from
3scrutinized companies pursuant to subsection (d) or reinvest
4in scrutinized companies from which it divested pursuant to
5subsection (d) if clear and convincing evidence shows that the
6value of investments in scrutinized companies with active
7scrutinized business operations becomes equal to or less than
80.5% of the market value of all assets under management by the
9retirement system. Cessation of divestment, reinvestment, or
10any subsequent ongoing investment authorized by this Section
11is limited to the minimum steps necessary to avoid the
12contingency set forth in this subsection (k). For any
13cessation of divestment, reinvestment, or subsequent ongoing
14investment authorized by this Section, the retirement system
15shall provide a written report to the Public Pension Division
16in advance of initial reinvestment, updated semiannually
17thereafter as applicable, setting forth the reasons and
18justification, supported by clear and convincing evidence, for
19its decisions to cease divestment, reinvest, or remain
20invested in companies having scrutinized active business
21operations. This Section does not apply to reinvestment in
22companies on the grounds that they have ceased to have
23scrutinized active business operations.
24    (l) If any provision of this Section or its application to
25any person or circumstance is held invalid, the invalidity
26does not affect other provisions or applications of the Act

 

 

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1which can be given effect without the invalid provision or
2application, and to this end the provisions of this Section
3are severable.
4(Source: P.A. 95-616, eff. 1-1-08; 95-876, eff. 8-21-08.)
 
5    (40 ILCS 5/1-113.4)
6    Sec. 1-113.4. List of additional permitted investments for
7pension funds with net assets of $5,000,000 or more.
8    (a) In addition to the items in Sections 1-113.2 and
91-113.3, a pension fund established under Article 3 or 4 that
10has net assets of at least $5,000,000 and has appointed an
11investment adviser under Section 1-113.5 may, through that
12investment adviser, invest a portion of its assets in common
13and preferred stocks authorized for investments of trust funds
14under the laws of the State of Illinois. The stocks must meet
15all of the following requirements:
16        (1) The common stocks are listed on a national
17    securities exchange or board of trade (as defined in the
18    federal Securities Exchange Act of 1934 and set forth in
19    subdivision G of Section 3 of the Illinois Securities Law
20    of 1953) or quoted in the National Association of
21    Securities Dealers Automated Quotation System National
22    Market System (NASDAQ NMS).
23        (2) The securities are of a corporation created or
24    existing under the laws of the United States or any state,
25    district, or territory thereof and the corporation has

 

 

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1    been in existence for at least 5 years.
2        (3) The corporation has not been in arrears on payment
3    of dividends on its preferred stock during the preceding 5
4    years.
5        (4) The market value of stock in any one corporation
6    does not exceed 5% of the cash and invested assets of the
7    pension fund, and the investments in the stock of any one
8    corporation do not exceed 5% of the total outstanding
9    stock of that corporation.
10        (5) The straight preferred stocks or convertible
11    preferred stocks are issued or guaranteed by a corporation
12    whose common stock qualifies for investment by the board.
13        (6) The issuer of the stocks has been subject to the
14    requirements of Section 12 of the federal Securities
15    Exchange Act of 1934 and has been current with the filing
16    requirements of Sections 13 and 14 of that Act during the
17    preceding 3 years.
18    (b) A pension fund's total investment in the items
19authorized under this Section and Section 1-113.3 shall not
20exceed 35% of the market value of the pension fund's net
21present assets stated in its most recent annual report on file
22with the Public Pension Division of the Illinois Department of
23Insurance.
24    (c) A pension fund that invests funds under this Section
25shall electronically file with the Public Pension Division of
26the Department of Insurance any reports of its investment

 

 

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1activities that the Division may require, at the times and in
2the format required by the Division.
3(Source: P.A. 100-201, eff. 8-18-17.)
 
4    (40 ILCS 5/1-113.4a)
5    Sec. 1-113.4a. List of additional permitted investments
6for Article 3 and 4 pension funds with net assets of
7$10,000,000 or more.
8    (a) In addition to the items in Sections 1-113.2 and
91-113.3, a pension fund established under Article 3 or 4 that
10has net assets of at least $10,000,000 and has appointed an
11investment adviser, as defined under Sections 1-101.4 and
121-113.5, may, through that investment adviser, invest an
13additional portion of its assets in common and preferred
14stocks and mutual funds.
15    (b) The stocks must meet all of the following
16requirements:
17        (1) The common stocks must be listed on a national
18    securities exchange or board of trade (as defined in the
19    Federal Securities Exchange Act of 1934 and set forth in
20    paragraph G of Section 3 of the Illinois Securities Law of
21    1953) or quoted in the National Association of Securities
22    Dealers Automated Quotation System National Market System.
23        (2) The securities must be of a corporation in
24    existence for at least 5 years.
25        (3) The market value of stock in any one corporation

 

 

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1    may not exceed 5% of the cash and invested assets of the
2    pension fund, and the investments in the stock of any one
3    corporation may not exceed 5% of the total outstanding
4    stock of that corporation.
5        (4) The straight preferred stocks or convertible
6    preferred stocks must be issued or guaranteed by a
7    corporation whose common stock qualifies for investment by
8    the board.
9    (c) The mutual funds must meet the following requirements:
10        (1) The mutual fund must be managed by an investment
11    company registered under the Federal Investment Company
12    Act of 1940 and registered under the Illinois Securities
13    Law of 1953.
14        (2) The mutual fund must have been in operation for at
15    least 5 years.
16        (3) The mutual fund must have total net assets of
17    $250,000,000 or more.
18        (4) The mutual fund must be comprised of a diversified
19    portfolio of common or preferred stocks, bonds, or money
20    market instruments.
21    (d) A pension fund's total investment in the items
22authorized under this Section and Section 1-113.3 shall not
23exceed 50% effective July 1, 2011 and 55% effective July 1,
242012 of the market value of the pension fund's net present
25assets stated in its most recent annual report on file with the
26Public Pension Division of the Department of Insurance.

 

 

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1    (e) A pension fund that invests funds under this Section
2shall electronically file with the Public Pension Division of
3the Department of Insurance any reports of its investment
4activities that the Division may require, at the time and in
5the format required by the Division.
6(Source: P.A. 96-1495, eff. 1-1-11.)
 
7    (40 ILCS 5/1-113.5)
8    Sec. 1-113.5. Investment advisers and investment services
9for all Article 3 or 4 pension funds.
10    (a) The board of trustees of a pension fund may appoint
11investment advisers as defined in Section 1-101.4. The board
12of any pension fund investing in common or preferred stock
13under Section 1-113.4 shall appoint an investment adviser
14before making such investments.
15    The investment adviser shall be a fiduciary, as defined in
16Section 1-101.2, with respect to the pension fund and shall be
17one of the following:
18        (1) an investment adviser registered under the federal
19    Investment Advisers Act of 1940 and the Illinois
20    Securities Law of 1953;
21        (2) a bank or trust company authorized to conduct a
22    trust business in Illinois;
23        (3) a life insurance company authorized to transact
24    business in Illinois; or
25        (4) an investment company as defined and registered

 

 

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1    under the federal Investment Company Act of 1940 and
2    registered under the Illinois Securities Law of 1953.
3    (a-5) Notwithstanding any other provision of law, a person
4or entity that provides consulting services (referred to as a
5"consultant" in this Section) to a pension fund with respect
6to the selection of fiduciaries may not be awarded a contract
7to provide those consulting services that is more than 5 years
8in duration. No contract to provide such consulting services
9may be renewed or extended. At the end of the term of a
10contract, however, the contractor is eligible to compete for a
11new contract. No person shall attempt to avoid or contravene
12the restrictions of this subsection by any means. All offers
13from responsive offerors shall be accompanied by disclosure of
14the names and addresses of the following:
15        (1) The offeror.
16        (2) Any entity that is a parent of, or owns a
17    controlling interest in, the offeror.
18        (3) Any entity that is a subsidiary of, or in which a
19    controlling interest is owned by, the offeror.
20    Beginning on July 1, 2008, a person, other than a trustee
21or an employee of a pension fund or retirement system, may not
22act as a consultant under this Section unless that person is at
23least one of the following: (i) registered as an investment
24adviser under the federal Investment Advisers Act of 1940 (15
25U.S.C. 80b-1, et seq.); (ii) registered as an investment
26adviser under the Illinois Securities Law of 1953; (iii) a

 

 

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1bank, as defined in the Investment Advisers Act of 1940; or
2(iv) an insurance company authorized to transact business in
3this State.
4    (b) All investment advice and services provided by an
5investment adviser or a consultant appointed under this
6Section shall be rendered pursuant to a written contract
7between the investment adviser and the board, and in
8accordance with the board's investment policy.
9    The contract shall include all of the following:
10        (1) acknowledgement in writing by the investment
11    adviser that he or she is a fiduciary with respect to the
12    pension fund;
13        (2) the board's investment policy;
14        (3) full disclosure of direct and indirect fees,
15    commissions, penalties, and any other compensation that
16    may be received by the investment adviser, including
17    reimbursement for expenses; and
18        (4) a requirement that the investment adviser submit
19    periodic written reports, on at least a quarterly basis,
20    for the board's review at its regularly scheduled
21    meetings. All returns on investment shall be reported as
22    net returns after payment of all fees, commissions, and
23    any other compensation.
24    (b-5) Each contract described in subsection (b) shall also
25include (i) full disclosure of direct and indirect fees,
26commissions, penalties, and other compensation, including

 

 

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1reimbursement for expenses, that may be paid by or on behalf of
2the investment adviser or consultant in connection with the
3provision of services to the pension fund and (ii) a
4requirement that the investment adviser or consultant update
5the disclosure promptly after a modification of those payments
6or an additional payment.
7    Within 30 days after the effective date of this amendatory
8Act of the 95th General Assembly, each investment adviser and
9consultant providing services on the effective date or subject
10to an existing contract for the provision of services must
11disclose to the board of trustees all direct and indirect
12fees, commissions, penalties, and other compensation paid by
13or on behalf of the investment adviser or consultant in
14connection with the provision of those services and shall
15update that disclosure promptly after a modification of those
16payments or an additional payment.
17    A person required to make a disclosure under subsection
18(d) is also required to disclose direct and indirect fees,
19commissions, penalties, or other compensation that shall or
20may be paid by or on behalf of the person in connection with
21the rendering of those services. The person shall update the
22disclosure promptly after a modification of those payments or
23an additional payment.
24    The disclosures required by this subsection shall be in
25writing and shall include the date and amount of each payment
26and the name and address of each recipient of a payment.

 

 

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1    (c) Within 30 days after appointing an investment adviser
2or consultant, the board shall submit a copy of the contract to
3the Public Pension Division of the Department of Insurance of
4the Department of Financial and Professional Regulation.
5    (d) Investment services provided by a person other than an
6investment adviser appointed under this Section, including but
7not limited to services provided by the kinds of persons
8listed in items (1) through (4) of subsection (a), shall be
9rendered only after full written disclosure of direct and
10indirect fees, commissions, penalties, and any other
11compensation that shall or may be received by the person
12rendering those services.
13    (e) The board of trustees of each pension fund shall
14retain records of investment transactions in accordance with
15the rules of the Public Pension Division of the Department of
16Insurance Financial and Professional Regulation.
17(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
 
18    (40 ILCS 5/1-113.18)
19    Sec. 1-113.18. Ethics training. All board members of a
20retirement system, pension fund, or investment board created
21under this Code must attend ethics training of at least 8 hours
22per year. The training required under this Section shall
23include training on ethics, fiduciary duty, and investment
24issues and any other curriculum that the board of the
25retirement system, pension fund, or investment board

 

 

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1establishes as being important for the administration of the
2retirement system, pension fund, or investment board. The
3Supreme Court of Illinois shall be responsible for ethics
4training and curriculum for judges designated by the Court to
5serve as members of a retirement system, pension fund, or
6investment board. Each board shall annually certify its
7members' compliance with this Section and submit an annual
8certification to the Public Pension Division of the Department
9of Insurance of the Department of Financial and Professional
10Regulation. Judges shall annually certify compliance with the
11ethics training requirement and shall submit an annual
12certification to the Chief Justice of the Supreme Court of
13Illinois. For an elected or appointed trustee under Article 3
14or 4 of this Code, fulfillment of the requirements of Section
151-109.3 satisfies the requirements of this Section.
16(Source: P.A. 100-904, eff. 8-17-18.)
 
17    (40 ILCS 5/2-162)
18    (Text of Section WITHOUT the changes made by P.A. 98-599,
19which has been held unconstitutional)
20    Sec. 2-162. Application and expiration of new benefit
21increases.
22    (a) As used in this Section, "new benefit increase" means
23an increase in the amount of any benefit provided under this
24Article, or an expansion of the conditions of eligibility for
25any benefit under this Article, that results from an amendment

 

 

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1to this Code that takes effect after the effective date of this
2amendatory Act of the 94th General Assembly.
3    (b) Notwithstanding any other provision of this Code or
4any subsequent amendment to this Code, every new benefit
5increase is subject to this Section and shall be deemed to be
6granted only in conformance with and contingent upon
7compliance with the provisions of this Section.
8    (c) The Public Act enacting a new benefit increase must
9identify and provide for payment to the System of additional
10funding at least sufficient to fund the resulting annual
11increase in cost to the System as it accrues.
12    Every new benefit increase is contingent upon the General
13Assembly providing the additional funding required under this
14subsection. The Commission on Government Forecasting and
15Accountability shall analyze whether adequate additional
16funding has been provided for the new benefit increase and
17shall report its analysis to the Public Pension Division of
18the Department of Insurance Financial and Professional
19Regulation. A new benefit increase created by a Public Act
20that does not include the additional funding required under
21this subsection is null and void. If the Public Pension
22Division determines that the additional funding provided for a
23new benefit increase under this subsection is or has become
24inadequate, it may so certify to the Governor and the State
25Comptroller and, in the absence of corrective action by the
26General Assembly, the new benefit increase shall expire at the

 

 

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1end of the fiscal year in which the certification is made.
2    (d) Every new benefit increase shall expire 5 years after
3its effective date or on such earlier date as may be specified
4in the language enacting the new benefit increase or provided
5under subsection (c). This does not prevent the General
6Assembly from extending or re-creating a new benefit increase
7by law.
8    (e) Except as otherwise provided in the language creating
9the new benefit increase, a new benefit increase that expires
10under this Section continues to apply to persons who applied
11and qualified for the affected benefit while the new benefit
12increase was in effect and to the affected beneficiaries and
13alternate payees of such persons, but does not apply to any
14other person, including without limitation a person who
15continues in service after the expiration date and did not
16apply and qualify for the affected benefit while the new
17benefit increase was in effect.
18(Source: P.A. 94-4, eff. 6-1-05.)
 
19    (40 ILCS 5/3-110)  (from Ch. 108 1/2, par. 3-110)
20    Sec. 3-110. Creditable service.
21    (a) "Creditable service" is the time served by a police
22officer as a member of a regularly constituted police force of
23a municipality. In computing creditable service furloughs
24without pay exceeding 30 days shall not be counted, but all
25leaves of absence for illness or accident, regardless of

 

 

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1length, and all periods of disability retirement for which a
2police officer has received no disability pension payments
3under this Article shall be counted.
4    (a-5) Up to 3 years of time during which the police officer
5receives a disability pension under Section 3-114.1, 3-114.2,
63-114.3, or 3-114.6 shall be counted as creditable service,
7provided that (i) the police officer returns to active service
8after the disability for a period at least equal to the period
9for which credit is to be established and (ii) the police
10officer makes contributions to the fund based on the rates
11specified in Section 3-125.1 and the salary upon which the
12disability pension is based. These contributions may be paid
13at any time prior to the commencement of a retirement pension.
14The police officer may, but need not, elect to have the
15contributions deducted from the disability pension or to pay
16them in installments on a schedule approved by the board. If
17not deducted from the disability pension, the contributions
18shall include interest at the rate of 6% per year, compounded
19annually, from the date for which service credit is being
20established to the date of payment. If contributions are paid
21under this subsection (a-5) in excess of those needed to
22establish the credit, the excess shall be refunded. This
23subsection (a-5) applies to persons receiving a disability
24pension under Section 3-114.1, 3-114.2, 3-114.3, or 3-114.6 on
25the effective date of this amendatory Act of the 91st General
26Assembly, as well as persons who begin to receive such a

 

 

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1disability pension after that date.
2    (b) Creditable service includes all periods of service in
3the military, naval or air forces of the United States entered
4upon while an active police officer of a municipality,
5provided that upon applying for a permanent pension, and in
6accordance with the rules of the board, the police officer
7pays into the fund the amount the officer would have
8contributed if he or she had been a regular contributor during
9such period, to the extent that the municipality which the
10police officer served has not made such contributions in the
11officer's behalf. The total amount of such creditable service
12shall not exceed 5 years, except that any police officer who on
13July 1, 1973 had more than 5 years of such creditable service
14shall receive the total amount thereof.
15    (b-5) Creditable service includes all periods of service
16in the military, naval, or air forces of the United States
17entered upon before beginning service as an active police
18officer of a municipality, provided that, in accordance with
19the rules of the board, the police officer pays into the fund
20the amount the police officer would have contributed if he or
21she had been a regular contributor during such period, plus an
22amount determined by the Board to be equal to the
23municipality's normal cost of the benefit, plus interest at
24the actuarially assumed rate calculated from the date the
25employee last became a police officer under this Article. The
26total amount of such creditable service shall not exceed 2

 

 

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1years.
2    (c) Creditable service also includes service rendered by a
3police officer while on leave of absence from a police
4department to serve as an executive of an organization whose
5membership consists of members of a police department, subject
6to the following conditions: (i) the police officer is a
7participant of a fund established under this Article with at
8least 10 years of service as a police officer; (ii) the police
9officer received no credit for such service under any other
10retirement system, pension fund, or annuity and benefit fund
11included in this Code; (iii) pursuant to the rules of the board
12the police officer pays to the fund the amount he or she would
13have contributed had the officer been an active member of the
14police department; (iv) the organization pays a contribution
15equal to the municipality's normal cost for that period of
16service; and (v) for all leaves of absence under this
17subsection (c), including those beginning before the effective
18date of this amendatory Act of the 97th General Assembly, the
19police officer continues to remain in sworn status, subject to
20the professional standards of the public employer or those
21terms established in statute.
22        (d)(1) Creditable service also includes periods of
23    service originally established in another police pension
24    fund under this Article or in the Fund established under
25    Article 7 of this Code for which (i) the contributions
26    have been transferred under Section 3-110.7 or Section

 

 

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1    7-139.9 and (ii) any additional contribution required
2    under paragraph (2) of this subsection has been paid in
3    full in accordance with the requirements of this
4    subsection (d).
5        (2) If the board of the pension fund to which
6    creditable service and related contributions are
7    transferred under Section 7-139.9 determines that the
8    amount transferred is less than the true cost to the
9    pension fund of allowing that creditable service to be
10    established, then in order to establish that creditable
11    service the police officer must pay to the pension fund,
12    within the payment period specified in paragraph (3) of
13    this subsection, an additional contribution equal to the
14    difference, as determined by the board in accordance with
15    the rules and procedures adopted under paragraph (6) of
16    this subsection. If the board of the pension fund to which
17    creditable service and related contributions are
18    transferred under Section 3-110.7 determines that the
19    amount transferred is less than the true cost to the
20    pension fund of allowing that creditable service to be
21    established, then the police officer may elect (A) to
22    establish that creditable service by paying to the pension
23    fund, within the payment period specified in paragraph (3)
24    of this subsection (d), an additional contribution equal
25    to the difference, as determined by the board in
26    accordance with the rules and procedures adopted under

 

 

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1    paragraph (6) of this subsection (d) or (B) to have his or
2    her creditable service reduced by an amount equal to the
3    difference between the amount transferred under Section
4    3-110.7 and the true cost to the pension fund of allowing
5    that creditable service to be established, as determined
6    by the board in accordance with the rules and procedures
7    adopted under paragraph (6) of this subsection (d).
8        (3) Except as provided in paragraph (4), the
9    additional contribution that is required or elected under
10    paragraph (2) of this subsection (d) must be paid to the
11    board (i) within 5 years from the date of the transfer of
12    contributions under Section 3-110.7 or 7-139.9 and (ii)
13    before the police officer terminates service with the
14    fund. The additional contribution may be paid in a lump
15    sum or in accordance with a schedule of installment
16    payments authorized by the board.
17        (4) If the police officer dies in service before
18    payment in full has been made and before the expiration of
19    the 5-year payment period, the surviving spouse of the
20    officer may elect to pay the unpaid amount on the
21    officer's behalf within 6 months after the date of death,
22    in which case the creditable service shall be granted as
23    though the deceased police officer had paid the remaining
24    balance on the day before the date of death.
25        (5) If the additional contribution that is required or
26    elected under paragraph (2) of this subsection (d) is not

 

 

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1    paid in full within the required time, the creditable
2    service shall not be granted and the police officer (or
3    the officer's surviving spouse or estate) shall be
4    entitled to receive a refund of (i) any partial payment of
5    the additional contribution that has been made by the
6    police officer and (ii) those portions of the amounts
7    transferred under subdivision (a)(1) of Section 3-110.7 or
8    subdivisions (a)(1) and (a)(3) of Section 7-139.9 that
9    represent employee contributions paid by the police
10    officer (but not the accumulated interest on those
11    contributions) and interest paid by the police officer to
12    the prior pension fund in order to reinstate service
13    terminated by acceptance of a refund.
14        At the time of paying a refund under this item (5), the
15    pension fund shall also repay to the pension fund from
16    which the contributions were transferred under Section
17    3-110.7 or 7-139.9 the amount originally transferred under
18    subdivision (a)(2) of that Section, plus interest at the
19    rate of 6% per year, compounded annually, from the date of
20    the original transfer to the date of repayment. Amounts
21    repaid to the Article 7 fund under this provision shall be
22    credited to the appropriate municipality.
23        Transferred credit that is not granted due to failure
24    to pay the additional contribution within the required
25    time is lost; it may not be transferred to another pension
26    fund and may not be reinstated in the pension fund from

 

 

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1    which it was transferred.
2        (6) The Public Employee Pension Fund Division of the
3    Department of Insurance shall establish by rule the manner
4    of making the calculation required under paragraph (2) of
5    this subsection, taking into account the appropriate
6    actuarial assumptions; the police officer's service, age,
7    and salary history; the level of funding of the pension
8    fund to which the credits are being transferred; and any
9    other factors that the Division determines to be relevant.
10    The rules may require that all calculations made under
11    paragraph (2) be reported to the Division by the board
12    performing the calculation, together with documentation of
13    the creditable service to be transferred, the amounts of
14    contributions and interest to be transferred, the manner
15    in which the calculation was performed, the numbers relied
16    upon in making the calculation, the results of the
17    calculation, and any other information the Division may
18    deem useful.
19        (e)(1) Creditable service also includes periods of
20    service originally established in the Fund established
21    under Article 7 of this Code for which the contributions
22    have been transferred under Section 7-139.11.
23        (2) If the board of the pension fund to which
24    creditable service and related contributions are
25    transferred under Section 7-139.11 determines that the
26    amount transferred is less than the true cost to the

 

 

HB2089 Engrossed- 41 -LRB103 05055 BMS 51381 b

1    pension fund of allowing that creditable service to be
2    established, then the amount of creditable service the
3    police officer may establish under this subsection (e)
4    shall be reduced by an amount equal to the difference, as
5    determined by the board in accordance with the rules and
6    procedures adopted under paragraph (3) of this subsection.
7        (3) The Public Pension Division of the Department of
8    Insurance Financial and Professional Regulation shall
9    establish by rule the manner of making the calculation
10    required under paragraph (2) of this subsection, taking
11    into account the appropriate actuarial assumptions; the
12    police officer's service, age, and salary history; the
13    level of funding of the pension fund to which the credits
14    are being transferred; and any other factors that the
15    Division determines to be relevant. The rules may require
16    that all calculations made under paragraph (2) be reported
17    to the Division by the board performing the calculation,
18    together with documentation of the creditable service to
19    be transferred, the amounts of contributions and interest
20    to be transferred, the manner in which the calculation was
21    performed, the numbers relied upon in making the
22    calculation, the results of the calculation, and any other
23    information the Division may deem useful.
24        (4) Until January 1, 2010, a police officer who
25    transferred service from the Fund established under
26    Article 7 of this Code under the provisions of Public Act

 

 

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1    94-356 may establish additional credit, but only for the
2    amount of the service credit reduction in that transfer,
3    as calculated under paragraph (3) of this subsection (e).
4    This credit may be established upon payment by the police
5    officer of an amount to be determined by the board, equal
6    to (1) the amount that would have been contributed as
7    employee and employer contributions had all of the service
8    been as an employee under this Article, plus interest
9    thereon at the rate of 6% per year, compounded annually
10    from the date of service to the date of transfer, less (2)
11    the total amount transferred from the Article 7 Fund, plus
12    (3) interest on the difference at the rate of 6% per year,
13    compounded annually, from the date of the transfer to the
14    date of payment. The additional service credit is allowed
15    under this amendatory Act of the 95th General Assembly
16    notwithstanding the provisions of Article 7 terminating
17    all transferred credits on the date of transfer.
18(Source: P.A. 96-297, eff. 8-11-09; 96-1260, eff. 7-23-10;
1997-651, eff. 1-5-12.)
 
20    (40 ILCS 5/4-108)  (from Ch. 108 1/2, par. 4-108)
21    Sec. 4-108. Creditable service.
22    (a) Creditable service is the time served as a firefighter
23of a municipality. In computing creditable service, furloughs
24and leaves of absence without pay exceeding 30 days in any one
25year shall not be counted, but leaves of absence for illness or

 

 

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1accident regardless of length, and periods of disability for
2which a firefighter received no disability pension payments
3under this Article, shall be counted.
4    (b) Furloughs and leaves of absence of 30 days or less in
5any one year may be counted as creditable service, if the
6firefighter makes the contribution to the fund that would have
7been required had he or she not been on furlough or leave of
8absence. To qualify for this creditable service, the
9firefighter must pay the required contributions to the fund
10not more than 90 days subsequent to the termination of the
11furlough or leave of absence, to the extent that the
12municipality has not made such contribution on his or her
13behalf.
14    (c) Creditable service includes:
15        (1) Service in the military, naval or air forces of
16    the United States entered upon when the person was an
17    active firefighter, provided that, upon applying for a
18    permanent pension, and in accordance with the rules of the
19    board the firefighter pays into the fund the amount that
20    would have been contributed had he or she been a regular
21    contributor during such period of service, if and to the
22    extent that the municipality which the firefighter served
23    made no such contributions in his or her behalf. The total
24    amount of such creditable service shall not exceed 5
25    years, except that any firefighter who on July 1, 1973 had
26    more than 5 years of such creditable service shall receive

 

 

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1    the total amount thereof as of that date.
2        (1.5) Up to 24 months of service in the military,
3    naval, or air forces of the United States that was served
4    prior to employment by a municipality or fire protection
5    district as a firefighter. To receive the credit for the
6    military service prior to the employment as a firefighter,
7    the firefighter must apply in writing to the fund and must
8    make contributions to the fund equal to (i) the employee
9    contributions that would have been required had the
10    service been rendered as a member, plus (ii) an amount
11    determined by the fund to be equal to the employer's
12    normal cost of the benefits accrued for that military
13    service, plus (iii) interest at the actuarially assumed
14    rate provided by the Public Pension Division of the
15    Department of Insurance Financial and Professional
16    Regulation, compounded annually from the first date of
17    membership in the fund to the date of payment on items (i)
18    and (ii). The changes to this paragraph (1.5) by this
19    amendatory Act of the 95th General Assembly apply only to
20    participating employees in service on or after its
21    effective date.
22        (2) Service prior to July 1, 1976 by a firefighter
23    initially excluded from participation by reason of age who
24    elected to participate and paid the required contributions
25    for such service.
26        (3) Up to 8 years of service by a firefighter as an

 

 

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1    officer in a statewide firefighters' association when he
2    is on a leave of absence from a municipality's payroll,
3    provided that (i) the firefighter has at least 10 years of
4    creditable service as an active firefighter, (ii) the
5    firefighter contributes to the fund the amount that he
6    would have contributed had he remained an active member of
7    the fund, (iii) the employee or statewide firefighter
8    association contributes to the fund an amount equal to the
9    employer's required contribution as determined by the
10    board, and (iv) for all leaves of absence under this
11    subdivision (3), including those beginning before the
12    effective date of this amendatory Act of the 97th General
13    Assembly, the firefighter continues to remain in sworn
14    status, subject to the professional standards of the
15    public employer or those terms established in statute.
16        (4) Time spent as an on-call fireman for a
17    municipality, calculated at the rate of one year of
18    creditable service for each 5 years of time spent as an
19    on-call fireman, provided that (i) the firefighter has at
20    least 18 years of creditable service as an active
21    firefighter, (ii) the firefighter spent at least 14 years
22    as an on-call firefighter for the municipality, (iii) the
23    firefighter applies for such creditable service within 30
24    days after the effective date of this amendatory Act of
25    1989, (iv) the firefighter contributes to the Fund an
26    amount representing employee contributions for the number

 

 

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1    of years of creditable service granted under this
2    subdivision (4), based on the salary and contribution rate
3    in effect for the firefighter at the date of entry into the
4    Fund, to be determined by the board, and (v) not more than
5    3 years of creditable service may be granted under this
6    subdivision (4).
7        Except as provided in Section 4-108.5, creditable
8    service shall not include time spent as a volunteer
9    firefighter, whether or not any compensation was received
10    therefor. The change made in this Section by Public Act
11    83-0463 is intended to be a restatement and clarification
12    of existing law, and does not imply that creditable
13    service was previously allowed under this Article for time
14    spent as a volunteer firefighter.
15        (5) Time served between July 1, 1976 and July 1, 1988
16    in the position of protective inspection officer or
17    administrative assistant for fire services, for a
18    municipality with a population under 10,000 that is
19    located in a county with a population over 3,000,000 and
20    that maintains a firefighters' pension fund under this
21    Article, if the position included firefighting duties,
22    notwithstanding that the person may not have held an
23    appointment as a firefighter, provided that application is
24    made to the pension fund within 30 days after the
25    effective date of this amendatory Act of 1991, and the
26    corresponding contributions are paid for the number of

 

 

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1    years of service granted, based upon the salary and
2    contribution rate in effect for the firefighter at the
3    date of entry into the pension fund, as determined by the
4    Board.
5        (6) Service before becoming a participant by a
6    firefighter initially excluded from participation by
7    reason of age who becomes a participant under the
8    amendment to Section 4-107 made by this amendatory Act of
9    1993 and pays the required contributions for such service.
10        (7) Up to 3 years of time during which the firefighter
11    receives a disability pension under Section 4-110,
12    4-110.1, or 4-111, provided that (i) the firefighter
13    returns to active service after the disability for a
14    period at least equal to the period for which credit is to
15    be established and (ii) the firefighter makes
16    contributions to the fund based on the rates specified in
17    Section 4-118.1 and the salary upon which the disability
18    pension is based. These contributions may be paid at any
19    time prior to the commencement of a retirement pension.
20    The firefighter may, but need not, elect to have the
21    contributions deducted from the disability pension or to
22    pay them in installments on a schedule approved by the
23    board. If not deducted from the disability pension, the
24    contributions shall include interest at the rate of 6% per
25    year, compounded annually, from the date for which service
26    credit is being established to the date of payment. If

 

 

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1    contributions are paid under this subdivision (c)(7) in
2    excess of those needed to establish the credit, the excess
3    shall be refunded. This subdivision (c)(7) applies to
4    persons receiving a disability pension under Section
5    4-110, 4-110.1, or 4-111 on the effective date of this
6    amendatory Act of the 91st General Assembly, as well as
7    persons who begin to receive such a disability pension
8    after that date.
9        (8) Up to 6 years of service as a police officer and
10    participant in an Article 3 police pension fund
11    administered by the unit of local government that employs
12    the firefighter under this Article, provided that the
13    service has been transferred to, and the required payment
14    received by, the Article 4 fund in accordance with
15    subsection (a) of Section 3-110.12 of this Code.
16        (9) Up to 8 years of service as a police officer and
17    participant in an Article 3 police pension fund
18    administered by a unit of local government, provided that
19    the service has been transferred to, and the required
20    payment received by, the Article 4 fund in accordance with
21    subsection (a-5) of Section 3-110.12 of this Code.
22(Source: P.A. 102-63, eff. 7-9-21.)
 
23    (40 ILCS 5/4-109.3)
24    Sec. 4-109.3. Employee creditable service.
25    (a) As used in this Section:

 

 

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1    "Final monthly salary" means the monthly salary attached
2to the rank held by the firefighter at the time of his or her
3last withdrawal from service under a particular pension fund.
4    "Last pension fund" means the pension fund in which the
5firefighter was participating at the time of his or her last
6withdrawal from service.
7    (b) The benefits provided under this Section are available
8only to a firefighter who:
9        (1) is a firefighter at the time of withdrawal from
10    the last pension fund and for at least the final 3 years of
11    employment prior to that withdrawal;
12        (2) has established service credit with at least one
13    pension fund established under this Article other than the
14    last pension fund;
15        (3) has a total of at least 20 years of service under
16    the various pension funds established under this Article
17    and has attained age 50; and
18        (4) is in service on or after the effective date of
19    this amendatory Act of the 93rd General Assembly.
20    (c) A firefighter who is eligible for benefits under this
21Section may elect to receive a retirement pension from each
22pension fund under this Article in which the firefighter has
23at least one year of service credit but has not received a
24refund under Section 4-116 (unless the firefighter repays that
25refund under subsection (g)) or subsection (c) of Section
264-118.1, by applying in writing and paying the contribution

 

 

HB2089 Engrossed- 50 -LRB103 05055 BMS 51381 b

1required under subsection (i).
2    (d) From each such pension fund other than the last
3pension fund, in lieu of any retirement pension otherwise
4payable under this Article, a firefighter to whom this Section
5applies may elect to receive a monthly pension of 1/12th of
62.5% of his or her final monthly salary under that fund for
7each month of service in that fund, subject to a maximum of 75%
8of that final monthly salary.
9    (e) From the last pension fund, in lieu of any retirement
10pension otherwise payable under this Article, a firefighter to
11whom this Section applies may elect to receive a monthly
12pension calculated as follows:
13    The last pension fund shall calculate the retirement
14pension that would be payable to the firefighter under Section
154-109 as if he or she had participated in that last pension
16fund during his or her entire period of service under all
17pension funds established under this Article (excluding any
18period of service for which the firefighter has received a
19refund under Section 4-116, unless the firefighter repays that
20refund under subsection (g), or for which the firefighter has
21received a refund under subsection (c) of Section 4-118.1).
22From this hypothetical pension there shall be subtracted the
23original amounts of the retirement pensions payable to the
24firefighter by all other pension funds under subsection (d).
25The remainder is the retirement pension payable to the
26firefighter by the last pension fund under this subsection

 

 

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1(e).
2    (f) Pensions elected under this Section shall be subject
3to increases as provided in Section 4-109.1.
4    (g) A current firefighter may reinstate creditable service
5in a pension fund established under this Article that was
6terminated upon receipt of a refund, by payment to that
7pension fund of the amount of the refund together with
8interest thereon at the rate of 6% per year, compounded
9annually, from the date of the refund to the date of payment. A
10repayment of a refund under this Section may be made in equal
11installments over a period of up to 10 years, but must be paid
12in full prior to retirement.
13    (h) As a condition of being eligible for the benefits
14provided in this Section, a person who is hired to a position
15as a firefighter on or after July 1, 2004 must, within 21
16months after being hired, notify the new employer, all of his
17or her previous employers under this Article, and the Public
18Pension Division of the Department Division of Insurance of
19the Department of Financial and Professional Regulation of his
20or her intent to receive the benefits provided under this
21Section.
22    As a condition of being eligible for the benefits provided
23in this Section, a person who first becomes a firefighter
24under this Article after December 31, 2010 must (1) within 21
25months after being hired or within 21 months after the
26effective date of this amendatory Act of the 102nd General

 

 

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1Assembly, whichever is later, notify the new employer, all of
2his or her previous employers under this Article, and the
3Public Pension Division of the Department of Insurance of his
4or her intent to receive the benefits provided under this
5Section; and (2) make the required contributions with
6applicable interest. A person who first becomes a firefighter
7under this Article after December 31, 2010 and who, before the
8effective date of this amendatory Act of the 102nd General
9Assembly, notified the new employer, all of his or her
10previous employers under this Article, and the Public Pension
11Division of the Department of Insurance of his or her intent to
12receive the benefits provided under this Section shall be
13deemed to have met the notice requirement under item (1) of the
14preceding sentence. The changes made to this Section by this
15amendatory Act of the 102nd General Assembly apply
16retroactively, notwithstanding Section 1-103.1.
17    (i) In order to receive a pension under this Section or an
18occupational disease disability pension for which he or she
19becomes eligible due to the application of subsection (m) of
20this Section, a firefighter must pay to each pension fund from
21which he or she has elected to receive a pension under this
22Section a contribution equal to 1% of monthly salary for each
23month of service credit that the firefighter has in that fund
24(other than service credit for which the firefighter has
25already paid the additional contribution required under
26subsection (c) of Section 4-118.1), together with interest

 

 

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1thereon at the rate of 6% per annum, compounded annually, from
2the firefighter's first day of employment with that fund or
3the first day of the fiscal year of that fund that immediately
4precedes the firefighter's first day of employment with that
5fund, whichever is earlier.
6    In order for a firefighter who, as of the effective date of
7this amendatory Act of the 93rd General Assembly, has not
8begun to receive a pension under this Section or an
9occupational disease disability pension under subsection (m)
10of this Section and who has contributed 1/12th of 1% of monthly
11salary for each month of service credit that the firefighter
12has in that fund (other than service credit for which the
13firefighter has already paid the additional contribution
14required under subsection (c) of Section 4-118.1), together
15with the required interest thereon, to receive a pension under
16this Section or an occupational disease disability pension for
17which he or she becomes eligible due to the application of
18subsection (m) of this Section, the firefighter must, within
19one year after the effective date of this amendatory Act of the
2093rd General Assembly, make an additional contribution equal
21to 11/12ths of 1% of monthly salary for each month of service
22credit that the firefighter has in that fund (other than
23service credit for which the firefighter has already paid the
24additional contribution required under subsection (c) of
25Section 4-118.1), together with interest thereon at the rate
26of 6% per annum, compounded annually, from the firefighter's

 

 

HB2089 Engrossed- 54 -LRB103 05055 BMS 51381 b

1first day of employment with that fund or the first day of the
2fiscal year of that fund that immediately precedes the
3firefighter's first day of employment with the fund, whichever
4is earlier. A firefighter who, as of the effective date of this
5amendatory Act of the 93rd General Assembly, has not begun to
6receive a pension under this Section or an occupational
7disease disability pension under subsection (m) of this
8Section and who has contributed 1/12th of 1% of monthly salary
9for each month of service credit that the firefighter has in
10that fund (other than service credit for which the firefighter
11has already paid the additional contribution required under
12subsection (c) of Section 4-118.1), together with the required
13interest thereon, in order to receive a pension under this
14Section or an occupational disease disability pension under
15subsection (m) of this Section, may elect, within one year
16after the effective date of this amendatory Act of the 93rd
17General Assembly to forfeit the benefits provided under this
18Section and receive a refund of that contribution.
19    (j) A retired firefighter who is receiving pension
20payments under Section 4-109 may reenter active service under
21this Article. Subject to the provisions of Section 4-117, the
22firefighter may receive credit for service performed after the
23reentry if the firefighter (1) applies to receive credit for
24that service, (2) suspends his or her pensions under this
25Section, and (3) makes the contributions required under
26subsection (i).

 

 

HB2089 Engrossed- 55 -LRB103 05055 BMS 51381 b

1    (k) A firefighter who is newly hired or promoted to a
2position as a firefighter shall not be denied participation in
3a fund under this Article based on his or her age.
4    (l) If a firefighter who elects to make contributions
5under subsection (c) of Section 4-118.1 for the pension
6benefits provided under this Section becomes entitled to a
7disability pension under Section 4-110, the last pension fund
8is responsible to pay that disability pension and the amount
9of that disability pension shall be based only on the
10firefighter's service with the last pension fund.
11    (m) Notwithstanding any provision in Section 4-110.1 to
12the contrary, if a firefighter who elects to make
13contributions under subsection (c) of Section 4-118.1 for the
14pension benefits provided under this Section becomes entitled
15to an occupational disease disability pension under Section
164-110.1, each pension fund to which the firefighter has made
17contributions under subsection (c) of Section 4-118.1 must pay
18a portion of that occupational disease disability pension
19equal to the proportion that the firefighter's service credit
20with that pension fund for which the contributions under
21subsection (c) of Section 4-118.1 have been made bears to the
22firefighter's total service credit with all of the pension
23funds for which the contributions under subsection (c) of
24Section 4-118.1 have been made. A firefighter who has made
25contributions under subsection (c) of Section 4-118.1 for at
26least 5 years of creditable service shall be deemed to have met

 

 

HB2089 Engrossed- 56 -LRB103 05055 BMS 51381 b

1the 5-year creditable service requirement under Section
24-110.1, regardless of whether the firefighter has 5 years of
3creditable service with the last pension fund.
4    (n) If a firefighter who elects to make contributions
5under subsection (c) of Section 4-118.1 for the pension
6benefits provided under this Section becomes entitled to a
7disability pension under Section 4-111, the last pension fund
8is responsible to pay that disability pension, provided that
9the firefighter has at least 7 years of creditable service
10with the last pension fund. In the event a firefighter began
11employment with a new employer as a result of an
12intergovernmental agreement that resulted in the elimination
13of the previous employer's fire department, the firefighter
14shall not be required to have 7 years of creditable service
15with the last pension fund to qualify for a disability pension
16under Section 4-111. Under this circumstance, a firefighter
17shall be required to have 7 years of total combined creditable
18service time to qualify for a disability pension under Section
194-111. The disability pension received pursuant to this
20Section shall be paid by the previous employer and new
21employer in proportion to the firefighter's years of service
22with each employer.
23(Source: P.A. 102-81, eff. 7-9-21.)
 
24    (40 ILCS 5/18-169)
25    Sec. 18-169. Application and expiration of new benefit

 

 

HB2089 Engrossed- 57 -LRB103 05055 BMS 51381 b

1increases.
2    (a) As used in this Section, "new benefit increase" means
3an increase in the amount of any benefit provided under this
4Article, or an expansion of the conditions of eligibility for
5any benefit under this Article, that results from an amendment
6to this Code that takes effect after the effective date of this
7amendatory Act of the 94th General Assembly.
8    (b) Notwithstanding any other provision of this Code or
9any subsequent amendment to this Code, every new benefit
10increase is subject to this Section and shall be deemed to be
11granted only in conformance with and contingent upon
12compliance with the provisions of this Section.
13    (c) The Public Act enacting a new benefit increase must
14identify and provide for payment to the System of additional
15funding at least sufficient to fund the resulting annual
16increase in cost to the System as it accrues.
17    Every new benefit increase is contingent upon the General
18Assembly providing the additional funding required under this
19subsection. The Commission on Government Forecasting and
20Accountability shall analyze whether adequate additional
21funding has been provided for the new benefit increase and
22shall report its analysis to the Public Pension Division of
23the Department of Insurance Financial and Professional
24Regulation. A new benefit increase created by a Public Act
25that does not include the additional funding required under
26this subsection is null and void. If the Public Pension

 

 

HB2089 Engrossed- 58 -LRB103 05055 BMS 51381 b

1Division determines that the additional funding provided for a
2new benefit increase under this subsection is or has become
3inadequate, it may so certify to the Governor and the State
4Comptroller and, in the absence of corrective action by the
5General Assembly, the new benefit increase shall expire at the
6end of the fiscal year in which the certification is made.
7    (d) Every new benefit increase shall expire 5 years after
8its effective date or on such earlier date as may be specified
9in the language enacting the new benefit increase or provided
10under subsection (c). This does not prevent the General
11Assembly from extending or re-creating a new benefit increase
12by law.
13    (e) Except as otherwise provided in the language creating
14the new benefit increase, a new benefit increase that expires
15under this Section continues to apply to persons who applied
16and qualified for the affected benefit while the new benefit
17increase was in effect and to the affected beneficiaries and
18alternate payees of such persons, but does not apply to any
19other person, including without limitation a person who
20continues in service after the expiration date and did not
21apply and qualify for the affected benefit while the new
22benefit increase was in effect.
23(Source: P.A. 94-4, eff. 6-1-05.)
 
24    (40 ILCS 5/22-1004)
25    Sec. 22-1004. Commission on Government Forecasting and

 

 

HB2089 Engrossed- 59 -LRB103 05055 BMS 51381 b

1Accountability report on Articles 3 and 4 funds. Each odd
2numbered year, the Commission on Government Forecasting and
3Accountability shall analyze data submitted by the Public
4Pension Division of the Illinois Department of Insurance
5Financial and Professional Regulation pertaining to the
6pension systems established under Article 3 and Article 4 of
7this Code. The Commission shall issue a formal report during
8such years, the content of which is, to the extent
9practicable, to be similar in nature to that required under
10Section 22-1003. In addition to providing aggregate analyses
11of both systems, the report shall analyze the fiscal status
12and provide forecasting projections for selected individual
13funds in each system. To the fullest extent practicable, the
14report shall analyze factors that affect each selected
15individual fund's unfunded liability and any actuarial gains
16and losses caused by salary increases, investment returns,
17employer contributions, benefit increases, change in
18assumptions, the difference in employer contributions and the
19normal cost plus interest, and any other applicable factors.
20In analyzing net investment returns, the report shall analyze
21the assumed investment return compared to the actual
22investment return over the preceding 10 fiscal years. The
23Public Pension Division of the Department of Insurance
24Financial and Professional Regulation shall provide to the
25Commission any assistance that the Commission may request with
26respect to its report under this Section.

 

 

HB2089 Engrossed- 60 -LRB103 05055 BMS 51381 b

1(Source: P.A. 95-950, eff. 8-29-08.)
 
2    Section 10. The Illinois Insurance Code is amended by
3changing Sections 143.20a, 155.18, 155.19, 155.36, 370c, 412,
4500-140, and 1204 as follows:
 
5    (215 ILCS 5/143.20a)  (from Ch. 73, par. 755.20a)
6    Sec. 143.20a. Cancellation of Fire and Marine Policies.
7(1) Policies covering property, except policies described in
8subsection (b) of Section 143.13 143.13b, of this Code, issued
9for the kinds of business enumerated in Class 3 of Section 4 of
10this Code may be cancelled 10 days following receipt of
11written notice by the named insureds if the insured property
12is found to consist of one or more of the following:
13    (a) Buildings to which, following a fire loss, permanent
14repairs have not commenced within 60 days after satisfactory
15adjustment of loss, unless such delay is a direct result of a
16labor dispute or weather conditions.
17    (b) Buildings which have been unoccupied 60 consecutive
18days, except buildings which have a seasonal occupancy and
19buildings which are undergoing construction, repair or
20reconstruction and are properly secured against unauthorized
21entry.
22    (c) Buildings on which, because of their physical
23condition, there is an outstanding order to vacate, an
24outstanding demolition order, or which have been declared

 

 

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1unsafe in accordance with applicable law.
2    (d) Buildings on which heat, water, sewer service or
3public lighting have not been connected for 30 consecutive
4days or more.
5    (2) All notices of cancellation under this Section shall
6be sent by certified mail and regular mail to the address of
7record of the named insureds.
8    (3) All cancellations made pursuant to this Section shall
9be on a pro rata basis.
10(Source: P.A. 86-437.)
 
11    (215 ILCS 5/155.18)  (from Ch. 73, par. 767.18)
12    (Text of Section WITHOUT the changes made by P.A. 94-677,
13which has been held unconstitutional)
14    Sec. 155.18. (a) This Section shall apply to insurance on
15risks based upon negligence by a physician, hospital or other
16health care provider, referred to herein as medical liability
17insurance. This Section shall not apply to contracts of
18reinsurance, nor to any farm, county, district or township
19mutual insurance company transacting business under an Act
20entitled "An Act relating to local mutual district, county and
21township insurance companies", approved March 13, 1936, as now
22or hereafter amended, nor to any such company operating under
23a special charter.
24    (b) The following standards shall apply to the making and
25use of rates pertaining to all classes of medical liability

 

 

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1insurance:
2        (1) Rates shall not be excessive or inadequate, as
3    herein defined, nor shall they be unfairly discriminatory.
4    No rate shall be held to be excessive unless such rate is
5    unreasonably high for the insurance provided, and a
6    reasonable degree of competition does not exist in the
7    area with respect to the classification to which such rate
8    is applicable.
9        No rate shall be held inadequate unless it is
10    unreasonably low for the insurance provided and continued
11    use of it would endanger solvency of the company.
12        (2) Consideration shall be given, to the extent
13    applicable, to past and prospective loss experience within
14    and outside this State, to a reasonable margin for
15    underwriting profit and contingencies, to past and
16    prospective expenses both countrywide and those especially
17    applicable to this State, and to all other factors,
18    including judgment factors, deemed relevant within and
19    outside this State.
20        Consideration may also be given in the making and use
21    of rates to dividends, savings or unabsorbed premium
22    deposits allowed or returned by companies to their
23    policyholders, members or subscribers.
24        (3) The systems of expense provisions included in the
25    rates for use by any company or group of companies may
26    differ from those of other companies or groups of

 

 

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1    companies to reflect the operating methods of any such
2    company or group with respect to any kind of insurance, or
3    with respect to any subdivision or combination thereof.
4        (4) Risks may be grouped by classifications for the
5    establishment of rates and minimum premiums.
6    Classification rates may be modified to produce rates for
7    individual risks in accordance with rating plans which
8    establish standards for measuring variations in hazards or
9    expense provisions, or both. Such standards may measure
10    any difference among risks that have a probable effect
11    upon losses or expenses. Such classifications or
12    modifications of classifications of risks may be
13    established based upon size, expense, management,
14    individual experience, location or dispersion of hazard,
15    or any other reasonable considerations and shall apply to
16    all risks under the same or substantially the same
17    circumstances or conditions. The rate for an established
18    classification should be related generally to the
19    anticipated loss and expense factors of the class.
20    (c) Every company writing medical liability insurance
21shall file with the Director of Insurance the rates and rating
22schedules it uses for medical liability insurance.
23         (1) This filing shall occur at least annually and as
24    often as the rates are changed or amended.
25         (2) For the purposes of this Section any change in
26    premium to the company's insureds as a result of a change

 

 

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1    in the company's base rates or a change in its increased
2    limits factors shall constitute a change in rates and
3    shall require a filing with the Director.
4     (3) It shall be certified in such filing by an officer of
5the company and a qualified actuary that the company's rates
6are based on sound actuarial principles and are not
7inconsistent with the company's experience.
8    (d) If after a hearing the Director finds:
9        (1) that any rate, rating plan or rating system
10    violates the provisions of this Section applicable to it,
11    he may issue an order to the company which has been the
12    subject of the hearing specifying in what respects such
13    violation exists and stating when, within a reasonable
14    period of time, the further use of such rate or rating
15    system by such company in contracts of insurance made
16    thereafter shall be prohibited;
17        (2) that the violation of any of the provisions of
18    this Section applicable to it by any company which has
19    been the subject of hearing was wilful, he may suspend or
20    revoke, in whole or in part, the certificate of authority
21    of such company with respect to the class of insurance
22    which has been the subject of the hearing.
23(Source: P.A. 79-1434.)
 
24    (215 ILCS 5/155.19)  (from Ch. 73, par. 767.19)
25    (Text of Section WITHOUT the changes made by P.A. 94-677,

 

 

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1which has been held unconstitutional)
2    Sec. 155.19. All claims filed after December 31, 1976 with
3any insurer and all suits filed after December 31, 1976 in any
4court in this State, alleging liability on the part of any
5physician, hospital or other health care provider for
6medically related injuries, shall be reported to the Director
7of Insurance in such form and under such terms and conditions
8as may be prescribed by the Director. The Director shall
9maintain complete and accurate records of all such claims and
10suits including their nature, amount, disposition and other
11information as he may deem useful or desirable in observing
12and reporting on health care provider liability trends in this
13State. The Director shall release to appropriate disciplinary
14and licensing agencies any such data or information which may
15assist such agencies in improving the quality of health care
16or which may be useful to such agencies for the purpose of
17professional discipline.
18    With due regard for appropriate maintenance of the
19confidentiality thereof, the Director may release from time to
20time to the Governor, the General Assembly and the general
21public statistical reports based on such data and information.
22    The Director may promulgate such rules and regulations as
23may be necessary to carry out the provisions of this Section.
24(Source: P.A. 79-1434.)
 
25    (215 ILCS 5/155.36)

 

 

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1    Sec. 155.36. Managed Care Reform and Patient Rights Act.
2Insurance companies that transact the kinds of insurance
3authorized under Class 1(b) or Class 2(a) of Section 4 of this
4Code shall comply with Sections 25, 45, 45.1, 45.2, 45.3, 65,
570, and 85, subsection (d) of Section 30, and the definition of
6the term "emergency medical condition" in Section 10 of the
7Managed Care Reform and Patient Rights Act.
8(Source: P.A. 101-608, eff. 1-1-20; 102-409, eff. 1-1-22.)
 
9    (215 ILCS 5/370c)  (from Ch. 73, par. 982c)
10    Sec. 370c. Mental and emotional disorders.
11    (a)(1) On and after January 1, 2022 (the effective date of
12Public Act 102-579), every insurer that amends, delivers,
13issues, or renews group accident and health policies providing
14coverage for hospital or medical treatment or services for
15illness on an expense-incurred basis shall provide coverage
16for the medically necessary treatment of mental, emotional,
17nervous, or substance use disorders or conditions consistent
18with the parity requirements of Section 370c.1 of this Code.
19    (2) Each insured that is covered for mental, emotional,
20nervous, or substance use disorders or conditions shall be
21free to select the physician licensed to practice medicine in
22all its branches, licensed clinical psychologist, licensed
23clinical social worker, licensed clinical professional
24counselor, licensed marriage and family therapist, licensed
25speech-language pathologist, or other licensed or certified

 

 

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1professional at a program licensed pursuant to the Substance
2Use Disorder Act of his or her choice to treat such disorders,
3and the insurer shall pay the covered charges of such
4physician licensed to practice medicine in all its branches,
5licensed clinical psychologist, licensed clinical social
6worker, licensed clinical professional counselor, licensed
7marriage and family therapist, licensed speech-language
8pathologist, or other licensed or certified professional at a
9program licensed pursuant to the Substance Use Disorder Act up
10to the limits of coverage, provided (i) the disorder or
11condition treated is covered by the policy, and (ii) the
12physician, licensed psychologist, licensed clinical social
13worker, licensed clinical professional counselor, licensed
14marriage and family therapist, licensed speech-language
15pathologist, or other licensed or certified professional at a
16program licensed pursuant to the Substance Use Disorder Act is
17authorized to provide said services under the statutes of this
18State and in accordance with accepted principles of his or her
19profession.
20    (3) Insofar as this Section applies solely to licensed
21clinical social workers, licensed clinical professional
22counselors, licensed marriage and family therapists, licensed
23speech-language pathologists, and other licensed or certified
24professionals at programs licensed pursuant to the Substance
25Use Disorder Act, those persons who may provide services to
26individuals shall do so after the licensed clinical social

 

 

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1worker, licensed clinical professional counselor, licensed
2marriage and family therapist, licensed speech-language
3pathologist, or other licensed or certified professional at a
4program licensed pursuant to the Substance Use Disorder Act
5has informed the patient of the desirability of the patient
6conferring with the patient's primary care physician.
7    (4) "Mental, emotional, nervous, or substance use disorder
8or condition" means a condition or disorder that involves a
9mental health condition or substance use disorder that falls
10under any of the diagnostic categories listed in the mental
11and behavioral disorders chapter of the current edition of the
12World Health Organization's International Classification of
13Disease or that is listed in the most recent version of the
14American Psychiatric Association's Diagnostic and Statistical
15Manual of Mental Disorders. "Mental, emotional, nervous, or
16substance use disorder or condition" includes any mental
17health condition that occurs during pregnancy or during the
18postpartum period and includes, but is not limited to,
19postpartum depression.
20    (5) Medically necessary treatment and medical necessity
21determinations shall be interpreted and made in a manner that
22is consistent with and pursuant to subsections (h) through
23(t).
24    (b)(1) (Blank).
25    (2) (Blank).
26    (2.5) (Blank).

 

 

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1    (3) Unless otherwise prohibited by federal law and
2consistent with the parity requirements of Section 370c.1 of
3this Code, the reimbursing insurer that amends, delivers,
4issues, or renews a group or individual policy of accident and
5health insurance, a qualified health plan offered through the
6health insurance marketplace, or a provider of treatment of
7mental, emotional, nervous, or substance use disorders or
8conditions shall furnish medical records or other necessary
9data that substantiate that initial or continued treatment is
10at all times medically necessary. An insurer shall provide a
11mechanism for the timely review by a provider holding the same
12license and practicing in the same specialty as the patient's
13provider, who is unaffiliated with the insurer, jointly
14selected by the patient (or the patient's next of kin or legal
15representative if the patient is unable to act for himself or
16herself), the patient's provider, and the insurer in the event
17of a dispute between the insurer and patient's provider
18regarding the medical necessity of a treatment proposed by a
19patient's provider. If the reviewing provider determines the
20treatment to be medically necessary, the insurer shall provide
21reimbursement for the treatment. Future contractual or
22employment actions by the insurer regarding the patient's
23provider may not be based on the provider's participation in
24this procedure. Nothing prevents the insured from agreeing in
25writing to continue treatment at his or her expense. When
26making a determination of the medical necessity for a

 

 

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1treatment modality for mental, emotional, nervous, or
2substance use disorders or conditions, an insurer must make
3the determination in a manner that is consistent with the
4manner used to make that determination with respect to other
5diseases or illnesses covered under the policy, including an
6appeals process. Medical necessity determinations for
7substance use disorders shall be made in accordance with
8appropriate patient placement criteria established by the
9American Society of Addiction Medicine. No additional criteria
10may be used to make medical necessity determinations for
11substance use disorders.
12    (4) A group health benefit plan amended, delivered,
13issued, or renewed on or after January 1, 2019 (the effective
14date of Public Act 100-1024) or an individual policy of
15accident and health insurance or a qualified health plan
16offered through the health insurance marketplace amended,
17delivered, issued, or renewed on or after January 1, 2019 (the
18effective date of Public Act 100-1024):
19        (A) shall provide coverage based upon medical
20    necessity for the treatment of a mental, emotional,
21    nervous, or substance use disorder or condition consistent
22    with the parity requirements of Section 370c.1 of this
23    Code; provided, however, that in each calendar year
24    coverage shall not be less than the following:
25            (i) 45 days of inpatient treatment; and
26            (ii) beginning on June 26, 2006 (the effective

 

 

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1        date of Public Act 94-921), 60 visits for outpatient
2        treatment including group and individual outpatient
3        treatment; and
4            (iii) for plans or policies delivered, issued for
5        delivery, renewed, or modified after January 1, 2007
6        (the effective date of Public Act 94-906), 20
7        additional outpatient visits for speech therapy for
8        treatment of pervasive developmental disorders that
9        will be in addition to speech therapy provided
10        pursuant to item (ii) of this subparagraph (A); and
11        (B) may not include a lifetime limit on the number of
12    days of inpatient treatment or the number of outpatient
13    visits covered under the plan.
14        (C) (Blank).
15    (5) An issuer of a group health benefit plan or an
16individual policy of accident and health insurance or a
17qualified health plan offered through the health insurance
18marketplace may not count toward the number of outpatient
19visits required to be covered under this Section an outpatient
20visit for the purpose of medication management and shall cover
21the outpatient visits under the same terms and conditions as
22it covers outpatient visits for the treatment of physical
23illness.
24    (5.5) An individual or group health benefit plan amended,
25delivered, issued, or renewed on or after September 9, 2015
26(the effective date of Public Act 99-480) shall offer coverage

 

 

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1for medically necessary acute treatment services and medically
2necessary clinical stabilization services. The treating
3provider shall base all treatment recommendations and the
4health benefit plan shall base all medical necessity
5determinations for substance use disorders in accordance with
6the most current edition of the Treatment Criteria for
7Addictive, Substance-Related, and Co-Occurring Conditions
8established by the American Society of Addiction Medicine. The
9treating provider shall base all treatment recommendations and
10the health benefit plan shall base all medical necessity
11determinations for medication-assisted treatment in accordance
12with the most current Treatment Criteria for Addictive,
13Substance-Related, and Co-Occurring Conditions established by
14the American Society of Addiction Medicine.
15    As used in this subsection:
16    "Acute treatment services" means 24-hour medically
17supervised addiction treatment that provides evaluation and
18withdrawal management and may include biopsychosocial
19assessment, individual and group counseling, psychoeducational
20groups, and discharge planning.
21    "Clinical stabilization services" means 24-hour treatment,
22usually following acute treatment services for substance
23abuse, which may include intensive education and counseling
24regarding the nature of addiction and its consequences,
25relapse prevention, outreach to families and significant
26others, and aftercare planning for individuals beginning to

 

 

HB2089 Engrossed- 73 -LRB103 05055 BMS 51381 b

1engage in recovery from addiction.
2    (6) An issuer of a group health benefit plan may provide or
3offer coverage required under this Section through a managed
4care plan.
5    (6.5) An individual or group health benefit plan amended,
6delivered, issued, or renewed on or after January 1, 2019 (the
7effective date of Public Act 100-1024):
8        (A) shall not impose prior authorization requirements,
9    other than those established under the Treatment Criteria
10    for Addictive, Substance-Related, and Co-Occurring
11    Conditions established by the American Society of
12    Addiction Medicine, on a prescription medication approved
13    by the United States Food and Drug Administration that is
14    prescribed or administered for the treatment of substance
15    use disorders;
16        (B) shall not impose any step therapy requirements,
17    other than those established under the Treatment Criteria
18    for Addictive, Substance-Related, and Co-Occurring
19    Conditions established by the American Society of
20    Addiction Medicine, before authorizing coverage for a
21    prescription medication approved by the United States Food
22    and Drug Administration that is prescribed or administered
23    for the treatment of substance use disorders;
24        (C) shall place all prescription medications approved
25    by the United States Food and Drug Administration
26    prescribed or administered for the treatment of substance

 

 

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1    use disorders on, for brand medications, the lowest tier
2    of the drug formulary developed and maintained by the
3    individual or group health benefit plan that covers brand
4    medications and, for generic medications, the lowest tier
5    of the drug formulary developed and maintained by the
6    individual or group health benefit plan that covers
7    generic medications; and
8        (D) shall not exclude coverage for a prescription
9    medication approved by the United States Food and Drug
10    Administration for the treatment of substance use
11    disorders and any associated counseling or wraparound
12    services on the grounds that such medications and services
13    were court ordered.
14    (7) (Blank).
15    (8) (Blank).
16    (9) With respect to all mental, emotional, nervous, or
17substance use disorders or conditions, coverage for inpatient
18treatment shall include coverage for treatment in a
19residential treatment center certified or licensed by the
20Department of Public Health or the Department of Human
21Services.
22    (c) This Section shall not be interpreted to require
23coverage for speech therapy or other habilitative services for
24those individuals covered under Section 356z.15 of this Code.
25    (d) With respect to a group or individual policy of
26accident and health insurance or a qualified health plan

 

 

HB2089 Engrossed- 75 -LRB103 05055 BMS 51381 b

1offered through the health insurance marketplace, the
2Department and, with respect to medical assistance, the
3Department of Healthcare and Family Services shall each
4enforce the requirements of this Section and Sections 356z.23
5and 370c.1 of this Code, the Paul Wellstone and Pete Domenici
6Mental Health Parity and Addiction Equity Act of 2008, 42
7U.S.C. 18031(j), and any amendments to, and federal guidance
8or regulations issued under, those Acts, including, but not
9limited to, final regulations issued under the Paul Wellstone
10and Pete Domenici Mental Health Parity and Addiction Equity
11Act of 2008 and final regulations applying the Paul Wellstone
12and Pete Domenici Mental Health Parity and Addiction Equity
13Act of 2008 to Medicaid managed care organizations, the
14Children's Health Insurance Program, and alternative benefit
15plans. Specifically, the Department and the Department of
16Healthcare and Family Services shall take action:
17        (1) proactively ensuring compliance by individual and
18    group policies, including by requiring that insurers
19    submit comparative analyses, as set forth in paragraph (6)
20    of subsection (k) of Section 370c.1, demonstrating how
21    they design and apply nonquantitative treatment
22    limitations, both as written and in operation, for mental,
23    emotional, nervous, or substance use disorder or condition
24    benefits as compared to how they design and apply
25    nonquantitative treatment limitations, as written and in
26    operation, for medical and surgical benefits;

 

 

HB2089 Engrossed- 76 -LRB103 05055 BMS 51381 b

1        (2) evaluating all consumer or provider complaints
2    regarding mental, emotional, nervous, or substance use
3    disorder or condition coverage for possible parity
4    violations;
5        (3) performing parity compliance market conduct
6    examinations or, in the case of the Department of
7    Healthcare and Family Services, parity compliance audits
8    of individual and group plans and policies, including, but
9    not limited to, reviews of:
10            (A) nonquantitative treatment limitations,
11        including, but not limited to, prior authorization
12        requirements, concurrent review, retrospective review,
13        step therapy, network admission standards,
14        reimbursement rates, and geographic restrictions;
15            (B) denials of authorization, payment, and
16        coverage; and
17            (C) other specific criteria as may be determined
18        by the Department.
19    The findings and the conclusions of the parity compliance
20market conduct examinations and audits shall be made public.
21    The Director may adopt rules to effectuate any provisions
22of the Paul Wellstone and Pete Domenici Mental Health Parity
23and Addiction Equity Act of 2008 that relate to the business of
24insurance.
25    (e) Availability of plan information.
26        (1) The criteria for medical necessity determinations

 

 

HB2089 Engrossed- 77 -LRB103 05055 BMS 51381 b

1    made under a group health plan, an individual policy of
2    accident and health insurance, or a qualified health plan
3    offered through the health insurance marketplace with
4    respect to mental health or substance use disorder
5    benefits (or health insurance coverage offered in
6    connection with the plan with respect to such benefits)
7    must be made available by the plan administrator (or the
8    health insurance issuer offering such coverage) to any
9    current or potential participant, beneficiary, or
10    contracting provider upon request.
11        (2) The reason for any denial under a group health
12    benefit plan, an individual policy of accident and health
13    insurance, or a qualified health plan offered through the
14    health insurance marketplace (or health insurance coverage
15    offered in connection with such plan or policy) of
16    reimbursement or payment for services with respect to
17    mental, emotional, nervous, or substance use disorders or
18    conditions benefits in the case of any participant or
19    beneficiary must be made available within a reasonable
20    time and in a reasonable manner and in readily
21    understandable language by the plan administrator (or the
22    health insurance issuer offering such coverage) to the
23    participant or beneficiary upon request.
24    (f) As used in this Section, "group policy of accident and
25health insurance" and "group health benefit plan" includes (1)
26State-regulated employer-sponsored group health insurance

 

 

HB2089 Engrossed- 78 -LRB103 05055 BMS 51381 b

1plans written in Illinois or which purport to provide coverage
2for a resident of this State; and (2) State employee health
3plans.
4    (g) (1) As used in this subsection:
5    "Benefits", with respect to insurers, means the benefits
6provided for treatment services for inpatient and outpatient
7treatment of substance use disorders or conditions at American
8Society of Addiction Medicine levels of treatment 2.1
9(Intensive Outpatient), 2.5 (Partial Hospitalization), 3.1
10(Clinically Managed Low-Intensity Residential), 3.3
11(Clinically Managed Population-Specific High-Intensity
12Residential), 3.5 (Clinically Managed High-Intensity
13Residential), and 3.7 (Medically Monitored Intensive
14Inpatient) and OMT (Opioid Maintenance Therapy) services.
15    "Benefits", with respect to managed care organizations,
16means the benefits provided for treatment services for
17inpatient and outpatient treatment of substance use disorders
18or conditions at American Society of Addiction Medicine levels
19of treatment 2.1 (Intensive Outpatient), 2.5 (Partial
20Hospitalization), 3.5 (Clinically Managed High-Intensity
21Residential), and 3.7 (Medically Monitored Intensive
22Inpatient) and OMT (Opioid Maintenance Therapy) services.
23    "Substance use disorder treatment provider or facility"
24means a licensed physician, licensed psychologist, licensed
25psychiatrist, licensed advanced practice registered nurse, or
26licensed, certified, or otherwise State-approved facility or

 

 

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1provider of substance use disorder treatment.
2    (2) A group health insurance policy, an individual health
3benefit plan, or qualified health plan that is offered through
4the health insurance marketplace, small employer group health
5plan, and large employer group health plan that is amended,
6delivered, issued, executed, or renewed in this State, or
7approved for issuance or renewal in this State, on or after
8January 1, 2019 (the effective date of Public Act 100-1023)
9shall comply with the requirements of this Section and Section
10370c.1. The services for the treatment and the ongoing
11assessment of the patient's progress in treatment shall follow
12the requirements of 77 Ill. Adm. Code 2060.
13    (3) Prior authorization shall not be utilized for the
14benefits under this subsection. The substance use disorder
15treatment provider or facility shall notify the insurer of the
16initiation of treatment. For an insurer that is not a managed
17care organization, the substance use disorder treatment
18provider or facility notification shall occur for the
19initiation of treatment of the covered person within 2
20business days. For managed care organizations, the substance
21use disorder treatment provider or facility notification shall
22occur in accordance with the protocol set forth in the
23provider agreement for initiation of treatment within 24
24hours. If the managed care organization is not capable of
25accepting the notification in accordance with the contractual
26protocol during the 24-hour period following admission, the

 

 

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1substance use disorder treatment provider or facility shall
2have one additional business day to provide the notification
3to the appropriate managed care organization. Treatment plans
4shall be developed in accordance with the requirements and
5timeframes established in 77 Ill. Adm. Code 2060. If the
6substance use disorder treatment provider or facility fails to
7notify the insurer of the initiation of treatment in
8accordance with these provisions, the insurer may follow its
9normal prior authorization processes.
10    (4) For an insurer that is not a managed care
11organization, if an insurer determines that benefits are no
12longer medically necessary, the insurer shall notify the
13covered person, the covered person's authorized
14representative, if any, and the covered person's health care
15provider in writing of the covered person's right to request
16an external review pursuant to the Health Carrier External
17Review Act. The notification shall occur within 24 hours
18following the adverse determination.
19    Pursuant to the requirements of the Health Carrier
20External Review Act, the covered person or the covered
21person's authorized representative may request an expedited
22external review. An expedited external review may not occur if
23the substance use disorder treatment provider or facility
24determines that continued treatment is no longer medically
25necessary. Under this subsection, a request for expedited
26external review must be initiated within 24 hours following

 

 

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1the adverse determination notification by the insurer. Failure
2to request an expedited external review within 24 hours shall
3preclude a covered person or a covered person's authorized
4representative from requesting an expedited external review.
5    If an expedited external review request meets the criteria
6of the Health Carrier External Review Act, an independent
7review organization shall make a final determination of
8medical necessity within 72 hours. If an independent review
9organization upholds an adverse determination, an insurer
10shall remain responsible to provide coverage of benefits
11through the day following the determination of the independent
12review organization. A decision to reverse an adverse
13determination shall comply with the Health Carrier External
14Review Act.
15    (5) The substance use disorder treatment provider or
16facility shall provide the insurer with 7 business days'
17advance notice of the planned discharge of the patient from
18the substance use disorder treatment provider or facility and
19notice on the day that the patient is discharged from the
20substance use disorder treatment provider or facility.
21    (6) The benefits required by this subsection shall be
22provided to all covered persons with a diagnosis of substance
23use disorder or conditions. The presence of additional related
24or unrelated diagnoses shall not be a basis to reduce or deny
25the benefits required by this subsection.
26    (7) Nothing in this subsection shall be construed to

 

 

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1require an insurer to provide coverage for any of the benefits
2in this subsection.
3    (h) As used in this Section:
4    "Generally accepted standards of mental, emotional,
5nervous, or substance use disorder or condition care" means
6standards of care and clinical practice that are generally
7recognized by health care providers practicing in relevant
8clinical specialties such as psychiatry, psychology, clinical
9sociology, social work, addiction medicine and counseling, and
10behavioral health treatment. Valid, evidence-based sources
11reflecting generally accepted standards of mental, emotional,
12nervous, or substance use disorder or condition care include
13peer-reviewed scientific studies and medical literature,
14recommendations of nonprofit health care provider professional
15associations and specialty societies, including, but not
16limited to, patient placement criteria and clinical practice
17guidelines, recommendations of federal government agencies,
18and drug labeling approved by the United States Food and Drug
19Administration.
20    "Medically necessary treatment of mental, emotional,
21nervous, or substance use disorders or conditions" means a
22service or product addressing the specific needs of that
23patient, for the purpose of screening, preventing, diagnosing,
24managing, or treating an illness, injury, or condition or its
25symptoms and comorbidities, including minimizing the
26progression of an illness, injury, or condition or its

 

 

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1symptoms and comorbidities in a manner that is all of the
2following:
3        (1) in accordance with the generally accepted
4    standards of mental, emotional, nervous, or substance use
5    disorder or condition care;
6        (2) clinically appropriate in terms of type,
7    frequency, extent, site, and duration; and
8        (3) not primarily for the economic benefit of the
9    insurer, purchaser, or for the convenience of the patient,
10    treating physician, or other health care provider.
11    "Utilization review" means either of the following:
12        (1) prospectively, retrospectively, or concurrently
13    reviewing and approving, modifying, delaying, or denying,
14    based in whole or in part on medical necessity, requests
15    by health care providers, insureds, or their authorized
16    representatives for coverage of health care services
17    before, retrospectively, or concurrently with the
18    provision of health care services to insureds.
19        (2) evaluating the medical necessity, appropriateness,
20    level of care, service intensity, efficacy, or efficiency
21    of health care services, benefits, procedures, or
22    settings, under any circumstances, to determine whether a
23    health care service or benefit subject to a medical
24    necessity coverage requirement in an insurance policy is
25    covered as medically necessary for an insured.
26    "Utilization review criteria" means patient placement

 

 

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1criteria or any criteria, standards, protocols, or guidelines
2used by an insurer to conduct utilization review.
3    (i)(1) Every insurer that amends, delivers, issues, or
4renews a group or individual policy of accident and health
5insurance or a qualified health plan offered through the
6health insurance marketplace in this State and Medicaid
7managed care organizations providing coverage for hospital or
8medical treatment on or after January 1, 2023 shall, pursuant
9to subsections (h) through (s), provide coverage for medically
10necessary treatment of mental, emotional, nervous, or
11substance use disorders or conditions.
12    (2) An insurer shall not set a specific limit on the
13duration of benefits or coverage of medically necessary
14treatment of mental, emotional, nervous, or substance use
15disorders or conditions or limit coverage only to alleviation
16of the insured's current symptoms.
17    (3) All medical necessity determinations made by the
18insurer concerning service intensity, level of care placement,
19continued stay, and transfer or discharge of insureds
20diagnosed with mental, emotional, nervous, or substance use
21disorders or conditions shall be conducted in accordance with
22the requirements of subsections (k) through (u).
23    (4) An insurer that authorizes a specific type of
24treatment by a provider pursuant to this Section shall not
25rescind or modify the authorization after that provider
26renders the health care service in good faith and pursuant to

 

 

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1this authorization for any reason, including, but not limited
2to, the insurer's subsequent cancellation or modification of
3the insured's or policyholder's contract, or the insured's or
4policyholder's eligibility. Nothing in this Section shall
5require the insurer to cover a treatment when the
6authorization was granted based on a material
7misrepresentation by the insured, the policyholder, or the
8provider. Nothing in this Section shall require Medicaid
9managed care organizations to pay for services if the
10individual was not eligible for Medicaid at the time the
11service was rendered. Nothing in this Section shall require an
12insurer to pay for services if the individual was not the
13insurer's enrollee at the time services were rendered. As used
14in this paragraph, "material" means a fact or situation that
15is not merely technical in nature and results in or could
16result in a substantial change in the situation.
17    (j) An insurer shall not limit benefits or coverage for
18medically necessary services on the basis that those services
19should be or could be covered by a public entitlement program,
20including, but not limited to, special education or an
21individualized education program, Medicaid, Medicare,
22Supplemental Security Income, or Social Security Disability
23Insurance, and shall not include or enforce a contract term
24that excludes otherwise covered benefits on the basis that
25those services should be or could be covered by a public
26entitlement program. Nothing in this subsection shall be

 

 

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1construed to require an insurer to cover benefits that have
2been authorized and provided for a covered person by a public
3entitlement program. Medicaid managed care organizations are
4not subject to this subsection.
5    (k) An insurer shall base any medical necessity
6determination or the utilization review criteria that the
7insurer, and any entity acting on the insurer's behalf,
8applies to determine the medical necessity of health care
9services and benefits for the diagnosis, prevention, and
10treatment of mental, emotional, nervous, or substance use
11disorders or conditions on current generally accepted
12standards of mental, emotional, nervous, or substance use
13disorder or condition care. All denials and appeals shall be
14reviewed by a professional with experience or expertise
15comparable to the provider requesting the authorization.
16    (l) For medical necessity determinations relating to level
17of care placement, continued stay, and transfer or discharge
18of insureds diagnosed with mental, emotional, and nervous
19disorders or conditions, an insurer shall apply the patient
20placement criteria set forth in the most recent version of the
21treatment criteria developed by an unaffiliated nonprofit
22professional association for the relevant clinical specialty
23or, for Medicaid managed care organizations, patient placement
24criteria determined by the Department of Healthcare and Family
25Services that are consistent with generally accepted standards
26of mental, emotional, nervous or substance use disorder or

 

 

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1condition care. Pursuant to subsection (b), in conducting
2utilization review of all covered services and benefits for
3the diagnosis, prevention, and treatment of substance use
4disorders an insurer shall use the most recent edition of the
5patient placement criteria established by the American Society
6of Addiction Medicine.
7    (m) For medical necessity determinations relating to level
8of care placement, continued stay, and transfer or discharge
9that are within the scope of the sources specified in
10subsection (l), an insurer shall not apply different,
11additional, conflicting, or more restrictive utilization
12review criteria than the criteria set forth in those sources.
13For all level of care placement decisions, the insurer shall
14authorize placement at the level of care consistent with the
15assessment of the insured using the relevant patient placement
16criteria as specified in subsection (l). If that level of
17placement is not available, the insurer shall authorize the
18next higher level of care. In the event of disagreement, the
19insurer shall provide full detail of its assessment using the
20relevant criteria as specified in subsection (l) to the
21provider of the service and the patient.
22    Nothing in this subsection or subsection (l) prohibits an
23insurer from applying utilization review criteria that were
24developed in accordance with subsection (k) to health care
25services and benefits for mental, emotional, and nervous
26disorders or conditions that are not related to medical

 

 

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1necessity determinations for level of care placement,
2continued stay, and transfer or discharge. If an insurer
3purchases or licenses utilization review criteria pursuant to
4this subsection, the insurer shall verify and document before
5use that the criteria were developed in accordance with
6subsection (k).
7    (n) In conducting utilization review that is outside the
8scope of the criteria as specified in subsection (l) or
9relates to the advancements in technology or in the types or
10levels of care that are not addressed in the most recent
11versions of the sources specified in subsection (l), an
12insurer shall conduct utilization review in accordance with
13subsection (k).
14    (o) This Section does not in any way limit the rights of a
15patient under the Medical Patient Rights Act.
16    (p) This Section does not in any way limit early and
17periodic screening, diagnostic, and treatment benefits as
18defined under 42 U.S.C. 1396d(r).
19    (q) To ensure the proper use of the criteria described in
20subsection (l), every insurer shall do all of the following:
21        (1) Educate the insurer's staff, including any third
22    parties contracted with the insurer to review claims,
23    conduct utilization reviews, or make medical necessity
24    determinations about the utilization review criteria.
25        (2) Make the educational program available to other
26    stakeholders, including the insurer's participating or

 

 

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1    contracted providers and potential participants,
2    beneficiaries, or covered lives. The education program
3    must be provided at least once a year, in-person or
4    digitally, or recordings of the education program must be
5    made available to the aforementioned stakeholders.
6        (3) Provide, at no cost, the utilization review
7    criteria and any training material or resources to
8    providers and insured patients upon request. For
9    utilization review criteria not concerning level of care
10    placement, continued stay, and transfer or discharge used
11    by the insurer pursuant to subsection (m), the insurer may
12    place the criteria on a secure, password-protected website
13    so long as the access requirements of the website do not
14    unreasonably restrict access to insureds or their
15    providers. No restrictions shall be placed upon the
16    insured's or treating provider's access right to
17    utilization review criteria obtained under this paragraph
18    at any point in time, including before an initial request
19    for authorization.
20        (4) Track, identify, and analyze how the utilization
21    review criteria are used to certify care, deny care, and
22    support the appeals process.
23        (5) Conduct interrater reliability testing to ensure
24    consistency in utilization review decision making that
25    covers how medical necessity decisions are made; this
26    assessment shall cover all aspects of utilization review

 

 

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1    as defined in subsection (h).
2        (6) Run interrater reliability reports about how the
3    clinical guidelines are used in conjunction with the
4    utilization review process and parity compliance
5    activities.
6        (7) Achieve interrater reliability pass rates of at
7    least 90% and, if this threshold is not met, immediately
8    provide for the remediation of poor interrater reliability
9    and interrater reliability testing for all new staff
10    before they can conduct utilization review without
11    supervision.
12        (8) Maintain documentation of interrater reliability
13    testing and the remediation actions taken for those with
14    pass rates lower than 90% and submit to the Department of
15    Insurance or, in the case of Medicaid managed care
16    organizations, the Department of Healthcare and Family
17    Services the testing results and a summary of remedial
18    actions as part of parity compliance reporting set forth
19    in subsection (k) of Section 370c.1.
20    (r) This Section applies to all health care services and
21benefits for the diagnosis, prevention, and treatment of
22mental, emotional, nervous, or substance use disorders or
23conditions covered by an insurance policy, including
24prescription drugs.
25    (s) This Section applies to an insurer that amends,
26delivers, issues, or renews a group or individual policy of

 

 

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1accident and health insurance or a qualified health plan
2offered through the health insurance marketplace in this State
3providing coverage for hospital or medical treatment and
4conducts utilization review as defined in this Section,
5including Medicaid managed care organizations, and any entity
6or contracting provider that performs utilization review or
7utilization management functions on an insurer's behalf.
8    (t) If the Director determines that an insurer has
9violated this Section, the Director may, after appropriate
10notice and opportunity for hearing, by order, assess a civil
11penalty between $1,000 and $5,000 for each violation. Moneys
12collected from penalties shall be deposited into the Parity
13Advancement Fund established in subsection (i) of Section
14370c.1.
15    (u) An insurer shall not adopt, impose, or enforce terms
16in its policies or provider agreements, in writing or in
17operation, that undermine, alter, or conflict with the
18requirements of this Section.
19    (v) The provisions of this Section are severable. If any
20provision of this Section or its application is held invalid,
21that invalidity shall not affect other provisions or
22applications that can be given effect without the invalid
23provision or application.
24(Source: P.A. 101-81, eff. 7-12-19; 101-386, eff. 8-16-19;
25102-558, eff. 8-20-21; 102-579, eff. 1-1-22; 102-813, eff.
265-13-22.)
 

 

 

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1    (215 ILCS 5/412)  (from Ch. 73, par. 1024)
2    Sec. 412. Refunds; penalties; collection.
3    (1)(a) Whenever it appears to the satisfaction of the
4Director that because of some mistake of fact, error in
5calculation, or erroneous interpretation of a statute of this
6or any other state, any authorized company, surplus line
7producer, or industrial insured has paid to him, pursuant to
8any provision of law, taxes, fees, or other charges in excess
9of the amount legally chargeable against it, during the 6 year
10period immediately preceding the discovery of such
11overpayment, he shall have power to refund to such company,
12surplus line producer, or industrial insured the amount of the
13excess or excesses by applying the amount or amounts thereof
14toward the payment of taxes, fees, or other charges already
15due, or which may thereafter become due from that company
16until such excess or excesses have been fully refunded, or
17upon a written request from the authorized company, surplus
18line producer, or industrial insured, the Director shall
19provide a cash refund within 120 days after receipt of the
20written request if all necessary information has been filed
21with the Department in order for it to perform an audit of the
22tax report for the transaction or period or annual return for
23the year in which the overpayment occurred or within 120 days
24after the date the Department receives all the necessary
25information to perform such audit. The Director shall not

 

 

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1provide a cash refund if there are insufficient funds in the
2Insurance Premium Tax Refund Fund to provide a cash refund, if
3the amount of the overpayment is less than $100, or if the
4amount of the overpayment can be fully offset against the
5taxpayer's estimated liability for the year following the year
6of the cash refund request. Any cash refund shall be paid from
7the Insurance Premium Tax Refund Fund, a special fund hereby
8created in the State treasury.
9    (b) As determined by the Director pursuant to paragraph
10(a) of this subsection, the Department shall deposit an amount
11of cash refunds approved by the Director for payment as a
12result of overpayment of tax liability collected under
13Sections 121-2.08, 409, 444, 444.1, and 445 of this Code into
14the Insurance Premium Tax Refund Fund.
15    (c) Beginning July 1, 1999, moneys in the Insurance
16Premium Tax Refund Fund shall be expended exclusively for the
17purpose of paying cash refunds resulting from overpayment of
18tax liability under Sections 121-2.08, 409, 444, 444.1, and
19445 of this Code as determined by the Director pursuant to
20subsection 1(a) of this Section. Cash refunds made in
21accordance with this Section may be made from the Insurance
22Premium Tax Refund Fund only to the extent that amounts have
23been deposited and retained in the Insurance Premium Tax
24Refund Fund.
25    (d) This Section shall constitute an irrevocable and
26continuing appropriation from the Insurance Premium Tax Refund

 

 

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1Fund for the purpose of paying cash refunds pursuant to the
2provisions of this Section.
3    (2)(a) When any insurance company fails to file any tax
4return required under Sections 408.1, 409, 444, and 444.1 of
5this Code or Section 12 of the Fire Investigation Act on the
6date prescribed, including any extensions, there shall be
7added as a penalty $400 or 10% of the amount of such tax,
8whichever is greater, for each month or part of a month of
9failure to file, the entire penalty not to exceed $2,000 or 50%
10of the tax due, whichever is greater.
11    (b) When any industrial insured or surplus line producer
12fails to file any tax return or report required under Sections
13121-2.08 and 445 of this Code or Section 12 of the Fire
14Investigation Act on the date prescribed, including any
15extensions, there shall be added:
16        (i) as a late fee, if the return or report is received
17    at least one day but not more than 15 7 days after the
18    prescribed due date, $50 $400 or 5% 10% of the tax due,
19    whichever is greater, the entire fee not to exceed $1,000;
20        (ii) as a late fee, if the return or report is received
21    at least 8 days but not more than 14 days after the
22    prescribed due date, $400 or 10% of the tax due, whichever
23    is greater, the entire fee not to exceed $1,500;
24        (ii) (iii) as a late fee, if the return or report is
25    received at least 16 15 days but not more than 30 21 days
26    after the prescribed due date, $100 $400 or 5% 10% of the

 

 

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1    tax due, whichever is greater, the entire fee not to
2    exceed $2,000; or
3        (iii) (iv) as a penalty, if the return or report is
4    received more than 30 21 days after the prescribed due
5    date, $100 $400 or 5% 10% of the tax due, whichever is
6    greater, for each month or part of a month of failure to
7    file, the entire penalty not to exceed $500 $2,000 or 30%
8    50% of the tax due, whichever is greater.
9    A tax return or report shall be deemed received as of the
10date mailed as evidenced by a postmark, proof of mailing on a
11recognized United States Postal Service form or a form
12acceptable to the United States Postal Service or other
13commercial mail delivery service, or other evidence acceptable
14to the Director.
15    (3)(a) When any insurance company fails to pay the full
16amount due under the provisions of this Section, Sections
17408.1, 409, 444, or 444.1 of this Code, or Section 12 of the
18Fire Investigation Act, there shall be added to the amount due
19as a penalty an amount equal to 10% of the deficiency.
20    (a-5) When any industrial insured or surplus line producer
21fails to pay the full amount due under the provisions of this
22Section, Sections 121-2.08 or 445 of this Code, or Section 12
23of the Fire Investigation Act on the date prescribed, there
24shall be added:
25        (i) as a late fee, if the payment is received at least
26    one day but not more than 7 days after the prescribed due

 

 

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1    date, 10% of the tax due, the entire fee not to exceed
2    $1,000;
3        (ii) as a late fee, if the payment is received at least
4    8 days but not more than 14 days after the prescribed due
5    date, 10% of the tax due, the entire fee not to exceed
6    $1,500;
7        (iii) as a late fee, if the payment is received at
8    least 15 days but not more than 21 days after the
9    prescribed due date, 10% of the tax due, the entire fee not
10    to exceed $2,000; or
11        (iv) as a penalty, if the return or report is received
12    more than 21 days after the prescribed due date, 10% of the
13    tax due.
14    A tax payment shall be deemed received as of the date
15mailed as evidenced by a postmark, proof of mailing on a
16recognized United States Postal Service form or a form
17acceptable to the United States Postal Service or other
18commercial mail delivery service, or other evidence acceptable
19to the Director.
20    (b) If such failure to pay is determined by the Director to
21be wilful, after a hearing under Sections 402 and 403, there
22shall be added to the tax as a penalty an amount equal to the
23greater of 50% of the deficiency or 10% of the amount due and
24unpaid for each month or part of a month that the deficiency
25remains unpaid commencing with the date that the amount
26becomes due. Such amount shall be in lieu of any determined

 

 

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1under paragraph (a) or (a-5).
2    (4) Any insurance company, industrial insured, or surplus
3line producer that fails to pay the full amount due under this
4Section or Sections 121-2.08, 408.1, 409, 444, 444.1, or 445
5of this Code, or Section 12 of the Fire Investigation Act is
6liable, in addition to the tax and any late fees and penalties,
7for interest on such deficiency at the rate of 12% per annum,
8or at such higher adjusted rates as are or may be established
9under subsection (b) of Section 6621 of the Internal Revenue
10Code, from the date that payment of any such tax was due,
11determined without regard to any extensions, to the date of
12payment of such amount.
13    (5) The Director, through the Attorney General, may
14institute an action in the name of the People of the State of
15Illinois, in any court of competent jurisdiction, for the
16recovery of the amount of such taxes, fees, and penalties due,
17and prosecute the same to final judgment, and take such steps
18as are necessary to collect the same.
19    (6) In the event that the certificate of authority of a
20foreign or alien company is revoked for any cause or the
21company withdraws from this State prior to the renewal date of
22the certificate of authority as provided in Section 114, the
23company may recover the amount of any such tax paid in advance.
24Except as provided in this subsection, no revocation or
25withdrawal excuses payment of or constitutes grounds for the
26recovery of any taxes or penalties imposed by this Code.

 

 

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1    (7) When an insurance company or domestic affiliated group
2fails to pay the full amount of any fee of $200 or more due
3under Section 408 of this Code, there shall be added to the
4amount due as a penalty the greater of $100 or an amount equal
5to 10% of the deficiency for each month or part of a month that
6the deficiency remains unpaid.
7    (8) The Department shall have a lien for the taxes, fees,
8charges, fines, penalties, interest, other charges, or any
9portion thereof, imposed or assessed pursuant to this Code,
10upon all the real and personal property of any company or
11person to whom the assessment or final order has been issued or
12whenever a tax return is filed without payment of the tax or
13penalty shown therein to be due, including all such property
14of the company or person acquired after receipt of the
15assessment, issuance of the order, or filing of the return.
16The company or person is liable for the filing fee incurred by
17the Department for filing the lien and the filing fee incurred
18by the Department to file the release of that lien. The filing
19fees shall be paid to the Department in addition to payment of
20the tax, fee, charge, fine, penalty, interest, other charges,
21or any portion thereof, included in the amount of the lien.
22However, where the lien arises because of the issuance of a
23final order of the Director or tax assessment by the
24Department, the lien shall not attach and the notice referred
25to in this Section shall not be filed until all administrative
26proceedings or proceedings in court for review of the final

 

 

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1order or assessment have terminated or the time for the taking
2thereof has expired without such proceedings being instituted.
3    Upon the granting of Department review after a lien has
4attached, the lien shall remain in full force except to the
5extent to which the final assessment may be reduced by a
6revised final assessment following the rehearing or review.
7The lien created by the issuance of a final assessment shall
8terminate, unless a notice of lien is filed, within 3 years
9after the date all proceedings in court for the review of the
10final assessment have terminated or the time for the taking
11thereof has expired without such proceedings being instituted,
12or (in the case of a revised final assessment issued pursuant
13to a rehearing or review by the Department) within 3 years
14after the date all proceedings in court for the review of such
15revised final assessment have terminated or the time for the
16taking thereof has expired without such proceedings being
17instituted. Where the lien results from the filing of a tax
18return without payment of the tax or penalty shown therein to
19be due, the lien shall terminate, unless a notice of lien is
20filed, within 3 years after the date when the return is filed
21with the Department.
22    The time limitation period on the Department's right to
23file a notice of lien shall not run during any period of time
24in which the order of any court has the effect of enjoining or
25restraining the Department from filing such notice of lien. If
26the Department finds that a company or person is about to

 

 

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1depart from the State, to conceal himself or his property, or
2to do any other act tending to prejudice or to render wholly or
3partly ineffectual proceedings to collect the amount due and
4owing to the Department unless such proceedings are brought
5without delay, or if the Department finds that the collection
6of the amount due from any company or person will be
7jeopardized by delay, the Department shall give the company or
8person notice of such findings and shall make demand for
9immediate return and payment of the amount, whereupon the
10amount shall become immediately due and payable. If the
11company or person, within 5 days after the notice (or within
12such extension of time as the Department may grant), does not
13comply with the notice or show to the Department that the
14findings in the notice are erroneous, the Department may file
15a notice of jeopardy assessment lien in the office of the
16recorder of the county in which any property of the company or
17person may be located and shall notify the company or person of
18the filing. The jeopardy assessment lien shall have the same
19scope and effect as the statutory lien provided for in this
20Section. If the company or person believes that the company or
21person does not owe some or all of the tax for which the
22jeopardy assessment lien against the company or person has
23been filed, or that no jeopardy to the revenue in fact exists,
24the company or person may protest within 20 days after being
25notified by the Department of the filing of the jeopardy
26assessment lien and request a hearing, whereupon the

 

 

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1Department shall hold a hearing in conformity with the
2provisions of this Code and, pursuant thereto, shall notify
3the company or person of its findings as to whether or not the
4jeopardy assessment lien will be released. If not, and if the
5company or person is aggrieved by this decision, the company
6or person may file an action for judicial review of the final
7determination of the Department in accordance with the
8Administrative Review Law. If, pursuant to such hearing (or
9after an independent determination of the facts by the
10Department without a hearing), the Department determines that
11some or all of the amount due covered by the jeopardy
12assessment lien is not owed by the company or person, or that
13no jeopardy to the revenue exists, or if on judicial review the
14final judgment of the court is that the company or person does
15not owe some or all of the amount due covered by the jeopardy
16assessment lien against them, or that no jeopardy to the
17revenue exists, the Department shall release its jeopardy
18assessment lien to the extent of such finding of nonliability
19for the amount, or to the extent of such finding of no jeopardy
20to the revenue. The Department shall also release its jeopardy
21assessment lien against the company or person whenever the
22amount due and owing covered by the lien, plus any interest
23which may be due, are paid and the company or person has paid
24the Department in cash or by guaranteed remittance an amount
25representing the filing fee for the lien and the filing fee for
26the release of that lien. The Department shall file that

 

 

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1release of lien with the recorder of the county where that lien
2was filed.
3    Nothing in this Section shall be construed to give the
4Department a preference over the rights of any bona fide
5purchaser, holder of a security interest, mechanics
6lienholder, mortgagee, or judgment lien creditor arising prior
7to the filing of a regular notice of lien or a notice of
8jeopardy assessment lien in the office of the recorder in the
9county in which the property subject to the lien is located.
10For purposes of this Section, "bona fide" shall not include
11any mortgage of real or personal property or any other credit
12transaction that results in the mortgagee or the holder of the
13security acting as trustee for unsecured creditors of the
14company or person mentioned in the notice of lien who executed
15such chattel or real property mortgage or the document
16evidencing such credit transaction. The lien shall be inferior
17to the lien of general taxes, special assessments, and special
18taxes levied by any political subdivision of this State. In
19case title to land to be affected by the notice of lien or
20notice of jeopardy assessment lien is registered under the
21provisions of the Registered Titles (Torrens) Act, such notice
22shall be filed in the office of the Registrar of Titles of the
23county within which the property subject to the lien is
24situated and shall be entered upon the register of titles as a
25memorial or charge upon each folium of the register of titles
26affected by such notice, and the Department shall not have a

 

 

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1preference over the rights of any bona fide purchaser,
2mortgagee, judgment creditor, or other lienholder arising
3prior to the registration of such notice. The regular lien or
4jeopardy assessment lien shall not be effective against any
5purchaser with respect to any item in a retailer's stock in
6trade purchased from the retailer in the usual course of the
7retailer's business.
8(Source: P.A. 102-775, eff. 5-13-22.)
 
9    (215 ILCS 5/500-140)
10    (Section scheduled to be repealed on January 1, 2027)
11    Sec. 500-140. Injunctive relief. A person required to be
12licensed under this Article but failing to obtain a valid and
13current license under this Article constitutes a public
14nuisance. The Director may report the failure to obtain a
15license to the Attorney General, whose duty it is to apply
16forthwith by complaint on relation of the Director in the name
17of the people of the State of Illinois, for injunctive relief
18in the circuit court of the county where the failure to obtain
19a license occurred to enjoin that person from acting in any
20capacity that requires such a license failing to obtain a
21license. Upon the filing of a verified petition in the court,
22the court, if satisfied by affidavit or otherwise that the
23person is required to have a license and does not have a valid
24and current license, may enter a temporary restraining order
25without notice or bond, enjoining the defendant from acting in

 

 

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1any capacity that requires such license. A copy of the
2verified complaint shall be served upon the defendant, and the
3proceedings shall thereafter be conducted as in other civil
4cases. If it is established that the defendant has been, or is
5engaged in any unlawful practice, the court may enter an order
6or judgment perpetually enjoining the defendant from further
7engaging in such practice. In all proceedings brought under
8this Section, the court, in its discretion, may apportion the
9costs among the parties, including the cost of filing the
10complaint, service of process, witness fees and expenses,
11court reporter charges, and reasonable attorney fees. In case
12of the violation of any injunctive order entered under the
13provisions of this Section, the court may summarily try and
14punish the offender for contempt of court. The injunctive
15relief available under this Section is in addition to and not
16in lieu of all other penalties and remedies provided in this
17Code.
18(Source: P.A. 92-386, eff. 1-1-02.)
 
19    (215 ILCS 5/1204)  (from Ch. 73, par. 1065.904)
20    (Text of Section WITHOUT the changes made by P.A. 94-677,
21which has been held unconstitutional)
22    Sec. 1204. (A) The Director shall promulgate rules and
23regulations which shall require each insurer licensed to write
24property or casualty insurance in the State and each syndicate
25doing business on the Illinois Insurance Exchange to record

 

 

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1and report its loss and expense experience and other data as
2may be necessary to assess the relationship of insurance
3premiums and related income as compared to insurance costs and
4expenses. The Director may designate one or more rate service
5organizations or advisory organizations to gather and compile
6such experience and data. The Director shall require each
7insurer licensed to write property or casualty insurance in
8this State and each syndicate doing business on the Illinois
9Insurance Exchange to submit a report, on a form furnished by
10the Director, showing its direct writings in this State and
11companywide.
12    (B) Such report required by subsection (A) of this Section
13may include, but not be limited to, the following specific
14types of insurance written by such insurer:
15        (1) Political subdivision liability insurance reported
16    separately in the following categories:
17            (a) municipalities;
18            (b) school districts;
19            (c) other political subdivisions;
20        (2) Public official liability insurance;
21        (3) Dram shop liability insurance;
22        (4) Day care center liability insurance;
23        (5) Labor, fraternal or religious organizations
24    liability insurance;
25        (6) Errors and omissions liability insurance;
26        (7) Officers and directors liability insurance

 

 

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1    reported separately as follows:
2            (a) non-profit entities;
3            (b) for-profit entities;
4        (8) Products liability insurance;
5        (9) Medical malpractice insurance;
6        (10) Attorney malpractice insurance;
7        (11) Architects and engineers malpractice insurance;
8    and
9        (12) Motor vehicle insurance reported separately for
10    commercial and private passenger vehicles as follows:
11            (a) motor vehicle physical damage insurance;
12            (b) motor vehicle liability insurance.
13    (C) Such report may include, but need not be limited to the
14following data, both specific to this State and companywide,
15in the aggregate or by type of insurance for the previous year
16on a calendar year basis:
17        (1) Direct premiums written;
18        (2) Direct premiums earned;
19        (3) Number of policies;
20        (4) Net investment income, using appropriate estimates
21    where necessary;
22        (5) Losses paid;
23        (6) Losses incurred;
24        (7) Loss reserves:
25            (a) Losses unpaid on reported claims;
26            (b) Losses unpaid on incurred but not reported

 

 

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1        claims;
2        (8) Number of claims:
3            (a) Paid claims;
4            (b) Arising claims;
5        (9) Loss adjustment expenses:
6            (a) Allocated loss adjustment expenses;
7            (b) Unallocated loss adjustment expenses;
8        (10) Net underwriting gain or loss;
9        (11) Net operation gain or loss, including net
10    investment income;
11        (12) Any other information requested by the Director.
12    (C-3) Additional information by an advisory organization
13as defined in Section 463 of this Code.
14        (1) An advisory organization as defined in Section 463
15    of this Code shall report annually the following
16    information in such format as may be prescribed by the
17    Secretary:
18            (a) paid and incurred losses for each of the past
19        10 years;
20            (b) medical payments and medical charges, if
21        collected, for each of the past 10 years;
22            (c) the following indemnity payment information:
23        cumulative payments by accident year by calendar year
24        of development. This array will show payments made and
25        frequency of claims in the following categories:
26        medical only, permanent partial disability (PPD),

 

 

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1        permanent total disability (PTD), temporary total
2        disability (TTD), and fatalities;
3            (d) injuries by frequency and severity;
4            (e) by class of employee.
5        (2) The report filed with the Secretary of Financial
6    and Professional Regulation under paragraph (1) of this
7    subsection (C-3) shall be made available, on an aggregate
8    basis, to the General Assembly and to the general public.
9    The identity of the petitioner, the respondent, the
10    attorneys, and the insurers shall not be disclosed.
11        (3) Reports required under this subsection (C-3) shall
12    be filed with the Secretary no later than September 1 in
13    2006 and no later than September 1 of each year
14    thereafter.
15    (D) In addition to the information which may be requested
16under subsection (C), the Director may also request on a
17companywide, aggregate basis, Federal Income Tax recoverable,
18net realized capital gain or loss, net unrealized capital gain
19or loss, and all other expenses not requested in subsection
20(C) above.
21    (E) Violations - Suspensions - Revocations.
22        (1) Any company or person subject to this Article, who
23    willfully or repeatedly fails to observe or who otherwise
24    violates any of the provisions of this Article or any rule
25    or regulation promulgated by the Director under authority
26    of this Article or any final order of the Director entered

 

 

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1    under the authority of this Article shall by civil penalty
2    forfeit to the State of Illinois a sum not to exceed
3    $2,000. Each day during which a violation occurs
4    constitutes a separate offense.
5        (2) No forfeiture liability under paragraph (1) of
6    this subsection may attach unless a written notice of
7    apparent liability has been issued by the Director and
8    received by the respondent, or the Director sends written
9    notice of apparent liability by registered or certified
10    mail, return receipt requested, to the last known address
11    of the respondent. Any respondent so notified must be
12    granted an opportunity to request a hearing within 10 days
13    from receipt of notice, or to show in writing, why he
14    should not be held liable. A notice issued under this
15    Section must set forth the date, facts and nature of the
16    act or omission with which the respondent is charged and
17    must specifically identify the particular provision of
18    this Article, rule, regulation or order of which a
19    violation is charged.
20        (3) No forfeiture liability under paragraph (1) of
21    this subsection may attach for any violation occurring
22    more than 2 years prior to the date of issuance of the
23    notice of apparent liability and in no event may the total
24    civil penalty forfeiture imposed for the acts or omissions
25    set forth in any one notice of apparent liability exceed
26    $100,000.

 

 

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1        (4) All administrative hearings conducted pursuant to
2    this Article are subject to 50 Ill. Adm. Code 2402 and all
3    administrative hearings are subject to the Administrative
4    Review Law.
5        (5) The civil penalty forfeitures provided for in this
6    Section are payable to the General Revenue Fund of the
7    State of Illinois, and may be recovered in a civil suit in
8    the name of the State of Illinois brought in the Circuit
9    Court in Sangamon County or in the Circuit Court of the
10    county where the respondent is domiciled or has its
11    principal operating office.
12        (6) In any case where the Director issues a notice of
13    apparent liability looking toward the imposition of a
14    civil penalty forfeiture under this Section that fact may
15    not be used in any other proceeding before the Director to
16    the prejudice of the respondent to whom the notice was
17    issued, unless (a) the civil penalty forfeiture has been
18    paid, or (b) a court has ordered payment of the civil
19    penalty forfeiture and that order has become final.
20        (7) When any person or company has a license or
21    certificate of authority under this Code and knowingly
22    fails or refuses to comply with a lawful order of the
23    Director requiring compliance with this Article, entered
24    after notice and hearing, within the period of time
25    specified in the order, the Director may, in addition to
26    any other penalty or authority provided, revoke or refuse

 

 

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1    to renew the license or certificate of authority of such
2    person or company, or may suspend the license or
3    certificate of authority of such person or company until
4    compliance with such order has been obtained.
5        (8) When any person or company has a license or
6    certificate of authority under this Code and knowingly
7    fails or refuses to comply with any provisions of this
8    Article, the Director may, after notice and hearing, in
9    addition to any other penalty provided, revoke or refuse
10    to renew the license or certificate of authority of such
11    person or company, or may suspend the license or
12    certificate of authority of such person or company, until
13    compliance with such provision of this Article has been
14    obtained.
15        (9) No suspension or revocation under this Section may
16    become effective until 5 days from the date that the
17    notice of suspension or revocation has been personally
18    delivered or delivered by registered or certified mail to
19    the company or person. A suspension or revocation under
20    this Section is stayed upon the filing, by the company or
21    person, of a petition for judicial review under the
22    Administrative Review Law.
23(Source: P.A. 94-277, eff. 7-20-05; 95-331, eff. 8-21-07.)
 
24    (215 ILCS 5/155.18a rep.)
25    Section 15. The Illinois Insurance Code is amended by

 

 

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1repealing Section 155.18a.
 
2    Section 20. The Small Employer Health Insurance Rating Act
3is amended by changing Section 15 as follows:
 
4    (215 ILCS 93/15)
5    Sec. 15. Applicability and scope.
6    (a) This Act shall apply to each health benefit plan for a
7small employer that is delivered, issued for delivery,
8renewed, or continued in this State after July 1, 2000. For
9purposes of this Section, the date a plan is continued shall be
10the first rating period which commences after July 1, 2000.
11The Act shall apply to any such health benefit plan which
12provides coverage to employees of a small employer, except
13that the Act shall not apply to individual health insurance
14policies.
15    (b) This Act shall not apply to any health benefit plan for
16a small employer that is delivered, issued, renewed, or
17continued in this State on or after January 1, 2022. However,
18if 42 U.S.C. 18032(c)(2) or any successor law is repealed,
19then this Act shall apply to each health benefit plan for a
20small employer that is delivered, issued, renewed, or
21continued in this State on or after the date that law ceases to
22apply to such plans.
23(Source: P.A. 91-510, eff. 1-1-00; 92-16, eff. 6-28-01.)
 

 

 

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1    Section 25. The Health Maintenance Organization Act is
2amended by changing Section 5-3 as follows:
 
3    (215 ILCS 125/5-3)  (from Ch. 111 1/2, par. 1411.2)
4    Sec. 5-3. Insurance Code provisions.
5    (a) Health Maintenance Organizations shall be subject to
6the provisions of Sections 133, 134, 136, 137, 139, 140,
7141.1, 141.2, 141.3, 143, 143c, 147, 148, 149, 151, 152, 153,
8154, 154.5, 154.6, 154.7, 154.8, 155.04, 155.22a, 355.2,
9355.3, 355b, 355c, 356f, 356g.5-1, 356m, 356q, 356v, 356w,
10356x, 356y, 356z.2, 356z.3a, 356z.4, 356z.4a, 356z.5, 356z.6,
11356z.8, 356z.9, 356z.10, 356z.11, 356z.12, 356z.13, 356z.14,
12356z.15, 356z.17, 356z.18, 356z.19, 356z.20, 356z.21, 356z.22,
13356z.23, 356z.24, 356z.25, 356z.26, 356z.28, 356z.29, 356z.30,
14356z.30a, 356z.31, 356z.32, 356z.33, 356z.34, 356z.35,
15356z.36, 356z.37, 356z.38, 356z.39, 356z.40, 356z.41, 356z.44,
16356z.45, 356z.46, 356z.47, 356z.48, 356z.49, 356z.50, 356z.51,
17356z.53 256z.53, 356z.54, 356z.55, 356z.56, 356z.57, 356z.58,
18356z.59, 356z.60, 364, 364.01, 364.3, 367.2, 367.2-5, 367i,
19368a, 368b, 368c, 368d, 368e, 370c, 370c.1, 401, 401.1, 402,
20403, 403A, 408, 408.2, 409, 412, 444, and 444.1, paragraph (c)
21of subsection (2) of Section 367, and Articles IIA, VIII 1/2,
22XII, XII 1/2, XIII, XIII 1/2, XXV, XXVI, and XXXIIB of the
23Illinois Insurance Code.
24    (b) For purposes of the Illinois Insurance Code, except
25for Sections 444 and 444.1 and Articles XIII and XIII 1/2,

 

 

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1Health Maintenance Organizations in the following categories
2are deemed to be "domestic companies":
3        (1) a corporation authorized under the Dental Service
4    Plan Act or the Voluntary Health Services Plans Act;
5        (2) a corporation organized under the laws of this
6    State; or
7        (3) a corporation organized under the laws of another
8    state, 30% or more of the enrollees of which are residents
9    of this State, except a corporation subject to
10    substantially the same requirements in its state of
11    organization as is a "domestic company" under Article VIII
12    1/2 of the Illinois Insurance Code.
13    (c) In considering the merger, consolidation, or other
14acquisition of control of a Health Maintenance Organization
15pursuant to Article VIII 1/2 of the Illinois Insurance Code,
16        (1) the Director shall give primary consideration to
17    the continuation of benefits to enrollees and the
18    financial conditions of the acquired Health Maintenance
19    Organization after the merger, consolidation, or other
20    acquisition of control takes effect;
21        (2)(i) the criteria specified in subsection (1)(b) of
22    Section 131.8 of the Illinois Insurance Code shall not
23    apply and (ii) the Director, in making his determination
24    with respect to the merger, consolidation, or other
25    acquisition of control, need not take into account the
26    effect on competition of the merger, consolidation, or

 

 

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1    other acquisition of control;
2        (3) the Director shall have the power to require the
3    following information:
4            (A) certification by an independent actuary of the
5        adequacy of the reserves of the Health Maintenance
6        Organization sought to be acquired;
7            (B) pro forma financial statements reflecting the
8        combined balance sheets of the acquiring company and
9        the Health Maintenance Organization sought to be
10        acquired as of the end of the preceding year and as of
11        a date 90 days prior to the acquisition, as well as pro
12        forma financial statements reflecting projected
13        combined operation for a period of 2 years;
14            (C) a pro forma business plan detailing an
15        acquiring party's plans with respect to the operation
16        of the Health Maintenance Organization sought to be
17        acquired for a period of not less than 3 years; and
18            (D) such other information as the Director shall
19        require.
20    (d) The provisions of Article VIII 1/2 of the Illinois
21Insurance Code and this Section 5-3 shall apply to the sale by
22any health maintenance organization of greater than 10% of its
23enrollee population (including without limitation the health
24maintenance organization's right, title, and interest in and
25to its health care certificates).
26    (e) In considering any management contract or service

 

 

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1agreement subject to Section 141.1 of the Illinois Insurance
2Code, the Director (i) shall, in addition to the criteria
3specified in Section 141.2 of the Illinois Insurance Code,
4take into account the effect of the management contract or
5service agreement on the continuation of benefits to enrollees
6and the financial condition of the health maintenance
7organization to be managed or serviced, and (ii) need not take
8into account the effect of the management contract or service
9agreement on competition.
10    (f) Except for small employer groups as defined in the
11Small Employer Rating, Renewability and Portability Health
12Insurance Act and except for medicare supplement policies as
13defined in Section 363 of the Illinois Insurance Code, a
14Health Maintenance Organization may by contract agree with a
15group or other enrollment unit to effect refunds or charge
16additional premiums under the following terms and conditions:
17        (i) the amount of, and other terms and conditions with
18    respect to, the refund or additional premium are set forth
19    in the group or enrollment unit contract agreed in advance
20    of the period for which a refund is to be paid or
21    additional premium is to be charged (which period shall
22    not be less than one year); and
23        (ii) the amount of the refund or additional premium
24    shall not exceed 20% of the Health Maintenance
25    Organization's profitable or unprofitable experience with
26    respect to the group or other enrollment unit for the

 

 

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1    period (and, for purposes of a refund or additional
2    premium, the profitable or unprofitable experience shall
3    be calculated taking into account a pro rata share of the
4    Health Maintenance Organization's administrative and
5    marketing expenses, but shall not include any refund to be
6    made or additional premium to be paid pursuant to this
7    subsection (f)). The Health Maintenance Organization and
8    the group or enrollment unit may agree that the profitable
9    or unprofitable experience may be calculated taking into
10    account the refund period and the immediately preceding 2
11    plan years.
12    The Health Maintenance Organization shall include a
13statement in the evidence of coverage issued to each enrollee
14describing the possibility of a refund or additional premium,
15and upon request of any group or enrollment unit, provide to
16the group or enrollment unit a description of the method used
17to calculate (1) the Health Maintenance Organization's
18profitable experience with respect to the group or enrollment
19unit and the resulting refund to the group or enrollment unit
20or (2) the Health Maintenance Organization's unprofitable
21experience with respect to the group or enrollment unit and
22the resulting additional premium to be paid by the group or
23enrollment unit.
24    In no event shall the Illinois Health Maintenance
25Organization Guaranty Association be liable to pay any
26contractual obligation of an insolvent organization to pay any

 

 

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1refund authorized under this Section.
2    (g) Rulemaking authority to implement Public Act 95-1045,
3if any, is conditioned on the rules being adopted in
4accordance with all provisions of the Illinois Administrative
5Procedure Act and all rules and procedures of the Joint
6Committee on Administrative Rules; any purported rule not so
7adopted, for whatever reason, is unauthorized.
8(Source: P.A. 101-13, eff. 6-12-19; 101-81, eff. 7-12-19;
9101-281, eff. 1-1-20; 101-371, eff. 1-1-20; 101-393, eff.
101-1-20; 101-452, eff. 1-1-20; 101-461, eff. 1-1-20; 101-625,
11eff. 1-1-21; 102-30, eff. 1-1-22; 102-34, eff. 6-25-21;
12102-203, eff. 1-1-22; 102-306, eff. 1-1-22; 102-443, eff.
131-1-22; 102-589, eff. 1-1-22; 102-642, eff. 1-1-22; 102-665,
14eff. 10-8-21; 102-731, eff. 1-1-23; 102-775, eff. 5-13-22;
15102-804, eff. 1-1-23; 102-813, eff. 5-13-22; 102-816, eff.
161-1-23; 102-860, eff. 1-1-23; 102-901, eff. 7-1-22; 102-1093,
17eff. 1-1-23; 102-1117, eff. 1-13-23; revised 1-22-23.)
 
18    Section 30. The Managed Care Reform and Patient Rights Act
19is amended by changing Section 10 as follows:
 
20    (215 ILCS 134/10)
21    Sec. 10. Definitions.
22    "Adverse determination" means a determination by a health
23care plan under Section 45 or by a utilization review program
24under Section 85 that a health care service is not medically

 

 

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1necessary.
2    "Clinical peer" means a health care professional who is in
3the same profession and the same or similar specialty as the
4health care provider who typically manages the medical
5condition, procedures, or treatment under review.
6    "Department" means the Department of Insurance.
7    "Emergency medical condition" means a medical condition
8manifesting itself by acute symptoms of sufficient severity,
9regardless of the final diagnosis given, such that a prudent
10layperson, who possesses an average knowledge of health and
11medicine, could reasonably expect the absence of immediate
12medical attention to result in:
13        (1) placing the health of the individual (or, with
14    respect to a pregnant woman, the health of the woman or her
15    unborn child) in serious jeopardy;
16        (2) serious impairment to bodily functions;
17        (3) serious dysfunction of any bodily organ or part;
18        (4) inadequately controlled pain; or
19        (5) with respect to a pregnant woman who is having
20    contractions:
21            (A) inadequate time to complete a safe transfer to
22        another hospital before delivery; or
23            (B) a transfer to another hospital may pose a
24        threat to the health or safety of the woman or unborn
25        child.
26    "Emergency medical screening examination" means a medical

 

 

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1screening examination and evaluation by a physician licensed
2to practice medicine in all its branches, or to the extent
3permitted by applicable laws, by other appropriately licensed
4personnel under the supervision of or in collaboration with a
5physician licensed to practice medicine in all its branches to
6determine whether the need for emergency services exists.
7    "Emergency services" means, with respect to an enrollee of
8a health care plan, transportation services, including but not
9limited to ambulance services, and covered inpatient and
10outpatient hospital services furnished by a provider qualified
11to furnish those services that are needed to evaluate or
12stabilize an emergency medical condition. "Emergency services"
13does not refer to post-stabilization medical services.
14    "Enrollee" means any person and his or her dependents
15enrolled in or covered by a health care plan.
16    "Health care plan" means a plan, including, but not
17limited to, a health maintenance organization, a managed care
18community network as defined in the Illinois Public Aid Code,
19or an accountable care entity as defined in the Illinois
20Public Aid Code that receives capitated payments to cover
21medical services from the Department of Healthcare and Family
22Services, that establishes, operates, or maintains a network
23of health care providers that has entered into an agreement
24with the plan to provide health care services to enrollees to
25whom the plan has the ultimate obligation to arrange for the
26provision of or payment for services through organizational

 

 

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1arrangements for ongoing quality assurance, utilization review
2programs, or dispute resolution. Nothing in this definition
3shall be construed to mean that an independent practice
4association or a physician hospital organization that
5subcontracts with a health care plan is, for purposes of that
6subcontract, a health care plan.
7    For purposes of this definition, "health care plan" shall
8not include the following:
9        (1) indemnity health insurance policies including
10    those using a contracted provider network;
11        (2) health care plans that offer only dental or only
12    vision coverage;
13        (3) preferred provider administrators, as defined in
14    Section 370g(g) of the Illinois Insurance Code;
15        (4) employee or employer self-insured health benefit
16    plans under the federal Employee Retirement Income
17    Security Act of 1974;
18        (5) health care provided pursuant to the Workers'
19    Compensation Act or the Workers' Occupational Diseases
20    Act; and
21        (6) except with respect to subsections (a) and (b) of
22    Section 65 and subsection (a-5) of Section 70,
23    not-for-profit voluntary health services plans with health
24    maintenance organization authority in existence as of
25    January 1, 1999 that are affiliated with a union and that
26    only extend coverage to union members and their

 

 

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1    dependents.
2    "Health care professional" means a physician, a registered
3professional nurse, or other individual appropriately licensed
4or registered to provide health care services.
5    "Health care provider" means any physician, hospital
6facility, facility licensed under the Nursing Home Care Act,
7long-term care facility as defined in Section 1-113 of the
8Nursing Home Care Act, or other person that is licensed or
9otherwise authorized to deliver health care services. Nothing
10in this Act shall be construed to define Independent Practice
11Associations or Physician-Hospital Organizations as health
12care providers.
13    "Health care services" means any services included in the
14furnishing to any individual of medical care, or the
15hospitalization incident to the furnishing of such care, as
16well as the furnishing to any person of any and all other
17services for the purpose of preventing, alleviating, curing,
18or healing human illness or injury including behavioral
19health, mental health, home health, and pharmaceutical
20services and products.
21    "Medical director" means a physician licensed in any state
22to practice medicine in all its branches appointed by a health
23care plan.
24    "Person" means a corporation, association, partnership,
25limited liability company, sole proprietorship, or any other
26legal entity.

 

 

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1    "Physician" means a person licensed under the Medical
2Practice Act of 1987.
3    "Post-stabilization medical services" means health care
4services provided to an enrollee that are furnished in a
5licensed hospital by a provider that is qualified to furnish
6such services, and determined to be medically necessary and
7directly related to the emergency medical condition following
8stabilization.
9    "Stabilization" means, with respect to an emergency
10medical condition, to provide such medical treatment of the
11condition as may be necessary to assure, within reasonable
12medical probability, that no material deterioration of the
13condition is likely to result.
14    "Utilization review" means the evaluation of the medical
15necessity, appropriateness, and efficiency of the use of
16health care services, procedures, and facilities.
17    "Utilization review program" means a program established
18by a person to perform utilization review.
19(Source: P.A. 101-452, eff. 1-1-20; 102-409, eff. 1-1-22.)
 
20    Section 99. Effective date. This Act takes effect July 1,
212023.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    40 ILCS 5/1-110.6
4    40 ILCS 5/1-110.10
5    40 ILCS 5/1-110.15
6    40 ILCS 5/1-113.4
7    40 ILCS 5/1-113.4a
8    40 ILCS 5/1-113.5
9    40 ILCS 5/1-113.18
10    40 ILCS 5/2-162
11    40 ILCS 5/3-110from Ch. 108 1/2, par. 3-110
12    40 ILCS 5/4-108from Ch. 108 1/2, par. 4-108
13    40 ILCS 5/4-109.3
14    40 ILCS 5/18-169
15    40 ILCS 5/22-1004
16    215 ILCS 5/143.20afrom Ch. 73, par. 755.20a
17    215 ILCS 5/155.18from Ch. 73, par. 767.18
18    215 ILCS 5/155.19from Ch. 73, par. 767.19
19    215 ILCS 5/155.36
20    215 ILCS 5/370cfrom Ch. 73, par. 982c
21    215 ILCS 5/412from Ch. 73, par. 1024
22    215 ILCS 5/500-140
23    215 ILCS 5/1204from Ch. 73, par. 1065.904
24    215 ILCS 5/155.18a rep.
25    215 ILCS 93/15

 

 

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1    215 ILCS 125/5-3from Ch. 111 1/2, par. 1411.2
2    215 ILCS 134/10