Full Text of HB5018 96th General Assembly
HB5018sam002 96TH GENERAL ASSEMBLY | Sen. William R. Haine Filed: 1/5/2011
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| 1 | | AMENDMENT TO HOUSE BILL 5018
| 2 | | AMENDMENT NO. ______. Amend House Bill 5018 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Health Maintenance Organization Act is | 5 | | amended by changing Section 6-8 as follows:
| 6 | | (215 ILCS 125/6-8) (from Ch. 111 1/2, par. 1418.8)
| 7 | | Sec. 6-8. Powers and duties of the Association. In addition | 8 | | to
the powers and duties enumerated in other Sections of this | 9 | | Article, the
Association shall have the powers set forth in | 10 | | this Section.
| 11 | | (1) If a domestic organization is an impaired organization, | 12 | | the Association
may, subject to any conditions imposed by the | 13 | | Association other than
those which impair the contractual | 14 | | obligations of the impaired organization,
and approved by the | 15 | | impaired organization and the Director:
| 16 | | (a) guarantee, assume, or reinsure, or cause to be |
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| 1 | | guaranteed, assumed or
reinsured, any or all of the covered | 2 | | health care plan certificates of
covered persons of the | 3 | | impaired organization;
| 4 | | (b) provide such monies, pledges, notes, guarantees, | 5 | | or other means
as are proper to effectuate paragraph (a), | 6 | | and assure payment of the
contractual obligations of the | 7 | | impaired organization pending action under
paragraph (a); | 8 | | and
| 9 | | (c) loan money to the impaired organization.
| 10 | | (2) If a domestic, foreign, or alien organization is an | 11 | | insolvent
organization, the Association shall, subject to the | 12 | | approval of the Director:
| 13 | | (a) guarantee, assume, indemnify or reinsure or cause | 14 | | to be guaranteed,
assumed, indemnified or reinsured the | 15 | | covered health care plan benefits
of covered persons of the | 16 | | insolvent organization; however, in the event
that the | 17 | | Director of Healthcare and Family Services (formerly
| 18 | | Director of the Department of Public Aid)
assigns | 19 | | individuals that are recipients of public aid from an | 20 | | insolvent
organization to another organization, the | 21 | | Director of Healthcare and Family Services shall, before | 22 | | fixing the rates to be paid by the Department of
Healthcare | 23 | | and Family Services
to the transferee organization on | 24 | | account of such individuals,
consult with the Director of | 25 | | the Department of Insurance as to the
reasonableness of | 26 | | such rates in light of the health care needs of such
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| 1 | | individuals and the costs of providing health care services | 2 | | to such
individuals;
| 3 | | (b) assure payment of the contractual obligations of | 4 | | the insolvent
organization to covered persons;
| 5 | | (c) make payments to providers of health care, or | 6 | | indemnity payments
to covered persons, so as to assure the | 7 | | continued payment of benefits
substantially similar to | 8 | | those provided for under covered health care plan
| 9 | | certificate issued by the insolvent organization to | 10 | | covered persons; and
| 11 | | (d) provide such monies, pledges, notes, guaranties, | 12 | | or other means
as are reasonably necessary to discharge | 13 | | such duties.
| 14 | | This subsection (2) shall not apply when the
Director has | 15 | | determined that the foreign or alien organization's
| 16 | | domiciliary jurisdiction or state of entry provides, by | 17 | | statute, protection
substantially similar to that provided by | 18 | | this Article for residents of
this State and such protection | 19 | | will be provided in a timely manner.
| 20 | | (3) There shall be no liability on the part of and no cause | 21 | | of action
shall arise against the Association or against any | 22 | | transferee from the
Association in connection with the transfer | 23 | | by reinsurance or otherwise of
all or any part of an impaired | 24 | | or insolvent organization's business by
reason of any action | 25 | | taken or any failure to take any action by the
impaired or | 26 | | insolvent organization at any time.
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| 1 | | (4) If the Association fails to act within a reasonable | 2 | | period of
time as provided in subsection (2) of this Section | 3 | | with respect to an
insolvent organization, the Director shall | 4 | | have the powers and duties of
the Association under this | 5 | | Article with regard to such insolvent organization.
| 6 | | (5) The Association or its designated representatives may | 7 | | render
assistance and advice to the Director, upon his request, | 8 | | concerning
rehabilitation, payment of claims, continuations of | 9 | | coverage, or the
performance of other contractual obligations | 10 | | of any impaired or insolvent
organization.
| 11 | | (6) The Association has standing to appear before any court | 12 | | concerning
all matters germane to the powers and duties of
the | 13 | | Association, including, but not limited to, proposals for | 14 | | reinsuring
or guaranteeing the covered health care plan | 15 | | certificates of the impaired
or insolvent organization and the | 16 | | determination of the covered health care plan
certificates and | 17 | | contractual obligations.
| 18 | | (7) (a) Any person receiving benefits under this Article is | 19 | | deemed
to have assigned the rights under the covered health | 20 | | care plan
certificates to the Association to the extent of the | 21 | | benefits received
because of this Article whether the benefits | 22 | | are payments of contractual
obligations or continuation of | 23 | | coverage. The Association may require an
assignment to it of | 24 | | such rights by any payee, enrollee or beneficiary as a
| 25 | | condition precedent to the receipt of any rights or benefits | 26 | | conferred by
this Article upon such person. The Association is |
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| 1 | | subrogated to these
rights against the assets of any insolvent | 2 | | organization and against any
other party who may be liable to | 3 | | such payee, enrollee or beneficiary.
| 4 | | (b) The subrogation rights of the Association under this | 5 | | subsection
have the same priority against the assets of the | 6 | | insolvent organization as
that possessed by the person entitled | 7 | | to receive benefits under this
Article.
| 8 | | (8) (a) The contractual obligations of the insolvent | 9 | | organization for
which the Association becomes or may become | 10 | | liable are as great as but no
greater than the contractual | 11 | | obligations of the insolvent organization would
have been in | 12 | | the absence of an insolvency unless such obligations are
| 13 | | reduced as permitted by subsection (3), but the aggregate | 14 | | liability of the
Association shall not exceed $500,000 $300,000 | 15 | | with respect to any one natural person.
| 16 | | (b) Furthermore, the Association shall not be required to | 17 | | pay, and shall
have no liability to, any provider of health | 18 | | care services to an enrollee:
| 19 | | (i) if such provider, or his or its affiliates or | 20 | | members of his
immediate family, at any time within the one | 21 | | year prior to the date of the
issuance of the first order, | 22 | | by a court of competent jurisdiction, of
conservation, | 23 | | rehabilitation or liquidation pertaining to the health
| 24 | | maintenance organization:
| 25 | | (A) was a securityholder of such organization (but | 26 | | excluding any
securityholder holding an equity |
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| 1 | | interest of 5% or less);
| 2 | | (B) exercised control over the organization by | 3 | | means such as serving as
an officer or director, | 4 | | through a management agreement or as a principal
member | 5 | | of a not-for-profit organization;
| 6 | | (C) had a representative serving by virtue of or | 7 | | his or her official
position as a representative of | 8 | | such provider on the board of any entity
which | 9 | | exercised control over the organization;
| 10 | | (D) received provider payments made by such | 11 | | organization pursuant to a
contract which was not a | 12 | | product of arms-length bargaining; or
| 13 | | (E) received distributions other than for | 14 | | physician services from a
not-for-profit organization | 15 | | on account of such provider's status as a
member of | 16 | | such organization.
| 17 | | For purposes of this subparagraph (i), the terms | 18 | | "affiliate," "person,"
"control" and "securityholder" | 19 | | shall have the meanings ascribed to such
terms in Section | 20 | | 131.1 of the Illinois Insurance Code; or
| 21 | | (ii) if and to the extent such a provider has agreed by | 22 | | contract not
to seek payment from the enrollee for services | 23 | | provided to such enrollee
or if, and to the extent, as a | 24 | | matter of law such provider may not seek
payment from the | 25 | | enrollee for services provided to such enrollee ; or .
| 26 | | (iii) related to any policy, contract, or certificate |
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| 1 | | providing any hospital, medical, prescription drug, or | 2 | | other health care benefits pursuant to Part C or Part D of | 3 | | Subchapter XVIII, Chapter 7 of Title 42 of the United | 4 | | States Code (commonly known as Medicare Part C & D) or any | 5 | | regulations issued pursuant thereto; or | 6 | | (iv) for any portion of a policy, contract, or | 7 | | certificate to the extent that the assessments required by | 8 | | this Article with respect to the policy or contract are | 9 | | preempted or otherwise not permitted by federal or State | 10 | | law; or | 11 | | (v) for any obligation that does not arise under the | 12 | | express written terms of the policy or contract issued by | 13 | | the organization to the contract owner or policy owner, | 14 | | including without limitation: | 15 | | (A) claims based on marketing materials; | 16 | | (B) claims based on side letters, riders, or other | 17 | | documents that were issued by the insurer without | 18 | | meeting applicable policy form filing or approval | 19 | | requirements; | 20 | | (C) misrepresentations of or regarding policy | 21 | | benefits; | 22 | | (D) extra-contractual claims; or | 23 | | (E) claims for penalties or consequential or | 24 | | incidental damages. | 25 | | (c) In no event shall the Association be required to pay | 26 | | any provider
participating in the insolvent organization
any |
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| 1 | | amount for in-plan services rendered by such provider prior to | 2 | | the
insolvency of the organization in excess of (1) the amount
| 3 | | provided by a capitation contract between a physician provider | 4 | | and the
insolvent organization for such services; or (2) the
| 5 | | amounts provided by contract between a hospital provider and | 6 | | the Department of Healthcare and Family Services (formerly
| 7 | | Department of
Public Aid) for similar services to recipients of | 8 | | public aid; or (3) in the
event neither (1) nor (2) above is | 9 | | applicable, then the amounts paid under
the Medicare area | 10 | | prevailing rate for the area where the services were
provided, | 11 | | or if no such rate exists with respect to such services, then | 12 | | 80%
of the usual and customary rates established by the Health | 13 | | Insurance
Association of America. The payments required to be | 14 | | made by the Association
under this Section shall constitute | 15 | | full and complete payment for such
provider services to the | 16 | | enrollee.
| 17 | | (d) The Association shall not be required to pay more than | 18 | | an
aggregate of $300,000 for any organization which is declared | 19 | | to be
insolvent prior to July 1, 1987, and such funds shall be | 20 | | distributed first
to enrollees who are not public aid | 21 | | recipients pursuant to a plan
recommended by the Association | 22 | | and approved by the Director and the court
having jurisdiction | 23 | | over the liquidation.
| 24 | | (9) The Association may:
| 25 | | (a) Enter into such contracts as are necessary or | 26 | | proper to carry
out the provisions and purposes of this |
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| 1 | | Article.
| 2 | | (b) Sue or be sued, including taking any legal actions | 3 | | necessary or
proper for recovery of any unpaid assessments | 4 | | under Section 6-9. The
Association shall not be liable for | 5 | | punitive or exemplary damages.
| 6 | | (c) Borrow money to effect the purposes of this | 7 | | Article. Any notes
or other evidence of indebtedness of the | 8 | | Association not in default are
legal investments for | 9 | | domestic organizations and may be carried as admitted
| 10 | | assets.
| 11 | | (d) Employ or retain such persons as are necessary to | 12 | | handle the
financial transactions of the Association, and | 13 | | to perform such other
functions as become necessary or | 14 | | proper under this Article.
| 15 | | (e) Negotiate and contract with any liquidator, | 16 | | rehabilitator,
conservator, or ancillary receiver to carry | 17 | | out the powers and duties of
the Association.
| 18 | | (f) Take such legal action as may be necessary to avoid | 19 | | payment of
improper claims.
| 20 | | (g) Exercise, for the purposes of this Article and to | 21 | | the extent
approved by the Director, the powers of a | 22 | | domestic
organization, but in no case may the Association | 23 | | issue evidence of coverage
other than that issued to | 24 | | perform the contractual
obligations of the impaired or | 25 | | insolvent organization.
| 26 | | (h) Exercise all the rights of the Director under |
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| 1 | | Section 193(4) of
the Illinois Insurance Code with respect | 2 | | to covered health care plan
certificates after the | 3 | | association becomes obligated by statute.
| 4 | | (i) Request information from a person seeking coverage | 5 | | from the Association in order to aid the Association in | 6 | | determining its obligations under this Article with | 7 | | respect to the person and the person shall promptly comply | 8 | | with the request. | 9 | | (j) Take other necessary or appropriate action to | 10 | | discharge its duties and obligations under this Article or | 11 | | to exercise its powers under this Article. | 12 | | (10) The obligations of the Association under this Article | 13 | | shall not
relieve any reinsurer, insurer or other person of its | 14 | | obligations to the
insolvent organization (or its conservator, | 15 | | rehabilitator, liquidator or
similar official) or its | 16 | | enrollees, including without limitation any
reinsurer, insurer | 17 | | or other person liable to the insolvent insurer (or its
| 18 | | conservator, rehabilitator, liquidator or similar official) or | 19 | | its
enrollees under any contract of reinsurance, any contract | 20 | | providing stop
loss coverage or similar coverage or any health | 21 | | care contract. With
respect to covered health care plan | 22 | | certificates for which the
Association becomes obligated after | 23 | | an entry of an order of liquidation
or rehabilitation, the | 24 | | Association may elect to succeed to the rights of
the insolvent | 25 | | organization arising after the date of the order of
liquidation | 26 | | or rehabilitation under any contract of reinsurance, any
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| 1 | | contract providing stop loss coverage or similar coverages or | 2 | | any health
care service contract to which the insolvent | 3 | | organization was a party, on
the terms set forth under such | 4 | | contract, to the extent that such contract
provides coverage | 5 | | for health care services provided after the date of the
order | 6 | | of liquidation or rehabilitation. As a condition to making this
| 7 | | election, the Association must pay premiums for coverage | 8 | | relating to
periods after the date of the order of liquidation | 9 | | or rehabilitation.
| 10 | | (11) The Association shall be entitled to collect premiums | 11 | | due under or with
respect to covered health care certificates | 12 | | for a period from the date on which
the domestic, foreign, or | 13 | | alien organization became an insolvent organization
until the | 14 | | Association no longer has obligations under subsection (2) of
| 15 | | this Section with respect to such certificates. The | 16 | | Association's
obligations under subsection (2) of this Section | 17 | | with respect to
any covered health care plan certificates shall | 18 | | terminate in the event that
all such premiums due under or with | 19 | | respect to such covered health care plan
certificates are not | 20 | | paid to the Association (i) within 30 days of the
Association's | 21 | | demand therefor, or (ii) in the event that such certificates
| 22 | | provide for a longer grace period for payment of premiums after | 23 | | notice of
non-payment or demand therefor, within the lesser of | 24 | | (A) the period provided
for in such certificates or (B) 60 | 25 | | days.
| 26 | | (12) The Board of Directors of the Association shall have |
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| 1 | | discretion and may exercise reasonable business judgment to | 2 | | determine the means by which the Association is to provide the | 3 | | benefits of this Article in an economical and efficient manner. | 4 | | (13) Where the Association has arranged or offered to | 5 | | provide the benefits of this Article to a covered person under | 6 | | a plan or arrangement that fulfills the Association's | 7 | | obligations under this Article, the person shall not be | 8 | | entitled to benefits from the Association in addition to or | 9 | | other than those provided under the plan or arrangement. | 10 | | (14) Venue in a suit against the Association arising under | 11 | | the Article shall be in Cook County. The Association shall not | 12 | | be required to give any appeal bond in an appeal that relates | 13 | | to a cause of action arising under this Article. | 14 | | (Source: P.A. 95-331, eff. 8-21-07; 96-1450, eff. 8-20-10; | 15 | | revised 9-16-10.)
| 16 | | Section 99. Effective date. This Act takes effect upon | 17 | | becoming law.".
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