2002 -- H 7725 SUBSTITUTE A

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LC01782/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2002

____________

AN ACT

RELATING TO STATUTES AND STATUTORY CONSTRUCTION

     Introduced By: Representatives Carter, Fox, and San Bento

     Date Introduced: February 13, 2002

     Referred To: House Corporations

It is enacted by the General Assembly as follows:

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      SECTION 1. Section 5-40.1-13 of the General Laws in Chapter 5-40.1 entitled

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“Occupational Therapy” is hereby amended to read as follows:

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      5-40.1-13. Fees. -- When an application is submitted to the division of

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professional regulation for a license to practice occupational therapy in Rhode Island, the

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applicant pays shall pay a non-refundable fee of sixty-two dollars and fifty cents ($62.50)

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to the general treasurer. A licensee shall submit a biennial renewal fee of sixty-two

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dollars and fifty cents ($62.50) is submitted with a renewal application on or before the

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first thirty-first (31st) day of March of each even year pursuant to the requirements of §

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5-40.1-12(1)(a)(3), and any person who allows his or her license to lapse by failing to

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renew it in the manner prescribed pays shall pay an additional fee of twenty-five dollars

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($25.00) as referred to in § 5-40.1-12(1)

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     (a)(6).

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      SECTION 2. Section 23-17-44 of the General Laws in Chapter 23-17 entitled “Licensing

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of Health Care Facilities” is hereby amended to read as follows:

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      23-17-44. Moratorium on new initial nursing facility licensed beds and on

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increases to the licensed capacity of existing nursing facility licenses. -- (a) The

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licensing agency shall issue no new initial licenses for nursing facilities prior to July 1,

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2004; provided, however, that:

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     (1) Any person holding a previously issued and valid certificate of need as of August 21,

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1996 shall be permitted to effect a prior certificate from the licensing agency consistent with any

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other statutory and regulatory provisions which may further apply;

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     (2) Any person holding a nursing facility license may undertake activities to construct

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and operate a replacement nursing facility with the same or lower bed capacity as is presently

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licensed provided that the replacement facility may only be licensed upon the otherwise

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unconditional cessation of operation of the previously licensed nursing facility;

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     (3) Any certificate of need application under active review before the state agency as of

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     January 10, 1996, which application seeks approval of a proposal to establish a new nursing

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facility or seeks to increase the licensed bed capacity of an existing nursing facility shall continue

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to be reviewed under all the statutory and regulatory requirements in effect at the time the

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application was accepted for review by the state agency; and

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     (4) On July 1, 1999, if the statewide occupancy rate of licensed nursing facility beds

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exceeds ninety-two percent (92%) for the preceding calendar year, as determined by the

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department of human services, an assisted living residence licensed pursuant to chapter 17.4 of

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this title may propose to seek nursing facility licensure by conversion of assisted living residence

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rooms within its existing physical plant; provided however, that:

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     (i) The number of nursing facility beds to be licensed does not exceed the lesser of twenty

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(20) beds or ten percent (10%) of the licensed bed capacity of the assisted living residence;

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     (ii) The capital expenditures associated with the implementation of the nursing facility

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beds does not exceed five hundred thousand dollars ($500,000);

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     (iii) The nursing facility shall be limited in taking residents to those persons who are

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transferring from residency at the assisted living residence;

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     (iv) The assisted living residence must participate in the Medicaid program;

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     (v) The application must be submitted to the health services council on or before October

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1, 1999;

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     (vi) The facility must comply with all requirements of the Health Care Certificate of

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Need Act, chapter 15 of title 23.

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     (b) Prior to July 1, 2004, the licensing agency shall not increase the licensed bed capacity

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of any existing licensed nursing facility, including any nursing facility approved for change in

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ownership pursuant to § 23-17-14 §§23-17-14.3 and 23-17-14.4, except for the greater of ten (10)

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beds or ten percent (10%) of the facility's licensed capacity. Any person holding a previously

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issued and valid certificate of need as of the date of passage of this section or who shall

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subsequently be granted a certificate of need pursuant to subsection (a) shall be permitted to

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effect a prior certificate from the licensing agency consistent with any other statutory and

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regulatory provisions which may further apply.

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     SECTION 3. Sections 25-2-14, 25-2-18.1, 25-2-25, and 25-2-19 of the General Laws in

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Chapter 25-2 entitled “Days of Special Observance” are hereby amended to read as follows:

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     25-2-14. White Ccane Ssafety Dday - Proclamation. -- Each year the governor shall

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take suitable public notice of October 15 as “Wwhite Ccane Ssafety Dday.” The governor shall

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issue a proclamation in which he or she:

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     (1) Comments upon the significance of the white cane;

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     (2) Calls upon the citizens of the state to observe the provisions of the white cane law and

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to take precautions necessary to the safety of the people who are disabled;

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     (3) Reminds the citizens of the state of the policies with respect to people who are

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disabled herein as declared in § 25-2-13 and urges the citizens to cooperate in giving effect to

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them; and

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     (4) Emphasizes the need of the citizens to be aware of the presence of people who are

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disabled in the community and to keep safe and functional for people who are disabled the streets,

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highways, sidewalks, walkways, public buildings, public facilities, other public places, places of

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public accommodation, amusement, and resort, and other places to which the public is invited,

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and to offer assistance to people who are disabled upon appropriate occasions.

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     25-2-18.1. Martin Luther King, Jr. State Holiday Commission. [Effective until

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January 7, 2003.] -- (a) There is hereby created a permanent commission to be known as the

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Martin Luther King, Jr. State Holiday Commission to consist of thirteen (13) members, three (3)

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of whom shall be from the house of representatives, not more than two (2) from the same political

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party, to be appointed by the speaker; three (3) of whom shall be from the senate, not more than

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two (2) from the same political party to be appointed by the senate majority leader; three (3) of

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whom shall be representatives of the general public, to be appointed by the speaker; two (2) of

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whom shall be representatives of the general public to be appointed by the senate majority leader;

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one of whom shall be a representative of the governor’s office, to be appointed by the governor;

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and one of whom shall be the lieutenant governor, all of the foregoing to be known as

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commission members. The commission shall appoint not more than sixteen (16) representatives

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from organizations and groups generally identified with and thought to epitomize the ideals of Dr.

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Martin Luther King, Jr., all of whom shall be known as non-voting affiliate members, to serve for

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two (2) year terms.

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     (b) The purpose of the commission shall be to plan, supervise, and administer, in

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conjunction with the federal Martin Luther King Day Commission and the Martin Luther King

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Center for Non-Violent Social Change, an appropriate celebration to commemorate the birthday

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of Dr. Martin Luther King, Jr., and the annual observance of Dr. Martin Luther King Day, which

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will be observed on the third Monday in January each year. The commission shall not limit its

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activities to the annual celebration, but shall endeavor to promote educational efforts throughout

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the year, as well as to promote seminar events during the annual celebration that will be of

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informative value to all segments of the Rhode Island community.

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     (c) Forthwith upon the passage of this section, The members of the commission shall

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meet at the call of the speaker and shall, in February of each odd-numbered year, elect from

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among themselves a chairperson, who shall be a legislator, and a vice-chairperson, who shall not

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be a government official or employee. Vacancies in the commission shall be filled in like manner

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as the original appointment.

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     (d) The commission is empowered to appoint committees to study specialized areas of

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concern and to report their findings and recommendations to the commission; provided, however,

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that one of these committees shall be an education committee.

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     (e) The commission is empowered to establish a Martin Luther King Scholarship Fund

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and to award scholarships therefrom from the fund. Decisions concerning scholarship awards

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shall be made by the education committee of the commission in conjunction with the higher

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education assistance authority.

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     (f) The commission is empowered to apply for and receive grants, appropriations, or gifts

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from any federal, state, or local agency, from any public or private foundation, and from any

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person, firm, or corporation in order to carry out the purposes of this chapter. The allocation of

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any funds received shall be decided by a majority vote of voting members in attendance at a

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meeting duly convened for the conduct of business by the commission.

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     Seven (7) members of the commission shall constitute a quorum.

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     (g) The commission shall meet at least four (4) times per year.

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     (h) On or before October 1, 1996, The commission shall adopt policies concerning the

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responsibilities of its voting members and non-voting affiliate members, including attendance at

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commission meetings.

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     (i) All departments and agencies of the state shall furnish advice and information,

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documentary and otherwise, to the commission and its agents as may be necessary or desirable to

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facilitate the purposes of this chapter.

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     (j) The speaker is hereby authorized and directed to provide suitable quarters for the

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commission.

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     (k) The commission shall file a report with the general assembly outlining its plans for

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the celebration on or before December 15th each year prior to the celebration.

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     25-2-18.1. Martin Luther King, Jr. State Holiday Commission. [Effective January 7,

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2003.] -- (a) There is hereby created a permanent commission to be known as the Martin Luther

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King, Jr. State Holiday Commission to consist of thirteen (13) members, three (3) of whom shall

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be from the house of representatives, not more than two (2) from the same political party, to be

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appointed by the speaker; three (3) of whom shall be from the senate, not more than two (2) from

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the same political party to be appointed by the president of the senate; three (3) of whom shall be

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representatives of the general public, to be appointed by the speaker; two (2) of whom shall be

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representatives of the general public to be appointed by the president of the senate; one of whom

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shall be a representative of the governor’s office, to be appointed by the governor; and one of

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whom shall be the lieutenant governor, all of the foregoing to be known as commission members.

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The commission shall appoint not more than sixteen (16) representatives from organizations and

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groups generally identified with and thought to epitomize the ideals of Dr. Martin Luther King,

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Jr., all of whom shall be known as non-voting affiliate members, to serve for two (2) year terms.

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     (b) The purpose of the commission shall be to plan, supervise, and administer, in

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conjunction with the federal Martin Luther King Day Commission and the Martin Luther King

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Center for Non-Violent Social Change, an appropriate celebration to commemorate the birthday

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of Dr. Martin Luther King, Jr., and the annual observance of Dr. Martin Luther King Day, which

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will be observed on the third Monday in January each year. The commission shall not limit its

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activities to the annual celebration, but shall endeavor to promote educational efforts throughout

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the year, as well as to promote seminar events during the annual celebration that will be of

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informative value to all segments of the Rhode Island community.

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     (c) Forthwith upon the passage of this section, The members of the commission shall

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meet at the call of the speaker and shall, in February of each odd-numbered year, elect from

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among themselves a chairperson, who shall be a legislator, and a vice-chairperson, who shall not

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be a government official or employee. Vacancies in the commission shall be filled in like manner

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as the original appointment.

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     (d) The commission is empowered to appoint committees to study specialized areas of

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concern and to report their findings and recommendations to the commission; provided, however,

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that one of these committees shall be an education committee.

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     (e) The commission is empowered to establish a Martin Luther King Scholarship Fund

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and to award scholarships therefrom from the fund. Decisions concerning scholarship awards

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shall be made by the education committee of the commission in conjunction with the higher

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education assistance authority.

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     (f) The commission is empowered to apply for and receive grants, appropriations, or gifts

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from any federal, state, or local agency, from any public or private foundation, and from any

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person, firm, or corporation in order to carry out the purposes of this chapter. The allocation of

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any funds received shall be decided by a majority vote of voting members in attendance at a

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meeting duly convened for the conduct of business by the commission.

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     Seven (7) members of the commission shall constitute a quorum.

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     (g) The commission shall meet at least four (4) times per year.

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     (h) On or before October 1, 1996, The commission shall adopt policies concerning the

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responsibilities of its voting members and non-voting affiliate members, including attendance at

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commission meetings.

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     (i) All departments and agencies of the state shall furnish advice and information,

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documentary and otherwise, to the commission and its agents as may be necessary or desirable to

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facilitate the purposes of this chapter.

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     (j) The speaker is hereby authorized and directed to provide suitable quarters for the

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commission.

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     (k) The commission shall file a report with the general assembly outlining its plans for

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the celebration on or before December 15th each year prior to the celebration.

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     25-2-25. National Women’s History Week. -- The calendar week containing March

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eighth, “International Women’s dDay,” in each year is hereby designated as “National Women’s

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History Week.” The governor shall annually issue an annual proclamation inviting and urging

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the people of the state to observe the week in schools and other suitable places with appropriate

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exercises and study with an emphasis on the historical accomplishments of Rhode Island women.

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The department of elementary and secondary education, the Rhode Island office of civil rights,

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and the Rhode Island commission on women shall make appropriate information regarding the

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observance available to the people of the state and to schools within the limits of their budgets.

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      25-2-29. Saint Jean-Baptiste Day. -- The twenty-fourth day of June shall

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annually be set aside as a day to be known as “Saint Jean-Baptiste Day” and the governor

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shall annually issue an annual proclamation inviting and urging the people of the state

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to observe this day in suitable places with appropriate ceremonies. Saint Jean-Baptiste

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Day shall commemorate the feast of Saint John the Baptist Jean-Baptiste as an important

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observance and show of appreciation for the significant cultural, economic, and civic

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contributions made by Franco-Americans which that have served to enrich the culture

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and lifestyle of this state.

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      SECTION 4. Sections 25-3-1 and 25-3-3 of the General Laws in Chapter 25-3

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entitled “Work on Holidays and Sundays” are hereby amended to read as follows:

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      25-3-1. Definitions. -- As used in this chapter:

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     (1) “Director” means the director of the department of labor and training;

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     (2) “Economic necessity” means and refers to any case where the director determines

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that:

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     (i) Both the economics and technology of manufacture of the product or a component

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thereof of the product requires continuous conversion or processing of raw materials,

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intermediates, or components without interruption to avoid disproportionate loss of production

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capacity;

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     (ii) The economics and technology of data processing requires the continuous operation

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of data processing equipment to avoid deterioration of equipment or a disproportionate loss of

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computer capacity or where customer requirements are such that data processing equipment must

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be available for input or output on a continuous basis;

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     (iii) Because prevailing industry practice in the manufacturing or processing of the

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product or in the provision of banking or financial services is to operate facilities within that

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industry seven (7) days per week, the failure to operate on one or more Sundays or holidays will

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subject the employer to a competitive hardship within the industry in which the employer

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competes;

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     (iv) Maintenance or improvement of plant or equipment cannot practically or efficiently

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be performed while production is in process;

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     (v) The scheduling of production on Sundays or holidays is necessitated by interrupted or

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allocated energy supplies, or shortages of raw materials or component parts;

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     (vi) An employer has been deprived of its normal production schedule by fire, flood,

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power failure, or other circumstances beyond its control; or

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     (vii) Circumstances, temporary in nature, are such that undue economic hardship would

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result from the inability to operate on one or more Sundays or holidays;

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     (3) “Employee” means any individual employed by an employer, but shall not include:

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     (i) Any individual employed in agriculture or maritime trades, including commercial

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fishing or boat repairs;

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     (ii) Any physician, dentist, attorney at law, or accountant;

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     (iii) Any individual engaged in the provision of health care or maintenance;

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     (iv) Any individual employed in a restaurant, hotel, motel, summer camp, resort, or other

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recreational facility (except health clubs);

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     (v) Any individual employed in the business of offshore petroleum or gas exploration or

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extraction, or in the business of servicing or supplying persons engaged in exploration or

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extraction;

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     (vi) Supervisory employees as defined in 29 U.S.C. § 213(a)(1) and regulations issued

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pursuant thereto to that section;

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     (vii) Any individual employed by an employer holding a license issued pursuant to

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chapter 23 of title 5; or

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     (viii) Any individual employed as part of a telephonic delivery of customer service, sales

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operations, and ancillary services related thereto to those services and operations, except for

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specific employment positions in the telecommunications industry which that are part of any

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collective bargaining agreement or employment contract in effect on July 2, 1998.

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     (4) “Employer” means any natural person, partnership, firm, corporation, or other

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enterprise engaged in industry, transportation, communication, or any other commercial

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occupation involving one or more employees; and

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     (5) “Holidays” means Sunday, New Year’s Day, Memorial Day, July 4th, Victory Day,

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Labor Day, Columbus Day, Veterans’ Day, Thanksgiving, and Christmas; provided, however,

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that as it pertains to all offices of state and municipal government, the term “holiday” includes in

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addition to the foregoing holidays enumerated in this subdivision, Dr. Martin Luther King, Jr.’s

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Birthday, as defined herein. in § 25-2-18.

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      25-3-3. Work on Sundays or holidays. -- (a) Work performed by employees on

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Sundays and holidays must be paid for at least one and one-half (1 1/2) times the normal rate of

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pay for the work performed; provided: (1) that it is not grounds for discharge or other penalty

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upon any employee for refusing to work upon any Sunday or holiday enumerated in this section

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chapter; (2) any manufacturer which operates for seven (7) continuous days per week is exempt

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from the requirement of subdivision (1).

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     (b) Any manufacturer of wall-covering products which operates for seven (7) continuous

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days per week, twenty-four (24) hours per day, and has complied with the provisions of

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subsection (a) is exempt from the requirement that the work be voluntary on Sundays as provided

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in subsection (a); provided, that the manufacturer increases employment by at least ten percent

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(10%), within one year of its conversion to continuous operation from non-continuous operation.

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     (c) Any manufacturer that operates three (3) shifts, or begins its work week on Sundays,

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may begin the shift or start the work week at 11:00 P.M. on Sunday and not be required to pay its

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employees one and one-half (1 1/2) times the normal rate of pay during the one hour period

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between 11:00 P.M. Sunday and 12 midnight.

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     SECTION 5. Sections 27-1-1, 27-1-29, 27-1-38 and 27-1-40 of the General Laws in

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chapter 27-1 entitled “Domestic Insurance Companies” are hereby amended to read as follows:

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     27-1-1. Site of principal office and records. -- (a) Every insurance company organized

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after May 3, 1956, under the laws of this state shall have its principal office and maintain all of its

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records, or duplicates thereof of those records, in this state; provided, however, that the director

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of business regulation may, after a public hearing, allow any insurance company, upon

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application, to locate its principal office and maintain certain original records outside of this state

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if it is determined that it is not inconsistent with the public interest of the people of the state of

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Rhode Island. In determining what is not inconsistent with the public interest of the people of the

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state of Rhode Island, the director shall make findings of fact, reduced to writing and filed with

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the secretary of state, which findings shall include, but are not be limited to the following:

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     (1) (a) The number of full time employees currently located within the state, and the

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number of full time employees anticipated to be located within the state if the petition is granted;

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and

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     (2) (b) That no detriment nor prejudice will inure to any current or anticipated future

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policyholders of the company by granting the application; and

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     (3) (c) That the granting of the application is not inimicable inimical to the ability of

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policyholders to file claims with and against the company, and, in furtherance of this finding, may

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require that the company maintain a toll free number for registering claims, and may require a

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claims office to be located within the state, staffed by a person authorized to issue payment on

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behalf of the company on approved claims; and

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     (4) (d) That a review of the financial records of the company and the records relied upon

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by the director in making the determination have satisfied the director that the company is able to

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meet its obligations to current policyholders. In the event that there is any risk associated with the

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granting the application the director may deny the application or may, in furtherance thereof of

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the application, may require the posting of bonds and/or securities with the general treasurer, in

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an amount to be determined by the director, sufficient to protect the interest of the policyholders

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within the state. ; and

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     (b) (e) The director is authorized to promulgate regulations as provided for by the

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Administrative Procedures Act, chapter 35 of title 42, not inconsistent with the foregoing

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this section, in furtherance of the authority herein granted in this section.

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      27-1-29. Reports of directors, officers, and principal shareholders. -- Every

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person who is directly or indirectly the beneficial owner of more than ten percent (10%)

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of any class of any equity security of a domestic stock insurance company, or who is a

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director or an officer of a domestic stock insurance company, shall file in the office of the

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commissioner on or before the first day of July, 1966, or within ten (10) days after he or

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she becomes the beneficial owner, director, or officer, a statement, in a form as the

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commissioner may prescribe, of the amount of all equity securities of the company of

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which he or she is the beneficial owner. Within ten (10) days after the close of each

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calendar month, thereafter, if there has been a change in ownership during the month, he

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or she shall file in the office of the commissioner a statement, in a form as the

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commissioner may prescribe, indicating his or her ownership at the close of the calendar

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month and any changes in his or her ownership as have occurred during the calendar

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month.

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     27-1-38. Acquisition of minority interests in subsidiary insurers. -- (a) Any parent

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corporation directly or indirectly owning at least ninety-five percent (95%) of the aggregate

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issued and outstanding shares of all classes of voting stock of an insurance company created by

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special act of the general assembly may, pursuant to a plan for acquisition of minority interests in

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the insurance company adopted pursuant to this section, acquire all of the remaining issued and

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outstanding shares of voting stock of the insurance company, by exchange of stock, other

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securities, cash, other consideration, or any combination thereof of these.

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     (b) The board of directors, trustees, or other governing body of the parent corporation

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may adopt a plan for the acquisition of minority interests in a subsidiary insurer. Every plan shall

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set forth:

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     (1) The name of the company whose shares are to be acquired;

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     (2) The total number of issued and outstanding shares of each class of voting stock of the

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company, the number of its shares owned by the parent corporation and, if either of the foregoing

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is subject to change prior to the effective date of acquisition, the manner in which any change

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may occur;

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     (3) The terms and conditions of the plan, including the manner and basis of exchanging

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the shares to be acquired for shares or other securities of the parent corporation, for cash, other

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consideration, or any combination of the foregoing, the proposed effective date of acquisition,

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and a statement clearly describing the rights of dissenting shareholders to demand appraisal;

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     (4) If the parent corporation that has adopted the plan is neither a domestic corporation

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nor an authorized insurer, its consent to the enforcement against it in this state of the rights of

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shareholders pursuant to the plan, and a designation of the insurance commissioner as the agent

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upon whom process may be served against the parent corporation in the same manner as if the

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parent corporation were a foreign insurance company licensed to do business in this state; and

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     (5) The other provisions with respect to the plan that the board of directors, trustees or

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other governing body deems necessary or desirable, or which the director of the department of

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business regulation may prescribe.

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     (c) Upon adoption of the plan, it shall be duly executed by the president and attested by

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the secretary, or the executive officers corresponding thereto to president and secretary, under the

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corporate seal of the parent corporation which has adopted the plan. A certified copy of the plan,

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together with a certificate of its adoption subscribed by the officers and affirmed by them as true

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under the penalties of perjury and under the seal of the parent corporation, shall be submitted to

11-18

the director of business regulation for his or her approval. The director of business regulation

11-19

shall consider the plan and, if satisfied that it complies with this section, is fair and equitable and

11-20

not inconsistent with law, the director of business regulation shall approve the plan. The director

11-21

of business regulation shall approve, modify, or disapprove the plan within sixty (60) days of its

11-22

submission to him or her. If the director of business regulation modifies or disapproves the plan,

11-23

notification of his or her modification or disapproval, assigning the reasons therefor for that

11-24

action, shall be given in writing by him or her to the parent corporation that submitted the plan.

11-25

No plan shall take effect unless the approval of the director of the department of business

11-26

regulation has been obtained.

11-27

     (d) If the director of business regulation approves the plan as submitted or modified, the

11-28

parent corporation which has adopted the plan shall deliver to each person who, as of the date of

11-29

delivery, is a holder of record of stock to be acquired pursuant to the plan, a copy of the plan, or a

11-30

summary of the plan approved by the director of the department of business regulation in person

11-31

or by depositing a copy or a summary of the plan in the post office, postage prepaid, addressed to

11-32

the shareholder at the shareholder’s address of record. On or before the date of acquisition

11-33

proposed in the plan, the parent corporation which has adopted the plan shall file with the director

11-34

of the department of business regulation a certificate, executed by its president and attested by its

12-1

secretary, or the executive officers corresponding thereto to president and secretary, and

12-2

subscribed by the officers and affirmed by them as true under the penalties of perjury and under

12-3

the seal of the parent corporation, attesting to compliance with this subsection.

12-4

     (e) Upon compliance with this section, ownership of the shares to be acquired pursuant

12-5

to the plan shall vest in the parent corporation which has adopted the plan on the date of

12-6

acquisition proposed in the plan whether or not the certificates for the shares have been

12-7

surrendered for exchange. The parent corporation shall be entitled to have new certificates

12-8

registered in its name. Shareholders whose shares have been so acquired shall thereafter retain

12-9

only the right either to receive the consideration to be paid in exchange for their shares pursuant

12-10

to the plan or to demand appraisal pursuant to subsection (g).

12-11

     (f) Neither the right granted by this section nor the exercise of that right by a parent

12-12

corporation shall preclude the exercise by the parent corporation of any other rights it may have

12-13

under any other applicable law.

12-14

     (g)(1) Any shareholder of an insurance company whose shares are to be acquired by a

12-15

parent corporation pursuant to a plan for the acquisition of minority interests adopted under this

12-16

section shall have the right to dissent from the plan.

12-17

     (2) (1) A shareholder may not dissent as to less than all of the shares registered in the

12-18

shareholder’s name which are owned beneficially by the shareholder. A nominee or fiduciary

12-19

may not dissent on behalf of any beneficial owner as to less than all of the shares of the owner

12-20

registered in the name of the nominee or fiduciary.

12-21

     (3) (2) Any shareholder electing to exercise the right of dissent shall file with the parent

12-22

corporation a written demand for payment of the fair value of the shareholder’s shares within

12-23

fifteen (15) days after the plan shall have been mailed to the shareholder.

12-24

     (4) (3) Any shareholder failing to make demand within the fifteen (15) day period shall

12-25

be bound by the terms of the plan. Any shareholder making a demand shall be entitled only to

12-26

payment as in this section provided and shall not be entitled to vote or to exercise any other rights

12-27

of a shareholder.

12-28

     (5) (4) No demand may be withdrawn unless the parent corporation consents. If,

12-29

however, the demand shall be withdrawn upon consent, or if the plan shall be abandoned, or if no

12-30

demand or petition for the determination of fair value by a court shall have been made or filed

12-31

within the time provided in this section, or if a court of competent jurisdiction shall determine

12-32

that the shareholder is not entitled to the relief provided by this section, then the right of the

12-33

shareholder to be paid the fair value of his or her shares shall cease and his or her status as a

13-1

shareholder shall be restored, without prejudice to any corporate proceedings which may have

13-2

been taken during the interim.

13-3

     (6) (5) Within ten (10) days after the effective date of the acquisition under the plan, the

13-4

parent corporation shall make a written offer to each shareholder who has made demand to pay

13-5

for the shares at a specified price deemed by the corporation to be fair value thereof of the shares.

13-6

The notice and offer shall be accompanied by a balance sheet of the insurance company as of the

13-7

latest available date and not more than twelve (12) months prior to the making of the offer, and a

13-8

profit and loss statement of the insurance company for the twelve (12) month period ended on the

13-9

date of the balance sheet.

13-10

     (7) (6) If within thirty (30) days after the effective date of the acquisition under the plan

13-11

the fair value of the shares is agreed upon between any dissenting shareholder and the parent

13-12

corporation, payment therefor for the shares shall be made within ninety (90) days after the

13-13

effective date of the acquisition under the plan upon surrender of the certificate or certificates

13-14

representing the shares. Upon payment of the agreed value, the dissenting shareholder shall cease

13-15

to have any interest in the shares.

13-16

     (8) (7) If, within the period of thirty (30) days, a dissenting shareholder and the parent

13-17

corporation do not so agree as provided in subdivision (g)(7), then the parent corporation shall

13-18

file a petition in any court of competent jurisdiction in the county in this state where the insurance

13-19

company maintains its principal office praying that the fair value of the shares be found and

13-20

determined; provided, that the parent corporation shall have received a written request for the

13-21

filing from any dissenting shareholder given within sixty (60) days after the effective date of the

13-22

acquisition under the plan, and the parent corporation shall file the petition within thirty (30) days

13-23

after receipt of the request. If no request is made, the parent corporation may at its election file a

13-24

petition at any time within sixty (60) days after the effective date of the acquisition date of the

13-25

plan. If the parent corporation shall fail to institute the proceeding, any dissenting shareholder

13-26

may do so in the name of the parent corporation.

13-27

     (9) (8) The subsidiary insurance company shall join as a party petitioner in the

13-28

proceeding, and in the event that the insurance company shall fail to do so, the court upon the

13-29

motion of any party shall join the insurance company as a party petitioner.

13-30

     (10) (9) All dissenting shareholders, wherever residing, shall be made parties to the

13-31

proceeding as an action against their shares quasi in rem. A copy of the petition shall be served on

13-32

each dissenting shareholder who is a resident of this state and shall be served by registered or

13-33

certified mail on each dissenting shareholder who is a nonresident. Service on nonresidents shall

13-34

also be made by publication as provided by law. The jurisdiction of the court shall be plenary and

14-1

exclusive. All shareholders who are parties to the proceeding shall be entitled to judgment against

14-2

the parent corporation and the subsidiary insurance company jointly and severally for the amount

14-3

of the fair value of their shares, and execution shall issue upon the motion of any party respondent

14-4

against either or both of the parent corporation and the subsidiary insurance company and their

14-5

respective assets, and any execution so issued against the insurance company shall have priority

14-6

over the claims of any other shareholder.

14-7

     (11) (10) The court may, if it so elects, appoint one or more persons as appraisers to

14-8

receive evidence and recommend a decision on the question of fair value. The appraisers shall

14-9

have the power and authority specified in the order of their appointment or an amendment of the

14-10

order. The judgment shall be payable only upon and concurrently with the surrender to the parent

14-11

corporation of the certificate or certificates representing the shares. Upon payment of the

14-12

judgment, the dissenting shareholder shall cease to have any interest in the shares.

14-13

     (12) (11) The judgment shall include an allowance for interest at a rate that the court may

14-14

find to be fair and equitable in all the circumstances, from the date of acquisition proposed in the

14-15

plan to the date of payment.

14-16

     (13) (12) The costs and expenses of any proceeding shall be determined by the court and

14-17

shall be assessed against the parent corporation, but all or any part of the costs and expenses may

14-18

be apportioned and assessed as the court may deem equitable against any or all of the dissenting

14-19

shareholders who are parties to the proceeding to whom the parent corporation shall have made

14-20

an offer to pay for the shares, if the court shall find that the action of the shareholders in failing to

14-21

accept the offer was arbitrary or vexatious or not in good faith. The expenses shall include

14-22

reasonable compensation for and reasonable expenses of the counsel for any experts employed by

14-23

any party; but if the fair value of the share as determined materially exceeds the amount which

14-24

the parent corporation offered to pay, or if no offer was made, the court in its discretion may

14-25

award to any shareholder who is a party to the proceeding the sum as the court may determine to

14-26

be reasonable compensation to any expert or experts employed by the shareholder in the

14-27

proceeding.

14-28

     (14) (13) Within twenty (20) days after demanding payment for his or her shares, each

14-29

shareholder demanding payment shall submit the certificate or certificates representing his or her

14-30

shares to the parent corporation for notation thereon on the certificate or certificates that the

14-31

demand has been made. The shareholder’s failure to do so shall, at the option of the parent

14-32

corporation, terminate the shareholder’s rights under this subsection unless a court of competent

14-33

jurisdiction, for good and sufficient cause shown, otherwise directs. If shares represented by a

14-34

certificate on which notation has been so made shall be transferred, each new certificate issued

15-1

shall bear similar notation, together with the name of the original dissenting holder of the shares,

15-2

and a transferee of the shares shall acquire by transfer no rights in the insurance company other

15-3

than those which the original dissenting shareholder had after making demand for payment of the

15-4

fair value thereof of the shares.

15-5

     27-1-40. Conversion to stock form of organization. -- (a) Any mutual insurance

15-6

company created under the laws of this state which meets or exceeds all capital and surplus funds

15-7

required by law for the transaction of business in Rhode Island may convert to and become an

15-8

insurance company with a capital stock form of organization upon adoption of a plan of

15-9

conversion by two-thirds (2/3) vote of the board of directors or other governing body and

15-10

approval of the plan by the director of the department of business regulation and the affirmative

15-11

vote of one half (1/2) of its members or policyholders present in person or by proxy at a meeting

15-12

called by the board of directors or other governing body. Unless otherwise provided in its charter

15-13

or by-laws bylaws or plan of conversion, each member or policyholder shall have one vote, and in

15-14

the case of any policy or contract of group life or other group insurance, the employer or other

15-15

person to whom or in whose name the master policy or contract has been issued shall be deemed

15-16

to be the member or policyholder and shall be entitled to one vote for each policy or contract of

15-17

group insurance irrespective of the number of individuals insured. The plan of conversion shall

15-18

provide that the insurance company shall issue and sell the stock issued in connection with the

15-19

conversion at a price which represents its pro forma market value, as determined by an

15-20

independent appraisal, and shall offer its stock, initially, in a subscription offering to the members

15-21

or policyholders, individuals in the insurance company’s management, and employee groups of

15-22

the insurance company on an eligibility record date established by the board of directors, giving

15-23

the members or policyholders, individuals in the insurance company’s management, and

15-24

employee groups priority rights to purchase the shares over the general public pro rata. The plan

15-25

of conversion may provide for the establishment of accounts for the benefit of members or

15-26

policyholders pursuant to which the converting insurance company shall provide for the

15-27

continued maintenance of its dividend practices required by existing charter, by-laws bylaws, or

15-28

policy provisions relative to its then existing lines of business, but assets in the account will be

15-29

assets of the converting insurance company, subject to liabilities in the same manner and priority

15-30

as all other assets of the company. The plan of conversion may provide for restrictions on the

15-31

amount of stock which any person or entity may purchase in the conversion, or own or control

15-32

thereafter after this, which may also be incorporated into the stock charter or agreement of

15-33

association of the converted entity.

16-1

     (b) In connection with the conversion, the insurance company may form a holding

16-2

company or utilize an existing holding company to hold all the shares of the converted entity, and

16-3

offer to its members or policyholders and the general public, subject to subscription rights in

16-4

favor of members or policyholders as stated above in subsection (a), all of the stock of the

16-5

holding company in lieu of the capital stock of the converting insurance company. The converting

16-6

insurance company may, at the time of the conversion, merge any insurance company subsidiary

16-7

into the capital stock entity resulting from the conversion, or cause the subsidiary to become a

16-8

separate subsidiary of a holding company.

16-9

     (c) The corporate existence of an insurance company converting to the stock form of

16-10

organization shall not terminate, but the converted institution shall be deemed to be a

16-11

continuation of entity of the converted insurance company so converted .

16-12

     (d) The director of the department of business regulation, upon finding that the

16-13

requirements of this section and applicable regulations have been met, that the terms and

16-14

conditions of the plan are fair and equitable, and that the conversion has been completed with the

16-15

sale of all shares offered in the conversion, shall issue a certificate of approval of the conversion

16-16

to the converted entity. Upon the payment of fifty dollars ($50.00), the certificate of approval

16-17

shall be filed in the office of the secretary of state, together with the certificate of the general

16-18

treasurer that the converted entity has paid into the treasury for the use of the state a sum equal to

16-19

one-tenth of one percent (.1%) of the capital stock, but in no event less than ten thousand dollars

16-20

($10,000). Upon the filing of the certificate with the secretary of state and payment of fifty dollars

16-21

($50.00), the secretary of state shall immediately record the certificate of approval and stock

16-22

charter or agreement of association, whereupon then the stock charter or agreement of association

16-23

will become effective.

16-24

     (e) The director of the department of business regulation may employ staff personnel as

16-25

well as and professional consultants and other persons to assist in the review of the plan of

16-26

conversion and may hold public hearings as, in the director’s discretion, are desirable prior to

16-27

granting approval of the plan of conversion. All reasonable costs related to the review of the plan

16-28

of conversion, including the costs attributable to staff personnel and professional consultants,

16-29

shall be borne by the insurance company filing a plan of conversion for approval.

16-30

     (f) The department of business regulation shall issue rules and regulations implementing

16-31

this section, which shall be administered by the director of the department of business regulation.

16-32

     (g) To the extent not inconsistent herewith with this section, each insurance company

16-33

converted into a capital stock insurance company shall have all the powers, privileges, including

16-34

the right to merge, convert, or otherwise restructure its corporate form upon a two-thirds (2/3)

17-1

vote of its stockholders and subject to any regulatory approval as required by law, and duties and

17-2

liabilities imposed upon insurance companies generally under the laws of this state, as applicable.

17-3

Unless otherwise governed by the laws of this state specifically applicable to insurance

17-4

companies, a capital stock entity converted pursuant to this section shall be subject to the general

17-5

provisions of the Rhode Island Business Corporation Act, chapter 1.1 of title 7, with respect to its

17-6

corporate governance.

17-7

     SECTION 6. Section 27-1.1-4 of the General Laws in Chapter 27-1 entitled “Credit for

17-8

Reinsurance Act” is hereby amended to read as follows:

17-9

      27-1.1-4. Rules and regulations. -- The commissioner may adopt reasonable

17-10

rules and regulations implementing the provisions of this law.

17-11

     SECTION 7. Section 27-1.1-8 of the General Laws in chapter 27-1 entitled

17-12

“Credit for Reinsurance Act” is hereby repealed.

17-13

     27-1.1-8. Regulations. -- The commissioner may adopt reasonable rules and regulations

17-14

for the implementation of this chapter.

17-15

     SECTION 8. Section 27-2-25 of the General Laws in Chapter 27-2 entitled “Foreign

17-16

Insurance Companies” is hereby amended to read as follows:

17-17

     27-2-25. Notice of revocation or suspension of license. -- The insurance

17-18

commissioner shall give written notice to the company specifying the date on which any

17-19

revocation or suspension shall be effective, the term of any suspension, and the ground

17-20

for the revocation or suspension; provided, that if the ground for revocation or suspension

17-21

is that the company has violated any provision of law or has failed to comply with its

17-22

charter, the effective date of the revocation or suspension shall be not less than ten (10)

17-23

days from the date of issue of the notice, and the particulars of the violation or failure to

17-24

comply with its charter shall be specified in the notice. The notice shall be served by

17-25

registered or certified mail, sent postage prepaid, and addressed to the company at its last

17-26

home office address, or in the case of a company of a foreign country, sent to its resident

17-27

manager in the United States or at his last address appearing on the records of the

17-28

insurance commissioner. An affidavit of the insurance commissioner in any form as the

17-29

commissioner may prescribe, or of anyone authorized by him or her to give notice,

17-30

appended to a copy thereof of the notice, that the notice has been mailed as provided

17-31

above in this section shall be prima facie evidence that the notice has been duly given.

17-32

The insurance commissioner shall also cause notice of the revocation or suspension to be

18-1

published in any manner as the commissioner may deem necessary for the protection of

18-2

the public.

18-3

     SECTION 9. Section 27-2.1-4 of the General Laws in Chapter 27-2.1 entitled

18-4

“Additional Fees for Foreign Insurance Companies” is hereby amended to read as

18-5

follows:

18-6

      27-2.1-4. Use of fees. -- Any and all fees as prescribed by this section chapter

18-7

shall be paid to the general treasurer of the state of Rhode Island.

18-8

      SECTION 10. Sections 27-2.4-20 of the General Laws in Chapter 27-2.4 entitled

18-9

“Producer Licensing Act” is hereby amended to read as follows:

18-10

     27-2.4-20. Revocation or modification of insurance producer’s contract —

18-11

Procedures. -- (a) No company shall cancel the authority of an insurance producer, if the

18-12

insurance producer is not an employee of the company, and no company shall modify a contract

18-13

with that insurance producer unless the company gives written notice of its intent to cancel that

18-14

insurance producer or its intent to modify the contract at least one hundred eighty (180) days

18-15

before the proposed effective date of any cancellation or at least one hundred eighty (180) days

18-16

before the proposed effective date of any modification. No company shall allow the license of

18-17

that insurance producer to expire unless the company gives written notice of its intent to do so at

18-18

least one hundred eighty (180) days before the proposed effective date of expiration because of

18-19

cancellation. Except as otherwise provided in this section, any insurance producer receiving

18-20

notice of cancellation, modification, or expiration may, within sixty (60) days after receipt of the

18-21

notice, make a written demand for reference to three (3) referees of the question as to whether or

18-22

not the cancellation, modification, or expiration will so affect the renewal, continuation, or

18-23

replacement of any policies placed with the company through the efforts of the insurance

18-24

producer, or the services needed by any policyholder doing business with the company as a result

18-25

of the efforts of the insurance producer, as to justify renewal or continuation of any policies then

18-26

in effect having been placed with the company by that insurance producer. In the event the

18-27

referees find that the cancellation, modification, or expiration will so affect the renewal,

18-28

continuation, or replacement of any policies placed with the company through the efforts of the

18-29

insurance producer, or the services needed by any policyholders doing business with the company

18-30

as a result of the efforts of the insurance producer, then the referees shall order continuance or

18-31

renewal of any policies expiring within a period of twelve (12) months of the issuance of the

18-32

notice, at a rate of compensation to the insurance producer equal to that as provided in the

18-33

agreement expiring or being so cancelled or modified, for one additional policy period equal in

19-1

length to the most recent policy period of the expiring policy, but in no event for more than one

19-2

year. However, the The referees shall not order continuance or renewal of any policies if they find

19-3

that the reason for the cancellation or expiration of the agreement by the company was

19-4

legitimately based upon one of the following grounds:

19-5

     (1) The insurance producer was convicted of a dishonest act related to his or her

19-6

occupation as an insurance agent;

19-7

     (2) The insurance producer’s license to engage as an insurance producer was revoked; or

19-8

     (3) The company surrendered its license to do business in the state.

19-9

     (b) An insurance producer making a written demand for a reference shall accompany the

19-10

written demand with the names and addresses of three (3) persons, whereupon the company shall,

19-11

within fifteen (15) days, notify the insurance producer of its choice of one of the persons to act as

19-12

one of the referees and at the same time submit the names and addresses of three (3) persons to

19-13

the insurance producer, who shall, within fifteen (15) days after receiving these names, notify the

19-14

company in writing of his her choice of one of the persons to act as a second referee. At the same

19-15

time the insurance producer shall notify the commissioner, the notice to be on a form prescribed

19-16

by the commissioner, that both the company and insurance producer have chosen referees. Within

19-17

ten (10) days of the receipt of this notice the commissioner shall appoint a person to serve as third

19-18

referee, and shall notify that person, the insurance producer, and the company in writing of this

19-19

appointment. Each person nominated or appointed as a referee shall be a disinterested person,

19-20

shall be a resident of the state, and shall be willing to act as a referee. Within ten (10) working

19-21

days of the appointment of the third referee, who shall serve as chairperson, the three (3) referees

19-22

shall meet, hear evidence, and reduce their decisions to writing and sign it, and shall deliver a

19-23

copy of the decision to the insurance producer, to the company, and to the commissioner. In the

19-24

event any company receiving a written demand for a reference fails to comply with the provisions

19-25

of this subsection, then the insurance producer shall have the authority to renew or continue any

19-26

policies placed with that company through the efforts of the insurance producer expiring within a

19-27

period of thirteen (13) months from the date of the notice of cancellation, modification, or

19-28

expiration of the agreement, at a rate of compensation to the insurance producer equal to that as

19-29

provided in the agreement expiring or being so cancelled or modified, for one additional policy

19-30

period equal in length to the most recent policy period of the expiring policy, but in no event for

19-31

more than one year.

19-32

     (c) Any insurance company and any insurance producer may by written contract agree to

19-33

modify the provisions of subsections (a) and (b) of this section other than the requirement of a

19-34

one hundred eighty (180) day notice in the event of cancellation or a one hundred eighty (180)

20-1

day notice in the event of modification of a contract or of intent to allow the expiration of a

20-2

license, by provisions presented to and approved by the commissioner which he or she finds after

20-3

due hearing and investigation will adequately protect both the right of the policyholder to a

20-4

continuance of insurance and the services of any insurance producer of his or her own choosing

20-5

and the right of the insurance producer to fair compensation for the insurance placed with a

20-6

company as a result of the insurance producer’s efforts. The commissioner may make reasonable

20-7

rules of general application regarding these modified provisions.

20-8

     (d) The decision of the referees may provide for the renewal or continuance of any or all

20-9

policies expiring within a period of twelve (12) months of the issuance of any notice, at a rate of

20-10

compensation to the insurance producer equal to that as provided in the agreement expiring or

20-11

being so cancelled or modified, for one additional policy period equal in length to the most recent

20-12

policy period of the expiring policy, but in no event for more than one year. The decision of the

20-13

referees may also provide for the continuance of previous contractual provisions, if the referees,

20-14

or a majority of them, find that the decision will best protect the right of a policyholder to a

20-15

continuance of insurance and the services of an insurance producer of his or her own choosing

20-16

and the right of any insurance producer to compensation for the insurance placed with a company

20-17

as a result of his or her efforts, giving due consideration to the possibility the affected insurance

20-18

producer has of obtaining similar coverage for policyholders affected from other companies at

20-19

reasonable compensation. The decisions rendered in accordance with the provisions of this

20-20

section providing for reference shall be binding on all companies and insurance producer affected

20-21

by those decisions. If a decision orders the renewal or continuance of any policies, policyholders

20-22

and the affected insurance producer shall be entitled in all respects to the same services and

20-23

practices as were in effect prior to reference insofar as amounts and types of coverage, credit

20-24

terms, commissions paid to the insurance producer, and insurance producer services are also

20-25

continued.

20-26

     (e) All policies expiring within twelve (12) months of the notice may be renewed for the

20-27

policy periods as provided in subsection (d) of this section above, but no insurance producer or

20-28

company relying on this section shall again refer the same issue to referees. Where other

20-29

provisions of the general laws require notice to policyholders before non -renewal of any

20-30

coverages, the company shall, at the request of the insurance producer who is unable to replace

20-31

any policy which has been renewed for one or more policy periods in accordance with this

20-32

section, comply with those provisions of law.

20-33

     (f) An insurance producer initiating reference under this section and the company

20-34

receiving written demand shall each be liable for the payment of the reasonable charges

21-1

and expenses of his or her nominee for referee and one-half (1/2) of the compensation for

21-2

the reasonable charges and expenses of the third referee. The third referee shall upon the

21-3

execution of the decision furnish the insurance producer and the company with a written

21-4

statement specifying in detail his or her charges for compensation and expenses. The

21-5

insurance producer or the company, if aggrieved by these charges, may petition the

21-6

commissioner for review. The petition shall set forth with particularity the specific item

21-7

or charges in dispute. The commissioner shall, within ten (10) days of receipt of the

21-8

petition, notify the interested parties of the date established for a hearing on the petition

21-9

and, after the hearing, the commissioner shall approve or disapprove the charges in whole

21-10

or in part, his or her findings and decisions shall be final and conclusive.

21-11

     SECTION 11. Sections 27-3.2-5 and 27-3.2-9 of the General Laws in chapter 27-

21-12

3.2 entitled “Continuing Education Requirements” are hereby amended to read as

21-13

follows:

21-14

     27-3.2-5. Continuing education advisory board. -- There shall hereby be is established

21-15

the continuing education advisory board. This board shall consist of two (2) representatives of the

21-16

Rhode Island Life Underwriters Association, three (3) representatives of the Independent

21-17

Insurance Agents of Rhode Island, two (2) representatives of the Chartered Life Underwriters,

21-18

and two (2) representatives of the Chartered Property and Casualty Underwriters. The board

21-19

members shall be appointed by the commissioner and shall serve two (2) year terms. ; provided,

21-20

however, that the initial term of one representative of each of the above organizations shall be one

21-21

year. The board shall meet at least once a year and additionally as required. This board shall

21-22

advise the insurance commissioner on the plans and operations of the continuing education

21-23

program for any person licensed pursuant to this title and not exempt under § 27-3.2-3.

21-24

      27-3.2-9. Fee. -- Notwithstanding any provision of the general laws to the contrary, there

21-25

is hereby established a fee of five dollars ($5.00) per annum, which shall be paid by all persons

21-26

licensed pursuant to chapter 2.3 2.4 of this title, and shall be deposited as general revenues.

21-27

      SECTION 12. Sections 27-4-6, 27-4-13.1, 27-4-17, 27-4-18 and 27-4-22 of the General

21-28

Laws in chapter 27-4 entitled “Life Insurance Policies and Reserves” are hereby amended to read

21-29

as follows:

21-30

     27-4-6. Terms to be stated in policy — Rebates prohibited. -- (a) No life insurance

21-31

corporation doing business in this state, nor any insurance producer thereof of the corporation,

21-32

shall permit, offer, or make any contract of insurance or agreement as to any contract other than

21-33

as plainly expressed in the policy issued thereon on the contract or agreement; nor shall any

22-1

company or any officer, insurance producer, or representative thereof of the company or producer

22-2

pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, as inducement to any

22-3

person to insure, or give, sell, or purchase, or offer to give, sell, or purchase as an inducement or

22-4

in connection with any insurance, any stocks, bonds, or other securities of any insurance company

22-5

or other corporation, association, or partnership, or any dividends or profits accruing thereon on

22-6

the securities, or any valuable consideration or inducement whatever not specified in the policy,

22-7

nor shall any person knowingly receive as an inducement any rebate of premium, or any special

22-8

favor or advantage in the dividends or other benefits, to accrue thereon, or any paid employment

22-9

or contract for services of any kind, or any valuable consideration or inducement whatever, not

22-10

specified in the policy.

22-11

     (b) Provided, however, that Nothing in this section shall be construed as to forbid a

22-12

company transacting industrial insurance on a weekly payment plan from returning to

22-13

policyholders who have made premium payments for a period of at least one year, directly to the

22-14

company at its home or district offices, a percentage of the premium which the company would

22-15

have paid for the weekly collection of the premiums.

22-16

     27-4-13.1. Policy loan interest rates. -- (a) The term “Published monthly average”

22-17

means:

22-18

     (1) Moody’s corporate bond yield average — monthly average corporates, as published

22-19

by Moody’s Investors Service, Inc. or any successor; thereto; or

22-20

     (2) In the event that the Moody’s corporate bond yield average — monthly average

22-21

corporates is no longer published, a substantially similar average, established by regulation issued

22-22

by the commissioner.

22-23

     (b) (1) Policies issued on or after May 25, 1982, shall provide for policy loan interest

22-24

rates as follows:

22-25

     (i) A provision permitting a maximum interest rate of not more than eight percent (8%)

22-26

per annum; or

22-27

     (ii) A provision permitting an adjustable maximum interest rate established from time to

22-28

time by the life insurer as permitted by law.

22-29

     (2) The rate of interest charged on a policy loan made under subdivision (b)(1)(ii) shall

22-30

not exceed the higher of the following:

22-31

     (i) The published monthly average for the calendar month ending two (2) months before

22-32

the date on which the rate is determined; or

22-33

     (ii) The rate used to compute the cash surrender values under the policy during the

22-34

applicable period plus one percent (1%) per annum.

23-1

     (3) If the maximum rate of interest is determined pursuant to subdivision (b)(1)(ii), the

23-2

policy shall contain a provision setting forth the frequency at which the rate is to be determined

23-3

for that policy.

23-4

     (4) The maximum rate for each policy must be determined at regular intervals at least

23-5

once every twelve (12) months, but not more frequently than once in any three (3) month period.

23-6

At the intervals specified in the policy:

23-7

     (i) The rate being charged may be increased whenever an increase as determined under

23-8

subdivision (b)(2) would increase that rate by one half of one percent (.5%) or more per annum;

23-9

     (ii) The rate being charged must be reduced whenever a reduction as determined under

23-10

subdivision (b)(2) would decrease that rate by one half of one percent (.5%) or more per annum.

23-11

     (5) The life insurer shall:

23-12

     (i) Notify the policy holder policyholder at the time a cash loan is made of the initial rate

23-13

of interest on the loan;

23-14

     (ii) Notify the policy holder policyholder with respect to premium loans of the initial rate

23-15

of interest on the loan as soon as it is reasonably practical to do so after making the initial loan.

23-16

Notice does not need not to be given to the policyholder when a further premium loan is added,

23-17

except as provided in subdivision (b)(5)(iii);

23-18

     (iii) Send to policyholders with loans reasonable advance notice of any increase in the

23-19

rate; and

23-20

     (iv) Include in the notices required above in subdivision (5) of this section the substance

23-21

of the pertinent provisions of subdivisions (b)(1) and (b)(3).

23-22

     (6) No policy shall terminate in a policy year as the sole result of a change in the interest

23-23

rate during that policy year, and the life insurer shall maintain coverage during that policy year

23-24

until the time at which it would otherwise have terminated if there had been no change during that

23-25

policy year.

23-26

     (7) The substance of the pertinent provisions of subdivisions (b)(1) and (b)(3) shall be set

23-27

forth in the policies to which they apply.

23-28

     (8) For purposes of this section:

23-29

     (i) The rate of interest on policy loans permitted under this section includes the interest

23-30

rate charged on the reinstatement of policy loans for the period during and after any lapse of a

23-31

policy;

23-32

     (ii) The term “Policy loan” includes any premium loan made under a policy to pay one or

23-33

more premiums that were not paid to the life insurer as they fell became due;

24-1

     (iii) The term “Policyholder” includes the owner of the policy or the person designated to

24-2

pay premiums as shown on the records of the life insurer; and

24-3

     (iv) The term “Policy” includes certificates issued by a fraternal benefit society and

24-4

annuity contracts which that provide for policy loans.

24-5

     (9) No other provision of law shall apply to policy loan interest rates unless made

24-6

specifically applicable to those rates.

24-7

     (c) The provisions of this section shall not apply to any insurance contract issued before

24-8

May 25, 1982, unless the policyholder agrees in writing to the applicability of this section.

24-9

     27-4-17. Annual valuation of policies and reserves. -- a) The director of business

24-10

regulation shall annually make annual valuations of all outstanding policies, additions thereto to

24-11

policies, unpaid dividends, and all other obligations of every life insurance corporation doing

24-12

business in this state. All valuations made by the director, or by his or her authority, shall be

24-13

made upon the net premium basis. The legal minimum standard for valuation of contracts issued

24-14

before January 1, 1907, shall be the American experience table of mortality with the interest at

24-15

four percent (4%) per annum, and for contracts issued on or after that date the same table of

24-16

mortality with interest at three and one-half percent (3 1/2%) per annum. Any company may

24-17

adopt as a legal minimum standard, for the valuation of life insurance policies issued on or after

24-18

January 1, 1948, the commissioners reserve valuation method, with interest at three and one-half

24-19

percent (3 1/2%) per annum, or in the case of policies issued on or after April 17, 1975, four

24-20

percent (4%) per annum for policies issued prior to April 27, 1979, and four and one-half percent

24-21

(4 1/2%) per annum for policies issued on or after April 27, 1979, and either the commissioners

24-22

1941 standard ordinary mortality table or the commissioners 1958 standard ordinary mortality

24-23

table for ordinary policies, and either the 1941 standard industrial mortality table or the

24-24

commissioners 1961 standard industrial mortality table or any industrial mortality table, adopted

24-25

after 1980 by the National Association of Insurance Commissioners, that is approved by

24-26

regulation promulgated by the commissioner for use in determining the minimum standard of

24-27

valuation for industrial policies, for industrial policies in lieu of the legal minimum standard

24-28

hereinabove allowed by this section.

24-29

     (b) The interest rates used in determining the minimum standard for the valuation of all

24-30

life insurance policies issued in a particular calendar year on or after May 15, 1981, shall be the

24-31

calendar year statutory valuation interest rates as defined in this section.

24-32

     (c) (1) The calendar year statutory valuation interest rates shall be determined as follows

24-33

and the results rounded to the nearer one-quarter of one percent (.25%):

24-34

     For life insurance:

25-1

     I = .03 + W (R1 - .03) + W/2 (R1 - .09); where R1 is the lesser of R and .09, R2 is the greater of

25-2

R and .09, R is the reference interest rate defined in this section, and W is the weighting factor

25-3

defined in this section;

25-4

     (2) However, i If the calendar year statutory valuation interest rate for any life insurance

25-5

policies issued in any calendar year determined without reference to subdivision (c)(1) differs

25-6

from the corresponding actual rate for similar policies issued in the immediately preceding

25-7

calendar year by less than one-half of one percent (.5%), the calendar year statutory valuation

25-8

interest rate for these life insurance policies shall be equal to the corresponding actual rate for the

25-9

immediately preceding calendar year. For the purposes of applying the provisions in this

25-10

subdivision the immediately preceding sentence, the calendar year statutory valuation interest rate

25-11

for life insurance policies issued in a calendar year shall be determined for 1980 using the

25-12

reference interest rate defined for 1979 and shall be determined for each subsequent calendar

25-13

year.

25-14

      (3) The weighting factors referred to in the formula stated above in subdivision (c)(1) are

25-15

given in the following table:

25-16

      Weighting Factors for Life Insurance:

25-17

     Guarantee

25-18

     Duration Weighting

25-19

      (Years) Factors

25-20

     10 or less .50

25-21

     More than 10, but not more than 20 .45

25-22

     More than 20 .35

25-23

      For life insurance, the guarantee duration is the maximum number of years the life insurance

25-24

can remain in force on a basis guaranteed in the policy or under options to convert to plans of life

25-25

insurance with premium rates or non-forfeiture values or both which are guaranteed in the

25-26

original policy.

25-27

     (4) The reference interest rate referred to in subdivision (c)(1) shall be defined as follows:

25-28

     (i) For all life insurance, the lesser of the average over a period of thirty-six (36) months

25-29

and the average over a period of twelve (12) months, ending on June 30 of the calendar year next

25-30

preceding the year of issue, of Moody’s corporate bond yield average — monthly average

25-31

corporates, as published by Moody’s Investors Service, Inc., or any successor; thereto; or

25-32

     (ii) In the event that the Moody’s corporate bond yield average — monthly average

25-33

corporates is no longer published by Moody’s Investors Service, Inc., or in the event that the

25-34

National Association of Insurance Commissioners determines that the Moody’s corporate bond

26-1

yield average — monthly average corporates, as published by Moody’s Investors Service, Inc., is

26-2

no longer appropriate for the determination of the reference interest rate, then an alternative

26-3

method for determination of the references interest rate, which is adopted by the National

26-4

Association of Insurance Commissioners and approved by regulation promulgated by the

26-5

commissioner, may be substituted.

26-6

     (d) The mortality table used in determining the minimum standard for the valuation of

26-7

ordinary life insurance policies issued on or after May 15, 1981, shall be:

26-8

     (1) The commissioners 1980 standard ordinary mortality table;

26-9

     (2) At the election of the company for any one or more specified plans of life insurance,

26-10

the commissioners 1980 standard ordinary mortality table with ten (10) year select mortality

26-11

factors; or

26-12

     (3) Any ordinary mortality table, adopted after 1980 by the National Association of

26-13

Insurance Commissioners, that is approved by regulation promulgated by the commissioner for

26-14

use in determining the minimum standard of valuation for these policies.

26-15

     (e) Reserves for any category of policies or contracts may be calculated, at the option of

26-16

the insurer, according to any standard or standards which produce greater aggregate reserves for

26-17

all policies or contracts than the legal minimum standard or standards.

26-18

      27-4-18. Variance from valuation standards. -- The director of business regulation may

26-19

vary the standards of interest and mortality in the case of corporations from foreign countries as

26-20

to contracts issued by these corporations in countries other than the United States, and in

26-21

particular cases of invalid lives and other extra hazards, and value policies seriatim or in groups,

26-22

use approximate averages for fractions of a year and otherwise, and accept the valuation of the

26-23

department of insurance of any other state or country if made upon the basis of, and according to,

26-24

standards not lower than herein required or authorized by §§ 27-4-17 — 27-4-20, in place of the

26-25

valuation herein required by §§ 27-4-17 — 27-4-20.

26-26

     27-4-22. Assignment of interest under group life insurance. -- Subject to the terms of

26-27

the policy relating to assignment of incidents of ownership thereunder under the policy, a person

26-28

whose life is insured under a policy of group life insurance may assign any or all incidents of

26-29

ownership granted that person under the policy, including but not limited to any right to designate

26-30

a beneficiary, to have an individual policy issued to him or her, and to pay premiums. Any

26-31

assignment by the insured, made either before or after May 7, 1970, shall be valid for the purpose

26-32

of vesting in the assignee, in accordance with any provisions included therein in the policy as to

26-33

the time at which it is to be effective, all of the incident of ownership so assigned, but without

26-34

prejudice to the insurer on account of any payment it may make or individual policy it may issue

27-1

without notice of the assignment. This section shall be construed as being declaratory of the law

27-2

in effect prior to May 7, 1970 and not as modifying, altering, or amending that law.

27-3

     SECTION 13. Section 27-4.2-5 of the General Laws in chapter 27-4.2 entitled “Life and

27-4

health Reinsurance Agreements Act” is hereby repealed.

27-5

     27-4.2-5. Existing agreements. -- Insurers subject to this chapter shall reduce to zero (0)

27-6

by December 31, 1997, any reserve credits or assets established with respect to reinsurance

27-7

agreements entered into prior to the effective date of this law which, under the provisions of this

27-8

law would not be entitled to recognition of the reserve credits or assets; provided, however, that

27-9

the reinsurance agreements shall have been in compliance with laws or regulations in existence

27-10

immediately preceding the effective date of this regulation.

27-11

     SECTION 14. Sections 27-4.3-5 and 27-4.3-8 of the General Laws in Chapter 27-4.3

27-12

entitled “The Standard Nonforfeiture Law for Life Insurance” are hereby amended to read as

27-13

follows:

27-14

     27-4.3-5. Calculations of adjusted premiums by the nonforfeiture net level premium

27-15

method. -- (a) This section shall apply to all policies issued on or after January 1, 1994. Except

27-16

as provided in subsection (g) of this section, the adjusted premiums for any policy shall be

27-17

calculated on an annual basis and shall be a uniform percentage of the respective premiums

27-18

specified in the policy for each policy year, excluding amounts payable as extra premiums to

27-19

cover impairments or special hazards, and also excluding any uniform annual contract charge or

27-20

policy fee specified in the policy in a statement of the method to be used in calculating the cash

27-21

surrender values and paid up nonforfeiture benefits, so that the present value, at the date of issue

27-22

of the policy, of all adjusted premiums shall be equal to the sum of: (1) the then present value of

27-23

the future guaranteed benefits provided for by the policy; (2) one percent (1%) of either the

27-24

amount of insurance, if the insurance be uniform in amount, or the average amount of insurance

27-25

at the beginning of each of the first ten (10) policy years; and (3) one hundred twenty-five percent

27-26

(125%) of the nonforfeiture net level premium as hereinafter defined in subsection (b); provided,

27-27

however, that in applying the percentage specified in (item 3) above subdivision (a)(3), no

27-28

nonforfeiture net level premium shall be deemed to exceed four percent (4%) of either the amount

27-29

of insurance, if the insurance is uniform in amount, or the average amount of insurance at the

27-30

beginning of each of the first ten (10) policy years. The date of issue of a policy for the purpose

27-31

of this section shall be the date as of which the rated age of the insured is determined.

27-32

     (b) The nonforfeiture net level premium shall be equal to the present value, at the date of

27-33

issue of the policy, of the guaranteed benefits provided for by the policy divided by the present

28-1

value, at the date of issue of the policy, of an annuity of one per annum payable on the date of

28-2

issue of the policy and on each anniversary of the policy on which a premium falls due.

28-3

     (c) In the case of policies which cause on a basis guaranteed in the policy unscheduled

28-4

changes in benefits or premiums, or which provide an option for changes in benefits or premiums,

28-5

other than a change to a new policy, the adjusted premiums and present values shall initially be

28-6

calculated on the assumption that future benefits and premiums do not change from those

28-7

stipulated at the date of issue of the policy. At the time of any change in the benefits or premiums

28-8

the future adjusted premiums, nonforfeiture net level premiums, and present values shall be

28-9

recalculated on the assumption that future benefits and premiums do not change from those

28-10

stipulated by the policy immediately after the change.

28-11

     (d) Except as otherwise provided in subsection (g), the recalculated future adjusted

28-12

premiums for any policy shall be a uniform percentage of the respective future premiums

28-13

specified in the policy for each policy year, excluding amounts payable as extra premiums to

28-14

cover impairments and special hazards, and also excluding any uniform annual contract charge or

28-15

policy fee specified in the policy in a statement of the method to be used in calculating the cash

28-16

surrender values and paid up nonforfeiture benefits, so that the present value, at the time of

28-17

change to the newly defined benefits or premiums, of all future adjusted premiums shall be equal

28-18

to the excess of: (1) the sum of: (i) the then present value of the then future guaranteed benefits

28-19

provided for by the policy and (ii) the additional expense allowance, if any, over (2) the then cash

28-20

surrender value, if any, or present value of any paid up nonforfeiture benefit under this policy.

28-21

     (e) The additional expense allowance, at the time of the change to the newly defined

28-22

benefits or premiums, shall be the sum of: (1) one percent (1%) of the excess, if positive, of the

28-23

average amount of insurance at the beginning of each of the first ten (10) policy years subsequent

28-24

to the change over the average amount of insurance prior to the change at the beginning of each

28-25

of the first ten (10) policy years subsequent to the time of the most recent previous change, or, if

28-26

there has been no previous change, the date of issue of the policy; and (2) one hundred twenty-

28-27

five percent (125%) of the increase, if positive, in the nonforfeiture net level premium.

28-28

     (f) The recalculated nonforfeiture net level premium shall be equal to the result obtained

28-29

by dividing subdivision (f)(1) by subdivision (f)(2) where:

28-30

     (1) Equals the sum of:

28-31

     (i) The nonforfeiture net level premium applicable prior to the change multiplied by the

28-32

present value of an annuity of one per annum payable on each anniversary of the policy on or

28-33

subsequent to the date of the change on which a premium would have fallen due had the change

28-34

not occurred, and

29-1

     (ii) The present value of the increase in future guaranteed benefits provided for by the

29-2

policy; and

29-3

     (2) Equals the present value of an annuity of one per annum payable on each anniversary

29-4

of the policy on or subsequent to the date of change on which a premium falls due.

29-5

     (g) Notwithstanding any other provisions of this section to the contrary, in the case of a

29-6

policy issued on a substandard basis which provides reduced graded amounts of insurance so that,

29-7

in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy

29-8

issued on the standard basis which provides for a higher uniform amount of insurance, adjusted

29-9

premiums and present values for the substandard policy may be calculated as if it were issued to

29-10

provide the higher uniform amounts of insurance on the standard basis.

29-11

     (h) All adjusted premiums and present values referred to in this chapter shall for all

29-12

policies of ordinary insurance be calculated on the basis of (1) the commissioners 1980 standard

29-13

ordinary mortality table or, (2) at the election of the insurance company for any one or more

29-14

specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with

29-15

ten (10) year select mortality factors; adjusted premiums and present values shall for all policies

29-16

of industrial insurance be calculated on the basis of the commissioners 1961 standard industrial

29-17

mortality table; and adjusted premiums and present values shall for all policies issued in a

29-18

particular calendar year be calculated on the basis of a rate of interest not exceeding the

29-19

nonforfeiture interest rate as defined in this section, for policies issued in that calendar year;

29-20

provided, however, that:

29-21

     (1) At the option of the insurance company, calculations for all policies issued in a

29-22

particular calendar may be made on the basis of a rate of interest not exceeding the nonforfeiture

29-23

interest rate, as defined in this section, for policies issued in the immediately preceding calendar

29-24

year;

29-25

     (2) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions,

29-26

any cash surrender value available, whether or not required by § 27-4.3-2, shall be calculated on

29-27

the basis of the mortality table and rate of interest used in determining the amount of any paid-up

29-28

nonforfeiture benefit and paid-up dividend additions, if any;

29-29

     (3) An insurance company may calculate the amount of any guaranteed paid-up

29-30

nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest

29-31

rate no lower than that specified in the policy for calculating cash surrender values;

29-32

     (4) In calculating the present value of any paid-up term insurance with accompanying

29-33

pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be

29-34

not more than those shown in the commissioners 1980 extended term insurance table for policies

30-1

of ordinary insurance and not more than the commissioners 1961 industrial extended term

30-2

insurance table for policies of industrial insurance;

30-3

     (5) For insurance issued on a substandard basis, the calculation of any adjusted premiums

30-4

and present values may be based on appropriate modifications of the aforementioned tables

30-5

mentioned in this subsection;

30-6

     (6) Any ordinary mortality tables, adopted after 1980 by the National Association of

30-7

Insurance Commissioners, that are approved by regulation promulgated by the commissioner of

30-8

insurance for use in determining the minimum nonforfeiture standard, may be substituted for the

30-9

commissioners 1980 standard ordinary mortality table with or without ten (10) year select

30-10

mortality factors or for the commissioners 1980 extended term insurance table; and

30-11

     (7) Any industrial mortality tables, adopted after 1980 by the National Association of

30-12

Insurance Commissioners, that are approved by regulation promulgated by the commissioner of

30-13

insurance for use in determining the minimum nonforfeiture standard, may be substituted for the

30-14

commissioners 1961 standard industrial mortality table or the commissioners 1961 industrial

30-15

extended term insurance table.

30-16

     (i) The nonforfeiture interest rate per annum for any policy issued in a particular

30-17

calendar year shall be equal to one hundred and twenty-five percent (125%) of the calendar year

30-18

statutory valuation interest rate for the policy as defined in chapter 4.5 of this title, rounded to the

30-19

nearer one-quarter of one percent (1/4 of 1%) (.25%).

30-20

     (j) Notwithstanding any other provision in this title to the contrary, any refiling of

30-21

nonforfeiture values or their methods of computation for any previously approved policy form

30-22

which involves only a change in the interest rate or mortality table used to compute nonforfeiture

30-23

values shall not require refiling of any other provisions of that policy form.

30-24

     27-4.3-8. Consistency of progression of cash surrender values with increasing policy

30-25

duration. -- (a) This section, in addition to all other applicable sections of this chapter, shall

30-26

apply to all policies issued on or after January 1, 1994. Any cash surrender value available under

30-27

the policy in the event of default in a premium payment due on any policy anniversary shall be in

30-28

an amount which does not differ by more than two tenths of one percent (.2%) of either the

30-29

amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at

30-30

the beginning of each of the first ten (10) policy years, from the sum of: (1) the greater of zero (0)

30-31

and the basic cash value hereinafter specified in subsection (b), and (2) the present value of any

30-32

existing paid up additions less the amount of any indebtedness to the insurance company under

30-33

the policy.

31-1

     (b) The basic cash value shall be equal to the present value, on the anniversary, of the

31-2

future guaranteed benefits which would have been provided for by the policy, excluding any

31-3

existing paid-up additions and before deduction of any indebtedness to the insurance company, if

31-4

there had been no default, less the then present value of the nonforfeiture factors, as defined in

31-5

this section, corresponding to premiums which would have fallen due on and after the

31-6

anniversary; provided, however, that the effects on the basic cash value of supplemental life

31-7

insurance or annuity benefits or of family coverage, as described in § 27-4.3-3 or 27-4.3-5,

31-8

whichever is applicable, shall be the same as are the effects specified in § 27-4.3-3 or 27-4.3-5,

31-9

whichever is applicable, on the cash surrender values defined in that section.

31-10

     (c) The nonforfeiture factor for each policy year shall be an amount equal to a percentage

31-11

of the adjusted premium for the policy year, as defined in § 27-4.3-5. Except as is required by the

31-12

next succeeding sentence of in this subsection, the percentage:

31-13

     (1) Must be the same percentage for each policy year between the second policy

31-14

anniversary and the later of: (i) the fifth policy anniversary, and (ii) the first policy anniversary at

31-15

which there is available under the policy a cash surrender value in an amount, before including

31-16

any paid-up additions and before deducting any indebtedness, of at least two tenths of one percent

31-17

(.2%) of either the amount of insurance, if the insurance is uniform in amount, or the average

31-18

amount of insurance at the beginning of each of the first ten (10) policy years; and

31-19

     (2) Must be such that no percentage after the later of the two policy anniversaries

31-20

specified in subdivision (c)(1) may apply to fewer than five (5) consecutive policy years.

31-21

     (d) No basic cash value may be less than the value which would be obtained if the

31-22

adjusted premiums for the policy, as defined in § 27-4.3-5, were substituted for the nonforfeiture

31-23

factors in the calculation of the basic cash value.

31-24

     (e) All adjusted premiums and present values referred to in this section shall for a

31-25

particular policy be calculated on the same mortality and interest bases as are used in

31-26

demonstrating the policy’s compliance with the other sections of this chapter. The cash surrender

31-27

values referred to in this section shall include any endowment benefits provided for by the policy.

31-28

     (f) Any cash surrender value available other than in the event of default in a premium

31-29

payment due on a policy anniversary, and the amount of any paid up nonforfeiture benefit

31-30

available under the policy in the event of default in a premium payment, shall be determined in

31-31

manners consistent with the manners specified for determining the analogous minimum amounts

31-32

in §§ 27-4.3-2 — 27-4.3-5 and 27-4.3-7. The amounts of any cash surrender values and of any

31-33

paid up nonforfeiture benefits granted in connection with additional benefits such as those listed

32-1

as items subdivisions (1) through (6) in (1) — (6) of § 27-4.3-7 shall conform with the principles

32-2

of this section.

32-3

     SECTION 15. Section 27-4.4-4 of the General Laws in Chapter 27-4.4 entitled “The

32-4

Standard Nonforfeiture Law for Individual Deferred Annuities” is hereby amended to read as

32-5

follows:

32-6

     27-4.4-4. Minimum values. -- (a) The minimum values as specified in §§ 27-4.4-5 —

32-7

27-4.4-8 and 27-4.4-10 of any paid-up annuity, cash surrender, or death benefits available under

32-8

an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this

32-9

section.

32-10

     (b) With respect to In contracts providing for flexible considerations, the minimum

32-11

nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall

32-12

be equal to an accumulation up to that time at a rate of interest of three percent (3%) per annum

32-13

of percentages of the net considerations as defined in this section paid prior to that time,

32-14

decreased by the sum of:

32-15

      (1) Any prior withdrawals from or partial surrenders of the contract accumulated at a rate

32-16

of interest of three percent (3%) per annum; and

32-17

      (2) The amount of any indebtedness to the company on the contract, including interest

32-18

due and accrued, and increased by any existing additional amounts credited by the company to

32-19

the contract.

32-20

      (c) The net considerations for a given contract year used to define the minimum

32-21

nonforfeiture amount shall be an amount not less than zero and shall be equal to the

32-22

corresponding gross considerations credited to the contract during that contract year less an

32-23

annual contract charge of thirty dollars ($30.00) and less a collection charge of one dollar and

32-24

twenty-five cents ($1.25) per consideration credited to the contract during that contract year. The

32-25

percentages of net considerations shall be sixty-five percent (65%) of the net consideration for the

32-26

first contract year and eighty-seven and one-half percent (87 1/2%) (87.5%) of the net

32-27

considerations for the second and later contract years. Notwithstanding the these net

32-28

considerations provisions of the preceding sentence, the percentage shall be sixty-five percent

32-29

(65%) of the portion of the total net considerations for any renewal contract year which that

32-30

exceeds by not more than two (2) times the sum of those portions of the net considerations in all

32-31

prior contract years for which the percentage was sixty-five percent (65%).

32-32

     (d) With respect to In contracts providing for fixed scheduled considerations, minimum

32-33

nonforfeiture amounts shall be calculated on the assumption that considerations are paid annually

33-1

in advance and shall be defined as for contracts with flexible considerations which are paid

33-2

annually with two (2) exceptions:

33-3

     (1) The portion of the net consideration for the first contract year to be accumulated shall

33-4

be the sum of sixty-five percent (65%) of the net consideration for the first contract year plus

33-5

twenty-two and one-half percent (22 1/2%) (22.5%) of the excess of the net consideration for the

33-6

first contract year over the lesser of the net considerations for the second and third contract years;

33-7

and

33-8

     (2) The annual contract charge shall be the lesser of (i) thirty dollars ($30.00) or (ii) ten

33-9

percent (10%) of the gross annual consideration.

33-10

     (e) With respect to In contracts providing for a single consideration, minimum

33-11

nonforfeiture amounts shall be defined as for contracts with flexible considerations except that

33-12

the percentage of net consideration used to determine the minimum nonforfeiture amount shall be

33-13

equal to ninety percent (90%) and the net consideration shall be the gross consideration less a

33-14

contract charge of seventy-five dollars ($75.00).

33-15

     SECTION 16. Sections 27-4.5-3, 27-4.5-4.1, and 27-4.5-5 of the General Laws in

33-16

Chapter 27-4.5 entitled “The Standard Valuation Law” are hereby amended to read as follows:

33-17

     27-4.5-3. Actuarial opinion of reserves. -- (a) This section shall become operative at

33-18

the end of the first full calendar year following the year of enactment.

33-19

     (a) (b) General. Every life insurance company doing business in this state shall annually

33-20

submit the opinion of a qualified actuary as to whether the reserves and related actuarial items

33-21

held in support of the policies and contracts specified by the commissioner of insurance by

33-22

regulation are computed appropriately, are based on assumptions which satisfy contractual

33-23

provisions, are consistent with prior reported amounts, and comply with applicable laws of this

33-24

state. The commissioner of insurance by regulation shall define the specifics of this opinion and

33-25

add any other items deemed to be necessary to its scope.

33-26

     (b) (c) Actuarial analysis of reserves and assets supporting the reserves.

33-27

     (1) Every life insurance company, except as exempted by or pursuant to regulation, shall also

33-28

annually include in the opinion required by subsection (b) (a), an opinion of the same qualified

33-29

actuary as to whether the reserves and related actuarial items held in support of the policies and

33-30

contracts specified by the commissioner of insurance by regulation, when considered in light of

33-31

the assets held by the company with respect to the reserves and related actuarial items, including,

33-32

but not limited to, the investment earnings on the assets and the considerations anticipated to be

33-33

received and retained under the policies and contracts, make adequate provision for the

34-1

company’s obligations under the policies and contracts, including, but not limited to, the benefits

34-2

under and expenses associated with the policies and contracts.

34-3

     (2) The commissioner of insurance may provide by regulation for a transition period for

34-4

establishing any higher reserves which that the qualified actuary may deem necessary in order to

34-5

render the opinion required by this section.

34-6

     (c) (d) Requirement for opinion under subsection (c)(b). Each opinion required by

34-7

subsection (c)(b) shall be governed by the following provisions:

34-8

     (1) A memorandum, in form and substance acceptable to the commissioner of insurance

34-9

as specified by regulation, shall be prepared to support each actuarial opinion; and

34-10

     (2) If the insurance company fails to provide a supporting memorandum at the request of

34-11

the commissioner of insurance within a period specified by regulation or the commissioner of

34-12

insurance determines that the supporting memorandum provided by the insurance company fails

34-13

to meet the standards prescribed by the regulations or is otherwise unacceptable to the

34-14

commissioner of insurance, the commissioner of insurance may engage a qualified actuary for the

34-15

opinion and prepare the supporting memorandum as is required by the commissioner of

34-16

insurance.

34-17

     (d) (e) Requirement for all opinions. Every opinion shall be governed by the following

34-18

provisions:

34-19

     (1) The opinion shall be submitted with the annual statement reflecting the valuation of

34-20

the reserve liabilities for each year ending on or after December 31, 1994;

34-21

     (2) The opinion shall apply to all business in force including individual and group health

34-22

insurance plans, in a form and substance acceptable to the commissioner of insurance as specified

34-23

by regulation;

34-24

     (3) The opinion shall be based on standards adopted from time to time by the actuarial

34-25

standards board and on any additional standards as that commissioner of insurance may by

34-26

regulation prescribe;

34-27

     (4) In the case of an opinion required to be submitted by a foreign or alien company, the

34-28

commissioner of insurance may accept the opinion filed by that company with the insurance

34-29

supervisory official of another state if the commissioner of insurance determines that the opinion

34-30

reasonably meets the requirements applicable to a company domiciled in this state;

34-31

     (5) For the purposes of this section, “qualified actuary” means a member in good

34-32

standing of the American Academy of Actuaries who meets the requirements set forth in the

34-33

regulations;

35-1

     (6) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable

35-2

for damages to any person, other than the insurance company and the commissioner of insurance,

35-3

for any act, error, omission, decision, or conduct with respect to the actuary’s opinion;

35-4

     (7) Disciplinary action by the commissioner of insurance against the company or the

35-5

qualified actuary shall be defined in regulations by the commissioner of insurance; and

35-6

     (8) Any memorandum in support of the opinion, and any other material provided by the

35-7

company to the commissioner of insurance in connection therewith with the opinion, shall be kept

35-8

confidential by the commissioner of insurance and shall not be made public and shall not be

35-9

subject to subpoena, other than for the purpose of defending an action seeking damages from any

35-10

person by reason of any action required by this section or by regulations promulgated hereunder

35-11

under this section; provided, however, that the memorandum or other material may otherwise be

35-12

released by the commissioner of insurance (i) with the written consent of the company or (ii) to

35-13

the American Academy of Actuaries upon request stating that the memorandum or other material

35-14

is required for the purpose of professional disciplinary proceedings and setting forth procedures

35-15

satisfactory to the commissioner of insurance for preserving the confidentiality of the

35-16

memorandum or other material. Once any portion of the confidential memorandum is cited by the

35-17

company in its marketing or is cited before any governmental agency other than a state insurance

35-18

department or is released by the company to the news media, all portions of the confidential

35-19

memorandum shall be no longer confidential.

35-20

     27-4.5-4.1. Computation of minimum standard by calendar year of issue. -- (a)

35-21

Applicability. of this section. The interest rates used in determining the minimum standards for

35-22

the valuation of: (1) all life insurance policies issued on or after January 1, 1994; (2) all individual

35-23

annuity and pure endowment contracts issued in a particular calendar year on or after January 1,

35-24

1994; (3) all annuities and pure endowments purchased in a particular calendar year on or after

35-25

January 1, 1994, under group annuity and pure endowment contracts; and (4) the net increase, if

35-26

any, in a particular calendar year after January 1, 1994, in amounts held under guaranteed interest

35-27

contracts; shall be the calendar year statutory valuation interest rates as defined in this section.

35-28

     (b) Calendar year statutory valuation interest rates.

35-29

     (1) The calendar year statutory valuation interest rates, “I”, shall be determined as

35-30

follows and the results rounded to the nearer one-quarter of one percent (1/4 of 1%) (.25%),

35-31

where R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate

35-32

as defined in this section, and W is the weighting factor as defined in this section:

35-33

      (i) For life insurance:

35-34

     I = .03 + W(R1 - .03) + W/2(R2 - .09);

36-1

      (ii) For single premium immediate annuities and for annuity benefits involving life

36-2

contingencies arising from other annuities with cash settlement options and from guaranteed

36-3

interest contracts with cash settlement options:

36-4

     I = .03 + W(R1 - .03);

36-5

     (iii) For other annuities with cash settlement options and guaranteed interest contracts

36-6

with cash settlement options, valued on an issued year basis, except as stated in subdivision

36-7

(b)(1)(ii), the formula for life insurance stated in subdivision (b)(1)(i) shall apply to annuities and

36-8

guaranteed interest contracts with guarantee durations in excess of ten (10) years and the formula

36-9

for single premium immediate annuities stated in subdivision (b)(1)(ii) shall apply to annuities

36-10

and guaranteed interest contracts with guarantee duration of ten (10) years or less;

36-11

     (iv) For other annuities with no cash settlement options and for guaranteed interest

36-12

contracts with no cash settlement options, the formula for single premium immediate annuities

36-13

stated in subdivision (b)(1)(ii) shall apply; and

36-14

     (v) For other annuities with cash settlement options and guaranteed interest contracts with

36-15

cash settlement options, valued on a change in fund basis, the formula for single premium

36-16

immediate annuities stated in subdivision (b)(1)(ii) shall apply; and

36-17

     (2) If, however, the calendar year statutory valuation interest rate for any life insurance

36-18

policies issued in any calendar year determined without reference to this subsection differs from

36-19

the corresponding actual rate for similar policies issued in the immediately preceding calendar

36-20

year by less than one-half of one percent (1/2 of 1%) (.5%), the calendar year statutory valuation

36-21

interest rate for those life insurance policies shall be equal to the corresponding actual rate for the

36-22

immediately preceding calendar year. For the purposes of applying the immediately preceding

36-23

sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a

36-24

calendar year shall be determined for 1994 using the reference interest rate defined in 1993 by

36-25

application of the standards specified in § 27-4-17(c)(2) and shall be determined for each

36-26

subsequent calendar year regardless of when § 27-4.3-5 becomes effective.

36-27

     (c) Weighting factors. (1) The weighting factors referred to in the formulas stated in

36-28

subdivisions (b)(1)(i) and (ii) are given in the following tables as follows:

36-29

     Guarantee Duration (Years) Weighting Factors

36-30

     10 or less .50

36-31

     More than 10, but not more than 20 .45

36-32

     More than 20 .35

36-33

     For life insurance, the guarantee duration is the maximum number of years the life

36-34

insurance can remain in force on a basis guaranteed in the policy or under options to convert to

37-1

plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in

37-2

the original policy;

37-3

     (2) Weighting factor for single premium immediate annuities and for annuity benefits

37-4

involving life contingencies arising from other annuities with cash settlement options and

37-5

guaranteed interest contracts with cash settlement options is .80;

37-6

     (3) Weighting factors for other annuities and for guaranteed interest contracts, except as

37-7

stated in subdivision (c)(2), shall be as specified in tables paragraphs (i), (ii) and (iii) below,

37-8

according to the rules and definitions in paragraphs (iv), (v) and (vi) below:

37-9

     (i) For annuities and guaranteed interest contracts valued on an issue year basis:

37-10

     Guarantee Duration (Years) Weighting Factor for Plan Type

37-11

      A B C

37-12

     5 or less: .80 .60 .50

37-13

     More than 5, but not more than 10: .75 .60 .50

37-14

     More than 10, but not more than 20: .65 .50 .45

37-15

     More than 20: .45 .35 .35

37-16

     (ii) For annuities and guaranteed interest contracts valued on a change in fund basis, the

37-17

factors show in subdivision (c)(3)(i) increased by:

37-18

      Plan Type

37-19

      A B C

37-20

      .15 .25 .05

37-21

     (iii) For annuities and guaranteed interest contracts valued on an issued year basis, other

37-22

than those with no cash settlement options, which do not guarantee interest on considerations

37-23

received more than one year after issue or purchase and for annuities and guaranteed interest

37-24

contracts valued on a change in fund basis which do not guarantee interest rates on consideration

37-25

received more than twelve (12) months beyond the valuation date, the factors shown in

37-26

subdivision (c)(3)(i) or derived in subdivision (c)(3)(ii) increased by:

37-27

      Plan Type

37-28

      A B C

37-29

      .05 .05 .05

37-30

     (iv) For other annuities with cash settlement options and guaranteed interest contracts

37-31

with cash settlement options, the guarantee duration is the number of years for which the contract

37-32

guarantees interest rates in excess of the calendar year statutory valuation interest rate for life

37-33

insurance policies with guarantee durations in excess of twenty (20) years. For other annuities

37-34

with no cash settlement options and for guaranteed interest contracts with no cash settlement

38-1

options, the guaranteed duration is the number of years from the date of issue or date of purchase

38-2

to the date annuity benefits are scheduled to commence;

38-3

     (v) Plan Type as used in the above tables is defined as follows:

38-4

     (A) Plan Type A: At any time the policyholder may withdraw funds only (1)(I) with an

38-5

adjustment to reflect changes in interest rates or asset values since receipt of the funds by the

38-6

insurance company, or (2)(II) without an adjustment but installments over five (5) years or more,

38-7

or (3)(III) as an immediate life annuity, or (4)(IV) no withdrawal permitted;

38-8

     (B) Plan Type B: Before expiration of the interest rate guarantee, the policyholder may

38-9

withdraw funds only (1)(I) with an adjustment to reflect changes in interest rates or asset values

38-10

since receipt of the funds by the insurance company, or (2)(II) without an adjustment but in

38-11

installments over five (5) years or more, or (3)(III) no withdrawal permitted. At the end of the

38-12

interest rate guarantee, funds may be withdrawn without the adjustment in a single sum or

38-13

installments over less than five (5) years; and

38-14

     (C) Plan Type C: The policyholder may withdraw funds before the expiration of interest

38-15

rate guarantee in a single sum or installments over less than five (5) years either (1)(I) without

38-16

adjustment to reflect changes in interest rates or asset values since receipt of the funds by the

38-17

insurance company, or (2)(II) subject only to a fixed surrender charge stipulated in the contract as

38-18

a percentage of the fund; and

38-19

     (vi) A company may elect to value guaranteed interest contracts with cash settlement

38-20

options and annuities with cash settlement options on either an issue year basis or on a change in

38-21

fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with

38-22

no cash settlement options must be valued on an issue year basis. As used in this section, “issue

38-23

year basis of valuation” refers to a valuation basis under which the interest rate used to determine

38-24

the minimum valuation standard for the entire duration of the annuity or guaranteed interest

38-25

contract is the calendar year valuation interest rate for the year of issue or year of purchase of the

38-26

annuity or guaranteed interest contract, and “change in fund basis of valuation” refers to a

38-27

valuation basis under which the interest rate used to determine the minimum valuation standard

38-28

applicable to each change in the fund held under the annuity or guaranteed interest contract is the

38-29

calendar year valuation interest rate for the year of the change in the fund.

38-30

     (d) Reference interest rate. Reference interest rate referred to in subsection (b) shall be

38-31

defined as follows:

38-32

     (1) For all life insurance, the lesser of the average over a period of thirty-six (36) months

38-33

and the average over a period of twelve (12) months, ending on June 30 of the calendar year next

39-1

preceding the year of issue, of the monthly average of the composite yield on seasoned corporate

39-2

bonds, as published by Moody’s Investors Service, Inc.;

39-3

     (2) For single premium immediate annuities and for annuity benefits involving life

39-4

contingencies arising from other annuities with cash settlement options and guaranteed interest

39-5

contracts with cash settlement options, the average over a period of twelve (12) months, ending

39-6

on June 30 of the calendar year of issue or year of purchase, of the monthly average of the

39-7

composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;

39-8

     (3) For other annuities with cash settlement options and guaranteed interest contracts with

39-9

cash settlement options, valued on a year of issue basis, except as stated in subsdivision

39-10

subdivision (d)(2), with guarantee duration in excess of ten (10) years, the lesser of the average

39-11

over a period of thirty-six (36) months and the average over a period of twelve (12) months,

39-12

ending on June 30 of the calendar year of issue or purchase, of the monthly average of the

39-13

composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;

39-14

     (4) For other annuities with cash settlement options and guaranteed interest contracts with

39-15

cash settlement options, valued on a year of issue basis, except as stated in subdivision (d)(2),

39-16

with guarantee duration of ten (10) years or less, the average over a period of twelve (12) months,

39-17

ending on June 30 of the calendar year of issue or purchase, of the monthly average of the

39-18

composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;

39-19

     (5) For other annuities with no cash settlement options and for guaranteed interest

39-20

contracts with no cash settlement options, the average over a period of twelve (12) months,

39-21

ending on June 30 of the calendar year of issue or purchase, of the monthly average of the

39-22

composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;

39-23

and

39-24

     (6) For other annuities with cash settlement options and guaranteed interest contracts with

39-25

cash settlement options, valued on a change in fund basis, except as stated in subdivision (d)(2),

39-26

the average over a period of twelve (12) months, ending on June 30 of the calendar year of the

39-27

change in the fund, of the monthly average of the composite yield on seasoned corporate bonds,

39-28

as published by Moody’s Investors Service, Inc.

39-29

     (e) Alternative method for determining reference interest rates. In the event that the

39-30

monthly average of the composite yield on seasoned corporate bonds is no longer published by

39-31

Moody’s Investors Service, Inc., or in the event that the National Association of Insurance

39-32

Commissioners determines that the monthly average of the composite yield on seasoned

39-33

corporate bonds as published by Moody’s Investors Service, Inc. is no longer appropriate for the

39-34

determination of the reference interest rate, then an alternative method for determination of the

40-1

reference interest rate, which is adopted by the National Association of Insurance Commissioners

40-2

and approved by regulation promulgated by the commissioner of insurance, may be substituted.

40-3

     27-4.5-5. Reserve valuation method — Life insurance and endowment benefits. -- (a)

40-4

Except as otherwise provided in §§ 27-4.5-5.1, 27-4.5-8 and 27-4.5-10, reserves according to the

40-5

commissioners’ reserve valuation method for the life insurance and endowment benefits of

40-6

policies providing for a uniform amount of insurance and requiring the payment of uniform

40-7

premiums shall be the excess, if any, of the present value, at the date of valuation, of the future

40-8

guaranteed benefits provided for by the policies, over the then present value of any future

40-9

modified net premiums. The modified net premiums for any policy shall be a uniform percentage

40-10

of the contract premiums for the benefits so that the present value, at the date of issue of the

40-11

policy, of all modified net premiums shall be equal to the sum of the then present value of the

40-12

benefits provided for by the policy and the excess of (1) over (2), as follows:

40-13

     (1) A net level annual premium equal to the present value, at the date of issue, of the

40-14

benefits provided for after the first policy year, divided by the present value, at the date of issue,

40-15

of an annuity of one per annum payable on the first and each subsequent anniversary of the policy

40-16

on which a premium falls due; provided, however, that the net level annual premium shall not

40-17

exceed the net level annual premium on the nineteen (19) year premium whole life plan for

40-18

insurance of the same amount at an age one year higher than the age at issue of the policy; and

40-19

     (2) A net one year term premium for the benefits provided for in the first policy year.

40-20

     (b) For any life insurance policy issued on or after January 1, 1994 for which the contract

40-21

premium in the first policy year exceeds that of the second year and for which no comparable

40-22

additional benefit is provided in the first year for the excess, and which provides an endowment

40-23

benefit or a cash surrender value or a combination thereof of them in an amount greater than the

40-24

excess premium, the reserve according to the commissioner’s reserve valuation method as of any

40-25

policy anniversary occurring on or before the assumed ending date, defined herein as the first

40-26

policy anniversary on which the sum of any endowment benefit and any cash surrender value

40-27

then available is greater than the excess premium, shall, except as otherwise provided in § 27-4.5-

40-28

8, be the greater of the reserve as of the policy anniversary calculated as described in subdivision

40-29

subsection (a) and the reserve as of the policy anniversary calculated as described in subdivision

40-30

subsection (a), but with: (1) the value defined in subdivision (a)(1) being reduced by fifteen

40-31

percent (15%) of the amount of the excess first year premium, (2) all present values of benefits

40-32

and premiums being determined without reference to premiums or benefits provided for by the

40-33

policy after the assumed ending date, (3) the policy being assumed to mature on the date as an

40-34

endowment, and (4) the cash surrender value provided on the date being considered as an

41-1

endowment benefit. In making the above comparison contained in this subsection the mortality

41-2

and interest basis stated in §§ 27-4.5-4 and 27-4.5-4.1 shall be used.

41-3

     (c) Reserves according to the commissioner’s reserve valuation method for: (1) life

41-4

insurance policies providing for a varying amount of insurance or requiring the payment of

41-5

varying premiums; (2) group annuity and pure endowment contracts purchased under a retirement

41-6

plan or plan of deferred compensation, established or maintained by an employer including a

41-7

partnership or sole proprietorship or by an employee organization, or by both, other than a plan

41-8

providing individual retirement accounts or individual retirement annuities under 26 U.S.C. §

41-9

408; (3) disability and accidental death benefits in all policies and contracts; and (4) all other

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benefits, except life insurance and endowment benefits in life insurance policies and benefits

41-11

provided by all other annuity and pure endowment contracts; shall be calculated by a method

41-12

consistent with the principles of the preceding subsections (a) and (b) of this section.

41-13

     SECTION 17. Section 27-45.7-15 of the General Laws in chapter 27-4.7 entitled “Risk-

41-14

Based Capital (RBC) for “Health Organizations Act” is hereby repealed.

41-15

      27-4.7-15. Phase-In provision. -- For RBC reports required to be filed by health

41-16

organizations with respect to the years 2000 and 2001, the following requirements shall apply in

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lieu of the provisions of §§ 27-4.7-4, 27-4.7-5, 27-4.7-6, and 27-4.7-7. However, in no event shall

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any of the following requirements preclude any action or limit any powers or duties otherwise

41-19

available to the insurance commissioner under any other state laws or regulation:

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     (1) In the event of a company action level event with respect to a domestic health

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organization, the commissioner shall take no regulatory action under this chapter;

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     (2) In the event of a regulatory action level event under § 27-4.7-5(a)(1), (2), or (3) with

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respect to a domestic health organization, the commissioner shall take the actions required under

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§ 27-4.7-4 with respect to the health organization;

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     (3) In the event of a regulatory action level event under § 27-4.7-5(a)(4), (5), (6), (7), (8),

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or (9) or an authorized control level event, the commissioner shall take the actions required under

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§ 27-4.7-5 with respect to the health organization;

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     (4) In the event of a mandatory control level event with respect to a health organization,

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the commissioner shall take the actions required under § 27-4.7-6 with respect to the health

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organization;

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     (5) In the event the health organization’s total adjusted capital at December 31, 2000, is

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less than the product of twenty-five one hundredths (.25) and its authorized control level RBC,

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the commissioner shall take the actions required under § 27-4.7-7 with respect to the health

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organization; and

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     (6) In the event the health organization’s total adjusted capital at December 31,

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2001, is less than the product of one-half (.5) and its authorized control level RBC, the

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commission shall take the actions required under § 27-4.7-7 with respect to the health

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organization.

42-5

     SECTIONS 18. Section 40-18-2 of the General Laws in Chapter 40-18 entitled

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“Long Term Home Health Care – Alternative to Placement in a Skilled Nursing or

42-7

Intermediate Care Facility” is hereby amended to read as follows:

42-8

      40-18-2. Definitions. -- As used in this chapter, the following words and phrases

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shall have the following meanings unless the context otherwise requires:

42-10

     (1) 'Adult day care service' means a comprehensive supervised program on a regularly

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scheduled basis to adults with disabilities for a substantial part of the day in a single physical

42-12

location for a specified number of participants daily. The adult day care center shall be reviewed

42-13

and approved by the department of elderly affairs or other appropriate state agency. Adult day

42-14

care services may include, but are not limited to, medical supervision, social and educational

42-15

activities, snacks and/or hot lunch, and transportation to and from the day care site. All adult day

42-16

care services must meet the conditions set forth in the rules and regulations of the department of

42-17

elderly affairs and must provide these services as an alternative to twenty-four (24) hour long

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term institutional care.

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     (2) 'Case management services' means the coordination of a plan of care and services

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provided at home to persons with disabilities who are medically eligible for placement in a skilled

42-21

nursing facility or an intermediate care facility upon discharge from a hospital. Such programs

42-22

shall be provided in the person's home or in the home of a responsible relative or other

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responsible adult, but not provided in a skilled nursing facility and/or an intermediate care

42-24

facility.

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     (3) 'Certified home health' means a home care services agency which is licensed by the

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state and which is qualified to participate as home health agency under the provisions of titles

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XVII and XIX of the federal Social Security Act, 42 U.S.C. § 1395x, and shall provide, directly

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or through contract arrangement, a minimum of the following services, which are of a

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preventative, therapeutic, rehabilitative health guidance, and/or supportive nature to persons at

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home: skilled nursing services, physical therapy, occupational therapy, speech therapy, and home

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health aide services.

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     (4) 'Director' means the director of the department of human services.

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     (5) 'Emergency response system' means a twenty-four (24) hour per day monitoring

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service designed for use by elderly adults in the community. The purpose of that system is to

43-3

provide contact between the elderly adult in the community and the appropriate emergency

43-4

response agency.

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     (6) 'Government funds' means funds provided under the provisions of chapter 8 of title

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40.

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     (7) 'Home care services' means those services provided by (i) medicare Medicaid

43-8

certified and state licensed home health agency and (ii) state licensed home health

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aide/homemaker agency.

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     (8) 'Home health aide/homemaker agency', defined in § 23-17.7-2, means: (i) home

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health aide services, at a minimum, includes assistance with personal hygiene, dressing, feeding,

43-12

and household tasks essential to the patient's health and (ii) homemaker services, at a minimum,

43-13

includes light work or household tasks such as cooking, cleaning, shopping, and laundry.

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     (9) 'Hospital' means a hospital as defined in chapter 17 of title 23.

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     SECTION 19. Section 42-66.4-2 of the General Laws in Chapter 42-66.4 entitled “Long-

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Term Health Care – Removal From A Skilled Nursing and/or Intermediate Care Facility” is

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hereby amended to read as follows:

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      42-66.4-2. Definitions. -- As used in this chapter, unless the context otherwise

43-19

requires:

43-20

     (1) 'Adult day care services' means a comprehensive supervised program on a regularly

43-21

scheduled basis to adults with disabilities for a substantial part of the day in a single physical

43-22

location for a specified number of participants daily. The adult day care center shall be reviewed

43-23

and approved by the department of elderly affairs or other appropriate state agency. Adult day

43-24

care services may include, but are not limited to, medical supervision, social and educational

43-25

activities, snacks and/or hot lunch, and transportation to and from the day care site. All adult day

43-26

care services must meet the conditions set forth in the rules and regulations of the department of

43-27

elderly affairs and must provide these services as an alternative to twenty-four (24) hour long

43-28

term institutional care.

43-29

     (2) 'Case management services' means the coordination of a plan of care and services

43-30

provided at home to persons with disabilities who are medically eligible for placement in a skilled

43-31

nursing facility or an intermediate care facility. These programs shall be provided in the person's

43-32

home or in the home of a responsible relative or other responsible adult, but not provided in a

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skilled nursing facility and/or an intermediate care facility.

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     (3) 'Certified home health' means a home care services agency which is licensed by the

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state and which is qualified to participate as a home health agency under the provisions of 42

44-3

U.S.C. § 1395 et seq. and § 1396 et seq., and shall provide, directly or through contract

44-4

arrangement, a minimum of the following services which are of a preventative, therapeutic,

44-5

rehabilitative health guidance and/or supportive nature to persons at home: skilled nursing

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services, physical therapy, occupational therapy, speech therapy, and home health aide services.

44-7

     (4) 'Director' means the director of the department of elderly affairs unless the context

44-8

clearly requires a different meaning.

44-9

     (5) 'Emergency response system' means a twenty-four (24) hour per day monitoring

44-10

service designed for use by elderly adults in the community. The purpose of the system is to

44-11

provide contact between the elderly adult in the community and the appropriate emergency

44-12

response agency.

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      (6) 'Government funds' means funds provided under the provisions of chapter 8 of title

44-14

40.

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     (7) 'Home care services' means those services provided by (a) medicare Medicaid

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certified and state licensed home health agency and (b) state licensed home health

44-17

aide/homemaker agency.

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     (8) 'Home health aide/homemaker agency', defined in § 23-17.7-2, means:

44-19

     (i) Home health aide services, at a minimum, includes assistance with personal hygiene,

44-20

dressing, feeding, and household tasks essential to the patient's health; and

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     (ii) Homemaker services, at a minimum, includes light work or household tasks such as

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cooking, cleaning, shopping, and laundry.

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     (9) 'Skilled nursing facility' and 'intermediate care facility' shall have the same definition

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as set forth in chapter 17 of title 23.

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     SECTION 20. Section 17-4-2 of the General Laws in Chapter 17-4 entitled “Federal

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Elective Officers” is hereby amended to read as follows:

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      17-4-2. Territory in first congressional district -- The first district consists of the