Introduced By: Senators Roberts, Kelly, Paiva Weed, Enos and Izzo
Date Introduced : May 5, 1999
It is enacted by the General Assembly as follows:
SECTION 1. Title 27 of the General Laws entitled "Insurance" is hereby amended by adding thereto the following chapter:
{ADD 27-66-1. Short title. -- ADD} {ADD This act shall be known and may be cited as "The Health Insurance Conversions Act". ADD}
{ADD 27-66-2. Findings. -- ADD} {ADD The general assembly finds and declares that: ADD}
{ADD (1) Rhode Island has a proud history of health insurance companies including health insurance corporations, health maintenance organizations, non-profit hospital service corporations, and non-profit medical service corporations doing business in this state; ADD}
{ADD (2) Nationally and regionally private investment is being made that results in the conversion of not-for-profit into for-profit health insurance corporations, health maintenance organizations, hospital service corporations and medical service corporations; ADD}
{ADD (3) These health insurance organizations and corporations provide an important health insurance product in the community. There are concerns that for profit health insurance organizations and corporations may engage in practices which affect the quality of the insurance coverage in the community as a whole and for more vulnerable members of society in particular; ADD}
{ADD (4) In order to protect public health and welfare, it is necessary to establish standards and procedures for health insurance organizations and corporations conversions. ADD}
{ADD 27-66-3. Applicability. -- ADD} {ADD This chapter shall apply to health insurance corporations subject to title 27, chapter 1, nonprofit hospital, or medical service corporation subject to title 27, chapters 19 or 20 and health maintenance organizations incorporated or otherwise resident in the state of Rhode Island. ADD}
{ADD 27-66-4. Definitions. -- ADD} {ADD For purposes of this chapter: ADD}
{ADD (1) "Acquiree" shall mean the person or persons which lose(s) any ownership or control in a health insurance corporation, health maintenance organization, non-profit hospital service corporations and non-profit medical service corporations; ADD}
{ADD (2) "Acquiror" shall mean the person or persons which gain(s) an ownership or control in a health insurance corporation, health maintenance organization, non-profit hospital service corporation and non-profit medical service corporation; ADD}
{ADD (3) "Conversion" shall mean any transfer by a person or persons of an ownership or membership interest or authority in a health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation or the assets thereof, whether by purchase, merger, consolidation, lease, gift, joint venture, sale, or other disposition which results in a change of ownership or control or possession of twenty percent (20%) or greater of the members or voting rights or interests of the health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation or of the assets of the health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation or pursuant to which, by virtue of such transfer, a person, together with all persons affiliated with such person, holds or owns, in the aggregate, twenty percent (20%) or greater of the membership or voting rights or interests of the health insurance corporations, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation or of the assets of the health insurance organization, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation or the removal, addition or substitution of a partner which results in a new partner gaining or acquiring a controlling interest in the health insurance organization, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation or any change in membership which results in a new person gaining or acquiring a controlling vote in the health insurance corporation, health maintenance organization non-profit hospital service corporation, or non-profit medical service corporation; ADD}
{ADD (4) "Department" shall mean the department of business regulation; ADD}
{ADD (5) "Director" shall mean the director of the department of business regulation; ADD}
{ADD (6) "Existing health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation" shall mean the health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation as it exists prior to the acquisition; ADD}
{ADD (7) "For profit corporation" shall mean a legal entity formed for the purpose of transacting business which has as any one of its purposes pecuniary profit; ADD}
{ADD (8) "Health insurance corporation" shall mean any insurance company subject to title 27, chapter 1 of the general laws that offers health insurance in Rhode Island except that "health insurance corporation" shall not include companies whose health insurance policies only cover one or more of the following: disability income, long term care, legal services, hospital confinement indemnity, specified disease indemnity, sickness or bodily injury by accident or other limited health benefits. ADD}
{ADD (9) "Mutual Insurance Company" shall mean a corporation which shares are held exclusively by members to whom profits are distributed as dividends and members are both the insurer and the insured. ADD}
{ADD (10) "New health insurance corporations, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation" shall mean the health insurance corporations, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation as it exists after the completion of a conversion; ADD}
{ADD (11) "Not-for-profit corporation" shall mean a corporation subject to title 7, chapter 6, of the general laws, including any corporation organized under special provisions of the general laws or under a private act, which is declared to be a "charitable corporation". ADD}
{ADD (12) "Person" shall mean any individual, trust or estate, partnership, joint venture, corporation, whether for profit or not for profit, (including associations, mutual insurance companies, joint stock companies and insurance companies); ADD}
{ADD (13) "Subscriber" shall mean those persons or groups of persons who shall contract with a health insurance corporation, health maintenance organization, nonprofit hospital service corporation or nonprofit medical service corporation for health insurance. ADD}
{ADD (14) "Transacting parties" shall mean any person or persons who seeks either to transfer or acquire ownership or a controlling interest or controlling authority in a health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation which would result in a change of ownership, control or authority of twenty percent (20%) or greater; ADD}
{ADD 27-66-5. Prior approval required -- Department of business regulation. -- ADD} {ADD A conversion shall require review and approval from the department of business regulation, after a public hearing, in accordance with the provisions of this chapter. ADD}
{ADD 27-66-6. Initial application -- Conversions. -- ADD} {ADD (a) No person shall engage in a conversion involving the establishment, maintenance, or operation of a health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation, without prior approval of the department of business regulation. The transacting parties shall file an initial application in accordance with subsection (b) of this section which shall, at a minimum, include the following information with respect to each transacting party and to the proposed new health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation: ADD}
{ADD (1) A detailed summary of the proposed conversion; ADD}
{ADD (2) Names, addresses and phone numbers of the transacting parties; ADD}
{ADD (3) Name, address, phone number and occupation of all officers, members of the board of directors, trustees, executive and senior level management including for each position, current persons and persons holding position during the past three (3) years; ADD}
{ADD (4) Articles of incorporation and certificate of incorporation; ADD}
{ADD (5) Bylaws and organizational charts; ADD}
{ADD (6) Organizational structure for existing transacting parties and each partner, affiliate, parent, subsidiary or related corporate entity in which the acquiror has a twenty percent (20%) or greater ownership interest; ADD}
{ADD (7) Conflict of interest statements, policies and procedures; ADD}
{ADD (8) Names, addresses and phone numbers of professional consultants engaged in connection with the proposed conversion; ADD}
{ADD (9) Copies of audited income statements, balance sheets, and other financial statements for the past three (3) years and to the extent they have been made public, audited interim financial statements and income statements together with detailed description of the financing structure of the proposed conversion including equity contribution, debt restructuring, stock issuance, partnership interests, stock offerings and the like; ADD}
{ADD (10) A detailed description as each relates to the proposed transaction for equipment leases, insurance, regulatory compliance, tax status, pending litigation or pending regulatory citations, pension plan descriptions and employee benefits, assessments and organizational goals; ADD}
{ADD (11) Copies of reports analyzing the proposed conversion during the past three (3) years including, but not limited to, reports by appraisers, accountants, investment bankers, actuaries and other experts; ADD}
{ADD (12) A description of the manner in which the price was determined including which methods of valuation and what data were used, and the names and addresses of persons preparing said documents, and this information is deemed to be proprietary; ADD}
{ADD (13) The name and mailing address of all facilities in which the acquiror maintains an ownership interest or controlling interest or operating authority; ADD}
{ADD (14) A list of pending or adjudicated citations, violations or charges against the facilities listed in subsection (13) brought by any governmental agency within the past three (3) years and the status or disposition of each matter with regard to its operation; ADD}
{ADD (15) The names of persons currently holding a position as an officer, director, or senior level management who will or will not maintain any position with the new health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation and whether any said person will receive any salary, severance stock offering or any financial gain, current or deferred, as a result of or in relation to the proposed conversion; ADD}
{ADD (16) Current, signed original conflict of interest forms from all officers, directors, trustees, senior management, chairpersons or department chairpersons on a form acceptable to the attorney general; ADD}
{ADD (17) Any other material that the department of business regulation deems relevant to its investigation; ADD}
{ADD (18) A detailed description of real estate owned or leased including title reports for land owned and lease agreements concerning the proposed conversion; ADD}
{ADD (19) Copies of all documents related to (a) identification of all charitable assets (b) accounting of all charitable assets for the past three (3) years; and (c) distribution of the charitable assets including, but not limited to, endowments, restricted, unrestricted and specific purpose funds as each relates to the proposed transaction; ADD}
{ADD (20) A description of the plan as to how the new health insurance corporation, health maintenance organization, nonprofit hospital service corporation or nonprofit medical service corporation will provide community benefits and continued access to health insurance during the first three (3) years of operation; ADD}
{ADD (21) Copies of documents or description of any proposed plan for any entity to be created for charitable assets, including but not limited to, endowments, restricted, unrestricted and specific purpose funds, the proposed articles of incorporation, by-laws, mission statement, program agenda, method of appointment of board members, qualifications of board members, duties of board members, and conflict of interest policies; ADD}
{ADD (22) The application shall also include a complete statement of performance during the preceding one (1) year with regard to the terms and conditions of approval of conversion and each projection, plan, or description submitted as part of the application for any conversion completed under any application. ADD}
{ADD (23) Copies of all NCQA (National Council on Quality Assurance) reports and profiles and all NAIC (National Association of Insurance Commissioners) reports issued during the past five (5) years; ADD}
{ADD (b) Two (2) copies of the initial application shall be provided to the department of business regulation and the department of attorney general simultaneously by United States mail, certified, return receipt requested. ADD}
{ADD (c) Except for information determined by the department of business regulation in accordance with section 27-66-23 to be confidential and/or proprietary, the initial application, supporting documentation, and the attorney general's report shall be considered public records and shall be available for inspection upon request. ADD}
{ADD 27-66-7. Review process and review criteria by department of attorney general -- Conversions. -- ADD} {ADD (a) The department of attorney general shall review all conversions involving a health insurance corporation, health maintenance organization non-profit hospital service corporation or non-profit medical service corporation. ADD}
{ADD (b) The department of attorney general shall, within twenty (20) days of its receipt of an initial application, inform the department of business regulation and/or the applicant of any additional information necessary to its ability to prepare the detailed report required under subsections (d) and (e) of this section. ADD}
{ADD (c) Upon receipt by the department of attorney general of the additional information requested in section 27-66-7(b), the application shall be deemed complete. ADD}
{ADD (d) The department of attorney general shall transmit, within sixty (60) days of the receipt of the completed application, a detailed report of its findings to the department of business regulation. ADD}
{ADD (e) The report of the department of the attorney general shall address each of the following criteria: ADD}
{ADD (1) Whether any conflict of interest exists concerning the proposed conversion relative to the officers, directors, senior management, experts or consultants engaged in connection with the proposed conversion including, but not limited to attorneys, accountants, investment bankers, actuaries, health care experts, or industry analysts; ADD}
{ADD (2) Whether individuals described in subsection (1) were provided with contracts or consulting agreements or arrangements which included pecuniary rewards based in whole, or in part on the contingency of the completion of the conversion; ADD}
{ADD (3) Whether any members of the board of directors will retain any authority in the new health insurance corporation, health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation; ADD}
{ADD (4) Whether individual officers, directors, or senior management engaged legal counsel to consider their individual rights or duties in acting in their capacity as a fiduciary in connection with the proposed conversion; ADD}
{ADD (5) Whether the conversion is proper under the Rhode Island nonprofit corporation act; ADD}
{ADD (6) Whether the conversion is proper under applicable state tax code provisions; ADD}
{ADD (7) Whether the individuals who represented the existing health maintenance organization, non-profit hospital service corporation or non-profit medical service corporation in negotiations avoided conflicts of interest; ADD}
{ADD (8) Whether the proposed conversion results in an abandonment of the original purposes of the acquiree or whether a resulting entity will depart from the traditional purposes and mission of the acquiree such that a cy pres proceeding would be necessary; ADD}
{ADD (9) Whether the proposed conversion jeopardizes the tax status of the acquiree; ADD}
{ADD (10) Whether the transacting parties are in compliance with the charitable trust act, chapter 9 of Title 18; ADD}
{ADD (11) Whether the proposed conversion will harm the public's interest in trust property given, devised, or bequeathed to the acquiree for charitable, educational or religious purposes located or administered in this state; ADD}
{ADD (12) Whether a trustee or trustees of any charitable trust located or administered in this state will be deemed to have exercised reasonable care, diligence, and prudence in performing as a fiduciary in connection with the proposed conversion; and ADD}
{ADD (13) Whether the proposed conversion appropriately provides for the disposition of proceeds of the conversion which may include, but not be limited to: ADD}
{ADD (a) Whether an existing entity or a new entity will receive the proceeds; ADD}
{ADD (b) Whether appropriate tax status implications of the entity receiving the proceeds have been considered; ADD}
{ADD (c) Whether the mission statement and program agenda will be or should be closely related with the purposes of the mission of the acquiree; ADD}
{ADD (d) Whether any conflicts of interest arise in the proposed handling of the conversion's proceeds; ADD}
{ADD (e) Whether the bylaws and articles of incorporation have been prepared for the new entity; ADD}
{ADD (f) Whether the board of any continuing entity will be independent from the new entity; ADD}
{ADD (g) Whether the method for selecting board members, staff, and consultants is appropriate; ADD}
{ADD (h) Whether the board will comprise an appropriate number of individuals with experience in pertinent areas such as foundations, health care, business, labor, community programs, financial management, legal, accounting, grant making and public members representing diverse ethnic populations of the affected community; andADD}
{ADD (i) Whether the size of the board and proposed length of board terms are sufficient. ADD}
{ADD 27-66-8. Review process and review criteria by department of business regulation for conversions. -- ADD} {ADD (a) The department shall review all proposed conversions involving a health insurance corporation, health maintenance organization, non-profit hospital serviced corporation or a non-profit medical service corporation. ADD}
{ADD (b) In reviewing proposed conversions in accordance with subsection (a) the department shall adhere to the following process: ADD}
{ADD (1) Within ten (10) working days after receipt of two (2) copies of an initial application pursuant to section 27-66-6, the department shall publish notice of the application in a newspaper of general circulation in the state and shall notify by United States mail any person who has requested notice of the filing of such application. The notice shall state (a) that an initial application has been received, (b) the names of the transacting parties, (c) the date by which a person may submit written comments to the department, and shall provide notice of the date, time and place of a public hearing; ADD}
{ADD (2) Within thirty (30) days after receipt of an initial application, the department shall advise the applicant in writing whether the application is complete, and, if not, shall specify what additional information, is required; ADD}
{ADD (3) The department shall, upon receipt of information requested in subsection (b)(2) herein, notify the applicant in writing of the date of completion of the application; ADD}
{ADD (4) The department shall approve, approve with conditions directly related to the proposed conversion, or disapprove the application within ninety (90) days of the date of completion of the application; ADD}
{ADD (c) In reviewing an application for a conversion involving health insurance corporations, health maintenance organizations, non-profit hospital service corporations, or non-profit medical service corporations the department shall consider the following criteria: ADD}
{ADD (1) Whether the proposed conversion provides reasonable assurance that the entity surviving after the conversion will be financially viable and competently managed; ADD}
{ADD (2) Whether the character, commitment, competence, and standing in the community, or any other communities served by the proposed transacting parties, are satisfactory; ADD}
{ADD (3) Whether the transacting parties have made a commitment to assure the continuation of collective bargaining rights, if applicable, and retention of the workforce; ADD}
{ADD (4) Whether the transacting parties have appropriately accounted for employment needs at the facility and addressed workforce retraining needed as a consequence of any proposed restructuring; ADD}
{ADD (5) Whether the acquiror has demonstrated that it has satisfactorily met the terms and conditions of approval for any previous conversion pursuant to an application submitted under section 27-66-5. ADD}
{ADD (6) Whether the acquiree established appropriate criteria in deciding to pursue a conversion in relation to carrying out its mission and purposes; ADD}
{ADD (7) Whether the acquiree formulated and issued appropriate requests for proposals in pursuing a conversion; ADD}
{ADD (8) Whether the acquiree considered the proposed conversion as the only alternative or as the best alternative in carrying out its mission and purposes; ADD}
{ADD (9) Whether the acquiree exercised due care in engaging consultants with the appropriate level of independence, education, and experience in similar conversions; ADD}
{ADD (10) Whether the acquiree exercised due care in accepting assumptions and conclusions provided by consultants engaged to assist in the proposed conversion; ADD}
{ADD (11) Whether the acquiree accepted fair consideration and value for any management contracts made part of the proposed conversion; ADD}
{ADD (12) Whether the proposed conversion contemplates the appropriate and reasonable fair market value; ADD}
{ADD (13) Whether the proposed conversion was based upon appropriate valuation methods including, but not limited to, market approach, third party report or fairness opinion; ADD}
{ADD (14) Whether officers, directors, or senior management deliberately acted or failed to act in a manner which impacted negatively on the value or purchase price; ADD}
{ADD (15) Whether the board exposed an inappropriate amount of assets by accepting in exchange for the proposed conversion future or contingent value based upon success of the new health insurance corporations, health maintenance organizations, nonprofit hospital service corporations, and nonprofit medical service corporations; ADD}
{ADD (16) Whether the formula used in determining the value of the acquiree was appropriate and reasonable which may include, but not be limited to factors such as: the multiple factor applied to the "EBITDA" -- earnings before interest, taxes, depreciation, and amortization; the time period of the evaluation; price/earnings multiples; the projected efficiency differences between the acquiree and the new entity and the historic value of any tax exemptions granted to the acquiree; ADD}
{ADD (17) Whether the transacting parties have made a commitment (A) to honor existing contracts with subscribers, businesses and providers and (B) to satisfy outstanding liabilities to providers through a formal account reconciliation process; ADD}
{ADD (18) Whether a right of first refusal to repurchase the assets has been retained; ADD}
{ADD (19) Whether a control premium is an appropriate component of the proposed conversion; ADD}
{ADD (20) Whether the value of assets factored in the conversion is based on past performance or future potential performance; ADD}
{ADD (21) Whether the board exercised due care in assigning a value to the acquiree and its charitable assets in proceeding to negotiate the proposed conversion; ADD}
{ADD (22) Any criteria delineated in section 27-35-2(d)(1) of the General Laws which the department deems applicable and appropriate. ADD}
{ADD (23) The detailed report submitted to the department of business regulation, by the department of the attorney general; and ADD}
{ADD (24) Any other criteria the department deems relevant to its investigation;. ADD}
{ADD (25) Whether the transacting parties have made a commitment to assure access to care for insured, underinsured and uninsured members of the community; ADD}
{ADD (26) Whether the proposed conversion negatively impacts on the quality and reliability of health services. ADD}
{ADD (d) In considering the above criteria, the department shall assign such weight and importance as it deems necessary and appropriate under the circumstances to carry out the purposes of this chapter. ADD}
{ADD 27-66-9. Reports, use of experts, costs. -- ADD} {ADDThe department of business regulation and/or the department of attorney general may, in effectuating the purposes of this chapter engage experts or consultants including, but not limited to, actuaries, investment bankers, accountants, attorneys, or industry analysts. All copies of reports prepared by experts and consultants, and costs associated therewith, shall be made available to the transacting parties and to the public. All costs incurred under this provision shall be the responsibility of one (1) or more transacting parties in an amount to be determined by the director as he deems appropriate. No application for a conversion made pursuant to the requirements of this chapter shall be considered complete unless an agreement has been executed with the director for the payment of costs in accordance with this section. ADD}
{ADD 27-66-10. Investigation -- Notice to attend -- Court order to appear -- Contempt. -- ADD} {ADD (a) The director and/or the department of attorney general may conduct investigations in discharging the duties required under this chapter. For purposes of this investigation the director or the attorney general may require any person, agent, trustee, fiduciary, consultant, institution, association, or corporation directly related to the proposed conversion to appear at such time and place as the director or the attorney general may designate, then and there under oath to produce for the use of the director or the attorney general any and all documents and other such information. ADD}
{ADD (b) Whenever the director or the attorney general may require the attendance of any person as provided in subsection (a), the director or the attorney general shall issue a notice setting the time and place when the attendance is required and shall cause the notice to be delivered or sent by registered or certified mail to the person at least fourteen (14) days before the date fixed in the notice for the attendance. ADD}
{ADD (c) If any person receiving notice pursuant to this provision neglects to attend or remain in attendance so long as may be necessary for the purposes for which the notice was issued, or refuses to produce information requested, any justice of the superior court for the county within which the inquiry is carried on or within which the person resides or transacts business, upon application by the director or the attorney general, or any transacting party shall have jurisdiction to hear and consider on an expedited basis the request, and if appropriate and relevant to the consideration of proposed conversion, may issue to the person an order requiring the person to appear before the director or the attorney general there to produce for the use of the director or the attorney general evidence in accordance with the terms of the order of the court, and any failure to obey the order of the superior court may be punished by the court as contempt thereof. ADD}
{ADD 27-66-11. Perjury. -- ADD} {ADD Any person who is found to have testified falsely under oath before the general assembly, department of business regulation or department of attorney general, pursuant to this chapter shall be subject to prosecution for perjury and be subject to the penalties set forth in section 11-33-1. ADD}
{ADD 27-66-12. Licensing fees. -- ADD} {ADD Nothing contained in this chapter shall be deemed to affect the licensing fees set forth in chapters 27-19, 27-20 and 27-41. ADD}
{ADD 27-66-13. Concurrent approval -- License. -- ADD} {ADD A decision of the director required by this chapter shall be subject to chapter 35 of title 42. For any conversion subject to this chapter, the director may combine any hearings required by this chapter with any hearings on similar or related matters required by chapters 27-19, 27-20 and 27-41 and shall consider issues of market share especially as they affect quality, access, and affordability of service. ADD}
{ADD 27-66-14. No derogation of attorney general. -- ADD} {ADD (a) No provision of this chapter shall derogate from the common law or statutory authority of the attorney general nor shall any provision be construed as a limitation on the common law or statutory authority of the attorney general, including the authority to investigate at any time charitable trusts for the purpose of determining and ascertaining whether they are being administered in accordance with law and with the terms and purposes thereof. ADD}
{ADD (b) No provision of this chapter shall be construed as a limitation on the application of the doctrine of cy pres or any other legal doctrine applicable to charitable assets and/or charitable trusts. ADD}
{ADD 27-66-15. Distribution of proceeds from acquisition -- Selection and establishment of an independent foundation. -- ADD} {ADD (a) In the event of the approval of a conversion involving a not for profit corporation, as an acquiree, it may be required that the proceeds from the sale and any endowments, restricted, unrestricted and specific purpose funds may be transferred to a charitable foundation established herein. ADD}
{ADD (b) The determination whether the proceeds of the conversion shall be transferred to the foundation established herein shall be made pursuant to the common law doctrine of cy pres and chapter 4 of Title 18 of General Laws. ADD}
{ADD (c) The board of directors shall consist of an executive director, who shall serve ex-officio, and nine (9) members, all of whom shall be citizens and residents of this state and none of whom shall be members of the general assembly, and three (3) of whom shall be appointed by the governor, three (3) of whom shall be appointed by the speaker of the house and three (3) of whom shall be appointed by the senate majority leader. The board members may include one or more members with experience in matters including financial, legal, business, labor, health care delivery, investments, community purpose, grant-making, health insurance and members who represent diverse populations of the affected community and not more than three (3) members of the board may be prior board members of the acquiree; ADD}
{ADD (d) The members shall be appointed for terms of three (3) years except for the three (3) members originally appointed by each of the appointing authorities; one (1) shall be appointed for a term of one (1) year, one (1) shall be appointed for a term of two (2) years and one (1) for a term of three (3) years. The board shall annually elect a chairperson from among its members and other officers it deems necessary for the performance of its duties and board members shall not receive compensation; ADD}
{ADD (e) Control of the distribution of the proceeds of the fund is vested solely in the board provided however, the investment responsibility shall be through the "Rhode Island Foundation", or similar foundation; ADD}
{ADD (f) Vacancies occurring on such board may be filled by a majority vote of the remaining board members. ADD}
{ADD 27-66-16. Powers and duties of the board. -- ADD} {ADD The board is vested with full power, authority, and jurisdiction over the foundation and may perform all acts necessary or convenient in the exercise of any power, authority, or jurisdiction over the foundation; including the power to intervene in any cy pres proceeding involving the transfer of proceeds from health care conversion in order to seek their transfer to the foundation, or as an amicus curie. ADD}
{ADD 27-66-17. Personal liability excluded. -- ADD} {ADD> The members of the board and officers or employees of the foundation are not liable personally, either jointly or severally, for any debt or obligation created or incurred by the foundation unless such conduct is deemed to be gross misconduct or reckless. ADD}
{ADD 27-66-18. Implementation. -- ADD} {ADD (a) The attorney general may take all steps necessary to effectuate the purposes of section 27-66-15 and the board shall be appointed no more than sixty (60) days after the completion of the conversion. The board shall act promptly to appoint an executive director, hire such staff as necessary, acquire necessary facilities and supplies to begin the operation of the foundation; ADD}
{ADD (b) The board shall conduct a public hearing to solicit comments on the proposed mission statement, program agenda, corporate structure, and strategic planning. The board shall hold a public hearing within one hundred eighty (180) days of establishment of the board and on an annual basis thereafter. ADD}
{ADD 27-66-19. Annual report. -- ADD} {ADD The board shall submit an annual report and a copy of form 990 as required by the Internal Revenue Service to the governor, the attorney general and the legislature. ADD}
{ADD 27-66-20. General powers and limitations. -- ADD} {ADD For the purposes of exercising the specific powers granted in this chapter and effectuating the other purposes of this chapter, the foundation: ADD}
{ADD (1) May be sued and sue; ADD}
{ADD (2) May have a seal and alter it at will; ADD}
{ADD (3) May make, amend, and repeal rules relating to the conduct of the business of the foundation; ADD}
{ADD (4) May enter into contracts relating to the administration of the foundation; ADD}
{ADD (5) May rent, lease, buy or sell property in its own name and may construct or repair buildings necessary to provide space for its operations; ADD}
{ADD (6) May hire personnel, consultants and experts and set salaries; and ADD}
{ADD (7) May perform all other functions and exercise all other powers that are necessary, appropriate or convenient to administer the foundation. ADD}
{ADD 27-66-21. Failure to comply -- Penalties. -- ADD} {ADD If any person knowingly violates or fails to comply with any provision of this chapter or willingly or knowingly gives false or incorrect information the director may, after notice and opportunity for a prompt and fair hearing to the applicant or licensee, deny, suspend or revoke a license, or to take corrective action necessary to secure compliance under this chapter, or (2) the Superior Court may, after notice and opportunity for a prompt and fair hearing, may impose a fine of not more than one hundred thousand dollars ($100,000) or impose a prison term of not more than five (5) years. ADD}
{ADD 27-66-22. Powers of the department of business regulation. -- ADD} {ADDThe department may adopt rules, including measurable standards, as may be necessary to accomplish the purpose of this chapter. ADD}
{ADD 27-66-23. Determination of confidentiality by the department of business regulation. -- ADD} {ADD The director shall have the power to decide whether any information required by this chapter of an applicant is confidential and/or proprietary. Such decisions by the department of business regulation shall be made prior to any public notice of an initial application or any public review of such information. ADD}
{ADD 27-66-24. Exceptions -- Rehabilitation, Liquidation or Conservation. -- ADD} {ADD No proposed conversion shall be subject to this chapter in the event that the Health Insurance Corporation, Health Maintenance Corporation, a nonprofit hospital service corporation, nonprofit medical service corporation or affiliate or subsidiary thereof is subject to an order from the superior court directing the director to rehabilitate, liquidate or conserve, as provided in section 27-19-28, 27-20-24, 27-41-18, 27-14.1-1 et seq., 27-14.2-1 et seq., 27-14.3-1 et seq. or 27-14.4-1 et seq. ADD}
{ADD 27-66-25. Applicability. -- ADD} {ADDThe acquirors shall be subject to the provisions of chapters 23-17.12 and 23-17.13. ADD}
{ADD 27-66-26. Conflict of law. -- ADD} {ADDThe provisions of this chapter shall supersede the provisions of chapters 27-19, 27-20, and 27-41 in conflict with this chapter. Except as expressly provided in this chapter, this chapter shall supersede title 27, chapter 35 with respect to conversions subject to this chapter, except for conversions involving domestic insurance companies subject to Title 27 Chapter 1, which conversion shall be subject to Title 27, Chapter 35. ADD}
{ADD 27-66-27. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter, which can be given effect without the invalid provision or applicable, and to this end the provisions of this chapter are declared to be severable. ADD}
SECTION 2. Chapter 27-18 of the General Laws entitled "Accident and Sickness Insurance Policies" is hereby amended by adding thereto the following section:
{ADD 27-18-54. Health insurance rates. -- ADD} {ADDNo insurance company organized as a stock or mutual corporation which merges or consolidates with, acquires ownership or control or possession of twenty percent (20%) or greater of the operating assets of, or otherwise acquires control of a non-profit hospital service corporation organized under chapter 27-19, a non-profit medical service corporation organized under chapter 27-20 or a health maintenance organization organized under chapter 27-41 (i) may file with any state agency for review or approval any proposed rate to be used by the company in the state, or (ii) may charge to any party in the state any rate or premium, which takes into account or reflects in any manner the value of any contribution, distribution or allocation the company expends or incurs in establishing or funding a charitable foundation organized to maintain or otherwise account for the assets of a non-profit hospital service corporation, non-profit medical service corporation or health maintenance organization. For any rate that is to be charged to policy holders, regardless of whether such rate is subject to approval by a state agency under this or another chapter, the company shall at least thirty (30) days before implementing the rate submit under oath to the commissioner of insurance an accounting that documents the cost structure on which the rate is based and otherwise demonstrates the company's compliance with this section. ADD}
SECTION 3. Chapter 27-19 of the General Laws entitled "Nonprofit Hospital Service Corporations" is hereby amended by adding thereto the following section:
{ADD 27-19-30.1. Health insurance rates. --ADD} {ADD No insurance company organized as a stock or mutual corporation which merges or consolidates with, acquires ownership or control or possession of twenty percent (20%) or greater of the operating assets of, or otherwise acquires control of a non-profit hospital service corporation organized under chapter 27-19, a non-profit medical service corporation organized under chapter 27-20 or a health maintenance organization organized under chapter 27-41 (i) may file with any state agency for review or approval any proposed rate to be used by the company in the state, or (ii) may charge to any party in the state any rate or premium, which takes into account or reflects in any manner the value of any contribution, distribution or allocation the company expends or incurs in establishing or funding a charitable foundation organized to maintain or otherwise account for the assets of a non-profit hospital service corporation, non-profit medical service corporation or health maintenance organization. For any rate that is to be charged to policy holders, regardless of whether such rate is subject to approval by a state agency under this or another chapter, the company shall at least thirty (30) days before implementing the rate submit under oath to the commissioner of insurance an accounting that documents the cost structure on which the rate is based and otherwise demonstrates the company's compliance with this section. ADD}
SECTION 4. Chapter 27-20 of the General Laws entitled "Nonprofit Medical Service Corporations" is hereby amended by adding thereto the following section:
{ADD 27-20-25.2. Health insurance rates. -- ADD} {ADDNo insurance company organized as a stock or mutual corporation which merges or consolidates with, acquires ownership or control or possession of twenty percent (20%) or greater of the operating assets of, or otherwise acquires control of a non-profit hospital service corporation organized under chapter 27-19, a non-profit medical service corporation organized under chapter 27-20 or a health maintenance organization organized under chapter 27-41 (i) may file with any state agency for review or approval any proposed rate to be used by the company in the state, or (ii) may charge to any party in the state any rate or premium, which takes into account or reflects in any manner the value of any contribution, distribution or allocation the company expends or incurs in establishing or funding a charitable foundation organized to maintain or otherwise account for the assets of a non-profit hospital service corporation, non-profit medical service corporation or health maintenance organization. For any rate that is to be charged to policy holders, regardless of whether such rate is subject to approval by a state agency under this or another chapter, the company shall at least thirty (30) days before implementing the rate submit under oath to the commissioner of insurance an accounting that documents the cost structure on which the rate is based and otherwise demonstrates the company's compliance with this section. ADD}
SECTION 5. Chapter 27-41 of the General Laws entitled "Health Maintenance Organizations" is hereby amended by adding thereto the following section:
{ADD 27-41-27.2 Health insurance rates. ADD} {ADD -- No insurance company organized as a stock or mutual corporation which merges or consolidates with, acquires ownership or control or possession of twenty percent (20%) or greater of the operating assets of, or otherwise acquires control of a non-profit hospital service corporation organized under chapter 27-19, a non-profit medical service corporation organized under chapter 27-20 or a health maintenance organization organized under chapter 27-41 (i) may file with any state agency for review or approval any proposed rate to be used by the company in the state, or (ii) may charge to any party in the state any rate or premium, which takes into account or reflects in any manner the value of any contribution, distribution or allocation the company expends or incurs in establishing or funding a charitable foundation organized to maintain or otherwise account for the assets of a non-profit hospital service corporation, non-profit medical service corporation or health maintenance organization. For any rate that is to be charged to policy holders, regardless of whether such rate is subject to approval by a state agency under this or another chapter, the company shall at least thirty (30) days before implementing the rate submit under oath to the commissioner of insurance an accounting that documents the cost structure on which the rate is based and otherwise demonstrates the company's compliance with this section. ADD}
SECTION 6. In order to assist the department of Business Regulations in its assessment, evaluation and review, there shall be available to the department, in the Rhode Island State House Library Room 208, a copy of the book, Due Diligence in Business Transactions, 1996 edition.
SECTION 7. This act shall take effect upon passage.
