CHAPTER 124

FORMERLY

SENATE BILL NO. 232

AS AMENDED BY HOUSE AMENDMENT NO. 1

AN ACT TO AMEND TITLES 18 AND 16 OF THE DELAWARE CODE RELATING TO INSURANCE AND HEALTH AND SAFETY AND TO ALLOCATE RESPONSIBILITY FOR REGULATION OF HEALTH MAINTENANCE ORGANIZATIONS BETWEEN THE INSURANCE COMMISSIONER AND THE DEPARTMENT OF HEALTH AND SOCIAL SERVICES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (three-fifths of all members elected to each House thereof concurring therein):

Section 1. Amend Title 18, Delaware Code by adding a new Chapter 64 as follows:

"CHAPTER 64. INSURANCE REGULATION OF HEALTH MAINTENANCE ORGANIZATIONS

§6401. Statement of Intent

It is the intent of the General Assembly in enacting this Chapter to provide that the Insurance Commissioner regulate the insurance aspects, including financial solvency, of health maintenance organizations established or operated in this State. It is the intent of the General Assembly that such organizations be subject only to the provisions of Title 16, Chapter 91 and to the provisions of this Chapter, including those other chapters of Title 18 expressly included in §6406 herein, and no insurance law hereinafter enacted shall be deemed to apply to health maintenance organizations unless they are specifically referred to therein.

§6402. Health Maintenance Organization Defined

'Health Maintenance Organization' means an organization as defined in §9102(4) of Title 16, Delaware Code.

§6403. Certificate_of Authority: When Required' Application

(a) No person shall establish, operate or engage in the business of a health maintenance organization or enter this State for the purpose of enrolling persons in a health maintenance organization without first obtaining a certificate of authority therefor from the Insurance Commissioner and a certificate of authority from the Department of Health and Social Services under Chapter 91, Title 16.

(a) Every health maintenance organization which is established or operating in this State on the effective date of this Chapter must apply for and obtain a certificate of authority under this Chapter in order to continue such operation. If such an
application is filed within ninety (90) days after the Insurance Commissioner promulgates the application Form called for in (c) of this Section, such operation may continue until the application is acted upon. If the application is denied the
applicant shall be treated as a health maintenance organization which has had its certificate of authority revoked under §6405 of this Title.

(b) Application for a certificate of authority as a health maintenance
organization shall be made on forms promulgated by the Insurance Commissioner and containing such information as he shall by regulation require. The application shall be accompanied by a filing fee of 5500, copies of any documents which the Insurance Commissioner shall by regulation require, and copies of the following documents:

(1) Certificate of Incorporation;

(2) Bylaws;

(3) A list of the names and addresses of the members of the board of directors or other governing body of the corporation and its principal officers;

(1) A statement of the geographic areas in which the health maintenance
organization proposes to operate;

(1) A statement describing how the health maintenance organization shall
operate, including its anticipated enrollment, the proposed method of marketing and a financial plan which includes a projection of operating results for the first three years of operation;

(6) A statement identifying the states where the health maintenance organization is authorized to operate, any states where it has pending an application for authorization to operate; any states where it has been cited for a violation of any laws or legislation and an explanation of any such alleged violation, including the status or outcome;

(1) Forms of proposed contracts to be offered for members who enroll on a direct payment or standard group basis;

(1) Tables of rates to be charged for such contracts or a statement of the rating formulas to be used in lieu of fixed rates; and

(2) Financial statements showing the applicant's assets, liabilities and sources of financial support; provided that if the applicant's financial affairs are audited by an independent certified public accountant, a copy of the applicant's most recent certified financial statement shall be deemed to satisfy this requirement.

§6404. Issuance_of_Certificate_of Authority

The Commissioner shall issue a certificate of authority to the applicant when it is shown to his satisfaction that:

(1) The applicant meets or is able to meet the requirements of this Title as set forth herein;

(1) Arrangements have been made by the applicant reasonably to assure provision of the services covered by its contracts; and

(2) The applicant is financially responsible and able to meet its obligations to members.

§6405. Suspension or Revoc•.f i e of Authority

The Commissioner may. after a hearing, suspend or revoke the certificate of authority of a health maintenance organization for any of the following causes:

(1) If the health maintenance organization is no longer qualified therefor under this Chapter;

(1) For a violation by the health maintenance organization of any provision of this Chapter; or

(2) Upon any applicable ground under this Chapter or any of the Chapters specified in §6406 of this Chapter for which the certificate of authority of an insurer may be suspended or revoked.

§6406. Other Provisions Applicable

Health maintenance organizations shall be subject to this Chapter and to the following Chapters of this Title, as amended from time to time, to the extent applicable and not in conflict with the express provisions of this Chapter. For purposes of the following Chapters only, a health maintenance organization shall be treated as a health insurer, and its coverages shall be deemed to be 'medical and hospital expense-incurred insurance policies' for purposes of Chapter 25. Title 18.

(1) Chapter I (General Definitions and Provisions).

(2) Chapter 3 (The Insurance Commissioner).

(3) Chapter 5 (Authorization of Insurers and General Requirements).

(4) Chapter 9 (Kinds of Insurance; Limits of Risk; Reinsurance).

(5) Chapter 11 (Assets and Liabilities).

(6) Chapter 13 (Investments).

(7) Chapter 15 (Administration of Deposits).

(8) Chapter 17 (Agents, Brokers, Consultants, etc.).

(9) Chapter 21 (Unauthorized Insurers).

(10) Chapter 23 (Unfair Practices in the Insurance Business).

(11) Chapter 25 (Rates and Rating Organizations).

(12) Chapter 27 (The Insurance Contract).

(13) Chapter 33 (Health Insurance Contracts).

(14) Chapter 34 (Medicare Supplement Insurance Minimum Standards).

(15) Chapter 35 (Group and Blanket Health Insurance).

(16) Chapter 36 (Individual Health Insurance Minimum Standards).

(17) Chapter 59, Subchapter I (Rehabilitation and Liquidation)."

Section 2. Amend §9101, Chapter 91, Title 16, Delaware Code by striking the second

sentence thereof and substituting in lieu thereof the following:

"It is the intent of the General Assembly that such organizations be subject only to the provisions of this Chapter, the provisions of Chapter 64 of Title 18, and any Chapters specified in §6406 of Chapter 64 of Title 18."

Section 3. Amend Subsection 9102(2), Chapter 91, Title 16, Delaware Code by inserting the words and under Chapter 64 of Title 18" after the word "title" where it first appears in the subsection, and by adding the words and subsection (b) of §6403 of Title 18" to the end of the subsection.

Section 4. Amend §9102, Chapter 91, Title 16, Oelaware Code by adding the following new subsections (6) and (7):

"(6) 'Insurance Commissioner' means the Insurance Commissioner of the State of Delaware.

(7) 'Health Care Services' means any services included in the furnishing to any

individual of medical or dental care, or hospitalization or incident to the furnishing of such care or hospitalization, as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing, or healing human illness, injury or physical disability."

Section 5. Amend §9102, Chapter 91, Title 16, Delaware Code by deleting the word

"primarily" from §9102(4)(c), by inserting the word "primarily" before the word "compensated" in §9102(4)(b), and by adding the following sentence at the end of subsection 9102(4):

The organization may also provide or arrange for health care services on a prepayment or other financial basis."

Section 6. Amend §9103(a), Chapter 91, Title 16, Oelaware Code by adding the words "and under Chapter 64 of Title 18" to the end of the first sentence of that Section.

Section 7. Amend Chapter 91, Title 16, Delaware Code by deleting §§9105, 9106 and 9109 in their entirety and renumbering the remaining sections accordingly, and by renumbering the reference to §9112 found in current §9103(b), and the reference to §9114 found in current §9104(c)(3).

Section 8. Amend §9112(a), Chapter 91, Title 16, Delaware Code by striking the word

or at the end of §9112(a)(3), by striking the "." at the end of §9112(a)(4) and substituting in lieu thereof the following ; or", and by adding the following new subsection (5):

"(5) The health maintenance organization no longer holds a valid certificate of authority from the Insurance Commissioner pursuant to Chapter 64, Title 18."

Section 9. Amend §9112(d), Chapter 91, Title 16, Delaware Code by deleting the second sentence thereof.

Section 10. Amend §9114, Chapter 91, Title 16, Delaware Code by substituting the figures "$500" and "$100" for "$100" and "$50", respectively.

Section 11. Amend §9115(a), Chapter 91, Title 16, Delaware Code by striking the following at the beginning thereof: "Except as provided in subsection (e) below.", and by adding the following sentence at the end of §9115(a):

"A certified health maintenance organization shall not be deemed to be practicing any other licensed health care profession, and the health maintenance organization shall be exempt from statutes, rules and regulations relating to such professions."

Section 12. Amend §9115(b), Chapter 91, Title 16, Delaware Code by inserting the

following sentence at the beginning thereof:

"A certified health maintenance organization may contract with, or employ, any licensed health care professional to provide health care services, notwithstanding any statute, rule or regulation to the contrary."

Section 13. Amend §9115(c), Chapter 91, Title 16, Delaware Code by deleting the phrase "§9108 or 9109" and substituting in lieu thereof "§9106".

Section 14. Amend §9115(d), Chapter 91, Title 16, Delaware Code by deleting the first sentence of the subsection in its entirety and substituting the following sentence therefor:

"(d) All insurance regulation of certified health maintenance organizations shall

take place according to the provisions of Chapter 64, Title 18.

Section 15. Amend §9115, Chapter 91, Title 16, Delaware Code by deleting §9115(e) and (f) in their entirety.

Section 16. Effective Date. This Act shall be effective immediately upon its enactment into law.

Approved July 8, 1987.