October 11, 2007, Introduced by Reps. Farrah, Hopgood, Virgil Smith, Condino, Polidori, Scott, Espinoza, Accavitti, Gonzales, Mayes, Gaffney, Young, Hune, Constan, Robert Jones, Simpson, Wojno, Kathleen Law, Spade, Meadows, Vagnozzi, Alma Smith, Warren, Bauer, Johnson, Melton, Rick Jones, Moore, Hammon, Ward, Clack, Clemente, Griffin, Valentine, Ebli, Lemmons, Gillard, Byrnes, Sak, Hildenbrand, Meisner, Bennett, Hammel, Leland, Miller, Angerer, Corriveau, LeBlanc, Coulouris, Hood, Sheltrown, Dean, Brown, Cheeks, Green, Moolenaar, Palsrok, Byrum, Stakoe, Hansen, David Law, LaJoy, Wenke, Donigan, Bieda, Cushingberry and Shaffer and referred to the Committee on Insurance.
A bill to amend 1980 PA 350, entitled
"The nonprofit health care corporation reform act,"
by amending sections 202, 206, and 207 (MCL 550.1202, 550.1206, and
550.1207), section 202 as amended by 1994 PA 40 and sections 206
and 207 as amended by 2003 PA 59.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 202. (1) Persons associating to form a health care
corporation under this act shall subscribe to articles of
incorporation that shall contain all of the following:
(a) The names and addresses of the incorporators.
(b) The location of the principal office of the corporation
for the transaction of business in this state.
(c) The name by which the corporation shall be known and all
assumed names under which the corporation does business. The
corporate name shall not include the words insurance, casualty,
surety, health and accident, mutual, or other words descriptive of
the insurance or surety business, and shall not be so similar to
the name of an insurance or surety company doing business in this
or other states at the time of incorporation so as to tend, in the
judgment of the commissioner, to create confusion in identity with
that insurance or surety company.
(d) The purposes of the corporation, which shall be:
(i) To provide health care benefits.
(ii) To secure for all of the people of this state who apply
for a certificate the opportunity for access to coverage for health
care services at a fair and reasonable price.
(iii) To assure for nongroup and group subscribers reasonable
access to, and reasonable cost and quality of, health care
services.
(iv) To achieve the goals of the corporation relative to
access, quality, and cost of health care services, as prescribed in
section 504.
(v) To offer supplemental coverage to all medicare enrollees
as provided in part 4A.
(vi) If under contract to serve as fiscal intermediary for the
federal medicare program, to do all of the following:
(A) Carry out its contractual responsibilities efficiently,
including the timely processing and payment of claims.
(B) Actively represent, in negotiations with the federal
government and with providers of medical, hospital, and other
health services for which benefits are provided under the federal
medicare program, the interests of senior citizens as they relate
to cost and quality of, and access to, health care services and
administration of the program.
(vii) To engage in activity otherwise authorized by this
act,
within
law that is in support of, or
not inconsistent with, the
purposes for which corporations may be organized under this act and
to own subsidiary corporations that are organized under other acts
and have other and different purposes, so long as those other and
different purposes are not prohibited by law.
(e) The term of existence of the corporation, which may be in
perpetuity.
(f) The time for the holding of the annual meeting of the
corporation.
(g) Other terms and conditions not inconsistent with this act,
necessary for the conduct of the affairs of the corporation.
(2) The articles shall be in triplicate and upon proper forms
as prescribed by the commissioner.
(3) Before the articles or amendments to the articles are
effective for any purpose, they shall be submitted to the attorney
general for examination. If the attorney general finds the articles
or amendments to the articles to be in compliance with this act,
the attorney general shall certify this finding to the
commissioner. The articles or amendments shall be effective at the
time certified by the attorney general.
(4) Each health care corporation shall pay a fee of $250.00 to
the attorney general for the examination of its articles of
incorporation, or $100.00 for the examination of amendments to the
articles of incorporation. Each health care corporation shall pay a
filing fee of $100.00 to the commissioner for filing its articles
of incorporation or $50.00 for the filing of amendments to the
articles of incorporation. The fees prescribed in this subsection
shall be deposited in the state treasury and credited to the
general fund of the state.
Sec. 206. (1) The funds and property of a health care
corporation shall be acquired, held, and disposed of only for the
lawful purposes of the corporation and for the benefit of the
subscribers of the corporation as a whole. A health care
corporation shall only transact business, receive, collect, and
disburse money, and acquire, hold, protect, and convey property,
that is properly within the scope of the purposes of the
corporation as specifically set forth in section 202(1)(d), for the
benefit of the subscribers of the corporation as a whole, and
consistent with this act.
(2) The funds of a health care corporation shall be invested
only in securities permitted by the laws of this state for the
investments of assets of life insurance companies, as described in
chapter 9 of the insurance code of 1956, 1956 PA 218, MCL 500.901
to 500.947.
(3) Without regard to the limitation in subsection (2), up to
2% of the assets of the health care corporation may be invested in
venture-type investments. For purposes of calculating adequate and
unimpaired surplus under section 204a, a venture-type investment
shall be carried on the books of a health care corporation at the
original acquisition cost, and losses may only be realized as an
offset against gains from venture-type investments. All venture-
type investments under this subsection shall provide employment or
capital investment primarily within this state. Each investment
under this subsection is subject to prior approval by the board of
directors. As used in this subsection, "venture-type investments"
include:
(a) Common stock, preferred stock, limited partnerships, or
similar equity interests acquired from the issuer subject to a
provision barring resale without consent of the issuer for 5 years
from the date of acquisition by the corporation.
(b) Unsecured debt instruments that are either convertible
into equity or have equity acquisition rights. These debt
instruments shall be subordinated by their terms to all borrowings
of the issuer from other institutional lenders and shall have no
part amortized during the first 5 years.
(4) A health care corporation shall not market or transact, as
defined in sections 402a and 402b of the insurance code of 1956,
1956 PA 218, MCL 500.402a and 500.402b, any type of insurance
described in chapter 6 of the insurance code of 1956, 1956 PA 218,
MCL
500.600 to 500.644. This subsection shall not be construed to
prohibit
the provision of prepaid health care benefits. If
authorized by a certificate of authority granted to it by the
commissioner, a subsidiary of a health care corporation may market
or transact, as defined in sections 402a and 402b of the insurance
code of 1956, 1956 PA 218, MCL 500.402a and 500.402b, any type of
insurance described in chapter 6 of the insurance code of 1956,
1956 PA 218, MCL 500.600 to 500.644.
Sec. 207. (1) A health care corporation, subject to any
limitation provided in this act, in any other statute of this
state, or in its articles of incorporation, may do any or all of
the following:
(a) Contract to provide computer services and other
administrative consulting services to 1 or more providers or groups
of providers, if the services are primarily designed to result in
cost savings to subscribers.
(b) Engage in experimental health care projects to explore
more efficient and economical means of implementing the
corporation's programs, or the corporation's goals as prescribed in
section 504 and the purposes of this act, to develop incentives to
promote alternative methods and alternative providers, including
nurse midwives, nurse anesthetists, and nurse practitioners, for
delivering health care, including preventive care and home health
care.
(c) For the purpose of providing health care services to
employees of this state, the United States, or an agency,
instrumentality, or political subdivision of this state or the
United States, or for the purpose of providing all or part of the
costs of health care services to disabled, aged, or needy persons,
contract with this state, the United States, or an agency,
instrumentality, or political subdivision of this state or the
United States.
(d) For the purpose of administering any publicly supported
health benefit plan, accept and administer funds, directly or
indirectly, made available by a contract authorized under
subdivision (c), or made available by or received from any private
entity.
(e) For the purpose of administering any publicly supported
health benefit plan, subcontract with any organization that has
contracted with this state, the United States, or an agency,
instrumentality, or political subdivision of this state or the
United States, for the administration or furnishing of health
services or any publicly supported health benefit plan.
(f) Provide administrative services only and cost-plus
arrangements
for the federal medicare program established by parts
A
and B of under title XVIII of the social security act, chapter
531,
49 Stat. 620, 42 U.S.C. 1395c to 1395i, 1395i-2 to 1395i-5,
1395j
to 1395t, 1395u to 1395w, and 1395w-2 to 1395w-4 42 USC 1395
to 1395hhh; for the federal medicaid program established under
title
XIX of the social security act, chapter 531, 49 Stat. 620, 42
U.S.C.
1396 to 1396r-6, and 1396r-8 to 1396v 42 USC 1396 to 1396v;
for title V of the social security act, chapter 531, 49 Stat. 620,
42
U.S.C. USC 701 to 704 and 705 to 710; for the program of
medical
and dental care established by the military medical benefits
amendments
of 1966, Public Law 85-861; , 80 Stat. 862; for the
Detroit maternity and infant care--preschool, school, and
adolescent project; and for any other health benefit program
established under state or federal law.
(g) Provide administrative services only and cost-plus
arrangements for any noninsured health benefit plan, subject to the
requirements of sections 211 and 211a.
(h) Establish, own, and operate a health maintenance
organization, subject to the requirements of the insurance code of
1956, 1956 PA 218, MCL 500.100 to 500.8302.
(i) Guarantee loans for the education of persons who are
planning to enter or have entered a profession that is licensed,
certified, or registered under parts 161 to 182 of the public
health code, 1978 PA 368, MCL 333.16101 to 333.18237, and has been
identified by the commissioner, with the consultation of the office
of health and medical affairs in the department of management and
budget, as a profession whose practitioners are in insufficient
supply in this state or specified areas of this state and who
agree, as a condition of receiving a guarantee of a loan, to work
in this state, or an area of this state specified in a listing of
shortage areas for the profession issued by the commissioner, for a
period of time determined by the commissioner.
(j) Receive donations to assist or enable the corporation to
carry out its purposes, as provided in this act.
(k) Bring an action against an officer or director of the
corporation.
(l) Designate and maintain a registered office and a resident
agent in that office upon whom service of process may be made.
(m) Sue and be sued in all courts and participate in actions
and proceedings, judicial, administrative, arbitrative, or
otherwise, in the same cases as natural persons.
(n) Have a corporate seal, alter the seal, and use it by
causing the seal or a facsimile to be affixed, impressed, or
reproduced in any other manner.
(o) Subject to chapter 9 of the insurance code of 1956, 1956
PA 218, MCL 500.901 to 500.947, invest and reinvest its funds and,
for investment purposes only, purchase, take, receive, subscribe
for, or otherwise acquire, own, hold, vote, employ, sell, lend,
lease, exchange, transfer, or otherwise dispose of, mortgage,
pledge, use, and otherwise deal in and with, bonds and other
obligations, shares, or other securities or interests issued by
entities other than domestic, foreign, or alien insurers, as
defined in sections 106 and 110 of the insurance code of 1956, 1956
PA 218, MCL 500.106 and 500.110, whether engaged in a similar or
different business, or governmental or other activity, including
banking corporations or trust companies. However, a health care
corporation may purchase, take, receive, subscribe for, or
otherwise acquire, own, hold, vote, employ, sell, lend, lease,
exchange, transfer, or otherwise dispose of bonds or other
obligations, shares, or other securities or interests issued by a
domestic, foreign, or alien insurer, so long as the activity meets
all of the following:
(i) Is determined by the attorney general to be lawful under
section 202.
(ii) Is approved in writing by the commissioner as being in the
best interests of the health care corporation and its subscribers.
(iii) For an activity that occurred before the
effective date of
the
amendatory act that added subparagraph (iv) July
15, 2003, will
not result in the health care corporation owning or controlling 10%
or more of the voting securities of the insurer or will not
otherwise result in the health care corporation having control of
the
insurer, either before or after the effective date of the
amendatory
act that added subparagraph (iv) July 15, 2003. As used
in this subparagraph and subparagraph (iv), "control" means that
term as defined in section 115 of the insurance code of 1956, 1956
PA 218, MCL 500.115.
(iv) Subject to section 218 and beginning on the
effective date
of
the amendatory act that added this subparagraph July 15, 2003,
will not result in the health care corporation owning or
controlling part or all of the insurer unless the transaction
satisfies chapter 13 of the insurance code of 1956, 1956 PA 218,
MCL
500.1301 to 500.1379. , and the insurer being acquired is only
authorized
to sell disability insurance as defined under section
606
of the insurance code of 1956, 1956 PA 218, MCL 500.606, or
under
a statute or regulation in the insurer's domiciliary
jurisdiction
that is substantially similar to section 606 of the
insurance
code of 1956, 1956 PA 218, MCL 500.606.
(p) Purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ,
use and otherwise deal in and with, real or personal property, or
an interest therein, wherever situated.
(q) Sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, or create a security interest
in, any of its property, or an interest therein, wherever situated.
(r) Borrow money and issue its promissory note or bond for the
repayment of the borrowed money with interest.
(s) Make donations for the public welfare, including hospital,
charitable, or educational contributions that do not significantly
affect rates charged to subscribers.
(t) Participate with others in any joint venture with respect
to any transaction that the health care corporation would have the
power to conduct by itself.
(u) Cease its activities and dissolve, subject to the
commissioner's authority under section 606(2).
(v) Make contracts, transact business, carry on its
operations, have offices, and exercise the powers granted by this
act in any jurisdiction, to the extent necessary to carry out its
purposes under this act.
(w) Have and exercise all powers necessary or convenient to
effect any purpose for which the corporation was formed.
(x) Notwithstanding subdivision (o) or any other provision of
this act, establish, own, and operate a domestic stock insurance
company only for the purpose of acquiring, owning, and operating
the state accident fund pursuant to chapter 51 of the insurance
code of 1956, 1956 PA 218, MCL 500.5100 to 500.5114, so long as all
of the following are met:
(i) For insurance products and services the insurer
whether
directly
or indirectly only transacts worker's compensation
insurance
and employer's liability insurance, transacts disability
insurance
limited to replacement of loss of earnings, and acts as
an
administrative services organization for an approved self-
insured
worker's compensation plan or a disability insurance plan
limited
to replacement of loss of earnings and does not transact
any
other type of insurance notwithstanding the authorization in
chapter
51 of the insurance code of 1956, 1956 PA 218, MCL 500.5100
to
500.5114. This subparagraph does not preclude the insurer from
providing
either directly or indirectly noninsurance products and
services
as otherwise provided by law.
(i) (ii) The
activity is determined by the attorney general to
be lawful under section 202.
(ii) (iii) The
health care corporation does not directly or
indirectly subsidize the use of any provider or subscriber
information, loss data, contract, agreement, reimbursement
mechanism or arrangement, computer system, or health care provider
discount to the insurer.
(iii) (iv) Members
of the board of directors, employees, and
officers of the health care corporation are not, directly or
indirectly, employed by the insurer unless the health care
corporation is fairly and reasonably compensated for the services
rendered to the insurer if those services were paid for by the
health care corporation.
(iv) (v) Health
care corporation and subscriber funds are used
only for the acquisition from the state of Michigan of the assets
and liabilities of the state accident fund.
(v) (vi) Health
care corporation and subscriber funds are not
used to operate or subsidize in any way the insurer including the
use of such funds to subsidize contracts for goods and services.
This subparagraph does not prohibit joint undertakings between the
health care corporation and the insurer to take advantage of
economies of scale or arm's-length loans or other financial
transactions between the health care corporation and the insurer.
(2) In order to ascertain the interests of senior citizens
regarding the provision of medicare supplemental coverage, as
described in section 202(1)(d)(v), and to ascertain the interests of
senior citizens regarding the administration of the federal
medicare program when acting as fiscal intermediary in this state,
as described in section 202(1)(d)(vi), a health care corporation
shall consult with the office of services to the aging and with
senior citizens' organizations in this state.
(3) An act of a health care corporation, otherwise lawful, is
not invalid because the corporation was without capacity or power
to do the act. However, the lack of capacity or power may be
asserted:
(a) In an action by a director or a member of the corporate
body against the corporation to enjoin the doing of an act.
(b) In an action by or in the right of the corporation to
procure a judgment in its favor against an incumbent or former
officer or director of the corporation for loss or damage due to an
unauthorized act of that officer or director.
(c) In an action or special proceeding by the attorney general
to enjoin the corporation from the transacting of unauthorized
business, to set aside an unauthorized transaction, or to obtain
other equitable relief.
(4) A health care corporation shall not condition the sale or
vary the terms or conditions of any product sold by the corporation
or by a subsidiary of the corporation by requiring the purchase of
any other product from the corporation or from a subsidiary of the
corporation.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 5285(request no.
03044'07) of the 94th Legislature is enacted into law.