PRIOR PRINTER'S NOS. 1448, 2237, 2326,        PRINTER'S NO. 4133
        4085, 4107, 4110, 4115

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1150 Session of 2007


        INTRODUCED BY D. O'BRIEN, DeWEESE, PALLONE, PHILLIPS, RAPP,
           SCAVELLO, STURLA, BAKER, BASTIAN, BOYD, BROOKS, CALTAGIRONE,
           CARROLL, CLYMER, COHEN, CONKLIN, DALEY, DALLY, DeLUCA,
           DePASQUALE, DONATUCCI, EVERETT, FREEMAN, GEIST, GEORGE,
           GIBBONS, GINGRICH, GOODMAN, GRUCELA, HALUSKA, HARKINS,
           HENNESSEY, HERSHEY, JAMES, JOSEPHS, KAUFFMAN, W. KELLER,
           KENNEY, KIRKLAND, KOTIK, KULA, LEACH, LENTZ, MAHONEY,
           MANDERINO, MANN, MARKOSEK, MARSHALL, McILHATTAN, MOYER, MURT,
           MUSTIO, McGEEHAN, MYERS, NAILOR, M. O'BRIEN, PASHINSKI,
           PAYNE, PETRONE, PRESTON, READSHAW, REICHLEY, ROSS, SCHRODER,
           SEIP, SHAPIRO, SHIMKUS, M. SMITH, SOLOBAY, SONNEY, STABACK,
           STEIL, SURRA, TANGRETTI, TRUE, VEREB, WATSON, J. WHITE,
           WOJNAROSKI, YUDICHAK, MACKERETH, MANTZ, BARRAR, HORNAMAN,
           CAUSER, WALKO, HELM, MELIO, DENLINGER, BRENNAN, RAMALEY,
           DiGIROLAMO, GERGELY, M. KELLER, FRANKEL, FABRIZIO,
           YOUNGBLOOD, REED, ROAE, CURRY, K. SMITH, GALLOWAY, SIPTROTH,
           RUBLEY, SAMUELSON AND BOBACK, APRIL 30, 2007

        AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES,
           JULY 1, 2008

                                     AN ACT

     1  Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
     2     act relating to insurance; amending, revising, and
     3     consolidating the law providing for the incorporation of
     4     insurance companies, and the regulation, supervision, and
     5     protection of home and foreign insurance companies, Lloyds
     6     associations, reciprocal and inter-insurance exchanges, and
     7     fire insurance rating bureaus, and the regulation and
     8     supervision of insurance carried by such companies,
     9     associations, and exchanges, including insurance carried by
    10     the State Workmen's Insurance Fund; providing penalties; and
    11     repealing existing laws," in preliminary provisions, further
    12     providing for effect of act on existing laws; in life
    13     insurance, further providing for additional investment
    14     authority for subsidiaries; in casualty insurance, providing
    15     for autism spectrum disorders coverage and for colorectal
    16     cancer screenings coverage; in insurance holding companies,
    17     further providing for definitions, for acquisition of control


     1     of or merger with domestic insurer, for acquisitions
     2     involving insurers not otherwise covered and for standards
     3     and management of an insurer within a holding company system;
     4     providing for committee review; establishing the Insurance
     5     Restructuring Restricted Receipt Account; providing for
     6     community health reinvestment; and making a related repeal.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9     Section 1.  Section 108 of the act of May 17, 1921 (P.L.682,
    10  No.284), known as The Insurance Company Law of 1921, is amended
    11  to read:
    12     Section 108.  Effect of Act on Existing Laws.--The provisions
    13  of this act, so far as they are the same as those of existing
    14  laws, shall be construed as a continuation of such laws and not
    15  as new enactments. The repeal by this act of any provision of
    16  law shall not revive any law heretofore repealed or superseded,
    17  nor shall such repeal affect any act done, liability incurred,
    18  or any right accrued or vested, or any suit or prosecution
    19  pending or to be instituted to enforce any right or penalty or
    20  punish any offense under the authority of the repealed laws. The
    21  provisions of this act shall not limit the jurisdiction and
    22  authority of the Office of Attorney General, including, but not
    23  limited to, the jurisdiction and authority granted pursuant to
    24  the act of October 15, 1980 (P.L.950, No.164), known as the
    25  "Commonwealth Attorneys Act."
    26     Section 2.  Section 405.2(c) of the act, amended December 21,
    27  1995 (P.L.714, No.79), is amended to read:
    28     Section 405.2.  Additional Investment Authority for
    29  Subsidiaries.--* * *
    30     (c)  (1)  [At] Except as set forth in paragraph (1.1), at no
    31  time shall a domestic life insurance company make an investment
    32  in any subsidiary which will bring the aggregate value of its

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     1  investments, as determined for annual statement purposes but not
     2  in excess of cost, in all subsidiaries under this subsection to
     3  an amount in excess of ten per centum (10%) of its total
     4  admitted assets as of the immediately preceding thirty-first day
     5  of December. In determining the amount of investments of any
     6  domestic life insurance company in subsidiaries for purposes of
     7  this subsection, there shall be included investments made
     8  directly by such insurance company and, if such investment is
     9  made by another subsidiary, then to the extent that funds for
    10  such investments are provided by the insurance company for such
    11  purpose.
    12     (1.1)  A domestic life insurance company may increase the
    13  aggregate value of its investments, as determined for annual
    14  statement purposes, but not in excess of cost, in all
    15  subsidiaries under this subsection to an amount in excess of ten
    16  per centum (10%) but at no time in excess of fifteen per centum
    17  (15%) of its total admitted assets as of the immediately
    18  preceding thirty-first day of December if the increase has been
    19  approved in writing by the Insurance Department prior to making
    20  the investment. If the Insurance Department does not approve or
    21  disapprove the increased investment within thirty (30) days of
    22  receipt of a request for approval, the increased investment
    23  shall be deemed approved. In determining the amount of
    24  investments of any domestic life insurance company in
    25  subsidiaries for purposes of this subsection, there shall be
    26  included investments made directly by such insurance company
    27  and, if such investment is made by another subsidiary, then to
    28  the extent that funds for such investments are provided by the
    29  insurance company for such purpose.
    30     (2)  The limitations set forth in [clause (1)] CLAUSES (1)     <--
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     1  AND (1.1) of this subsection shall not apply to investments in
     2  any subsidiary which is:
     3     (i)  An insurance company or a health maintenance
     4  organization holding a certificate of authority under the act of
     5  December 29, 1972 (P.L.1701, No.364), known as the "Health
     6  Maintenance Organization Act."
     7     (ii)  A holding company to the extent its business consists
     8  of the holding of the stock of, or otherwise controlling, its
     9  own subsidiaries.
    10     (iii)  A corporation whose business primarily consists of
    11  direct or indirect ownership, operation or management of assets
    12  authorized as investments pursuant to sections 404.1 and 406.
    13     (iv)  A company engaged in any combination of the activities
    14  described in subclauses (i), (ii) and (iii) of this clause.
    15  Investments made pursuant to subclause (i) shall not be
    16  restricted in amount provided that after such investment, as
    17  calculated for NAIC annual statement purposes, the insurer's
    18  surplus will be reasonable in relation to the insurer's
    19  outstanding liabilities and adequate to its financial needs.
    20  Investments made pursuant to subclause (ii), or to the extent
    21  applicable in this subclause, shall in addition not be subject
    22  to any limitations on the amount of a domestic life insurance
    23  company's assets provided for under any other provision of this
    24  act and which might otherwise be applicable: Provided, however,
    25  That such life insurance company's investments, to the extent
    26  that such life insurance company provided the funds therefor, in
    27  each of the subsidiaries of such holding company shall be
    28  subject to the limitations, if any, applicable to such
    29  investment as if the holding company's interest in each such
    30  subsidiary were instead owned directly by the life insurance
    20070H1150B4133                  - 4 -     

     1  company. Investments made pursuant to subclause (iii), or, to
     2  the extent applicable, this clause, shall be counted in
     3  determining the limitations contained in applicable subsections
     4  of sections 404.2 and 406: Provided, however, That the value as
     5  calculated for annual statement purposes, but not in excess of
     6  the cost thereof, of such investment shall include only funds
     7  provided by the insurance company therefor. Investments made in
     8  other subsidiaries of such life insurance company by any
     9  subsidiary described in subclauses (i), (ii), (iii) and this
    10  subclause or by a person whose business primarily consists of
    11  direct or indirect ownership, operation or management of real
    12  property and interest therein under section 406 shall be deemed
    13  investments made by the insurance company only to the extent the
    14  funds for such investment were provided by such insurance
    15  company.
    16     * * *
    17     Section 3.  The act is amended by adding sections to read:
    18     Section 635.2.  Autism Spectrum Disorders Coverage.--(a)  A
    19  health insurance policy or government program covered under this
    20  section shall provide to covered individuals or recipients under
    21  twenty-one (21) years of age coverage for the diagnostic
    22  assessment of autism spectrum disorders and for the treatment of
    23  autism spectrum disorders.
    24     (b)  Coverage provided under this section by an insurer shall
    25  be subject to a maximum benefit of thirty-six thousand dollars
    26  ($36,000) per year but shall not be subject to any limits on the
    27  number of visits to an autism service provider for treatment of
    28  autism spectrum disorders. After December 30, 2011, the
    29  Insurance Commissioner shall, on or before April 1 of each
    30  calendar year, publish in the Pennsylvania Bulletin an
    20070H1150B4133                  - 5 -     

     1  adjustment to the maximum benefit equal to the change in the
     2  United States Department of Labor Consumer Price Index for All
     3  Urban Consumers (CPI-U) in the preceding year, and the published
     4  adjusted maximum benefit shall be applicable to the following
     5  calendar years to health insurance policies issued or renewed in
     6  those calendar years. Payments made by an insurer on behalf of a
     7  covered individual for treatment of a health condition unrelated
     8  to or distinguishable from the individual's autism spectrum
     9  disorder shall not be applied toward any maximum benefit
    10  established under this subsection.
    11     (c)  Coverage under this section shall be subject to
    12  copayment, deductible and coinsurance provisions, and any other
    13  general exclusions or limitations, of a health insurance policy
    14  or government program to the same extent as other medical
    15  services covered by the policy or program are subject to these
    16  provisions.
    17     (d)  This section shall not be construed as limiting benefits
    18  which are otherwise available to an individual under a health
    19  insurance policy or government program.
    20     (d.1)  This section shall not be construed as requiring
    21  coverage by insurers of any service based solely on its
    22  inclusion in an individualized education program. Consistent
    23  with Federal or State law and upon consent of the parent or
    24  guardian of the covered individual, the treatment of autism
    25  spectrum disorders may be coordinated with any service included
    26  in an individualized education program. Coverage for the
    27  treatment of autism spectrum disorders shall not be contingent
    28  upon a coordination of services with an individualized education
    29  program.
    30     (e)  (1)  This section shall apply to any health insurance
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     1  policy offered, issued or renewed on or after July 1, 2009, in
     2  this Commonwealth to groups of fifty-one (51) or more employees:
     3  Provided, That this section shall not include the following
     4  policies:
     5     (i)  Accident only.
     6     (ii)  Fixed indemnity.
     7     (iii)  Limited benefit.
     8     (iv)  Credit.
     9     (v)  Dental.
    10     (vi)  Vision.
    11     (vii)  Specified disease.
    12     (viii)  Medicare supplement.
    13     (ix)  CHAMPUS (Civilian Health and Medical Program of the
    14  Uniformed Services) supplement.
    15     (x)  Long-term care or disability income.
    16     (xi)  Workers' compensation.
    17     (xii)  Automobile medical payment.
    18     (2)  This section shall apply to any contract executed on or
    19  after July 1, 2009, by the adult Basic coverage insurance
    20  program established under Chapter 13 of the act of June 26, 2001
    21  (P.L.755, No.77), known as the "Tobacco Settlement Act," or by
    22  the Children's Health Care Program established under this act,
    23  or by any successor program of either of them.
    24     (3)  On January 1, 2011, insurers shall make a report to the
    25  Insurance Department, in a form and manner as determined by the
    26  department, to evaluate the implementation of this section.
    27     (f)  As used in this section:
    28     (1)  "Applied behavioral analysis" means the design,
    29  implementation and evaluation of environmental modification       <--
    30  MODIFICATIONS, using behavioral stimuli and consequences, to      <--
    20070H1150B4133                  - 7 -     

     1  produce socially significant improvement in human behavior or to
     2  prevent loss of attained skill or function, including the use of
     3  direct observation, measurement and functional analysis of the
     4  relations between environment and behavior.
     5     (2)  "Autism service provider" means any of the following:
     6     (i)  A person, entity or group providing treatment of autism
     7  spectrum disorders, pursuant to a treatment plan, that is         <--
     8  licensed or certified in this Commonwealth.
     9     (ii)  Any person, entity or group providing treatment of
    10  autism spectrum disorders, pursuant to a treatment plan, that is  <--
    11  enrolled in the Commonwealth's medical assistance program on or
    12  before the effective date of this section.
    13     (3)  "Autism spectrum disorders" means any of the pervasive
    14  developmental disorders defined by the most recent edition of
    15  the Diagnostic and Statistical Manual of Mental Disorders (DSM),
    16  or its successor, including autistic disorder, Asperger's
    17  disorder and pervasive developmental disorder not otherwise
    18  specified.
    19     (4)  "Behavior specialist" means an individual who designs,
    20  implements or evaluates a behavior modification intervention
    21  component of a treatment plan, including those based on applied
    22  behavioral analysis, to produce socially significant
    23  improvements in human behavior or to prevent loss of attained
    24  skill or function, through skill acquisition and the reduction    <--
    25  of problematic behavior.
    26     (5)  "Diagnostic assessment of autism spectrum disorders"
    27  means medically necessary assessments, evaluations or tests
    28  performed by a licensed physician, licensed physician assistant,
    29  licensed psychologist or certified registered nurse practitioner
    30  to diagnose whether an individual has an autism spectrum
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     1  disorder.
     2     (6)  "Government program" means any of the following:
     3     (i)  The Commonwealth's medical assistance program
     4  established under the act of June 13, 1967 (P.L.31, No.21),
     5  known as the "Public Welfare Code."
     6     (ii)  The adult basic coverage insurance program established
     7  under Chapter 13 of the act of June 26, 2001 (P.L.755, No.77),
     8  known as the "Tobacco Settlement Act."
     9     (iii)  The Children's Health Care Program established under
    10  this act.
    11     (7)  "Health insurance policy" means any group health,
    12  sickness or accident policy, or subscriber contract or
    13  certificate offered, issued or renewed by an entity subject to
    14  one of the following:
    15     (i)  This act.
    16     (ii)  The act of December 29, 1972 (P.L.1701, No.364), known
    17  as the "Health Maintenance Organization Act."
    18     (iii)  40 Pa.C.S. Ch. 61 (relating to hospital plan
    19  corporations) or 63 (relating to professional health service
    20  plan corporations).
    21     (8)  "Insurer" means any entity offering a health insurance
    22  policy as defined in this section.
    23     (9)  "Pharmacy care" means medications prescribed by a
    24  licensed physician, licensed physician assistant or certified
    25  registered nurse practitioner and any assessment, evaluation or
    26  test prescribed or ordered by a licensed physician, licensed
    27  physician assistant or certified registered nurse practitioner
    28  to determine the need or effectiveness of such medications.
    29     (10)  "Psychiatric care" means direct or consultative
    30  services provided by a physician who specializes in psychiatry.
    20070H1150B4133                  - 9 -     

     1     (11)  "Psychological care" means direct or consultative
     2  services provided by a psychologist.
     3     (12)  "Rehabilitative care" means professional services and
     4  treatment programs, including applied behavioral analysis,
     5  provided by an autism service provider TO PRODUCE SOCIALLY        <--
     6  SIGNIFICANT IMPROVEMENTS IN HUMAN BEHAVIOR OR TO PREVENT LOSS OF
     7  ATTAINED SKILL OR FUNCTION.
     8     (13)  "Therapeutic care" means services provided by speech
     9  language pathologists, occupational therapists or physical
    10  therapists.
    11     (14)  "Treatment of autism spectrum disorder DISORDERS" shall  <--
    12  be identified in a treatment plan and shall include any of the
    13  following medically necessary pharmacy care, psychiatric care,
    14  psychological care, rehabilitative care and therapeutic care
    15  that is:
    16     (i)  Prescribed, ordered or provided by a licensed physician,
    17  licensed physician assistant, licensed psychologist, licensed
    18  clinical social worker or certified registered nurse
    19  practitioner.
    20     (ii)  Provided by an autism service provider.
    21     (iii)  Provided by a person, entity or group that works under
    22  the direction of an autism service provider.
    23     (15)  "Treatment plan" means a plan for the treatment of
    24  autism spectrum disorders developed by a licensed physician or
    25  licensed psychologist pursuant to a comprehensive evaluation or
    26  reevaluation performed in a manner consistent with the most
    27  recent clinical report or recommendations of the American
    28  Academy of Pediatrics.
    29     (g)  (1)  The State Board of Medicine, in consultation with
    30  the Department of Public Welfare, shall promulgate regulations
    20070H1150B4133                 - 10 -     

     1  providing for the licensure or certification of behavior
     2  specialists. Behavior specialists licensed or certified by the
     3  State Board of Medicine shall be subject to all disciplinary
     4  provisions applicable to medical doctors as set forth in the act
     5  of December 20, 1985 (P.L.457, No.112), known as the "Medical
     6  Practice Act of 1985." The State Board of Medicine may charge
     7  reasonable fees as set by board regulation for licensure or
     8  certificates or applications permitted by the "Medical Practice
     9  Act of 1985."
    10     (2)  An applicant applying for a license or certificate as a
    11  behavior specialist shall submit a written application on forms
    12  provided by the State Board of Medicine evidencing and insuring
    13  to the satisfaction of the board that the applicant:
    14     (i)  Is of good moral character.
    15     (ii)  Has received a master's or higher degree from a board-
    16  approved, accredited college or university, including a major
    17  course of study in school, clinical or counseling psychology,
    18  special education, social work, speech therapy, occupational
    19  therapy or another related field.
    20     (iii)  Has at least one year of experience involving
    21  functional behavior assessments, including the development and
    22  implementation of behavioral supports or treatment plans.
    23     (iv)  Has completed at least one thousand (1,000) hours in
    24  direct clinical experience with individuals with behavioral
    25  challenges or at least one thousand (1,000) hours' experience in
    26  a related field with individuals with autism spectrum disorders.
    27     (v)  Has completed relevant training programs, including
    28  professional ethics, autism-specific training, assessments
    29  training, instructional strategies and best practices, crisis
    30  intervention, comorbidity and medications, family collaboration
    20070H1150B4133                 - 11 -     

     1  and addressing specific skill deficits training.
     2     (3)  The board shall not issue a license or certificate to an
     3  applicant who has been convicted of a felony under the act of
     4  April 14, 1972 (P.L.233, No.64), known as "The Controlled
     5  Substance, Drug, Device and Cosmetic Act," or if an offense
     6  under the laws of another jurisdiction which, if committed in
     7  this Commonwealth, would be a felony under "The Controlled
     8  Substance, Drug, Device and Cosmetic Act," unless:
     9     (i)  At least ten (10) years have elapsed from the date of
    10  conviction.
    11     (ii)  The applicant satisfactorily demonstrates to the board
    12  that he has made significant progress in personal rehabilitation
    13  since the conviction such that licensure of the applicant should
    14  not be expected to create a substantial risk of harm to the
    15  health and safety of his patients or the public or a substantial
    16  risk of further criminal violations.
    17     (iii)  The applicant otherwise satisfies the qualifications
    18  contained in or authorized by this section.
    19  As used in this paragraph, the term "convicted" shall include a
    20  judgment, an admission of guilt or a plea of nolo contendere.
    21     (h)  An insurer shall be required to contract with and to
    22  accept as a participating provider any autism service provider
    23  within its service area and enrolled in the Commonwealth's
    24  medical assistance program who agrees to accept the payment
    25  levels, terms and conditions applicable to the insurer's other
    26  participating providers for such service.
    27     (i)  An insurer may review a treatment plan for treatment of
    28  autism spectrum disorders once every six (6) months, subject to
    29  its utilization review requirements, including case management,
    30  concurrent review and other managed care provisions. A more or
    20070H1150B4133                 - 12 -     

     1  less frequent review can be agreed upon by the insurer and the
     2  licensed physician or licensed psychologist developing the
     3  treatment plan.
     4     (j)  The FOR PURPOSES OF THIS SECTION, THE results of a        <--
     5  diagnostic assessment of autism spectrum disorder shall be valid
     6  for a period of NOT LESS THAN twelve (12) months, unless a        <--
     7  licensed physician or licensed psychologist determines an
     8  earlier assessment is necessary.
     9     (k)  (1)  Upon denial or partial denial by an insurer of a
    10  claim for diagnostic assessment of autism spectrum disorders or
    11  a claim for treatment of autism spectrum disorders, a covered
    12  individual or an authorized representative shall be entitled to
    13  an expedited internal review process pursuant to the procedures
    14  set forth in Article XXI, followed by an expedited independent
    15  external review process established and administered by the
    16  Insurance Department.
    17     (2)  An insurer or covered individual or an authorized
    18  representative may appeal to a court of competent jurisdiction
    19  an order of an expedited independent external review
    20  disapproving a denial or partial denial. Pending a ruling of
    21  such court, the insurer shall pay for those services, if any,
    22  that have been authorized OR ORDERED until such ruling.           <--
    23     (3)  The Insurance Commissioner may promulgate rules and
    24  regulations as may be necessary or appropriate to implement and
    25  administer this subsection.
    26     (l)  For purposes of this section, the term "autism service
    27  provider" shall include any behavior specialist in this
    28  Commonwealth providing treatment of autism spectrum disorders
    29  pursuant to a treatment plan until one (1) year from the time
    30  that regulations under subsection (g) are promulgated or until
    20070H1150B4133                 - 13 -     

     1  three (3) years from the effective date of this section,
     2  whichever is later.
     3     Section 635.3.  Coverage for Colorectal Cancer Screening.--
     4  (a)  Except to the extent already covered under another policy,
     5  all health insurance policies as defined in this section shall
     6  also provide coverage for colorectal cancer screening for
     7  covered individuals in accordance with American Cancer Society
     8  guidelines for colorectal cancer screening published as of
     9  January 1, 2008, and consistent with approved medical standards
    10  and practices.
    11     (1)  Coverage for nonsymptomatic covered individuals who are
    12  fifty (50) years of age or older shall include, but not be
    13  limited to:
    14     (i)  An annual fecal occult blood test.
    15     (ii)  A sigmoidoscopy, a screening barium enema or a test
    16  consistent with approved medical standards and practices to
    17  detect colon cancer, at least once every five (5) years.
    18     (iii)  A colonoscopy at least once every ten (10) years.
    19     (2)  Coverage for symptomatic covered individuals shall
    20  include a colonoscopy, sigmoidoscopy or any combination of
    21  colorectal cancer screening tests at a frequency determined by a
    22  treating physician.
    23     (3)  Coverage for nonsymptomatic covered individuals who are
    24  at high or increased risk for colorectal cancer who are under
    25  fifty (50) years of age shall include a colonoscopy or any
    26  combination of colorectal cancer screening tests in accordance
    27  with the American Cancer Society guidelines on screening for
    28  colorectal cancer published as of January 1, 2008.
    29     (b)  The coverage required under this section shall be
    30  subject to annual deductibles, coinsurance and copayment
    20070H1150B4133                 - 14 -     

     1  requirements imposed by an entity subject to this section for
     2  similar coverages under the same health insurance policy or
     3  contract.
     4     (c)  For the purpose of this section:
     5     (1)  "Health insurance policy" means any group health,
     6  sickness or accident policy or subscriber contract or
     7  certificate offered to groups of fifty-one (51) or more employes
     8  issued by an entity subject to any one of the following:
     9     (i)  This act.
    10     (ii)  The act of December 29, 1972 (P.L.1701, No.364), known
    11  as the "Health Maintenance Organization Act."
    12     (iii)  40 Pa.C.S. Ch. 61 (relating to hospital plan
    13  corporations) or 63 (relating to professional health services
    14  plan corporations).
    15  The term does not include accident only, fixed indemnity,
    16  limited benefit, credit, dental, vision, specified disease,
    17  Medicare supplement, Civilian Health and Medical Program of the
    18  Uniformed Services (CHAMPUS) supplement, long-term care or
    19  disability income, workers' compensation or automobile medical
    20  payment insurance.
    21     (2)  "Colonoscopy" means an examination of the rectum and the
    22  entire colon using a lighted instrument called a colonoscope.
    23     (3)  "Colorectal cancer screening" means any of the following
    24  procedures that are furnished to an individual for the purpose
    25  of early detection of colorectal cancer:
    26     (i)  Screening fecal-occult blood or fecal immunochemical
    27  test.
    28     (ii)  Screening flexible sigmoidoscopy.
    29     (iii)  Screening colonoscopy.
    30     (iv)  Screening barium enema.
    20070H1150B4133                 - 15 -     

     1     (v)  Screening test consistent with approved medical
     2  standards and practices to detect colon cancer.
     3     (4)  "Nonsymptomatic person at high or increased risk" means
     4  an individual who poses a higher than average risk for
     5  colorectal cancer according to the American Cancer Society
     6  guidelines on screening for colorectal cancer as of January 1,
     7  2008.
     8     (5)  "Symptomatic person" means an individual who experiences
     9  a change in bowel habits, rectal bleeding or persistent stomach
    10  cramps, weight loss or abdominal pain.
    11     Section 4.  The introductory paragraph and the definitions of
    12  "insurer" and "person" in section 1401 of the act, amended
    13  December 20, 2000 (P.L.967, No.132), are amended and the section
    14  is amended by adding a definition to read:
    15     Section 1401.  Definitions.--As used in this article, and for
    16  the purposes of this article only, the following words and
    17  phrases shall have the meanings given to them in this section:
    18     * * *
    19     "Insurer."  Any health maintenance organization, preferred
    20  provider organization, company, association [or], exchange,
    21  hospital plan corporation as defined in and subject to 40
    22  Pa.C.S. Ch. 61 (relating to hospital plan corporations) or
    23  professional health services plan corporation subject to 40
    24  Pa.C.S. Ch. 63 (relating to professional health services plan
    25  corporations), authorized by the Insurance Commissioner to
    26  transact the business of insurance in this Commonwealth except
    27  that the term shall not include:
    28     (1)  the Commonwealth or any agency or instrumentality
    29  thereof;
    30     (2)  agencies, authorities or instrumentalities of the United
    20070H1150B4133                 - 16 -     

     1  States, its possessions and territories, the Commonwealth of
     2  Puerto Rico, the District of Columbia or a state or political
     3  subdivision; or
     4     (3)  fraternal benefit societies[; or
     5     (4)  nonprofit medical and hospital service associations].
     6     * * *
     7     "Person."  An individual, an insurer, a corporation, a
     8  partnership, a limited liability company, an association, a
     9  joint stock company, a trust, an unincorporated organization,
    10  any similar entity or any combination of the foregoing acting in
    11  concert. The term shall not include any joint venture
    12  partnership exclusively engaged in owning, managing, leasing or
    13  developing real or tangible personal property.
    14     * * *
    15     "Shareholder."  A record holder or record owner of shares of
    16  an insurer.
    17     (1)  The term shall include all of the following:
    18     (i)  A member of an insurer that is a domestic nonstock
    19  corporation under 15 Pa.C.S. Ch. 21 (relating to nonstock
    20  corporations) or a prior statute.
    21     (ii)  A member, as defined in 15 Pa.C.S. § 5103 (relating to
    22  definitions), of an insurer that is a domestic nonprofit
    23  corporation under 15 Pa.C.S. Ch. 51 (relating to general
    24  provisions) or a prior statute.
    25     (iii)  A subscriber of an insurer that is a domestic
    26  reciprocal exchange under Article X or a prior statute.
    27     (2)  The term shall not include any subscriber, insured or
    28  customer of:
    29     (i)  a hospital plan corporation subject to 40 Pa.C.S. Ch. 61
    30  (relating to hospital plan corporations); or
    20070H1150B4133                 - 17 -     

     1     (ii)  a professional health service plan corporation subject
     2  to 40 Pa.C.S. Ch. 63 (relating to professional health services
     3  plan corporations).
     4     * * *
     5     Section 5.  Section 1402 of the act, amended or added
     6  December 18, 1992 (P.L.1519, No.178) and December 21, 1998
     7  (P.L.1108, No.150), is amended to read:
     8     Section 1402.  Acquisition of Control of or Merger or
     9  Consolidation with Domestic Insurer.--(a)  (1)  No person other
    10  than the issuer shall make a tender offer for or a request or
    11  invitation for tenders of, or enter into any agreement to
    12  exchange securities or seek to acquire or acquire in the open
    13  market or otherwise, any voting security of a domestic insurer
    14  if, after the consummation thereof, such person would directly
    15  or indirectly or by conversion or by exercise of any right to
    16  acquire, be in control of such insurer, and no person shall
    17  enter into an agreement to merge or consolidate with or
    18  otherwise to acquire control of a domestic insurer or any person
    19  controlling a domestic insurer unless, at the time any such
    20  offer, request or invitation is made or any such agreement is
    21  entered into or prior to the acquisition of such securities if
    22  no offer or agreement is involved, such person has filed with
    23  the department and has sent to such insurer a statement
    24  containing the information required by this section and such
    25  offer, request, invitation, agreement or acquisition has been
    26  approved by the department in the manner hereinafter prescribed.
    27     (2)  For purposes of this section, a "domestic insurer" shall
    28  include any person controlling a domestic insurer unless such
    29  person as determined by the department is either directly or
    30  through its affiliates primarily engaged in business other than
    20070H1150B4133                 - 18 -     

     1  the business of insurance. Such person shall, however, file a
     2  preacquisition notification with the department containing the
     3  information set forth in section 1403(c)(2) thirty (30) days
     4  prior to the proposed effective date of the acquisition. Failure
     5  to file is subject to section 1403(e)(3). For purposes of this
     6  section, "person" shall not include any securities broker
     7  holding, in the usual and customary manner, less than twenty per
     8  centum (20%) of the voting securities of an insurance company or
     9  of any person which controls an insurance company.
    10     (b)  The statement to be filed with the department under this
    11  section shall be made under oath or affirmation and shall
    12  contain the following information:
    13     (1)  The name and address of each person by whom or on whose
    14  behalf the merger, consolidation or other acquisition of control
    15  referred to in subsection (a) is to be effected, hereinafter
    16  called "acquiring party," and
    17     (i)  if such person is an individual, his principal
    18  occupation and all offices and positions held during the past
    19  five (5) years, and any conviction of crimes other than minor
    20  traffic violations during the past ten (10) years; or
    21     (ii)  if such person is not an individual, a report of the
    22  nature of its business operations during the past five (5) years
    23  or for such lesser period as the person and any predecessors
    24  thereof shall have been in existence; an informative description
    25  of the business intended to be done by the person and the
    26  person's subsidiaries; and a list of all individuals who are or
    27  who have been selected to become directors or executive officers
    28  of the person, or who perform or will perform functions
    29  appropriate to those positions. This list shall include for each
    30  individual the information required by subparagraph (i).
    20070H1150B4133                 - 19 -     

     1     (2)  The source, nature and amount of the consideration used
     2  or to be used in effecting the merger, consolidation or other
     3  acquisition of control, a description of any transaction wherein
     4  funds were or are to be obtained for any such purpose, including
     5  any pledge of the insurer's stock or the stock of any of its
     6  subsidiaries or controlling affiliates, and the identity of
     7  persons furnishing such consideration, provided, however, that
     8  where a source of such consideration is a loan made in the
     9  lender's ordinary course of business, the identity of the lender
    10  shall remain confidential if the person filing such statement so
    11  requests.
    12     (3)  Fully audited financial information as to the earnings
    13  and financial condition of each acquiring party for the
    14  preceding five (5) fiscal years of each such acquiring party, or
    15  for such lesser period as such acquiring party and any
    16  predecessors thereof shall have been in existence, and similar
    17  unaudited information as of a date not earlier than ninety (90)
    18  days prior to the filing of the statement.
    19     (4)  Any plans or proposals which each acquiring party may
    20  have to liquidate such insurer, to sell its assets or merge or
    21  consolidate it with any person or to make any other material
    22  change in its business or corporate structure or management.
    23     (5)  The number of shares of any security referred to in
    24  subsection (a) which each acquiring party proposes to acquire,
    25  and the terms of the offer, request, invitation, agreement or
    26  acquisition referred to in subsection (a), and a statement as to
    27  the method by which the fairness of the proposal was arrived.
    28     (6)  The amount of each class of any security referred to in
    29  subsection (a) which is beneficially owned or concerning which
    30  there is a right to acquire beneficial ownership by each
    20070H1150B4133                 - 20 -     

     1  acquiring party.
     2     (7)  A full description of any contracts, arrangements or
     3  understandings with respect to any security referred to in
     4  subsection (a) in which any acquiring party is involved,
     5  including, but not limited to, transfer of any of the
     6  securities, joint ventures, loan or option arrangements, puts or
     7  calls, guarantees of loans, guarantees against loss or
     8  guarantees of profits, division of losses or profits, or the
     9  giving or withholding of proxies. Such description shall
    10  identify the persons with whom such contracts, arrangements or
    11  understandings have been entered into.
    12     (8)  A description of the purchase of any security referred
    13  to in subsection (a) during the twelve calendar months preceding
    14  the filing of the statement, by any acquiring party, including
    15  the dates of purchase, names of the purchasers and consideration
    16  paid or agreed to be paid therefor.
    17     (9)  A description of any recommendations to purchase any
    18  security referred to in subsection (a) made during the twelve
    19  calendar months preceding the filing of the statement, by any
    20  acquiring party, or by anyone based upon interviews or at the
    21  suggestion of such acquiring party.
    22     (10)  Copies of all tender offers for, requests or
    23  invitations for tenders of, exchange offers for and agreements
    24  to acquire or exchange any securities referred to in subsection
    25  (a) and, if distributed, of additional soliciting material
    26  relating thereto.
    27     (11)  The term of any agreement, contract or understanding
    28  made with or proposed to be made with any broker-dealer as to
    29  solicitation of securities referred to in subsection (a) for
    30  tender and the amount of any fees, commissions or other
    20070H1150B4133                 - 21 -     

     1  compensation to be paid to broker-dealers with regard thereto.
     2     (12)  Such additional information as the department may by
     3  rule or regulation prescribe as necessary or appropriate for the
     4  protection of policyholders of the insurer or in the public
     5  interest.
     6     (c)  If the person required to file the statement referred to
     7  in subsection (a) is a partnership, limited partnership,
     8  syndicate or other group, the department may require that the
     9  information called for by subsection (b)(1) through (12) shall
    10  be given with respect to each partner of such partnership or
    11  limited partnership, each member of such syndicate or group and
    12  each person who controls such partner or member. If any such
    13  partner, member or person is a corporation or the person
    14  required to file the statement referred to in subsection (a) is
    15  a corporation, the department may require that the information
    16  called for by subsection (b)(1) through (12) shall be given with
    17  respect to such corporation, each officer and director of such
    18  corporation and each person who is directly or indirectly the
    19  beneficial owner of more than ten per centum (10%) of the
    20  outstanding voting securities of such corporation.
    21     (d)  If any material change occurs in the facts set forth in
    22  the statement filed with the department and sent to such insurer
    23  pursuant to this section, an amendment setting forth such
    24  change, together with copies of all documents and other material
    25  relevant to such change, shall be filed with the department and
    26  sent to such insurer within two (2) business days after the
    27  person learns of such change.
    28     (e)  If any offer, request, invitation, agreement or
    29  acquisition referred to in subsection (a) is proposed to be made
    30  by means of a registration statement under the Securities Act of
    20070H1150B4133                 - 22 -     

     1  1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.), or in circumstances
     2  requiring the disclosure of similar information under the
     3  Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a
     4  et seq.), or under a State law requiring similar registration or
     5  disclosure, the person required to file the statement referred
     6  to in subsection (a) may utilize such documents in furnishing
     7  the information called for by that statement.
     8     (f)  (1)  The department shall approve any merger,
     9  consolidation or other acquisition of control referred to in
    10  subsection (a) unless it finds any of the following:
    11     (i)  After the [change] merger, consolidation or other
    12  acquisition of control, the domestic insurer referred to in
    13  subsection (a) would not be able to satisfy the requirements for
    14  the issuance of a license to write the line or lines of
    15  insurance for which it is presently licensed.
    16     (ii)  The effect of the merger, consolidation or other
    17  acquisition of control would be to substantially lessen
    18  competition in insurance in this Commonwealth or tend to create
    19  a monopoly therein. In applying the competitive standard in this
    20  subparagraph:
    21     (A)  the informational requirements of section 1403(c)(2) and
    22  the standards of section 1403(d)(2) shall apply;
    23     (B)  the merger, consolidation or other acquisition of
    24  control shall not be disapproved if the department finds that
    25  any of the situations meeting the criteria provided by section
    26  1403(d)(3) exist; and
    27     (C)  the department may condition the approval of the merger,
    28  consolidation or other acquisition of control on the removal of
    29  the basis of disapproval within a specified period of time.
    30     (iii)  The financial condition of any acquiring party is such
    20070H1150B4133                 - 23 -     

     1  as might jeopardize the financial stability of the insurer or
     2  prejudice the interest of its policyholders.
     3     (iv)  The plans or proposals which the acquiring party has to
     4  liquidate the insurer, sell its assets or consolidate or merge
     5  it with any person, or to make any other material change in its
     6  business or corporate structure or management, are unfair and
     7  unreasonable [to policyholders of the insurer and not in the
     8  public interest.] and fail to confer benefit on policyholders of
     9  the insurer and are not in the public interest.
    10     (v)  The competence, experience and integrity of those
    11  persons who would control the operation of the insurer are such
    12  that it would not be in the interest of policyholders of the
    13  insurer and of the public to permit the merger, consolidation or
    14  other acquisition of control.
    15     (vi)  The [acquisition] merger, consolidation or other
    16  acquisition of control is likely to be hazardous or prejudicial
    17  to the insurance buying public.
    18     (vii)  The merger, consolidation or other acquisition of
    19  control is not in compliance with the laws of this Commonwealth,
    20  including Article VIII-A.
    21     (2)  If the merger, consolidation or other acquisition of
    22  control is approved, the department shall so notify the person
    23  filing the statement and the insurer [whose stock] that is
    24  proposed to be acquired, and such a determination is hereafter
    25  referred to as an approving determination. Notice shall also be
    26  given by the department of any determination which is not an
    27  approving determination. If an approving determination is made
    28  by the department and not otherwise, the proposed offer and
    29  acquisition may thereafter be made and consummated on the terms
    30  and conditions and in the manner described in the statement and
    20070H1150B4133                 - 24 -     

     1  subject to such conditions as may be prescribed by the
     2  department as hereinafter provided. An approving determination
     3  by the department shall be deemed to extend to offers or
     4  acquisitions made pursuant thereto within one year following the
     5  date of determination. The department may, as a condition of its
     6  approving determination, require the inclusion in any offer of
     7  provisions requiring the offer to remain open a specified
     8  minimum length of time, permitting withdrawal of shares
     9  deposited prior to the time the offeror becomes bound to
    10  consummate the acquisition and requiring pro rata acceptance of
    11  any shares deposited pursuant to the offer. The department shall
    12  hold a hearing before making the determination required by this
    13  subsection if, within ten (10) days following the filing with
    14  the department of the statement, written request for the holding
    15  of such hearing is made either by the person proposing to make
    16  the acquisition, by the insurer [whose stock] that is proposed
    17  to be acquired or, if [such] the issuer of stock proposed to be
    18  acquired is not an insurer, by the [insurance company] insurer
    19  controlled by such issuer. Otherwise, the department shall
    20  determine in its discretion whether such a hearing shall be
    21  held. Thirty (30) days' notice of any such hearing shall be
    22  given to the person proposing to make the acquisition, to the
    23  issuer whose stock is proposed to be acquired and, if such
    24  issuer is not an insurer, to the insurance company controlled by
    25  such issuer. Notice of any such hearing shall also be given to
    26  such other persons, if any, as the department may determine.
    27     (3)  The department may retain at the acquiring person's
    28  expense any attorneys, actuaries, accountants and other experts
    29  not otherwise a part of the department's staff as may be
    30  reasonably necessary to assist the department in reviewing the
    20070H1150B4133                 - 25 -     

     1  proposed acquisition of control.
     2     (g)  The provisions of this section shall not apply to any
     3  offer, request, invitation, agreement or acquisition which the
     4  department by order shall exempt therefrom as:
     5     (1)  not having been made or entered into for the purpose and
     6  not having the effect of changing or influencing the control of
     7  a domestic insurer; or
     8     (2)  as otherwise not comprehended within the purposes of
     9  this section.
    10     (h)  The following shall constitute a violation of this
    11  section:
    12     (1)  the failure to file any statement, amendment or other
    13  material required to be filed pursuant to subsection (a) or (b);
    14     (2)  the effectuation or any attempt to effectuate an
    15  acquisition of control of or merger or consolidation with a
    16  domestic insurer unless the department has given its approval
    17  thereto; or
    18     (3)  a violation of section 819-A.
    19     (i)  The department shall, within seventy-two hours of
    20  receiving a statement filed under this section, provide
    21  notification to the Office of Attorney General that the filing
    22  was received.
    23     (j)  As used in this section, the term "annual statement"
    24  shall mean the annual report of the financial condition required
    25  to be filed under 40 Pa.C.S. § 6331 (relating to reports and
    26  examinations).
    27     Section 6.  Section 1403(a), (b) and (d), added December 18,
    28  1992 (P.L.1519, No.178), are amended to read:
    29     Section 1403.  Acquisitions Involving Insurers not Otherwise
    30  Covered.--(a)  As used in this section the following words and
    20070H1150B4133                 - 26 -     

     1  phrases shall have the meanings given to them in this
     2  subsection:
     3     "Acquisition."  Any agreement, arrangement or activity the
     4  consummation of which results in a person acquiring, directly or
     5  indirectly, the control of another person and includes, but is
     6  not limited to, the acquisition of voting securities, the
     7  acquisition of assets, bulk reinsurance [and], mergers and
     8  consolidations.
     9     "Involved insurer."  Includes an insurer which either
    10  acquires or is acquired, is affiliated with an acquirer or
    11  acquired or is the result of a merger or consolidation.
    12     (b)  (1)  Except as exempted in paragraph (2), this section
    13  applies to any acquisition in which there is a change in control
    14  of an insurer authorized to do business in this Commonwealth.
    15     (2)  This section shall not apply to any of the following:
    16     (i)  An acquisition subject to approval or disapproval by the
    17  department pursuant to section 1402.
    18     (ii)  A purchase of securities solely for investment purposes
    19  so long as such securities are not used by voting or otherwise
    20  to cause or attempt to cause the substantial lessening of
    21  competition in any insurance market in this Commonwealth. If a
    22  purchase of securities results in a presumption of control as
    23  described in the definition of "control" in section [1301] 1401,
    24  it is not solely for investment purposes unless the insurance
    25  department of the insurer's state of domicile accepts a
    26  disclaimer of control or affirmatively finds that control does
    27  not exist and such disclaimer action or affirmative finding is
    28  communicated by the domiciliary insurance department to the
    29  Insurance Department of the Commonwealth.
    30     (iii)  The acquisition of a person by another person when
    20070H1150B4133                 - 27 -     

     1  both persons are neither directly nor through affiliates
     2  primarily engaged in the business of insurance, if
     3  preacquisition notification is filed with the department in
     4  accordance with subsection (c)(2) thirty (30) days prior to the
     5  proposed effective date of the acquisition. However, such
     6  preacquisition notification is not required for exclusion from
     7  this section if the acquisition would otherwise be excluded from
     8  this section by this paragraph.
     9     (iv)  The acquisition of already affiliated persons.
    10     (v)  An acquisition if, as an immediate result of the
    11  acquisition:
    12     (A)  in no market would the combined market share of the
    13  involved insurers exceed five per centum (5%) of the total
    14  market;
    15     (B)  there would be no increase in any market share; or
    16     (C)  in no market would:
    17     (I)  the combined market share of the involved insurers
    18  exceeds twelve per centum (12%) of the total market; and
    19     (II)  the market share increases by more than two per centum
    20  (2%) of the total market.
    21  For the purpose of this subparagraph, a market means direct
    22  written insurance premium in this Commonwealth for a line of
    23  business as contained in the annual statement required to be
    24  filed by insurers licensed to do business in this Commonwealth.
    25     (vi)  An acquisition for which a preacquisition notification
    26  would be required pursuant to this section due solely to the
    27  resulting effect on the ocean marine insurance line of business.
    28     (vii)  An acquisition of an insurer whose domiciliary
    29  insurance department affirmatively finds that such insurer is in
    30  failing condition; there is a lack of feasible alternative to
    20070H1150B4133                 - 28 -     

     1  improving such condition; the public benefits of improving such
     2  insurer's condition through the acquisition exceed the public
     3  benefits that would arise from not lessening competition; and
     4  such findings are communicated by the domiciliary insurance
     5  department to the Insurance Department of the Commonwealth.
     6     (3)  Sections 1409(b) and (c) and 1411 shall not apply to
     7  acquisitions provided for in this subsection.
     8     * * *
     9     (d)  (1)  The department may enter an order under subsection
    10  (e)(1) with respect to an acquisition if there is substantial
    11  evidence that the effect of the acquisition may be substantially
    12  to lessen competition in any line of insurance in this
    13  Commonwealth or tend to create a monopoly therein or if the
    14  insurer fails to file adequate information in compliance with
    15  subsection (c).
    16     (2)  In determining whether a proposed acquisition would
    17  violate the competitive standard of paragraph (1), the
    18  department shall consider the following:
    19     (i)  Any acquisition covered under subsection (b) involving
    20  two or more insurers competing in the same market is prima facie
    21  evidence of violation of the competitive standards as follows:
    22     (A)  if the market is highly concentrated and the involved
    23  insurers possess the following shares of the market:
    24               Insurer A           Insurer B
    25                    4%               4% or more
    26                   10%               2% or more
    27                   15%               1% or more; or
    28     (B)  if the market is not highly concentrated and the
    29  involved insurers possess the following shares of the market:
    30               Insurer A           Insurer B
    20070H1150B4133                 - 29 -     

     1                    5%               5% or more
     2                   10%               4% or more
     3                   15%               3% or more
     4                   19%               1% or more.
     5  A highly concentrated market is one in which the share of the
     6  four largest insurers is seventy-five per centum (75%) or more
     7  of the market. Percentages not shown in the tables are
     8  interpolated proportionately to the percentages that are shown.
     9  If more than two insurers are involved, exceeding the total of
    10  the two columns in the table is prima facie evidence of
    11  violation of the competitive standard in paragraph (1). For the
    12  purpose of this subparagraph, the insurer with the largest share
    13  of the market shall be deemed to be insurer A.
    14     (ii)  There is a significant trend toward increased
    15  concentration when the aggregate market share of any grouping of
    16  the largest insurers in the market, from the two largest to the
    17  eight largest, has increased by seven per centum (7%) or more of
    18  the market over a period of time extending from any base year
    19  five (5) to ten (10) years prior to the acquisition up to the
    20  time of the acquisition. Any acquisition [or merger], merger or
    21  consolidation covered under subsection (b) involving two or more
    22  insurers competing in the same market is prima facie evidence of
    23  violation of the competitive standard in paragraph (1) if:
    24     (A)  there is a significant trend toward increased
    25  concentration in the market;
    26     (B)  one of the insurers involved is one of the insurers in a
    27  grouping of such large insurers showing the requisite increase
    28  in the market share; and
    29     (C)  another involved insurer's market is two per centum (2%)
    30  or more.
    20070H1150B4133                 - 30 -     

     1     (iii)  For the purposes of this paragraph:
     2     (A)  The term "insurer" includes any company or group of
     3  companies under common management, ownership or control.
     4     (B)  The term "market" means the relevant product and
     5  geographical markets. In determining the relevant product and
     6  geographical markets, the department shall give due
     7  consideration to, among other things, the definitions or
     8  guidelines, if any, promulgated by the NAIC and to information,
     9  if any, submitted by parties to the acquisition. In the absence
    10  of sufficient information to the contrary, the relevant product
    11  market is assumed to be the direct written insurance premium for
    12  a line of business, such line being that used in the annual
    13  statement required to be filed by insurers doing business in
    14  this Commonwealth and the relevant geographical market is
    15  assumed to be this Commonwealth.
    16     (C)  The burden of showing prima facie evidence of violation
    17  of the competitive standard rests upon the commissioner.
    18     (iv)  Even though an acquisition is not prima facie violative
    19  of the competitive standard under subparagraphs (i) and (ii),
    20  the department may establish the requisite anticompetitive
    21  effect based upon other substantial evidence. Even though an
    22  acquisition is prima facie violative of the competitive standard
    23  under subparagraphs (i) and (ii), a party may establish the
    24  absence of the requisite anticompetitive effect based upon other
    25  substantial evidence. Relevant factors in making a determination
    26  under this paragraph include, but are not limited to, the
    27  following: market shares, volatility of ranking of market
    28  leaders, number of competitors, concentration, trend of
    29  concentration in the industry and ease of entry and exit into
    30  the market.
    20070H1150B4133                 - 31 -     

     1     (3)  An order may not be entered under subsection (e)(1) if:
     2     (i)  the acquisition will yield substantial economies of
     3  scale or economies in resource utilization that cannot be
     4  feasibly achieved in any other way, and the public benefits
     5  which would arise from such economies exceed the public benefits
     6  which would arise from not lessening competition; or
     7     (ii)  the acquisition will substantially increase the
     8  availability of insurance, and the public benefits of such
     9  increase exceed the public benefits which would arise from not
    10  lessening competition.
    11     * * *
    12     Section 7.  The act is amended by adding sections to read:
    13     Section 1403.1.  Committee Review.--(a)  The Banking and
    14  Insurance Committee of the Senate and the Insurance Committee of
    15  the House of Representatives may review an application or
    16  statement submitted by a hospital plan corporation or
    17  professional health services plan corporation seeking the
    18  approval of a merger, consolidation or other acquisition of
    19  control of a hospital plan corporation or professional health
    20  services plan corporation under this act.
    21     (b)  The Banking and Insurance Committee of the Senate and
    22  the Insurance Committee of the House of Representatives shall
    23  have the following powers and duties:
    24     (1)  To convene the committee for purposes of reviewing an
    25  application for approval of a merger, consolidation or other
    26  acquisition of control under this section.
    27     (2)  To receive and review all filings submitted to the
    28  department relating to the merger, consolidation or other
    29  acquisition of control and all accompanying data and other
    30  information. This paragraph shall not apply to information
    20070H1150B4133                 - 32 -     

     1  deemed confidential or proprietary by the department.
     2     (3)  To consult experts, hold hearings and obtain additional
     3  information relating to the merger, consolidation or other
     4  acquisition of control.
     5     (4)  To develop written comments and recommendations on the
     6  merger, consolidation or acquisition of control and submit them
     7  to the department within forty-five (45) days of the close of
     8  the public comment period established under this paragraph,
     9  developed by the department on the merger, consolidation or
    10  other acquisition of control. The department shall publish the
    11  date of the close of the public comment period in the
    12  Pennsylvania Bulletin prior to final closure of the public
    13  comment period. The department may issue a final order and
    14  determination on or after one hundred five (105) days following
    15  the public comment period.
    16     (c)  The commissioner, the department and its attorneys and
    17  experts, including experts employed or retained by the
    18  department, shall be available to provide testimony to each
    19  committee relating to the merger, consolidation or other
    20  acquisition of control. Nothing in this act shall affect any
    21  privileges or immunities of the department or its attorneys,
    22  experts or consultants. The department or its attorneys, experts
    23  or consultants shall not be required to appear before either
    24  committee within thirty (30) days following the department's
    25  issuance of a final order and determination.
    26     (d)  The department shall provide a detailed written response
    27  to each comment and recommendation submitted by the Banking and
    28  Insurance Committee of the Senate or the Insurance Committee of
    29  the House of Representatives in its final order. The order and
    30  determination shall not be issued before sixty (60) days have
    20070H1150B4133                 - 33 -     

     1  elapsed following receipt of the comments and recommendations
     2  under subsection (b)(4).
     3     (e)  If no comments and recommendations are received under
     4  subsection (b)(4), the department may issue a final order and
     5  determination on or after one hundred five (105) days following
     6  the close of the public comment period.
     7     Section 1403.2.  Insurance Restructuring Restricted Receipt
     8  Account.--(a)  There is established in the State Treasury a
     9  restricted receipt account to be known as the Insurance
    10  Restructuring Restricted Receipt Account. Interest earned on
    11  money in the account shall be deposited into the account.
    12     (b)  All net economic benefits, including proceeds, savings,
    13  funds or moneys derived from and any agreement related to or
    14  from the merger, consolidation or other acquisition of control
    15  of a hospital plan corporation or professional health services
    16  plan corporation which are to be paid to the Commonwealth or a
    17  Commonwealth program shall be deposited into the account for
    18  purposes as determined by the General Assembly.
    19     (c)  No contract or written agreement between a hospital plan
    20  corporation or professional health services plan corporation and
    21  the Commonwealth or any other entity relating to the
    22  disbursement or spending of money in the account may be entered
    23  into until moneys that may exist or are to be derived from any
    24  contract or written agreement for deposit into the account are
    25  appropriated by the General Assembly.
    26     (d)  No moneys or funds may be transferred or paid from the
    27  account unless appropriated by the General Assembly.
    28     Section 8.  Section 1405(c) of the act, amended February 17,
    29  1994 (P.L.92, No.9), is amended to read:
    30     Section 1405.  Standards and Management of an Insurer within
    20070H1150B4133                 - 34 -     

     1  a Holding Company System.--* * *
     2     (c)  (1)  Notwithstanding the control of a domestic insurer
     3  by any person, the officers and directors of the insurer shall
     4  not thereby be relieved of any obligation or liability to which
     5  they would otherwise be subject by law, and the insurer shall be
     6  managed so as to assure its separate operating identity
     7  consistent with this article.
     8     (2)  Nothing herein shall preclude a domestic insurer from
     9  having or sharing a common management or cooperative or joint
    10  use of personnel, property or services with one or more other
    11  persons under arrangements meeting the standards of subsection
    12  (a)(1).
    13     (3)  (i)  Not less than one-third of the directors of a
    14  domestic insurer [and not less than one-third of the members of
    15  each committee of the board of directors of any domestic
    16  insurer] shall be persons who are not officers or employes of
    17  such insurer or of any entity controlling, controlled by or
    18  under common control with such insurer and who are not
    19  beneficial owners of a controlling interest in the voting stock
    20  of such insurer or any such entity. At least one such person
    21  must be included in any quorum for the transaction of business
    22  at any meeting of the board of directors [or any committee
    23  thereof].
    24     (ii)  Not less than one-third of the members of each
    25  committee of the board of directors of any domestic insurer
    26  shall be persons who are not officers or employes of such
    27  insurer or of any entity controlling, controlled by or under
    28  common control with such insurer. At least one such person must
    29  be included in any quorum for the transaction of business at any
    30  meeting of each committee.
    20070H1150B4133                 - 35 -     

     1     (4)  The board of directors of a domestic insurer shall
     2  establish [one or more committees] a committee comprised solely
     3  of directors who are not officers or employes of the insurer or
     4  of any entity controlling, controlled by or under common control
     5  with the insurer and who are not beneficial owners of a
     6  controlling interest in the voting stock of the insurer or any
     7  such entity. The committee [or committees] shall have
     8  responsibility for recommending the selection of independent
     9  certified public accountants[,] and reviewing the insurer's
    10  financial condition, the scope and results of the independent
    11  audit and any internal audit[, nominating candidates for
    12  director for election by shareholders or policyholders,
    13  evaluating the performance of officers deemed to be principal
    14  officers of the insurer and recommending to the board of
    15  directors the selection and compensation of the principal
    16  officers]. The committee may also have the responsibilities
    17  described in paragraph (4.1) if one or more committees described
    18  in paragraph (4.1) are not separately established.
    19     (4.1)  The board of directors of a domestic insurer shall
    20  establish one or more committees comprised solely of directors
    21  who are not officers or employes of the insurer or of any entity
    22  controlling, controlled by or under common control with the
    23  insurer. The committee or committees shall have responsibility
    24  for recommending candidates to be nominated by the board of
    25  directors, in addition to any other nominations by voting
    26  shareholders or policyholders, for election as directors by
    27  voting shareholders or policyholders, evaluating the performance
    28  of officers deemed to be principal officers of the insurer and
    29  recommending to the board of directors the selection and
    30  compensation of the principal officers.
    20070H1150B4133                 - 36 -     

     1     (5)  The provisions of paragraphs (3) [and], (4) and (4.1)
     2  shall not apply to a domestic insurer if the person controlling
     3  such insurer is an insurer or [a publicly held corporation]
     4  another business entity having a board of directors and
     5  committees thereof which already meet the requirements of
     6  paragraphs (3) [and (4)], (4) and (4.1).
     7     * * *
     8     Section 9.  The act is amended by adding an article to read:
     9                            ARTICLE XXV
    10                   COMMUNITY HEALTH REINVESTMENT
    11  Section 2501.  Definitions.
    12     The following words and phrases when used in this article
    13  shall have the meanings given to them in this section unless the
    14  context clearly indicates otherwise:
    15     "Community health reinvestment activity."  Community health
    16  services and projects that improve health care or make health
    17  care more accessible. The term includes funding, subsidization
    18  or provision of the following:
    19         (1)  Health care coverage for persons who are determined
    20     by recognized standards as determined by the Insurance
    21     Department to be unable to pay for coverage.
    22         (2)  Health care services for persons who are determined
    23     by recognized standards to be uninsured and unable to pay for
    24     services.
    25         (3)  Programs for the prevention and treatment of disease
    26     or injury, including mental retardation, mental disorders,
    27     mental health counseling or the promotion of health or
    28     wellness.
    29  The term shall not include expenditures for advertising, public
    30  relations, sponsorships, bad debt, administrative costs
    20070H1150B4133                 - 37 -     

     1  associated with State health care programs, programs provided as
     2  an employee benefit, use of facilities for meetings held by
     3  community groups or expenses for in-service training, continuing
     4  education, orientation or mentoring of employees.
     5     "Department."  The Insurance Department of the Commonwealth.
     6     "Plan."  A hospital plan corporation as defined in 40 Pa.C.S.
     7  Ch. 61 (relating to hospital plan corporations) or professional
     8  health services plan corporation as defined in 40 Pa.C.S. Ch. 63
     9  (relating to professional health services plan corporations).
    10  Section 2502.  Duties of plan and department.
    11     (a)  Plan duties.--A plan shall have the following duties:
    12         (1)  To submit a proposal to the department on or before
    13     March 30 of each year setting forth the manner in which the
    14     plan will provide proposed community health reinvestment
    15     activities conducted or provided by the plan during the next
    16     fiscal year.
    17         (2)  To annually provide to the department, the Banking
    18     and Insurance Committee of the Senate and the Insurance
    19     Committee of the House of Representatives the name and
    20     address of each officer, director or employee who serves on
    21     the board of directors of a hospital or other health care
    22     facility as defined in section 802.1 of the act of July 19,
    23     1979 (P.L.130, No.48), known as the Health Care Facilities
    24     Act, or on the board of an entity that owns, operates or
    25     manages a hospital or other health care facility. This
    26     paragraph shall apply to a nonprofit or for-profit subsidiary
    27     or affiliate of a hospital plan corporation or professional
    28     health services plan corporation. The information shall be
    29     submitted by January 31 for the immediately preceding year.
    30     (b)  Department duties.--The department shall have the
    20070H1150B4133                 - 38 -     

     1  following duties:
     2         (1)  To develop a form which shall be used by each plan
     3     for the submission of the proposal under subsection (a)(1).
     4     The form shall require the itemization of individual
     5     community health reinvestment activities and the cost of each
     6     activity under the Agreement on Community Health Reinvestment
     7     entered into February 2, 2005, by the Insurance Department
     8     and Capital Blue Cross, Highmark, Inc., the Hospital Service
     9     Association of Northeastern Pennsylvania and Independence
    10     Blue Cross and published at 35 Pa.B. 4155 or any successor or
    11     other agreements. The proposal shall be on a form published
    12     by the department in the Pennsylvania Bulletin.
    13         (2)  To approve or disapprove the expenditures in the
    14     proposal submitted under subsection (a)(1).
    15  Section 2503.  Public record.
    16     All proposals submitted under section 2502 shall be public
    17  records.
    18  Section 2504.  Regulations.
    19     The department may promulgate regulations as necessary for
    20  the administration of this article.
    21     Section 10.  Repeals are as follows:
    22         (1)  The General Assembly declares the repeal under
    23     paragraph (2) is necessary to effectuate the addition of
    24     section 1403.2 of the act.
    25         (2)  Section 1716.1-E of the act of April 9, 1929
    26     (P.L.343, No.176), known as The Fiscal Code, is repealed.
    27         (3)  The act of December 19, 1990 (P.L.834, No.198),
    28     known as the GAA Amendments Act of 1990, is repealed insofar
    29     as it is inconsistent with this act.
    30     Section 11.  This act shall not apply to any merger,
    20070H1150B4133                 - 39 -     

     1  consolidation or other acquisition of control completed or
     2  consummated prior to the effective date of this section and, if
     3  required, following the issuance of an approving determination.
     4     Section 12.  This act shall apply to any application,
     5  statement or other plan or proposal relating to a merger,
     6  consolidation or other acquisition of control filed with the
     7  Insurance Department on or after January 1, 2007.
     8     Section 13.  This act shall take effect as follows:
     9         (1)  The amendment or addition of sections 405.2(c),
    10     635.3 and 1405(c) of the act shall take effect in 60 days.
    11         (2)  The remainder of this act shall take effect
    12     immediately.












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