PRINTER'S NO. 319
No. 292 Session of 1993
INTRODUCED BY LESCOVITZ, BELFANTI, LaGROTTA, OLASZ AND VEON,
FEBRUARY 8, 1993
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 8, 1993
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," further providing for group
12 accident and sickness insurance.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Section 621.2(a) of the act of May 17, 1921
16 (P.L.682, No.284), known as The Insurance Company Law of 1921,
17 amended or added December 9, 1955 (P.L.807, No.233) and January
18 18, 1968 (1967 P.L.969, No.433), is amended and the section is
19 amended by adding subsections to read:
20 Section 621.2. Group Accident and Sickness Insurance.--(a)
21 Group accident and sickness insurance is hereby declared to be
22 that form of accident and sickness insurance covering groups of
1 persons defined in this section with or without one or more
2 members of their families or one or more of their dependents, or
3 covering one or more members of the families or one or more
4 dependents of such groups or persons and issued upon the
5 following basis:
6 (1) Under a policy issued to an employer or trustees of a
7 fund established by an employer, who shall be deemed the
8 policyholder insuring at least ten employes of such employer for
9 the benefit of persons other than the employer. The term
10 "employes," as used herein, shall be deemed to include the
11 officers, managers and employes of the employer, the individual
12 proprietor or partner, if the employer is an individual
13 proprietor or partnership, the officers, managers and employes
14 of subsidiary or affiliated corporations, the individual
15 proprietors, partners and employes of individuals and firms, if
16 the business of the employer and such individual or firm is
17 under common control through stock ownership, contract or
18 otherwise. The term "employes," as used herein, may include
19 retired employes. A policy issued to insure employes of a public
20 body may provide that the term "employes" shall include elected
21 or appointed officials.
22 (2) Under a policy issued to an association, including a
23 labor union, which shall have a constitution and by-laws and
24 which has been organized by other than an insurer and is
25 maintained in good faith for purposes other than that of
26 obtaining insurance insuring at least twenty-five members,
27 employes or employes of members of the association for the
28 benefit of persons other than the association or its officers or
29 trustees[.], which has been in active existence for at least two
30 years, operates from offices other than the insurer's, and is
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1 controlled by principals other than the insurer's. The term
2 "employes," as used herein, may include retired employes.
3 (3) Under a policy issued to the trustees of a fund
4 established by an insurer for two or more employers in the same
5 industry or by two or more employers in the same industry or by
6 an insurer for one or more labor unions or by one or more labor
7 unions or by an insurer for one or more employers and one or
8 more labor unions or by [an association as defined in clause (2)
9 of this section,] one or more employers and one or more labor
10 unions or by an insurer for one or more associations meeting the
11 qualifications as defined in clause (2) of this subsection or by
12 one or more associations meeting the qualifications as defined
13 in clause (2) of this subsection, which trustees shall be deemed
14 the policyholder to insure employes of the employers or members
15 of the unions or [such associations] members, employes of labor
16 unions and employes of the associations for the benefit of
17 persons other than the employers or the unions or [such
18 associations.] the associations. The term "employes," as used
19 herein, may include the officers, managers and employes of the
20 employer and the individual proprietor or partners, if the
21 employer is an individual proprietor or partnership. The term
22 "employes," as used herein, may include retired employes. The
23 policy may provide that the term "employes" shall include the
24 trustees or their employes, or both, if their duties are
25 principally connected with such trusteeship.
26 (4) Under a policy issued to any person or organization to
27 which a policy of group life insurance may be issued or
28 delivered in this Commonwealth to insure any class or classes of
29 individuals that could be insured under such group life policy.
30 (5) Under a policy issued to cover any other substantially
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1 similar group, which in the discretion of the Insurance
2 Commissioner may be subject to the issuance of a group accident
3 and sickness policy or contract.
4 (5.1) Under a policy issued to a group, other than one
5 described in clauses (1) through (5) and under which the
6 Insurance Commissioner finds that the issuance is not contrary
7 to the best interest of the public; the issuance would result in
8 economies of acquisition or administration; and the benefits are
9 reasonable in relation to the premiums charged.
10 (6) A policy delivered or issued for delivery on or after
11 January 1, 1968 under which coverage of a dependent of an
12 employe or other member of the insured group terminates at a
13 specified age shall, with respect to an unmarried child covered
14 by the policy prior to the attainment of the age of nineteen who
15 is incapable of self-sustaining employment by reason of mental
16 retardation or physical handicap and who became so incapable
17 prior to attainment of age nineteen and who is chiefly dependent
18 upon such employe or member for support and maintenance, not so
19 terminate while the insurance of the employe or member remains
20 in force and the dependent remains in such condition, if the
21 insured employe or member has within thirty-one days of such
22 dependent's attainment of the termination age submitted proof of
23 such dependent's incapacity as described herein. The foregoing
24 provisions of this paragraph shall not require an insurer to
25 insure a dependent who is a mentally retarded or physically
26 handicapped child of an employe or other member of the insured
27 group where such dependent does not satisfy the conditions of
28 the group policy as to any requirements for evidence of
29 insurability or other provisions as may be stated in the group
30 policy required for coverage thereunder to take effect. In any
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1 such case the terms of the policy shall apply with regard to the
2 coverage or exclusion from coverage of such dependent.
3 * * *
4 (e) No insurer shall issue in this Commonwealth group
5 accident and health insurance coverage provided under a group
6 policy issued in another state or deliver or issue for delivery
7 in this Commonwealth a certificate of group accident and health
8 insurance evidencing coverage under a group policy issued in
9 another state unless the coverage is in compliance with the
10 requirements of this act or any other applicable act. The
11 provisions of this act shall not apply if a group policy is
12 issued to:
13 (1) An out-of-State trustee of a fund where Commonwealth
14 residents shall not at any time comprise twenty-five per cent or
15 more of the total certificate holders, or where Commonwealth
16 residents shall not at any time comprise the largest share of
17 the total certificate holders, whichever is less.
18 (2) An out-of-State single employer.
19 (3) Trustee of a fund established by any person acting
20 directly as an employer having its principal office located in a
21 state other than this Commonwealth.
22 (4) An association, organized or domiciled in a state other
23 than this Commonwealth, which has a constitution and bylaws, has
24 been organized by other than an insurer, is maintained in good
25 faith for purposes other than that of obtaining insurance, has
26 been in active existence for at least two years, operates from
27 offices other than the insurer's, and is controlled by
28 principals other than the insurer's.
29 (5) A union-negotiated out-of-State trust.
30 (6) Other groups as may be determined discretionally by the
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1 Insurance Commissioner.
2 (f) (1) Subsection (e)(1) shall apply only if the insurer
3 supplies to the Commissioner certification as to its insured
4 trusts and, for each trust, the percentage of Commonwealth
5 certificate holders or the number of certificate holders
6 compared to the total number of certificate holders.
7 (2) The initial certification shall be supplied no later
8 than the effective date of this amendatory subsection, and
9 thereafter, no later than March 1 of each year. The
10 certification shall be filed along with the annual statement but
11 shall not be made a part of the annual statement.
12 (g) (1) For group accident and health insurance coverage
13 provided in this Commonwealth under a policy issued in another
14 State, all group policies, certificates, amendments,
15 endorsements and enrollment forms shall be filed with the
16 Commissioner for approval. The insurer shall also file with the
17 Commissioner evidence of approval in the State where the group
18 policy is issued.
19 (2) Forms filed for approval shall be deemed approved at the
20 expiration of sixty days after filing, unless earlier approved
21 or disapproved by the Commissioner. The Commissioner, by written
22 notice to the insurer, may within the sixty-day period extend
23 the period of approval or disapproval for an additional sixty
24 days.
25 (3) An approval shall become void upon any subsequent notice
26 of disapproval from the Commissioner, or upon any subsequent
27 withdrawal of license or refusal of the Commissioner to
28 relicense any company, association, or exchange, or upon the
29 subsequent passage of an act which would no longer make group
30 policies a fit subject for approval, except that this provision
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1 shall not affect previously issued contracts.
2 (4) Upon any disapproval, the Insurance Commissioner shall
3 notify the insurer in writing, specifying the reason for the
4 disapproval; and within thirty days from the date of mailing the
5 notice to the insurer, the insurer may make written application
6 to the Commissioner for a hearing on the disapproval. The
7 hearing shall be scheduled within a reasonable period of time
8 following receipt of the application. The procedure before the
9 Insurance Commissioner shall be in accordance with the
10 adjudication procedure set forth in Title 2 of the Pennsylvania
11 Consolidated Statutes (relating to administrative law and
12 procedure), and the insurer shall be entitled to judicial review
13 as provided in Title 2.
14 (5) Upon satisfactory evidence of the violation of this
15 section by any person, corporation, insurance company, exchange,
16 order or society, the Insurance Commissioner may discretionally
17 pursue any one or more of the following courses of action:
18 (i) Suspend or revoke the license of the offending person,
19 corporation, insurance company, exchange, order or society.
20 (ii) Refuse, for a period not to exceed the year thereafter,
21 to issue a new license to the person, corporation, insurance
22 company, exchange, order or society.
23 (iii) Impose a fine of not more than one thousand dollars
24 ($1,000) for each and every violation of this subsection.
25 (h) (1) In the case of a policy issued on a group basis, if
26 compensation of any kind will or may be paid to a policyholder
27 or sponsoring or endorsing entity, the insurer shall cause to be
28 distributed to prospective insureds in writing notice that
29 compensation will or may be paid.
30 (2) The notice shall be distributed:
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1 (i) whether compensation is direct or indirect; and
2 (ii) whether compensation is paid to or retained by the
3 policyholder or sponsoring or endorsing entity, or paid to or
4 retained by a third party at the direction of the policyholder
5 or sponsoring or endorsing entity, or any entity affiliated with
6 a sponsoring or endorsing entity by way of ownership, contract,
7 or employment.
8 (3) The notice required by this section shall be placed on
9 or accompany any application or enrollment form provided to
10 prospective insureds.
11 (4) As used in this subsection, a "sponsoring or endorsing
12 entity" means an organization which has arranged for the
13 offering of a program of insurance in a manner which
14 communicates that eligibility for participation in the program
15 is dependent upon affiliation with the organization or that
16 encourages participation in the program.
17 (i) The provisions of this amendatory act shall not
18 invalidate or otherwise affect either group policies legally
19 issued prior to the effective date of this section or
20 certificates in effect prior to the effective date of this
21 section. All group policies or certificates may remain in full
22 force and effect until three years after the effective date of
23 this section, notwithstanding the fact they do not comply with
24 the provisions of this act.
25 (j) Any group policy issued on or after the effective date
26 of this subsection shall comply with the provisions of this act.
27 (k) Certificates issued on or after the effective date of
28 this subsection under a group policy legally issued prior to the
29 effective date of this subsection shall comply with the
30 provisions of this act no later than three years after the
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1 effective date of this subsection if issued to: an employer or
2 trustees of a fund established by an employer or trustees of a
3 fund established by two or more employers none of whom has
4 joined after the effective date of this subsection, labor union,
5 police fraternity, firemen's fraternity, teacher's association
6 or federation and a unit of the National Guard or Naval Militia.
7 Any other certificates issued on or after the effective date of
8 this subsection under a group policy issued prior to the
9 effective date of this subsection shall comply with the
10 provisions of this act.
11 (l) Any certificate issued under a group policy issued on or
12 after the effective date of this subsection shall comply with
13 the provisions of this act.
14 (m) As used in this section, the term "out-of-State single
15 employer" means any person acting directly as an employer and
16 has its principal office located in a state other than this
17 Commonwealth. An "out-of-State trustee" of a fund means a
18 trustee of a fund established by an insurer for an employer or
19 established by two or more persons acting directly as employers
20 in the same industry and which has its principal office located
21 in a state other than this Commonwealth. "Out-of-State coverage"
22 means insurance coverage issued in this Commonwealth and
23 provided under a group policy issued in a state other than this
24 Commonwealth. A "union-negotiated out-of-State trust" means a
25 trust established under a collective bargaining agreement and
26 which is located in a state other than this Commonwealth.
27 Section 2. This act shall take effect in 90 days.
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