PRIOR PRINTER'S NOS. 170, 931, 1024, PRINTER'S NO. 1438
1306, 1339
No. 176 Session of 1997
INTRODUCED BY HOLL, JANUARY 21, 1997
SENATE AMENDMENTS TO HOUSE AMENDMENTS, OCTOBER 28, 1997
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 CONTENTS OR <--
12 PARTS OF POLICIES AND FOR APPLICATIONS FOR POLICIES;
13 providing mastectomy and breast cancer reconstructive surgery
14 coverage standards for health insurance policies; REGULATING <--
15 INDIVIDUAL ACCESS TO HEALTH CARE INSURANCE; AND PROVIDING FOR
16 PENALTIES.
17 The General Assembly of the Commonwealth of Pennsylvania
18 hereby enacts as follows:
19 Section 1. The act of May 17, 1921 (P.L.682, No.284), known <--
20 as The Insurance Company Law of 1921, is amended by adding a
21 section to read:
22 SECTION 1. SECTION 318 OF THE ACT OF MAY 17, 1921 (P.L.682, <--
23 NO.284), KNOWN AS THE INSURANCE COMPANY LAW OF 1921, IS AMENDED
24 TO READ:
1 SECTION 318. [WHEN APPLICATION, CONSTITUTION, BY-LAWS, AND
2 RULES ARE CONSIDERED PART OF POLICY.--ALL INSURANCE POLICIES,
3 ISSUED BY STOCK OR MUTUAL INSURANCE COMPANIES OR ASSOCIATIONS
4 DOING BUSINESS IN THIS STATE, IN WHICH THE APPLICATION OF THE
5 INSURED, THE CONSTITUTION, BY-LAWS, OR OTHER RULES OF THE
6 COMPANY FORM PART OF THE POLICY OR CONTRACT BETWEEN THE PARTIES
7 THERETO, OR HAVE ANY BEARING ON SAID CONTRACT, SHALL CONTAIN, OR
8 HAVE ATTACHED TO SAID POLICIES, CORRECT COPIES OF THE
9 APPLICATION AS SIGNED BY THE APPLICANT, OR THE CONSTITUTION, BY-
10 LAWS, OR OTHER RULES REFERRED TO; AND, UNLESS SO ATTACHED AND
11 ACCOMPANYING THE POLICY, NO SUCH APPLICATION, CONSTITUTION, OR
12 BY-LAWS, OR OTHER RULES SHALL BE RECEIVED IN EVIDENCE IN ANY
13 CONTROVERSY BETWEEN THE PARTIES TO, OR INTERESTED IN, THE
14 POLICY, NOR SHALL SUCH APPLICATION, CONSTITUTION, BY-LAWS, OR
15 OTHER RULES BE CONSIDERED A PART OF THE POLICY OR CONTRACT
16 BETWEEN SUCH PARTIES.] STATEMENT BY INSURED AS EVIDENCE.--NO
17 STATEMENT MADE BY AN INSURED SHALL BE RECEIVED IN EVIDENCE IN
18 ANY CONTROVERSY BETWEEN THE PARTIES TO, OR A CLAIMANT OR
19 CLAIMANTS INTERESTED IN, A LIFE INSURANCE OR HEALTH AND ACCIDENT
20 INSURANCE POLICY UNLESS A COPY OF THE DOCUMENT CONTAINING THE
21 STATEMENT IS OR HAS BEEN FURNISHED TO SUCH PERSON OR THOSE
22 LEGALLY ACTING ON HIS BEHALF IN THE CONTROVERSY.
23 SECTION 2. SECTION 623 OF THE ACT, ADDED MAY 25, 1951
24 (P.L.417, NO.99), IS AMENDED TO READ:
25 SECTION 623. APPLICATION.--[(A) THE INSURED SHALL NOT BE
26 BOUND BY ANY STATEMENT MADE IN AN APPLICATION FOR A POLICY
27 UNLESS A COPY OF SUCH APPLICATION IS ATTACHED TO OR ENDORSED ON
28 THE POLICY WHEN ISSUED AS A PART THEREOF. IF ANY SUCH POLICY
29 DELIVERED OR ISSUED FOR DELIVERY TO ANY PERSON IN THIS
30 COMMONWEALTH SHALL BE REINSTATED OR RENEWED, AND THE INSURED OR
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1 THE BENEFICIARY OR ASSIGNEE OF SUCH POLICY SHALL MAKE WRITTEN
2 REQUEST TO THE INSURER FOR A COPY OF THE APPLICATION, IF ANY,
3 FOR SUCH REINSTATEMENT OR RENEWAL, THE INSURER SHALL, WITHIN
4 FIFTEEN DAYS AFTER THE RECEIPT OF SUCH REQUEST AT ITS HOME
5 OFFICE OR ANY BRANCH OFFICE OF THE INSURER, DELIVER OR MAIL TO
6 THE PERSON MAKING SUCH REQUEST, A COPY OF SUCH APPLICATION. IF
7 SUCH COPY SHALL NOT BE SO DELIVERED OR MAILED, THE INSURER SHALL
8 BE PRECLUDED FROM INTRODUCING SUCH APPLICATION AS EVIDENCE IN
9 ANY ACTION OR PROCEEDING BASED UPON OR INVOLVING SUCH POLICY OR
10 ITS REINSTATEMENT OR RENEWAL.
11 (B)] NO ALTERATION OF ANY WRITTEN APPLICATION FOR [ANY] SUCH
12 A POLICY SHALL BE MADE BY ANY PERSON OTHER THAN THE APPLICANT
13 WITHOUT HIS WRITTEN CONSENT, EXCEPT THAT INSERTIONS MAY BE MADE
14 BY THE INSURER, FOR ADMINISTRATIVE PURPOSES ONLY, IN SUCH MANNER
15 AS TO INDICATE CLEARLY THAT SUCH INSERTIONS ARE NOT TO BE
16 ASCRIBED TO THE APPLICANT.
17 SECTION 3. THE ACT IS AMENDED BY ADDING A SECTION TO READ:
18 Section 633. Mastectomy and Breast Cancer Reconstruction.--
19 (a) (1) No health insurance policy delivered, issued, executed
20 or renewed in this Commonwealth on or after the effective date
21 of this section shall require outpatient care following a
22 mastectomy performed in a health care facility.
23 (2) Policies described in clause (1) of this subsection
24 shall provide coverage for inpatient care following a mastectomy
25 for the length of stay that the treating physician determines is
26 necessary to meet generally accepted criteria for safe
27 discharge.
28 (3) Such policies shall also provide coverage for a home
29 health care visit that the treating physician determines is
30 necessary within forty-eight hours after discharge, when the
19970S0176B1438 - 3 -
1 discharge occurs within forty-eight hours following admission
2 for the mastectomy.
3 (4) Coverage under this section shall, however, remain
4 subject to any copayment, coinsurance or deductible amounts set
5 forth in the policy.
6 (b) (1) Every health care policy which is delivered, issued
7 for delivery, renewed, extended or modified in this Commonwealth
8 by a health care insurer which provides coverage for the
9 surgical procedure known as mastectomy shall also include
10 coverage for prosthetic devices and reconstructive surgery
11 incident to any mastectomy.
12 (2) Coverage for prosthetic devices and reconstructive
13 surgery shall be subject to the deductible and coinsurance
14 conditions applied to the mastectomy and all other terms and
15 conditions applicable to other benefits.
16 (3) The coverage for prosthetic devices inserted during
17 reconstructive surgery and reconstructive surgery pursuant to
18 this section may be limited to such surgical procedures
19 performed within six years of the date of the mastectomy.
20 (c) This section shall not apply to the following types of
21 policies:
22 (1) Accident only.
23 (2) Limited benefit.
24 (3) Credit.
25 (4) Dental.
26 (5) Vision.
27 (6) Specified disease.
28 (7) Medicare supplement.
29 (8) Civilian Health and Medical Program of the Uniformed
30 Services (CHAMPUS) supplement.
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1 (9) Long-term care or disability income.
2 (10) Workers' compensation.
3 (11) Automobile medical payment.
4 (d) (1) The term "health insurance policy" when used in
5 this section means any individual or group health insurance
6 policy, subscriber contract, certificate or plan which provides
7 medical or health care coverage by any health care facility or
8 licensed health care provider which is offered by or is governed
9 under this act or any of the following:
10 (i) Subarticle (f) of Article IV of the act of June 13, 1967
11 (P.L.31, No.21), known as the "Public Welfare Code."
12 (ii) The act of December 29, 1972 (P.L.1701, No.364), known
13 as the "Health Maintenance Organization Act."
14 (iii) The act of May 18, 1976 (P.L.123, No.54), known as the
15 "Individual Accident and Sickness Insurance Minimum Standards
16 Act."
17 (iv) The act of December 14, 1992 (P.L.835, No.134), known
18 as the "Fraternal Benefit Societies Code."
19 (v) A nonprofit corporation subject to 40 Pa.C.S. Chs. 61
20 (relating to hospital plan corporations) and 63 (relating to
21 professional health services plan corporations).
22 (2) The term "insurer" when used in this section means any
23 entity that issues an individual or group health insurance
24 policy, contract or plan described under clause (1) of this
25 subsection.
26 (3) The term "mastectomy" when used in this section means
27 the removal of all or part of the breast for medically necessary
28 reasons, as determined by a licensed physician.
29 (4) The term "prosthetic devices" when used in this section
30 means the use of initial and subsequent artificial devices to
19970S0176B1438 - 5 -
1 replace the removed breast or portions thereof, pursuant to an
2 order of the patient's physician.
3 (5) The term "reconstructive surgery" when used in this
4 section means a surgical procedure performed on one breast or
5 both breasts following a mastectomy, as determined by the
6 treating physician, to reestablish symmetry between the two
7 breasts or alleviate functional impairment caused by the
8 mastectomy. The term "reconstructive surgery" shall include, but
9 is not limited to, augmentation mammoplasty, reduction
10 mammoplasty and mastopexy.
11 (6) The term "symmetry between breasts" when used in this
12 section means approximate equality in size and shape of the
13 nondiseased breast with the diseased breast after definitive
14 reconstructive surgery on the diseased or nondiseased breast has
15 been performed.
16 SECTION 4. THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ: <--
17 ARTICLE X-A.
18 HEALTH CARE INSURANCE INDIVIDUAL ACCESSIBILITY.
19 SECTION 1001-A. PURPOSE.--IT IS NECESSARY TO MAINTAIN THE
20 COMMONWEALTH'S SOVEREIGNTY OVER THE REGULATION OF HEALTH
21 INSURANCE IN THIS COMMONWEALTH BY COMPLYING WITH THE
22 REQUIREMENTS OF THE HEALTH INSURANCE PORTABILITY AND
23 ACCOUNTABILITY ACT OF 1996 (PUBLIC LAW 104-191, 110 STAT. 1936).
24 THIS ARTICLE IS INTENDED TO MEET THOSE REQUIREMENTS WHILE
25 RETAINING THE COMMONWEALTH'S AUTHORITY TO REGULATE HEALTH
26 INSURANCE IN THIS COMMONWEALTH.
27 SECTION 1002-A. DEFINITIONS.--(A) AS USED IN THIS ARTICLE,
28 THE FOLLOWING WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO
29 THEM IN THIS SECTION UNLESS THE CONTEXT CLEARLY INDICATES
30 OTHERWISE:
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1 "COMMISSIONER." THE INSURANCE COMMISSIONER OF THE
2 COMMONWEALTH.
3 "DEPARTMENT." THE INSURANCE DEPARTMENT OF THE COMMONWEALTH.
4 "DESIGNATED INSURERS." AN INSURER REQUIRED TO OFFER HEALTH
5 COVERAGE TO ELIGIBLE INDIVIDUALS UNDER SECTION 1003-A.
6 "ELIGIBLE INDIVIDUAL." A RESIDENT OF THIS COMMONWEALTH WHO
7 MEETS THE DEFINITION IN SECTION 2741(B) OF THE FEDERAL HEALTH
8 INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (P.L.104-
9 191, 110 STAT. 1936).
10 "FEDERAL ACT." THE FEDERAL HEALTH INSURANCE PORTABILITY AND
11 ACCOUNTABILITY ACT OF 1996 (P.L.104-191, 110 STAT. 1936).
12 "FRATERNAL BENEFIT SOCIETY." AN ENTITY HOLDING A CURRENT
13 CERTIFICATE OF AUTHORITY IN THIS COMMONWEALTH UNDER THE ACT OF
14 DECEMBER 14, 1992 (P.L.835, NO.124), KNOWN AS THE "FRATERNAL
15 BENEFIT SOCIETIES CODE."
16 "HEALTH MAINTENANCE ORGANIZATION" OR "HMO." AN ENTITY
17 HOLDING A CURRENT CERTIFICATE OF AUTHORITY UNDER THE ACT OF
18 DECEMBER 29, 1972 (P.L.1701, NO.364), KNOWN AS THE "HEALTH
19 MAINTENANCE ORGANIZATION ACT."
20 "HOSPITAL PLAN CORPORATION." AN ENTITY HOLDING A CURRENT
21 CERTIFICATE OF AUTHORITY ORGANIZED AND OPERATED UNDER 40 PA.C.S.
22 CH. 61 (RELATING TO HOSPITAL PLAN CORPORATIONS).
23 "INSURER." A FOREIGN OR DOMESTIC INSURANCE COMPANY,
24 ASSOCIATION OR EXCHANGE, HEALTH MAINTENANCE ORGANIZATION,
25 HOSPITAL PLAN CORPORATION, PROFESSIONAL HEALTH SERVICES PLAN
26 CORPORATION, FRATERNAL BENEFIT SOCIETY OR RISK-ASSUMING
27 PREFERRED PROVIDER ORGANIZATION. THE TERM DOES NOT INCLUDE A
28 GROUP HEALTH PLAN AS DEFINED IN SECTION 2791 OF THE FEDERAL
29 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996
30 (P.L.104-191, 110 STAT. 1936).
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1 "MEDICAL LOSS RATIO." THE RATIO OF INCURRED MEDICAL CLAIM
2 COSTS TO EARNED PREMIUMS.
3 "PREFERRED PROVIDER ORGANIZATION" OR "PPO." AN ENTITY
4 HOLDING A CURRENT CERTIFICATE OF AUTHORITY ORGANIZED AND
5 OPERATED UNDER SECTION 630 OF THIS ACT.
6 "PROFESSIONAL HEALTH SERVICES PLAN CORPORATION." AN ENTITY
7 HOLDING A CURRENT CERTIFICATE OF AUTHORITY ORGANIZED AND
8 OPERATED UNDER 40 PA.C.S. CH. 63 (RELATING TO PROFESSIONAL
9 HEALTH SERVICES PLAN CORPORATIONS). THE TERM DOES NOT INCLUDE
10 DENTAL SERVICE CORPORATIONS OR OPTOMETRIC SERVICE CORPORATIONS,
11 AS DEFINED UNDER 40 PA.C.S. § 6302(A) (RELATING TO DEFINITIONS).
12 (B) THE WORDS, TERMS AND DEFINITIONS FOUND IN THE FEDERAL
13 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996
14 (P.L.104-191, 119 STAT. 1936), INCLUDING, BUT NOT LIMITED TO,
15 THOSE DEFINITIONS IN SECTION 2791 OF THAT ACT, ARE HEREBY
16 ADOPTED FOR PURPOSES OF IMPLEMENTING THIS ARTICLE UNLESS
17 OTHERWISE PROVIDED BY THIS ARTICLE. THE TERM "HEALTH INSURANCE
18 ISSUER" FOUND IN SECTION 2791(B)(2) OF THE FEDERAL HEALTH
19 INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (PUBLIC LAW
20 104-191, 110 STAT. 1936) SHALL HAVE THE SAME MEANING AS
21 "INSURER" IN SUBSECTION (A).
22 SECTION 1003-A. DESIGNATED INSURERS.--(A) THE FOLLOWING
23 INSURERS SHALL COMPLY WITH SECTIONS 1004-A AND 1005-A IN ORDER
24 TO IMPLEMENT THE ALTERNATIVE MECHANISM REQUIREMENTS OF THE
25 FEDERAL ACT:
26 (1) HOSPITAL PLAN CORPORATIONS.
27 (2) PROFESSIONAL HEALTH SERVICES PLAN CORPORATIONS.
28 (B) IF A DESIGNATED INSURER OWNS A HOSPITAL PLAN CORPORATION
29 OR A PROFESSIONAL HEALTH SERVICES PLAN CORPORATION WHICH
30 PROVIDES SERVICES WITHIN SUBSTANTIALLY THE SAME SERVICE AREA AS
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1 THE PARENT ORGANIZATION, THE SUBSIDIARY HOSPITAL PLAN
2 CORPORATION AND PROFESSIONAL HEALTH SERVICES PLAN CORPORATION
3 ARE NOT REQUIRED TO OFFER COVERAGE TO ELIGIBLE INDIVIDUALS IF
4 THE PARENT ORGANIZATION OFFERS COVERAGE TO ELIGIBLE INDIVIDUALS
5 UNDER SECTIONS 1004-A AND 1005-A.
6 SECTION 1004-A. ALTERNATIVE MECHANISM IN INDIVIDUAL
7 MARKET.--(A) A DESIGNATED INSURER SHALL:
8 (1) OFFER CONTINUOUS YEAR-ROUND OPEN ENROLLMENT TO ELIGIBLE
9 INDIVIDUALS.
10 (2) OFFER TO ELIGIBLE INDIVIDUALS, UPON REQUEST, A CHOICE OF
11 AT LEAST TWO INDIVIDUAL HEALTH INSURANCE POLICIES, AS SPECIFIED
12 IN SECTION 1005-A.
13 (3) ISSUE TO ELIGIBLE INDIVIDUALS, UPON REQUEST, AN
14 INDIVIDUAL POLICY THAT MEETS THE REQUIREMENTS OF SECTION 1005-A.
15 (B) UNLESS AN ELIGIBLE INDIVIDUAL CHOOSES TO PURCHASE A
16 POLICY PURSUANT TO SECTION 1005-A(C), A POLICY OFFERED OR ISSUED
17 TO AN ELIGIBLE INDIVIDUAL UNDER SECTION 1005-A SHALL NOT CONTAIN
18 PREEXISTING CONDITION LIMITATIONS OR RESTRICTIONS.
19 (C) DESIGNATED INSURERS SHALL PROVIDE FINANCIAL
20 SUBSIDIZATION OF POLICIES ISSUED TO ELIGIBLE INDIVIDUALS.
21 DESIGNATED INSURERS SHALL FILE FOR REVIEW BY THE COMMISSIONER A
22 METHOD FOR FINANCIAL SUBSIDIZATION IN ALL RATE FILINGS ON POLICY
23 CHOICES FOR ELIGIBLE INDIVIDUALS. THE TOTAL SUBSIDY PROVIDED BY
24 THE DESIGNATED INSURER TO ALL OF ITS PRODUCTS SHALL NOT BE
25 AFFECTED BY THE REQUIREMENT TO SUBSIDIZE PRODUCTS ISSUED TO
26 ELIGIBLE INDIVIDUALS.
27 SECTION 1005-A. POLICY CHOICE FOR ELIGIBLE INDIVIDUALS.--(A)
28 DESIGNATED INSURERS SHALL OFFER ELIGIBLE INDIVIDUALS A CHOICE OF
29 POLICIES. THE CHOICES SHALL INCLUDE:
30 (1) AT LEAST ONE POLICY THAT IS COMPARABLE TO A STANDARD
19970S0176B1438 - 9 -
1 HEALTH INSURANCE POLICY OR A COMPREHENSIVE HEALTH INSURANCE
2 POLICY BEING ACTIVELY MARKETED BY THE INSURER TO PERSONS OTHER
3 THAN ELIGIBLE INDIVIDUALS IN THE VOLUNTARY INDIVIDUAL MARKET.
4 (2) AT LEAST ONE OTHER POLICY THAT IS BEING ACTIVELY
5 MARKETED BY THE INSURER TO PERSONS OTHER THAN ELIGIBLE
6 INDIVIDUALS IN THE VOLUNTARY INDIVIDUAL MARKET.
7 (B) EACH DESIGNATED INSURER SHALL FILE WITH AND IDENTIFY TO
8 THE COMMISSIONER THE COMPREHENSIVE POLICY FORM OR THE STANDARD
9 POLICY FORM THE INSURER INTENDS TO OFFER TO ELIGIBLE INDIVIDUALS
10 UNDER SUBSECTION (A)(1). A DESIGNATED INSURER MAY ELECT TO
11 IDENTIFY MORE THAN ONE COMPREHENSIVE OR STANDARD POLICY FORM
12 WHICH WILL BE OFFERED TO ELIGIBLE INDIVIDUALS. EACH POLICY FORM
13 SHALL CONTAIN BENEFITS AND LIMITS COMPARABLE TO POLICIES BEING
14 ACTIVELY MARKETED TO PERSONS OTHER THAN ELIGIBLE INDIVIDUALS IN
15 THE VOLUNTARY INDIVIDUAL MARKET. THE POLICY FORMS SHALL BE
16 CONSIDERED COMPARABLE EVEN IF THE POLICIES MARKETED IN THE
17 VOLUNTARY INDIVIDUAL MARKET INCLUDE A PREEXISTING CONDITION
18 EXCLUSION.
19 (C) NOTHING IN THIS ARTICLE SHALL PROHIBIT AN ELIGIBLE
20 INDIVIDUAL FROM PURCHASING A POLICY WHICH INCLUDES A PREEXISTING
21 CONDITION PROVISION OR IS NOT OTHERWISE OFFERED UNDER THIS
22 SECTION FROM A DESIGNATED INSURER OR ANY OTHER INSURER.
23 SECTION 1006-A. COORDINATION OF BENEFITS.--BENEFITS PROVIDED
24 UNDER INDIVIDUAL POLICIES BY AN INSURER MAY BE SUBJECT TO
25 COORDINATION OF BENEFITS WITH ANY OTHER GROUP POLICY, INDIVIDUAL
26 POLICY, FEDERAL OR STATE GOVERNMENT PROGRAM, LABOR-MANAGEMENT
27 TRUSTEE PLAN, UNION WELFARE PLAN, EMPLOYER ORGANIZATION PLAN OR
28 EMPLOYEE BENEFIT ORGANIZATION PLAN, EXCEPT AS OTHERWISE PROVIDED
29 BY LAW.
30 SECTION 1007-A. EXCESSIVE LOSS PROVISION.--(A) AT ANY TIME,
19970S0176B1438 - 10 -
1 THE DESIGNATED INSURER MAY FILE FOR A RATE ADJUSTMENT FOR
2 PRODUCTS OFFERED UNDER SECTION 1005-A WITH THE COMMISSIONER IN
3 ACCORDANCE WITH THE ACT OF DECEMBER 18, 1996 (P.L.1066, NO.159),
4 KNOWN AS THE "ACCIDENT AND HEALTH FILING REFORM ACT."
5 (B) THE DESIGNATED INSURER MAY REQUEST THAT THE COMMISSIONER
6 CONDUCT A HEARING IF:
7 (1) THE LOSSES EXPERIENCED BY THE DESIGNATED INSURER ON
8 PRODUCTS OFFERED UNDER SECTION 1005-A(A)(1) OR BY ELIGIBLE
9 INDIVIDUALS UNDER SECTION 1005-A(A)(2) REQUIRE A RATE INCREASE
10 OF GREATER THAN TWENTY PER CENTUM (20%) AND THE LOSSES ARE IN
11 EXCESS OF A ONE HUNDRED TEN PER CENTUM (110%) MEDICAL LOSS RATIO
12 FOR ANY CALENDAR YEAR; OR
13 (2) THE DESIGNATED INSURER REQUESTED A RATE INCREASE FOR
14 PRODUCTS UNDER SECTION 1005-A(A) AND HAS REASON TO BELIEVE THAT
15 CONTINUATION AS A DESIGNATED INSURER WILL HAVE A DETRIMENTAL
16 IMPACT ON ITS FINANCIAL CONDITION OR SOLVENCY.
17 (C) UPON THE REQUEST OF A DESIGNATED INSURER UNDER
18 SUBSECTION (B), THE COMMISSIONER SHALL CONDUCT A PUBLIC HEARING
19 REGARDING THE RATE FILING, MEDICAL LOSS RATIO OR THE IMPACT THAT
20 BEING A DESIGNATED INSURER IS HAVING ON THE DESIGNATED INSURER'S
21 SOLVENCY. THE HEARING SHALL BE HELD AS PROVIDED FOR IN 2 PA.C.S.
22 CH. 5 SUBCH. A (RELATING TO PRACTICE AND PROCEDURE OF
23 COMMONWEALTH AGENCIES). FOLLOWING THE HEARING, THE COMMISSIONER
24 SHALL DETERMINE THE EXTENT OF THE IMPACT, IF ANY, OF BEING A
25 DESIGNATED INSURER UNDER THIS ARTICLE ON THE DESIGNATED
26 INSURER'S RATE FILING, MEDICAL LOSS RATIO, OVERALL OPERATIONS
27 AND SOLVENCY, AND SHALL DO ONE OR MORE OF THE FOLLOWING:
28 (1) GRANT, MODIFY OR DENY THE REQUESTED RATE FILING; OR
29 (2) REQUEST TO WITHDRAW FROM THE APPROVED ALTERNATIVE
30 MECHANISM AND TO AUTHORIZE IMPLEMENTATION OF THE FEDERAL DEFAULT
19970S0176B1438 - 11 -
1 STANDARDS SET FORTH IN SECTION 2741 OF THE FEDERAL ACT.
2 SECTION 1008-A. REVIEW OF FILINGS.--THE DEPARTMENT SHALL
3 REVIEW FILINGS SUBMITTED UNDER SECTIONS 1004-A(C), 1005-A(B) AND
4 1007-A(A) IN ACCORDANCE WITH THE ACT OF DECEMBER 18, 1996
5 (P.L.1066, NO.159), KNOWN AS THE "ACCIDENT AND HEALTH FILING
6 REFORM ACT."
7 SECTION 1009-A. CONVERSION POLICIES.--(A) NOTIFICATION OF
8 THE CONVERSION PRIVILEGE SHALL BE INCLUDED WITH EACH CERTIFICATE
9 OF COVERAGE ISSUED UNDER SECTION 621.2(D). EACH CERTIFICATE
10 HOLDER IN AN INSURED GROUP SHALL BE GIVEN WRITTEN NOTIFICATION
11 OF THE CONVERSION PRIVILEGE AND ITS DURATION WITHIN A PERIOD
12 BEGINNING FIFTEEN (15) DAYS BEFORE AND ENDING THIRTY (30) DAYS
13 AFTER THE DATE OF TERMINATION OF THE GROUP COVERAGE. THE
14 CERTIFICATE HOLDER OR THE HOLDER'S DEPENDENT SHALL HAVE NO LESS
15 THAN THIRTY-ONE (31) DAYS FOLLOWING NOTIFICATION TO EXERCISE THE
16 CONVERSION PRIVILEGE. WRITTEN NOTIFICATION PROVIDED BY THE
17 CONTRACT HOLDER AND SUPPLIED TO THE CERTIFICATE HOLDER OR MAILED
18 TO THE CERTIFICATE HOLDER'S LAST KNOWN ADDRESS OR THE LAST
19 ADDRESS FURNISHED TO THE INSURER BY THE CONTRACT HOLDER OR
20 EMPLOYER SHALL CONSTITUTE FULL COMPLIANCE WITH THIS SECTION.
21 (B) THE PREMIUM RATES FOR INDIVIDUALS WHO PURCHASE A
22 COMPARABLE GROUP CONVERSION POLICY OFFERED PURSUANT TO
23 APPLICABLE LAW SHALL BE LIMITED TO ONE HUNDRED TWENTY PER CENTUM
24 (120%) OF THE APPROVED PREMIUM RATES FOR COMPARABLE GROUP
25 COVERAGE.
26 SECTION 1010-A. PENALTIES.--UPON SATISFACTORY EVIDENCE OF A
27 VIOLATION OF THIS ARTICLE BY AN INSURER OR OTHER PERSON, THE
28 COMMISSIONER MAY PURSUE ANY ONE OR MORE OF THE FOLLOWING
29 PENALTIES:
30 (1) SUSPEND, REVOKE OR REFUSE TO RENEW THE LICENSE OF THE
19970S0176B1438 - 12 -
1 INSURER OR OTHER PERSON.
2 (2) ENTER A CEASE AND DESIST ORDER.
3 (3) IMPOSE A CIVIL PENALTY OF NOT MORE THAN FIVE THOUSAND
4 DOLLARS ($5,000).
5 (4) IMPOSE A CIVIL PENALTY OF NOT MORE THAN TEN THOUSAND
6 DOLLARS ($10,000) FOR A WILFUL VIOLATION OF THIS ARTICLE.
7 (B) PENALTIES IMPOSED ON AN INSURER OR OTHER PERSON UNDER
8 THIS ARTICLE SHALL NOT EXCEED FIVE HUNDRED DOLLARS ($500,000) IN
9 THE AGGREGATE DURING A SINGLE CALENDAR YEAR.
10 SECTION 1011-A. REGULATIONS.--THE DEPARTMENT MAY PROMULGATE
11 REGULATIONS AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THIS
12 ARTICLE.
13 SECTION 1012-A. EXPIRATION.--THIS ARTICLE SHALL EXPIRE ON
14 DECEMBER 31, 2000.
15 Section 2. This act 5. THE ADDITION OF SECTION 633 OF THE <--
16 ACT shall apply to all insurance policies, subscriber contracts
17 and group insurance certificates issued under any group master
18 policy delivered or issued for delivery on or after the
19 effective date of this act. This act SECTION 633 OF THE ACT. <--
20 SECTION 633 OF THE ACT shall also apply to all renewals of
21 contracts on any renewal date which is on or after the effective
22 date of this act SECTION 633 OF THE ACT. <--
23 Section 3. This act shall take effect in 90 days. <--
24 SECTION 6. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: <--
25 (1) THE AMENDMENT OF SECTIONS 318 AND 623 OF THE ACT
26 SHALL TAKE EFFECT IMMEDIATELY.
27 (2) THE ADDITION OF ARTICLE X-A OF THE ACT SHALL TAKE
28 EFFECT ON JANUARY 1, 1998, OR IMMEDIATELY, WHICHEVER IS
29 LATER.
30 (3) THIS SECTION SHALL TAKE EFFECT IMMEDIATELY.
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1 (4) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 90
2 DAYS.
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