GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2021
SESSION LAW 2021-169
SENATE BILL 85
AN ACT to allow vision service plans and to make technical and CONFORMING changes to chapter 58 of the general statutes.
The General Assembly of North Carolina enacts:
Part I. Allow vision service Plans
SECTION 1. Article 65 of Chapter 58 of the General Statutes reads as rewritten:
"Article 65.
"Hospital, Medical and
Dental Hospital Service Corporations.
"Part 1. In General.
"§ 58‑65‑1. Regulation and definitions; application of other laws; profit and foreign corporations prohibited.
(a) Any corporation
organized under the general corporation laws of the State of North Carolina for
the purpose of maintaining and operating a nonprofit hospital or medical or
dental dental, health care, medical, or vision service plan whereby hospital
care or medical or dental service dental, health care, medical, or
vision care or services may be provided in whole or in part by the
corporation or by hospitals, physicians, optometrists, or dentists
participating in the plan, or plans, shall be governed by this Article and
Article 66 of this Chapter and shall be exempt from all other provisions of the
insurance laws of this State, unless otherwise provided.
The term "hospital service
plan" as used in this Article includes the contracting for certain fees
for, or furnishing of, hospital care, laboratory facilities, X‑ray
facilities, drugs, appliances, anesthesia, nursing care, operating and
obstetrical equipment, accommodations or any other services authorized or
permitted to be furnished by a hospital under the laws of the State of North
Carolina and approved by the North Carolina Hospital Association or the
American Medical Association.
The term "medical service
plan" as used in this Article includes the contracting for the payment of
fees toward, or furnishing of, medical, obstetrical, surgical or any other
professional services authorized or permitted to be furnished by a duly
licensed physician or other provider listed in G.S. 58‑50‑30.
The term "medical services plan" also includes the contracting for
the payment of fees toward, or furnishing of, professional medical services
authorized or permitted to be furnished by a duly licensed provider of health
services licensed under Chapter 90 of the General Statutes.
The term "dental service
plan" as used in this Article includes contracting for the payment of fees
toward, or furnishing of dental or any other professional services authorized
or permitted to be furnished by a duly licensed dentist.
The term "hospital service
corporation" as used in this Article is intended to mean any nonprofit
corporation operating a hospital or medical or dental service plan, as defined
in this section. Any corporation organized and subject to the provisions of
this Article, the certificate of incorporation of which authorizes the
operation of either a hospital or medical or dental service plan, or any or all
of them, may, with the approval of the Commissioner, issue subscribers'
contracts or certificates approved by the Commissioner of Insurance, for the
payment of either hospital or medical or dental fees, or the furnishing of such
services, or any or all of them, and may enter into contracts with hospitals
for physicians or dentists, or any or all of them, for the furnishing of fees
or services respectively under a hospital or medical or dental service plan, or
any or all of them.
The term "preferred
provider" as used in this Article with respect to contracts,
organizations, policies or otherwise means a health care service provider who
has agreed to accept, from a corporation organized for the purposes authorized
by this Article or other applicable law, special reimbursement terms in
exchange for providing services to beneficiaries of a plan administered
pursuant to this Article.
The term "full service
corporation" as used in this Article means any corporation organized under
the provisions of this Article that offers a medical service plan or a hospital
service plan.
The term "single service
corporation" as used in this Article means any corporation organized under
the provisions of this Article that offers only a dental service plan.
(a1) With the approval of the Commissioner, any corporation organized and subject to the provisions of this Article, the certificate of authority of which authorizes the operation of either a dental, health care, medical, or vision service plan, or any combination of those plans, may do both of the following:
(1) Issue subscribers' contracts or certificates for the provision of, or the payment of fees for, dental, health care, medical, or vision service or care, or any or all of those services or care as applicable.
(2) Enter into contracts with hospitals, physicians, dentists, optometrists, or any or all of those health care providers, for the provision of, or the payment of fees for, services or care under a dental, health care, medical, or vision service plan, or any combination of those plans.
(b) through (c) Repealed by Session Laws 2001‑297.
(d) No foreign or alien
hospital or medical or dental service corporation as herein defined shall
be authorized to do business in this State.
"§ 58‑65‑1.1. Definitions applicable to this Article.
The following definitions apply in this Article:
(1) Dental service plan. A contract for the provision of, or the payment of fees for, dental care or dental services, including any other professional services authorized or permitted to be provided by a duly licensed dentist.
(2) Full‑service corporation. Any corporation organized under the provisions of this Article that offers a medical service plan or a health care service plan.
(3) Health care service plan. Any contract for the provision of, or the payment of fees for, hospital care, laboratory facilities, X‑ray facilities, drugs, health care appliances, anesthesia, nursing care, operating and obstetrical equipment, or health care accommodations, including any other services permitted to be provided by a hospital under the laws of this State and approved by the North Carolina Hospital Association or the American Medical Association.
(4) Hospital service corporation. Any nonprofit corporation that operates one or any combination of the following:
a. Dental service plan.
b. Health care service plan.
c. Medical service plan.
d. Vision service plan.
(5) Medical service plan. Any contract for the furnishing of, or the payment of fees for, any of the following:
a. Medical, obstetrical, surgical, or any other professional services authorized or permitted to be provided by a duly licensed physician or other provider listed in G.S. 58‑50‑30.
b. Professional medical services authorized or permitted to be provided by a health care provider licensed under Chapter 90 of the General Statutes.
(6) Preferred provider. A health care provider who has agreed to accept, from a corporation organized for the purposes authorized by this Article, special reimbursement terms in exchange for providing services to beneficiaries of a plan administered pursuant to this Article.
(7) Single‑service corporation. Any corporation organized under the provisions of this Article that offers any of the following:
a. Only a dental service plan.
b. Only a vision service plan.
c. Both a dental service plan and a vision service plan, but no other plans.
(8) Vision service plan. Any contract for the provision of, or the payment of fees for, vision care or vision services, including any other professional services permitted to be provided by a duly licensed optometrist or ophthalmologist.
"§ 58‑65‑2. Other laws applicable to all service corporations.
The following provisions of this Chapter are applicable to hospital service corporations that are subject to this Article:
G.S. 58‑2‑125................... Authority over all insurance companies; no exemptions from license.
G.S. 58‑50‑290................. Health benefit plans or insurers contracting for the provision of dental services; no limitation on fees for noncovered services.
G.S. 58‑50‑300................. Health benefit plans or insurers contracting for the provision of vision services or materials; no limitation on fees for noncovered services or materials.
G.S. 58‑51‑15(a)(2)b........ Accident and health policy provisions.
G.S. 58‑51‑17................... Portability for accident and health insurance.
G.S. 58‑51‑25................... Policy coverage to continue as to children with an intellectual or physical disability or dependent students on medically necessary leave of absence.
G.S. 58‑51‑95(h),(i),(j)..... Approval by Commissioner of forms, classification and rates; hearings; exceptions.
"§ 58‑65‑5. Contract for joint assumption or underwriting of risks.
Any hospital service corporation
organized or regulated by the provisions of this Article and Article 66 of this
Chapter is authorized to enter into such contracts with any other firm
or corporation for joint assumption or underwriting of any part or all part,
or all, of any risks undertaken upon such terms and conditions as
that are approved by the Commissioner of Insurance.
"§ 58‑65‑10. Premium or dues paid by
employer, employee, principal or agent or jointly and severally.paid.
(a) Any premium or dues charged by a corporation
regulated under the provisions of this Article and Article 66 of this Chapter
may be paid by the employer, employee, principal, or agent, or jointly and
severally. agent. The term "employer" as used herein in
this section includes counties, municipal corporations, and all departments
or subdivisions of the State, county, municipal corporation, and official
boards including city and county boards of alcoholic control, together with all
others occupying the status of employer and employee, principal and agent.
(b) Any premium or dues charged by a corporation regulated under the provisions of this Article and Article 66 of this Chapter may be paid jointly and severally.
"§ 58‑65‑25.
Hospital, physician and dentist physician, dentist, and optometrist contracts.
(a) Any full‑service
corporation organized under this Article may enter into contracts for the
rendering of hospital service to any of its subscribers by hospitals approved
by the American Medical Association and/or or the North Carolina
Hospital Association, and Association.
(a1) Any hospital service corporation may enter
into contracts for the furnishing provision of, or the payment in
whole or in part for, medical and/or dental medical, dental, or
vision services rendered to any of its subscribers by duly licensed physicians
and/or dentists. physicians, dentists, or optometrists in accordance
with this Article.
(a2) All obligations arising under contracts issued by such
corporations a hospital service corporation to its subscribers shall
be satisfied by payments made (i) directly to the hospitals or hospitals
and/or physicians and/or dentists physicians, dentists, or optometrists rendering
such the service, or direct (ii) directly to the
subscriber or his, her, or their the subscriber's legal
representatives upon the receipt by the corporation from the subscriber of a
statement marked paid by the hospital(s) and/or physician(s) and/or
dentist(s) or both hospitals, physicians, dentists, or optometrists rendering
such service, and all such payments heretofore made are hereby ratified. the
applicable service. Nothing in this section shall be construed to
discriminate against hospitals conducted by other schools of medical practice.
(b) All certificates, plans
or contracts issued to subscribers or other persons by hospital and medical
and/or dental service hospital service corporations operating under
this Article shall contain in substance a provision as follows: "After two
years from the date of issue of this certificate, contract or plan no
misstatements, except fraudulent misstatements made by the applicant in the
application for such certificate, contract or plan, shall be used to void said
certificate, contract or plan, or to deny a claim for loss incurred or
disability (as therein defined) commencing after the expiration of such two‑year
period."
"§ 58‑65‑50. Application for certificate of authority or license.
No corporation subject to the
provisions of this Article and Article 66 of this Chapter shall issue contracts
for the rendering of hospital or medical and/or dental dental, health
care, medical, or vision service to subscribers, until the Commissioner of
Insurance has, by formal certificate or license, authorized it to do so.
Application for such a certificate of authority or license shall
be made on forms to be supplied by the Commissioner of Insurance, Insurance
and containing such any information as he shall deem
necessary. required by the Commissioner. Each application for such
a certificate of authority or license, as a part thereof shall be
accompanied by license shall include duplicate copies of the
following documents duly certified by at least two of the executive officers of
such the corporation:
(1) Certificate of incorporation
with all amendments thereto.incorporation, including any amendments.
(2) Bylaws with all
amendments thereto.Bylaws, including any amendments.
(3) Each contract executed or
proposed to be executed by and between the corporation and any participating hospital,
and/or physicians hospital or physician, dentist, or optometrist under
the terms of which hospital and/or medical and/or dental dental, health
care, medical, or vision service is to be furnished to subscribers to the plan.
(4) Each form of contract,
application, rider, and endorsement, issued or proposed to be issued to
subscribers to the plan, or in renewal of any of contracts with subscribers to
the plan, together with a table of rates charged or proposed to be charged to
subscribers for each form of such the contract.
(5) Financial statement of
the corporation which shall include the amounts of each contribution paid or
agreed to be paid to the corporation for working capital, the name or names of
each contributor contributor, and the terms or of each
contribution.
"§ 58‑65‑55. Issuance and continuation of license.
(a) Every corporation
subject to this Article shall pay to the Commissioner a fee of two hundred
fifty dollars ($250.00) for filing an application for a license. Fee payment
shall be contemporaneous with the filing. Before issuing or continuing any such
license or certificate under this Article, the Commissioner may make
such an examination or investigation as the Commissioner deems
expedient. The Commissioner shall issue a license upon the payment of a fee of
one thousand five hundred dollars ($1,500) for a single service single‑service
corporation or two thousand five hundred dollars ($2,500) for a full
service full‑service corporation and upon being satisfied on the
following points:
(1) The applicant is established as a bona fide nonprofit hospital service corporation as defined by this Article and Article 66 of this Chapter.
(2) The rates charged and benefits to be provided are fair and reasonable.
(3) The amounts provided as
working capital of the corporation are repayable only out of earned income in
excess of amounts paid and payable for operating expenses and hospital and
medical and/or dental expenses and such reserve as the Department deems
adequate, as provided hereinafter.dental, health care, medical, or
vision expenses, and the reserve is deemed adequate by the Department.
(4) That the The amount
of money actually available for working capital be is sufficient
to carry all acquisition costs and operating expenses for a reasonable period
of time from the date of the issuance of the certificate.
(b) The license shall
continue in full force and effect, subject to payment of an annual license
continuation fee of one thousand five hundred dollars ($1,500) for a single
service single‑service corporation or two thousand five
hundred dollars ($2,500), ($2,500) for a full‑service
corporation, subject to all other provisions of subsection (a) of this
section and subject to any other applicable provisions of the insurance laws of
this State.
"§ 58‑65‑60. Subscribers' contracts; required and prohibited provisions.
(c) Every contract entered
into by any such corporation subject to the provisions of this
Article and Article 66 of this Chapter with any subscriber thereof of
the corporation shall be in writing and a certificate stating the terms and
conditions thereof of the contract shall be furnished to the
subscriber to be kept by him. the subscriber. No such certificate
form, other than to group subscribers of groups of 10 or more certificate
holders or those issued pursuant to a master group contract covering 10 or more
certificate holders shall be made, issued or delivered in this State unless it
contains the following provisions, provided, however, groups between five and
10 certificate holders complying with and maintaining eligibility status under
regulations approved by the Commissioner of Insurance for group enrollment may
be cancelled if such the group participation falls below the
minimum participation of five certificate holders; or if the group takes other
group hospital, medical or surgical coverage:
(1) A statement of the amount
payable to the corporation by the subscriber and the times at which and manner
in which such the required amount is to be paid; this provision
may be inserted in the application rather than in the certificate. Application
The application need not be attached to the certificate.
(2) A statement of the nature of the benefits to be furnished and the period during which they will be furnished.
(3) A statement of the terms and conditions, if any, upon which the contract may be cancelled or otherwise terminated at the option of either party. The statement shall be in the following language:
a. "Renewability":
Renewability. Any contract subject to the provisions of this
subdivision is renewable at the option of the subscriber unless sufficient
notice in writing of nonrenewal is mailed to the subscriber by the corporation
addressed to the last address recorded with the corporation.
b. "Sufficient
notice" Sufficient notice. The notice required shall be as
follows:
1. During the first year of
any such contract, or during the first year following any lapse and
reinstatement, or reenrollment, a period of 30 days.
2. During the second and
subsequent years of continuous coverage, a number of full calendar months most
nearly equivalent to one fourth the number of months of continuous coverage
from the first anniversary of the date of issue or reinstatement or
reenrollment, whichever date is more recent, to the date of mailing of such the
30‑day notice.
3. No period of required
notice shall exceed two years, and no renewal hereunder shall renew any such
contract for any period beyond the required period of notice except by written
agreement of the subscriber and corporation.
c. Modifications, terminations, and cancellations.
The contract may be modified, terminated or cancelled by the corporation
at any time at its option, upon:upon any of the following:
a.1. Nonpayment by
the subscriber of fees or dues as required.
b.2. Failure or
refusal by the subscriber to comply with rate or benefit changes approved by
the Commissioner under G.S. 58‑65‑45.
c.3. Failure or
refusal by the subscriber after 30 days' written notice to subscriber to
transfer into hospital, medical, or dental a dental, health care,
medical, or vision service plan serving the area to which the subscriber
has changed residence and is eligible for or to which corporation is required
to transfer by interplan agreement of transfer.
(4) A statement that the contract includes the endorsement thereon and attached papers, if any, and together with the applications contains the entire contract.
(5) A statement that if the
subscriber defaults in making any payment, payment under the
contract, then the subsequent acceptance of a payment by the corporation
at its home office shall reinstate the contract, but with respect to sickness
and injury, only to cover such sickness as may be first manifested more than 10
days after the date of such acceptance.acceptance of the payment.
"§ 58‑65‑65. Coverage for active medical treatment in tax‑supported institutions.
(a) No hospital or
medical or dental dental, health care, medical, or vision service
plan, contract, or certificate governed by this Article and Article 66 of this
Chapter shall be delivered, issued, executed, or renewed in this State, or
approved for issuance or renewal in this State, unless it provides for the
payment of benefits for charges made for medical care rendered by duly licensed
State tax‑supported institutions on a basis no less favorable than the
basis that would apply had the medical care been rendered by any other public
or private institution or provider. The term "State tax‑supported
institutions" includes community mental health centers and other health
clinics which that are certified as Medicaid providers.
"§ 58‑65‑70. Contracts to cover any person possessing the sickle cell trait or hemoglobin C trait.
No hospital, medical, dental, or
any health hospital service corporation governed by this
Article and Article 66 of this Chapter shall refuse do either of the
following:
(1) Refuse to issue or deliver any individual or
group hospital, dental, medical, vision, or health service contract in
this State which it is currently issuing for delivery in this State, and
which affords that provides benefits or coverage for any medical health
care treatment or service authorized or permitted to be furnished provided
by a hospital, clinic, family health clinic, neighborhood health clinic,
health maintenance organization, physician, physician's assistant, nurse
practitioner or any medical service facility or health care facility, or
health care personnel, on account of the fact that the person who is to be
insured possesses sickle cell trait or hemoglobin C trait; nor shall any
such policy issued and delivered in this State carry trait.
(2) Issue and deliver a policy that has a higher premium rate or charge on account of the fact that the person who is to be insured possesses sickle cell trait.
"§ 58‑65‑95. Investments and reserves.
(a) Corporations subject to this Article shall invest in or hold only those assets permitted by Article 7 of this Chapter for life and health insurance companies.
(b) Every such corporation
shall accumulate and maintain, in addition to proper reserves for current
administrative liabilities and whatever reserves are deemed to be adequate and
proper by the Commissioner for unpaid hospital, medical, or dental dental,
health care, medical, or vision bills and unearned membership dues, a
special contingent surplus or reserve at the following rates annually of its
gross annual collections from membership dues, exclusive of receipts from cost
plus plans, until the reserve equals an amount that is three times its average
monthly expenditures for claims and administrative and selling expenses:
(1) First $200,000 4%
(2) Next $200,000 2%
(3) All above $400,000 1%
(c) Any such corporation
subject to this Article may accumulate and maintain a contingent reserve
in excess of the reserve required in subsection (b) of this section, not to
exceed an amount equal to six times the average monthly expenditures for claims
and administrative and selling expenses.
(d) If the Commissioner finds that special conditions exist warranting an increase or decrease in the reserves or schedule of reserves in subsection (b) of this section, the Commissioner may modify them accordingly. Provided, however, when special conditions exist warranting an increase in the schedule of reserves, the schedule shall not be increased by the Commissioner until a reasonable length of time has elapsed after the Commissioner gives notice of the increase.
"§ 58‑65‑110. Expenses.
All acquisition expenses in connection
with the solicitation of subscribers to such hospital and/or medical and/or
dental a dental, health care, medical, or vision service plan and
administration costs including salaries paid to officers of the corporations,
if any, shall at all times be subject to inspection by the Commissioner of
Insurance.
"§ 58‑65‑120. Medical, dental and hospital Dental,
health care, medical, and vision service associations and agent to transact
business through licensed agents only.
No medical and/or dental or
hospital dental, health care, medical, or vision service association;
association, nor any agent of any association the
association, shall on behalf of such the association or agent,
agent knowingly permit any person not licensed as an agent as provided
required by law, to solicit, negotiate for, collect or transmit a
premium for a new contract of medical and/or dental or hospital dental,
health care, medical, or vision service certificate or to act in any way in
the negotiation for any contract or policy; provided, no policy. No license
shall be required of any of the following:
(1) Persons designated by the
association or subscriber to collect or deduct or transmit premiums or other
charges for medical and/or dental care or hospital dental, health
care, medical, or vision contracts, or to perform such any acts
as may be required for providing coverage for additional persons who are
eligible under a master contract.
(2) An agency office employee
acting in the confines of the agent's office, under the direction and
supervision of the duly licensed agent and within the scope of such that
agent's license, in the acceptance of request for insurance and payment of
premiums, and the performance of clerical, stenographic, and similar office
duties.
"§ 58‑65‑131. Findings; definitions; conversion plan.
(a) Intent and Findings.
It is the intent of the General Assembly by the enactment of this section,
G.S. 58‑65‑132, and G.S. 58‑65‑133 to create
a procedure for a medical, hospital, or dental hospital service
corporation to convert to a stock accident and health insurance company or
stock life insurance company that is subject to the applicable provisions of
Articles 1 through 64 of this Chapter. Except as provided herein, in
this section, it is not the intent of the General Assembly to supplant,
modify, or repeal other provisions of this Article and Article 66 of this
Chapter or the provisions of Chapter 55A of the General Statutes (the Statutes,
the Nonprofit Corporation Act) Act, that govern other
transactions and the procedures relating to such those transactions
that apply to corporations governed by the provisions of this Article and
Article 66 of this Chapter.
The General Assembly recognizes the
substantial and recent changes in market and health care conditions that are
affecting these corporations and the benefit of equal regulatory treatment and
competitive equality for health care insurers. The General Assembly finds that
a procedure for conversion is in the best interest of policyholders because it
will provide greater financial stability for these corporations and a greater
opportunity for the corporations to remain financially independent. The General
Assembly also finds that if a medical, hospital, or dental hospital service
corporation converts to a stock accident and health insurance company or stock
life insurance company, the conversion plan must provide a benefit to the
people of North Carolina equal to one hundred percent (100%) of the fair market
value of the corporation.
(b) Definitions. As
used in The following definitions apply in this section,
G.S. 58‑65‑132, and G.S. 58‑65‑133:
(1) "Certificate
holder" includes an Certificate holder. An enrollee, as
defined in Article 67 of this Chapter, in a health maintenance plan provided by
the corporation or a subsidiary or by the new corporation or a subsidiary.
(2) "Code" means
Code. Title 26 of the United States Code, the United States
Internal Revenue Code of 1986, as amended.
(3) "Conversion"
means the Conversion. The conversion of a hospital, medical, or
dental hospital service corporation to a stock accident and health
insurance company or stock life insurance company subject to the applicable
provisions of Articles 1 through 64 of this Chapter.
(4) "Corporation"
means a Corporation. A hospital, medical, or dental hospital
service corporation governed by this Article that files or is required to
file a plan of conversion with the Commissioner under subsection (d) of this
section to convert from a hospital, medical, or dental hospital service
corporation to a stock accident and health insurance company or stock life
insurance company.
(5) "Foundation"
means a Foundation. A newly formed tax‑exempt charitable
social welfare organization formed and operating under section 501(c)(4) of the
Code and Chapter 55A of the General Statutes.
(6) "New
corporation" means a New corporation. A corporation
originally governed by this Article that has had its plan of conversion
approved by the Commissioner under G.S. 58‑65‑132 and that has
converted to a stock accident and health insurance company or stock life
insurance company.
"§ 58‑65‑132. Review and approval of conversion plan; new corporation.
(a) Approval of Plan of Conversion. The Commissioner shall approve the plan of conversion and issue a certificate of authority to the new corporation to transact business in this State only if the Commissioner finds all of the following:
(1) The plan of conversion meets the requirements of G.S. 58‑65‑131, this section, and G.S. 58‑65‑133.
(2) Upon conversion, the new corporation will meet the applicable standards and conditions under this Chapter, including applicable minimum capital and surplus requirements.
(3) The plan of conversion
adequately protects the existing contractual rights of the corporation's
subscribers and certificate holders to medical or hospital dental, health
care, medical, or vision services and payment of claims for reimbursement
for those services.
(b) New Corporation. After issuance of the certificate of authority as provided in subsection (a) of this section, the new corporation shall no longer be subject to this Article and Article 66 of this Chapter but shall be subject to and comply with all applicable laws and regulations applicable to domestic insurers and Chapter 55 of the General Statutes, except that Articles 9 and 9A of Chapter 55 shall not apply to the new corporation. The new corporation shall file its articles of incorporation, as amended and certified by the Commissioner, with the North Carolina Secretary of State. The legal existence of the corporation does not terminate, and the new corporation is a continuation of the corporation. The conversion shall only be a change in identity and form of organization. Except as provided in subdivision (a)(7) of this subsection, all property, assets, rights, liabilities, obligations, interests, and relations of whatever kind of the corporation shall continue and remain in the new corporation. All actions and legal proceedings to which the corporation was a party prior to conversion shall be unaffected by the conversion.
(c) Final Decision and Order; Procedures. The Commissioner's final decision and order regarding the plan of conversion shall include findings of fact and conclusions of law. Findings of fact shall be based upon and supported by substantial evidence, including evidence submitted with the plan by the corporation and evidence obtained at hearings held by the Commissioner. A person aggrieved by a final decision of the Commissioner approving or disapproving a conversion may petition the Superior Court of Wake County within 30 days thereafter for judicial review. An appeal from a final decision and order of the Commissioner under this section shall be conducted pursuant to G.S. 58‑2‑75. Chapter 150B of the General Statutes does not apply to the procedures of G.S. 58‑65‑131, this section, and G.S. 58‑65‑133. This subsection does not apply to appeal of an order of the Commissioner issued pursuant to G.S. 58‑65‑131(c).
(d) Attorney General's Enforcement Authority; Legal Action on Validity of Plan of Conversion.
(1) Nothing in this Chapter limits the power of the Attorney General to seek a declaratory judgment or to take other legal action to protect or enforce the rights of the public in the corporation.
(2) Any legal action with respect to the conversion must be filed in the Superior Court of Wake County.
"§ 58‑65‑135. Cost plus plans.
(a) Any corporation organized under the provisions of
this Article and Article 66 of this Chapter shall be authorized as agent of any
other corporation, firm, group, partnership, or association, or any subsidiary
or subsidiaries thereof, municipal corporation, State, federal government, or
any agency thereof, to administer on behalf of such corporation, firm, group,
partnership, or association, or any subsidiary or subsidiaries thereof,
municipal corporation, State, federal government, or any agency thereof, any
group hospitalization or medical and/or dental dental, health care,
medical, or vision service plan, promulgated by such the corporation,
firm, group, partnership, or association, or any subsidiary or subsidiaries
thereof, municipal corporation, State, federal government, or any agency
thereof, on a cost plus administrative expense basis, provided said only
if all of the following apply:
(1) The other corporation, firm, group,
partnership, or association, or any subsidiary or subsidiaries thereof,
municipal corporation, State, federal government, or any agency thereof shall
have had an active existence for at least one year preceding the establishment
of such the plan, and was formed for purposes other than
procuring such the group hospitalization and/or medical and/or
dental dental, health care, medical, or vision service coverage in a
cost plus administrative expense basis, and provided only that
administrative basis.
(2) Administrative costs of such a the
cost plus plan administered by a corporation organized under the provisions
of this Article and Article 66 of this Chapter, acting as an agent as herein
provided, provided by this section, shall not exceed the
remuneration received therefor, and provided further that the received.
(3) The corporation organized under this Article
and Article 66 of this Chapter administering such a the cost plus plan
shall have no liability to the subscribers or to the hospitals or health care
providers for the success or failure, liquidation or dissolution of such
the group hospitalization or medical and/or dental dental,
health care, medical, or vision service plan and provided further, that
nothing herein contained plan.
(b) Nothing in this section shall be construed
to require of said that a corporation, firm, group, partnership,
or association, or any subsidiary or subsidiaries thereof, municipal
corporation, State, federal government, or any agency thereof, conformity conform
to the provisions of this Article and Article 66 of this Chapter if such
a group hospitalization service plan is administered by a
corporation organized under this Article and Article 66 of this Chapter, on a
cost plus expense basis.
(c) The administration of any cost plus plans as
herein provided as provided for by this section shall not be subject
to regulation or supervision by the Commissioner of Insurance.
"§ 58‑65‑150. Construction of Chapter as to single employer plans; associations exempt.
(a) Nothing in this Article and Article 66 of this
Chapter shall be construed to affect or apply to hospital or medical and/or
dental dental, health care, medical, or vision service plans which
limit their membership to employees and the immediate members of the families
of the employees of a single employer or his or its subsidiary or subsidiaries
and which plans are operated by such employer of such limited group of the employees;
nor shall employees.
(b) Nothing in this Article and Article 66 of
this Chapter be construed to affect or apply to any nonstock, nonprofit medical
service association which was, on January 1, 1943, organized solely for the
purpose of, and actually engaged in, the administration of any medical service
plan in this State upon contracts and participating agreements with physicians,
surgeons, or medical societies, whereby such physicians or surgeons societies
that underwrite such the medical service plan by contributing
their services to members of such the association upon agreement
with such the association as to the schedule of fees to apply and
the rate and method of payment by the association from the common fund paid in
periodically by the members for medical, surgical and obstetrical care; and
such hospital care.
(c) All service plans, plans described
in subsection (a) of this section and such all medical
service associations as are herein specifically described, described
in subsection (b) of this section are hereby exempt from the
provisions of this Article and Article 66 of this Chapter.
(d) The Commissioner of Insurance may require from any such
hospital service full‑service or single‑service plan or
medical service association such any information as will necessary
to enable him the Commissioner to determine whether such
hospital the service plan or medical service association is exempt
from the provisions of this Article and Article 66 of this Chapter.
"§ 58‑65‑155. Merger or consolidation, proceedings for.
(a) Mergers and Consolidations Allowed. Any
two or more hospital and/or medical and/or dental service corporations
organized under and/or or subject to the provisions of this
Article and Article 66 of this Chapter Chapter, as determined by
the Commissioner of Insurance may, as shall be specified in the agreement
hereinafter required, Insurance may be (i) merged into one of
such the constituent corporations, herein designated as
the surviving corporation, or may be (ii) consolidated into a new
corporation to be formed by the means of such consolidation of the constituent
corporations, which new corporation is herein designated as the
resulting or consolidated corporation, and the directors and/or directors,
the trustees, or a majority of them, directors or trustees, of
such the merging or consolidating corporations as desire to
consolidate or merge, may enter into an agreement signed by them and under
the corporate seals of the respective corporations, prescribing the corporations.
(b) Written Agreement Required. The terms of any merger or consolidation allowed under this section shall be contained in a written agreement. All written agreements shall contain the following:
(1) The terms and conditions of the consolidation
or merger, the merger.
(2) The mode of carrying the same consolidation
or merger into effect and stating such other effect.
(3) Any facts as can be stated in the case of a
consolidation or merger, stated in such altered form as the circumstances of
the case require, and with such and other details as to conversion
of certificates of the subscribers as are deemed necessary and/or or proper.
(c) Said agreement Notice of Agreement. Agreements
for any merger or consolidation allowed under this section shall be
submitted to the certificate holders of each constituent corporation, at a
separate meeting thereof, called for the purpose of taking the same consolidation
or merger into consideration; of the time, consideration. Notice
of place and object of which subject of the meeting due
notice shall be required and shall meet all of the following
requirements:
(1) The notice shall be given by publication
once a week for two consecutive weeks in some newspaper published in Raleigh,
North Carolina, and in the counties in which the principal offices of the
constituent corporations are located, and if no such located. If
there is no paper is published in the county of the principal office
of such the constituent corporations, then said the
required notice shall be posted at the courthouse door of said the
applicable county or counties for a period of two weeks.
(2) Said The required printed or posted
notices shall be in such a form and of such a size
as the Commissioner of Insurance may approve.
(3) A true copy of said the required notices
shall be filed with the Commissioner of Insurance.
(4) Such The publication and filing of
notices shall be completed at least 15 days prior to the date set therein for
the meeting, and due proof thereof shall be filed with the Commissioner of
Insurance at least 10 days prior to the date of such the meeting.
(d) Meeting to Adopt Agreement. At this the
meeting required for an agreement for any merger or consolidation
allowed under this section, those present in person or represented by proxy
shall constitute a quorum and said the agreement for
consolidation or merger shall be considered and voted upon by ballot in
person or by proxy or both taken for the adoption or rejection of the same;
and if same. If the votes of two thirds of those at said the
meeting voting in person or by proxy shall be for the adoption of
the said agreement, then that fact shall be certified on said the
agreement by the president and secretary of each such corporation,
under the seal thereof.of each corporation.
The adopted and certified agreement
so adopted and certified shall be signed by the president or vice‑president
and secretary or assistant secretary of each of such corporations corporation
under the corporate seals thereof and acknowledged by the president
or vice‑president of each such corporation before any officer
authorized by the laws of this State to take acknowledgement of deeds to be the
respective act, deed, and agreement of each of said the corporations.
(e) The said Commissioner Approval of Merger
or Consolidation Agreements. In advance of any merger or consolidation allowed
under this section, the agreement shall be submitted to and approved by the
Commissioner of Insurance, in advance of the merger or consolidation and his
approval thereof Insurance for approval. The Commissioner's approval shall
be indicated by his or her signature being affixed thereto to
the agreement under the seal of his the office.
The Commissioner shall not approve
any such consolidation or merger agreement or plans, unless,
after a hearing, he the Commissioner finds that it is fair,
equitable to certificate holders and members, consistent with law, and will not
conflict with the public interest.
(f) The agreement so certified Filing of Agreement
With Secretary of State. Certified and acknowledged agreements for
mergers or consolidations allowed under this section with the approval of
the Commissioner of Insurance noted thereon, shall be filed in the office of
the Secretary of State, and shall thenceforth be taken and State. The
agreement on file shall be deemed to be the agreement and act of
consolidation or merger of said corporations; and a the corporations.
A copy of said the agreement and act of consolidation or
merger duly certified by the Secretary of State under the seal of his the
office shall also be recorded, recorded in the office of the
register of deeds of the county of this State in which the principal office of
the surviving or consolidated corporation is, or is to be established, and in
the office of the registers of deeds of the counties of this State in which the
respective corporations so merging or consolidating shall have their original
certificates of incorporation recorded, and also in the office of the register
of deeds in each county in which either or any of the corporations entering
into merger or consolidation owns any real estate; and such estate.
This record, or a certified copy thereof, of the record, shall
be evidence of the agreement and act of consolidation or merger of said the
applicable corporations, and of the observance and performance of all acts
and conditions necessary to have been observed and performed precedent to such
the consolidation or merger.
For the filing of the agreement as provided for by this subsection, the Secretary of State is entitled to receive such fees only in the amount that would have been received had a new corporation been formed.
(g) Effect of Filing and Recording. When an
agreement shall have been signed, authorized, adopted, acknowledged, approved,
and filed and recorded as hereinabove set forth in this as required
by this section, for all purposes of the laws of this State, the separate
existence of all constituent corporations, parties to said the agreement,
or of all such of the constituent corporations, except the one
into which the other or others of such the constituent
corporations have been merged, as the case may be, shall cease and the
constituent corporations shall become a new corporation, or be merged into one
of such the corporations, as the case may be, in accordance with
the provisions of said the filed and recorded agreement,
possessing all the rights, privileges, powers and franchises as well of a public
as of a private nature, of each of said the constituent
corporations, and all and singular, the rights, privileges, powers and
franchises of each of said the corporations, and all property,
real, personal and mixed, and all debts due to any of said the constituent
corporations on whatever account, shall be vested in the corporation resulting
from or surviving such consolidation or merger, and all property, rights,
privileges, powers, and franchises and all and every other interest shall be
thereafter as effectually the property of the resulting or surviving
corporation as they were of the several and respective constituent
corporations, and the title to any real estate, whether vested by deed or
otherwise, under the laws of this State, vested in any such constituent
corporations shall not revert or be in any way impaired by reason of such consolidation
or merger; provided, however, that all rights of creditors and all liens upon
the property of either of or any of said the constituent
corporations shall be preserved, unimpaired, limited in lien to the property
affected by such any lien at the time of the merger or
consolidation, and all debts, liabilities, and duties of the respective
constituent corporations shall thenceforth attach to said the resulting
or surviving corporation, and may be enforced against it to the same extent as
if said the debts, liabilities, and duties had been incurred or
contracted by it; and further provided that notice of any said liens,
debts, liabilities, and duties is given in writing to the resulting or
surviving corporation within six months after the date of the filing of the
agreement of merger in the office of the Secretary of State. All such applicable
liens, debts, liabilities, and duties of which notice is not given as provided
herein required by this subsection are forever barred. The
certificate of incorporation of the surviving corporation shall be deemed to be
amended to the extent, if any, that the changes in its certificates of
incorporation are stated in the agreement of merger. All certificates
theretofore issued and outstanding by each constituent corporation in good
standing upon the date of the filing of such the agreement with
the Secretary of State without reissuance thereof by the resulting or surviving
corporation shall be the contract and agreement of the resulting or surviving
corporation with each of the certificate holders thereof and subject to all
terms and conditions thereof and of the agreement of merger filed in the office
of the Secretary of State.
Any action or proceeding pending by
or against any of the corporations consolidated or merged may be prosecuted to
judgment as if such consolidation or merger had not taken place, or the
corporations resulting from or surviving such the consolidation
or merger may be substituted in its place.
(h) Liability. The liability of such the
constituent corporations to the certificate holders thereof, and the rights
or remedies of the creditors thereof, or persons doing or transacting business
with such the corporations, shall not, in any way, be lessened or
impaired by the consolidation or merger of two or more of such corporations
under the provisions of this section, except as provided in this section.
(i) Power and Authority of New or Surviving Corporation.
When two or more corporations are consolidated or merged, the corporation
resulting from or surviving such the consolidation or merger
shall have the power and authority to continue any contracts which any of the
constituent corporations might have elected to continue. All contracts entered
into between any constituent corporations and any other persons shall be and
become the contract of the resulting corporations according to the terms and
conditions of said contract and the agreement of consolidation or merger.
For the filing of the agreement
as hereinabove provided, the Secretary of State is entitled to receive such
fees only as he would have received had a new corporation been formed.
(j) Objection to Merger or Consolidation. Any
agreement for merger and/or or consolidation as shall conform to
the provisions of this section, shall be binding and valid upon all the
subscribers, certificate holders and/or and members of such the
constituent corporations, provided only that any subscriber, certificate
holder and/or or member who shall so indicate his a disapproval
thereof of the consolidation or merger to the resulting, consolidated
consolidated, or surviving corporation within 90 days after the
filing of said required agreement with the Secretary of State
shall be entitled to receive all unearned portions of premiums paid on his or
her certificate from and after the date of the receipt of the application therefor
by the resulting, surviving, or consolidated corporation; each Corporation.
Each subscriber, certificate holder and/or holder, or member
who shall not so indicate his or her disapproval of said the required
agreement and said the merger or consolidation within said
the required period of 90 days is deemed and presumed to have
approved said the agreement and said the merger and/or
or consolidation and shall have waived his or her right to question
the legality of said the merger and/or or consolidation.
(k) Prohibition on Compensation. No director,
officer, subscriber, certificate holder and/or holder, or member as
such of any such corporation, corporation entering into an
agreement under this section, except as is expressly provided by the plan
of merger or consolidation, shall receive any fee, commission, other
compensation or valuable consideration whatever, for in any manner aiding,
promoting or assisting in the merger or consolidation.
"§ 58‑65‑165. Commissioner of Insurance determines corporations exempt from this Article and Article 66 of this Chapter.
The Commissioner of Insurance may
require from any corporation writing any hospital service contracts and any
corporation writing medical and/or dental dental, health care, medical,
or vision service contracts or any or all of them, such any information
as that will enable him the Commissioner to
determine whether such the corporation is subject to the
provisions of this Article and Article 66 of this Chapter.
."
Part II. Technical and conforming changes
SECTION 2. G.S. 58‑65‑166(b)(1) reads as rewritten:
"(1) "Corporation"
includes any not for profit domestic hospital, medical, or dental hospital
service corporation, or successor of a corporation in a merger or other
transaction in which the predecessor's existence ceased upon consummation of
the transaction."
SECTION 3.(a) The title of Article 66 of Chapter 58 of the General Statutes reads as rewritten:
"Article 66.
"Hospital, Medical and
Dental Hospital Service Corporation Readable Insurance Certificates
Act."
SECTION 3.(b) G.S. 58‑66‑1 reads as rewritten:
"§ 58‑66‑1. Title.
This Article is known and may be
cited as the "Hospital, Medical and Dental "Hospital Service
Corporation Readable Insurance Certificates Act.""
SECTION 3.(c) G.S. 58‑66‑35 reads as rewritten:
"§ 58‑66‑35. Application to policies; dates.
(a) The filing requirements
of G.S. 58‑66‑30 apply to all subscribers' contracts of hospital,
medical, and dental hospital service corporations as described in
G.S. 58‑65‑60(a) and (b) that are made, issued, amended or
renewed after July 1, 1983.
(b) Repealed by Session Laws 1995, c. 193, s. 58, effective June 7, 1995."
SECTION 4. G.S. 58‑38‑35(a)(2) reads as rewritten:
"(2) To all policies of
life insurance as described in Article 58 of this Chapter, to all benefit
certificates issued by fraternal orders and societies as described in Articles
24 and 25 of this Chapter, to all policies of accident and health insurance as
described in Articles 50 through 55 of this Chapter, to all subscribers'
contracts of hospital, medical, and dental hospital service
corporations as described in Articles 65 and 66 of this Chapter, and to all
health maintenance organization evidences of coverage as described in Article
67 of this Chapter, that are made, issued, amended, or renewed after July 1,
1983."
SECTION 5. G.S. 58‑49‑25(a) reads as rewritten:
"(a) Any production
agency or administrator that advertises, sells, transacts, or administers the
coverage in this State described in G.S. 58‑49‑5 and that is
required to submit to an examination by the Commissioner under G.S. 58‑49‑15,
shall, if said coverage is not fully insured or otherwise fully covered by an
admitted life, accident, health, accident and health, or disability insurer,
nonprofit hospital, dental, health care, medical, or dental vision
service plan, or nonprofit health care plan, clearly and distinctly advise
every purchaser, prospective purchaser, and covered person of such lack of
insurance or other coverage."
SECTION 6.(a) G.S. 58‑50‑5(a) reads as rewritten:
"(a) On and after January
1, 1956, each individual or family accident, health, hospitalization policy,
certificate or service plan of hospitalization and medical and/or dental hospital
service corporations shall be issued only on application in writing signed
by the insured or the head of the household or guardian. Any application or
enrollment form that is taken by a resident agent shall also contain the
certificate of the agent that he the agent has truly and
accurately recorded on the application or enrollment form the information
supplied by the insured. Every policy subject to the provisions of this section
shall contain as a part of such policy the original or a reproduction of
the application required by this section. This section shall not apply to
travel or dread disease policies or to policies issued pursuant to a group
insurance conversion privilege. If any such policy to which this
section applies delivered or issued for delivery to any person in this
State shall be reinstated or renewed, and the insured or the beneficiary or
assignee of such the policy shall make written request to the
insurer for a copy of the application, if any, application for such
the reinstatement or renewal, then the insurer shall within
15 days after the receipt of such that request at his the
insurer's home office or any branch office of the insurer, deliver or mail
to the person making such the request, a copy of such the
requested application. If such the copy shall not be so
delivered or mailed, the insurer shall be precluded from introducing such the
application as evidence in any action or proceeding based upon or involving
such the policy or its reinstatement or renewal."
SECTION 6.(b) G.S. 58‑50‑45 reads as rewritten:
"§ 58‑50‑45. Group health or life insurers to notify insurance fiduciaries of obligations.
(a) Upon the issuance or renewal of any policy, contract, certificate, or evidence of coverage of group health or life insurance, the insurer, corporation, or health maintenance organization shall give written notice to the insurance fiduciary of the provisions of G.S. 58‑50‑40.
(b) The notice required by subsection (a) of this section shall be printed in 10 point type and shall read as follows:
"UNDER NORTH CAROLINA GENERAL
STATUTE SECTION 58‑50‑40, NO PERSON, EMPLOYER, PRINCIPAL, AGENT,
TRUSTEE, OR THIRD PARTY ADMINISTRATOR, WHO IS RESPONSIBLE FOR THE PAYMENT OF
GROUP HEALTH OR LIFE INSURANCE OR GROUP HEALTH PLAN PREMIUMS, SHALL: (1) CAUSE
THE CANCELLATION OR NONRENEWAL OF GROUP HEALTH OR LIFE INSURANCE, HOSPITAL,
MEDICAL, OR DENTAL HOSPITAL SERVICE CORPORATION PLAN, MULTIPLE
EMPLOYER WELFARE ARRANGEMENT, OR GROUP HEALTH PLAN COVERAGES AND THE
CONSEQUENTIAL LOSS OF THE COVERAGES OF THE PERSONS INSURED, BY WILLFULLY
FAILING TO PAY THOSE PREMIUMS IN ACCORDANCE WITH THE TERMS OF THE INSURANCE OR
PLAN CONTRACT, AND (2) WILLFULLY FAIL TO DELIVER, AT LEAST 45 DAYS BEFORE THE
TERMINATION OF THOSE COVERAGES, TO ALL PERSONS COVERED BY THE GROUP POLICY A
WRITTEN NOTICE OF THE PERSON'S INTENTION TO STOP PAYMENT OF PREMIUMS. THIS
WRITTEN NOTICE MUST ALSO CONTAIN A NOTICE TO ALL PERSONS COVERED BY THE GROUP
POLICY OF THEIR RIGHTS TO HEALTH INSURANCE CONVERSION POLICIES UNDER ARTICLE 53
OF CHAPTER 58 OF THE GENERAL STATUTES AND THEIR RIGHTS TO PURCHASE INDIVIDUAL
POLICIES UNDER THE FEDERAL HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT
AND UNDER ARTICLE 68 OF CHAPTER 58 OF THE GENERAL STATUTES. VIOLATION OF THIS
LAW IS A FELONY. ANY PERSON VIOLATING THIS LAW IS ALSO SUBJECT TO A COURT ORDER
REQUIRING THE PERSON TO COMPENSATE PERSONS INSURED FOR EXPENSES OR LOSSES
INCURRED AS A RESULT OF THE TERMINATION OF THE INSURANCE.""
part III. Effective date
SECTION 7. This act is effective when it becomes law and applies to contracts issued, amended, or renewed on or after November 1, 2021.
In the General Assembly read three times and ratified this the 7th day of October, 2021.
s/ Phil Berger
President Pro Tempore of the Senate
s/ Tim Moore
Speaker of the House of Representatives
s/ Roy Cooper
Governor
Approved 9:49 a.m. this 15th day of October, 2021