SENATE BILL NO. 783 October 5, 1999, Introduced by Senators BULLARD and DUNASKISS and referred to the Committee on Financial Services. A bill to amend 1980 PA 350, entitled "The nonprofit health care reform act," by amending section 207 (MCL 550.1207), as amended by 1993 PA 201. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 207. (1) A health care corporation, subject to any 2 limitation provided in this act, in any other statute of this 3 state, or in its articles of incorporation, may do any or all of 4 the following: 5 (a) Contract to provide computer services and other adminis- 6 trative consulting services to 1 or more providers or groups of 7 providers, if the services are primarily designed to result in 8 cost savings to subscribers. 9 (b) Engage in experimental health care projects to explore 10 more efficient and economical means of implementing the 04042'99 DKH 2 1 corporation's programs, or the corporation's goals as prescribed 2 in section 504 and the purposes of this act, to develop incen- 3 tives to promote alternative methods and alternative providers, 4 including nurse midwives, nurse anesthetists, and nurse practi- 5 tioners, for delivering health care, including preventive care 6 and home health care. 7 (c) For the purpose of providing health care services to 8 employees of this state, the United States, or an agency, instru- 9 mentality, or political subdivision of this state or the United 10 States, or for the purpose of providing all or part of the costs 11 of health care services to disabled, aged, or needy persons, con- 12 tract with this state, the United States, or an agency, instru- 13 mentality, or political subdivision of this state or the United 14 States. 15 (d) For the purpose of administering any publicly supported 16 health benefit plan, accept and administer funds, directly or 17 indirectly, made available by a contract authorized under subdi- 18 vision (c), or made available by or received from any private 19 entity. 20 (e) For the purpose of administering any publicly supported 21 health benefit plan, subcontract with any organization that has 22 contracted with this state, the United States, or an agency, 23 instrumentality, or political subdivision of this state or the 24 United States, for the administration or furnishing of health 25 services or any publicly supported health benefit plan. 26 (f) Provide administrative services only and cost-plus 27 arrangements for the federal medicare program established by 04042'99 3 1 parts A and B of title XVIII of the social security act, chapter 2 531, 49 Stat. 620,42 U.S.C. 1395c to 1395i, 1395i-2 to 1395i-4,31395j to 1395t, 1395u to 1395w-2, and 1395w-442 U.S.C. 1395 TO 4 1395b, 1395b-2, 1395b-6 TO 1395-7, 1395c TO 1395i, 1395i-2 TO 5 1395i-5, 1395j TO 1395t, 1395u TO 1395w, 1395w-2 TO 1395w-4, 6 1395w-21 TO 1395w-28, 1395x TO 1395yy, AND 1395bbb TO 1395ggg; 7 for the federal medicaid program established under title XIX of 8 the social security act, chapter 531, 49 Stat. 620, 42 9 U.S.C. 1396 to 1396f,and 1396i to 1396u1396g-1 to 1396r-6, 10 AND 1396r-8 TO 1396v; for title V of the social security act, 11 chapter 531, 49 Stat. 620, 42 U.S.C. 701 to 704 and 705 to70912 710; for the program of medical and dental care established by 13 the military medical benefits amendments of 1966, Public Law 14 85-861, 80 Stat. 862; for the Detroit maternity and infant 15 care--preschool, school, and adolescent project; and for any 16 other health benefit program established under state or federal 17 law. 18 (g) Provide administrative services only and cost-plus 19 arrangements for any noninsured health benefit plan, subject to 20 the requirements of sections 211 and 211a. 21 (h) Establish, own, and operate a health maintenance organi- 22 zation, subject to the requirements of the public health code, 23Act No. 368 of the Public Acts of 1978, as amended, being24sections 333.1101 to 333.25211 of the Michigan Compiled Laws25 1978 PA 368, MCL 333.1101 TO 333.25211. 26 (i) Guarantee loans for the education of persons who are 27 planning to enter or have entered a profession that is licensed, 04042'99 4 1 certified, or registered under parts 161 to 182 ofAct No. 3682of the Public Acts of 1978, as amended, being sections 333.161013to 333.18237 of the Michigan Compiled LawsTHE PUBLIC HEALTH 4 CODE, 1978 PA 368, MCL 333.16101 TO 333.18237, and has been iden- 5 tified by the commissioner, with the consultation of the office 6 of health and medical affairs in the department of management and 7 budget, as a profession whose practitioners are in insufficient 8 supply in this state or specified areas of this state and who 9 agree, as a condition of receiving a guarantee of a loan, to work 10 in this state, or an area of this state specified in a listing of 11 shortage areas for the profession issued by the commissioner, for 12 a period of time determined by the commissioner. 13 (j) Receive donations to assist or enable the corporation to 14 carry out its purposes, as provided in this act. 15 (k) Bring an action against an officer or director of the 16 corporation. 17 (l) Designate and maintain a registered office and a resi- 18 dent agent in that office upon whom service of process may be 19 made. 20 (m) Sue and be sued in all courts and participate in actions 21 and proceedings, judicial, administrative, arbitrative, or other- 22 wise, in the same cases as natural persons. 23 (n) Have a corporate seal, alter the seal, and use it by 24 causing the seal or a facsimile to be affixed, impressed, or 25 reproduced in any other manner. 26 (o) Invest and reinvest its funds and, for investment 27 purposes only, purchase, take, receive, subscribe for, or 04042'99 5 1 otherwise acquire, own, hold, vote, employ, sell, lend, lease, 2 exchange, transfer, or otherwise dispose of, mortgage, pledge, 3 use, and otherwise deal in and with, bonds and other obligations, 4 shares, or other securities or interests issued by entities other 5 than domestic, foreign, or alien insurers, as defined in sections 6 106 and 110 of the insurance code of 1956,Act No. 218 of the7Public Acts of 1956, being sections 500.106 and 500.110 of the8Michigan Compiled Laws1956 PA 218, MCL 500.106 AND 500.110, 9 whether engaged in a similar or different business, or governmen- 10 tal or other activity, including banking corporations or trust 11 companies. However, a health care corporation may purchase, 12 take, receive, subscribe for, or otherwise acquire, own, hold, 13 vote, employ, sell, lend, lease, exchange, transfer, or otherwise 14 dispose of bonds or other obligations, shares, or other securi- 15 ties or interests issued by a domestic, foreign, or alien insur- 16 er, so long as the activity meets all of the following: 17 (i) Is determined by the attorney general to be lawful under 18 section 202. 19 (ii) Is approved in writing by the commissioner as being in 20 the best interests of the health care corporation and its 21 subscribers. 22 (iii) Will not result in the health care corporation owning 23 or controlling 10% or more of the voting securities of the 24 insurer. Nothing in this subdivision shall be interpreted as 25 expanding the lawful purposes of a health care corporation under 26 this act. Except where expressly authorized by statute, a health 27 care corporation shall not indirectly engage in any investment 04042'99 6 1 activity that it may not engage in directly. A health care 2 corporation shall not guarantee or become surety upon a bond or 3 other undertaking securing the deposit of public money. 4 (p) Purchase, receive, take by grant, gift, devise, bequest 5 or otherwise, lease, or otherwise acquire, own, hold, improve, 6 employ, use and otherwise deal in and with, real or personal 7 property, or an interest therein, wherever situated. 8 (q) Sell, convey, lease, exchange, transfer or otherwise 9 dispose of, or mortgage or pledge, or create a security interest 10 in, any of its property, or an interest therein, wherever 11 situated. 12 (r) Borrow money and issue its promissory note or bond for 13 the repayment of the borrowed money with interest. 14 (s) Make donations for the public welfare, including hospi- 15 tal, charitable, or educational contributions that do not signif- 16 icantly affect rates charged to subscribers. 17 (t) Participate with others in any joint venture with 18 respect to any transaction that the health care corporation would 19 have the power to conduct by itself. 20 (u) Cease its activities and dissolve, subject to the 21 commissioner's authority under section 606(2). 22 (v) Make contracts, transact business, carry on its opera- 23 tions, have offices, and exercise the powers granted by this act 24 in any jurisdiction, to the extent necessary to carry out its 25 purposes under this act. 26 (w) Have and exercise all powers necessary or convenient to 27 effect any purpose for which the corporation was formed. 04042'99 7 1 (x) Notwithstanding subdivision (o) or any other provision 2 of this act, establish, own, and operate a domestic stock insur- 3 ance company only for the purpose of acquiring, owning, and oper- 4 ating the state accident fund pursuant to chapter 51 of the 5 insurance code of 1956,Act No. 218 of the Public Acts of 1956,6being sections 500.5100 to 500.5114 of the Michigan Compiled7Laws1956 PA 218, MCL 500.5100 TO 500.5114, so long as all of 8 the following are met: 9 (i) The insurer ONLY transactsonlyworker's compensation 10 insurance and employer's liability insurance,andTRANSACTS 11 DISABILITY INSURANCE LIMITED TO REPLACEMENT OF LOSS OF EARNINGS, 12 acts as an administrative services organization for an approved 13 self-insured worker's compensation plan, OR ACTS AS A DISABILITY 14 INSURANCE PLAN LIMITED TO REPLACEMENT OF LOSS OF EARNINGS and 15 does not transact any other type of insurance notwithstanding the 16 authorization in chapter 51 ofAct No. 218 of the Public Acts of171956THE INSURANCE CODE OF 1956, 1956 PA 218, MCL 500.5100 TO 18 500.5114. 19 (ii) The activity is determined by the attorney general to 20 be lawful under section 202. 21 (iii) The health care corporation does not directly or indi- 22 rectly subsidize the use of any provider or subscriber informa- 23 tion, loss data, contract, agreement, reimbursement mechanism or 24 arrangement, computer system, or health care provider discount to 25 the insurer. 26 (iv) Members of the board of directors, employees, and 27 officers of the health care corporation are not, directly or 04042'99 8 1 indirectly, employed by the insurer unless the health care 2 corporation is fairly and reasonably compensated for the services 3 rendered to the insurer if those services were paid for by the 4 health care corporation. 5 (v) Health care corporation and subscriber funds are used 6 only for the acquisition from the state of Michigan of the assets 7 and liabilities of the state accident fund. 8 (vi) Health care corporation and subscriber funds are not 9 used to operate or subsidize in any way the insurer including the 10 use of such funds to subsidize contracts for goods and services. 11 This subparagraph does not prohibit joint undertakings between 12 the health care corporation and the insurer to take advantage of 13 economies of scale or arm's-length loans or other financial 14 transactions between the health care corporation and the 15 insurer. 16 (2) In order to ascertain the interests of senior citizens 17 regarding the provision of medicare supplemental coverage, as 18 described in section 202(1)(d)(v), and to ascertain the interests 19 of senior citizens regarding the administration of the federal 20 medicare program when acting as fiscal intermediary in this 21 state, as described in section 202(1)(d)(vi), a health care cor- 22 poration shall consult with the office of services to the aging 23 and with senior citizens' organizations in this state. 24 (3) An act of a health care corporation, otherwise lawful, 25 is not invalid because the corporation was without capacity or 26 power to do the act. However, the lack of capacity or power may 27 be asserted: 04042'99 9 1 (a) In an action by a director or a member of the corporate 2 body against the corporation to enjoin the doing of an act. 3 (b) In an action by or in the right of the corporation to 4 procure a judgment in its favor against an incumbent or former 5 officer or director of the corporation for loss or damage due to 6 an unauthorized act of that officer or director. 7 (c) In an action or special proceeding by the attorney gen- 8 eral to enjoin the corporation from the transacting of unautho- 9 rized business, to set aside an unauthorized transaction, or to 10 obtain other equitable relief. 11 Enacting section 1. This amendatory act does not take 12 effect unless Senate Bill No. 784 13 of the 90th Legislature is enacted into 14 law. 04042'99 Final page. DKH