House Introduced Bill 6046

HOUSE BILL No. 6046

May 9, 2002, Introduced by Reps. Raczkowski, Bishop and George and referred to the Committee on Health Insurance.

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

(MCL 500.100 to 500.8302) by adding chapter 51A.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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CHAPTER 51A.

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CHANGE OF LEGAL STATUS TRANSACTION

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SEC. 5151. AS USED IN THIS CHAPTER:

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(A) "BOARD" MEANS THE BOARD OF DIRECTORS OF THE FUND.

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(B) "CHANGE OF LEGAL STATUS TRANSACTION" MEANS ANY OF THE

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FOLLOWING:

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(i) THE SALE, TRANSFER, LEASE, EXCHANGE, OPTIONING, CONVEY-

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ANCE, OR OTHER DISPOSITION OF A MATERIAL AMOUNT OF THE ASSETS OR

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OPERATIONS OF A NONPROFIT HEALTH INSURER, TO ANOTHER PERSON.

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(ii) THE TRANSFER OF CONTROL OR GOVERNANCE OF A MATERIAL

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AMOUNT OF THE ASSETS OR OPERATIONS OF A NONPROFIT HEALTH INSURER

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TO ANOTHER PERSON OTHER THAN AS PERMITTED UNDER SECTION 3721.

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(C) "FUND" MEANS THE MICHIGAN COMMUNITY HEALTH TRUST FUND

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CREATED IN SECTION 3553.

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(D) "MEMBER" MEANS A MEMBER OF THE BOARD OF DIRECTORS OF THE

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FUND.

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(E) "NONPROFIT HEALTH INSURER" MEANS A NONPROFIT HEALTH

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INSURER OPERATING PURSUANT TO CHAPTER 37.

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SEC. 3553. (1) THE MICHIGAN COMMUNITY HEALTH TRUST FUND IS

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ESTABLISHED AS A TRUST FUND IN THE DEPARTMENT OF TREASURY. THE

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FUND IS ESTABLISHED FOR THE PURPOSE OF RECEIVING THE FAIR MARKET

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VALUE OF THE NONPROFIT HEALTH INSURER RESULTING FROM ANY CHANGE

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OF LEGAL STATUS TRANSACTION. THE BOARD SHALL ADMINISTER THE FUND

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TO CONTINUE IN PERPETUITY THE CHARITABLE AND BENEVOLENT MISSION

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AS PRESCRIBED IN FORMER 1980 PA 350 AND CONTINUED UNDER CHAPTER

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37 OF A NONPROFIT HEALTH INSURER FOLLOWING A CHANGE IN LEGAL

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STATUS TRANSACTION.

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(2) THE FUND IS CREATED AS A REVOLVING FUND. ASSETS IN THE

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FUND SHALL NOT REVERT TO THE GENERAL FUND.

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(3) EXPENDITURES FROM THE FUND ARE SUBJECT TO APPROPRIATION

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FOR THE PURPOSES DESCRIBED IN SECTION 3557.

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SEC. 3555. (1) THE BOARD SHALL NOT BE CREATED UNDER THIS

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SECTION UNTIL THE COMMISSIONER HAS RECEIVED AN APPLICATION UNDER

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SECTION 3563 INDICATING THAT A CHANGE OF LEGAL STATUS TRANSACTION

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IS BEING CONTEMPLATED. UPON RECEIPT OF THE APPLICATION UNDER

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SECTION 3563, THE COMMISSIONER SHALL NOTIFY THE GOVERNOR OF HIS

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OR HER NEED TO APPOINT MEMBERS TO THE BOARD.

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(2) A BOARD OF DIRECTORS SHALL ADMINISTER THE FUND. THE

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BOARD SHALL BE LOCATED IN THE DEPARTMENT OF TREASURY. THE BOARD

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SHALL CONSIST OF 3 VOTING MEMBERS WHO ARE RESIDENTS OF THIS STATE

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AND APPOINTED BY THE GOVERNOR AS FOLLOWS:

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(A) ONE MEMBER WHO IS 62 YEARS OF AGE OR OLDER.

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(B) ONE MEMBER WHO HAS TECHNICAL EXPERTISE IN THE AREA OF

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INSURANCE, ACTUARIAL SCIENCE, LAW, INVESTMENT, OR OTHER RELATED

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FIELD.

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(C) ONE MEMBER WHO HAS PRACTICAL EXPERIENCE IN THE AREA OF

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CONSUMER AND PUBLIC INTEREST ORGANIZATIONS, PUBLIC HEALTH, HEALTH

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CARE DELIVERY AND FINANCING, PATIENT HEALTH ISSUES, PHILANTHROPIC

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ADMINISTRATION, OR OTHER RELATED FIELD.

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(3) THE COMMISSIONER SHALL BE AN EX OFFICIO, NONVOTING

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MEMBER OF THE BOARD.

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(4) EACH APPOINTED MEMBER SHALL HAVE A TERM OF 3 YEARS AND

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MAY BE REAPPOINTED AT THE END OF HIS OR HER TERM. A VACANCY ON

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THE BOARD SHALL BE FILLED FOR THE REMAINDER OF THE UNEXPIRED TERM

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IN THE SAME MANNER AND WITH THE SAME RESTRICTIONS AS THE INITIAL

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APPOINTMENT. EXCEPT AS PROVIDED IN SUBSECTIONS (5) AND (6), A

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BOARD MEMBER REMAINS A MEMBER UNTIL HIS OR HER SUCCESSOR IS

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APPOINTED AND TAKES OFFICE.

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(5) AN INDIVIDUAL APPOINTED TO THE BOARD SHALL NOT BE ANY OF

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THE FOLLOWING:

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(A) AN OFFICER OR EMPLOYEE OF THIS STATE OR ANY POLITICAL

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SUBDIVISION OF THIS STATE.

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(B) AN OFFICER, DIRECTOR, OR EMPLOYEE OF THE NONPROFIT

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HEALTH INSURER AT THE TIME THE NONPROFIT HEALTH INSURER APPLIED

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FOR CHANGE IN LEGAL STATUS TRANSACTION UNDER SECTION 3563.

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(C) AN OFFICER, DIRECTOR, OR EMPLOYEE OF THE ENTITY SURVIV-

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ING AFTER A CHANGE IN LEGAL STATUS TRANSACTION OCCURS OR ITS

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AFFILIATES OR SUCCESSORS.

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(D) AN OFFICER OR EMPLOYEE OF THE FUND.

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(6) A MEMBER IS DISQUALIFIED FROM MEMBERSHIP ON THE BOARD

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AND FROM PARTICIPATING IN ANY BOARD ACTIVITY IMMEDIATELY UPON

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MEETING SUBSECTION (5)(A) TO (D). THIS SUBSECTION DOES NOT

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AFFECT ANY ACTION OF THE BOARD TAKEN WHILE A MEMBER WAS A QUALI-

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FIED MEMBER AND BEFORE THE DATE A MEMBER BECAME DISQUALIFIED

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UNDER THIS SUBSECTION. ANY ACTION OF THE BOARD TAKEN WHILE A

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DISQUALIFIED MEMBER WAS ACTING IS NULL AND VOID UNLESS, BY ORDER

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OF THE COMMISSIONER, THE ACTION IS RATIFIED.

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(7) A MEMBER SHALL SERVE WITHOUT COMPENSATION FOR HIS OR HER

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SERVICES AS MEMBER, BUT IS ENTITLED TO REIMBURSEMENT FOR ACTUAL

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EXPENSES WHILE ENGAGING IN OFFICIAL DUTIES AS MEMBER. A MEMBER

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MAY ENGAGE IN PRIVATE EMPLOYMENT, OR IN A PROFESSION OR BUSINESS,

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UNLESS OTHERWISE PROHIBITED BY THIS CHAPTER.

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(8) THE AFFIRMATIVE VOTE OF ALL 3 VOTING MEMBERS OF THE

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BOARD IS NECESSARY FOR THE TRANSACTION OF ANY BUSINESS OR THE

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EXERCISE OF ANY POWER OR FUNCTION OF THE BOARD. THE BOARD MAY

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DELEGATE TO 1 OR MORE OF ITS MEMBERS OR AGENTS THOSE POWERS THE

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BOARD CONSIDERS NECESSARY.

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(9) THE BOARD MAY MAKE AND EXECUTE CONTRACTS AND ALL OTHER

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INSTRUMENTS AND EXERCISE SUCH OTHER POWERS AND DUTIES IT

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CONSIDERS NECESSARY. IN DIRECTING INVESTMENTS UNDER THIS

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CHAPTER, THE BOARD IS NOT LIMITED BY ANY RESTRICTIONS ON INVEST-

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MENTS CONTAINED IN ANY ACT AND IS SUBJECT ONLY TO THE BOARD'S

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OBLIGATION AND MISSION UNDER THIS CHAPTER.

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(10) A BOARD MEMBER OR ANY AGENT OR OTHER PERSON ACTING ON

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BEHALF OF THE BOARD, WHILE ACTING WITHIN THE SCOPE OF HIS OR HER

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AUTHORITY, IS NOT SUBJECT TO ANY PERSONAL LIABILITY RESULTING

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FROM THE CARRYING OUT OF THE POWERS UNDER THIS CHAPTER.

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SEC. 3557. (1) MONEY IN THE FUND SHALL BE EXPENDED FOR ALL

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OF THE FOLLOWING PURPOSES:

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(A) TO SUBSIDIZE THE COST OF INDIVIDUAL MEDIGAP COVERAGE,

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INCLUDING MEDIGAP COVERAGE PURCHASED BY SENIOR CITIZENS IN THIS

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STATE.

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(B) TO EXPAND ACCESS TO HEALTH CARE BY EXTENDING HEALTH

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INSURANCE COVERAGE TO STATE RESIDENTS WHO CANNOT AFFORD TO PUR-

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CHASE THEIR OWN COVERAGE OR WHO HAVE COVERAGE INADEQUATE TO MEET

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THEIR NEEDS.

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(C) TO EXPAND AND ENHANCE ACCESS TO HEALTH CARE BY AUGMENT-

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ING AND CREATING HEALTH CARE PROGRAMS THAT DELIVER HEALTH SERV-

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ICES TO POPULATIONS THAT ARE UNABLE TO ACCESS HEALTH CARE.

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(D) TO SUPPORT PROGRAMS THAT INFORM AND EDUCATE RESIDENTS OF

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THIS STATE ABOUT PUBLIC HEALTH ISSUES AND PROGRAMS THAT EMPOWER

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COMMUNITIES TO ADDRESS PUBLIC HEALTH ISSUES BY BECOMING MORE

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EFFECTIVE AT IDENTIFYING AND ARTICULATING HEALTH CARE NEEDS AND

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IMPLEMENTING SOLUTIONS.

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(E) TO PROMOTE SAFEGUARDS FOR MAINTAINING APPROPRIATE

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CAPACITY FOR HEALTH SCIENCE RESEARCH AND HEALTH CARE PROVIDER

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EDUCATION.

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(F) TO SUPPORT, MAINTAIN, AND IMPLEMENT PROGRAMS OR INITIA-

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TIVES THAT SERVE THE RESIDENTS OR INSTITUTIONS SERVED BY THE NON-

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PROFIT HEALTH INSURER PRIOR TO THE CHANGE OF LEGAL STATUS

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TRANSACTION.

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(2) THE BOARD SHALL PROVIDE MECHANISMS FOR ONGOING COMMUNITY

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CONSULTATION AND ENGAGEMENT RELATING TO THE PURPOSES FOR WHICH

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MONEY IN THE FUND IS TO BE EXPENDED, INCLUDING, BUT NOT LIMITED

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TO, THE ESTABLISHMENT OF A COMMUNITY ADVISORY BOARD.

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(3) THE BOARD SHALL FILE AN ANNUAL REPORT WITH THE COMMIS-

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SIONER AND POST ITS ANNUAL REPORT ELECTRONICALLY ON THE

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INTERNET. THE ANNUAL REPORT SHALL CONTAIN THE INFORMATION AND BE

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IN A FORM AS PRESCRIBED BY THE COMMISSION.

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(4) THE FUND, ITS BOARD, AND ANY DIRECTOR, OFFICER, OR

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EMPLOYEES OF THE FUND OR BOARD SHALL REMAIN INDEPENDENT OF ANY

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CONTROL OR INFLUENCE OF THE ENTITY SURVIVING AFTER A CHANGE IN

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LEGAL STATUS TRANSACTION OR ITS AFFILIATES AND SUCCESSORS. THIS

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SUBSECTION DOES NOT PREVENT THE BOARD FROM VOTING THE FUND'S

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EQUITY SHARES IN THE ENTITY SURVIVING AFTER A CHANGE IN LEGAL

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STATUS TRANSACTION OR ITS AFFILIATES AND SUCCESSORS IN ACCORDANCE

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WITH THE VOTING AND SHAREHOLDER RIGHTS AGREEMENT ENTERED INTO BY

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THE BOARD. THE BOARD, IN VOTING THE FUND'S EQUITY SHARE, IS

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SUBJECT TO THE VOTING AND SHAREHOLDER RIGHTS AGREEMENT AND THE

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ASSET PRESERVATION AGREEMENT ENTERED INTO BY THE BOARD AND THE

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NONPROFIT HEALTH INSURER.

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(5) THE BOARD SHALL ESTABLISH FORMAL MECHANISMS TO AVOID

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CONFLICTS OF INTEREST AND TO PROHIBIT GRANTS BENEFITING THE

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ENTITY SURVIVING AFTER A CHANGE IN LEGAL STATUS TRANSACTION OR

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ITS AFFILIATES AND SUCCESSORS OR ANY OF ITS OFFICERS, DIRECTORS,

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OR EMPLOYEES.

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SEC. 3559. (1) THE BOARD SHALL DO ALL OF THE FOLLOWING:

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(A) IMMEDIATELY TRANSMIT TO THE FUND ANY ASSETS RECEIVED

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UNDER SECTION 3565.

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(B) RESERVE A PORTION OF THE FUND INCOME, INCLUDING INTEREST

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EARNINGS AND REALIZED GAINS, TO GROW THE FUND CORPUS AND RETAIN

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BUYING POWER AGAINST INFLATION.

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(C) PAY FOR ANY ADMINISTRATIVE EXPENSES OF THE FUND FROM THE

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FUND INCOME, INCLUDING INTEREST EARNINGS AND REALIZED GAINS.

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(D) PROVIDE FOR ANY OTHER EXPENDITURE AS DETERMINED NECES-

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SARY BY THE BOARD TO IMPROVE ACCESS TO HEALTH CARE FOR MICHIGAN'S

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UNINSURED AND UNDERINSURED.

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(2) THE BOARD MAY EMPLOY, HIRE, OR CONTRACT WITH INDEPENDENT

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FINANCIAL, LEGAL, OR OTHER EXPERTS OR CONSULTANTS THE BOARD CON-

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SIDERS APPROPRIATE TO ASSIST THE BOARD IN ADMINISTERING THE

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FUND'S ASSETS AND CARRYING OUT ITS POWERS AND DUTIES UNDER THIS

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CHAPTER.

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SEC. 3561. (1) ANY ACTION OR PROCEEDING IN WHICH A QUESTION

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ARISES CONCERNING THE VALIDITY OF ANY PROVISION IN THIS CHAPTER

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SHALL BE PREFERRED OVER ALL OTHER CIVIL CAUSES EXCEPT ELECTION

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CAUSES IN ALL COURTS OF THIS STATE AND SHALL BE HEARD AND DETER-

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MINED BEFORE ALL OTHER CIVIL BUSINESS PENDING IN THIS STATE

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EXCEPT ELECTION CAUSES, IRRESPECTIVE OF POSITION ON THE

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CALENDAR. THE SAME PREFERENCE WILL BE GIVEN UPON APPLICATION OF

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BOARD COUNSEL IN ANY ACTION OR PROCEEDING QUESTIONING THE VALID-

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ITY OF ANY PROVISION IN THIS CHAPTER.

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(2) IF ANY OTHER PROVISION OF LAW CONFLICTS WITH A PROVISION

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IN THIS CHAPTER, THIS CHAPTER PREVAILS. THIS CHAPTER, BEING NEC-

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ESSARY FOR THE WELFARE OF THE CITIZENS OF THIS STATE, SHALL BE

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LIBERALLY CONSTRUED IN ORDER TO EFFECTUATE ITS PURPOSES.

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SEC. 3563. (1) A NONPROFIT HEALTH INSURER SHALL APPLY FOR

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AND OBTAIN THE APPROVAL OF THE COMMISSIONER AND THE LEGISLATURE

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BEFORE ENTERING INTO ANY CHANGE OF LEGAL STATUS TRANSACTION. AT

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THE TIME OF APPLICATION UNDER THIS SUBSECTION, THE NONPROFIT

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HEALTH INSURER SHALL PROVIDE THE COMMISSIONER WITH WRITTEN CERTI-

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FICATION THAT A COPY OF THIS CHAPTER HAS BEEN GIVEN IN ITS

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ENTIRETY TO EACH MEMBER OF THE BOARD OF TRUSTEES OF THE NONPROFIT

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HEALTH INSURER.

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(2) THE APPLICATION SHALL BE ON A FORM PRESCRIBED BY THE

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COMMISSIONER AND SHALL REQUIRE ALL THE INFORMATION THE COMMIS-

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SIONER DETERMINES IS NECESSARY. AT A MINIMUM, THE APPLICATION

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SHALL INCLUDE A DETAILED DESCRIPTION OF THE PROPOSED CHANGE OF

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LEGAL STATUS TRANSACTION, A PLAN TO EFFECTUATE THE PROPOSED

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CHANGE OF LEGAL STATUS TRANSACTION, IDENTIFICATION OF ALL OF THE

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PARTIES INVOLVED IN THE PROPOSED CHANGE OF LEGAL STATUS TRANSAC-

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TION, AND ALL OTHER DETAILS NECESSARY FOR THE COMMISSIONER TO

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EVALUATE THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION UNDER

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THIS SECTION. AN APPLICATION SHALL NOT BE CONSIDERED RECEIVED

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UNTIL THE COMMISSIONER HAS ACKNOWLEDGED RECEIPT OF A COMPLETE

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APPLICATION PURSUANT TO THIS CHAPTER AND ANY RULES PROMULGATED

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AND ANY OTHER PROCEDURES ESTABLISHED BY THE COMMISSIONER UNDER

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THIS CHAPTER.

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(3) BY NOT LATER THAN 30 DAYS AFTER FILING THE APPLICATION

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UNDER SUBSECTION (1), THE NONPROFIT HEALTH INSURER SHALL DO ALL

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OF THE FOLLOWING:

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(A) PUBLISH NOTICE, IN A FORM AND IN NEWSPAPERS TO BE

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APPROVED BY THE COMMISSIONER, OF THE PROPOSED CHANGE OF LEGAL

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STATUS TRANSACTION ONCE A WEEK FOR 3 CONSECUTIVE WEEKS IN AT

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LEAST 1 DAILY NEWSPAPER OF GENERAL CIRCULATION IN SEVERAL GEO-

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GRAPHIC AREAS OF THIS STATE DESIGNED TO REACH AS MANY CITIZENS OF

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THIS STATE AS POSSIBLE.

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(B) CAUSE NOTICE, IN A FORM AND MANNER TO BE APPROVED BY THE

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COMMISSIONER, OF THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION

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TO BE DELIVERED BY REGULAR MAIL TO ALL CURRENT SUBSCRIBERS COV-

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ERED UNDER A CERTIFICATE ISSUED BY THE NONPROFIT HEALTH INSURER.

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THE COMMISSIONER MAY PERMIT THE NONPROFIT HEALTH INSURER TO COM-

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BINE THE NOTICE REQUIRED IN THIS SUBDIVISION WITH OTHER REGULAR

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MAILINGS TO SUBSCRIBERS IF SPECIAL EMPHASIS IS SHOWN THAT SEPA-

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RATE ATTENTION IS GIVEN TO THE CHANGE OF LEGAL STATUS

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TRANSACTION.

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(C) SUBMIT TO THE COMMISSIONER PROOF OF PUBLICATION OF THE

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NOTICE REQUIRED IN SUBDIVISION (A) AND PROPERLY EXECUTED AMEND-

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MENTS TO THE NONPROFIT HEALTH INSURER'S ARTICLES OF INCORPORA-

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TION, BYLAWS, AND OTHER ORGANIZATIONAL DOCUMENTS TO EFFECTUATE

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THE NONPROFIT HEALTH INSURER CHANGE OF LEGAL STATUS TRANSACTION.

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SEC. 3565. (1) BY NOT LATER THAN 6 MONTHS AFTER THE RECEIPT

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OF A COMPLETE WRITTEN APPLICATION AS PRESCRIBED IN SECTION 3563,

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THE COMMISSIONER SHALL SUBMIT TO THE LEGISLATURE HIS OR HER

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DECISION TO APPROVE OR DISAPPROVE THE PROPOSED CHANGE OF LEGAL

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STATUS TRANSACTION. THE COMMISSIONER MAY EXTEND THIS PERIOD FOR

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AN ADDITIONAL 120-DAY PERIOD, PROVIDED THE EXTENSION IS NECES-

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SARY, AS DETERMINED BY THE COMMISSIONER, TO OBTAIN INFORMATION

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PURSUANT TO SECTION 3573 OR 3575.

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(2) IF THE COMMISSIONER'S DECISION UNDER SUBSECTION (1) IS

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TO APPROVE THE PROPOSED CHANGE IN LEGAL STATUS TRANSACTION, THE

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LEGISLATURE SHALL BY CONCURRENT RESOLUTION VOTE ON WHETHER TO

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APPROVE OR DISAPPROVE THE COMMISSIONER'S DECISION REGARDING THE

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PROPOSED CHANGE IN LEGAL STATUS TRANSACTION. IF THE LEGISLATURE

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BY CONCURRENT RESOLUTION DOES NOT APPROVE THE COMMISSIONER'S

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DECISION REGARDING THE PROPOSED CHANGE IN LEGAL STATUS TRANSAC-

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TION, THE NONPROFIT HEALTH INSURER MAY AGAIN SUBMIT AN APPLICA-

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TION FOR A CHANGE IN LEGAL STATUS TRANSACTION UNDER SECTION

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3563.

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(3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), IF THE

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APPLICATION FOR THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION

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IS APPROVED UNDER SUBSECTIONS (1) AND (2), THE NONPROFIT HEALTH

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INSURER SHALL PROCEED ACCORDING TO THE APPROVED PLAN. UPON THE

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COMMISSIONER'S REQUEST AND WITHIN A REASONABLE TIME AFTER RECEIPT

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OF THE REQUEST, THE NONPROFIT HEALTH INSURER SHALL PROVIDE THE

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COMMISSIONER WITH REPORTS ON THE STATUS OF THE CHANGE OF LEGAL

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STATUS TRANSACTION. AS SOON AS PRACTICABLE, THE NONPROFIT HEALTH

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INSURER SHALL TRANSMIT THE FAIR MARKET VALUE OF THE NONPROFIT

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HEALTH INSURER TO THE COMMISSIONER FOR DEPOSIT INTO THE FUND.

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(4) IF REQUESTED BY THE NONPROFIT HEALTH INSURER, THE

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COMMISSIONER SHALL, AT ANY TIME DURING THE APPROVAL PROCESS UNDER

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THIS CHAPTER, SUSPEND OR TERMINATE THE REVIEW OF THE PROPOSED

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CHANGE IN LEGAL STATUS TRANSACTION. UPON A REQUEST FOR A SUSPEN-

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SION OF THE APPROVAL PROCESS UNDER THIS SUBSECTION BY THE NON-

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PROFIT HEALTH INSURER, THE TIME PERIODS ESTABLISHED UNDER THIS

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CHAPTER ARE TOLLED FOR THE ENTIRE PERIOD OF THE SUSPENSION. UPON

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A REQUEST FOR A TERMINATION OF THE APPROVAL PROCESS UNDER THIS

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SUBSECTION BY THE NONPROFIT HEALTH INSURER, THE APPLICATION IS

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CONSIDERED WITHDRAWN. THIS SUBSECTION DOES NOT PRECLUDE A NON-

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PROFIT HEALTH INSURER FROM AGAIN SUBMITTING AN APPLICATION FOR A

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CHANGE IN LEGAL STATUS TRANSACTION UNDER SECTION 3563.

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SEC. 3567. BEFORE ISSUING ANY WRITTEN DECISION UNDER SEC-

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TION 3565, THE COMMISSIONER SHALL CONDUCT 1 OR MORE PUBLIC HEAR-

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INGS, 1 OF WHICH SHALL BE HELD IN INGHAM COUNTY. AT THE PUBLIC

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HEARING, THE COMMISSIONER SHALL RECEIVE WRITTEN AND ORAL COMMENTS

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FROM INTERESTED PERSONS DESIRING TO MAKE STATEMENTS REGARDING THE

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PROPOSED CHANGE OF LEGAL STATUS TRANSACTION. FOURTEEN OR MORE

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DAYS BEFORE THE MEETING, THE COMMISSIONER SHALL CAUSE WRITTEN

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NOTICE TO BE PROVIDED OF THE TIME AND PLACE OF THE PUBLIC HEARING

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THROUGH PUBLICATION IN AT LEAST 1 DAILY NEWSPAPER OF GENERAL CIR-

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CULATION IN SEVERAL GEOGRAPHIC AREAS OF THIS STATE AS DETERMINED

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NECESSARY BY THE COMMISSIONER TO REACH AS MANY CITIZENS OF THIS

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STATE AS POSSIBLE.

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SEC. 3569. (1) BEFORE MAKING A DECISION REGARDING A PRO-

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POSED CHANGE OF LEGAL STATUS TRANSACTION, THE COMMISSIONER SHALL

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DETERMINE ALL OF THE FOLLOWING:

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(A) THAT THE STATE OF MICHIGAN, THROUGH THE FUND, WILL

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RECEIVE FAIR MARKET VALUE FOR THE NONPROFIT HEALTH INSURER. THE

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COMMISSIONER SHALL OBTAIN, AT THE NONPROFIT HEALTH INSURER'S

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COST, AN INDEPENDENT VALUATION CERTIFYING THAT THE CITIZENS OF

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THIS STATE WILL RECEIVE FAIR MARKET VALUE FOR THE NONPROFIT

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HEALTH INSURER.

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(B) THAT THE FAIR MARKET VALUE OF THE NONPROFIT HEALTH

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INSURER'S ASSETS TO BE TRANSFERRED HAS NOT BEEN MANIPULATED BY

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THE ACTIONS OF THE PARTIES IN A MANNER THAT WILL CAUSE THE FAIR

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MARKET VALUE OF THE ASSETS TO DECREASE.

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(C) THAT THE CHANGE OF LEGAL STATUS TRANSACTION WILL NOT

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HAVE AN UNREASONABLY ADVERSE IMPACT ON THE STATUS OF COMPETITION

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FOR HEALTH INSURANCE BETWEEN AND AMONG CARRIERS CURRENTLY OFFER-

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ING HEALTH INSURANCE TO CITIZENS OF THIS STATE.

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(D) THAT THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION

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WILL NOT RESULT IN A BREACH OF FIDUCIARY DUTY, AS DETERMINED BY

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THE COMMISSIONER, INCLUDING CONFLICTS OF INTEREST RELATED TO PAY-

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MENTS OR BENEFITS TO OFFICERS, DIRECTORS, BOARD MEMBERS, EXECU-

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TIVES, AND EXPERTS EMPLOYED BY OR RETAINED BY THE PARTIES.

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(E) THAT THE GOVERNING BODY OF THE NONPROFIT HEALTH INSURER

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EXERCISED DUE DILIGENCE IN DECIDING TO ENTER INTO A CHANGE OF

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LEGAL STATUS TRANSACTION, SELECTING THE ACQUIRING ENTITY, AND

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NEGOTIATING THE TERMS AND CONDITIONS OF THE TRANSACTION.

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(F) THAT THE CHANGE OF LEGAL STATUS TRANSACTION WILL NOT

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RESULT IN PRIVATE INUREMENT TO ANY PERSON, IN COMPLIANCE WITH

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THIS CHAPTER.

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(G) THAT HEALTH CARE PROVIDERS WILL BE OFFERED THE

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OPPORTUNITY TO INVEST IN OR OWN AN INTEREST IN THE ACQUIRING

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ENTITY OR A RELATED PARTY AND THAT PROCEDURES OR SAFEGUARDS ARE

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IN PLACE TO AVOID CONFLICT OF INTEREST IN PATIENT REFERRALS.

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(H) THAT THE TERMS OF ANY MANAGEMENT OR SERVICES CONTRACT

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NEGOTIATED IN CONJUNCTION WITH THE PROPOSED CHANGE OF LEGAL

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STATUS TRANSACTION ARE REASONABLE AND APPROPRIATE.

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(I) THAT THE COMMISSIONER HAS BEEN PROVIDED WITH SUFFICIENT

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INFORMATION AND DATA BY THE NONPROFIT HEALTH INSURER TO EVALUATE

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ADEQUATELY THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION OR THE

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EFFECTS OF THE TRANSACTION ON THE PUBLIC, PROVIDED THE COMMIS-

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SIONER HAS NOTIFIED THE NONPROFIT HEALTH INSURER OR THE ACQUIRING

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ENTITY OF ANY INADEQUACY OF THE INFORMATION OR DATA AND HAS PRO-

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VIDED A REASONABLE OPPORTUNITY TO REMEDY SUCH INADEQUACY.

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(J) ANY OTHER CRITERIA ESTABLISHED AS NECESSARY BY THE COM-

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MISSIONER PURSUANT TO THIS CHAPTER, ANY RULES PROMULGATED, AND

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ANY OTHER PROCEDURES ESTABLISHED BY THE COMMISSIONER UNDER THIS

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CHAPTER.

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(2) BEFORE MAKING A DECISION REGARDING A PROPOSED CHANGE OF

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LEGAL STATUS TRANSACTION, THE COMMISSIONER SHALL ALSO DETERMINE

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THAT THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION WILL NOT

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HAVE A SIGNIFICANT EFFECT ON THE AVAILABILITY OR ACCESSIBILITY OF

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HEALTH CARE SERVICES TO THE CITIZENS OF THIS STATE. IN MAKING

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THIS DETERMINATION, THE COMMISSIONER SHALL DETERMINE ALL OF THE

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FOLLOWING:

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(A) THAT SUFFICIENT SAFEGUARDS ARE INCLUDED TO ASSURE THE

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CONTINUED ACCESS TO AFFORDABLE HEALTH CARE.

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(B) THAT THE PROPOSED CHANGE OF LEGAL STATUS TRANSACTION

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DOES NOT CREATE OR WILL NOT HAVE THE LIKELIHOOD OF CREATING AN

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ADVERSE EFFECT ON THE ACCESS TO OR AVAILABILITY OR COST OF HEALTH

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CARE SERVICES.

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(C) ANY OTHER DETERMINATION THE COMMISSIONER CONSIDERS

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APPROPRIATE.

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SEC. 3571. IN A CHANGE OF LEGAL STATUS TRANSACTION, A NON-

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PROFIT HEALTH INSURER SHALL NOT ISSUE TO ANY EMPLOYEE OR MEMBER

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OF THE BOARD OF DIRECTORS OF EITHER THE NONPROFIT HEALTH INSURER

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OR THE ENTITY SURVIVING AFTER THE CHANGE IN LEGAL STATUS TRANSAC-

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TION ANY STOCK OPTIONS, WARRANTS, OR STOCK APPRECIATION RIGHTS

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UNLESS THE VALUE OF THE OPTIONS, WARRANTS, OR RIGHTS IS INITIALLY

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SET AT THE PUBLICLY TRADED PRICE OF THE STOCK OF THE ENTITY SUR-

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VIVING AFTER THE CHANGE IN LEGAL STATUS TRANSACTION ON A DATE NO

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EARLIER THAN 6 MONTHS AFTER THE COMMENCEMENT OF THE INITIAL

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PUBLIC OFFERING. IN NO EVENT SHALL A DIRECTOR, EXECUTIVE, OR

17
SENIOR LEVEL MANAGEMENT OF THE NONPROFIT HEALTH INSURER IN ITS

18
CHANGE OF LEGAL STATUS TRANSACTION RECEIVE ANY STOCK OPTIONS,

19
WARRANTS, OR STOCK APPRECIATION RIGHTS IN HIS OR HER CAPACITY AS

20
A DIRECTOR, EXECUTIVE, OR SENIOR LEVEL MANAGEMENT OF THE NON-

21
PROFIT HEALTH INSURER. AS USED IN THIS SECTION, "EXECUTIVE OR

22
SENIOR LEVEL MANAGEMENT" MEANS THOSE INDIVIDUALS IDENTIFIED AS

23
ELIGIBLE UNDER THE COMPENSATION PLAN OF THE NONPROFIT HEALTH

24
INSURER AS APPROVED BY THE COMMISSIONER UNDER SECTION 3726.

25
SEC. 3573. THE COMMISSIONER MAY REQUIRE THAT THE NONPROFIT

26
HEALTH INSURER APPLYING UNDER SECTION 3563 PROVIDE INFORMATION

27
THAT THE COMMISSIONER REASONABLY CONSIDERS NECESSARY TO COMPLETE

06817'02 15

1
THE REQUIRED REVIEW DESCRIBED IN SECTION 3569 OF ANY PROPOSED

2
CHANGE OF LEGAL STATUS TRANSACTION. A FAILURE BY THE NONPROFIT

3
HEALTH INSURER APPLYING UNDER SECTION 3563 TO PROVIDE TIMELY

4
INFORMATION AS REQUIRED BY THE COMMISSIONER IS A SUFFICIENT

5
GROUND FOR THE COMMISSIONER TO DISAPPROVE THE PROPOSED CHANGE OF

6
LEGAL STATUS TRANSACTION.

7
SEC. 3575. (1) WITHIN THE TIME PERIODS DESIGNATED IN SEC-

8
TION 3565, THE COMMISSIONER, IN ADDITION TO THE REQUIRED CERTIFI-

9
CATION IN SECTION 3569(1)(A), MAY DO ANY OF THE FOLLOWING TO

10
ASSIST IN THE REVIEW OF THE PROPOSED CHANGE OF LEGAL STATUS

11
TRANSACTION:

12
(A) CONTRACT WITH, CONSULT, AND RECEIVE ADVICE FROM ANY

13
STATE OR UNITED STATES AGENCY ON TERMS AND CONDITIONS THE COMMIS-

14
SIONER CONSIDERS APPROPRIATE.

15
(B) IN THE COMMISSIONER'S SOLE DISCRETION, CONTRACT WITH

16
EXPERTS OR CONSULTANTS THE COMMISSIONER CONSIDERS APPROPRIATE TO

17
ASSIST THE COMMISSIONER IN REVIEWING THE PROPOSED CHANGE OF LEGAL

18
STATUS TRANSACTION.

19
(2) THE REASONABLE AND NECESSARY EXPENSES OF THE COMMIS-

20
SIONER IN OBTAINING ADVICE UNDER SUBSECTION (1)(A) OR (B) SHALL

21
BE PAID BY THE NONPROFIT HEALTH INSURER APPLYING FOR A CHANGE IN

22
LEGAL STATUS TRANSACTION UNDER SECTION 3563. ANY CONTRACT COSTS

23
INCURRED BY THE COMMISSIONER UNDER THIS SECTION OR SECTION 3569

24
SHALL NOT EXCEED AN AMOUNT THAT IS REASONABLE AND NECESSARY TO

25
CONDUCT THE REVIEW OF THE PROPOSED CHANGE OF LEGAL STATUS

26
TRANSACTION.

06817'02 16

1
(3) THE COMMISSIONER IS ENTITLED TO REIMBURSEMENT FROM THE

2
NONPROFIT HEALTH INSURER APPLYING UNDER SECTION 3563 FOR ALL

3
REASONABLE AND ACTUAL COSTS INCURRED BY THE COMMISSIONER IN HOLD-

4
ING PUBLIC HEARINGS UNDER THIS CHAPTER AND REVIEWING ANY PROPOSED

5
CHANGE OF LEGAL STATUS TRANSACTION UNDER THIS CHAPTER, INCLUDING

6
ATTORNEY FEES AT THE BILLING RATE USED BY THE COMMISSIONER TO

7
BILL STATE AGENCIES FOR LEGAL SERVICES. THE NONPROFIT HEALTH

8
INSURER APPLYING UNDER SECTION 3563 SHALL, UPON REQUEST, PAY THE

9
COMMISSIONER PROMPTLY FOR ALL SUCH COSTS.

10
(4) THE FAILURE BY THE NONPROFIT HEALTH INSURER APPLYING

11
UNDER SECTION 3563 TO PROMPTLY REIMBURSE THE COMMISSIONER FOR ALL

12
COSTS UNDER THIS SECTION IS SUFFICIENT GROUND FOR THE COMMIS-

13
SIONER TO DISAPPROVE THE PROPOSED CHANGE OF LEGAL STATUS

14
TRANSACTION.

15
(5) THE COMMISSIONER IS EXEMPT FROM THE PROVISIONS OF THE

16
MANAGEMENT AND BUDGET ACT, 1984 PA 431, MCL 18.1101 TO 18.1594,

17
OR ANY OTHER STATE LAW FOR PURPOSES OF ENTERING INTO CONTRACTS

18
PURSUANT TO THIS CHAPTER. THE NONPROFIT HEALTH INSURER APPLYING

19
UNDER SECTION 3563, UPON REQUEST, SHALL PAY THE COMMISSIONER

20
PROMPTLY FOR ALL COSTS OF CONTRACTS ENTERED INTO BY THE COMMIS-

21
SIONER UNDER THIS CHAPTER.

22
SEC. 3677. ALL INFORMATION SUBMITTED TO THE COMMISSIONER BY

23
ANY PERSON, INCLUDING A NONPROFIT HEALTH INSURER APPLYING UNDER

24
SECTION 3563, IN CONNECTION WITH THE COMMISSIONER'S REVIEW OF THE

25
PROPOSED CHANGE OF LEGAL STATUS TRANSACTION PURSUANT TO THIS

26
CHAPTER IS A PUBLIC RECORD AND IS SUBJECT TO THE FREEDOM OF

06817'02 17

1
INFORMATION ACT, 1976 PA 442, MCL 15.231 TO 15.246, EXCEPT FOR

2
THE FOLLOWING AS DESIGNATED BY THE COMMISSIONER:

3
(A) PROPRIETARY INFORMATION.

4
(B) INFORMATION THAT CONTAINS TRADE SECRETS.

5
(C) OTHER COMMERCIALLY COMPETITIVE INFORMATION.

6
SEC. 3579. A CHANGE OF LEGAL STATUS TRANSACTION ENTERED

7
INTO IN VIOLATION OF THE APPLICATION, REVIEW, OR APPROVAL

8
REQUIREMENTS OF THIS CHAPTER IS NULL AND VOID. EACH MEMBER OF

9
THE GOVERNING BOARD AND THE CHIEF FINANCIAL OFFICERS OF THE PAR-

10
TIES TO THE NONPROFIT HEALTH INSURER CHANGE OF LEGAL STATUS

11
TRANSACTION ENTERED INTO IN VIOLATION OF THE APPLICATION, REVIEW,

12
OR APPROVAL REQUIREMENTS OF THIS CHAPTER ARE SUBJECT TO A CIVIL

13
FINE OF UP TO $1,000,000.00, THE AMOUNT TO BE DETERMINED BY THE

14
INGHAM COUNTY CIRCUIT COURT. UPON RECEIPT OF INFORMATION THAT A

15
CHANGE OF LEGAL STATUS TRANSACTION HAS BEEN ENTERED INTO IN VIO-

16
LATION OF THE APPLICATION, REVIEW, OR APPROVAL REQUIREMENTS OF

17
THIS CHAPTER, THE COMMISSIONER SHALL REQUEST THE ATTORNEY GENERAL

18
TO INSTITUTE PROCEEDINGS TO IMPOSE THE CIVIL FINE.

19
SEC. 3581. ANY FINAL DECISION OF THE COMMISSIONER PURSUANT

20
TO THIS CHAPTER IS SUBJECT TO JUDICIAL REVIEW PURSUANT TO SECTION

21
28 OF ARTICLE VI OF THE STATE CONSTITUTION OF 1963 AT THE INITIA-

22
TION OF THE NONPROFIT HEALTH INSURER OR ANY PERSON THAT WAS A

23
PARTY TO THE PROCEEDING AND WAS ADVERSELY AFFECTED OR AGGRIEVED

24
BY THE FINAL DECISION OF THE COMMISSIONER.

25
Enacting section 1. This amendatory act does not take

26
effect unless Senate Bill No. _____ or House Bill No. 6045

06817'02 18

1
(request no. 06816'02 *) of the 91st Legislature is enacted into

2
law.

06817'02 Final page. DKH