REPORT TITLE:



DESCRIPTION:


 
a                                                     CCA-13(00)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2475
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 432, Hawaii Revised Statutes, is amended
 
 2 by adding to article 1 a new section to be appropriately
 
 3 designated and to read as follows:
 
 4      "§432:1-     Reserve credit for reinsurance.  Any society
 
 5 that takes credit for reserves on risks ceded to a reinsurer
 
 6 shall be subject to provisions of chapter 431 related to credit
 
 7 for reinsurance."
 
 8      SECTION 2.  Chapter 432D, Hawaii Revised Statutes, is
 
 9 amended by adding a new section to be appropriately designated
 
10 and to read as follows:
 
11      "§432D-     Reserve Credit for reinsurance.  Any health
 
12 maintenance organization that takes credit for reserves on risks
 
13 ceded to a reinsurer shall be subject to provisions of chapter
 
14 431 related to credit for reinsurance."
 
15      SECTION 3.  Section 432:1-404, Hawaii Revised Statutes, is
 
16 amended by amending subsection (a) to read as follows:
 
17      "(a)  Each society shall file with the commissioner
 
18 annually, on or before April 30 in each year, a statement under
 
19 oath, and in such form and detail as the commissioner shall
 

 
a                                                     CCA-13(00)
Page 2                                                     2475
                                     H.B. NO.           
                                                        
                                                        

 
 1 [prescribe.  Those societies promising or offering to pay death,
 
 2 sick, disability, or other benefits shall set forth in the
 
 3 statement the following:
 
 4      (1)  The total business transacted and the amount of gross
 
 5           receipts received by the society during the year ending
 
 6           December 31 last preceding;
 
 7      (2)  The resources and liabilities of the society at the
 
 8           close of business on December 31;
 
 9      (3)  The receipts and expenditures; and
 
10      (4)  The computation of the loss or gain of the society
 
11           during the calendar year.]
 
12 prescribe; provided that any association or society organized and
 
13 operating as a nonprofit medical indemnity or hospital service
 
14 association shall file a report with the commissioner covering
 
15 the preceding calendar year and verified by at least two
 
16 principal officers.  The report shall comply with sections 431:3-
 
17 301 and 431:3-302.  The commissioner may prescribe the forms on
 
18 which the report is to be filed.
 
19      In addition, any association or society organized and
 
20 operating as a nonprofit medical indemnity or hospital service
 
21 association annually shall file with the commissioner the
 
22 following by the dates specified:
 
23      (1)  An audit, by an independent, certified public
 

 
a                                                     CCA-13(00)
Page 3                                                     2475
                                     H.B. NO.           
                                                        
                                                        

 
 1           accountant or an accounting firm designated by the
 
 2           association or society, of the financial statements,
 
 3           reporting the financial condition and results of
 
 4           operations of the association or society on or before
 
 5           June 1, or such later date as the commissioner upon
 
 6           request or for cause may specify.  The association or
 
 7           society, on an annual basis and prior to the
 
 8           commencement of the audit, shall notify the
 
 9           commissioner in writing of the name and address of the
 
10           person or firm retained to conduct the annual audit.
 
11           The commissioner may disapprove the association's or
 
12           society's designation within fifteen days of receipt of
 
13           the association's or society's notice, and the
 
14           association or society shall be required to designate
 
15           another independent certified public accountant or
 
16           accounting firm.  The audit required in this paragraph
 
17           shall be prepared in accordance with the National
 
18           Association of Insurance Commissioners' annual
 
19           statement instructions, following the practices and
 
20           procedures prescribed by the National Association of
 
21           Insurance Commissioners' accounting practices and
 
22           procedures manuals.
 
23      (2)  A description of the available grievance procedures,
 

 
a                                                     CCA-13(00)
Page 4                                                     2475
                                     H.B. NO.           
                                                        
                                                        

 
 1           the total number of grievances handled through those
 
 2           procedures, a compilation of the causes underlying
 
 3           those grievances, and a summary of the final
 
 4           disposition of those grievances on or before April 30."
 
 5      SECTION 4.  Section 432D-5, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (a) to read as follows:
 
 7      "(a)  Every health maintenance organization shall annually,
 
 8 on or before [March 1,] April 30, file a report verified by at
 
 9 least two principal officers [with the commissioner] covering the
 
10 preceding calendar year.  Each health maintenance organization
 
11 shall file quarterly with the commissioner, on or before the
 
12 forty-fifth day after each quarter, a copy of its quarterly
 
13 report verified by at least two principal officers [with the
 
14 commissioner].  These reports shall comply with sections 431:3-
 
15 301 and 431:3-302.  The commissioner may prescribe [on which] the
 
16 forms on which the reports are to be filed.  In addition, the
 
17 health maintenance organization annually shall file with the
 
18 commissioner the following by the dates specified:
 
19      (1)  An audit, by [a designated] an independent certified
 
20           public accountant or an accounting firm designated by
 
21           the health maintenance organization of the financial
 
22           statements, reporting the financial condition and
 
23           results of operations of the health maintenance
 

 
a                                                     CCA-13(00)
Page 5                                                     2475
                                     H.B. NO.           
                                                        
                                                        

 
 1           organization on or before June 1, or such later date as
 
 2           the commissioner upon request or for cause may specify.
 
 3           The health maintenance organization, on an annual basis
 
 4           and prior to the commencement of the audit, shall
 
 5           notify the commissioner in writing of the name and
 
 6           address of the person or firm retained to conduct the
 
 7           annual audit.  The commissioner may disapprove the
 
 8           health maintenance organization's designation within
 
 9           fifteen days of receipt of the health maintenance
 
10           organization's notice, and the health maintenance
 
11           organization shall be required to designate another
 
12           independent certified public accountant or accounting
 
13           firm[;].  The audit required in this paragraph shall be
 
14           prepared in accordance with the National Association of
 
15           Insurance Commissioners' annual statement instructions,
 
16           following the practices and procedures prescribed by
 
17           the National Association of Insurance Commissioners'
 
18           accounting practices and procedures manuals;
 
19      (2)  A list of the providers who have executed a contract
 
20           that complies with section 432D-8(d) on or before
 
21           [March 1;] April 30; and
 
22      (3)  A description of the available grievance procedures,
 
23           the total number of grievances handled through those
 

 
a                                                     CCA-13(00)
Page 6                                                     2475
                                     H.B. NO.           
                                                        
                                                        

 
 1           procedures, a compilation of the causes underlying
 
 2           those grievances, and a summary of the final
 
 3           disposition of those grievances on or before [March 1.]
 
 4           April 30."
 
 5      SECTION 5.  Section 432D-7, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "[[]§432D-7[]]  Investments.  All investments permitted
 
 8 under this section or section 432D-3(a)(1) can be considered as
 
 9 admitted assets in determination of net worth; provided that
 
10 these investments are in compliance [with rules adopted by the
 
11 commissioner.  With the exception of investments made in
 
12 accordance with section 432D-3(a)(1), the funds of a health
 
13 maintenance organization shall be invested only as permitted by
 
14 rules adopted by the commissioner pursuant to chapter 91.] with
 
15 article 6 of chapter 431."
 
16      SECTION 6.  Section 432D-22, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "[[]§432D-22[]]  Acquisition of control of or merger of a
 
19 health maintenance organization.  No person may make a tender for
 
20 or a request or invitation for tenders of, enter into an
 
21 agreement to exchange securities for, or acquire in the open
 
22 market or otherwise, any voting security of a health maintenance
 
23 organization or enter into any other agreement if, after the
 
24 consummation thereof, that person would, directly or indirectly,
 

 
a                                                     CCA-13(00)
Page 7                                                     2475
                                     H.B. NO.           
                                                        
                                                        

 
 1 or by conversion or by exercise of any right to acquire, be in
 
 2 control of the health maintenance organization, and no person may
 
 3 enter into an agreement to merge or consolidate with or otherwise
 
 4 to acquire control of a health maintenance organization, unless,
 
 5 at the time any offer, request, or invitation is made or any
 
 6 agreement is entered into, or prior to the acquisition of the
 
 7 securities if no offer or agreement is involved, the person has
 
 8 filed with the commissioner and has sent to the health
 
 9 maintenance organization, information required by section
 
10 [431:11-103(a)(1), (2), (3), (4), (5), and (12)] 431:11-104 and
 
11 the offer, request, invitation, agreement, or acquisition has
 
12 been approved by the commissioner.  Approval by the commissioner
 
13 shall be governed by section 431:11-104(d)[.]; provided that if
 
14 no action is taken by the commissioner within thirty days, the
 
15 offer, request, invitation, agreement, or acquisition shall be
 
16 deemed approved."
 
17      SECTION 7.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 8.  This Act shall take effect upon its approval.
 
20 
 
21                           INTRODUCED BY:  _______________________
 

 
a                                                     CCA-13(00)