Public Act 90-0177 of the 90th General Assembly

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Public Act 90-0177

SB193 Enrolled                                 LRB9000079DPcd

    AN ACT to repeal the Vision Service Plan Act.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  5.   The  Illinois  Insurance Code is amended by
changing Sections 355a, 408, 531.03, and 1003 as follows:

    (215 ILCS 5/355a) (from Ch. 73, par. 967a)
    Sec. 355a.  Standardization of terms and coverage.
    (1) The purpose of this Section shall be (a)  to  provide
reasonable  standardization  and  simplification of terms and
coverages  of  individual  accident  and   health   insurance
policies  to facilitate public understanding and comparisons;
(b) to eliminate provisions contained in individual  accident
and  health  insurance  policies  which  may be misleading or
unreasonably confusing in connection either with the purchase
of such coverages or with the settlement of claims;  and  (c)
to  provide for reasonable disclosure in the sale of accident
and health coverages.
    (2)  Definitions  applicable  to  this  Section  are   as
follows:
         (a)  "Policy"  means  all  or  any part of the forms
    constituting the contract between  the  insurer  and  the
    insured,  including  the  policy, certificate, subscriber
    contract, riders, endorsements, and  the  application  if
    attached,  which  are subject to filing with and approval
    by the Director.
         (b)  "Service   corporations"    means    non-profit
    hospital,  medical, voluntary health, vision, dental, and
    pharmaceutical  corporations  organized   and   operating
    respectively  under "the Non-Profit Hospital Service Plan
    Act", "the Medical  Service  Plan  Act",  "the  Voluntary
    Health  Services  Plans  Act",  "The  Vision Service Plan
    Act",   "the  Dental  Service   Plan   Act",   and   "the
    Pharmaceutical Service Plan Act".
         (c)  "Accident and health insurance" means insurance
    written  under  Article  XX  of the Insurance Code, other
    than credit accident and health insurance, and  coverages
    provided   in  subscriber  contracts  issued  by  service
    corporations.  For purposes of this Section such  service
    corporations  shall  be  deemed to be insurers engaged in
    the business of insurance.
    (3)  The Director shall issue such rules as he shall deem
necessary  or  desirable  to  establish  specific  standards,
including standards of full  and  fair  disclosure  that  set
forth  the form and content and required disclosure for sale,
of individual policies  of  accident  and  health  insurance,
which  rules  and  regulations shall be in addition to and in
accordance with the applicable laws of this State, and  which
may  cover  but  shall  not  be  limited  to:   (a)  terms of
renewability;  (b)  initial  and  subsequent  conditions   of
eligibility;  (c) non-duplication of coverage provisions; (d)
coverage of  dependents;  (e)  pre-existing  conditions;  (f)
termination  of  insurance;  (g)  probationary  periods;  (h)
limitation,   exceptions,  and  reductions;  (i)  elimination
periods;  (j)  requirements   regarding   replacements;   (k)
recurrent   conditions;  and  (l)  the  definition  of  terms
including  but  not  limited  to  the  following:   hospital,
accident,  sickness,  injury,  physician,  accidental  means,
total   disability,  partial  disability,  nervous  disorder,
guaranteed renewable, and non-cancellable.
    The Director may  issue  rules  that  specify  prohibited
policy  provisions  not  otherwise specifically authorized by
statute which in the opinion  of  the  Director  are  unjust,
unfair  or  unfairly  discriminatory to the policyholder, any
person insured under the policy, or beneficiary.
    (4)  The Director shall issue such rules as he shall deem
necessary or desirable to  establish  minimum  standards  for
benefits  under  each  category  of  coverage  in  individual
accident  and health policies, other than conversion policies
issued pursuant to a contractual conversion privilege under a
group policy, including but  not  limited  to  the  following
categories:   (a)  basic hospital expense coverage; (b) basic
medical-surgical expense coverage; (c)  hospital  confinement
indemnity  coverage;  (d) major medical expense coverage; (e)
disability income  protection  coverage;  (f)  accident  only
coverage;  and  (g)  specified  disease or specified accident
coverage.
    Nothing  in  this  subsection  (4)  shall  preclude   the
issuance  of  any  policy  which  combines two or more of the
categories  of  coverage  enumerated  in  subparagraphs   (a)
through (f) of this subsection.
    No  policy  shall  be delivered or issued for delivery in
this  State  which  does  not  meet  the  prescribed  minimum
standards for the  categories  of  coverage  listed  in  this
subsection  unless  the  Director  finds  that such policy is
necessary to meet specific needs of individuals or groups and
such individuals or groups will be adequately  informed  that
such  policy  does not meet the prescribed minimum standards,
and such policy  meets  the  requirement  that  the  benefits
provided  therein  are  reasonable in relation to the premium
charged. The  standards  and  criteria  to  be  used  by  the
Director  in approving such policies shall be included in the
rules required under this Section with as much specificity as
practicable.
    The Director  shall  prescribe  by  rule  the  method  of
identification of policies based upon coverages provided.
    (5) (a)  In order to provide for full and fair disclosure
in  the  sale  of  individual  accident  and health insurance
policies, no such policy shall be  delivered  or  issued  for
delivery  in  this  State  unless  the  outline  of  coverage
described   in   paragraph  (b)  of  this  subsection  either
accompanies the policy, or is delivered to the  applicant  at
the  time  the  application  is  made,  and an acknowledgment
signed by  the  insured,  of  receipt  of  delivery  of  such
outline, is provided to the insurer.  In the event the policy
is issued on a basis other than that applied for, the outline
of coverage properly describing the policy must accompany the
policy  when  it  is delivered and such outline shall clearly
state that the policy differs, and to what extent, from  that
for  which  application  was  originally  made. All policies,
except single  premium  nonrenewal  policies,  shall  have  a
notice prominently printed on the first page of the policy or
attached  thereto stating in substance, that the policyholder
shall have the right to return the  policy  within  ten  (10)
days  of  its  delivery  and  to have the premium refunded if
after examination of  the  policy  the  policyholder  is  not
satisfied for any reason.
    (b)  The Director shall issue such rules as he shall deem
necessary or desirable to prescribe the format and content of
the  outline  of  coverage  required by paragraph (a) of this
subsection. "Format" means style,  arrangement,  and  overall
appearance,  including  such  items  as  the size, color, and
prominence of type and the arrangement of text and  captions.
"Content"   shall   include   without   limitation   thereto,
statements  relating  to  the  particular  policy  as  to the
applicable category of coverage prescribed  under  subsection
4;    principal    benefits;   exceptions,   reductions   and
limitations;   and   renewal   provisions,   including    any
reservation  by  the  insurer  of a right to change premiums.
Such  outline  of  coverage  shall  clearly  state  that   it
constitutes a summary of the policy issued or applied for and
that  the  policy  should be consulted to determine governing
contractual provisions.
    (6)  Prior to the issuance  of  rules  pursuant  to  this
Section,  the Director shall afford the public, including the
companies  affected  thereby,  reasonable   opportunity   for
comment.   Such  rulemaking  is  subject to the provisions of
"The Illinois Administrative Procedure Act".
    (7)  When a rule  has  been  adopted,  pursuant  to  this
Section,  all  policies  of insurance or subscriber contracts
which are not in compliance  with such rule  shall,  when  so
provided  in  such  rule, be deemed to be disapproved as of a
date specified in such rule not less than 120 days  following
its  effective date, without any further or additional notice
other than the adoption of the rule.
    (8)  When a rule adopted  pursuant  to  this  Section  so
provides,  a policy of insurance or subscriber contract which
does not comply with the rule shall not less  than  120  days
from  the  effective date of such rule, be construed, and the
insurer or service corporation shall be  liable,  as  if  the
policy or contract did comply with the rule.
    (9)  Violation  of  any  rule  adopted  pursuant  to this
Section shall  be  a  violation  of  the  insurance  law  for
purposes of Sections 370 and 446 of the Insurance Code.
(Source: P.A. 81-0657; 81-0722; 81-1509.)

    (215 ILCS 5/408) (from Ch. 73, par. 1020)
    Sec. 408.  Fees and charges.
    (1)  The  Director  shall charge, collect and give proper
acquittances for  the  payment  of  the  following  fees  and
charges:
         (a)  For  filing  all  documents  submitted  for the
    incorporation  or  organization  or  certification  of  a
    domestic company, except for a fraternal benefit society,
    $1,000.
         (b)  For filing  all  documents  submitted  for  the
    incorporation  or  organization  of  a  fraternal benefit
    society, $250.
         (c)  For   filing   amendments   to   articles    of
    incorporation    and   amendments   to   declaration   of
    organization, except for a fraternal benefit  society,  a
    mutual  benefit  association,  a burial society or a farm
    mutual, $100.
         (d)  For   filing   amendments   to   articles    of
    incorporation  of  a  fraternal benefit society, a mutual
    benefit association or a burial society, $50.
         (e)  For   filing   amendments   to   articles    of
    incorporation of a farm mutual, $25.
         (f)  For filing bylaws or amendments thereto, $25.
         (g)  For    filing    agreement    of    merger   or
    consolidation:
              (i)  for  a  domestic  company,  except  for  a
         fraternal  benefit   society,   a   mutual   benefit
         association,  a  burial  society,  or a farm mutual,
         $1,000.
              (ii)  for a foreign or  alien  company,  except
         for a fraternal benefit society, $300.
              (iii)  for   a  fraternal  benefit  society,  a
         mutual benefit association, a burial society,  or  a
         farm mutual, $100.
         (h)  For  filing  agreements  of  reinsurance  by  a
    domestic company, $100.
         (i)  For filing all documents submitted by a foreign
    or  alien  company to be admitted to transact business or
    accredited as a reinsurer in this  State,  except  for  a
    fraternal benefit society, $2,500.
         (j)  For filing all documents submitted by a foreign
    or  alien  fraternal  benefit  society  to be admitted to
    transact business in this State, $250.
         (k)  For  filing  declaration  of  withdrawal  of  a
    foreign or alien company, $25.
         (l)  For filing annual statement, except a fraternal
    benefit society, a mutual benefit association,  a  burial
    society, or a farm mutual, $100.
         (m)  For  filing  annual  statement  by  a fraternal
    benefit society, $50.
         (n)  For filing annual statement by a farm mutual, a
    mutual benefit association, or a burial society, $25.
         (o)  For  issuing  a  certificate  of  authority  or
    renewal thereof except to a  fraternal  benefit  society,
    $100.
         (p)  For  issuing  a  certificate  of  authority  or
    renewal thereof to a fraternal benefit society, $50.
         (q)  For   issuing   an   amended   certificate   of
    authority, $25.
         (r)  For  each  certified  copy  of  certificate  of
    authority, $10.
         (s)  For  each certificate of deposit, or valuation,
    or compliance or surety certificate, $10.
         (t)  For copies of papers or records per page, $1.
         (u)  For each certification to copies of  papers  or
    records, $10.
         (v)  For    multiple    copies   of   documents   or
    certificates listed in subparagraphs (r), (s), and (u) of
    paragraph (1) of this Section, $10 for the first copy  of
    a certificate of any type and $5 for each additional copy
    of  the  same  certificate  requested  at  the same time,
    unless, pursuant to paragraph (2) of  this  Section,  the
    Director finds these additional fees excessive.
         (w)  For issuing a permit to sell shares or increase
    paid-up capital:
              (i)  in   connection   with   a   public  stock
         offering, $150;
              (ii)  in any other case, $50.
         (x)  For issuing any other certificate  required  or
    permissible under the law, $25.
         (y)  For filing a plan of exchange of the stock of a
    domestic    stock    insurance   company,   a   plan   of
    demutualization of a domestic mutual company, or  a  plan
    of reorganization under Article XII, $1,000.
         (z)  For  filing  a  statement  of  acquisition of a
    domestic company as defined  in  Section  131.4  of  this
    Code, $1,000.
         (aa)  For   filing  an  agreement  to  purchase  the
    business of an organization authorized under  the  Dental
    Service  Plan  Act,  the  Vision Service Plan Act, or the
    Voluntary Health  Services  Plans  Act  or  of  a  health
    maintenance  organization  or  a  limited  health service
    organization, $1,000.
         (bb)  For filing a statement  of  acquisition  of  a
    foreign  or alien insurance company as defined in Section
    131.12a of this Code, $500.
         (cc)  For  filing  a   registration   statement   as
    required  in Sections 131.13 and 131.14, the notification
    as required by Sections 131.16, 131.20a, or 141.4, or  an
    agreement  or  transaction required by Sections 124.2(2),
    141, 141a, or 141.1, $100.
         (dd)  For filing an application for licensing of:
              (i)  a religious  or  charitable  risk  pooling
         trust or a workers' compensation pool, $500;
              (ii)  a  workers' compensation service company,
         $250;
              (iii)  a self-insured automobile  fleet,  $100;
         or
              (iv)  a  renewal of or amendment of any license
         issued pursuant to (i), (ii), or (iii) above, $50.
         (ee)  For filing articles  of  incorporation  for  a
    syndicate  to engage in the business of insurance through
    the Illinois Insurance Exchange, $1,000.
         (ff)  For filing amended articles  of  incorporation
    for  a  syndicate  engaged  in  the business of insurance
    through the Illinois Insurance Exchange, $50.
         (gg)  For filing articles  of  incorporation  for  a
    limited  syndicate  to  join  with  other  subscribers or
    limited syndicates to do business  through  the  Illinois
    Insurance Exchange, $500.
         (hh)  For  filing  amended articles of incorporation
    for a  limited  syndicate  to  do  business  through  the
    Illinois Insurance Exchange, $50.
         (ii)  For  a  permit  to  solicit subscriptions to a
    syndicate or limited syndicate, $50.
         (jj)  For the filing of each  form  as  required  in
    Section  143  of  this  Code,  $25 per form.  The fee for
    advisory and rating organizations shall be $100 per form.
              (i)  For the purposes of the form  filing  fee,
         filings made on insert page basis will be considered
         one  form  at  the  time of its original submission.
         Changes made to a form subsequent  to  its  approval
         shall be considered a new filing.
              (ii)  Only one fee shall be charged for a form,
         regardless  of the number of other forms or policies
         with which it will be used.
              (iii)  Fees charged for a policy  filed  as  it
         will  be  issued  regardless  of the number of forms
         comprising that policy  shall  not  exceed  $500  or
         $1000 for advisory or rating organizations.
              (iv)  The  Director  may  by  rule exempt forms
         from such fees.
         (kk)  For filing an application for licensing  of  a
    reinsurance intermediary, $250.
         (ll)  For  filing  an  application  for renewal of a
    license of a reinsurance intermediary, $100.
    (2)  When printed copies or numerous copies of  the  same
paper or records are furnished or certified, the Director may
reduce  such  fees for copies if he finds them excessive.  He
may, when he considers it in  the  public  interest,  furnish
without  charge  to  state  insurance departments and persons
other than companies, copies or certified copies  of  reports
of examinations and of other papers and records.
    (3)  The expenses incurred in any performance examination
authorized  by  law  shall  be  paid by the company or person
being examined. The charge shall be reasonably related to the
cost  of  the  examination  including  but  not  limited   to
compensation  of examiners, electronic data processing costs,
supervision and preparation  of  an  examination  report  and
lodging  and travel expenses. All lodging and travel expenses
shall be in accord with the applicable travel regulations  as
published  by  the  Department of Central Management Services
and approved by the Governor's Travel Control  Board,  except
that  out-of-state  lodging  and  travel  expenses related to
examinations  authorized  under  Section  132  shall  be   in
accordance  with  travel  rates  prescribed  under  paragraph
301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
for  reimbursement  of  subsistence  expenses incurred during
official travel.  All lodging  and  travel  expenses  may  be
reimbursed  directly upon authorization of the Director. With
the exception of the direct reimbursements authorized by  the
Director,  all  performance  examination charges collected by
the Department shall  be  paid  to  the  Insurance  Producers
Administration  Fund, however, the electronic data processing
costs incurred by the Department in the  performance  of  any
examination  shall  be  billed  directly to the company being
examined for payment to the  Statistical  Services  Revolving
Fund.
    (4)  At  the  time  of  any  service  of  process  on the
Director as attorney for such  service,  the  Director  shall
charge  and collect the sum of $10.00, which may be recovered
as taxable costs by the party to the suit or  action  causing
such  service  to  be  made  if  he  prevails in such suit or
action.
    (5) (a)  The  costs  incurred  by   the   Department   of
Insurance  in  conducting any hearing authorized by law shall
be assessed against  the  parties  to  the  hearing  in  such
proportion  as  the  Director of Insurance may determine upon
consideration of all relevant circumstances  including:   (1)
the  nature  of  the  hearing;  (2)  whether  the hearing was
instigated by, or for the benefit of a  particular  party  or
parties;  (3)  whether  there  is  a  successful party on the
merits of the proceeding; and  (4)  the  relative  levels  of
participation by the parties.
    (b)  For  purposes  of this subsection (5) costs incurred
shall mean the hearing officer fees, court reporter fees, and
travel expenses  of  Department  of  Insurance  officers  and
employees;  provided  however,  that costs incurred shall not
include hearing officer fees or court  reporter  fees  unless
the  Department  has  retained  the  services  of independent
contractors or outside experts to perform such functions.
    (c)  The Director shall  make  the  assessment  of  costs
incurred  as  part of the final order or decision arising out
of the proceeding; provided,  however,  that  such  order  or
decision shall include findings and conclusions in support of
the  assessment  of  costs.  This subsection (5) shall not be
construed as permitting the payment of travel expenses unless
calculated  in  accordance   with   the   applicable   travel
regulations of the Department of Central Management Services,
as  approved  by  the  Governor's  Travel Control Board.  The
Director as part of such order or decision shall require  all
assessments for hearing officer fees and court reporter fees,
if  any,  to be paid directly to the hearing officer or court
reporter  by  the  party(s)  assessed  for  such  costs.  The
assessments for travel expenses of  Department  officers  and
employees  shall be reimbursable to the Director of Insurance
for deposit to the fund out of which those expenses had  been
paid.
    (d)  The provisions of this subsection (5) shall apply in
the  case  of  any  hearing  conducted  by  the  Director  of
Insurance not otherwise specifically provided for by law.
    (6)  The  Director  shall  charge  and  collect an annual
financial regulation fee  from  every  domestic  company  for
examination  and  analysis  of its financial condition and to
fund the  internal  costs  and  expenses  of  the  Interstate
Insurance  Receivership Commission as may be allocated to the
State of Illinois and companies doing an  insurance  business
in  this  State  pursuant  to  Article  X  of  the Interstate
Insurance Receivership Compact.  The fee shall be the greater
fixed amount based upon the combination of nationwide  direct
premium  income  and  nationwide  reinsurance assumed premium
income  or  upon  admitted  assets  calculated   under   this
subsection as follows:
         (a)  Combination of nationwide direct premium income
    and nationwide reinsurance assumed premium.
              (i)  $100, if the premium is less than $500,000
         and there is no reinsurance assumed premium;
              (ii)  $500, if the premium is $500,000 or more,
         but less than $5,000,000 and there is no reinsurance
         assumed  premium;  or  if  the  premium is less than
         $5,000,000 and the reinsurance  assumed  premium  is
         less than $10,000,000;
              (iii)  $2,500,  if  the  premium  is  less than
         $5,000,000 and the reinsurance  assumed  premium  is
         $10,000,000 or more;
              (iv)  $5,000,  if  the premium is $5,000,000 or
         more, but less than $10,000,000;
              (v)  $7,500, if the premium is  $10,000,000  or
         more, but less than $25,000,000;
              (vi)  $10,000, if the premium is $25,000,000 or
         more, but less than $50,000,000;
              (vii)  $14,000,  if  the premium is $50,000,000
         or more, but less than $100,000,000;
              (viii)  $16,000, if the premium is $100,000,000
         or more.
         (b)  Admitted assets.
              (i)  $100, if admitted  assets  are  less  than
         $1,000,000;
              (ii)  $500,  if  admitted assets are $1,000,000
         or more, but less than $5,000,000;
              (iii)  2,500, if admitted assets are $5,000,000
         or more, but less than $25,000,000;
              (iv)  $5,000,   if    admitted    assets    are
         $25,000,000 or more, but less than $50,000,000;
              (v)  $7,500, if admitted assets are $50,000,000
         or more, but less than $100,000,000;
              (vi)  $10,000,    if    admitted   assets   are
         $100,000,000 or more, but less than $500,000,000;
              (vii)  $14,000,   if   admitted   assets    are
         $500,000,000 or more, but less than $1,000,000,000;
              (viii)  $16,000,   if   admitted   assets   are
         $1,000,000,000 or more.
         (c)  The sum of financial regulation fees charged to
    the  domestic  companies  of the same domestic affiliated
    group shall not exceed $100,000 and shall  be  billed  by
    the  Director  to  the  member  company designated by the
    group.
    (7)  The Director shall  charge  and  collect  an  annual
financial regulation fee from every foreign or alien company,
except  fraternal  benefit societies, for the examination and
analysis of its financial condition and to fund the  internal
costs  and  expenses of the Interstate Insurance Receivership
Commission as may be allocated to the State of  Illinois  and
companies  doing an insurance business in this State pursuant
to  Article  X  of  the  Interstate  Insurance   Receivership
Compact.  The fee shall be a fixed amount based upon Illinois
direct  premium  income  and  nationwide  reinsurance assumed
premium income in accordance with the following schedule:
         (a)  $100, if the premium is less than $500,000  and
    there is no reinsurance assumed premium;
         (b)  $500,  if  the premium is $500,000 or more, but
    less than $5,000,000 and there is no reinsurance  assumed
    premium;  or  if  the premium is less than $5,000,000 and
    the reinsurance assumed premium is less than $10,000,000;
         (c)  $2,500, if the premium is less than  $5,000,000
    and  the  reinsurance  assumed  premium is $10,000,000 or
    more;
         (d)  $5,000, if the premium is $5,000,000  or  more,
    but less than $10,000,000;
         (e)  $12,000, if the premium is $10,000,000 or more,
    but less than $25,000,000;
         (f)  $15,000, if the premium is $25,000,000 or more,
    but less than $50,000,000;
         (g)  $20,000, if the premium is $50,000,000 or more,
    but less than $100,000,000;
         (h)  $25,000,  if  the  premium  is  $100,000,000 or
    more.
    (8)  Beginning January 1, 1992, the financial  regulation
fees  imposed  under  subsections (6) and (7) of this Section
shall be paid by each company or  domestic  affiliated  group
annually.   After January 1, 1994, the fee shall be billed by
Department invoice based upon the company's premium income or
admitted assets as shown in  its  annual  statement  for  the
preceding calendar year.  The invoice is due upon receipt and
must  be  paid  no  later than June 30 of each calendar year.
All financial regulation fees  collected  by  the  Department
shall  be  paid  to  the Insurance Financial Regulation Fund.
The Department may not collect financial  examiner  per  diem
charges  from companies subject to subsections (6) and (7) of
this Section undergoing financial examination after June  30,
1992.
    (9)  In addition to the financial regulation fee required
by   this   Section,   a  company  undergoing  any  financial
examination authorized by law shall pay the  following  costs
and  expenses  incurred  by  the Department:  electronic data
processing  costs,  the  expenses  authorized  under  Section
131.21 and subsection (d) of Section 132.4 of this Code,  and
lodging and travel expenses.
    Electronic   data   processing   costs  incurred  by  the
Department in the performance of  any  examination  shall  be
billed  directly  to  the  company undergoing examination for
payment to the Statistical Services Revolving  Fund.   Except
for  direct  reimbursements  authorized  by  the  Director or
direct payments made under Section 131.21 or  subsection  (d)
of  Section 132.4 of this Code, all financial regulation fees
and  all  financial  examination  charges  collected  by  the
Department  shall  be  paid  to   the   Insurance   Financial
Regulation Fund.
    All  lodging  and  travel expenses shall be in accordance
with  applicable  travel   regulations   published   by   the
Department of Central Management Services and approved by the
Governor's  Travel  Control  Board,  except that out-of-state
lodging  and  travel   expenses   related   to   examinations
authorized  under  Sections  132.1  through 132.7 shall be in
accordance  with  travel  rates  prescribed  under  paragraph
301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2,
for reimbursement of  subsistence  expenses  incurred  during
official  travel.    All  lodging  and travel expenses may be
reimbursed directly upon the authorization of the Director.
    In the case of an organization or person not  subject  to
the  financial  regulation  fee, the expenses incurred in any
financial examination authorized by law shall be paid by  the
organization  or  person being examined.  The charge shall be
reasonably related to the cost of the examination  including,
but not limited to, compensation of examiners and other costs
described in this subsection.
    (10)  Any  company, person, or entity failing to make any
payment of $100 or more as required under this Section  shall
be  subject  to  the penalty and interest provisions provided
for in subsections (4) and (7) of Section 412.
    (11)  Unless  otherwise  specified,  all  of   the   fees
collected under this Section shall be paid into the Insurance
Financial Regulation Fund.
    (12)  For purposes of this Section:
         (a)  "domestic  company"  means a company as defined
    in Section 2  of  this  Code  which  is  incorporated  or
    organized  under  the laws of this State, and in addition
    includes a not-for-profit  corporation  authorized  under
    the  Dental,  Vision, Pharmaceutical, or Voluntary Health
    Service Plan Acts, and a health maintenance  organization
    and a limited health service organization;
         (b)  "foreign company" means a company as defined in
    Section 2 of this Code which is incorporated or organized
    under  the  laws  of any state of the United States other
    than  this  State  and  in  addition  includes  a  health
    maintenance organization and  a  limited  health  service
    organization which is incorporated or organized under the
    laws  of  any  state of the United States other than this
    State;
         (c)  "alien company" means a company as  defined  in
    Section 2 of this Code which is incorporated or organized
    under  the  laws  of  any  country  other than the United
    States;
         (d)  "fraternal    benefit    society"    means    a
    corporation,   society,   order,   lodge   or   voluntary
    association as defined in Section 282.1 of this Code;
         (e)  "mutual benefit association" means  a  company,
    association  or corporation authorized by the Director to
    do business in this State under the provisions of Article
    XVIII of this Code;
         (f)  "burial  society"   means   a   person,   firm,
    corporation,   society   or  association  of  individuals
    authorized by the Director to do business in  this  State
    under the provisions of Article XIX of this Code; and
         (g)  "farm  mutual"  means  a  district,  county and
    township  mutual  insurance  company  authorized  by  the
    Director  to  do  business  in  this  State   under   the
    provisions  of  the  Farm Mutual Insurance Company Act of
    1986.
(Source: P.A.  88-364;  89-97,  eff.  7-7-95;  89-247,   eff.
1-1-96; 89-626, eff. 8-9-96.)

    (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
    Sec. 531.03.  Coverage and limitations.
    (1)  This Article shall provide coverage for the policies
and contracts specified in paragraph (2) of this Section:
         (a)  to persons who, regardless of where they reside
    (except  for non-resident certificate holders under group
    policies or contracts), are the beneficiaries,  assignees
    or  payees  of  the  persons  covered  under subparagraph
    (1)(b), and
         (b)  to persons who are  owners  of  or  certificate
    holders under such policies or contracts; or, in the case
    of  unallocated annuity contracts, to the persons who are
    the contract holders, and who
              (i)  are residents of this State, or
              (ii)  are not residents, but only under all  of
         the following conditions:
                   (A)  the   insurers   which   issued  such
              policies or contracts  are  domiciled  in  this
              State;
                   (B)  such insurers never held a license or
              certificate of authority in the states in which
              such persons reside;
                   (C)  such states have associations similar
              to the association created by this Act; and
                   (D)  such  persons  are  not  eligible for
              coverage by such associations.
    (2)(a)  This  Article  shall  provide  coverage  to   the
persons  specified  in  paragraph  (l)  of  this  Section for
direct, (i) nongroup life, health, annuity  and  supplemental
policies,  or  contracts,  (ii) for certificates under direct
group policies or contracts, (iii)  for  unallocated  annuity
contracts  and  (iv)  for  contracts  to  furnish health care
services and subscription certificates for medical or  health
care   services   issued  by  persons  licensed  to  transact
insurance business in this State under the Illinois Insurance
Code. Annuity contracts and certificates under group  annuity
contracts   include   but   are  not  limited  to  guaranteed
investment  contracts,  deposit   administration   contracts,
unallocated funding agreements, allocated funding agreements,
structured  settlement  agreements, lottery contracts and any
immediate or deferred annuity contracts.
    (b)  This Article shall not provide coverage for:
         (i)  that  portion  or  part  of  such  policies  or
    contracts  under  which  the  risk  is   borne   by   the
    policyholder;  provided  however,  that  nothing  in this
    subparagraph (i) shall make this Article inapplicable  to
    assessment   life   and  accident  and  health  insurance
    policies or contracts; or
         (ii)  any such policy or contract  or  part  thereof
    assumed  by  the  impaired  or  insolvent insurer under a
    contract of reinsurance, other than reinsurance for which
    assumption certificates have been issued; or
         (iii)  any portion of a policy or  contract  to  the
    extent  such portion represents an accrued value that the
    rate of interest on which it is accrued
              (A)  averaged over the  period  of  four  years
         prior  to  the date on which the Association becomes
         obligated with respect to such policy  or  contract,
         exceeds a rate of interest determined by subtracting
         two  percentage  points  from Moody's Corporate Bond
         Yield Average  averaged  for  that  same  four  year
         period  or  for  such lesser period if the policy or
         contract was issued less than four years before  the
         Association became obligated; and
              (B)  on   and  after  the  date  on  which  the
         Association becomes obligated with respect  to  such
         policy  or  contract,  exceeds  the rate of interest
         determined by subtracting  three  percentage  points
         from  Moody's  Corporate  Bond Yield Average as most
         recently available;
         (iv)  any unallocated annuity contract issued to  an
    employee benefit plan protected under the federal Pension
    Benefit Guaranty Corporation; and
         (v)  any portion of any unallocated annuity contract
    which  is  not issued to or in connection with a specific
    employee, union or association of natural persons benefit
    plan or a government lottery.
         (vi)  any burial society organized under Article XIX
    of this Act,  any  fraternal  benefit  society  organized
    under  Article  XVII  of  this  Act,  any  mutual benefit
    association organized under Article XVIII  of  this  Act,
    and  any foreign fraternal benefit society licensed under
    Article VI of this Act; or
         (vii)  any    health    maintenance     organization
    established    pursuant   to   the   Health   Maintenance
    Organization  Act  including   any   health   maintenance
    organization business of a member insurer; or
         (viii)  any   health   services   plan   corporation
    established  pursuant  to  the  Voluntary Health Services
    Plans Act; or
         (ix)  (blank); any vision service  plan  corporation
    established pursuant to the Vision Service Plan Act; or
         (x)  any dental service plan corporation established
    pursuant to the Dental Service Plan Act; or
         (xi)  any  stop-loss insurance, as defined in clause
    (b) of Class 1 or clause (a) of Class 2 of Section 4, and
    further defined in subsection (d) of Section 352; or
         (xii)  that portion  or  part  of  a  variable  life
    insurance  or variable annuity contract not guaranteed by
    an insurer.
    (3)  The benefits for which the  Association  may  become
liable shall in no event exceed the lesser of:
         (a)  the   contractual  obligations  for  which  the
    insurer is liable or would have been liable  if  it  were
    not an impaired or insolvent insurer, or
         (b)(i)  with  respect to any one life, regardless of
    the number of policies or contracts:
              (A)  $300,000 in life insurance death benefits,
         but not more than $100,000 in net cash surrender and
         net cash withdrawal values for life insurance;
              (B)  $300,000  in  health  insurance  benefits,
         including  any  net  cash  surrender  and  net  cash
         withdrawal values;
              (C)  $100,000 in the present value  of  annuity
         benefits,  including net cash surrender and net cash
         withdrawal values;
         (ii)  with respect to each individual  participating
    in  a  governmental  retirement  plan  established  under
    Section  401,  403(b) or 457 of the U.S. Internal Revenue
    Code covered by an unallocated annuity  contract  or  the
    beneficiaries of each such individual if deceased, in the
    aggregate,  $100,000  in  present value annuity benefits,
    including net cash  surrender  and  net  cash  withdrawal
    values;  provided,  however,  that  in no event shall the
    Association be liable to expend more than $300,000 in the
    aggregate  with  respect  to  any  one  individual  under
    subparagraph (1) and this subparagraph:
         (iii)  with  respect  to  any  one  contract  holder
    covered by any unallocated annuity contract not  included
    in   subparagraph   (3)(b)(ii)  of  this  Section  above,
    $5,000,000 in benefits, irrespective  of  the  number  of
    such contracts held by that contract holder.
(Source: P.A. 88-364.)

    (215 ILCS 5/1003) (from Ch. 73, par. 1065.703)
    Sec. 1003.  Definitions.  As used in this Article:
    (A) "Adverse underwriting decision" means:
         (1)  any  of  the  following actions with respect to
    insurance transactions involving insurance coverage which
    is individually underwritten:
              (a)  a declination of insurance coverage,
              (b)  a termination of insurance coverage,
              (c)  failure of an agent to apply for insurance
         coverage with a specific insurance institution which
         the agent represents and which is  requested  by  an
         applicant,
              (d)  in  the  case  of  a  property or casualty
         insurance coverage:
                   (i) placement by an insurance  institution
              or  agent  of  a  risk  with  a residual market
              mechanism,  an  unauthorized  insurer   or   an
              insurance   institution  which  specializes  in
              substandard risks, or
                   (ii) the charging of a higher rate on  the
              basis  of  information  which differs from that
              which the applicant or policyholder  furnished,
              or
              (e)  in  the case of life, health or disability
         insurance coverage, an offer  to  insure  at  higher
         than standard rates.
         (2)  Notwithstanding   paragraph   (1)   above,  the
    following  actions  shall  not  be   considered   adverse
    underwriting  decisions  but the insurance institution or
    agent responsible for their occurrence shall nevertheless
    provide the applicant or policyholder with  the  specific
    reason or reasons for their occurrence:
              (a)  the  termination  of  an individual policy
         form on a class or statewide basis,
              (b)  a declination of insurance coverage solely
         because such coverage is not available on a class or
         statewide basis, or
              (c)  the rescission of a policy.
    (B)  "Affiliate" or  "affiliated"  means  a  person  that
directly,  or  indirectly through one or more intermediaries,
controls, is controlled by or is under  common  control  with
another person.
    (C)  "Agent"  means  an  individual,  firm,  partnership,
association   or   corporation   who   is   involved  in  the
solicitation, negotiation or binding of coverages for  or  on
applications  or  policies of insurance, covering property or
risks located in  this  State.   For  the  purposes  of  this
Article,  both  "Insurance  Agent" and "Insurance Broker", as
defined in Section 490, shall be considered an agent.
    (D)  "Applicant" means any person who seeks  to  contract
for  insurance  coverage  other  than  a person seeking group
insurance that is not individually underwritten.
    (E)  "Director" means the Director of Insurance.
    (F)  "Consumer report" means any written, oral  or  other
communication  of  information  bearing on a natural person's
credit  worthiness,   credit   standing,   credit   capacity,
character,  general  reputation,  personal characteristics or
mode of living which is  used  or  expected  to  be  used  in
connection with an insurance transaction.
    (G) "Consumer reporting agency" means any person who:
         (1) regularly  engages,  in whole or in part, in the
    practice of assembling or preparing consumer reports  for
    a monetary fee,
         (2) obtains information primarily from sources other
    than insurance institutions, and
         (3) furnishes consumer reports to other persons.
    (H)  "Control",  including  the  terms "controlled by" or
"under common control with", means the possession, direct  or
indirect,  of  the  power to direct or cause the direction of
the management and policies of a person, whether through  the
ownership  of  voting  securities,  by  contract other than a
commercial contract for goods or nonmanagement  services,  or
otherwise,  unless  the  power  is  the result of an official
position with or corporate office held by the person.
    (I)  "Declination of insurance coverage" means a  denial,
in  whole or in part, by an insurance institution or agent of
requested insurance coverage.
    (J)  "Individual" means any natural person who:
         (1)  in the case of property or casualty  insurance,
    is   a   past,  present  or  proposed  named  insured  or
    certificateholder;
         (2)  in the  case  of  life,  health  or  disability
    insurance,  is  a  past,  present  or  proposed principal
    insured or certificateholder;
         (3)  is a past, present or proposed policyowner;
         (4)  is a past or present applicant;
         (5)  is a past or present claimant; or
         (6)  derived,  derives  or  is  proposed  to  derive
    insurance  coverage  under   an   insurance   policy   or
    certificate subject to this Article.
    (K)  "Institutional   source"   means   any   person   or
governmental   entity  that  provides  information  about  an
individual   to   an   agent,   insurance   institution    or
insurance-support organization, other than:
         (1)  an agent,
         (2)  the  individual  who  is  the  subject  of  the
    information, or
         (3)  a  natural person acting in a personal capacity
    rather than in a business or professional capacity.
    (L)  "Insurance  institution"  means   any   corporation,
association, partnership, reciprocal exchange, inter-insurer,
Lloyd's  insurer,  fraternal  benefit society or other person
engaged in the  business  of  insurance,  health  maintenance
organizations   as  defined  in  Section  2  of  the  "Health
Maintenance  Organization  Act",  medical  service  plans  as
defined in Section 2  of  "the  Medical  Service  Plan  Act",
hospital service corporation under "the Nonprofit Health Care
Service Plan Act", voluntary health services plans as defined
in  Section  2  of "the Voluntary Health Services Plans Act",
vision service plans as defined in Section 2  of-"The  Vision
Service Plan Act", dental service plans as defined in Section
4  of  "the  Dental  Service  Plan  Act",  and pharmaceutical
service plans as defined in Section 4 of "the  Pharmaceutical
Service Plan Act".  "Insurance institution" shall not include
agents or insurance-support organizations.
    (M)  "Insurance-support organization" means:
         (1) any person who regularly engages, in whole or in
    part,   in  the  practice  of  assembling  or  collecting
    information about natural persons for the primary purpose
    of providing the information to an insurance  institution
    or agent for insurance transactions, including:
              (a)  the  furnishing  of  consumer  reports  or
         investigative   consumer  reports  to  an  insurance
         institution or agent for use in connection  with  an
         insurance transaction, or
              (b)  the  collection  of  personal  information
         from   insurance   institutions,   agents  or  other
         insurance-support organizations for the  purpose  of
         detecting     or    preventing    fraud,    material
         misrepresentation  or  material   nondisclosure   in
         connection  with insurance underwriting or insurance
         claim activity.
         (2) Notwithstanding   paragraph   (1)   above,   the
    following    persons    shall    not    be     considered
    "insurance-support  organizations"  for  purposes of this
    Article:  agents,  government   institutions,   insurance
    institutions,   medical  care  institutions  and  medical
    professionals.
    (N)  "Insurance  transaction"   means   any   transaction
involving   insurance   primarily  for  personal,  family  or
household needs rather than business  or  professional  needs
which entails:
         (1)  the    determination    of    an   individual's
    eligibility  for  an  insurance  coverage,   benefit   or
    payment, or
         (2)  the  servicing  of  an  insurance  application,
    policy, contract or certificate.
    (O)  "Investigative  consumer  report"  means  a consumer
report or  portion  thereof  in  which  information  about  a
natural  person's  character,  general  reputation,  personal
characteristics   or  mode  of  living  is  obtained  through
personal interviews with  the  person's  neighbors,  friends,
associates,  acquaintances  or  others who may have knowledge
concerning such items of information.
    (P)  "Medical-care institution"  means  any  facility  or
institution  that is licensed to provide health care services
to natural persons, including but not limited to:  hospitals,
skilled  nursing  facilities,  home-health  agencies, medical
clinics, rehabilitation agencies and  public-health  agencies
and health-maintenance organizations.
    (Q)  "Medical  professional" means any person licensed or
certified    to  provide  health  care  services  to  natural
persons, including but not limited to, a physician,  dentist,
nurse,  optometrist,  chiropractor,  pharmacist,  physical or
occupational therapist,  psychiatric  social  worker,  speech
therapist, clinical dietitian or clinical psychologist.
    (R)  "Medical-record    information"    means    personal
information which:
         (1)  relates  to  an individual's physical or mental
    condition, medical history or medical treatment, and
         (2)  is obtained  from  a  medical  professional  or
    medical-care  institution,  from  the individual, or from
    the individual's spouse, parent or legal guardian.
    (S)  "Person"  means  any  natural  person,  corporation,
association, partnership or other legal entity.
    (T)  "Personal  information"   means   any   individually
identifiable  information  gathered  in  connection  with  an
insurance  transaction from which judgments can be made about
an  individual's  character,  habits,  avocations,  finances,
occupation, general reputation, credit, health or  any  other
personal characteristics.  "Personal information" includes an
individual's    name    and   address   and   "medical-record
information" but does not include "privileged information".
    (U)  "Policyholder" means any person who:
         (1)  in the case of individual property or  casualty
    insurance, is a present named insured;
         (2)  in  the  case  of  individual  life,  health or
    disability insurance, is a present policyowner; or
         (3)  in  the  case  of  group  insurance  which   is
    individually    underwritten,    is   a   present   group
    certificateholder.
    (V)  "Pretext interview" means  an  interview  whereby  a
person,  in  an attempt to obtain information about a natural
person, performs one or more of the following acts:
         (1)  pretends to be someone he or she is not,
         (2)  pretends to represent a person he or she is not
    in fact representing,
         (3)  misrepresents   the   true   purpose   of   the
    interview, or
         (4)  refuses to identify  himself  or  herself  upon
    request.
    (W)  "Privileged   information"  means  any  individually
identifiable information that: (1) relates  to  a  claim  for
insurance   benefits   or  a  civil  or  criminal  proceeding
involving an individual, and (2) is collected  in  connection
with  or  in reasonable anticipation of a claim for insurance
benefits  or  civil  or  criminal  proceeding  involving   an
individual;  provided, however, information otherwise meeting
the requirements of this  subsection  shall  nevertheless  be
considered "personal information" under this Article if it is
disclosed in violation of Section 1014 of this Article.
    (X)  "Residual  market  mechanism"  means an association,
organization or other entity described in Article  XXXIII  of
this Act, or Section 7-501 of "The Illinois Vehicle Code".
    (Y)  "Termination  of insurance coverage" or "termination
of an  insurance  policy"  means  either  a  cancellation  or
nonrenewal  of  an insurance policy, in whole or in part, for
any reason other  than  the  failure  to  pay  a  premium  as
required by the policy.
    (Z) "Unauthorized insurer" means an insurance institution
that  has  not been granted a certificate of authority by the
Director to transact the business of insurance in this State.
(Source: P.A. 82-108.)
    Section  10.  The Health Maintenance Organization Act  is
amended by changing Sections 1-2, 5-3, and 5-6 as follows:

    (215 ILCS 125/1-2) (from Ch. 111 1/2, par. 1402)
    Sec.  1-2.   Definitions. As used in this Act, unless the
context otherwise requires, the following  terms  shall  have
the meanings ascribed to them:
    (1)  "Advertisement"   means  any  printed  or  published
material, audiovisual material and descriptive literature  of
the  health  care  plan  used  in  direct  mail,  newspapers,
magazines,  radio scripts, television scripts, billboards and
similar displays; and any  descriptive  literature  or  sales
aids  of  all  kinds  disseminated by a representative of the
health care plan for presentation to  the  public  including,
but   not   limited   to,   circulars,   leaflets,  booklets,
depictions, illustrations, form letters  and  prepared  sales
presentations.
    (2)  "Director" means the Director of Insurance.
    (3)  "Basic  health  care services" means emergency care,
and inpatient hospital and physician care, outpatient medical
services, mental health services and  care  for  alcohol  and
drug   abuse,   including   any  reasonable  deductibles  and
co-payments, all of which are subject to such limitations  as
are determined by the Director pursuant to rule.
    (4)  "Enrollee" means an individual who has been enrolled
in a health care plan.
    (5)  "Evidence   of   coverage"  means  any  certificate,
agreement, or contract issued to an enrollee setting out  the
coverage to which he is entitled in exchange for a per capita
prepaid sum.
    (6)  "Group  contract"  means  a contract for health care
services which by its terms limits eligibility to members  of
a specified group.
    (7)  "Health care plan" means any arrangement whereby any
organization undertakes to provide or arrange for and pay for
or  reimburse  the  cost  of  basic health care services from
providers selected by the Health Maintenance Organization and
such arrangement consists of arranging for or  the  provision
of  such  health  care  services,  as distinguished from mere
indemnification against the cost of such services, except  as
otherwise  authorized  by  Section  2-3 of this Act, on a per
capita prepaid basis,  through  insurance  or  otherwise.   A
"health  care  plan" also includes any arrangement whereby an
organization undertakes to provide or arrange for or pay  for
or  reimburse the cost of any health care service for persons
who are  enrolled  in  the  integrated  health  care  program
established  under  Section 5-16.3 of the Illinois Public Aid
Code through providers selected by the organization  and  the
arrangement  consists of making provision for the delivery of
health   care   services,   as   distinguished   from    mere
indemnification.    Nothing   in  this  definition,  however,
affects the  total  medical  services  available  to  persons
eligible for medical assistance under the Illinois Public Aid
Code.
    (8)  "Health  care  services" means any services included
in the furnishing to any  individual  of  medical  or  dental
care, or the hospitalization or incident to the furnishing of
such care or hospitalization as well as the furnishing to any
person  of  any  and  all  other  services for the purpose of
preventing, alleviating, curing or healing human  illness  or
injury.
    (9)  "Health    Maintenance   Organization"   means   any
organization formed under the laws of this or  another  state
to provide or arrange for one or more health care plans under
a  system  which  causes  any part of the risk of health care
delivery to be borne by the organization or its providers.
    (10)  "Net worth" means admitted assets,  as  defined  in
Section 1-3 of this Act, minus liabilities.
    (11)  "Organization"  means  any  insurance company, or a
nonprofit corporation authorized under  the  Medical  Service
Plan  Act,  the  Dental  Service Plan Act, the Vision Service
Plan Act, the Pharmaceutical Service Plan Act, the  Voluntary
Health  Services  Plans  Act  or  the  Non-profit Health Care
Service Plan Act, or a corporation organized under  the  laws
of  this or another state for the purpose of operating one or
more health care plans and doing no business other than  that
of a Health Maintenance Organization or an insurance company.
Organization  shall  also  mean  the  University  of Illinois
Hospital as defined in the University  of  Illinois  Hospital
Act.
    (12)  "Provider"  means any physician, hospital facility,
or other person which is licensed or otherwise authorized  to
furnish  health  care  services  and  also includes any other
entity that arranges for the delivery or furnishing of health
care service.
    (13)  "Producer" means a person  directly  or  indirectly
associated   with   a   health   care  plan  who  engages  in
solicitation or enrollment.
    (14)  "Per capita prepaid" means a basis of prepayment by
which a fixed amount of money is prepaid  per  individual  or
any   other   enrollment   unit  to  the  Health  Maintenance
Organization or for health care services which  are  provided
during  a definite time period regardless of the frequency or
extent of the services rendered  by  the  Health  Maintenance
Organization,  except  for  copayments  and  deductibles  and
except  as  provided in subsection (f) of Section 5-3 of this
Act.
    (15)  "Subscriber" means a person who has entered into  a
contractual   relationship   with   the   Health  Maintenance
Organization for the provision of or arrangement of at  least
basic  health  care  services  to  the  beneficiaries of such
contract.
(Source: P.A. 88-554, eff. 7-26-94; 89-90, eff. 6-30-95.)

    (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
    Sec. 5-3.  Insurance Code provisions.
    (a)  Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1,  141.2,
141.3,  143,  143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356m, 367i,  401,  401.1,
402,  403,  403A,  408,  408.2,  and  412,  paragraph  (c) of
subsection (2) of Section 367, and Articles  VIII  1/2,  XII,
XII  1/2,  XIII, XIII 1/2, and XXVI of the Illinois Insurance
Code.
    (b)  For purposes of the Illinois Insurance Code,  except
for   Articles   XIII   and   XIII  1/2,  Health  Maintenance
Organizations in the following categories are  deemed  to  be
"domestic companies":
         (1)  a  corporation  authorized  under  the  Medical
    Service Plan Act, the Dental Service Plan Act, the Vision
    Service  Plan  Act,  the Pharmaceutical Service Plan Act,
    the Voluntary Health Services Plan Act, or the  Nonprofit
    Health Care Service Plan Act;
         (2)  a  corporation organized under the laws of this
    State; or
         (3)  a  corporation  organized  under  the  laws  of
    another state, 30% or more of the enrollees of which  are
    residents  of this State, except a corporation subject to
    substantially the  same  requirements  in  its  state  of
    organization  as  is  a  "domestic company" under Article
    VIII 1/2 of the Illinois Insurance Code.
    (c)  In considering the merger, consolidation,  or  other
acquisition  of  control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
         (1)  the Director shall give  primary  consideration
    to  the  continuation  of  benefits  to enrollees and the
    financial conditions of the acquired  Health  Maintenance
    Organization  after  the  merger, consolidation, or other
    acquisition of control takes effect;
         (2)(i)  the criteria specified in subsection  (1)(b)
    of Section 131.8 of the Illinois Insurance Code shall not
    apply  and (ii) the Director, in making his determination
    with respect  to  the  merger,  consolidation,  or  other
    acquisition  of  control,  need not take into account the
    effect on competition of the  merger,  consolidation,  or
    other acquisition of control;
         (3)  the  Director  shall  have the power to require
    the following information:
              (A)  certification by an independent actuary of
         the  adequacy  of  the  reserves   of   the   Health
         Maintenance Organization sought to be acquired;
              (B)  pro  forma financial statements reflecting
         the combined balance sheets of the acquiring company
         and the Health Maintenance Organization sought to be
         acquired as of the end of the preceding year and  as
         of  a date 90 days prior to the acquisition, as well
         as  pro  forma   financial   statements   reflecting
         projected  combined  operation  for  a  period  of 2
         years;
              (C)  a pro forma  business  plan  detailing  an
         acquiring   party's   plans   with  respect  to  the
         operation of  the  Health  Maintenance  Organization
         sought  to be acquired for a period of not less than
         3 years; and
              (D)  such other  information  as  the  Director
         shall require.
    (d)  The  provisions  of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to  the  sale
by any health maintenance organization of greater than 10% of
its  enrollee  population  (including  without limitation the
health maintenance organization's right, title, and  interest
in and to its health care certificates).
    (e)  In  considering  any  management contract or service
agreement subject to Section 141.1 of the Illinois  Insurance
Code,  the  Director  (i)  shall, in addition to the criteria
specified in Section 141.2 of the  Illinois  Insurance  Code,
take  into  account  the effect of the management contract or
service  agreement  on  the  continuation  of   benefits   to
enrollees   and   the   financial  condition  of  the  health
maintenance organization to be managed or serviced, and  (ii)
need  not  take  into  account  the  effect of the management
contract or service agreement on competition.
    (f)  Except for small employer groups as defined  in  the
Small  Employer  Rating,  Renewability and Portability Health
Insurance Act and except for medicare supplement policies  as
defined  in  Section  363  of  the Illinois Insurance Code, a
Health Maintenance Organization may by contract agree with  a
group  or  other  enrollment unit to effect refunds or charge
additional premiums under the following terms and conditions:
         (i)  the amount of, and other terms  and  conditions
    with respect to, the refund or additional premium are set
    forth  in the group or enrollment unit contract agreed in
    advance of the period for which a refund is to be paid or
    additional premium is to be charged (which  period  shall
    not be less than one year); and
         (ii)  the amount of the refund or additional premium
    shall   not   exceed   20%   of  the  Health  Maintenance
    Organization's profitable or unprofitable experience with
    respect to the group or other  enrollment  unit  for  the
    period  (and,  for  purposes  of  a  refund or additional
    premium, the profitable or unprofitable experience  shall
    be calculated taking into account a pro rata share of the
    Health   Maintenance  Organization's  administrative  and
    marketing expenses, but shall not include any  refund  to
    be made or additional premium to be paid pursuant to this
    subsection (f)).  The Health Maintenance Organization and
    the   group   or  enrollment  unit  may  agree  that  the
    profitable or unprofitable experience may  be  calculated
    taking into account the refund period and the immediately
    preceding 2 plan years.
    The  Health  Maintenance  Organization  shall  include  a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and  upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to  calculate  (1)  the  Health  Maintenance   Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or  (2)  the  Health  Maintenance Organization's unprofitable
experience with respect to the group or enrollment  unit  and
the  resulting  additional premium to be paid by the group or
enrollment unit.
    In  no  event  shall  the  Illinois  Health   Maintenance
Organization  Guaranty  Association  be  liable  to  pay  any
contractual  obligation  of  an insolvent organization to pay
any refund authorized under this Section.
(Source: P.A. 88-313; 89-90, eff. 6-30-95.)

    (215 ILCS 125/5-6) (from Ch. 111 1/2, par. 1414)
    Sec. 5-6.  Supervision of rehabilitation, liquidation  or
conservation by the Director.
    (a)  For  purposes  of the rehabilitation, liquidation or
conservation  of  a  health  maintenance  organization,   the
operation  of a health maintenance organization in this State
constitutes a form of insurance protection  which  should  be
governed by the same provisions governing the rehabilitation,
liquidation  or  conservation  of  insurance  companies.  Any
rehabilitation,  liquidation  or  conservation  of  a  Health
Maintenance  Organization shall be based upon the grounds set
forth in and subject to the provisions of the  laws  of  this
State   regarding   the   rehabilitation,   liquidation,   or
conservation  of  an insurance company and shall be conducted
under the supervision  of  the  Director.  Insolvency,  as  a
ground  for rehabilitation, liquidation, or conservation of a
Health Maintenance Organization, shall be recognized  when  a
Health Maintenance Organization cannot be expected to satisfy
its financial obligations when such obligations are to become
due or when the Health Maintenance Organization has neglected
to  correct  within  the time prescribed by subsection (c) of
Section   2-4,   a   deficiency   occurring   due   to   such
organization's  prescribed  minimum  net  worth  or   special
contingent   reserve   being   impaired.    For   purpose  of
determining the priority of distribution of  general  assets,
claims  of  enrollees and enrollees' beneficiaries shall have
the same priority  as  established  by  Section  205  of  the
Illinois  Insurance  Code for policyholders and beneficiaries
of insureds of insurance companies.  If an enrollee is liable
to any provider for services provided pursuant to and covered
by the health care plan, that liability shall have the status
of an enrollee claim for distribution of general assets.
    Any provider who is obligated by statute or agreement  to
hold  enrollees harmless from liability for services provided
pursuant to and covered by a health care plan  shall  have  a
priority  of  distribution  of the general assets immediately
following that of enrollees and enrollees'  beneficiaries  as
described  herein,  and immediately preceding the priority of
distribution described in paragraph (e) of subsection (1)  of
Section 205 of the Illinois Insurance Code.
    (b)  For  purposes  of  Articles XIII and XIII-1/2 of the
Illinois  Insurance  Code,  organizations  in  the  following
categories shall be deemed to be a "domestic company"  and  a
"domiciliary company":
         (i)  a  corporation  authorized  under  the  Medical
    Service Plan Act, the Dental Service Plan Act, the Vision
    Service  Plan  Act,  the Pharmaceutical Service Plan Act,
    the Voluntary Health Services Plans Act or the Non-Profit
    Health Care Service Plan Act;
         (ii)  a corporation organized under the laws of this
    State; or
         (iii)  a corporation organized  under  the  laws  of
    another  state, 20% or more of the enrollees of which are
    residents of this State, except where such a  corporation
    is,   in   its   state   of   incorporation,  subject  to
    rehabilitation, liquidation and  conservation  under  the
    laws relating to insurance companies.
    (c)  In   the   event  of  the  insolvency  of  a  health
maintenance organization, no enrollee  of  such  organization
shall be liable to any provider for medical services rendered
by  such  provider,  except  for  applicable  co-payments  or
deductibles  for  covered  services  or fees for services not
covered by the health maintenance organization, with  respect
to  the  amounts such provider is not paid by the Association
pursuant to the provisions of Section  6-8  (8)(b)  and  (c).
No  provider,  whether  or  not the provider is obligated  by
statute  or  agreement  to  hold  enrollees   harmless   from
liability,  shall  seek  to  recover any such amount from any
enrollee until the Association has made a final determination
of its  liability  (or  the  resolution  of  any  dispute  or
litigation  resulting  therefrom) with respect to the matters
specified in such provisions.  In the event that the provider
seeks to recover such amounts before the Association's  final
determination  of  its  liability  (or  the resolution of any
dispute or  litigation  resulting  therefrom),  the  provider
shall  be  liable  for all reasonable costs and attorney fees
incurred by the Director or the Association in enforcing this
provision or any court orders related hereto.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

    (215 ILCS 160/Act rep.)
    Section  15.  The Vision Service Plan Act is repealed.

    Section 99.  Effective date.  This Act takes effect  upon
becoming law.

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