A bill for an act
relating to health carriers; providing for oversight of health maintenance
organization transactions by the commissioner of health; establishing requirements
for nonprofit health coverage entity conversion transactions; prohibiting certain
conversion transactions; authorizing enforcement; classifying data; amending
Minnesota Statutes 2022, sections 62D.02, by adding subdivisions; 62D.22, by
adding a subdivision; 317A.811, subdivision 1; Minnesota Statutes 2023
Supplement, section 145D.01, subdivision 1; proposing coding for new law in
Minnesota Statutes, chapters 62C; 62D; 145D.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Minnesota Statutes 2022, section 62D.02, is amended by adding a subdivision
to read:
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"Control," including the terms "controlling," "controlled by," and
"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, corporate office held by, or court appointment of the person. Control is presumed to
exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or
holds proxies representing ten percent or more of the voting securities of any other person.
This presumption may be rebutted by a showing made in the manner provided by section
60D.19, subdivision 11, that control does not exist in fact. The commissioner may determine,
after furnishing all persons in interest notice and opportunity to be heard and making specific
findings of fact to support the determination, that control exists in fact, notwithstanding the
absence of a presumption to that effect.
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Minnesota Statutes 2022, section 62D.02, is amended by adding a subdivision to
read:
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"Enterprise risk" means an activity, circumstance, event, or
series of events involving one or more affiliates of a health maintenance organization that,
if not remedied promptly, is likely to have a material adverse effect upon the financial
condition or liquidity of the health maintenance organization or its holding company system
as a whole. Material adverse effects include but are not limited to anything that would cause
the health maintenance organization's risk-based capital to fall into company action level
event in sections 60A.50 to 60A.696 or would cause the health maintenance organization
to be in hazardous financial condition in accordance with the standards of section 60G.20.
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Minnesota Statutes 2022, section 62D.02, is amended by adding a subdivision to
read:
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"Health
maintenance organization holding company system" means two or more affiliated persons,
one or more of which is a health maintenance organization.
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Minnesota Statutes 2022, section 62D.02, is amended by adding a subdivision to
read:
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"Person" means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, an unincorporated organization, any similar
entity, or any combination of the foregoing acting in concert, but does not include any joint
venture partnership exclusively engaged in owning, managing, leasing, or developing real
or tangible personal property.
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Every health maintenance organization domiciled in this
state must file a report with the commissioner disclosing material acquisitions and
dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance
agreements unless the acquisitions and dispositions of assets or material nonrenewals,
cancellations, or revisions of ceded reinsurance agreements have been submitted to the
commissioner for review, approval, or informational purposes pursuant to other provisions
of law, rule, or other requirements.
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No acquisitions or dispositions of assets need be reported pursuant
to this section if the acquisitions or dispositions are not material. A material acquisition, or
the aggregate of any series of related acquisitions during any 30-day period, or disposition
or the aggregate of any series of related dispositions during any 30-day period is one that
is nonrecurring and not in the ordinary course of business and involves more than five
percent of the reporting health maintenance organization's total admitted assets as reported
in the organization's most recent statutory statement filed with the commissioner of
commerce.
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(a) Asset acquisitions subject to this section include every purchase,
lease, exchange, merger, consolidation, succession, or other acquisition other than the
construction or development of real property by or for the reporting health maintenance
organization or the acquisition of materials for this purpose.
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(b) Asset dispositions subject to this section include every sale, lease, exchange, merger,
consolidation, mortgage, hypothecation, assignment, whether for the benefit of creditors or
otherwise, abandonment, destruction, or other disposition.
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The following information is required to be
disclosed in a report of a material acquisition or disposition of assets:
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(1) date of the transaction;
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(2) manner of acquisition or disposition;
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(3) description of the assets involved;
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(4) nature and amount of the consideration given or received;
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(5) purpose of, or reason for, the transaction;
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(6) manner by which the amount of consideration was determined;
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(7) gain or loss recognized or realized by the health maintenance organization as a result
of the transaction;
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(8) name of each person from whom the assets were acquired or to whom the assets
were disposed; and
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(9) any additional information requested by the commissioner.
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The report required in subdivision 1 is due within 15 days after the
end of the calendar month in which the transactions occur.
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One complete copy of the report, including exhibits or other attachments
filed as part of the report, must be filed with the National Association of Insurance
Commissioners.
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Notwithstanding section 62D.23, reports filed with the
commissioner pursuant to this section must be held as nonpublic data as defined in section
13.02, are not subject to subpoena, and may not be made public by the commissioner, the
National Association of Insurance Commissioners, or any other person, except to insurance
departments of other states, without the prior written consent of the health maintenance