Bill Text: NY S00650 | 2009-2010 | General Assembly | Introduced
Bill Title: Provides for the licensing and regulation of health insurance purchasing cooperatives serving sole proprietors and small employers; provides that purchasing alliances or cooperatives operating pursuant to a memorandum of understanding with the superintendent of insurance shall not be subject to compliance and may continue to so operate for at least five years; permits purchasing cooperatives to assist small businesses in claims processing to help reduce personnel overhead costs of employers.
Spectrum: Partisan Bill (Republican 18-0)
Status: (Introduced - Dead) 2010-01-06 - REFERRED TO INSURANCE [S00650 Detail]
Download: New_York-2009-S00650-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
650
2009-2010 Regular Sessions
I N S E N A T E
January 12, 2009
___________
Introduced by Sens. LARKIN, SEWARD, ALESI, BONACIC, DeFRANCISCO, FARLEY,
FLANAGAN, GOLDEN, LAVALLE, LEIBELL, LITTLE, MAZIARZ, MORAHAN, NOZZO-
LIO, SALAND, SKELOS, VOLKER -- read twice and ordered printed, and
when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to licensing and regulat-
ing health insurance purchasing cooperatives
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 2101 of the insurance law is amended by adding a
2 new subsection (v) to read as follows:
3 (V) IN THIS ARTICLE, A "HEALTH INSURANCE PURCHASING COOPERATIVE" OR
4 "COOPERATIVE" MEANS ANY INDIVIDUAL, FIRM, ASSOCIATION, BUSINESS CORPO-
5 RATION OR NOT-FOR-PROFIT CORPORATION LICENSED PURSUANT TO THIS ARTICLE
6 THAT PROVIDES HEALTH INSURANCE OR A HEALTH BENEFITS PLAN THROUGH MULTI-
7 PLE UNAFFILIATED PARTICIPATING INSURERS OR HEALTH MAINTENANCE ORGANIZA-
8 TIONS TO MEMBER SOLE PROPRIETORS AND SMALL EMPLOYERS AND THEIR EMPLOYEES
9 WITHIN A DEFINED SERVICE AREA AUTHORIZED BY THE SUPERINTENDENT. FOR THE
10 PURPOSES OF THIS SUBSECTION, "SMALL EMPLOYER" SHALL MEAN ANY EMPLOYER
11 THAT EMPLOYS NOT FEWER THAN TWO NOR MORE THAN NINETY-NINE EMPLOYEES.
12 S 2. The insurance law is amended by adding a new section 2104-a to
13 read as follows:
14 S 2104-A. HEALTH INSURANCE PURCHASING COOPERATIVE: LICENSING. (A) THE
15 SUPERINTENDENT MAY ISSUE A HEALTH INSURANCE PURCHASING COOPERATIVE
16 LICENSE TO ANY NON-RISK BEARING INDIVIDUAL, FIRM, ASSOCIATION, BUSINESS
17 CORPORATION, OR NOT-FOR-PROFIT CORPORATION WHO OR WHICH IS DEEMED BY THE
18 SUPERINTENDENT TO BE TRUSTWORTHY AND COMPETENT TO ACT AS AN INSURANCE
19 BROKER PURSUANT TO SECTION TWO THOUSAND ONE HUNDRED FOUR OF THIS ARTICLE
20 AND TO EXERCISE THE ADDITIONAL POWERS GRANTED TO A COOPERATIVE LICENSEE
21 PURSUANT TO THIS SECTION. BEFORE ISSUING A COOPERATIVE LICENSE, THE
22 APPLICANT MUST HAVE AN INSURANCE BROKER'S LICENSE OR HAVE EMPLOYED BY
23 SUCH COOPERATIVE AN EMPLOYEE THAT HAS A BROKER'S LICENSE.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05217-01-9
S. 650 2
1 (B) A COOPERATIVE MAY MARKET, SELL OR OFFER FOR SALE OR ARRANGE FOR A
2 PACKAGE OF ONE OR MORE HEALTH INSURANCE BENEFITS PLANS UNDERWRITTEN BY
3 THREE OR MORE INSURERS OR HEALTH MAINTENANCE ORGANIZATIONS TO SOLE
4 PROPRIETORS AND SMALL EMPLOYERS AND THEIR EMPLOYEES. FOR THE PURPOSES OF
5 THIS SECTION, "SMALL EMPLOYER" MEANS ANY EMPLOYER THAT EMPLOYS NOT FEWER
6 THAN TWO NOR MORE THAN NINETY-NINE EMPLOYEES. A COOPERATIVE MAY NOT
7 ISSUE CONTRACTS OR QUOTE PREMIUM RATES OR PROVIDE COVERAGE UNTIL
8 CONTRACTS AND PREMIUM RATES FOR INSURERS AND HEALTH MAINTENANCE ORGAN-
9 IZATIONS PARTICIPATING IN THE COOPERATIVE ARE APPROVED BY THE SUPER-
10 INTENDENT.
11 (C) BEFORE A HEALTH INSURANCE PURCHASING COOPERATIVE LICENSE SHALL BE
12 ISSUED OR RENEWED, THE PROSPECTIVE LICENSEE SHALL PROPERLY FILE WITH THE
13 SUPERINTENDENT A WRITTEN APPLICATION AND PAY A FEE OF ONE HUNDRED
14 DOLLARS. EVERY LICENSE SHALL HAVE A DURATION OF TWO YEARS. THE LICENSE
15 APPLICATION SHALL CONTAIN THE FOLLOWING INFORMATION TO DEMONSTRATE THAT:
16 (1) A SPECIFIC BUSINESS PLAN HAS BEEN DEVELOPED TO DEMONSTRATE HOW THE
17 APPLICANT INTENDS TO REDUCE THE COST OF HEALTH INSURANCE OR ADMINISTRA-
18 TIVE COSTS FOR MEMBER BUSINESSES AND INCREASE ACCESS TO HEALTH INSUR-
19 ANCE;
20 (2) THE APPLICANT WILL HAVE THE EXPERTISE AND LOGISTICAL SUPPORT TO
21 ADEQUATELY SERVE MEMBER SOLE PROPRIETORS AND SMALL EMPLOYERS AND THEIR
22 EMPLOYEES;
23 (3) THE APPLICANT IS NOT A DISTRIBUTION NETWORK FOR A SINGLE PRODUCT
24 OR THE PRODUCTS OF A SINGLE HEALTH INSURER OR HEALTH MAINTENANCE ORGAN-
25 IZATION;
26 (4) ADEQUATE AND ONGOING FINANCIAL CONTROLS AND SECURITY ARRANGEMENTS
27 WILL BE INSTITUTED TO ENSURE THAT THE APPLICANT WILL REMAIN SOLVENT;
28 (5) THE APPLICANT WILL INSTITUTE ADEQUATE SAFEGUARDS WITH EACH PARTIC-
29 IPATING INSURER AND HEALTH MAINTENANCE ORGANIZATION TO ENSURE CONTINUITY
30 OF COVERAGE FOR PLAN SUBSCRIBERS SHOULD THE APPLICANT CEASE OPERATIONS;
31 (6) THE APPLICANT SHALL ATTEMPT TO EXTEND PURCHASING COOPERATIVE SPON-
32 SORED INSURANCE COVERAGES TO A LARGE NUMBER OF SMALL EMPLOYERS WITHIN
33 THE APPLICANT'S SERVICE AREA;
34 (7) THE APPLICANT HAS SATISFIED THE CRITERIA NECESSARY FOR OBTAINING
35 AN INSURANCE BROKER'S LICENSE PURSUANT TO SECTION TWO THOUSAND ONE
36 HUNDRED FOUR OF THIS ARTICLE; AND
37 (8) THE APPLICANT WILL COMPLY WITH ALL PROVISIONS RELATING TO COMMUNI-
38 TY RATING AND OPEN ENROLLMENT PURSUANT TO SECTION THREE THOUSAND TWO
39 HUNDRED THIRTY-THREE OF THIS CHAPTER.
40 (D) COOPERATIVE LICENSEES SHALL HAVE THE FOLLOWING POWERS:
41 (1) TO SELL, MARKET, OFFER OR ARRANGE FOR SALE TO SOLE PROPRIETORS AND
42 SMALL EMPLOYERS, THEIR EMPLOYEES AND THEIR FAMILIES A VARIETY OF HEALTH
43 INSURANCE PLANS.
44 (2) PREPARE AND DISSEMINATE INFORMATIONAL AND SOLICITATION MATERIALS
45 TO FACILITATE COMPARISON OF THE VARIOUS HEALTH INSURANCE PLANS OFFERED
46 TO MEMBER SOLE PROPRIETORS AND SMALL EMPLOYERS BY THE COOPERATIVE.
47 (3) SET REASONABLE PURCHASING COOPERATIVE MEMBERSHIP FEES AND COOPER-
48 ATIVE ADMINISTRATIVE FEES TO SERVICE EMPLOYER AND INSURER ENROLLMENT,
49 BILLING, COLLECTION, PREMIUM DISBURSEMENT AND RECONCILIATION, COMMISSION
50 DISBURSEMENT AND PROCESSING ACTIVITIES. THESE FEES MAY VARY BASED ON THE
51 SIZE OF THE EMPLOYER.
52 (4) PROVIDE ENROLLMENT, BILLING, PREMIUM COLLECTION, PREMIUM DISBURSE-
53 MENT AND RECONCILIATION, COMMISSION DISBURSEMENT AND OTHER PROCESSING
54 SERVICES FOR HEALTH INSURANCE PLANS OFFERED THROUGH THE COOPERATIVE.
55 (5) CONTRACT WITH QUALIFIED THIRD PARTIES TO PROVIDE FOR ANY SERVICE
56 NECESSARY TO CARRY OUT THE COOPERATIVE'S POWERS AND DUTIES.
S. 650 3
1 (6) CONTRACT WITH LICENSED INSURANCE AGENTS AND BROKERS TO MARKET AND
2 SERVICE COVERAGES MADE AVAILABLE THROUGH THE COOPERATIVE AND NEGOTIATE
3 THE DIVISION OF COMMISSION FEES BETWEEN THE INSURANCE AGENT, BROKER AND
4 COOPERATIVE.
5 (7) NEGOTIATE WITH PARTICIPATING INSURERS AND HEALTH MAINTENANCE
6 ORGANIZATIONS THE ADMINISTRATIVE EXPENSES PORTION OF PREMIUM RATES
7 CHARGED FOR COVERAGE OFFERED BY THE COOPERATIVE.
8 (8) EXERCISE THOSE POWERS GRANTED TO AN INSURANCE BROKER PURSUANT TO
9 SECTION TWO THOUSAND ONE HUNDRED FOUR OF THIS ARTICLE.
10 (9) ANY OTHER POWERS THAT THE SUPERINTENDENT DEEMS NECESSARY TO FACIL-
11 ITATE A COOPERATIVE'S ABILITY TO REDUCE THE COST OF HEALTH INSURANCE OR
12 ADMINISTRATIVE COSTS FOR MEMBER BUSINESSES OR TO INCREASE ACCESS TO SUCH
13 INSURANCE.
14 (E) INFORMATION PROVIDED TO THE SUPERINTENDENT BY AN APPLICANT FOR A
15 COOPERATIVE LICENSE OR A COOPERATIVE LICENSEE RELATING TO ITS FINANCES
16 OR OPERATIONS WILL, UPON REQUEST BY THE COOPERATIVE, BE GIVEN CONSIDER-
17 ATION AS A TRADE SECRET PURSUANT TO PARAGRAPH (D) OF SUBDIVISION TWO OF
18 SECTION EIGHTY-SEVEN OF THE PUBLIC OFFICERS LAW.
19 S 3. Section 2110 of the insurance law, as amended by chapter 687 of
20 the laws of 2003, is amended to read as follows:
21 S 2110. Revocation or suspension of license of insurance producer,
22 insurance consultant or adjuster. (a) The superintendent may refuse to
23 renew, revoke, or may suspend for a period the superintendent determines
24 the license of any insurance producer, HEALTH INSURANCE PURCHASING COOP-
25 ERATIVE, insurance consultant or adjuster, if, after notice and hearing,
26 the superintendent determines that the licensee or any sub-licensee has:
27 (1) violated any insurance laws, or violated any regulation, subpoena
28 or order of the superintendent [of insurance] or of another state's
29 insurance commissioner, or has violated any law in the course of his,
30 HER, OR ITS dealings in such capacity;
31 (2) provided materially incorrect, materially misleading, materially
32 incomplete or materially untrue information in the license application;
33 (3) obtained or attempted to obtain a license through misrepresen-
34 tation or fraud;
35 (4)(A) used fraudulent, coercive or dishonest practices;
36 (B) demonstrated incompetence;
37 (C) demonstrated untrustworthiness; or
38 (D) demonstrated financial irresponsibility in the conduct of business
39 in this state or elsewhere;
40 (5) improperly withheld, misappropriated or converted any monies or
41 properties received in the course of business in this state or else-
42 where;
43 (6) intentionally misrepresented the terms of an actual or proposed
44 insurance contract or application for insurance;
45 (7) has been convicted of a felony;
46 (8) admitted or been found to have committed any insurance unfair
47 trade practice or fraud;
48 (9) had an insurance producer license, or its equivalent, denied,
49 suspended or revoked in any other state, province, district or territo-
50 ry;
51 (10) forged another's name to an application for insurance or to any
52 document related to an insurance transaction;
53 (11) improperly used notes or any other reference material to complete
54 an examination for an insurance license;
55 (12) knowingly accepted insurance business from an individual who is
56 not licensed;
S. 650 4
1 (13) failed to comply with an administrative or court order imposing a
2 child support obligation; or
3 (14) failed to pay state income tax or comply with any administrative
4 or court order directing payment of state income tax.
5 (b) Before revoking or suspending the license of any HEALTH INSURANCE
6 PURCHASING COOPERATIVE, insurance producer or other licensee pursuant to
7 the provisions of this article, the superintendent shall, except when
8 proceeding pursuant to subsection (f) of this section, give notice to
9 the licensee and to every sub-licensee and shall hold, or cause to be
10 held, a hearing not less than ten days after the giving of such notice.
11 (c) If A HEALTH INSURANCE PURCHASING COOPERATIVE'S LICENSE, an insur-
12 ance producer's license or other licensee's license pursuant to the
13 provisions of this article is revoked or suspended by the superinten-
14 dent, [he] THE SUPERINTENDENT shall forthwith give notice to the licen-
15 see.
16 (d) The revocation or suspension of any HEALTH INSURANCE PURCHASING
17 COOPERATIVE'S LICENSE, insurance producer's license or other licensee's
18 license pursuant to the provisions of this article shall terminate
19 forthwith such COOPERATIVE'S LICENSE, producer's license or other
20 licensee's license and the authority conferred thereby upon all sub-li-
21 censees.
22 (e) (1) No individual, corporation, firm or association whose license
23 as A HEALTH INSURANCE PURCHASING COOPERATIVE, an insurance producer or
24 other licensee subject to subsection (a) of this section has been
25 revoked, and no firm or association of which such individual is a
26 member, and no corporation of which such individual is an officer or
27 director, shall be entitled to obtain any license under the provisions
28 of this chapter for a period of one year after such revocation, or, if
29 such revocation be judicially reviewed, for one year after the final
30 determination thereof affirming the action of the superintendent in
31 revoking such license.
32 (2) If any such license held by a firm, association or corporation be
33 revoked, no member of such firm or association and no officer or direc-
34 tor of such corporation shall be entitled to obtain any license, or to
35 be named as a sub-licensee in any such license, for the same period of
36 time, unless the superintendent determines, after notice and hearing,
37 that such member, officer or director was not personally at fault in the
38 matter on account of which such license was revoked.
39 (f) (1) As used in this subsection, "non-resident insurance producer's
40 license or sub-license" means a license or sub-license in such capacity
41 issued pursuant to paragraph five of subsection (g) of section two thou-
42 sand one hundred three or subsection (e) of section two thousand one
43 hundred four of this article.
44 (2) A non-resident insurance producer's license or sub-license may be
45 summarily revoked in the event that the licensee's license as an agent,
46 broker, adjuster or in any other capacity under the insurance law of the
47 licensee's home state of domicile or such license of the firm or associ-
48 ation of which the licensee is a member, employee or sub-licensee, or
49 such license of the corporation of which the licensee is an officer,
50 director, employee or sub-licensee has been suspended or revoked or
51 renewal thereof denied in the licensee's home state of domicile by a
52 procedure affording to the licensee or it a statutory right to a hear-
53 ing, for action or conduct which, if it had been established upon a
54 hearing before the superintendent, would have constituted grounds for
55 revocation of a license under subsection (a) of this section.
S. 650 5
1 (3) Before revoking the license of any non-resident insurance producer
2 in accordance with this section, the superintendent shall give ten days'
3 notice in writing to such producer of the action proposed to be taken,
4 which notice shall be given in accordance with the applicable provisions
5 of subsections (a) and (d) of section three hundred three of this chap-
6 ter.
7 (4) Upon submission to the superintendent of satisfactory proof that a
8 suspension or revocation of a license issued by a home state to act as
9 an insurance agent, insurance broker, adjuster or in another licensed
10 capacity under the insurance law of such other state or a denial of
11 renewal thereof has been duly withdrawn, set aside, reversed or voided,
12 the superintendent shall thereupon reinstate and restore any and all
13 licenses revoked in accordance with the provisions of this subsection.
14 (g) If ANY HEALTH INSURANCE PURCHASING COOPERATIVE, any licensed
15 insurance producer or any person aggrieved shall file with the super-
16 intendent a verified complaint setting forth facts tending to show
17 sufficient ground for the revocation or suspension of any insurance
18 producer's license OR ANY COOPERATIVE'S LICENSE, or if any licensed
19 adjuster or any person aggrieved files with the superintendent a veri-
20 fied complaint setting forth facts showing sufficient grounds for the
21 suspension or revocation of any adjuster's license, the superintendent
22 shall, after notice and a hearing, determine whether such license shall
23 be suspended or revoked.
24 (h) The superintendent shall retain the authority to enforce the
25 provisions of and impose any penalty or remedy authorized by this chap-
26 ter against any person or entity who is under investigation for or
27 charged with a violation of this chapter, even if the person's or enti-
28 ty's license or registration has been surrendered, or has expired or has
29 lapsed by operation of law.
30 (i) A licensee subject to this article shall report to the superinten-
31 dent any administrative action taken against the licensee in another
32 jurisdiction or by another governmental agency in this state within
33 thirty days of the final disposition of the matter. This report shall
34 include a copy of the order, consent to order or other relevant legal
35 documents.
36 (j) Within thirty days of the initial pretrial hearing date, a licen-
37 see subject to this article shall report to the superintendent any crim-
38 inal prosecution of the licensee taken in any jurisdiction. The report
39 shall include a copy of the initial complaint filed, the order resulting
40 from the hearing and any other relevant legal documents.
41 S 4. Section 2120 of the insurance law, subsection (d) as added by
42 chapter 527 of the laws of 2004, is amended to read as follows:
43 S 2120. Fiduciary capacity of insurance agents, HEALTH INSURANCE
44 PURCHASING COOPERATIVES, insurance brokers and reinsurance interme-
45 diaries. (a) Every insurance agent, EVERY HEALTH INSURANCE PURCHASING
46 COOPERATIVE and every insurance broker acting as such in this state
47 shall be responsible in a fiduciary capacity for all funds received or
48 collected as insurance agent, COOPERATIVE or insurance broker, and shall
49 not, without the express consent of his, HER or its principal, mingle
50 any such funds with his, HER or its own funds or with funds held by him,
51 HER or it in any other capacity.
52 (b) Every reinsurance intermediary acting as such in this state shall
53 be responsible, in a fiduciary capacity for all funds received or
54 collected in such capacity, and shall not, without the express consent
55 of his, HER or its principal or principals, mingle any such funds with
S. 650 6
1 his, HER or its own funds or with funds held by him, HER or it in any
2 other capacity.
3 (c) This section shall not require any such agent, broker, COOPERATIVE
4 or reinsurance intermediary to maintain a separate bank deposit for the
5 funds of each such principal, if and as long as the funds so held for
6 each such principal are reasonably ascertainable from the books of
7 account and records of such agent, broker, COOPERATIVE or reinsurance
8 intermediary, as the case may be.
9 (d) A retail insurance producer who violates paragraph (a) of subdivi-
10 sion two of section five hundred seventy-seven-a of the banking law
11 shall be liable for actual damages for the failure to notify, in writ-
12 ing, the premium finance agency of the information required pursuant to
13 such paragraph (a).
14 S 5. Section 2122 of the insurance law is amended to read as follows:
15 S 2122. Advertising by insurance agents [and], brokers AND COOPER-
16 ATIVES. (a) (1) No insurance agent [or insurance], broker OR COOPER-
17 ATIVE shall make or issue in this state any advertisement, sign,
18 pamphlet, circular, card or other public announcement purporting to make
19 known the financial condition of any insurer, unless the same shall
20 conform to the requirements of section one thousand three hundred thir-
21 teen of this chapter.
22 (2) No insurance agent, insurance broker, COOPERATIVE or other person,
23 shall, by any advertisement or public announcement in this state, call
24 attention to any unauthorized insurer or insurers.
25 (b) Every agent of any insurer and every insurance broker AND COOPER-
26 ATIVE shall, in all advertisements, public announcements, signs,
27 pamphlets, circulars and cards, which refer to an insurer, set forth
28 therein the name in full of the insurer referred to and the name of the
29 city, town or village in which it has its principal office in the United
30 States.
31 S 6. Every purchasing alliance or cooperative operating pursuant to a
32 memorandum of understanding with the insurance department prior to the
33 effective date of this act shall be exempt from this act until the
34 superintendent of insurance reasonably determines that such alliances or
35 cooperatives are able to comply with such provisions of this act.
36 Under no circumstances shall the superintendent of insurance mandate
37 that any existing purchasing alliance or cooperative operating prior to
38 the effective date of this act must comply with the provisions of this
39 act for a period of at least five years from the effective date of this
40 act or revoke or nullify in any way any memorandum of understanding with
41 such alliances or cooperatives for a period of at least five years.
42 S 7. This act shall take effect on the one hundred eightieth day after
43 it shall have become a law; provided however, that any rules or regu-
44 lations necessary to implement this act shall be promulgated on or
45 before such effective date.
