Article V - General Provisions - Illinois Statutes

      (215 ILCS 125/Art. V heading)ARTICLE V. GENERAL PROVISIONS

(215 ILCS 125/5‑1) (from Ch. 111 1/2, par. 1409A)     Sec. 5‑1. Section 155 of the Insurance Code shall apply to Health Maintenance Organizations; except that no action shall be brought for an unreasonable delay in the settling of a claim if the delay is caused by the failure of the enrollee to execute a lien as requested by the health care plan. (Source: P.A. 85‑20.)

(215 ILCS 125/5‑2) (from Ch. 111 1/2, par. 1410)     Sec. 5‑2. Rules and regulations or licensing of producers. The Director may promulgate such reasonable rules and regulations as are necessary to provide for the licensing of producers. (Source: P.A. 85‑20.)

    (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, 356g.5‑1, 356m, 356v, 356w, 356x, 356y, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 356z.9, 356z.10, 356z.11, 356z.12, 356z.13, 356z.14, 356z.15, 356z.17, 356z.18, 364.01, 367.2, 367.2‑5, 367i, 368a, 368b, 368c, 368d, 368e, 370c, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1, paragraph (c) of subsection (2) of Section 367, and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the Illinois Insurance Code.
    (b) For purposes of the Illinois Insurance Code, except for Sections 444 and 444.1 and 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 Dental Service

Plan Act or the Voluntary Health Services Plans 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.     (g) Rulemaking authority to implement Public Act 95‑1045, if any, is conditioned on the rules being adopted in accordance with all provisions of the Illinois Administrative Procedure Act and all rules and procedures of the Joint Committee on Administrative Rules; any purported rule not so adopted, for whatever reason, is unauthorized. (Source: P.A. 95‑422, eff. 8‑24‑07; 95‑520, eff. 8‑28‑07; 95‑876, eff. 8‑21‑08; 95‑958, eff. 6‑1‑09; 95‑978, eff. 1‑1‑09; 95‑1005, eff. 12‑12‑08; 95‑1045, eff. 3‑27‑09; 95‑1049, eff. 1‑1‑10; 96‑328, eff. 8‑11‑09; 96‑639, eff. 1‑1‑10; 96‑833, eff. 6‑1‑10; 96‑1000, eff. 7‑2‑10.)

(215 ILCS 125/5‑3.1)     Sec. 5‑3.1. Woman's health care provider. Health maintenance organizations are subject to the provisions of Section 356r of the Illinois Insurance Code. (Source: P.A. 89‑514, eff. 7‑17‑96.)

(215 ILCS 125/5‑3.5)     Sec. 5‑3.5. Illinois Health Insurance Portability and Accountability Act. The provisions of this Act are subject to the Illinois Health Insurance Portability and Accountability Act as provided in Section 15 of that Act. (Source: P.A. 90‑30, eff. 7‑1‑97.)

(215 ILCS 125/5‑3.6)     Sec. 5‑3.6. Managed Care Reform and Patient Rights Act. Health maintenance organizations are subject to the provisions of the Managed Care Reform and Patient Rights Act. (Source: P.A. 91‑617, eff. 1‑1‑00.)

(215 ILCS 125/5‑4) (from Ch. 111 1/2, par. 1412)     Sec. 5‑4. Examination of affairs and quality of services by the Director; books and records. The Director shall have with respect to health maintenance organizations the powers of examination conferred upon him relative to Sections 132 through 132.7 of the Illinois Insurance Code. The Director of Public Health shall make an examination concerning the quality of health care services of any health maintenance organization and providers with whom the organization has contracts, agreements, or other arrangements pursuant to its health care plan as often as he deems it necessary for the protection of the interest of the people of this State, but not less frequently than once every 3 years. The cost of any examination shall be paid by the health maintenance organization being examined.     The fee assessed against the organization being examined shall be composed of a fixed annual fee plus an additional fee based on the individual health maintenance organization's enrollment in Illinois. The revenues generated shall not exceed the estimated actual costs of the program. The methodology for computing the fee to be assessed shall be established by rule, pursuant to the Illinois Administrative Procedure Act.     Every health maintenance organization and provider shall submit its books and records relating to the Health Care Plan to examination and in every way facilitate them. For the purpose of examinations, the Director and the Director of Public Health may administer oaths to and examine the officers and agents of the health maintenance organization and the principals of providers concerning their business. (Source: P.A. 89‑97, eff. 7‑7‑95.)

(215 ILCS 125/5‑5) (from Ch. 111 1/2, par. 1413)     Sec. 5‑5. Suspension, revocation or denial of certification of authority. The Director may suspend or revoke any certificate of authority issued to a health maintenance organization under this Act or deny an application for a certificate of authority if he finds any of the following:     (a) The health maintenance organization is operating significantly in contravention of its basic organizational document, its health care plan, or in a manner contrary to that described in any information submitted under Section 2‑1 or 4‑12.     (b) The health maintenance organization issues contracts or evidences of coverage or uses a schedule of charges for health care services that do not comply with the requirement of Section 2‑1 or 4‑12.     (c) The health care plan does not provide or arrange for basic health care services, except as provided in Section 4‑13 concerning mental health services for clients of the Department of Children and Family Services.     (d) The Director of Public Health certifies to the Director that (1) the health maintenance organization does not meet the requirements of Section 2‑2 or (2) the health maintenance organization is unable to fulfill its obligations to furnish health care services as required under its health care plan. The Department of Public Health shall promulgate by rule, pursuant to the Illinois Administrative Procedure Act, the precise standards used for determining what constitutes a material misrepresentation, what constitutes a material violation of a contract or evidence of coverage, or what constitutes good faith with regard to certification under this paragraph.     (e) The health maintenance organization is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees.     (f) The health maintenance organization, or any person on its behalf, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner.     (g) The continued operation of the health maintenance organization would be hazardous to its enrollees.     (h) The health maintenance organization has neglected to correct, within the time prescribed by subsection (c) of Section 2‑4, any deficiency occurring due to the organization's prescribed minimum net worth or special contingent reserve being impaired.     (i) The health maintenance organization has otherwise failed to substantially comply with this Act.     (j) The health maintenance organization has failed to meet the requirements for issuance of a certificate of authority set forth in Section 2‑2.     When the certificate of authority of a health maintenance organization is revoked, the organization shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the organization. The Director may permit further operation of the organization that he finds to be in the best interest of enrollees to the end that the enrollees will be afforded the greatest practical opportunity to obtain health care services. (Source: P.A. 88‑487.)

(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 Dental

Service Plan Act or the Voluntary Health Services Plans 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. 89‑206, eff. 7‑21‑95; 90‑177, eff. 7‑23‑97; 90‑372, eff. 7‑1‑98; 90‑655, eff. 7‑30‑98.)

(215 ILCS 125/5‑7) (from Ch. 111 1/2, par. 1415)     Sec. 5‑7. Rules and regulations to carry out provisions of Act. The Director may, after notice and hearing, promulgate reasonable rules and regulations as are necessary and proper to:     (1) Establish minimum coverage standards for basic health care services, the application of which standards discriminate against no class of physician;     (2) Establish specific standards, including standards for the full and fair disclosure of health care services provided by group contracts or evidences of coverage which may cover but shall not be limited to:     (a) Coordination of benefits     (b) Conversion     (c) Cancellation and termination     (d) Deductibles and co‑payments     (e) Pre‑existing conditions; and     (3) Otherwise carry out the provisions of this Act. (Source: P.A. 86‑620.)

(215 ILCS 125/5‑7.1) (from Ch. 111 1/2, par. 1415.1)     Sec. 5‑7.1. No health care plan shall include any provision which shall have the effect of denying coverage to or on behalf of an enrollee under such plan on the basis of a failure by the enrollee to file a notice of claim within the time period required by the plan, provided such failure is caused solely by the physical inability or mental incapacity of the enrollee to file such notice of claim because of a period of emergency hospitalization. (Source: P.A. 86‑784.)

(215 ILCS 125/5‑8) (from Ch. 111 1/2, par. 1416)     Sec. 5‑8. Grounds for denial, suspension or revocation of certificate of authority‑Hearing‑Review under Administrative Review Law.     (a) When the Director has cause to believe that grounds for the denial of an application for a certificate of authority exists, or that grounds for the suspension or revocation of a certificate of authority exists, he shall issue an order to the organization or applicant stating the grounds upon which the denial, suspension, or revocation is based. The order shall be sent to the organization or applicant by certified or registered mail and to the Director of Public Health. The organization or applicant may in writing request a hearing within 30 days of receipt of the order. If no written request is made, the order shall be final upon the expiration of said 30 days.     (b) If the organization or applicant requests a hearing pursuant to this Section, the Director shall issue a written notice of hearing sent to the organization or applicant by certified or registered mail and to the Director of Public Health, stating:     (i) a specified time for the hearing, which may not be less than 20 nor more than 30 days after receipt of the notice of hearing; and     (ii) a specific place for the hearing, which may be either in the city of Springfield or in the county where the organization's or applicant's principal place of business is located.     (c) If a hearing is requested, the Director of the Department of Public Health or his delegated representative, shall be in attendance at the hearing and shall participate in the proceedings. The recommendations and findings of the Director of the Department of Public Health with regard to matters relating to the quality of health care services provided in connection with any decision regarding denial, suspension or revocation of a certificate of authority, shall be conclusive and binding upon the Director.     (d) After such hearing, or upon the failure of the organization or applicant to appear at such hearing, the Director shall take such action as is deemed advisable on written findings which shall be served on the organization or applicant with a copy thereof to the Director of the Department of Public Health. The action of the Director and the recommendations and findings of the Director of the Department of Public Health shall be subject to review under and in accordance with the Administrative Review Law. (Source: P.A. 86‑620.)

(215 ILCS 125/5‑9) (from Ch. 111 1/2, par. 1417)     Sec. 5‑9. Violations‑Class B misdemeanor‑Cease and desist order. (a) Any organization which violates this Act shall be guilty of a Class B misdemeanor.     (b) The Director may issue to any organization subject to this Act, a cease and desist order as provided in Article XXIV, Section 401.1 of the "Illinois Insurance Code".     (c) The Director may issue corrective orders to any organization subject to this Act, as provided in Article XII 1/2, Sections 186.1 and 186.2 of the "Illinois Insurance Code". (Source: P.A. 85‑20.)