WASHINGTON STATUTES AND CODES

48.31C.020 - Acquisition of a foreign health carrier -- Preacquisition notification -- Review.

Acquisition of a foreign health carrier — Preacquisition notification — Review.

(1) No person may acquire control of a foreign health carrier registered to do business in this state unless a preacquisition notification is filed with the commissioner under this section and the waiting period has expired. If a preacquisition notification is not filed with the commissioner an involved carrier may be subject to an order under subsection (3) of this section. The acquired person may file a preacquisition notification.

     (a) The preacquisition notification must be in the form and contain the information prescribed by the commissioner. The commissioner may require additional material and information necessary to determine whether the proposed acquisition, if consummated, would have the effect of substantially lessening competition, or tending to create a monopoly, in the health coverage business in this state. The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the person indicating his or her ability to render an informed opinion.

     (b) The waiting period required under this section begins on the date the commissioner receives the preacquisition notification and ends on the earlier of the sixtieth day after the date of the receipt by the commissioner of the preacquisition notification or the termination of the waiting period by the commissioner. Before the end of the waiting period, the commissioner may require the submission of additional needed information relevant to the proposed acquisition. If additional information is required, the waiting period ends on the earlier of the thirtieth day after the commissioner has received the additional information or the termination of the waiting period by the commissioner.

     (2)(a) The commissioner may enter an order under subsection (3)(a) of this section with respect to an acquisition if:

     (i) The health carrier fails to file adequate information in compliance with subsection (1)(a) of this section; or

     (ii) The antitrust section of the office of the attorney general and any federal antitrust enforcement agency has chosen not to undertake a review of the proposed acquisition and the commissioner pursuant to his or her own review finds that there is substantial evidence that the effect of the acquisition may substantially lessen competition or tend to create a monopoly in the health coverage business.

     (b) If the antitrust section of the office of the attorney general undertakes a review of the proposed transaction then the attorney general shall seek input from the commissioner throughout the review.

     (c) If the antitrust section of the office of the attorney general does not undertake a review of the proposed acquisition and the review is being conducted by the commissioner, then the commissioner shall seek input from the attorney general throughout the review.

     (3)(a)(i) If an acquisition violates the standards of this section, the commissioner may enter an order:

     (A) Requiring an involved carrier to cease and desist from doing business in this state with respect to business as a health care service contractor or health maintenance organization; or

     (B) Denying the application of an acquired or acquiring carrier for a license, certificate of authority, or registration to do business in this state.

     (ii) The commissioner may not enter the order unless:

     (A) There is a hearing;

     (B) Notice of the hearing is issued before the end of the waiting period and not less than fifteen days before the hearing; and

     (C) The hearing is concluded and the order is issued no later than thirty days after the conclusion of the hearing.

Every order must be accompanied by a written decision of the commissioner setting forth his or her findings of fact and conclusions of law.

     (iii) An order entered under (a) of this subsection may not become final earlier than thirty days after it is issued, during which time the involved carrier may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon the plan or other information, the commissioner shall specify the conditions, if any, under the time period during which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified.

     (iv) An order under (a) of this subsection does not apply if the acquisition is not consummated.

     (b) A person who violates a cease and desist order of the commissioner under (a) of this subsection and while the order is in effect, may, after notice and hearing and upon order of the commissioner, be subject at the discretion of the commissioner to one or more of the following:

     (i) A monetary penalty of not more than ten thousand dollars for every day of violation; or

     (ii) Suspension or revocation of the person's license, certificate of authority, or registration; or

     (iii) Both (b)(i) and (b)(ii) of this subsection.

     (c) A carrier or other person who fails to make a filing required by this section and who also fails to demonstrate a good faith effort to comply with the filing requirement, is subject to a civil penalty of not more than fifty thousand dollars.

     (4) An order may not be entered under subsection (3)(a) of this section if:

     (a) The acquisition will yield substantial economies of scale or economies in resource use that cannot be feasibly achieved in any other way, and the public benefits that would arise from the economies exceed the public benefits that would arise from more competition; or

     (b) The acquisition will substantially increase the availability of health care coverage, and the public benefits of the increase exceed the public benefits that would arise from more competition.

     (5)(a) RCW 48.31C.080 (2) and (3) and 48.31C.090 do not apply to acquisitions covered under this section.

     (b) This section does not apply to the following:

     (i) An acquisition subject to approval or disapproval by the commissioner under RCW 48.31C.030;

     (ii) A purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in the health coverage business in this state;

     (iii) The acquisition of a person by another person when neither person is directly, nor through affiliates, primarily engaged in the business of a domestic or foreign health carrier, if preacquisition notification is filed with the commissioner in accordance with subsection (1) of this section sixty days before the proposed effective date of the acquisition. However, preacquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by this subsection (5)(b);

     (iv) The acquisition of already affiliated persons;

     (v) An acquisition if, as an immediate result of the acquisition:

     (A) In no market would the combined market share of the involved carriers exceed five percent of the total market;

     (B) There would be no increase in any market share; or

     (C) In no market would:

     (I) The combined market share of the involved carriers exceed twelve percent of the total market; and

     (II) The market share increase by more than two percent of the total market.

     For the purpose of (b)(v) of this subsection, "market" means direct written premium in this state for a line of business as contained in the annual statement required to be filed by carriers licensed to do business in this state;

     (vi) An acquisition of a health carrier whose domiciliary commissioner affirmatively finds: That the health carrier is in failing condition; there is a lack of feasible alternatives to improving such a condition; and the public benefits of improving the health carrier's condition through the acquisition exceed the public benefits that would arise from more competition, and the findings are communicated by the domiciliary commissioner to the commissioner of this state.